The health care industry has faced massive shifts in recent years. Potential health care mergers disclosed since early December 2017 involve companies with more than $550 billion in cumulative revenue.
These mergers are based on the increasingly streamlined and data-driven health care market that is driven to control costs in the face of a dramatically increasing U.S. aging population.
Medicare, Medicaid and managed care companies are all seeking ways to keep patients out of emergency rooms and spend increasingly less time in costly hospital settings. The government is promoting all efforts that achieve cost-savings goals while also improving patient outcomes.
In December, 2017, CVS Health Corp announced it plans to acquire Aetna Inc., a health insurer, for $69 billion. The company stated that its purpose with the acquisition is to tackle soaring health care spending through lower-cost medical services in pharmacies.
CVS plans to capitalize and expand upon its existing MinuteClinic structure, which largely offers preventative services such as flu shots. The company’s stated vision is that in addition to the pharmacy and MinuteClinic, they could also provide vision, hearing and nutrition services in their stores.
Just one week after CVS made its announcement, UnitedHealth Group Inc. purchased DaVita Inc.’s doctor group for $4.9 billion. This is likely part of a move toward corporate ownership of physician practices, clinics and outpatient surgery centers. With this acquisition, UnitedHealth will add hundreds of medical clinics to the biggest U.S. health insurer’s growing business of providing direct medical care.
UnitedHealth will reportedly take control of 300 clinic groups in California, Colorado, Florida, Nevada, New Mexico and Washington, which serve about 1.7 million patients a year. The deal also includes 35 urgent-care centers and six outpatient surgery sites.
These mergers signal that health care companies are seeking to drive down costs and change how and where patients get care: away from hospitals and toward clinics, doctors’ offices, surgery centers and retail stores. Such a shift will likely impact the home health market by increasing demand for in-home care products.
Market Forces Driving Technology
The largest issue facing the health care industry is its ability to pay for the services required by an increasing geriatric population. In 2050, the U.S. geriatric population is expected to reach 83.7 million, which is more than double the population in 2012.
Medicare, the single largest payer in the U.S. market, is seeking innovative and cost-effective ways to reduce the immense costs of managing our aging population. This specifically includes increased expenditures in clinical and home health care settings. Meanwhile, increasing numbers of Medicaid and Medicare beneficiaries are now enrolled with managed care companies.
Managed care companies, including UnitedHealth and Humana, are seeking to reduce costs by reducing hospital care and driving care into the outpatient and home setting as much as possible. Insurers are increasingly positioning themselves to take more control over how their insurance dollars are spent, such as UnitedHealth’s frontline business, OptumCare.
Public and private health systems have been facing revenue pressures and declining margins for years. The trend is expected to persist as increasing demand, infrastructure upgrades, and therapeutic and technology advancements strain the already limited financial resources.
Health care stakeholders are constantly pursuing cost-reduction measures, including software and information technology (IT) that allows them to reduce overhead and shift patient care outside of costly hospitals.
Data analytics, in which health care companies collect patient data to provide a more efficient, lower-cost care plan, are increasingly driving health care decisions.
What This Means for HME Providers
These industry changes signal a significant opportunity for HME providers. As health care moves out of the hospital, more people will be seeking home health care supplies.
But the health care giants are going to seek partnerships with only the most advanced HME providers. This means that HME providers must incorporate the latest in software and data analytics solutions to ensure they can provide necessary information to health care companies.
HME providers that survive the industry shift will be able to collect data that supports payers in demonstrating how products are keeping patients from being readmitted to hospitals.
HME providers that recognize how they fit into the bigger picture of health care today are the ones that will succeed. They will recognize how they can make themselves indispensable to hospitals and payers.
Data Drives Progress
HME suppliers that invest in data collection and analytics are the ones that will survive the current industry consolidation.
Health care insurance providers want data to drive health care expenditures. The ability to efficiently manage a comprehensive record of claims and reimbursements is expected to contribute to the growth of the global healthcare IT market.
The appeal of health care data includes operational cost reduction, error reduction and improved health outcomes. The government is in full support of increased health care infrastructure and incorporation of data systems in existing establishments. While the first beneficiaries of this support will be acute care and long-term care facilities, HME providers that can meet the increased demand for data are best positioned to succeed as partners to these important referral sources.
In order to become an ally with payers, HME providers must maintain flawless records on their customers, including:
- Patient data, including address, caregiver, physician
- Patient ailments
- Patient historic and current home health care product usage
This data should be available instantly. With this data, the HME supplier can provide payers, long-term care facilities and hospitals with valuable insight into the efficacy of patient care, as well as the performance and usage of various HME products over time.