The way forward for well being care? – Twin Cities
WASHINGTON — The large information in well being care final week was the disclosure that CVS Well being Corp. — proprietor of an unlimited community of drug shops — is contemplating shopping for Aetna Inc., one of many nation’s largest well being insurers, for roughly $66 billion. It’s undeniably necessary, however why?
Clearly, financial focus in well being care is rising. The potential CVS-Aetna hookup is only a gigantic instance. Hospitals have been consolidating; so have doctor teams. A examine printed not too long ago in Well being Affairs, a journal of public coverage, reported that hospitals had been “extremely concentrated” in 90 p.c of the nation’s metropolitan areas.
The results, warns Alan Weil, Well being Affairs’ editor, embody a narrowing of client decisions and “outsized market energy” of hospitals and doctor specialists. However are there additionally advantages? Might we be glimpsing the way forward for well being care? Might the adjustments in the end overshadow the importance of Obamacare?
To make some sense of all this, I turned to Dan Mendelson, the president of Avalere, a well being care consulting firm that he based in 2000. I submitted inquiries to Mendelson; his replies, edited for brevity, are beneath.
Q.: Why is a significant retail drug chain (CVS) considering of merging with a giant insurer (Aetna)?
A.: Well being care is more and more concerning the capability of medical enterprises to ship improved affected person care by expertise. All insurers are focused on creating a powerful presence in knowledge analytics. This in flip encourages mergers and acquisitions. Why? CVS is a diversified well being care firm with operations in pharmacy profit administration, post-acute care and a powerful community of well being care clinics — it’s not only a drug retailer chain. By merging with CVS, Aetna good points entry to those wealthy knowledge sources to drive higher well being care practices.
The identical is true for CVS in reverse. It will get to faucet Aetna’s databases and uncover, say, which of its policy-holders haven’t acquired their flu shot and could possibly be solicited by CVS.
Q.: Do you anticipate extra huge mergers and acquisitions?
A.: Sure. The tempo of massive combos will speed up in coming years. All well being care corporations might want to reposition themselves to accommodate the basic developments of the well being care system — which is able to proceed no matter political change.
Q.: What are these developments?
A.: First, payers — personal insurers and authorities by Medicare and Medicaid — are paying extra for worth (good affected person outcomes) versus the quantity of providers (the variety of exams and procedures). Medicare and Medicaid have led the best way, however personal insurers are catching up. This has pushed consolidation within the supplier sectors (hospitals and docs), as a result of it’s simpler to measure and enhance high quality as a system versus influencing sole proprietor or small group practices. This has additionally pushed the acquisition of suppliers by insurers, as a result of the important thing to bettering high quality is getting a greater alignment between the pursuits of sufferers and suppliers.
A second main development is expounded: the growing position of knowledge expertise and knowledge analytics in bettering affected person care. Quite a lot of the essential wiring of the well being care system is now full — a results of federal funding and decrease expertise costs. The necessity now could be to harness the ability of analytics to enhance care. As famous, this drives mergers and acquisition.
A remaining development that appears more likely to proceed is the looming menace that among the massive tech corporations — Amazon, Google and the like — will enter the well being care markets. The prevailing well being care suppliers and payers suppose they should get bigger to compete with these mega-firms.
Q.: Will consolidation assist value management by eliminating duplication and by creating new economies of scale? Or will the lack of competitors and the market energy of the survivors enhance costs and well being care spending?
A.: In fact, regulators will scrutinize proposed combos to reply that query.
However the growing deal with affected person outcomes additionally has the potential of controlling prices.
We’ve seen this within the Medicare Benefit program, the place quality-based funds have additionally improved affected person well-being with decrease levels of cholesterol and higher blood sugar readings for diabetic sufferers.
There isn’t any query that elevated client entry to well being care and new expertise have an amazing potential to take inefficiencies out of the system.
Nonetheless, we shouldn’t be naïve. On the native stage, regulators want to make sure that supplier networks stay aggressive. A hospital with monopoly energy might be anticipated to lift prices for shoppers.
Robert Samuelson writes a column for the Washington Put up.
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