How Will New Entrants in the Healthcare Space Impact Provider Organizations? One Leading Consultant Offers His Perspective

April 6, 2018
Jacques Mulder, the U.S. health sector leader for Ernst & Young, shares his perspectives on the connotations of U.S. healthcare industry convergence and what healthcare executive leaders should be doing to navigate the changes that are coming.

Earlier this week, a cross-industry panel representing financial, health, technology and life science leaders discussed the implications of accelerating digital disruption in healthcare during a webcast hosted by Ernst and Young (EY), the New York City-based advisory services firm.

The panelists dissected the opportunities made possible by digital disruption, what these changes may mean to stakeholders across the health value chain and what organizations can do to seize the upside of technological disruption. In the last three months, non-traditional players, such as technology companies like Apple and Amazon, have made significant moves into the healthcare space, signaling a growing convergence of the American healthcare industry.

Jacques Mulder, who moderated the panel discussion, is the U.S. health sector leader for Ernst & Young, and, he is a 25-year healthcare industry veteran with a focus on working with pharmaceutical and biotechnology companies. In his consulting work, he helps U.S. healthcare clients navigate complex issues, bringing innovation to the healthcare delivery system.

In an interview with Healthcare Informatics Associate Editor Heather Landi after the webcast, Mulder shared his personal take on many of the topics explored during the panel discussion, including the connotations of U.S. healthcare industry convergence and what health system and hospital executive leaders should be doing to navigate the changes that are coming. And he discusses why healthcare organizations will have to fundamentally change how they deliver care and how they engage with patients in the face of aggressive competition from new players in the market. Below are excerpts from that interview, edited for length.

During the panel discussion, there was talk about the convergence of the U.S. healthcare industry.  What exactly does that mean?

I’m been talking and writing about this topic for years now, and I’ve always held the position that changes are required to fix or better healthcare, and many of these changes are not going to come from the healthcare industry itself. We’ve been following these series of non-traditional entrants into the market, and many of those have been announced in deals that were made public over the last couple of weeks, such as announcements from Google and Amazon. It basically comes down to this—companies that are technology-based and information-based organizations have developed significantly faster in their ability to create platforms upon which not only transactions happen but also where they use their deep analytics skills and data management skills to a much better effect than the healthcare system does it.

Looking ahead, what will this mean for the healthcare industry, and specifically for healthcare provider organizations?

It really is a shift to keep consumers at the center of care, which rides on the back of this whole concept of consumerization or consumerism, where patients are becoming a lot more informed about their own healthcare and also taking the reins into their own hands a little more. They’re doing their own research, and, for that reason, we have to start treating patients as customers, the same way we do in [the] retail and consumer goods [industries]. The missing link has always been the technology to make these things real. The growth and acceleration of technology is making things possible today that weren’t possible just two or three year ago. That pace is incredible; those technologies almost double in their capabilities every year. I think that it’s suddenly hit a point where the healthcare industry is saying: technology is surpassing what I’m currently offering, my consumers are educated and they are demanding a lot more of me. For that reason, I need to find ways to provide a customer experience or a patient experience that far exceeds what I’m doing today and, oh, by the way, if I want to keep these covered lives, I’m going to have to be competitive in the market, as it pertains not only to their health but also their satisfaction in the engagement of the services.

Convergence is really about, how do you start using and integrating the mobile apps, the wearable devices, such as the Fitbit, Garmin watch or Apple watch, and how do you start integrating those pieces of information in the overall health and wellness of patients? At this point, as those organizations assume risk for outcomes, they’re not only treating sick people, they’re also having to take care of healthy people so that they don’t become sick, so the technology allows them to do that. The healthcare industry is playing catch up, and the convergence is happening because there are people and technologies out there that can do a better job of most aspects, outside of patient care, than the industry itself can do.

The panel discussion covered many topics as it relates to digital disruption, vertical integrations and mergers and acquisitions in healthcare. What were the big takeaways from that discussion?

Provider organizations are going to have to be a lot more flexible and engaging. They’re going to have to be a lot more respectful of patients’ needs and requests, and that’s a switch in the focus. Healthcare organizations, specifically provider organizations, are going to be burdened with standing behind and being measured on the quality of clinical care they provide, as well as the wellness of populations that they serve, which is a dramatic shift from today. I think that touches on how do you change the clinical pathways and, more specifically, how do you change physician and caregiver attitudes and behavior in this changing dynamic of servicing the patient, rather than servicing the insurer? Those are the big things.

And, you have to consider the amount of transparency that’s being brought by technology and by consumers being more informed and shopping around more. To take a parallel from the car industry, you can find an application that tells you, in your area, what a Honda Civic sells for, with the same features, and you can find the best price. That transparency doesn’t yet exist in healthcare, so it’s going to become a price and a quality discussion very quickly that a consumer is going to be able to see. An organization’s ability to charge premium prices is going to evaporate dramatically, and I think that forces us into a fundamental change of the business model.

What should health system and hospital executive leaders be doing right now to strategize and leverage the opportunities that disruption brings?

There are two things—there is a lot of activity going out right now around mergers and acquisitions really for the purpose of scale. You have to make sure you have enough scale and size to adequately be competitive in a risk-based environment. And then secondly, we talked about bigger and then getter better, or getting smarter, which means the use of technology and other tools to better engage with patients, to be able to customize patient care, and to treat those patients with an aim toward client retention and client satisfaction that really wasn’t the case before. That’s going to require a fundamental shift in how care is delivered.

The options that are in front of provider organizations are so many that it’s difficult to decide what to do. What’s important is to clearly identify the things that are critical for you, as an organization, in this ongoing journey of how you want to enhance the patient experience and how much risk you want to assume. You need to get clarity on that, and then identify who your partners are that you can collaborate with to get this done. This is not a one-person show anymore. I think embracing those partnerships and having a willingness to use technologies and platforms that may not be your own or may not have been developed in your organization, that’s going to be a critical piece.

I’ll reiterate that the way the healthcare system is going is not sustainable, under any circumstance. With 18 to 19 percent of GDP [gross domestic product] and 5 to 6 percent growth, it’s one of the fastest growing industries or sectors in the word and, specifically, in the U.S. I do not think that cost cutting is going to get us out of any of that situation; we’ve been doing that for 15, 20 years, and it’s not changed anything.

Where we’re going to, I think, is a real realization by organizations that I need to embrace these technologies, and fundamentally change the way I deliver care and the way I engage with patients, and have that drive down costs, versus trying to get an extra 2 percent over my pharmaceutical benefit. I think we’re going to see physician and caregiver accountability increase, and that’s going to be linked to the performance of those organizations. They [physicians] are going to be required to change and behave differently, and that change is probably one of the biggest and most formidable change challenges that we have in this country. And, frankly, if they do not do it, other companies that are entering the market now that are much more efficient and much more focused on solving the client problem, will eat their lunch.

While many see healthcare as ripe for disruption, there is the argument that consumer tech companies like Apple and Amazon face major challenges in trying to shake up the healthcare industry. What is your take on that?

I may look at it in a slightly different way; I don’t think these new entrants necessarily want to take over the provision of healthcare, but what they are interested in is managing or owning the platform upon which healthcare and healthcare services are brokered. There is a difference between owning healthcare and being a critical participant. What I do think is that companies that are smart, and specifically employers—the employer, outside of the federal government, is the ultimate payer for healthcare, along with us as the patients with our out-of-pocket co-pays—the employers are saying the solutions that you’re giving the healthcare system are not adequate, and I will embrace other technologies, such as the Amazon platform or Google’s capability, to figure out how to better treat a specific disease or how to better intervene in the wellness of care, and then they will collaborate with clinical organizations to adopt different ways of doing it. But, those caregiver organizations are probably not going to do it themselves. These new entrants are not going to change the market by trying to own it, they will change the market because their technologies will be used by existing healthcare players to enhance their own businesses.

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