Senior healthcare leaders need to understand the drivers of industry change, as well as the technology underpinnings needed to support new value propositions.

The healthcare industry is rapidly being recontoured by the forces of digital innovation, new industry regulations and growing consumer expectations for better healthcare experiences. From our observations, healthcare payers and providers increasingly have both the technology tools and the regulatory incentives to overcome the industry’s traditionally adversarial silos and barriers.

The goal: delivering consumer experiences that seamlessly unify payer and provider functions and physical and digital channels. Soon, care, payment, follow-up, referrals and ancillary services will all be blended into a single, frictionless process that makes traditional boundaries between payers and providers transparent to consumers.

Already, payer-provider convergence is accelerating as interoperability, price transparency and aggressive new entrants with deep pockets erode the industry’s traditional barriers and business models. We’re seeing health plans executing diversification strategies designed to increase alignment and collaboration with providers. Some payers, including United Health Group/Optum and Blue Shield of California, have even bought provider practices.

On the provider side, some — including UPMC and Intermountain Health — have stood up their own health plans, taking on both insurance risk and the financial risk of shifting to more value-based contracts based on improving health outcomes. The race is on to deliver a seamless healthcare experience, and long-term incumbent players and new entrants alike are placing their bets.

To succeed in the emerging healthcare landscape, senior healthcare leaders need to first understand the forces reshaping healthcare and the experiences payers and providers deliver, as well as the impact of these forces on core healthcare technology.

In this blog, we’ll look at the drivers of change and what they entail for technology selections, and in an upcoming blog, we’ll evaluate emerging core technology strategies and explain the capabilities healthcare organizations need from next-gen technology.

A radical industry makeover

New market forces are driving out longstanding healthcare complexities and costs that historically have stymied innovation by preventing efficient data sharing and market-driven economics. These new developments include:

• Consumer-empowering regulations. The federal data interoperability rule breaks open data silos and sets standards to enable data flows among entities both inside and outside of healthcare. Similarly, price transparency regulations that reveal contract data and negotiated rates are already influencing payer-provider negotiations. This is inching the industry closer to a market-driven model for pricing medical services.
  
  Together, these regulations are rendering legacy business models based on proprietary data ownership and opaque pricing strategies obsolete. Consumers stand to gain real control over their health information and the ability to easily comparison-shop on quality and value.
  
  
• Mass “API-ification” of core payer and provider functions. With new advancements in technology — combined with interoperability regulations mandating standards-based application programming interfaces (APIs) — an ecosystem-powered approach is emerging to drive value from platform and technology investments. Standards-based APIs will help providers and payers overcome process gaps and inefficiencies by enabling real-time automated transactions.
  
  For example, an API could enable a best-of-breed quality management system to exchange data with a core administrative system, resulting in the ability to streamline quality reports and identify care gaps more quickly.
  APIs also will democratize data and functionality, enabling innovation marketplaces for third-party apps and developers. Imagine an App Store or Play Store specific to healthcare. Apps could range from FDA-vetted clinical functions to medical appointment reminders.
  
  
• New value-based care and payment models. The adoption of new payment models is aligning payer and provider incentives and inspiring new business and care delivery models that are breaking down traditional adversarial silos. This is accelerating payer/provider convergence.
  

A new platform for a reshaped industry

These forces — and the new industry topology they are creating — are testing the limits of traditional health industry technology platforms and surrounding applications. Traditional technology infrastructures are ill-equipped to support new value propositions based on interoperable data flows, transparent pricing and open ecosystems. 

Consider the friction points that exist at the historically adversarial payer/provider boundary: authorizations, referrals management, claims adjudication, denials management, appeals and grievances, etc. Both sides are heavily invested in a parallel revenue cycle management (RCM) arms race plagued by redundancy, inefficiency and costs.

Converting these friction points into value for consumers and healthcare organizations will require open platforms and an ecosystem approach to technology and automation. These must be built on an intelligence layer that draws on data and insights from combined consumer, payer and provider data sets — and increasingly, from combined payer/provider business models.

An evolution ahead

To support new business models based on payer/provider collaboration and even co-ownership of health systems, the industry’s technology platforms and strategies need to evolve. Yet we see many organizations trying to drive these alignments with outdated platform strategies that are technologically incapable of supporting the data fluidity and consumer-centricity these new business models require. Today’s profound business and operating model shifts require fundamental changes in how business and enabling technologies are architected.

At the same time, healthcare organizations need to resist the market noise and focus on making sensible investments that build on, and drive value from, their existing platform investments and leverage their incumbent advantages. Organizations must take time to understand the next-generation technology capabilities they’ll need.

In Part 2, we’ll dissect emerging solutions for delivering frictionless end-to-end consumer experiences and the characteristics healthcare organizations need from next-gen tech to generate opportunities in a reshaped consumer-focused industry.