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May 19, 2018 12:00 AM

CEO Power Panel: Health systems find consumerism drives innovation

Rachel Z. Arndt
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    The word "patient" is rapidly fading from the healthcare lexicon. Nowadays, healthcare executives sound like those from any other industry, talking about "consumers" or even "customers."

    With consumer-friendly companies like Apple and Amazon nipping at the heels of traditional healthcare organizations, not to mention the rise in out-of-pocket expenses, the consumer is inching toward center stage in healthcare. Leaders are responding with efforts to create more seamless and convenient healthcare experiences. They're starting to notice that consumerism matters. That's reflected in how they're using technology, innovative thinking and hiring. Healthcare CEOs see consumerism transforming the industry and are looking for tools to navigate that change, according to Modern Healthcare's most recent Power Panel survey of 75 top CEOs.

    But saying an organization is consumer-focused isn't enough. It's about executing a real strategy, whether that's driving patients to lower-acuity settings or turning mobile devices into health management tools. In general, the CEOs saw investment in technology and new ways of conducting their business speeding up, with none saying that innovation is slowing down and only a few saying that it's staying the same.

    Catering to consumers

    "Consumerism is playing a major role in innovation as we see more and more lower-acuity care options go digital or go to lower acuity settings, such as urgent care," said Ochsner Health System CEO Warner Thomas.

    One of those digital options is telemedicine. As reimbursement opportunities grow and consumers learn to shop more effectively for care, virtual interactions with the healthcare system are becoming more common. Medicare fee-for-service telemedicine volume has been on the rise, with coding instances up 28% between 2015 and 2016. Medicare Part B telehealth reimbursements totaled $28.7 million in 2016.

    "It's been a huge opportunity for us in care delivery to minimize the amount of travel and the out-of-pocket costs," Marshfield Clinic Health System CEO Dr. Susan Turney said. The Marshfield health plan covers telemedicine services, and Turney expects other insurers will soon do the same. "We all know that a hospital is an expensive place to provide care," she said.

    innovation in healthcare

    The move to more virtual care goes hand in hand with the rise of mobile devices. Many patients now want to receive care via those devices, Turney said.

    More than two-thirds of survey respondents said mobile devices have the most potential of various technologies to drive innovation in the next year. And just under half said telehealth will drive innovation the most.

    Meanwhile, healthcare organizations are starting to compete with consumer giants. Apple launched a new version of its Health app early this year that lets patients of certain providers download their health records to their iPhones. And just before that, Amazon, Berkshire Hathaway and JPMorgan Chase announced they're teaming up to form a healthcare company, although few details have emerged.

    Amazon also recently hired a former Food and Drug Administration chief health informatics officer to work on healthcare business development. And then there's continued push from retail clinics like CVS Health and Walgreens further into the traditional provider space.

    "When you have new entrants into the market that are known for their disruption and innovation, and have virtually zero limitations from a resource perspective, you have to take notice," Turney said. "I think it's exciting. I think we're going to see changes."

    Inching towards AI

    One consumer tech company that's been noticeably quieter in healthcare is Alphabet, though the company, which became Google's parent company in 2015 through a corporate restructuring, is poised to make a splash with artificial intelligence. The company's DeepMind AI subsidiary has been working on detecting kidney injuries, for instance, and its data analytics subsidiary Verily is developing algorithmic retinopathy detection.

    "The next wave of innovation around AI and predictive analytics is going to be very powerful in its impact on the healthcare industry," Ochsner's Thomas said.

    In general, AI is just as promising as telehealth, according to the respondents, just under half of whom said AI has the most potential to drive innovation in the coming year. Nearly one-third also called AI integration into electronic health records the most innovative development of the past year, putting it in front of giving patients ways to aggregate their own medical data (25%), the Veterans Affairs and Defense departments' push for interoperability (2.8%), and the CMS' MyHealthEData initiative (0%).

    most innovative development

    "I don't think AI is something for the future—it's happening today," Thomas said. "Its impact and scale will increase in the future." His organization is using AI to predict patient deterioration in some units outside of intensive care. During a pilot program in those units, there's been a 44% reduction in adverse events.

    "With all the information we have in our EHR, and with more and more information about our patients, the ability to be much more predictive is a reality," Thomas said.

    Other health systems aren't as far along, but they're still beginning to tap AI for its predictive powers. "We're just scratching the surface of what opportunity exists for AI," Turney said. Marshfield has some machine-learning-based clinical decision-support tools.

    Driving innovation from the inside …

    The majority of respondents said their boards regularly discuss innovation, and the majority also have an executive in charge of innovation. Reporting structures vary, with 8% reporting to the chief operating officer and 36% to the CEO, according to a recent survey of chief innovation officers at the 40 largest healthcare systems by revenue in the U.S.

    Though 83% of respondents to Modern Healthcare's survey said they saw innovation picking up over the past year, there are still barriers—namely, culture, which 69% cited as the biggest threat or challenge to innovation.

    "Having someone responsible for innovation in one's organization is very important, but it's really a multifaceted, multidisciplinary approach that's needed," Turney said.

    Some organizations get stuck in their ways because that's more comfortable, said Cambia Health Solutions CEO Mark Ganz. "'We had a great year last year' is one of the big excuses," he said. "Frankly, it's hard. It gets really scary when you get to your actual revenue model and the path forward tells you that you have to put that at risk to make the leap." That's why, he added, innovation often sounds a lot bigger than it turns out to be.

    biggest challenges to innovation

    To make truly important innovations, health systems must listen to their customers, Ganz said. They must do what Uber and Lyft have done and figure out what consumers can't even articulate wanting. "The only real way to understand what consumers want is to go into the field and ask them directly," he said.

    They might also look beyond digital tools alone, said Indiana University Health CEO Dennis Murphy. "Everybody thinks the only way you can innovate is to have some technological advance," he said. "We're finding a lot of innovations can occur without the use of technology but with changing the team and changing the thinking."

    … and from the outside

    Besides culture, respondents also said federal regulations are getting in the way of innovation. But that doesn't mean the government can't help, some respondents said.

    "The government can play a huge role by creating financial incentives to develop and adopt digital solutions," Turney said. "The government can really help us strike a balance of not encumbering innovation but still maintaining a very safe environment."

    Half of the respondents agreed with her, saying that the best way for the government to encourage digital innovation is to offer financial incentives to develop and use digital tools. It's already done that, notably with the EHR incentive program, which paid out more than $30 billion to Medicare and Medicaid providers for adopting electronic record systems.

    how can government encourage innovation

    But half the respondents also said that federal regulations are the biggest threat or challenge to innovation.

    For example, though Medicare recently expanded coverage for virtual visits, there's been slow progress in getting Medicare to pay for more telemedicine services, said Cathy Jacobson, CEO of Froedtert and the Medical College of Wisconsin. "The government's role is to remove the barriers," she said.

    The federal government might also help by setting standards, such as uniform insurance and billing forms, Jacobson said, as well as other technical standards. "We still have EHRs that can't talk to each other because we haven't set the standards to make that happen," she said.

    Which brings things back to consumer technology companies. "You are going to see the big tech companies get some way for patients to own and house their own records," she said. "They're going to do that no matter what."

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