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J.P. Morgan Healthcare Conference Wrap-Up: Transformation is becoming more than just a word

SANFRANCISCO—Health systems are turning to apps, partnerships with retail stores, revamped websites and business models outside of healthcare with the hope they can keep their heads above water as they try to ride the wave of consumerism.

In presentations and meetings at the J.P. Morgan Healthcare Conference last week, executives described some of the new models in place right now, such as a health system taking the view that even patients leaving the hospital should still be considered as under its care, an insurer providing post-acute home care, and a healthcare giant deciding to go into technology consulting.

Playing a big role in many of these new models are the technology-focused venture capitalists sniffing out innovation.

Hospital, insurance and other industry executives described ways they're trying to change their ways of doing business, in talks and meetings at the J.P. Morgan Healthcare Conference in San Francisco last week.

"If you're a big provider and want to be relevant going forward and you want to break the status quo, you've got to know who those people are," said Michael Dowling, CEO of Northwell Health, New Hyde Park, N.Y., in an interview. "You've got to enter into relationships with them, you've got to co-invest with them and do joint ventures together."

Northwell launched its corporate investment arm, Northwell Ventures, in 2013. It's one of more than 60 health systems with venture capital units. The way Dowling sees it, if hospitals expect to survive, they need to find new ways to generate revenue beyond just patient care, especially in the face of softening admissions and declining reimbursement from government programs like Medicare and Medicaid.

Catholic-sponsored Ascension is particularly active in pursuing new revenue sources beyond healthcare services. The system launched Agilify in 2017 after using its process automation platform in-house for several years and saving $20 million in the process.

So far, the St. Louis-based not-for-profit system has 20 customers using Agilify—most of them outside of healthcare—and the system is providing them with training, consulting and other services, Ascension Chief Financial Officer Anthony Speranzo told investors at the conference. By 2021, Ascension expects Agilify will generate $60 million to $70 million in revenue.

Even larger is Ascension's TriMedx, a biomedical engineering firm that the health system is transforming into a clinical asset management company, designed to help providers cut the number of clinical devices in use, thus reducing maintenance costs. TriMedx has lowered Ascension's operating expenses by 1% to 2% and its capital expenditures for clinical equipment by about 25%, Speranzo said. Ascension also boasts a 61% increase in the useful life of its clinical equipment because of TriMedx, which Speranzo said translates to about $400 million a year in savings. During fiscal 2017, TriMedx generated more than $550 million in revenue for Ascension, he said.

Ascension is also in the midst of commercializing another service that started in-house called Medxcel Facilities Management, which standardizes facilities management.


But the vast majority of healthcare innovators are keeping their efforts focused on healthcare, with consumerism garnering a lot of attention from hospital industry executives, including Ascension's hospital division. Ascension Healthcare is undergoing a full rebranding that will apply to all of its 2,500 sites of care. CEO Anthony Tersigni said the redesign is expected to make the system's website and mobile app easier to navigate.

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"We want to use digital tools to build long-term relationships with individuals in communities we serve in order to empower them to improve their health by seamlessly integrating personalized health and wellness into their everyday digital experience and throughout their healthcare journey," he told investors.

Adventist Health System at least conceptually is going a step farther. CEO Terry Shaw described to investors his intent to make sure every person who seeks care within the system is never considered to be discharged from its care and will not need to figure out where to get care. "If we are truly to never discharge a patient, then we must develop programs, services, platforms and a culture that connects with and serves the consumer's needs regardless of their location or condition," he said.

Toward that goal, the Altamonte Springs, Fla.-based system this summer will launch HelloWell, a healthcare management tool that lets patients message providers, participate in virtual visits, access their medical records and schedule appointments, among other tasks.

Health insurers and others are also looking to tap into patients' desire for more clarity and customer service.

For Humana, which just last year at this time was fighting to merge with Aetna, the future is home healthcare and remote monitoring. The Louisville, Ky.-based insurer's CEO, Bruce Broussard, touted the benefits of Humana's recent investment in 40% of Kindred Healthcare, a home health services provider.

As the population of people living with chronic diseases increases, Humana hopes its investment in home healthcare will help it keep Medicare Advantage seniors healthy and prevent the conditions they already have from getting worse. Moreover, Humana, which spends $750 million per year on home healthcare, is eying an opportunity to lower those costs by bringing home health services in-house through its Kindred connection, rather than outsourcing as it does now.

"The home offers not only a way for us to engage with our members on a very specific and personalized basis to help them in monitoring their conditions, but also helping treat their conditions in an intervention," Broussard said.

Humana also is poised to capitalize on its remote-monitoring capabilities. Broussard said the company has put scales in the households of more than 2,000 members with congestive heart failure, so it can monitor and predict weight gain—an indication in those patients that a heart attack is on the way.

At the same time, technology-driven insurer upstart Oscar Health, New York, which this year expanded into exchanges in six states from three in 2017, estimates it will serve 260,000 individual and small business plan members in 2018, up from 100,000 last year, despite still not having made a profit.

Oscar CEO Mario Schlosser said the company's high-deductible, narrow network plans, coupled with the use of telemedicine and Oscar's "concierge" team to help the patient find a doctor or pharmacy, will help lower costs.

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"If there's no real pressure for health systems and even physician practices to demonstrate that they can deliver better care at lower prices, the cost will never come down. And I just really don't think that pressure exists in broad network designs," Schlosser said. While Oscar doesn't expect to turn a net profit in 2018, its goal is to make an underwriting profit in all of its markets.

Another insurer, Florida Blue, a Blues affiliate, has 21 retail stores across Florida where consumers can walk in and enroll in an insurance plan. Some of them even feature clinics. President René Lerer said it's not so much about being consumer-centric. "We stopped using that word and started using 'consumer-obsessed,' " he said.

Meanwhile, Quest Diagnostics is trying to get closer to patients undergoing tests. The lab testing company now has collection sites in 180 Safeway stores, where patients can drop off samples to be sent to Quest labs, and patients can view results using the MyQuest app. Quest also has collection sites in six Walmarts in Texas and Florida under a partnership that began last year. The company is working to enter more Safeway and Walmart stores. Most of its collection sites are still stand-alone clinics.

Gary Samuels, Quest's vice president of corporate communications, said in an interview that Quest's lab tests are much cheaper out-of-pocket compared with hospital labs. As consumers shoulder increasing proportions of their medical bills, they're becoming more aware of those price differences, he said.

Where state regulation allows, Quest offers direct-to-consumer lab testing from its collection sites, albeit a more limited menu of tests than doctors can order, Samuels said. In some cases, he said patients want to order tests, such as a sexually transmitted infection test, without their doctor finding out.

"They want to be able to walk in, check in digitally. They want to be able to make appointments," he said. "Consumers want a consumer experience."



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Shelby Livingston is an insurance reporter. Before joining Modern Healthcare in 2016, she covered employee benefits at Business Insurance magazine. She has a master’s degree in journalism from Northwestern University’s Medill School of Journalism and a bachelor’s in English from Clemson University.

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Tara Bannow covers hospital finance for Modern Healthcare in Chicago. She previously covered all aspects of healthcare for the Bulletin, a daily newspaper in Bend, Ore. Prior to that, she covered higher education for the Iowa City Press-Citizen. She earned a bachelor’s degree in journalism in 2010 from the University of Minnesota.

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