Forget everything you know about the future: The clandestine changing of the guard in healthcare

Yogi Berra once said, “the future ain’t what it used to be,” and this is more true in today’s world of healthcare than ever before, especially when treating patients who live with chronic illnesses.

Dan Stevenson

To navigate the future of care, chronic illness or not, health system leaders must radically and immediately change their planning process around data, its uses and pitfalls. If they haven’t already done so, health system leaders must embrace data analytics and artificial intelligence as fundamental strategic levers that will improve care and drive down total healthcare costs. Thanks to advances in just the past few years, improvements in payer contracting, disease management, pharmacy services and more are all being driven by new approaches to data utilization. It’s proving to be more than some health systems can handle. But thankfully there are new ways to adapt and prosper.

Where can data analytics and artificial intelligence help patients most?
Unequivocally, health systems must look at the specialty pharmacy business as a beach head for starting a data science initiative that improves care. Technology and care advancements have been, and will continue prolonging life spans for patients with chronic illnesses, the most cost-intensive patients. The result has been the start and rapid growth of the specialty pharmacy market, which now is a $200 billion dollar industry growing at an annual rate of twenty percent.

Financial motivation aside, a successful hospital-owned specialty pharmacy program, like those now running at UMass Memorial in Worcester and at Fairview Health Services in Minneapolis, have proven that it offers a significantly better care model for patients with chronic illnesses. It does so by tightly integrating the clinical care team with a pharmacy team that includes pharmacists, patient liaisons and financial aid experts, extending care from the hospital into patients’ homes. In at least a dozen health systems this hospital-owned specialty pharmacy model has improved medication adherence rates by 20+ percent, reduced readmissions and cut total care costs — all vital milestones as reimbursement models continue to undergo dramatic shifts. Those gains can be attributed in large part to improved data utilization that enables integrated care.

Key highlights

  • Advancements in technology and medicine will continue to prolong lifespan, especially for patients with chronic illnesses
  • Data science enables an integrated care model, providing opportunity for better quality patient care
  • Specialty pharmacy is a $200 billion industry with 20 percent annual growth, and health systems need it in-house to reap the care and financial benefits for patients
  • Today there is significant and predominantly untapped revenue stream for hospitals
  • When used right, data science is bending the total healthcare cost curve down by lowering total medical expenses

Understanding the problem and the opportunity
The problem itself is actually rather simple to identify, all you need to do is speak to any hospital administrator or pharmacist that is actively running a specialty pharmacy program and they will immediately articulate the situation, usually accompanied with a sigh and look of defeat.

What most health systems, especially those not yet in the specialty pharmacy business, don’t realize is that they are no longer competing against the local community hospital or mom-and-pop pharmacy down the street. They are competing with Wall Street and monopolies that control over 90 percent of the specialty pharmacy market share.

These “competitors” that often come disguised as “contract pharmacy” partners have swept in and taken the business out of the market before the rest of the industry was able to recognize the need, as well as the opportunity.

These Wall Street-owned monopolies that now in control of this $200 billion industry certainly are not in the business of letting others play in their sandbox. So after they were awarded “specialty pharmacy contract” agreements, they set up the new rules of the game, tilted them in their favor and constantly iterate them to eliminate the competition from entering what has become a massive and highly profitable industry.

The monopolies have not only made it very complex but they set the membership standards, they set the accreditation standards, they set the qualifications standards and they make it nearly impossible for anyone – any hospital or health system — to take patient care back. That includes all of the patient-care data collected by the Big 3 contract pharmacy monopolies and reported back to the drug manufacturers. While the bifurcation of care and patient data is profitable, it hurts everyone but the contract pharmacy.

The seemingly insurmountable obstacle of taking on Wall Street’s Big 3 only further compounds the problem for today’s health systems in that as our healthcare system begins to shift toward a value based reimbursement model, hospitals no longer have control or ownership of their chronically-ill, high cost and lifelong patients, thus reducing their ability to control total medical expenses while further increasing their need to leverage these same Fortune 50 companies that they are trying to compete against.

Key highlights

  • Wall Street monopolies own 90 percent market share of the $200 billion specialty pharmacy industry
  • The drug access and payment system has been set up by the same monopolies to keep others from participating
  • Big 3 monopolies set all membership, accreditation and qualification standards
  • Constantly changing the rules creates barriers of entry for hospitals to compete
  • Hospitals can’t control expenses of high cost, life-long chronically ill patients without data and full pharmacy ownership, meaning fully integrated care from physician to the patient home and back
  • Integrated care is especially important as we shift to value based reimbursement for hospital care
  • Barriers to entry continue to increase as the Fortune 50 continues to grab market share and buy up competitors

A hypothetical case study
Imagine by comparison if the major MRI manufacturers decided that their business model was to go vertical. They chose not to sell to imaging centers, radiologists, or diagnostic centers, but instead did all of the imaging themselves. Then they gained access to all of the managed care contracts (insurance/payer contracts) so they could do the MRI scans at the lowest price points. Upon controlling the contracts, they would have then created the network, determined who could get in and then decided who got paid. This is exactly what has happened to the specialty pharmacy market.

Finding the solution
In today’s “game,” starting a specialty pharmacy or merely entering the game unfortunately does not guarantee success. Placing liaisons and pharmacists in clinics and offering patients a specialty pharmacy program may be a badge of honor but it will not be enough to compete with Wall Street. The notion of learning on the job through experience is a brutally expensive way to enter the space; however, the real cost is not the financial loss nor the opportunity cost, but rather the impact of fragmented care provided to chronically ill patients, leading to a hospital’s inability to control long-term costs.

In order to compete with these Fortune 50 companies, the healthcare industry, like many industries before it, needs to rethink everything they know. We must learn to leverage the advancements in fields such as artificial intelligence, big data, mobile technology, machine learning and TelemetryRx (data science applied to prescription drug use as it related to patient health). The acceleration of these advancements has long passed the point of linear growth and has now transformed into exponential technologies that will evolve in ways that have not yet been imagined. Take, for example, the invention of the smart phone only ten years ago. Today, there are over three hundred thousand full-time mobile application developers employed making over one hundred thousand dollars per year. There are very few, if any, that predicted ten years ago that mobile applications would replace travel agents, clothing retailers, maps, retail chains and many others. In an environment in which hospitals are now competing with Wall Street monopolies that are already leveraging these technologies, the healthcare ecosystem must develop and utilize these technologies or begin to look to partner with accelerators and integrators that have the expertise, technologies and infrastructure to help them win their patients back. The unfortunate reality for most hospitals is they are light years behind Wall Street monopoly pharmacies in speed to market. Data science technologies alone will be unfeasible for most hospitals to develop and deploy.

Fortunately, there have been a few hospitals, like UMass Memorial Medical Center, that have been able to partner with a technology-driven integrator to take the fight back to Wall Street. Providing hospitals with the ability to plug in and unplug from a purpose-built specialty pharmacy platform can help hospitals de-risk dancing with the monopolies on their turf. With a platform that tracks every patient and prescription in the hospital and aggregates data from countless sources, a purpose-built specialty pharmacy engine that uses advanced technologies like machine learning, artificial intelligence and big data has armed hospitals with the intelligence and insights needed to truly enter the “game”.

These tools have the ability to programmatically sort through hundreds of thousands of data points to proactively identify which patients are most likely to be non-adherent to their medications, identify which patients may be having socioeconomic issues that impact their care, and track those patients throughout their life cycle with the host hospital. Although patient identification appears to be the elusive white whale for those currently in the space, the right data engine also has the means to know when to intervene, how to intervene and the appropriate means to intervene. The same platform today allows for accelerated improvements in workflow efficiencies, monitors and tracks adherence, notifies the pharmacy team of negative margin trends, provides essential limited distribution drug reporting and monitoring of the pharma pipeline, analyzes financial assistance needs, and identifies when the monopolies begin changing the rules. The full suite of technologies, in addition to over a dozen other support functions, has allowed and will continue to give hospitals the ability to benefit both financially and clinically by embracing the power of data science to tackle the ever-changing healthcare landscape.

Key highlights

  • Advancements in technology have provided hospitals an opportunity to take their patients back from monopoly contract specialty pharmacies
  • Data science technologies are transforming healthcare by allowing hospitals to integrate care like never before
  • There is a drastic need for increased adoption of data science in healthcare so it does not become the next industry driven by quarterly earnings reports
  • The barriers to entry are difficult to overcome without partnering with an integrator with expertise AND implementation capabilities