Six Big Trends to Watch in Healthcare for 2016

January 26, 2016 Susan DeVore

With the upcoming Presidential election, healthcare is once again keeping us up at night. How much of the current debate is hyperbole? What policy changes are realistic in an election year? What market trends in the private sector will drive the most change?

Here’s a summary of the top health trends I am watching this year. See the original Health Affairs article for a more detailed dive.

Trend #1: MACRAnomics

Starting in 2016, new rules will be issued to the Medicare Access and Chip Reauthorization Act (MACRA) for quality reporting and payment policies that will substantially change the status quo for Medicare’s physician reimbursement.

What will we see in 2016?

  • Physicians will need to understand how to drive higher performance and avoid payment penalties.
  • Physicians and physician practices will need to conduct financial planning to determine which payment model presents the greatest upside given current performance.
  • Physicians must decide how to organize themselves to take advantage of their payment model choice, understanding that unprecedented levels of partner collaboration, testing and co-innovation will be the keys to long-term success.

 

Trend #2: …Or Your Money Back

Value-based contracting is an arrangement where manufacturers agree to go at risk for a portion of the purchase price if the product fails to meet or beat certain performance standards. Although more prevalent among device makers, value-based contracting is starting to gain ground in pharmaceuticals as well, starting with a deal between Amgen and Harvard Pilgrim.

Although these deals are still in their infancy, we’re expecting many more manufacturers to come to the table with value-based proposals in order to prove real innovation or value. The mandatory joint bundled payment program that takes effect this April will hasten this trend, especially given the fact that providers have to reduce the cost of the total bundle by two percent off the top.

Trend #3: Docs Ex Machina

Although the potential of telemedicine is outstanding, so far the service hasn’t taken off per expectations. This is largely due to the fact that Medicare and many private insurers don’t pay for telemedicine outside of rural areas with a shortage of providers.

Even without reimbursement for telemedicine implementation, many advanced providers, such as Banner Health, have found that the investment can pay dividends, particularly if they participate in alternative payment models.

As alternative payments spread, and smart phones and tablets become the normative form of convenient consumer communication, it’s finally time to trust the growth projections for this emerging technology. Additionally, the mandatory Medicare bundled payment program waives the rural-only limitation, and new requirements on private payers may be effective at incenting the use of telemedicine to meet new network requirements in 2016.

Trend #4: There’s Gold in Them Thar Hills!

Overall drug prices increased 12.2 percent last year, the highest rate of increase in more than a decade, driven not just by new branded entrants, but also by generics. Given the cost trends, it should come as no surprise that 98 percent of health system CEOs say rising drug costs represent a major financial challenge for their organizations.

Given this and the complicated politics of pharmaceutical spending, 2016 will be a year of increased focus and action to drive market competition. We anticipate:

  • The new FDA Commissioner will prioritize speed and market access of new drug approvals.
  • Bipartisan legislation will pass that will allow the Food and Drug Administration (FDA) additional authority to fast-track generic drug approvals.
  • The FDA will make significant progress in reducing the 42-month delay in bringing generic drugs to market, and it’s fair to assume at least one new biosimilar approval in 2016.

 

Trend #5: Breaking Up With HAL-9000

In 2016, particularly as more physicians start putting IT in place to capitalize on new MACRA incentives, the calls to improve overall functionality and interoperability of systems will reach fever pitch. Legislation was recently introduced that would hold HIT vendors accountable for their systems’ security, usability and ability to interoperate with other technologies.

With more information and a better ability to compare products, HIT vendors will have incentives to make improvements to their systems, while providers will be able to evaluate products using neutral, third-party data. I also expect there to be at least one significant partnership between an electronic health record (EHR) vendor and an application provider that will integrate the app into the EHR and the workflow in a hospital.

Trend # 6: Measure for Measure

In 2016, we will see a renewed effort to align and simplify the measurement cacophony among commercial and government payers. Considering that the new leader of America’s Health Insurance Plans’ (AHIP) is a former CMS Administrator, we expect real progress in aligning public and private sector measures, which will benefit consumers and providers alike. MACRA’s incentives to align payment models between payers will prompt more work here as well.

I also think that after years of talking, we’ll make real progress in 2016 on developing measures that capture patient-reported outcomes data, finally incorporating people’s real experiences into how we measure and personalize care.

So there you have it, the top six trends in healthcare I will be watching in 2016. If you are interested in learning about the top ten trends to watch this new year in population health, click here to check out my colleague, Joe Damore’s, free e-book.

Susan Devore, Six Big Trends to Watch in Health Care for 2016, Health Affairs Blog, Dec. 30, 2015, http://healthaffairs.org/blog/2015/12/30/six-big-trends-to-watch-in-health-care-for-2016/

Copyright ©2015 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

 

Author information

Susan DeVore

Susan DeVore

President and CEO, Premier, Inc.

I'm a healthcare executive with a passion for transforming the industry and empowering our members to deliver high quality, cost effective care. I enjoy serving the larger healthcare community and my local Charlotte community. When I'm not working, you will most likely find me spending time with my family and solving puzzles.

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