Healthcare experienced a large degree of uncertainty and fluctuation in 2017, and those challenges will continue to unsettle care delivery into the New Year.
All three areas of uncertainty have either direct or indirect implications for the information systems that healthcare organizations are using. As a result, providers will need to step up efforts to build systems that are mission-critical and yet flexible to react to shifting realities in the marketplace.
Data breaches remain a top issue for which healthcare does not have an answer. Both the number of breaches that occurred and the number of records impacted climbed for another year. The past year also saw two causes of the data breaches separate from the pack—cyberattacks through vehicles such as ransomware, malware or phishing and insider threats.
Earlier in the year, the pace of attacks equaled more than a breach per day, and that pace has not slackened. As more data become exposed, the question of whether healthcare can be trusted to actually maintain the privacy and security of data is a valid one to ask.
The difficulty arises from the number of systems connected within even one healthcare facility’s ecosystem as well as the inability to update some connected devices. As such, the number of avenues for an attack is numerous and sometimes without even the possibility of implementing a defensive mechanism. Such considerations also do not touch upon the insider risk, which can circumvent most security measures since the breach is caused by an individual with permission to access a system. Overall, cyber risk and attacks left many in healthcare wondering when their organization would make a headline.
The transition to value-based care challenged the healthcare industry, whether providers or insurers, for many reasons. First, moving from a system based upon volume to value requires a major realignment of systems, objectives and goals. The realignment has required a significant investment of time and resources to fundamentally modify operations.
Many compared the move to value-based care as a retread of the failed movement to managed care in the 1990s. However, the new move to value-based care included Medicare. As a result of the Affordable Care Act, Medicare began experimenting with accountable care organizations, bundled payments and other innovation initiatives to bolster payment for quality. Many states also began to follow suit with Medicaid and introduce more aspects of managed care. The involvement of the major government payers arguably provided cover for private payers to engage in similar efforts.
While those efforts had been proceeding steadily, the process hit a potential roadblock in 2017. Mixed signals and deliberate retrenchment from the Centers for Medicare & Medicaid Services left no clear answer as to whether Medicare will continue driving value-based care initiatives. The focus of Medicare’s pullback was on the bundled payment or comprehensive care initiatives, whether cutting contemplated programs or not continuing to push the envelope with existing programs.
While the end of the year potentially brought another shift in position, there is no clear answer. The shifting ground for value-based care opens the door to the question of whether technology or other investments have been for naught or changes will proceed without Medicare. The hope is value-based care will continue because maintaining the prior system was clearly not sustainable.
Consolidation, whether successful or thwarted, was the third major issue that cast a shadow over healthcare in 2017. The failed mergers of four of the largest insurers garnered a significant amount of attention. Providers feared the mergers would have curtailed the ability to negotiate “better” prices, and consumers were uncertain as to what fewer insurance companies would mean in terms of plan options.
While those fears were debated, they were not tested since court challenges by antitrust enforcers defeated both proposed transactions. The failed mergers actually resulted in one of the bigger surprises toward the end of the year, namely the merger of CVS and Aetna (not closed yet, but moving quickly). Instead of Aetna becoming an even larger insurance company, it will now team up with one of the largest pharmacy chains in the country and attempt to revolutionize the access to and delivery of care. While much speculation abounds as to what the combined CVS and Aetna will do, expect at least one unexpected action to occur.
While the insurance companies were playing games, providers (whether physicians or hospitals) also continued to consolidate. The unstopped contraction leaves small, independent practices a growing rarity, at least in some parts of the country.
The consolidation also sparked a few analyses suggesting that the accumulation of small deals that could fly under the antitrust radar was resulting in market-dominant groups that should be subject to oversight. At the same time, the justification that consolidation is necessary for value-based care was often trotted out. Those assertions largely remain unproven, partially for some of the reasons discussed above that value-based care is not actually the primary means of reimbursement for pretty much all providers. Following both the failed and successful mergers, the question became who would be next and could the next deal make it through.