The system shock created by COVID-19 has accelerated change in the ecosystem that was otherwise progressing slowly and presents a unique opportunity and threat for payers. Providers are seeing significant financial pressures. Hospitals are losing hundreds of millions every month. Certain physician practices have experienced 50%, 60% and even 80% declines in patient visits. Meanwhile, new virtual providers are having explosive growth with relaxed state licensing and an uptick in demand. Post-COVID-19, we believe home health and new technology-driven, home-based services will proliferate. In this environment, payer networks will surely be disrupted. Practices will fold, health systems will grow larger and new entrants will take share. Similar activity will likely occur on the product distribution side. Smaller brokers will be challenged. And, on the supply side, business process outsourcing arrangements may need to be revisited given global workforce disruptions.
This is all in the context of shifting business models where ecosystems are essential to delivering value for customers. Ultimately, payers will need to redefine how they compete in the market and build the capabilities required to win. Models such as demand aggregation or network orchestration have proven successful with technology firms in ride sharing, retail and media. We believe there are corollary models in health that payers are well positioned to capture and that the ability to craft partnerships and deliver seamless experience and value to customers is the future.
The opportunity of partnerships in health care
How will manufacturing products and distribution look in the future?
- Vertically integrate the supply chain
- Digitize health supply chains
- Direct to medical supplier and manufacturer pricing
- PBM and pharmacy disintermediation
- Group purchasing organization integrating supplier base
How can technology change the health care model?
- Technology and analytics to change patient and physician behaviors
- Home automation technology for primary care
- Financial and health care data price transparency
How might the way we access and deliver care be reshaped?
- Care and care delivery
- Direct provider relationships
- Care management
- Increased access to care and care planning
- End-to-end experience for wellness and care navigation
What might be the impact to demand and distribution?
- Ability to direct demand
- Self-insure and circumvent health insurance
- Private health marketplace
- Open health marketplace to all consumers
While partnership models have been evolving for the past several years, financial stress, shifting consumer behavior and new entrants driven by the COVID-19 outbreak have accelerated the trend. In a webcast for payer organizations, we polled more than 500 participants, asking which scenarios they saw playing out post-COVID-19 due to the increased pressure on provider organizations. Almost 45% of respondents indicated a more strategic role for network management.