Report: Affordable Care Act Remaking U.S. Health Sector

Presidential signature on the Affordable Care Act (whitehouse.gov)

18 March 2015. As the U.S. approaches the fifth anniversary of the Affordable Care Act, a new report from consulting firm PricewaterhouseCoopers highlights five major trends transforming the country’s health care sector, including creation of 90 new companies. The report, “Healthcare reform: Five trends to watch as the Affordable Care Act turns five,” is available for downloading from PwC’s Health Research Institute Web site.

The report compiles data from studies conducted by PwC’s Health Research Institute and other public sources, and argues that the country is developing a new health care economy, fundamentally changing business models in the industry valued at $2.9 trillion and accounting for 18 percent of GDP. No piece of legislation since the Telecommunications Act of 1996, says the report, sparked this degree of change in a major economic sector. Even with a Supreme Court challenge to one of the law’s basic features and reemergence of rising costs as a concern, the trends unleashed or encouraged by the Affordable Care Act are here to stay.

One of the five key trends is the entry of many new companies into the health care industry offering technology-based services, directly as a result of provisions in the Affordable Care Act or taking advantage of changes in health care delivery generated by the law. PwC identifies 90 of these enterprises, with nearly 1 in 3 (29 of 90) of the companies providing telehealth services, remotely connecting patients to clinicians. An example is CellScope Inc. in San Francisco, a spin-off company from University of California in Berkeley, developing an iPhone-based diagnostic toolkit.

Another 15 companies offer health consumer education services, such as Zest Health in Chicago developing a smartphone app to navigate through their health benefits, schedule appointments, compare costs for services, and get advice from a “nurse concierge.” Nearly the same number of new enterprises, 14, provide process-improvement services to improve efficiencies among health care professionals or enhance the patient experience. An example is Cureatr Inc. in New York that provides secure messaging and clinical workflow tools for health care providers on a mobile-device platform.

Some 9 new companies match patients and physicians with treatment and support networks, such as Smart Patients Inc. an online community connecting patients with clinical trials. Another 9 companies provide health and wellness benefit services for individuals or insurance companies, including EveryMove Inc., an online community encouraging fitness tracking on mobile devices.

PwC’s report identifies 7 companies offering analytics services, including Flatiron Health Inc. in New York that provides data analytics for cancer research and therapeutics. (Science & Enterprise profiled Flatiron Health’s collaboration with a genomics analysis enterprise in December 2014.) Another 7 companies develop new delivery and payment models, such as Aledade Inc. in Bethesda, Maryland, that helps primary care physicians form accountable care organizations, groups of health care providers, who come together voluntarily to give coordinated high quality care to their patients.

New payment and delivery models figure prominently in the four other major trends generated by the Affordable Care Act:

– The emergence of primary care as a key element in health care delivery, with experiments in new payment models and expansion of insurance coverage centered around primary care.

– Development of new payment models and schemes that spread more risk from insurance companies to health care providers, pharmaceutical companies, and consumers. These models include rewards for improved health outcomes and penalties for  high rates of readmission and hospital-acquired conditions, as well as pay-for-performance, shared savings, and bundled payments.

– Shift in health insurance marketing from wholesale — e.g., employer-provided — markets to retail marketplaces, such as health insurance exchanges, forcing large-scale changes the way health insurance providers do business. The report highlights private health insurance exchanges that supplement the public exchanges.

– Emergence or reemergence of individual states as key players in health insurance and finance, including design of health insurance exchanges and expansion of Medicaid.

While the Supreme Court may still invalidate insurance exchanges offered by the Federal government and a Republican Congress will continue trying to repeal or defund the law, the report says the forces unleashed by the Affordable Care Act will not likely be stopped. Staying relevant in the U.S. health care sector, says PwC, requires “the willingness to innovate: to develop strategies that meet the demands of new health care consumers, to pursue alternative business models, to adopt new technologies and to take on new roles and activities.”

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