10 healthcare stories you should expect to read in 2016

The impact of rising health costs and rampant consolidation are expected to dominate healthcare headlines in 2016, according to consultant Paul Keckley of Navigant Healthcare.

The healthcare analyst has created a list of his top 10 story lines, predicting more scrutiny of things like insurance consolidation, rising drug costs and the evolution of the healthcare executive suite.

Advance to the next slide to see his picks.

“The Department of Justice approved the mega-deals allowing Anthem’s acquisition of Cigna and Aetna’s takeover of Humana,” said Keckley. The deals will go forward once certain provisions are in place, which means 44 percent of the insurance market will be controlled by United, Anthem and Aetna.

In response, the Blue Cross NS Blue Shield Association and its 36 members will create a more cohesive strategy in order to compete with what Keckley calls “The Big 3.”

“Collectively, the four serve 242 million members, or more than 80% of the insurance market in the United States,” he said.

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“Scope and scale are the new c-suite imperatives across the industry,” said Keckley. “In many sectors, the traditional core businesses are being redefined.”

Scale is the name of the game as consolidation picks up speed: Kaiser and Group Health, Walgreens and Rite Aid, Pfizer and Allergan and hospital system-physician integration are all examples of this.

“Insurers are doubling down on monetizing their data, drug manufacturers are shedding underperforming compounds, and providers are expanding their shared services programs to keep pace,” said Keckley. “The big organizations are getting bigger and broader; the rest are contemplating their best move.”

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Several integrated health system CEOs have announced the creation of a nonprofit, provider-sponsored national health plan. They say it’s “consumer friendly, price competitive, and fully integrated in local systems of health,” according to Keckley.

The plan will operate as a taxable nonprofit with net proceeds returned to local providers and members, offering offer multi-year agreements to individuals, employers and government payers.

“Leaders of the group said traditional health insurance has failed to balance cost and quality, and fallen short in enhancing community wellbeing,” said Keckley. “The combined enrollments of the founding sponsors is two million, with a goal of 10 million by October 2017 as other systems join their effort.”

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Health spending is swelling, due largely to prices of prescription drugs. According to the Centers for Medicare and Medicaid services, drug spending increased 12.2 percent last year, while spending overall increased 5.3 percent.

“States saw their Medicaid drug costs spike 24% last year -- the biggest single year increase in reported history,” said Keckley. “Congress is investigating reforms of the drug industry that depends on the $374 billion U.S. market for half its global revenues.”

Options being discussed include patent reforms and tax credits for expeditious market access to biosimilars, as well as allowing importation.

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The majority of the Supreme Court didn’t buy the complaint that Little Sisters of the Poor should not be required to comply with federal noticing requirements about its religious objection to contraception.

It’s the third time the High Court has upheld the Affordable Care Act, following NFIB v. Sebelius in 2012 and King v. Burwell in 2015.

“Opponents of the law said they’d continue pursuit of its undoing through the courts,” said Keckley.

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There’s seemingly no end to what smartphones can do. Among their skill sets is capturing and distributing biometrics, as well as collecting genetic and diagnostic data from biodegradable chips in medications and implantable devices.

The FDA has noticed, determining that infomediary devices merit its scrutiny.

“Smart phones tap into elegant cloud-based clinical algorithms that provide relative risks and estimated accuracy of diagnoses and treatments in real time,” said Keckley. They also give access to profiles of low-cost clinicians and care teams that deliver good results.

“These devices in the hands of patients might supplant physician judgment and change the course of treatment for millions,” said Keckley. “The FDA convened an advisory council to consider its policies going forward.”

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Big business -- led by Loews, Boeing, IBM, GE, Walmart and their fellow players on the Fortune 100 -- is trying to squeeze more value out of the health system. Since last year’s spike in spending, employers are aggressively direct-contracting with local health systems. They’re “employing primary care providers in their companies, auctioning high-cost acute events i.e. joint replacements, open heart, et al. to regional providers who guarantee lowest costs and highest outcomes, shrinking employee benefits to high deductible plans channeled through private health exchanges, and encouraging healthier behavior of their employees,” according to Keckley.

“Citing discontent with insurers because their data has been inaccessible and with local health systems that have been rewarded for doing too much that’s not medically necessary, employers vowed to launch health reforms that will replace reduce cost without compromising safety and quality,” he said.

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The Department of Justice and Federal Trade Commission have unveiled guidelines for determining what constitutes anti-competitive consolidation among hospitals and other providers.

“The regulators will refine markets as regions, shrinking 385 metropolitan service areas (MSAs) into 80-100 new regions,” said Keckley. “The move comes as employers and consumers are using healthcare services outside local communities in increasing numbers, and as Medicare regulations for bundled payments incorporated regional costs (rather than local) in their calculations.”

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The House Budget Committee recently heard testimony to the effect that as much as 30 percent of what Medicare spends is for services that don’t improve outcomes. Many services are justified without solid evidence.

“(P)atterns of overuse have been related to financial gains on the part of providers,” said Keckley. “The Office of Inspector General announced a new task force to accelerate its efforts to crack down on unnecessary care.”

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Healthcare has been a pivotal issue in the 2016 campaign, right up there next to the Islamic State and the economy. Millennials want simpler, more affordable health coverage; seniors want their Medicare benefits protected. And the electorate’s still torn over the ACA -- half think its coverage expansion is worth all the fuss, and half thinks the government is stepping outside its bounds.

“Though the Senate passed a repeal measure on its 17th try (following the House that approved more than 50 such measures), the White House veto staged healthcare as a pivotal issue in the campaign,” said Keckley.

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