Future of Health Care Summit Explores Opportunities in New Retail Marketplace

WASHINGTON, March 12, 2015 /PRNewswire/ -- While patient-centered health care transformation remains in its early stages nationally, the trend's momentum is building, Centers for Medicare and Medicaid Services (CMS) executive Patrick Conway, MD, told an audience of hundreds of health care providers, employers, payers, policymakers, and retailers at Future of Health Care Summit on February 18 in Washington, DC.

Dr. Conway, Deputy Administrator for Innovation & Quality and Chief Medical Officer at CMS, cited the quick adoption of Medicare alternative payment models, which virtually did not exist within the system in 2011 and now comprise 20% of provider payments.  He also noted that unprecedented patient safety improvements led to $12 billion in savings from 2010 to 2014, driven by a 17% reduction in patient harm and 1.3 million fewer adverse events and infections. 

The inaugural Summit, convened by The Advisory Board Company, brought together a day's discussion focused on health care payment transformation as well as the emergence of more consumer-oriented retail models in coverage and care delivery.  Videos of plenary and select breakout sessions are now available on the Future of Health Care Summit website.

In addition to payment reform, CMS officials discussed how access to health care is increasing.  Meena Seshamani, MD, PhD, Director of the U.S. Department of Health and Human Services Office of Health Reform, noted that this year, the number of uninsured individuals reached its lowest level since the 1970s.  The public exchange market has enabled almost eight in 10 people to find a health plan with monthly premiums less than $100, Dr. Seshamani remarked, adding that for first time in a decade the proportion of patients who either avoid care because of cost or are not able to afford care is declining.  "We've been able to bring people into the health care system in a new way," said Karen DeSalvo, MD, National Coordinator for Health Information Technology and Acting Assistant Secretary for Health. 

Walmart Explains Its Retail Care Strategy

New entrants are also accelerating the health care industry's movement toward retail-based care.  Walmart wants to "become the number one retail provider of affordable health care," said Alex Hurd, Senior Director for Product Development, Growth, and Payer Innovation in Walmart's Health and Wellness business.  He stressed, however, that, "We cannot be successful in isolation. We are looking for partners." 

Mr. Hurd noted that Walmart's partners already include government, provider, payer, and startup organizations.  In partnership with First Lady Michelle Obama, Walmart formed a healthier food initiative that saved customers $2.3 billion on fresh fruits and vegetables in its first two years.  The retailer has also worked with a startup on smart kiosks that have provided 1.7 million visitors per month with information on their body mass index, weight, and vision.

Building on these early partnerships, in combination with patient behavior, Mr. Hurd noted that Walmart sees a huge opportunity for growth: 75% of consumers reported that they did not have or could not name a primary care physician or had not visited their physician in the last two years. "A large percentage of the population is not engaging," in primary care, Mr. Hurd said. 

Mr. Hurd also indicated that Walmart may participate in the retail market for health plans.  While Walmart is not planning on marketing its own health plans—"Right now, it's not on the road map," he said—it is considering becoming a distributor of health plans sold by other firms. 

Insurance Exchanges Shifting Decision-Making to Consumers

The Summit discussion also focused on the emergence of private market health insurance exchanges, noting that consumers will become increasingly price sensitive as they enroll in health plans with higher cost sharing obligations.  Observing that some analysts predict as many as 40 million individuals could be shopping for insurance on private exchanges by 2018, the panel discussion demonstrated that the impact of these marketplaces is already taking hold.  

Sears Holdings Corp. saved $38 million in employee benefit costs during its first year on the private exchange, according to Dean Carter, Chief Human Resources Officer at Sears.  But he also pointed out that achieving cost savings is not the only positive impact: "Ninety percent of our associates now say that they like the ability to choose their own carrier."  The benefits of private exchanges are so strong that Mr. Carter thinks most human resource officers are at least considering a shift.    

Many employers have noticed employees' sensitivity to costs in choosing a health plan but need new tools to help employees manage their own exposure to the cost of care, according to Jim Levine, Director of Compensation and Benefits at Church & Dwight.  To that end, exchanges will be more successful if they "also implement tools that allow employees to make better consumer decisions when they're selecting the actual health care that they get," Mr. Levine said.  As consumers increasingly face cost-related decisions about both coverage and health care services, providers must compete on cost both at the point of coverage and at the point of care. 

Public Insurance Exchanges Enter New Stage of Consumer Impact

Public exchanges were another topic of conversation at the Summit, with the official open enrollment period closing just days before the Summit.  "Exchanges are moving into adolescent stage," said Timothy Jost, Professor of Law at Washington and Lee University School of Law.  "People are just now realizing they have to pay," when they incur penalties for not complying with the (Affordable Care Act's) individual mandate and "that is going to drive a lot of people into the exchanges or into the private insurance market." 

Ultimately, through public insurance exchanges and the Affordable Care Act, "We're in this incredible period of transition from the way that care has been delivered historically to the way that care is being delivered as we move to integration and coordination," observed Diana Dooley, California's Secretary of Health and Human Services.  "We can't keep paying for making widgets," under a volume-based payment system, Ms. Dooley added.  She noted that providers in California have approached the state seeking to adopt payment models that transfer greater financial risk to the provider, leading to "dramatic" market changes. 

The Future of Health Care Summit also brought discussion and insights on many other topics, including emerging trends in employer-sponsored coverage, the impact of the retail insurance market, strategies for improving (and competing on) the convenience of care, the market for narrow provider networks, and the use of data in consumer engagement. 

"As health care enters more crowded and sophisticated retail environments for coverage and care, providers will continue to face urgent questions on how to compete and where and how to invest in new capabilities," said Lisa Bielamowicz, MD, Chief Medical Officer and Executive Director, Research and Insights at The Advisory Board Company.  "The national dialogue between the public sector, private payers, employers, retailers, and startups plays an invaluable role in helping providers understand how to adapt to the new health care purchasing landscape."

About The Advisory Board Company

The Advisory Board Company is the leading provider of insight-driven technology, research, and services for the health care and higher education industries. Through its innovative membership model, the company collaborates with more than 230,000 leaders at 5,000 member organizations to elevate performance and solve their most pressing problems. The company provides strategic guidance, actionable insights, web-based software solutions, and comprehensive implementation and management services. For more information, visit www.advisory.com.

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