The companies that we thought were pharmacies, grocery stores or delivery stores have decided it is time to disrupt the trillion dollar health care business. Many of them are starting some new business models that may look like a single model but are really just test cases to take it to a different level. They disrupted the acute care business with walk in clinics in the stores have all decided they want a bigger piece of this industry and they have the assets to deliver in many cases an entirely different package.
Will these new models attract the millennials? Will it change how companies look at acute care? Will companies see that this new model is actually better for their bottom line?
CVS is in their final stages of merging with Aetna insurance and their plans are a bit different. They certainly have the focus with their 1,000 Minute clinics in CVS stores, this will continue but now they have decided to expand outside of the acute care and into managing chronic conditions as well as preventative care with their new HealthHUB stores. 80% of the US population live within 10 miles of a CVS location
HealthHUB stores will focus on preventative care, wellness, health education and management of chronic illness like asthma and diabetes. Doesn’t this sound like what your primary care doctor should be doing? They plan to open 1.500 of these starting this year. They looked at the footprint of their stores and are planning on removing underperforming areas from the stores and replace them with HealthHub. This is their step into chronic care while still having a focus on acute care with their Minute Clinics.
This is the first step we are seeing with retail pharmacy extending into chronic care. Does it make sense? One would think their focus will be on convenience as they try to change a decade old way of healthcare being delivered. From a business side the pharmacy would rather have the patient who will take the diabetes medicine for 40 years as a customer, especially when compared to the patient from the Minute Clinic who may get 3 days of pain medication or 10 days of an antibiotic. Couple that now with the referral source being tied in and the days of traditional medicine will be changing.
The tie in with Aetna, shows that they feel there is a lot of waste in the system and any dollars they can shave off without lowering premiums goes straight to their bottom line. Aetna would also now have more direct information and could focus on individuals who appear headed in the wrong direction, or patients who use healthcare more than Aetna thinks they should and focus on minimizing those large costs that are provided by ER’s currently.
Walgreens – Village MD, Partners in Primary care Centers, Jenny Craig
Walgreens is also looking at expanding beyond their in store acute care clinics. With over 8 million customers interacting with Walgreens each day, it has gotten the attention of many in health care.
They recently partnered with Village MD in Houston and will be testing the concept of the primary care office right next to 5 current Walgreen’s stores in Houston. This will be their test of a concept, where the pharmacy owns the practice right next to its retail pharmacy. This will focus on convenience as well as affordable care. This concept is an office right next door to the Walgreens. In other parts of the country they will be putting physicians’ offices right in the store with their Partners in Primary Care Centers. The interesting thing here is their partner is Humana, so like CVS the partnership with Aetna another health insurance company may be showing that Health insurance companies see value in partnering with the pharmacy chains versus the sometime contentious negotiations with doctors or health systems. They may push more wellness and also again try to minimize those patients who use healthcare assets incorrectly or too often.
They also recently signed an agreement with Jenny Craig to open “Jenny Craig at Walgreens” in 20 states, including Texas, Arizona and Pennsylvania. In these stores they will offer one on one consultations, customized menu plans and meal delivery. Walgreens trying to show a focus on wellness not just a place you go when you are ill. They also are focusing on convenience to affordable healthcare in their stores.
Walgreens recently renovated a store near their corporate headquarters in Deerfield and it is doing this across the country, testing what services may be best served in this setting. They are considering hearing, vision and lab services. They have partnered with a large national lab company, a hearing aid company as well as Microsoft as they look to see where they will fall in this race to disrupt healthcare
We talked in the past about the thought of what Amazon would do as they took on healthcare in partnership with JPMorgan Chase and Berkshire Hathaway. The formation of this group was put in place to focus on the rising cost of health care without any noticeable increase in the value of the services provided. This group now also sees it as a way to attract and maintain great talent as young consumers are now looking for more convenient and lower cost healthcare. We all know amazon has a great deal of information on our spending habits, just think how powerful it will be as they now will have real health data not the fragmented data seen in doctors’ offices now. Amazon understands that and have hired technical and analytic data individuals to help them collect and review health data on a large population
It appears they have decided how they will jump in. They recently announced the creation of Amazon Care, in Seattle. This is currently only for their local Seattle employees but one can easily see that this is a test to see how it could be advanced to other companies and eventually to the general public. This service allows for employees and their families to have virtual visits via telemedicine, medical clinics and in home visits. They are marketing it as “healthcare built around you” with “no more waiting rooms”. They do realize that some patients will need more than a telemedicine visit. If the worker needs in person care, a nurse or doctor, is sent to their office or home to treat them. The percentage of those they can treat without an actual visit and with a telemedicine visit, not only costs less but also will make their staff more productive. ( less days off to go to a doctor visit )
Amazon.care is also now live. It is the Amazon app that offers health advice and virtual medical visits and arranges the home or office visits. Employees are speaking very positively, with dozens of positive reviews of this service already which has only been up for a few weeks. This data point also shows that Amazon is mining patient satisfaction data in real time as well, again something the current healthcare system does poorly.
Is this Amazon’s play to disrupt the young and growing fragmented telemedicine market or is it to show large corporations a way to decrease the cost of healthcare without compromising outcomes? Many argue it may be both. The Amazon brand is so well known and consumers trust and use Amazon often, those eyes alone on the website would expand their telemedicine clinic quickly if that ends up being their focus. Or, Sharing their financial savings to large companies with an offer to roll out Amazon.care to their business may catch the eyes of companies who are facing double digit growth in their premiums without seeing a healthier workforce.
Amazon also has a pharmacy so employees are able to have their medications and any other health supplies a patient may need, like vitamins, needles, dressing for wounds filled and delivered by Amazon, in many cases the same day.
Amazon.care is also now live. It is the Amazon app that offers health advice and virtual medical visits and arranges the home or office visits. Employees are speaking very positively of this service already which has only been up for a few weeks
Amazon is looking at controlling the entire experience, from the visit, to the data collection, to prevention to medication and other health related supplies, truly one stop shopping. Not surprising as they looked at the fragmentation we currently have
Amazon is also expanding into the personal health monitoring device business, building health wearable items that will monitor walking, calories burned, weight, Blood pressure, (Think Apple health) It will have data on the exercise patterns of their workers.
This set up gives them a test lab to see how this works, see if it brings down its own corporate health costs and figures out a way to expand it to the masses. The companies already in this field should be concerned as Amazon has a knack of finding industries with a need for an overhaul and doing exactly that.
A success with this business model would probably then be rolled out to Chase and Berkshire Hathaway for the telehealth portion in partnership with local healthcare.
Walmart has opened its first primary care clinic, again stepping into the world of chronic care and away from their acute care in store clinics. They plan to charge 30-50 % lower than what people are currently paying at a doctors office. They plan on doing doctor’s visits, lab, and radiology. If this is successful they plan a second one quickly and then rapid expansion to become the nation’s largest provider of healthcare. Look for their home delivery to try to mimic Amazon with medications and other needs delivered to the patient.
Do you not think that Amazon and Wal-Mart could do this? Well what is going on across the Pacific.
Alibaba – Good Doctor
In China online health is ready to explode. The expectation is that will grow dramatically over the next 5 years adding 10 million families in this time frame. In China the wait to see a physician is often over 2-3 months as the number of physicians in the country does not approach the need. Their healthcare infrastructure is poised for this innovative change. Alibaba has already signed up 15,000 doctors to start their continuing consultation services, as it plans to enter this field. China has set some good restrictions on this field. For example an initial diagnosis cannot be made with online services, it must be done in person and then follow up and medication changes can be made using on line interactions. One would expect that Alibaba could mimic Amazon with full service of the medical visit, the medication and supplies and they also have Alipay which would partner with public and private insurance making the payment for care easy for patients, one source of great frustration here in the US.
Google- Ascension Health
We hear every so often about a breach of healthcare data, this is sometimes following the loss of a computer from a healthcare worker or allowing access to data banks at insurance companies. The concern for those breached should not be minimized, health care records are more valuable to thieves as they often contain more information than your bank will have.
What we all need to get ready for is the fact that our healthcare data will be shared by design in many ways in the near future. We have insurance companies trying to save money by decreasing utilization, we have patients moving between doctors, health systems and states, we have companies looking at slowing down the growth of the health care premiums and we have apps that we have chosen to track a lot of our personal health data. In each of these cases personal health information is being stored and shared in some fashion.
We have talked about the need for big data and that is exactly what these companies are looking at. They are taking the results and data from many patients and building algorithms to see if there is anything in a person’s data that may have helped prevent a specific outcome. The physician personally may have a few anecdotes of patients they had seen in the past, or they may have read an article that made a new link to a disease. Consider however if those comparisons could be made by collecting and analyzing the data from the patients of one of the largest healthcare systems in the United States.
Google and Ascension Healthcare have teamed up to collect and review the personal health record data of patients from the 2,600 hospitals, doctors offices and clinics that Ascension owns. The partnership has been named “Project Nightingale” and it was started last year with little fanfare at all. The data they are collecting include lab results, radiology scans, medications diagnosis, hospitalization records that include the patient names and dates of birth. The information then streams to the Nightingale system where it is being reviewed where it may result in treatment plan recommendations for possible tests, may recommend the addition of specific physicians or identify deviations from care including narcotic policies.
Now it has been shared many questions have arisen, but as you may expect they were ready for the questions. It is allowed by law as federal law allows the sharing of information with business partners without telling the patient as long as it is to help the covered entity carry out its healthcare functions. It does not break any HIPPA laws as well.
Why are they doing this? Ascension aims to improve patient care, it hopes to identify tests that perhaps should be done sooner based on the data from many with similar conditions. This will also play well in the AI world where as the data base grows the indications for certain diseases will be fine-tuned and trends will identify earlier testing for diagnosis based on historical data of millions of individuals.
Are there other concerns, sure, Google just made public its 42.1 billion deal with Fitbit, the wearable fitness manufacturer that collects exercise information on those who wear the Fitbit. We know that Amazon, Apple and Microsoft are right behind them and don’t be surprised to see similar agreements with those big 3 technology companies to be announced soon. Think of the data that an Apple watch can now gather, think of how much health data Amazon may have soon as they get into the pharmacy and health business. Microsoft will also make a big play with Microsoft Digital Health and Microsoft HealthVault both areas where health information is collected
The reason this makes the front page of the Wall Street Journal may be that neither the patients nor the doctors had been notified
We know that Amazon, Apple and Microsoft are right behind them and don’t be surprised to see similar agreements with those big 3 technology companies to be announced