Does Highmark’s Move Portend a Payers’ Path to Financial Health?

The  recent acquisition by Highmark, Inc. of the five-hospital West Penn Allegheny Health System brings into focus an emerging healthcare provider model in which payers are assuming direct control of medical facilities. Payers, seeking to curb costs amid U.S. health reform are motivated by numerous factors, including:

• Gaining an early leadership positioning in developing a self-sufficient ACO model that can be leveraged nationwide.
• Providing direct insight into best practices they can use in contracting with other medical groups.
• Allowing the capture of new efficiencies in the healthcare system by accruing part of the costs that would have gone to providers

Over the years, payers have attempted a number of different cost control mechanisms ranging from preferred drug lists to performance incentives – but have had minimal success. This feet-on-the-street approach is their most direct attempt to control spending through managing the doctors directly. The thought is that the Payer-Provider Facility strategy will truly “incentivize” doctors to control spending as it affects their direct employer; as opposed to other historical financial incentive arrangements that have failed to hold ground.

In the mid ‘90s managed care failed in its attempt to take a greater role in the care delivery as consumers rebuffed limits on provider choice and treatment options. This time around (and as depicted the graphic below), insurers adopting this strategy appear to be focused on the controlling the provision of services and owning providers as opposed to network or treatment restrictions.

Source: TripleTree, LLC

A recent Washington Post article analyzes the ongoing transition of the major managed care players – namely UnitedHealthcare, WellPoint, CIGNA and Humana – into the provider space.  Further analysis by TripleTree underscores that the strategy appears to be driven by the insurers’ desire diminish the financial pressure of health reform, however, this could also viewed as a long-term strategic move by insurers to position themselves as the central hub of future ACOs.

Source: TripleTree, LLC

Highmark’s acquisition is unique in that it is one of the only significant payer-hospital acquisitions to occur in well over a decade.  Payers (such as Humana and Wellpoint) have routinely purchased clinics in recent years in an effort to push care further outside of the hospital towards more efficient, less costly outpatient settings. The acquisition represents a bold strategy to align Highmark with their hospital provider base. However, the move also poses the risk of competitive backlash from competitors who choose to not use West Penn and withdrawal from customers fearing provider choice and location limitations.

In the coming months, TripleTree will be spending a considerable amount of time monitoring the movement of payers to reposition themselves as “clinical” and “provider-focused” as ACOs develop.   In addition, we will also be analyzing how each payer’s provider strategy aligns with their efforts to expand their clinical technology platforms into the provider market.

Let us know what you think.

Joe Long

Joe Long is an analyst at TripleTree covering the healthcare sector, with a focus on the approaches and technologies surrounding health insurance exchanges.  You can email him at jlong@triple-tree.com.

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HIX: Finding the pony hidden within the ACA’s “exchange concept”

Change is coming to the U.S. health insurance market and the road will be bumpy.  Nowhere is the change more apparent than the current debate surrounding the state-run public health insurance exchanges. Our research underscores that the Affordable Care Act of 2010 underestimated the cost and complexity of establishing public exchanges. In spite of these issues, new and unforeseen opportunities are emerging relative to health insurance distribution. The application of retail, product design and customer service expertise could be transformational relative to the health insurance market for individuals.

As the Affordable Care Act (ACA) marks its first anniversary, a number of key questions remain. One of the largest revolves around the costs and benefits for the federally mandated and state-run competitive marketplaces called Health Insurance Exchanges (HIX), where individuals will be able to shop for and purchase health insurance. The public (state-run) HIX is one of the cornerstones of the health reform legislation, and for individuals without healthcare coverage today – an estimated 34 million people – the public HIXs are the intended mechanism by which individuals will acquire health insurance.

Our latest research report assesses the ACA requirement that each state build and operate a multi-channel (i.e. online, phone, and paper-based) marketplace where any qualified individual can shop for and buy health insurance.  The legislation provides some specifics as to what types of “essential health benefits” must be provided within the exchange, dictates guidelines and mandates as to how the states must run the HIX, and defines specific features the exchanges must possess. These include:

• A choice of certified and approved health plans from different carriers.

• Simple plan comparison tools that allow consumers to research and select the best policy for their needs.

• Enrollment assistance for those purchasing private insurance, and eligibility information for those qualified to receive government subsidies or Medicaid enrollment.

• A process for recouping operational costs of the HIX through surcharges in order to make them self-sustaining.

For these exchange-based insurance policies, federal and state law will closely regulate the products and benefits offered and the prices insurance companies can charge for their products. To keep the HIXs viable, insurance companies are forbidden from undercutting prices of products sold on a public exchange with competing products in the open market. They will also be required to pool risks across exchange and non-exchange participants. Further, the U.S. Department of Health and Human Services (HHS) will mandate a set of essential health benefits that must be provided under each policy, including coverage and deductible tiers for each plan offered.

While the public HIX concept seems simple and straight forward, our research predicts that their implementation will be fraught with costs, technical challenges, and sustainability issues that are neither recognized nor acknowledged, much less understood. Thus far, much of the debate about HIXs has focused on constitutional questions – and therefore political issues – related to the individual mandate which would compel citizens to purchase health insurance. As the states ramp their HIX implementation efforts in order to meet the 2014 deadline, we anticipate that several new challenges will come to the forefront. They will need to be addressed and will propel further change.

Healthcare reform and the resultant need for serving the individual market are propelling new approaches to capturing share in the insurance marketplace, and we expect that a range of new market entrants are just around the corner. Recognizing that it is still early in the progression of these alternative, free-market approaches, this report will review the concept of “private” insurance exchanges and reveal how they will likely serve a larger population than their public counterparts, and will provide more compelling insurance options and opportunities.

Thanks and have a great week.

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

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ACOs: Millions of Web Hits…Dozens of Theories…One Bottom Line

Nine million. That’s how many web hits are returned during a Google search for “Accountable Care Organization,” and reflects the countless articles, white papers and opinions that have been published regarding the potential successes and more likely pitfalls of the proposed ACO mandate. As highlighted in my colleague’s recent post, our team is continuously evaluating the business development opportunities being fueled by the demands and requirements of these new provider organizations.  Last week, the members of our Healthcare Executive Roundtable recently discussed and debated an element of the ACO equation that is not typically highlighted and could become a critical component of ACO success (or failure)…Trust.

In boardrooms around the country, health care executives are focusing on the technical requirements for their future ACO’s clinical and administrative systems. They are pouring over spreadsheets and attempting to understand the data and analytical tools that will be necessary for adequate financial and quality of care reporting. Getting these operational elements “right” is important; however, these business leaders should also focus on designing a culture – and the corresponding behaviors, communication, and incentives that will fuel strong and collaborative relationships between the ACO and its community of providers.

As Ed Brown, CEO of Iowa Clinic puts it, “People are unclear about what the value-based world looks like, and they’re unsettled on what clini­cal integration really means. And nobody has really made it work.”  This lack of clarity around the value-based model will make it challenging for providers to leave the financial security blanket of the traditional fee-for-service payment engine.  Moreover, influencing them to modify their approach to patient care for the benefit of the system and the promise of shared savings is a monumental effort. Success by any measure will largely depend on the trust established between providers and the ACO organization itself. ACO’s should prioritize establishing trust with providers in three key areas:

• ACO Operations and Management:  Providers need to trust that the ACO is well run. Understanding the organizational governance, expertise of the management team and core capabilities (strategic assets) will help generate confidence that the ACO is well-positioned to generate enough shared savings to make participation worthwhile. In addition, it is critical that the ACO measure and report management performance metrics that demonstrate its accountability to the providers.
• Compensation Incentives:  Providers need to trust that they are getting their fair distribution of shared savings. Clinical algorithms defining quality and outcomes must be evidence-based; and the financial tools and risk-adjustment methodologies used to distribute payment must be easy to understand. Above all, the organization’s compensation schemes must be highly transparent and accessible so that providers can validate that they are being treated as an equally valued business partner in the organization.
• Confidence in Provider Team:  Providers need to trust their ACO provider colleagues. If the right incentives are in place to bring members within the organization together, providers will need to trust that their peers will also be active participants working toward fully coordinated care within the ACO. Under an accountabilities and outcomes-based model, it will be important that providers view their care responsibilities as extending beyond the encounter. Active provider participants should be practicing first-class follow-up care, improving patient satisfaction, and reducing re-admission rates which will achieve collective rewards.

The inclusion of ACOs as a provision of the Patient Protection and Affordability Act is a strategy to realign delivery systems in the US so that they provide high quality, coordinated care.  The bottom line for achievement might simply boil down to whether providers can engage in meaningful and integrated relationships with the ACO and with each other. Since relationships are based on trust—predictability, integrity, and reciprocity–it is imperative that ACOs make trust a deliberate priority.  Our research and advisory agenda is 100% focused on the possibilities of ACOs, and moreover the innovations and business models which will be required to make them successful.

Let us know what you think!

Emma Daugherty & Archelle Georgiou

Emma Daugherty is a Senior Analyst at TripleTree covering the life sciences sector with a focus on provider technologies and patient safety.  You can contact her at edaugherty@triple-tree.com.

Archelle is a Senior Advisor and Chair of TripleTree’s Healthcare Executive Roundtable, and focused on creating health through innovation.  You can follow Archelle on Twitter or email her at ageorgiou@triple-tree.com.

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HHS Announcement Signals Start of ACO Services Race

With the proposed rule from the HHS and CMS finally released today for public comment, reactions and analysis will grow in the coming days on what it all means for healthcare providers.  We thought it made sense to offer some perspective on how we’re viewing the evolving opportunities for innovators, their investors, and their partners.

While integrated delivery networks (IDNs) and other large provider groups will have plenty to sort through to determine the tradeoffs of seeking accountable care organization (ACO) status, a number of researchers are already digging into the thorny issues surrounding ACOs to help develop standards, best practices, and collaboration between different models that are likely to spring up in the wake of health reform.  See this and this as examples.

What is most interesting to us so far is the jockeying of HIT vendors to reposition themselves as experts to the developing ACO marketplace.  While there are a number of ways to think about this – and our thinking is evolving pretty much daily – we see a few targeted areas where vendors are going to play.  None will be able to offer anything close to the end-to-end ACO functionality that several claim in their marketing materials.

Our view on the rapidly developing market for ACO services follows:

• Creating the ACO:  Provider groups will require help sorting through those 1,000 pages of regulations, and we are already seeing opportunities for large, healthcare-focused consulting and implementation firms that have the ear of the hospital CEO to help steer the design and creation of these models. Companies like Accenture, IBM, Deloitte, Dell/Perot and the Advisory Board are being asked questions every day by their clients about ACOs – and at least one have already started to work on their own solution.  Partnerships with these consulting firms will aid adoption for vendors downstream in the areas below

• Enabling the ACO:  The clinical integration of the ACO is the area of hottest focus right now – transactions in this space clearly demonstrate this.  HIE and interoperability vendors Axolotl, Medicity, and CareFX have all traded in the past 12 months.   Payers like UnitedHealth and Aetna have placed their bets on HIEs as the backbone on which clinical data will be integrated.  For provider networks looking to challenge this paradigm, the recent wave of physician practice acquisitions by hospitals and/or the subsidization of a single EMR system in an area (Minneapolis is largely an Epic market, for example) indicate that there may be another approach to achieve clinical integration.

• Optimizing the ACO:  Once an ACO is established, the network of providers will need plenty of technological capability:  decision support and evidentiary guidelines, contracting and risk tools, compliance reporting, and performance benchmarking analysis among them.  Many companies already providing these services to health insurers are sprinting to reposition themselves as experts for the provider community as well – visit the home page of any formerly payer-focused software vendor as proof.  Market interest in companies participating in this space is heating up.

• Marketing the ACO and Engaging with the Patient:  In our view, this is an overlooked area so far and will eventually be key to closing the loop on the ACO return on investment.  Vendors that will compete in this space are currently offering a range of services that can help do this, from health and wellness to member enrollment activities.  Once provider groups are operating as “mini-payers,” keeping patients healthy outside the facility walls while also keeping them happy with the level of engagement they experience with their physicians will extremely important.

Our research agenda and strategic advisory work have the ACO services space top of mind right now and our thinking is evolving constantly.  We’d love to know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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Ingenix Sells Clinical Development Outsourcing Business to Focus on the Safety and Effectiveness of Drugs and Devices

This morning, inVentiv Health announced that it will acquire Ingenix’s clinical development outsourcing business. According to press releases from both organizations the proposed transaction covers “businesses that generate approximately $400 million in annual gross revenue” and business units being acquired by inVentiv Health will retain the i3 brand name.

This is a bold move for inVentiv Health, which was taken private in August of 2010 by Thomas H. Lee Partners. Previously known more for its sales and marketing-related services to the life sciences industry than its clinical services, inVentiv Health now becomes a major player in the contract research organization (CRO) market. As part of inVentiv Health, i3 will continue to be led by CEO, Glenn Bilawsky, a CRO industry veteran with a proven track record of driving growth and innovation.

Now that inVentiv Health has a broad and deep portfolio of assets across the clinical and post-marketing life sciences services market, the most intriguing part of this transaction will be to see how and if inVentiv Health can integrate these different service lines and whether they will be able to successfully leverage customer relationships that both companies have in their respective businesses today to drive additional revenue. Historically, the sales and marketing teams in life sciences companies have had very little interaction with research and development, so it will be interesting to see if inVentiv Health is able to create new types of services that drive more collaboration across their clients’ operations and ultimately lead to better life sciences products.

From the Ingenix standpoint, this transaction is a clear illustration of the increased focus healthcare payers and providers are placing on health outcomes and comparative effectiveness of life sciences products. The remaining assets from i3 that are not being sold to inVentiv Health, including the Innovus, Quality Metric, Pharma Informatics, and Drug Safety/Epidemiology business units, and the CanReg and ChinaGate Regulatory Consulting businesses will be part of a newly-formed Ingenix Life Sciences division. According to a press release from Ingenix, these units “offer global solutions for evaluating health economics outcomes and late phase research, market access and reimbursement, data and informatics services, epidemiology and drug safety, patient-reported outcomes and regulatory consulting.”

With more and more blockbuster drugs going off patent and the economic pressures being felt across the healthcare industry, life sciences manufacturers can no longer rely on large marketing budgets to drive demand for their products. Healthcare payers have become much more selective in the products they will reimburse and have sponsored outcomes studies and comparative effectiveness research to help determine which care regimens create the highest return on investment. Additionally, with additional reimbursement risk being shifted to providers as a result of healthcare reform, physicians are and will continue to seek out products that will create the best outcomes for the lowest costs. These dynamics are clearly the impetus behind today’s announcement from Ingenix.

For now, we’ll continue to monitor this deal and new emerging ramifications of this deal on the sector…we’d be interested to know what you think.

Have a great week!

Jason Grais

Jason Grais is a Director at TripleTree covering the healthcare industry specializing in healthcare IT, population health management and emerging services in the life sciences sector. You can email him at jgrais@triple-tree.com

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Is a Healthy Workforce a Competitive Advantage? – 10/12/10

Speculation regarding the impact of health reform has run rampant across the United States, much of which has focused on whether employers will continue to offer health coverage to their employees or instead provide employees with cash to find their own plan. While the answer to this question may be important to health plans and third party administrators (TPAs), it is likely less impactful to population health management vendors selling directly to employers.

Regardless of the type of health coverage (or lack thereof) offered by employers, workforce health will continue to be a critical strategic and operational issue for companies to manage. In fact, there may be companies or whole industries that differentiate themselves as employers of choice through programs focused on improving and maintaining employee health.

How can a company that offers minimal health benefits to employees, or none at all, compete with a firm with a comprehensive health program? Health reform is driving employers toward comprehensive programs to not only attract and retain better talent, but drive higher productivity and have employees that feel more valued by their employer.

As we advise best-in-class wellness service providers, the benefits of a healthy workforce in a post-reform world remain top of mind, chiefly:

• Will the potential savings from not offering a health program truly outweigh the potential effects of that decision?
• How will the discontinuance of health benefits impact absenteeism, presenteeism and workers’ compensation claims?

Studies repeatedly show remarkable stats, including recent data from Indiana University-Purdue University, finding that 87.5 percent of health care claims costs are due to an individual’s lifestyle. The business case for successful wellness programs focused on improving participants’ lifestyles to prevent the onset of chronic conditions is significant and growing as healthcare costs continue to rise. Even if fewer employers are the direct payer of healthcare claims as a result of healthcare reform, optimizing workforce health will continue to be a direct benefit for employers.

Employer healthcare issues are central themes to TripleTree’s continued work in the broad category of population health management. Look for more insights here, and in an upcoming report scheduled for Q1’11.

Thanks and have a great week!

Jason Grais

Jason Grais is a Vice President at TripleTree covering the healthcare industry specializing in population health management and emerging services in the life sciences sector. You can email him at jgrais@triple-tree.com

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Mini-Med Plans & Unintended Consequences of Health Reform – 10/01/10

The gap between health insurance affordability and accessibility may have just become wider. Current economic conditions are driving employers to consider hiring hourly and part time workers and labor statistics underpin that this trend may persist for some time.

For some time, health insurers have offered “mini-med” plans as an inexpensive way to cover basic medical needs (primary care doctor visits, or prescriptions) for part-time or hourly employees who otherwise could not afford or necessarily want full coverage insurance (e.g. a major medical plan).

Health Reform (aka ObamaCare) has set in motion a series of dictates from agencies like the National Association of Insurance Commissioners, a coalition of state insurance regulators. High on this organization’s list of priorities is how to address the Medical Loss Ratio (MLR) constraints being thrust on health plans. The MLR is a financial metric that calculates the percentage of premium dollars that are directed to medical costs versus general business and administrative overhead. The ratios aren’t yet finalized and will vary by size of employer from 80% – 85% (which is a higher, more efficient ratio than found in most health plans where some industry sources cite an average MLR in the mid seventies); but it is clear that those who don’t meet federal thresholds, will pay a penalty (possibly in rebates to members).

Yesterday, news broke through various sources that McDonald’s Corporation may be considering dropping its mini-med health plan for nearly 30,000 workers unless the MLR constraints for its health plan (BCS Insurance Group) are modified. The news, as reported in Wall Street Journal, stated “last week, a senior McDonald’s official informed the Department of Health and Human Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.” The rationale for missing this threshold stems simply from the nature of employment in the food service industry…high turnover; low claims revenue and high administrative costs.

The debate continues as additional posts and stories emerge which both support and debunk what the Journals and other outlets initially reported.

Regardless, it brings to light a few realities:

• Small health plans and specialty plans will consider exiting the market altogether
• Effectively modeling the impacts of health reform is absurdly difficult
• Federal spending on simply “explaining” to the U.S. citizenry what the heck is going in will cost billions (if not more)
• In their quest to become more efficient, health plans continually scramble for solutions to address product marketing, pricing and packaging aimed at consumers, and not employers or groups
• Employers will need to quickly begin a steady campaign of internal messaging to concerned employees
• Self-insured employers (e.g. Wal-Mart) will look increasingly brilliant as they side-step these federally placed economic land mines
• Mini-med plans will likely fade from memory in the next three years

Let us know what you think, and have a great weekend!

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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B to C Marketing, Sales and Service: The New Battlefield for Health Plans – 09/17/10

Historically, commercial health plans have leveraged a traditional “B to B to C” model for marketing, selling and servicing health insurance products to their members. The breakdown for this distribution model is as follows – Health plans “B” create a product catalog for their broker network “B”; and brokers in turn sell to employers or groups “C”.

The pressures of a post-reform world are forcing a shift in the sales strategies of payers. Medical Loss Ratio compliance rules for example, are pinching the income statements of health plans so significantly that getting closer to the member (i.e. eliminating the broker) will be table stakes if they choose to remain competitive. Net result? The traditional model will fade and be replaced by a direct-to-consumer (“B to C”) strategy.

This threat to the broker-driven sales model is compounded by consumer “connectedness” (everywhere-WiFi + prolific mobile devices + social applications) where empowered individuals are becoming engaged relative to researching, monitoring, communicating and paying for their own health care.

Around our shop, we’re referring to this shift as ‘consumer engagement’; a concept pioneered by a few BlueCross organizations who successfully cultivated direct-to-consumer messages via TV, radio, print and online media for some time. Early on these consumer-direct campaigns were an anomaly, but we’re now seeing this approach take hold more broadly. This is more than simply educating potential members about “the right health plan” – it’s a 1:1 marketing approach with messaging the places the health plan in a new light as an entity capable of tailoring health and wellness services (bundled inside of health insurance) to individuals.

Consider what UnitedHealth Group did during this summers’ PGA Masters Tournament. The health plan behemoth aired variations of its “Heath in Numbers” television spots to showcase an optimized health experience for their members thanks to uniquely intelligent tools and services.

If Cigna, Aetna, Wellpoint and others haven’t taken note, they will – and rest assured the big ad agencies will be quick to offer them ideas honed from decades long slugfests in industries like consumer retailing and banking. These health plans are stepping onto a new competitive battlefield, and will likely find themselves trying to out-market the likes of Walmart and Target.

TripleTree is way out in front of other strategic advisors on this topic and has strong viewpoints on where the next set of industry inflection points will occur. Principally, we’re convinced that the health plans can’t go it alone successfully – they lack the internal resources and specialized skills to tackle consumerism, much less the turn-key solutions need to support the state health insurance exchanges.

We’d like to know what you think, and have a great week!

We’d also like to invite you to participate in our one question survey:
Given the momentum around consumer engagement, prioritize the five initiatives below relative to your experience as a member of a health plan.

Chris Hoffmann & Michael Boardman

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

Michael Boardman is an associate at TripleTree covering the healthcare and technology industries, specializing in clinical software solutions.  Follow Michael on Twitter or e-mail him at mboardman@triple-tree.com.

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Understanding the Transition From ICD-9 to ICD-10 – 9/10/10

In 2008, the Centers for Medicare & Medicaid Service (CMS) issued a notice that an industry wide migration from ICD-9 code sets to an expanded ICD-10 framework would go into effect on October 1, 2013.

ICD is the International Classification of Diseases – a set of codes for identification and tracking.  The shift in standards moves the industry from ~17,000 medical codes to over 155,000.  The rationale for this migration is that the current ICD-9 classification set has maxed out its capacity for new diagnoses.  More impactful is that the new ICD-10 code set will allow for increased data analytics, trending of outcomes, real-time transparency, and smarter delivery of care – all of which inherently take costs out of the system. This new set of codes will also give the government tools for establishing financial incentives (and penalties) for payers and providers with the underlying goal of maximizing every dollar of healthcare spend.

Along with the numerous benefits of the transition, a new set of challenges will arise for all constituents including a significant cost to migrate (estimated to be more than $1.6B spread across health plans and care providers).  Beyond these costs, the transition is predicted to cause an initial spike in the number of claim errors.  While this is a seemingly short term concern, it will cause headaches for an industry dealing with many other issues thanks to health reform.

With problems come solutions; and we’re already beginning to see a number of new business models hitting the marketplace to help organizations through this transition and take advantage of the benefits of ICD-10’s enhanced data set.  Some include:

• Middleware:  Applications to perform much of the translation services required to enable payers, providers, and other healthcare constituents to manage this massive expansion in medical code sets and clinical documentation
• Pay-for-Performance (P4P): A long time concept whose time may have finally come as payers have may finally be able to leverage richer data sets to establish a more optimized reimbursement model
• Outcome Based Care Regimens:  The richer data sets from ICD-10 will allow health plans to better track patient outcomes and link them to specific care regimens – the result will be a better understanding of care and disease management program efficacy.

Our team is following the transition to ICD-10 with great interest as a new era of accountability in healthcare maximizes the value of every healthcare dollar via improved efficiencies and reduced fraud, waste and abuse.  Let us know what you’re seeing in the market as new business models emerge and innovative programs are launched to effectively link data, analytics and services throughout the transition to ICD-10.

Have a great week!

Judd Stevens

Judd Stevens is an associate at TripleTree covering the healthcare industry, specializing in the impacts and transformation of health plans in a post-reform world.  Follow Judd on Twitter or e-mail him at jstevens@triple-tree.com.

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Can Cloud Computing Help Fix Healthcare? – 08/23/10

(The following is an excerpt from an article our colleague Scott Donahue authored for CloudBook magazine on hCloud – read the full article here)

Few topics have dominated the political news cycle over the past year more than health care reform. The recently passed Patient Protection and Affordable Care Act are aimed at improving the quality, cost, and accessibility of health care in the United States – an indisputably massive but much-needed undertaking.

Aside from political debates in Washington, the technology industry continues to buzz about cloud computing. It may seem, at first glance, that health care reform and cloud computing are unrelated, but TripleTree’s research and investment banking advisory work across the health care landscape are proving otherwise; the linkage with cloud is actually quite significant.

Our viewpoint is that cloud computing may end up mending a health care system that has largely let a decade of IT innovation pass by and now finds itself trapped in inefficiency and stifled by legacy IT systems.

Much has already been written about cloud computing’s potential and demonstrated successes at helping enterprise IT infrastructures adapt and transform into more efficient and flexible environments. But where does cloud computing fit within health care?

We have long espoused that innovation in health care needs to come from outside of the industry. Today, the likes of Amazon, Dell, Google, IBM, Intuit, and Microsoft have built early visions for cloud computing and see a role for themselves as health care solution providers. We are convinced that traditional HIT vendors will benefit from aligning with these groups such that their domain-specific knowledge can attach itself to approaches for cloud (public, private and hybrid), creating a transformational shift in the health care industry.

Cloud is active, relevant and fluid…see our colleague Jeff Kaplan’s recent blog post on the changing competitive landscape.

We’d be interested to know what you think…have a great week!

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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