Expanding Services Portfolios and M&A Defining Payer Landscape in Government Healthcare

The third generation of TRICARE contract RFPs celebrated turning four years old and the contracting process is still ongoing. While the initial contract awards were announced in 2009, heated negotiations are underway for the last remaining TRICARE contract. The last two weeks saw the five year $20B TRICARE West Region contract awarded to UnitedHealth Group – which was promptly counter protested from the incumbent, TriWest. Contract awards and protests are common, and to better understand the driving forces behind the highly combative and contentious atmosphere around TRICARE contracts, it is important to look at the broader market.

The Military Health System (MHS), which includes the TRICARE contracts, and the Veterans Health Administration (VHA) – represent the two largest opportunities for commercial health payers to expand their presence outside of Medicare and Medicaid. Unlike CMS, the MHS and VHA are relatively protected from government budget turmoil and political scapegoating. A decade of global military campaigns and higher combat survival rates have increased demands on DoD and VA care programs and driven combined spending to over $100 billion and counting, while persistent reimbursement challenges and healthcare reform uncertainties have spurred some payers to look elsewhere for diversification.

In order to better align with and pursue future opportunities in the government healthcare space, and recognizing the volatility of the TRICARE contracting process, commercial payers have revisited their government healthcare strategies and developed road maps for expansion going forward . With the most recent award to UnitedHealth Group, the three TRICARE contracts are all expected to be operated by large public commercial health plans, each with markedly different strategies for pursuing government healthcare expansion.

• Health Net operates a small portfolio of VA community-based outpatient clinics and has been a TRICARE North Region contractor since 2004.  It is also the contractor for the Military & Family Life Consultant Program, providing behavioral health and counseling services to youth and adults.  It wasn’t until this year that the Company identified the VA as a key opportunity and separate area of strategic focus going forward as it tries to diversify and expand beyond its TRICARE contract and grow its VA footprint.
• Humana has served as the TRICARE South Region contractor since 1996. Its MHS presence beyond that extends mostly to patient scheduling for some military treatment facilities. Within the VA, Humana has been a frontrunner in leveraging its expansive network of commercial providers to treat veterans through VA pilot programs Project HERO and Project ARCH.
  • Project ARCH (Access Received Closer to Home) is a VA care initiative designed to facilitate healthcare access for eligible Veterans by connecting them with care services closer to home.
  • Through Project HERO (Healthcare Effectiveness through Resource Optimization), Humana provides the VA with pre-screened networks of health care providers who meet VA standards for quality care when specific medical expertise or technology is not available inside the VA health care system. Critical for Humana in expanding its government presence will be continuing to find innovative ways to deploy its commercial expertise, and that of recent acquisitions Concentra and SeniorBridge, into government patient populations.
• While UnitedHealth Group may be the new kid on the block (its military and veterans services division was formed in 2007 to pursue the TRICARE opportunity), it has not spared expenses in clawing out a footprint. The recent TRICARE announcement was a massive strategic uplift for United, which had invested considerable time and resources since 2007 aimed at wresting a TRICARE contract from an incumbent.
  • UnitedHealth Group’s acquisition of Logistics Health Incorporated, a national provider of medical services to the federal government, instantly positioned the company as a government health leader.
  • At the time of LHI’s acquisition in June of last year, LHI’s operations were largely concentrated around the Reserve Health Readiness Program, providing medical evaluation and readiness exams to the military.
  • The contract win in March of last year to provide clinical disability exams to 31 VHA sites had a first year contract value of $120 million and a five year ceiling of $635 million.
  • With a substantial presence across the DoD and VA, a final decision on the TRICARE win would establish UnitedHealth Group as the undisputed government healthcare heavyweight.

The numerous program opportunities expected to enter the government health RFP pipeline in the next 6-12 months provide an impetus for commercial payers to aggressively expand their capabilities in the sector. Given the critical importance of past performance and quality of care in RFP processes, acquiring companies with government contract experience and a track record of superior results will be essential in expanding a government contract footprint in the healthcare sector.

TripleTree is closely watching a range of upcoming contracts to underscore any possible trend including:

• TRICARE for Life: $29B program providing supplemental coverage for two million TRICARE/Medicare dual eligible military/veterans projected to grow to $48B by 2021.
• TRICARE Overseas: TRICARE services for overseas personnel
• Military OneSource, a telephonic employee assistance program
• Reserve Health Readiness Program (RHRP), providing medical and dental readiness services to all Reserve forces

The competition for government contracts will increase in pace with government healthcare spending as more large-scale public players enters the market (i.e. Lockheed Martin’s acquisition of QTC) and the scarcity of independent quality assets with scale becomes more acute. The earlier and more meaningfully a payer is able to carve out a platform in the government healthcare services area, the more defensible such a position becomes down the road. We fully expect that in addition to the proactive interest defense contractors are displaying in expanding their healthcare presence, commercial players will continue to become more active and aggressive buyers as well.  Let us know what you think-

Marc Baudry

Marc Baudry is an analyst at TripleTree covering the healthcare industry specializing in government health, population health management, informatics, and facility-based services. Follow Marc on Twitter or email him at mbaudry@triple-tree.com.

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A Look at Oncology Medication Management

Each day, in the U.S. alone, over 4000 more people are diagnosed with cancer. In 2010, there were 13.8 million cancer survivors alive and some 18.1 million people in the U.S. are expected to be living with cancer by 2020 (Journal of the National Cancer Institute).

Of the nation’s 10 most expensive medical conditions, cancer is the highest per-person price medical condition.  Medicare data and other sources show that in 2010, care for the 16 most common types of cancers in U.S. women and 13 common types of cancers in U.S. men costs the healthcare system $124.6 billion.

Correlating Cost Increases and Survival Rates:

With the escalating cost of living with cancer and the increase in cancer survivors, technologies and services are evolving to help individuals live with cancer longer, happier, and cheaper.  Cancer is becoming an area of focus for payers to lower the cost of care and improve patient outcomes.

Health plans have begun pilot programs with Biological Management Companies (BMCs) to assist in oncology treatment.  The traditional oncology medication management approaches are evolving and payers are looking to reduce inappropriate drug utilizations and inefficiencies in distribution without impacting quality.

According to market research company HIRC, two-thirds of plans will have clinical pathways for high incidence cancer conditions by 2012.  There are numerous payers currently piloting with BMCs to help develop decision tools, medication management, and physician reimbursement schemes. A few recent pilots include:

• Aetna with US Oncology and P4 Healthcare
• BCBS of Florida and Coventry with iCore Healthcare
• BCBS of NJ with Via Oncology / PathForward
• CoreSource and Employee Benefit Management Corp with Biologics
• Highmark and AmeriHealth with P4 Healthcare
• Humana with New Century Health

Payers aren’t the only ones concerned about cancer costs.  Employers rated cancer as the number one specialty area of concern in a recent survey by HIRC.  Specialty Pharmacy Programs for the management of oncology medications continue to rise with 60% expecting to use them by 2015.  Specialty pharmacy providers (SPPs) have begun to offer oncology-specific services, including oversight of distribution and tighter management of supportive care products.

As payers and employers continue to form strategies and evolve payment methodologies for cancer, healthcare IT companies are making their bets on this high cost area:

• In late 2010, McKesson acquired US Oncology Holdings, a services, resources, and tools for cancer care delivery system for more than $2 billion.
• Following McKesson, in September 2011 AmerisourceBergen acquired IntrinsiQ, a medical data and business analysis solutions for the oncology market for $35m

The potential costs continue to escalate with direct cancer care expenditures expected to reach $158 billion in 2020.  We are continuing to watch this market as new players emerge and global healthcare services and technology vendors seek to lower cost and improve outcomes for cancer patients.

Let us know what you think!

Joanna Roth

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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Humana Bolsters Care Management Capabilities with Acquisition of SeniorBridge

Humana announced an agreement this past week to acquire SeniorBridge, a New York-based provider of in-home care services to the chronic care and senior populations. The acquisition marks the latest example of Humana’s attempt to position itself as a more retail-focused company through a series of acquisitions and strategic initiatives.

Over the past eleven years, SeniorBridge has established itself as a leader in managing complex chronic conditions for seniors in the self-pay (or private-pay) market. Through the acquisition, Humana will be presented with a host of opportunities to leverage SeniorBridge’s model across a broader market base:

• Medicare – upon receipt of Medicare certification, Humana will be able to leverage SeniorBridge’s suite of care management capabilities across its nearly 2 million Medicare plan members.
• Humana Cares – SeniorBridge bolsters the Humana Cares segment of the company, which provides on-the-ground care management services to over 185,000 chronically ill plan members. The Humana Cares segment of the company has been vital to Humana’s emergence as a leader in the Medicare Advantage Special Needs Plan (MA-SNP) market.
• Other Payer Groups – several reform related initiatives, such as reimbursement reform and medical loss ratios, have positioned in-home care to be a large growth area for SeniorBridge given its significance to payers as a cost-saving tool (managed care has traditionally only contributed to a small portion of SeniorBridge’s overall business).

Humana has been among the most progressive payers in promoting member self-management and wellness through a number of initiatives, including:

• Humana Guidance Centers – “store-front” hubs located in select cities provide members with access to a suite of wellness and self-management products.
• Remote Medical Monitoring – provides real-time condition monitoring solutions to help address member health challenges in real-time.
• Humana Center for Health & Well-being – Humana’s LifeSynch subsidiary provides face-to-face health coaching resources to plan members. In addition, the Company has established a partnership with MinuteClinic to provide quick-access to routine treatments.

In addition, Humana’s recent acquisition of Concentra, along with several urgent care clinics from NextCare, signaled their entrance into the provider marketplace. These strategic moves have provided Humana with a mechanism to execute on their strategy to become more consumer-facing and the flexibility to adapt to some of the new realities established through health reform as they are implemented over the next few years.

Other recent investment activity in the payer marketplace signals that Humana might not be alone in their efforts to diversify and establish an “on-the-ground” presence (for example, UnitedHealth’s purchase of Inspiris, BlueCross Blue Shield of Florida’s investment in CareCentrix).  Payers appear to have realized the disconnect that has existed historically between themselves and their customer base. Given the “bets” that payers have made across the landscape, it is clear that payers are seeking to re-orient themselves around the consumer and provide consumers with an opportunity to take a greater role in controlling their healthcare. While a variety of strategies are being used, payers have been prioritizing investments and services around the “consumer experience” to increase overall access and transparency.

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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Medicare Advantage…Here Today, Here Tomorrow…

CIGNA put a stake in the ground for the long term prospects of Medicare Advantage (M.A.) with its recent announcement that it would be acquiring HealthSpring for $3.8B (a 37% premium over its closing price prior to announcement).

HealthSpring primarily operates as a M.A. plan covering over 340K lives across 11 states (including over 800,000 Medicare Part D members).  CIGNA previously had a very limited presence in M.A. with ~44,000 lives entirely in Arizona.

CIGNA has been focused on diversifying its core US healthcare presence, so the move isn’t too much of a shocker, although many thought its approach would include international expansion versus a bold move into the government market.  It’s likely the HealthSpring business model was too alluring for CIGNA to pass on when you consider HealthSpring’s:

• Tight integration with network physicians including a high level of capitation and risk sharing;
• Strong leadership team lead by Herb Fritch whom possess the experience and know-how to operate a unique, physician-centric, coordinated care model; and
• Consumer brand presence within the senior market.

There is a large opportunity for CIGNA to leverage and replicate HealthSpring’s coordinated care model across their commercial book of business to drive efficiencies and deliver better care.  Additionally, CIGNA will benefit from its ability to cross-sell HealthSpring into new markets.

CIGNA is not the only health plan making moves in the M.A. market – recent M&A activity within the sector over the past 18 months include:

• Wellpoint – CareMore (2011)
• Aetna – Genworth’s Medicare Supplement (2011)
• Humana – MD Care (2011) and Arcadian Management Services (2011)
• HealthSpring – Bravo Health (2010)

HealthSpring was one of the few remaining M.A. plans with size and scale, and CIGNA’s move could prompt additional consolidation within the sector over the coming 12-18 months.  The list of targets with viable M.A. populations (100K+ lives) is becoming quite limited.  Some of these include Universal American and Wellcare, public M.A. plans with 100K+ lives; and XL Health, SCAN, Aveta and Universal Healthcare as examples of private M.A. plans with scale.

There have been recent headlines about increased pressure on reimbursement rates and minimum medical loss ratio (“MLR”) requirements posing a threat to the future of M.A.  My view, however, is that M.A. will not only survive, but thrive going forward and recent M&A activity would suggest the same.  Let me know what you think.

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 a New Approach to a Healthcare Claims Database Help Control Costs?

As congressmen and stakeholders across the country continue to debate the best methods for quality improvement and cost containment in the U.S. healthcare system, four of the nation’s largest health insurers have come together to provide access to data that has the potential to significantly bend the cost curve.

A long awaited announcement came last week from  Aetna, Humana, Kaiser Permanente and UnitedHealth Group  revealing that they will be providing access to over 5 billion de-identified claims from over 5,000 U.S. hospitals totaling $1 trillion of healthcare costs incurred since 2000. This data will be made available to researchers and distinguished healthcare economists via the newly formed nonprofit group, Health Care Cost Institute (HCCI).

According to the HCCI web site, its mission is to promote independent research and analysis on the causes of rising US health spending, to provide policy makers, consumers, and researchers with better, more transparent information on what is driving health care costs, to help ensure that, over time, the nation is able to get greater value from its health spending.

Last week I spoke with Dr. Stephen T. Parente, PhD., Professor in the Carlson School of Management at the University of Minnesota and member of the governing board of HCCI. He described the multi-stage approach of the HCCI which includes collecting and aggregating data from the participating private insurers and establishing a database for entities interested in getting a handle on health care costs and utilization.  The HCCI is also designing “rules of the road” related to research protocols, access and review..

Until now, claims data has been limited to federally provided data on Medicare. But with over half of healthcare expenditures coming from private pay insurers, this restricted view hasn’t been broad enough to draw meaningful conclusions.   As its content evolves, the HCCI will publish a bi-annual scorecard to help researchers identify trending information at levels of detail rarely (if ever) seen before.

We’re actively working with healthcare innovators, many of which are working toward the same healthcare cost-saving goal,, and thought it would be useful to list our view of where  we predict the HCCI could (in the near term) positively impact payers, providers and patients related to healthcare cost and quality:

• Develop evidence-based care recommendations and best practices (Providers and patients)
• Design multi-payer quality improvement strategies and evaluate their effectiveness (Payers and patients)
• Understand key bottlenecks along the care continuum where patients spend the most time and dollars (Payers and patients)
• Determine specific diseases, conditions and treatments that are driving the largest cost trends (Payers and patients)
• Identify the most cost-effective providers and medical procedures as well as geographical variations (Payers and patients)
• Isolate cost variances between Medicare/Medicaid and private health plans and help appropriately align pricing with private pay (Taxpayers)
• Analyze healthcare cost trends over time at an heightened level of specificity (Everyone)
• Evaluate the effectiveness and draw comparisons between different types of disease management programs and treatment procedures(Payers, providers and patients)

Our long term outlook on the value of this data is that it can create new metrics of clinical and care performance standards based largely on historical and real-time reporting on claims. We’re hopeful that as such analyses are developed and recognized on a broader stage, they will be used to inform policy on a much more direct basis and make a huge impact on the costs of healthcare.

Have a great week.

Emma Daugherty

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.

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Steward Takes On Insurer Role in Agreement with Tufts

Cerebrus-backed hospital operator Steward Health Care System (Steward) made news last week by launching an insurance product. This announcement marks one of the most dramatic attempts by a provider to position themselves to profit from system wide efforts to better control care delivery and distribution.

Dubbed Steward Community Choice, this new plan will see all routine care provided through Steward-affiliated doctors and facilities (although certain exceptions apply).  Despite potential access limitations, the plan is designed to appeal to small businesses as it will be priced as much as 15% to 30% below comparable products and calls for Steward to bear all the financial risk for patients’ care. Tufts Health Plan of Massachusetts will provide administrative services (running call centers staffing, card issuance, etc).

This announcement is the latest example of providers financially aligning themselves with the care they provide.  Similar models have been introduced throughout the country as well:

• Carilion Clinic through a partnership with Aetna in Virginia
• Sutter Health through a partnership with Health Net in northern California

The broader implication of this risk transfer to the provider is how the consumer has been thrust to the center of healthcare delivery and decision making processes, which is forcing payers (and providers) to re-think their distribution and retention strategies and focus on consumers.

Cost is the driver.  Employers are actively seeking solutions to better control healthcare-related costs and as they continue to shift towards high-deductible coverage (which send a significant percentage of healthcare costs towards the consumer) products like Steward’s where costs can be controlled.

Payers view this as another method to introduce performance-based risk contracting and better track the experience of a patient’s care. Several of the larger payers are trying to control the distribution of care by investing in providers as seen by Optum’s acquisition of Monarch and Humana’s acquisition of Concentra.

Providers view the potential additional revenue as a benefit too.  Given declining reimbursement rates and the increasing administrative burdens that accompany care distribution; these types of arrangements can increase revenues, cover costs and apply a stronger focus on the provision of care.

Perhaps the most affected will be consumers, who have increased demands for greater transparency, access and information to control their overall healthcare spending.  Historical efforts to introduce similar products have failed because consumers viewed them as restrictive and of poor quality, but trends around health reform are changing the playing field.

As healthcare costs continue to shift towards the consumer, these restrictive arrangements are likely to persist as the “closed” nature of provider networks offer cost relief by limiting access to certain doctors and hospitals.

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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Marketers Beware: Seniors Are Far From a Typical Healthcare Consumer

The U.S. is on the verge of a dramatic demographic shift as more than 10,000 Baby Boomers turn 65 each day.  This startling demographic change has tremendous implications for our society, ranging from the availability and utilization of our healthcare resources to the staggering, uncontrollable economic cost of providing medical care and support services.

While the problem is wide-spread, the age of Health Reform has shifted the traditional health delivery model to one focused on the individual.  In our research on seniors, TripleTree has unearthed several emerging themes that introduce improved transparency, advocacy, and choice into the senior’s decision-making process regarding their health and prescription drug coverage.  As a result, the senior becomes the focal point to improved coverage that better aligns with their specific health needs as well as cuts unnecessary cost and waste out of the purchasing and enrollment process.

The following themes highlight a few examples of how an alignment around the senior has played into the strategies of large corporate entities as well as emerging innovators that specialize in combining technology with high-touch service capabilities.

Leveraging “Brand”

The new generation of seniors will be much more retail-savvy, will demand greater transparency, and will have improved information tools to help guide all aspects of their health-related spending.  Recognizing this, retailers such as Wal-Mart, Walgreens, and CVS/Caremark are strongly positioned to leverage their trusted brand within the decision-making processes of seniors.

• Wal-Mart, through a recently announced co-branded Medicare Part D prescription drug plan with Humana, is already taking advantage of this phenomenon.  The Humana Wal-Mart-Preferred Rx Plan (PDP) is being offered in over 4,000 Wal-Mart pharmacies nationwide, providing substantial cost savings for the 18 million Americans that rely on Medicare Part D for their prescriptions.
• Walgreens has made several acquisitions that place limited service, acute illness clinics in retail stores and employer settings.  These purchases – which include Whole Health Management, I-trax Health Management Solutions, and Take Care Health Systems – highlight Walgreens’ efforts to expand an already trusted relationship with their customers.
• CVS/Caremark, like Walgreens, has capitalized on an opportunity to expand its platform to include other service-line extensions.  The company’s acquisition of MinuteClinic and subsequently, its rather aggressive expansion strategy have played on the brand’s trusted, neighborhood presence as a means of providing face-to-face care and assistance for seniors and other demographics.

Unique Demands & Approaches

While the complexities of comparing and procuring health insurance are much greater than that of other day-to-day purchasing decisions, new industry dynamics are driving the demand for solutions that can address both the functional requirements of health insurance exchanges as well as the purchasing preferences of seniors.  New innovative approaches are being developed to address the emerging demands of this new healthcare marketplace.

• Transparency: Several emerging vendors – such as Connextions, Benefitfocus, and Extend Health – have established themselves as trusted sources of information within the health and prescription drug coverage procurement process.  Their solutions interface with multiple data feeds (including eligibility, subsidy, health plan, premium data, etc.) and present this data in an easy-to-use, consumer-friendly format that can be understood and relied upon by the senior.
• High-Touch Advocacy: Companies that layer personalized advocacy and support services over their core technology are a step ahead as the requisite technology-services mix comes together to enable a comprehensive yet flexible approach that caters to the personal buying habits and technological proficiency of a diverse senior population.
• Establishing Trust in the Decision-Making Process: Seniors, to an extent greater than their younger peer groups, have a more pronounced set of preferences and possible reservations when it comes to making decisions regarding their health and prescription drug coverage.  This dynamic – which is only exacerbated as the senior ages and experiences accelerated cognitive impairment – introduces greater uncertainty and the potential for mistrust within the purchasing process.  To combat any negative preconceptions, companies that wish to market successfully to seniors must be disciplined in how they incorporate an easy-to-understand decision-making framework with personalized, high-touch guidance and support.

Soon, our research team will be publishing a series of reports on the Seniors market.  A range of themes are evaluated in the context of providing seniors with greater access to resources, support, and decision-making tools as they increasingly desire to age independently in the home.   Let us know if you’d like a copy.

Have a great week.

Seth Kneller

Seth Kneller is an Associate at TripleTree covering the healthcare industry, specializing in revenue cycle management, clinical software solutions, geriatric care and healthcare analytics. Follow Seth on Twitter or e-mail him at skneller@triple-tree.com.

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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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Sentiment 2010: Consolidation, Platforms and Compliance

Our team of analysts and senior bankers are taking stock of the past few quarters as we look ahead to 2011.  As such, we thought it might be useful to quickly summarize of our most popular posts below:

TripleTree’s Top 10 Posts – 2010

1. Humana’s Acquisition of Concentra Is A Multi-Pronged Move
2. Tech Platform Innovations in Healthcare Will Rely on “hCloud”
3. Understanding the Transition From ICD-9 to ICD-10
4. An Acute Focus on the CFO is Feeding IBM’s Appetite for Analytics
5. Risk Adjusted Payment Models for Medicare Advantage – New Markets and Business Opportunities
6. Health Plans & Provider Networks Seek Optimized “Channel to the Chart”
7. Prospective Payment Review: The MLR “Silver Bullet” for Health Plans
8. Seven Considerations for the Impact of Open Source on Healthcare
9. Is a Healthy Workforce a Competitive Advantage?
10. Reading the Tea Leaves: The HITECH Act & Health Reform in the Wake of the Election

Our research agenda and current sell-side mandates have taken shape, and include assessments of where best in class businesses can take advantage of opportunities in the Senior’s market, the growth of consumerism, content management, decision analytics and compliance platforms.  As expected, we’ll stay laser focused on delivery models like cloud, outsourcing and mobile.

We look forward to reconnecting and wish you a prosperous New Year!

Chris Hoffmann

Chris Hoffmann is a Senior 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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Wellness Now a Key Theme to the Healthcare Landscape Dialogue

Proactive preventive care is increasingly seen as a viable and in many cases necessary substitute to traditional reactive health care. Preventative offerings and wellness programs (including biometric screenings, care intervention, and health risk assessments) offer lower costs by addressing health issues prior to medical incidents, rather than after.

This psychological shift in our healthcare thinking has evolved around mounting healthcare costs and began entering consumer consciousness once it became apparent that we (the consumers) may soon be bearing more of our own healthcare costs.   Trends around wellness programs have shifted to a keen focus correlating healthy behavior and healthcare outcomes – all told, a broad societal “awareness shift” of the health effects of our individual behaviors.

Politicians and capital markets are taking note:

• Chicago mayoral candidate Rahm Emanuel’s recently announced that if elected he intends to implement an incentive-laden health and wellness plan for city employees projected to save Chicago $240 million over 4 years.
• 2010 saw numerous payer acquisitions of wellness companies, including OptumHealth’s acquisition of Wellness Inc., Humana’s acquisition of Hummingbird Coaching, and CIGNA’s purchase of Kronos Optimal Health, and, to name a few.

Much of this M&A activity has been driven by changing market regulations and broad government support. The Accountable Care Act of 2010 included many health and wellness provisions, including a potentially game changing provision altering prior HIPAA regulations. This provision raises the wellness incentives ceiling from 20% to 30% of the employee-only coverage portion of the plan (and includes the possibility of raising it to 50% pending review). The U.S. Department of Health and Human Services’ recently announced Healthy People 2020, a roadmap for public health and wellness that requires significant investment and utilization of wellness programs as a core component of national health goals.

This wave of public adoption is a key validation for “wellness,” a long-time healthcare “trend” that is now becoming a central theme in the broader healthcare dialogue.

Next steps? Continuing the momentum of wellness themes into effective wellness programs that capture meaningful participation from employees.

• While many U.S. employers currently offer some type of incentives, (56% according to the latest wellness survey by Buck Consultants, driving measurable wellness results means offering substantial incentives that drive meaningful participation.  Without incentives, participation in wellness programs, regardless of offerings, typically falls in an anemic range of 20-30% that fails to include the most at-risk members who are responsible for driving the majority of healthcare costs.
• Meaningful incentives drive participation increases of three to fourfold, bringing participation to 80-90% of those eligible, including engaging the top at-risk employee segment. This is a substantive increase and one that promises to shape the evolution of future wellness programs.

Our growing spate of advisory work and broadening research agenda underscore that preventative care and wellness programs are more relevant than ever. As we assess the landscape of wellness vendors, we’re most impressed by those firms pairing well-designed wellness platforms with go-to-market strategies that creatively leverage the incentives supported by health reform, and onboarding models that garner consumer/employee engagement.

Our research team is working on two reports that include “wellness” as a central theme; a Q1’11 publication focused on the Senior’s market, and a Q2’11 publication focused on healthcare informatics.  In addition, the 6^th annual Wireless-Life Sciences Alliance Convergence Summit will explore compliance, chronic care and a host of other wellness related topics.

Let us know if you’re interested in learning more, and have a great week!

Marc Baudry

Marc Baudry is an analyst at TripleTree covering the healthcare industry specializing in population health management and healthcare informatics. Follow Marc on Twitter or email him at mbaudry@triple-tree.com.

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