Trends and technologies driving health spending

Explore health-spending trends and technologies.

A recent Deloitte study, Breaking the cost curve, reported that historic trends show health spending could reach $11.8 trillion, but Deloitte estimates it could be closer to $8.3 trillion. Join us as we discuss the trends and technologies driving this deceleration in spending.

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What’s on the horizon for health care spending?

Health care spending may show a decrease in the near future, a dramatic transformation driven by new business models, emerging technologies, and highly engaged consumers. How will this trend affect the health care system and the Future of Health™?

Listen in as Andy Davis, a principal with Deloitte Consulting’s Health Care practice, is joined by Jason Wells, chief consumer and innovation officer of Adventist Health, and Krishna Ramachandran, vice president of provider performance at Blue Cross and Blue Shield of Illinois, to discuss the unstoppable shift that’s driving the future of health care.

Moving along with patients on their journey starts with the individual, then the family, then the full community. It’s the health transformation that has to happen if we’re going to bend this cost curve … Health care has been so transactional, and we must move to be relational.

– Jason Wells

Read through the transcript

Heidi: Welcome.

Jason: Good morning.

Andy: Super excited to be here, Heidi.

Krishna: Hey, thanks for having us!

Heidi: We have a lot of enthusiasm. All of you ready to share. This is a rich topic, and I’m looking forward to the discussion this morning.
Andy, I’m going to start with you. In the US, we are so used to seeing the headlines about health care spending increasing year over year. What trends led you to believe that we could actually stabilize and reverse this trajectory?

Andy: [00:01:27] I see that as a combination of a couple of things, one being the focus on early detection and prevention. One of the analyses that we covered was around non-small cell lung cancer and the impact of finding cancer before you progress to late-stage. And what we found in doing that was, through early detection, which there continues to be investment in, you could save upwards of $7 billion out of $22 billion that we spend annually caring for and treating those with non-small cell lung cancer just by finding disease states early, which multiple organizations are investing in today.

The second is around the brand-new information we’re going to see that is going to drive an empowered consumer. For the first time really ever in our health care industry, we’re going to have consumers with data at their fingertips, through regulations like price transparency and interoperability that’s going to offer this explosion of data. And really, I think of that as an opportunity. The industry, I think, will be exposed for “what is the price of health care today?” And I think that’s an opportunity and a challenge that’s going to create change in our ecosystem. And when you look at that, those two trends combined, I think that creates the seismic shift that you saw in the study that really drives well-being to be two-thirds of the spending that we project out in 2040.

Heidi: [00:02:55] Breaking the cost curve completely exemplifies that. Jason, in terms of the shift to well-being, talk to me a little bit about your thinking in terms of how to reverse this trajectory.

Jason: [00:03:08] We brought Blue Zones into the family in the middle of the pandemic. Adventist Health has 23 hospitals up and down the West Coast, but we serve in about 70 communities, and so we are already underway blue-zoning our footprint.

Those of you that may not be similar with the Blue Zones … Dan Buettner, in a November 2005 National Geographic article, covered the five communities around the world that live to a healthy 100. And so when we think about the purpose of Blue Zones to empower everyone everywhere to live better, longer, that is our passion to do that within the communities we serve and really partner with Blue Zones to do that around the world. The pandemic has clearly accelerated this trend to well-being.

Andy and the team were absolutely on point. Everyone does seem to be wanting to either blue-zone, bring more well-being into their business footprint, into their community, into their school. The pandemic highlighted our own mortality, and it’s so important that we live better longer. And it’s exciting to see that gain some national and international attention.

Breaking the cost curve report

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Krishna: [00:04:11] From my vantage point, I think that are several forces at play currently. One, I see the continued alignment of incentives with providers towards adoption of value-based care; two, this dilation of health care delivery systems via some of the regulations such as meaningful use.

Three, regulatory forces that are pushing health care players toward more interoperability of systems and transparency in pricing data. And so this potential to democratize the data brings opportunities for health care players, big and small, to surface up meaningful insights, empower the consumer to make choices, which could be a powerful force that can bend this cost trend.

Heidi: [00:04:52] We understand that today’s system has a tremendous amount of waste. That’s something that came out in the Breaking the cost curve report as well. What role do the current stakeholders have in driving a less wasteful health care?

Krishna: [00:05:07] I think it’s important for us to understand what one player in health care deems as waste is, in many instances, somebody else’s revenue. So there’s these counter-tensions built into our entire health care delivery system that make tackling the waste a challenge. That said, I think there are several opportunities for current stakeholders in health care. One, I’d say, is incentivizing for care that’s effective and efficient. These could include opportunities like optimal sites of service for the care to happen. It could be coordinating care across different entities through an episode of care. We’ve seen a lot of fragmentation that could really be minimized by optimal coordination. Two, I’d say measuring provider performance across the dimensions of quality, efficiency, and appropriateness of care and really sharing that data transparently with providers and consumers, too. And three, just using that information to change consumer carrier position patterns—so, essentially, sharing this data with consumers so that they can make clear choices. Certainly, closing the loop with providers so that we can engage in meaningful conversations of continuous improvement. And I’d say last, but not the least, sharing the data and information on testing and test results in a way that it’s interoperable and available at the point of care and the point of ordering.

Heidi: I’m really glad that you pointed out the appropriateness of care. Jason, at Adventist, that was a strategic goal, I understand.

Jason: Absolutely. Thirty percent is the target we’ve set of costs out of care by 2030. Appropriateness of care and appropriate venue. So we have launched the hospital at home program at Adventist Health in the middle of the pandemic.
The capital needed to sustain a hospital system serving in 70 communities is extreme. So we have thrived at this program, loved the opportunity to take care into patients’ homes. About 20% of full acute care, we believe, is appropriate for that venue. And the acceleration of that through the pandemic has been significant. We have … Our highest HCAHPS scores at our company are patients that are cared for in their homes. And so we think that is a significant move to take costs out and move to more appropriate venues of care, when appropriate. Tighter integration with payers is certainly a part of our strategic plan. We’ve launched the health division to do that work. We’re involved in multiple conversations with payers today. We think the administration of claims—how we can remove daylight between us and more appropriately care for the consumers and the patients by removing some of that overhead cost—is a really important part of that equation moving forward.

Heidi: [00:07:45] It’s amazing to hear that level of commitment, but there is a technology element to this, right, if we consider remote monitoring and sensors. Andy, how are we seeing this debt decrease in terms of a technical component point of view?

Andy: [00:07:59] You have to consider how health care works and how it has evolved to today. Oftentimes, when you look at the payer and the provider ecosystem, there’s large tech platforms that can be, let’s say, very old—30 to 40 years old, in some cases—multiple platforms looking to manage different segments of the business, whether that’s Medicare or Medicaid or our commercial population. And the amount of time and investment that goes into making sure those systems work and work well for our average consumer to really … what I would say is, make incremental change. And when we talk about this transformation, I also think there is opportunity where other organizations that are highly tech-savvy have opportunities.

And I think for our current stakeholders, there’s an opportunity to learn from that around what does it take; instead of trying to use what we have, are there opportunities to really transform how we offer health care. Jason, to your point, how we administer health care, and administer claims, I think, is a huge step that current incumbents really have the opportunity to capitalize on that would reduce the administrative burden that we tend to pass on today to our members, to our patients, to our consumers.

Heidi: [00:09:18] Let’s drill down into this fundamental shift from a focus on care and treatment to a focus on health and well-being. Jason, what could this shift mean to a health system, and how can they think differently about health care in their role, and how do they engage with patients?

Jason: [00:09:40] We have the opportunity to lean in and guide people, nudge them, partner with them on their journey to well-being. Through the pandemic, I had the chance to lead our hospitals in Mendocino County, where we take risks on a third of the entire county, almost 35,000 people.

And what we learned from that economic model is, when people are healthy and do well, we have some margin, and when they are incredibly sick, there is no margin. And so we are finally incentivized to invest in solutions that keep people well. And so the next blue-zone project in Mendocino County is, we believe that a healthy community will be a thriving community. And so all the solutions that are coming on there and up and down the West Coast is absolutely part of our strategic plan. It’s been hard in my career, being on the health care side, where you feel like we’re behind the game. “If only patients would have known X or been partnered with to do Y…” We are at the end of the road on so many situations, and I love the flip that is starting to happen. It’s an exciting transformation in health care right now.

Heidi: [00:10:45] In terms of Blue Zones, what is it about Blue Zones that you see is engaging with patients?

Jason: [00:10:52] There is definitely a thread that ties these communities together, where we see more centenarians than anywhere else in the world. So we have a passion to do this in our footprint. We created the well-being division in the middle of the pandemic. It is an incredible opportunity. Moving along with patients on their journey starts with the individual, then the family, then the full community. It’s the health transformation that has to happen if we’re going to bend this cost curve.

Andy: [00:11:16] And, Jason, just to add to that, I think one of the things that Blue Zones capitalize on— as we think about this transformation—it’s the fact that the communities that they have been invested in see the benefit and see the incentive of making these behavioral changes, which I think is very different than how we think about our health care system today and how we incentivize behavior for a consumer. And as we start to drive change, how do you incentivize behavior change investment into the longevity of your life? The Blue Zone’s investment has proven, through some of the data points, that members of the community see that, and I think that will be the challenge for a lot of our current stakeholders today: How do they drive and incentivize well-being-oriented behavior and not reaction to symptomatic care?

Heidi: [00:12:10] In terms of consumers, so much of what we’ve talked about is based on consumers changing their behavior and becoming much more empowered and engaged. Jason, do you think consumers are ready for this change, and what more can the health care system do to engage them?

Jason: [00:12:27] I think that the pandemic has accelerated this. I’m having a colonoscopy on Friday, but I haven’t had any nudges. It’s been six months, and no one’s saying, “Hey, Jason, have you done your prep? And did you do this?” Those things should be in place. We must do a better job at reminding people of the gaps in care, reminding people of what it means to live a healthy life, and give people the tools. And I think consumers are ready to be nudged. Health care has been so transactional, and we must move to be relational. And I think of the 95% of our life we aren’t in a hospital, aren’t in a doctor’s office … Let’s be in that space, let’s partner with them there so that we maybe can avoid 4 of the 5% in the hospital and in a clinic setting.

Heidi: [00:13:14] What we know nudging is, we can just relay from our own childhood. We all can relate to our parents nudging us along to do all kinds of things: getting up in the morning, eating your breakfast, getting dressed, brushing your teeth, and so on. It is built into our DNA. Krishna, what do you think about this willingness of the consumer for change?

Krishna: [00:13:34] I think there is a bright spot from the pandemic. I think it’s our collective ability as humanity to adapt and change. I think it’s extended to being able to work remotely, and that switch happened very rapidly and pretty effectively. And health care … I think it manifested in sort of an explosion of virtual visits and telemedicine, which is quite remarkable because just overnight, that just flipped.

So I’d say I think there’s plenty of potential to engage consumers to make sure we can change meaningful behavior. I do think a key part of that is, how do we make that convenient? And how did we surface up things that are useful and insightful and things that consumers care about? I think focusing on those will have a big potential to engaging consumers. These could be the timely reminders that we’ve spoken about, but also things like what is high quality, where do they find high-quality care, what is effectiveness? Where are there opportunities for price-sensitive and price-effective care? So I think there are useful elements of health care that, if presented in a way that’s convenient and timely, could really engage consumers.

Heidi: [00:14:42] Andy, we’ve got all of this data we’ve never seen before. Are the consumers really ready for all this change?

Andy: [00:14:50] Think about where we came from. Twenty-five years ago, you had to read a medical book and had to go to medical school to be able to interpret what’s wrong with you. And I love Jason’s personalized example. I’ll share one of my own. I know through testing I have both Alzheimer’s genes, so to me, there’s information that I have access to, that I can cobble together insights on what are the right things that Andy Davis can do to try to modify and prepare and potentially prevent the onset of that disease.

I think that if we can put an informed insight in front of our consumers with the power of this data that’s coming through—interoperability and price transparency and new and informed analytics—even in the next five years, you’re going to see consumers move from what would I say is an ill-informed choice around how they might try to manage their care to an extremely informed insight around how they manage their well-being. And I think that shift will happen very rapidly, again, due to the things that we’ve seen in the acceleration under COVID, that ability to change quickly as we learn and adapt to new information.

Heidi: [00:16:06] I want to talk about this idea of detecting and getting in front of diseases sooner and how that changes the interventions we provide to patients and consumers. Krishna, how could this impact the role health plans play?

Krishna: [00:16:22] I think it’s an opportunity for health plans to move from this sort of coverage and payment of sick care to truly being an advocate on a member’s health care journey. Health plans have a rich claims history filled with many useful insights, and so making investments in data and analytics solutions, as well as digital member experience solutions, gives us a natural opportunity for surfacing these insights and engaging with members, both healthy as well as rising risk. I do think using consumer-consented health data from sources like interoperability that Andy spoke about, or from other investments like health data exchange with providers and payers, is another opportunity for us to continue to enrich this data and sharpen the sort of useful insights that we can help our members with. Of course, there’s also sort of benefit design, tools, and opportunities, rewards for wellness, using certain apps, remote monitoring, that can really further consumer adoption and certainly the role of continued incentivizing of providers to focus on both wellness care, as well as sick care.

Heidi: [00:17:30] Andy, I remember reading in the report in terms of early detection. Talk to me about some of these other potentials in terms of early interventions.

Andy: [00:17:40] You’re seeing a contrast and investment for how people try to get in front of disease. One of the examples in the paper focused in on cancer. There are organizations that have invested in diagnostics that can detect up to 50 cancers with a simple blood draw. And what we’re talking about there with the blood draw is likely someone who is not symptomatic, so they’re not in late-stage. They’re not feeling the same effects that someone else would be, and we’re talking about things that go beyond what we have in routine screening. There are two things that are super important: How do we fund and allow for that type of innovation and access to those services, and two, how do we make sure that we are empowering our consumers to nudge and go ask for that?

Heidi: [00:18:39] With this shift from diagnosis and treatment to well-being and prevention, health care spending is always top of mind. What type of business models, partnerships, acquisitions, alliances can we expect to see in the future of health?

Krishna: [00:18:52] I think particularly what the pandemic has shown us … Just the power of virtual and telemedicine was just quite remarkable. I think we’ll see more and more of that and more investments being made into companies that offer virtual care delivery, companies that offer convenient accessible care for patients and members, and so definitely more investments there. That will probably extend into just remote monitoring, and so being able to use things to be able to monitor not just members that are sick, but also the healthy, as well as the rising risk, and be able to intervene in a timely, more effective manner. So I’d say partnerships related to those two topics, I would expect to see more growth and more expansion there.

Telemedicine as a platform … I think most people want a consistent telemedicine experience, and so we’ll see an ecosystem of platforms that’ll help members and patients seek access to care in a consistent, convenient experience. Certainly, the power of data, Andy’s mentioned, the regulatory forces that are unleashing the data in the landscape available to consumers, so being able to ingest it, being able to get insights from it, being able to convert it into useful information that can be presented timely from regulations like interoperability and price transparency, and certainly I’d say a continued movement toward vertical integration. A way for us to understand the health care dollar in totality and being able to … for the players to control more parts of it, whether it’s investments in providers and investments in other delivery mechanisms. I think we’ll see more of that as well.

Andy: [00:20:38] We’ve talked about the personalization of care. I think what we also need to recognize is that personalization of financing. We define affordability and value for our consumers. You see some new entrants and organizations really trying to have offerings that they believe are valuable and a different way to really think about how members, consumers, patients finance their care. I do think there are new entrant models that will play more on the financing and in the insurance side that drive and help someone manage the risk of the care that they have in different ways, above and beyond how we see major medical products offered in today’s space.

Heidi: [00:21:22] In the future, we expect that convergence of empowered consumers, interoperable data, and scientific discovery will lead to an unstoppable shift in our health care system, impacting all players in the health care ecosystem. I want to thank my guests, Andy Davis, Jason Wells, and Krishna Ramachandran, for joining me today on Tales of Transformation. Thank you so much.

Andy: [00:21:45] Thank you.

Jason: [00:21:46] Thank you, Heidi.

Krishna: Thank you.

Heidi: [00:21:49] Stay tuned as we continue our series exploring the future of health and trends transforming the industry.

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