gtag('config', 'UA-3783711-1'); Contact Us Medicare Advantage payers certainly have flexibility around ancillary benefits – like vision and dental and certain out-of-pocket costs – but compared to other segments (ACA Exchange population excluded), Medicare Advantage players have limited ability to differentiate based on benefit design. That can partly be explained by the job that employers hire health benefits to solve. If disruptive innovation were to increase the fragmentation of the health care system (even more so than it already is! These are the sectors where new business models are being created, new capabilities around understanding the consumer are being put to the test, and where a holistic approach to managing long-term health is yielding promising results. Few would expect that a government controlled part of the healthcare market would be where disruption is happening—but that is exactly what is taking place. Commercial health plans typically include very broad networks – meaning they include substantially all hospitals and the vast majority of physicians within a given geography. Narrow networks were part of the HMO experience in the late 1990s and in part the backlash from this past experience leads benefits managers to look elsewhere for cost-saving techniques. Disruptive innovations in healthcare can influence a new system that provides a continuum of care focused on each individual patient's needs, rather than focusing primarily on complex disorders and urgent health crises. But in order to fund it all, providers remain in a never-ending loop of pursuing efficiencies and raising capital—all in the hopes of stealing market share. Total outpatient visits, including ER and home health visits, increased from 3 million in 2014 to 3.6 million in 2016. On the way out, Eddie agreed at the front desk to set up a check-in appointment for six months. The implications are far-reaching, as this new system changes the basis of competition in the economy’s largest sector, leading to new growth opportunities outside the scope of traditional healthcare delivery. Just 0.65% of these investments have focused on helping payers and providers deploy new technology that enables them to practice population health management. The tradition of visiting your doctor for an annual checkup is fine, but there are potentially many missed opportunities in between—an area that we call “non-consumption.” If there were a lower-cost alternative to seeing a highly-paid physician, there could be a way to serve consumers more often. The patient and health coach determine the topics for the visit and take the lead when meeting with the physician to ensure what matters to the patient is covered. This article is part of our coverage of the 2019 Morningstar Investment Conference. You may review our, Develop Innovation Capabilities for Repeatable Growth. This results in a Catch-22 situation. In many markets, leading physicians operate at above full capacity. As an employee benefit, health insurance is a solution to the employer’s job to be done of attracting and retaining talent. In the classic path of business disruption, innovators take a complex, high-priced service and offer it with more convenience and at a lower price. For a patient who just needs an examination, treatment and prescription for a minor illness, or a routine vaccination, physical or screening—a retail clinic is a convenient and low-cost alternative to a doctor's office or urgent care visit. The aggregate rise has taken a huge toll. There’s no way to escape it: Attracting more patients while investing in new kinds of services as margins dwindle is initially taxing on an organization, because the payout is often far away (see J-curve). Health insurance is typically purchased once a year, with the buying decision often being made by an employee benefits manager, or someone other than the end user. That’s why so many providers are adopting a wait and see approach. Innovation Surviving Disruption in Health Care The fast-paced disruption of the internet economy is encroaching on America’s hospitals By Kenneth Kaufman. Despite the regulatory uncertainty surrounding health care, the examples and evidence we’ve shared provide strong reason to believe that creating the Disruptive Healthcare Delivery System is within reach. Regulatory changes have aimed at shifting costs and risks around the system yet have largely missed the true nature of the problem—the fundamental disconnect between what patients need in order to maximize their health and what they actually get as consumers: more services and treatments that generate revenue. Only a mere fraction of a fraction of 1% of those investments have focused on empowering and engaging consumers to play a more active role in managing their own health. will experiment first among their own employee populations. GAM Investments’ Christophe Eggmann explains why he believes this is about to change abruptly and identifies some of the themes and investment opportunities that are expected to play out. Andrea Park - Thursday, July 25th, 2019 Print | Email. Costs are too high and rising. Disruptors spend more in certain areas than incumbents, with an understanding that these upfront investments will drive significant long-term cost savings. For a more sustainable approach to change, we recommend a model detailed in the new book from Innosight, Dual Transformation: How to Reposition Today’s Business While Creating the Future. 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