As we head to the beach to recharge the batteries, it’s a good time to reflect on what has changed in U.S. healthcare since last summer, and what opportunities lie ahead for entrepreneurs and investors. [Disclosure: New Atlantic Ventures, in which I am a partner, has an investment in Qliance, one of many companies mentioned in this post.]
Our $3 trillion health care economy is morphing as we watch, driven by intolerable cost levels, consumer activism, digital technology, and health care reform. The past year brought some of the biggest milestones:
• The public exchanges launched. It was a classic government FUBAR, but the federal exchange eventually worked, and some state exchanges actually worked well. Eight million people signed up, exceeding the goal (1).
• More quietly, private exchanges have become significant: online benefits purchasing sites sponsored by employers or health insurers.
• Medicaid expansion happened, in about half the country anyway. The number of people without health insurance in the U.S. declined by 20%-25% (2), due largely to Medicaid expansion plus the exchanges. I doubt this expansion will be rolled back, and I expect that over time the “red” states will come to the table in one way or another. Managed Medicaid is expanding rapidly, and while the impact of this is not yet clear from national studies, insiders tell me that the opportunity to both save cost and improve health status is large.
• Providers have come to realize they are risk-bearers. At conferences this year I repeatedly heard leaders from the provider side say that bearing risk is the future and it is here now. This takes many forms: ACOs, penalties for readmission of Medicare patients, risk-sharing agreements with insurers, bundled payments direct from self-insured employers, etc. This has profound consequences for health insurance markets: why channel everything through insurers, when the providers bear much of the risk, and many employers bear risk too?
• Quantified self is now a major meme: FitBit and Pebble are doing well. AppleAAPL -0.16% and Google GOOGL -0.38% announced enhancements to their mobile OS products that support gathering and processing of health information.