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2020 Trends from SHSMD: New Entrants

By The SHSMD Team posted 01-28-2020 11:29 AM

  
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The health care field reaches approximately $3.65 trillion in the United States, larger than the entire GDP of many countries. In addition, private equity is purchasing medical practices at record rates. Some analysts have even tied the increase in surprise billing at least in part to these investments. It’s no surprise, then, that new organizations are seeking to enter this potentially lucrative market and that existing organizations are pivoting into health care. 

Hospitals and health systems face the choices between competing, collaborating or combining with them in an atmosphere of volatility, uncertainty, complexity and ambiguity (VUCA). The wrong choice, it appears, is to ignore them. And who are they?

So far we have seen….

New Organizations

Optum, which employs 46,000 primary care providers, is a pharmacy benefit manager and care services group that has recently acquired various companies such as The Advisory Board, MedExpress and DaVita Medical Group. It aims to provide seamless patient experiences throughout all aspects of health care, including financing care. 

Haven Healthcare is the health care joint venture among Amazon, Berkshire Hathaway and JP Morgan/Chase. At the moment, it is focused on the 1.2 million covered lives of their employees and their families (at an approximate annual cost of $4 billion) but could end up developing and commercializing solutions. Amazon, in particular, is known for testing its ideas internally and then commercializing them if it sees a market opportunity. Haven’s leaders are virtually unanimous in saying that they want to drive long-term change and that they are starting slowly, a significant difference from Facebook’s “move fast and break things” motto that has become a Silicon Valley mantra. 

Alphabet, Google’s parent company, is collaborating with the Mayo Clinic on applying artificial intelligence to diagnostics and research. It is also partnering with Suki, a voice-based assistant, on ways to improve clinical documentation and acquired Fitbit, indicating an interest in health monitoring. 

Many different organizations, including ChenMed, One Medical and Oak Street Health, are looking at ways to disrupt primary care, especially for the Medicare population. By adopting a value-based approach rather than fee-for-services, these organizations profit from reductions in high-cost services. Part of their strategy includes smaller patient-physician ratios, providing more time for appointments and the use of health coordinators/coaches. 

New Directions for Retailers

In addition to being part of Haven, Amazon is also entering health care in AI development for transcriptions and diagnostics; cloud services, including virtual care; and pharmacy services through PillPack. 

At first glance, Best Buy is one of the less intuitive entrants into health care. However, given its experience in electronics sales and in providing in-home service through its Geek Squad and In-Home Advisors, it makes sense that they want to diversify their reliance on retail. In particular, they’re moving into providing health support for the rapidly-growing market of older Americans. 

After the original pilots in Houston, CVS, which has over 10,000 locations in the United States, has announced that it will open HealthHUB services in 1,500 locations over the next few years. These hubs are designed to offer 80 percent of the services that a primary care physician’s office offers. CVS also announced that it is starting clinical trials of a home dialysis service. Walgreens, too, is adding more health services to its locations. Like Best Buy, it is concentrating on the senior market. 

Walmart has opened two Walmart Health standalone clinics in Georgia and announced plans to open more. While this is slow progress, Walmart is the largest retailer in the United States with more than 5,000 locations and $388 billion in US sales. Gregory Hudson, FACHE, network chief strategy officer at St. Luke's Hospital in Chesterfield, Mo., notes that if Walmart continues to expand these, “It will really shake up local markets, especially those in urban and rural areas (areas where there might be a higher concentration of population in lower socioeconomic situations).”

Apple added heart monitoring capabilities to the Apple Watch and is also piloting experiments with monitoring other health indicators. It is also providing consumers with access to their health records through their Apple phones and a health-coaching app, Attain. Higi offers approximately 11,000 health stations for monitoring, including ones at retail outlets, including pharmacies and grocery stores and through its app and describes itself as “a fourth network of health care.” It recently started a partnership with Livongo. 

Maybe in your market, there are other new entrants that are causing disruption for your organization.  Share your story with the SHSMD community and keep the conversation going with your peers.

Strategic questions to ask
Beyond these examples, are there other new entrants in our market?
Should our strategy be to compete, collaborate or exit?
How do we create new opportunities?

For more information and inspiration, check out SHSMD’s full collection of resources on growth strategies, strategic planning, change management and innovation/new models of care. SHSMD’s tools on these topics include presentations, articles and case studies, webinar recordings and reports.  The AHA Center for Health Innovation’s Market Scan newsletter regularly includes information on new entrants to health care. 

For insight into five-year trends, read SHSMD’s Futurescan, free for SHSMD members.

Want to discuss this trend, ask colleagues about who’s doing what, validate your thinking with peers or share your perspectives? Please join the discussions on MySHSMD, a lively members-only discussion list.  
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