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Analytics Magazine

Healthcare Analytics: Healthcare industry continues to change

September/October 2015

… which is good news for data scientists

Rajib GhoshBy Rajib Ghosh

Recently, the healthcare industry experienced developments that are both interesting and thought-provoking. Some leading health insurance companies have announced merger and acquisition deals, IBM added new capabilities to its Watson Expert System, and Google separated its newly formed life sciences unit from its core business. The healthcare provider market continues to consolidate as big health systems get bigger with the acquisitions of hospitals or provider practices. Clearly, the industry is undergoing rapid shifts in the post Affordable Care Act (ACA) world.

This is not uncommon when both demand and supply in an industry undergo rapid transformation. On the demand side, the ACA has introduced millions of newly insured people who bought insurance either via health information exchanges or through the Medicaid expansion program. On the supply side, health systems, driven by payment reform, are forced to focus on care outside of the hospital walls. Meanwhile data is becoming more important in healthcare both for care delivery and for payment organizations.

Consolidation in the Insurance Industry

The recent merger announcement of Anthem and Cigna made headlines. Prior to that Aetna and Humana also made headlines with merger talks. Those four and United Healthcare together cover 40 percent or more of all Americans. The merger will shorten the list to three. While the antitrust division of the Department of Justice will scrutinize all deals – and the closing of those deals, if approved, will be almost a year away – arguments on both sides of the proposals are becoming louder. It is clear that such mega mergers will leave consumers with fewer options in many markets. If insurance companies create monopolies like utility companies, the impact on product pricing can be significant. However, less competition is not necessarily bad.

Will data scientists emerge as key figures in efficient healthcare delivery?

Less competition definitely gives more pricing power to the seller, but healthcare is a complex industry and consolidated entities are actually welcome. The Affordable Care Act encouraged healthcare delivery and payer organizations to join hands and create accountable care organizations (ACO) for better-coordinated care for patients at a lower cost. Bigger health systems can negotiate higher reimbursement from the commercial insurance payers. The latter will surely pass along the cost to the end consumers. When payers become bigger they negotiate lower costs and force providers to move to value-based care rather than volume-based care. To put this into perspective, other than Medicare’s modest success in value-based purchasing, the commercial insurance market so far has minimally treaded the value path. Besides, insurance regulators have checks and balances in place and can intervene if insurance companies do unwarranted price hikes or pocket huge profits from the lower costs.

The other benefit of getting bigger is access to more data than before. When data is fragmented among various insurance payers and provider organizations within a given region, population health analytics becomes less effective. Consolidation of the payer industry will enable more analytics and hopefully better health management insights within different geographical markets.

Image Analytics in Healthcare

IBM recently purchased Merge Healthcare, a company focused on X-ray, CAT scan and other medical image storage and analysis software. IBM so far has made some headway into the healthcare market via various partnerships with Medtronic, Johnson & Johnson and Apple, but it still has not proven the value of a medical expert system. On paper, the potential is enormous, and Watson is a harbinger of what can be expected in healthcare within a decade, but IBM wants to create more value for its customers now. Adding the ability to analyze images in conjunction with structured or unstructured text data and detect with precision what a manual assessment might have missed will be a huge value proposition for Watson.

IBM claims that 90 percent of medical data comes from images, so clearly a big chunk of the medical data is currently absent from the purview of data analytics and automation. It will be interesting to see if Merge Healthcare’s solution seamlessly integrates with the knowledge engine of Watson, and if so, whether this can give rise to a new genre of analytics companies.

Google Life Sciences

In a recently announced corporate restructuring effort, Google has made its Life Sciences organization into an independent company and part of Alphabet, the newly formed holding company or “house of brands.” Google has been working on its contact lens glucometer solution for quite some time. Larry Page, the CEO of Alphabet, wants to scale his aspiration higher.

Data and analytics drive Google. The Life Sciences division was created to make healthcare more proactive, predictive and preemptive rather than reactive. Google (or Alphabet) will continue to invest heavily in this data and its analytics-focused healthcare unit to build smarter data mining solutions that will take input from various bio-signals.

Supporting ecosystems such as body sensors, ambient sensors and gene sequencing technologies are developing rapidly. These sources are on the verge of creating a data tsunami that only large data-focused corporations like Google with massive infrastructure and talent pool will be able to absorb and leverage. The contact lens glucometer is only the beginning of Google’s journey. Turning this division into an independent business unit with its own CEO is a game changer. In the future, healthcare data scientists will find lucrative job opportunities and ample scope to create impact in this outfit.

Overall, the changes we see now have the potential to create a far-reaching impact on the U.S. healthcare system. As a consumer and a data analytics professional, I feel excited rather than intimidated by such changes. It is reinforcing my core belief that healthcare is a data play, and very soon medical data scientists will become as important if not more important as front-end clinicians in delivering better patient care.

 


Rajib Ghosh (rghosh@hotmail.com) is an independent consultant and business advisor with 20 years of technology experience in various industry verticals where he had senior-level management roles in software engineering, program management, product management and business and strategy development. Ghosh spent a decade in the U.S. healthcare industry as part of a global ecosystem of medical device manufacturers, medical software companies and telehealth and telemedicine solution providers. He’s held senior positions at Hill-Rom, Solta Medical and Bosch Healthcare. His recent work interest includes public health and the field of IT-enabled sustainable healthcare delivery in the United States as well as emerging nations. Follow Ghosh on twitter @ghosh_r.

 

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