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Healthcare Analytics: Tighten your belt as healthcare industry slows down … but stay hopeful

Rajib GhoshBy Rajib Ghosh

In my last article, I mentioned that the Affordable Care Act (ACA) dodged the bullet but the attack would continue after the first incarnation of American Healthcare Act (AHCA) failed on the House floor. It didn’t take long for the House to get the second incarnation ready and get that passed, albeit without the Congressional Budget Office (CBO) score. The Senate now has it, but apparently they are working on their own bill that pundits expect to be a complete rewrite of the House bill. Meanwhile, the CBO came out with its scoring of the new incarnation of the House Bill and found it to have a large, negative impact on the healthcare of the elderly and the poor with a projected 23 million people expected to lose health insurance over a 10-year period, including 14 million from Medicaid.

On the positive side, the bill is expected to reduce the deficit by saving overall healthcare costs, which is intuitive since a smaller number of high-risk or high-utilizer people would be covered by the bill.

With all the drama going on in Washington these days, it is unclear when a real and final bill would come out of the Senate for the public debate and subsequent implementation. It is unfortunate that during this time of uncertainty access to healthcare for many people will recede as the insurance companies, being unable to figure out their upcoming risks, would play it safe and move out of many state health insurance exchanges. Medicaid expansion states would not be affected during this period, but they would be the first to feel the brunt should the Senate bill follow the same line of thinking as the House bill.

Healthcare politics, health policy and healthcare technology, which includes analytics, go so much together in our country that it is impossible to separate them. Politics determine federal and state policies, which in turn dictate provider and payer behavior and their subsequent adoption of technology solutions. If we return to the era of volume-based care, many healthcare technology solutions such as population health management or analytics to reduce hospital readmission won’t remain a priority, albeit the trailblazers would surely continue that path. Providers want to do things better, but they might not focus on doing better things. In other words, transformational change that healthcare analytics usher in would lose momentum. So, it is important to track healthcare politics and policies and analyze their impact so we understand the future direction of healthcare analytics.

Imminent Slowdown in the Healthcare Industry

After several years of rapid expansion of the healthcare industry, which analysts say was fueled by high debt growth, the growth rate is expected to slow down in the coming years. The 308 percent debt growth since 2009 is not supported by the demand growth. Large investments went into brick and mortar acquisitions, job growth and rapid mergers/acquisitions.

A recent report published by John Burns Real Estate Consulting company identified the risk of the industry pulling back and its impact (see Figure 1). The risk has already started to manifest itself in a few news items that came out recently including the large sell off of hospitals by Community Health Systems. Coupled with the uncertainty in the rise of uncompensated care with the AHCA’s attack on Medicaid, it is quite clear that brick and mortar expansion of the provider network will slow down in the coming months and years. However, the load of chronic disease management won’t go away as the population continues to age. The brick-and-mortar-based healthcare delivery channel will transform to a lower cost, virtual-care model. This transformation won’t be possible without digital technology, advanced data analytics and, in the near future, use of artificial intelligence. That’s the good news for my colleagues in the field.

health care analytics

Figure 1.

Rapid Rise of AI Companies in Healthcare

The scope and the use of artificial intelligence in healthcare is increasing. The technology is making progress at a rapid rate. Innovators and investors are both building and funding new companies to accelerate the growth. Six years ago, I was exposed to the digital nurse avatar created at Northeastern University. I was fortunate to meet Professor Timothy Bickmore, whose research found that patients waiting for hospital discharge resonated well when the non-human “Elizabeth” interacted with the patients instead of a human nurse. The technology has only become smoother since then, as natural language processing (NLP) powers have increased. As a result “avatar with digital empathy” is gaining momentum. CB Insights recently reported 106 companies that are working on AI and machine learning in many areas of healthcare, from virtual nurses to drug discovery (see Figure 2).

healthcare analytics startups

A recent global trend study published by Tata Consultancy Services stated that 86 percent of provider organizations, life sciences companies and technology vendors are using AI in their solution stack to improve business operations. This trend will continue through 2020 and beyond. The road for AI is not free of challenges, however. For example patient privacy is a big issue; an uproar ensued after the data sharing deal between Alphabet’s DeepMind AI company and National Health Services (NHS) of the United Kingdom became known. Nonetheless, consulting firm Frost & Sullivan predicts that by 2025 AI systems could be involved in everything from population health management to digital avatars like what Dr. Bickmore showed me in 2011.

AHCA in its current House incarnation or after the Senate rewrite is expected to bring forward several of ACA’s provisions. Nonetheless, the threat of uncompensated care for hospital-based systems is real. The complexity of the American healthcare system value chain is such that it is hard to find a silver bullet that ensures access to care for all while reducing the cost of care delivery. The only option is rapid transformation with digital health and AI. Hospital bed days and pharmaceutical costs, two of the biggest contributors to the overall cost of care, will have to be reined in through efficient post-acute care management, reduction in drug discovery cost and policy changes.

On both fronts technology, data and analytics would be the game-changers, but they need to be embraced with an open mind. The cost of these technologies also needs to come down so that providers can achieve better ROI, faster. At the beginning, many things would not be perfect, but with rapid iterations, technologies would deliver on their promises. While I am issuing a word of caution for my colleagues in this field expecting an imminent slow down, I am also encouraging them to feel hopeful about the field for the next five to 10 years.

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.

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