Jul 9, 2018, 7:30 PM ETPanel

New Players Disrupting the Healthcare and R&D Landscape

Healthcare cost trends in the U.S. are currently unsustainable, driving disruption through labor substitution, generic drugs, and biosimilars.
Government insurance markets (Medicare Advantage, Medicaid, and exchanges) are the primary drivers of insurer market capitalization growth over the last five years.
Anticipated policy changes regarding pharmaceuticals and Medicare Part B are viewed as significant future disruptors.
Biomedical innovation pipelines are robust, though market capacity to sustain growth and pay for new therapies remains a key concern.
Algorithm-based care and information technology are becoming foundational underpinnings for organizational strategy.
The industry is shifting payment models from volume-based (fee-for-service) to value-based and capitated models (e.g., lump-sum payments for specific conditions like breast cancer).
Three primary vectors of disruption are identified: the need for new skill sets (IT sophistication), corporate transformation (M&A), and "white space" entrants (e.g., the Amazon/Berkshire/Walmart partnership).

Intermountain Healthcare (Mark Dr. Mark McClellan)

Intermountain takes full financial risk on approximately 750,000 lives, including 100,000 Medicaid members in Utah.
The organization is launching a not-for-profit, stand-alone generic drug company to address shortages and pricing volatility.
More than 70 health systems have joined the initiative; 50% are willing to invest $10 million as founding members, with capacity for 10 initial investors.
The new entity aims to serve a network of over 600 hospitals with a focus on drugs where patients suffer the most.
Intermountain's model involves 1,700 employed physicians and 3,500 affiliated physicians, with 900,000 members in its health plan.
The organization is expanding telehealth services into five Western states.

CVS Health (Tom)

U.S. healthcare spending currently represents 18% of GDP ($3.3+ trillion), with projections indicating a 2-3% GDP increase over the next 5-7 years.
CVS aims to bend the healthcare cost curve by holding the baseline first, enabling reinvestment in long-term solutions.
Adherence rates for drugs drop from >98% in clinical trials to <50% in the open market due to a lack of ecosystem support.
Pharmacists interact with patients (e.g., diabetics) 18-24 times annually, compared to only 4-5 times for primary care physicians.
CVS plans to retool pharmacies into community access points, expanding pharmacist scope of practice and reducing administrative burdens on clinical staff.
The merger aims to leverage existing consumer behavioral patterns rather than forcing patients to create new ones.
The goal is to achieve customer service levels comparable to Apple's retail experience.

Oscar Health (Mario Kuniski)

Since the advent of the ACA in 2014, only 1 in 25 new insurance companies (including 24 government co-ops) have survived.
Oscar has built a full-stack, in-house technology infrastructure, avoiding outsourcing of claims, medical management, and underwriting.
The company currently serves 250,000 members with over $1 billion in revenue, primarily in the individual market.
4% of Oscar members utilize telemedicine in any given week, a rate that typically takes the broader insurance industry a year to achieve.
Approximately 66% of routine conditions (e.g., conjunctivitis) are treated via telemedicine.
80% of members who visit the ER have had a prior digital or concierge touchpoint within seven days of the visit.
Oscar operates with 25 different sales channels, including brokers, despite high broker commission costs (3-6%) compared to insurer margins (2-5%).
The company is building narrower provider networks to deepen engagement and reduce costs.

ASTAR, Singapore (Benjamin)

Asian countries spend 4-6% of GDP on healthcare, projected to rise to 6% in Singapore within five years (a 50% dollar increase).
East Asia faces rapid aging and a surge in chronic diseases, with diabetes projected to affect 1 in 5 people by 2030.
Non-traditional entrants include Alibaba and Tencent (digital health), Ping An (30 million health records), and Samsung (biologics manufacturing).
Singapore has implemented precision medicine reimbursement for a specific genetic test (carbamazepine/Steven Johnson syndrome) after 1.5-2 years of health economic studies.
The region maintains conservative technology adoption, prioritizing value-based reimbursement before widespread implementation.

GE Health (Sue Sanger-Samuelson)

GE acts as both a technology provider and a self-insured employer covering over 500,000 lives.
Disruption is accelerating due to digitization, requiring a shift from centralized to distributed business models (hospital to retail to home).
The trend is moving from Capital Expenditure (buying equipment) to Operating Expenditure (consuming services like teleradiology).
GE is shifting focus from static, "dumb" devices to smart, connected wearables that feed directly into EMRs.
The primary driver of disruption is the expectation for "tap and swipe" consumer experiences, currently missing in healthcare.

Collaboration: Competitors are increasingly working together in non-competitive areas to accelerate change, replacing the traditional "zero-sum" mindset.
Localization: Successful models require tailored solutions that account for specific cultural and behavioral norms of local populations.
Personalized Care: The individualization of the economy (freelance work, direct-to-consumer models) is expected to drive pressure for individualized healthcare products and pricing.
Medicaid Reform: State executives are prioritizing Medicaid, which consumes nearly one-third of state budgets, by shifting care to lower-cost primary care settings to avoid emergency room utilization.
Preventive Care: Intermountain is reorienting its primary care business to be purely preventative, though the transition is estimated to take 5-6 years.
Regulatory Innovation: The regulatory framework created by Medicare Advantage is viewed as a catalyst for market creativity, suggesting further regulatory innovation could be beneficial.
Technology in Asia: Wearables and monitoring systems are seen as critical for keeping patients out of acute hospital settings and managing care at home.

Data Interoperability: Current healthcare data systems rely on bulk, quarterly data loads with high error rates (30% wrong phone numbers), hindering real-time workflow integration.
Cultural Adoption: Digital health adoption faces significant hurdles regarding demographic differences in comfort with technology, particularly among older populations.
Data Quality: Patient records are often too "dirty" to support reliable predictive analytics without significant infrastructure rebuilding.
Consumer Financial Risk: The rise of high-deductible plans has shifted $1,000+ deductibles to 50% of Americans, with insufficient tools to help consumers manage pharmacy costs at the point of care.
Amazon Uncertainty: While Amazon's supply chain and data capabilities are powerful, concerns exist regarding the difficulty of execution, privacy regulations, and the impersonal nature of tech giants versus the trust required in healthcare.
Financial Toxicity: Patients are increasingly avoiding care due to cost concerns, contributing to healthcare as a leading cause of personal bankruptcy.