Consolidations, Mergers, Acquisitions: Healthcare will Never be the Same (And That’s A Good Thing)

Healthcare consumerism, abundant and cost-effective technologies, and the need for new or improved revenue streams are, in part, the motivation for the recent flurry of healthcare industry announcements featuring businesses, some already in healthcare and others that are not, that have been the talk of the internet.

Each of the three areas—consumerism, technology and revenue—are bound together and nearly equally responsible for driving these new changes in the healthcare industry. I see this triad as three tips of the same spear, making in-roads, at more or less the same time, into the healthcare space with technology taking a slight lead in helping to advance each of the other areas.

Technology Promotes Healthcare Consumerism

Technology is making healthcare consumerism possible and driving the ways in which companies can more effectively deliver healthcare to those consumers.

Whether it’s the new Uber Health ride-hailing service for consumers who might otherwise not have a ride to a doctor appointment to the iPhone Apple Health Record, which puts patient health record ownership literally into the hands of healthcare consumers through a smartphone, technology is making what was difficult or impossible just a few years ago, simple and easy to accomplish today.

By using older technology, Uber may be able to secure the healthcare ride-share market. Whether you’re a Millennial or a member of an older generation, you pretty much want to communicate via text when it comes to healthcare. In fact, more than 92% of men and women in varying income ranges, from less than $30,000 to $75,000, have a basic cell phone, which, of course, supports texting. Using texting as the method to link healthcare consumers to rides is a great way to capture more of the market, even parts that are less sophisticated technologically.

Apple’s already-ubiquitous smartphone likely will gain even more market share and influence as more hospitals—as of this writing it’s 39—adopt Apple’s health record platform. It’s a brilliant move as healthcare consumers have made it clear that they not only want more say in their treatment options but want the healthcare experience to mirror the retail experience, as well.

A few weeks ago I wrote on the Amazon healthcare announcement, which brings the entire idea of employer self-insurance to a new level thanks to Amazon’s infrastructure and ability to cost-effectively deliver durable medical equipment, and prescription and over-the-counter medications to its employees. When launched, the program will be available only to employees of the companies involved in the effort, but I imagine that if the health insurance program is a success, we may be able to use Amazon’s 1-Click to buy it in the future.

Healthcare Consumerism and Technology Boost Revenue

Companies continually look for new revenue streams and one way to get there is by purchasing other companies in the same space. This move increases the footprint of both organizations, produces efficiencies that wouldn’t be possible as separate entities and allows them to sell to markets that are currently out of reach or impractical to pursue.

Recent discussions about the possibility of Walmart buying Humana touch on each of the three areas. While Humana focuses more and more on serving patients through less costly outpatient settings, Walmart appears perfectly poised to continue this move through its more than 5,300 stores in the United States, some of which already have retail clinics and accept a variety of health insurance, including Humana. If the purchase occurs, I imagine the retail clinics will take on even more importance as Humana’s chronic illness management initiatives easily could find a home in stores, which would make it easy and convenient for healthcare consumers to stay on top of their health issues, receive low-cost care, and fill prescriptions and purchase durable medical equipment all in one trip. And if you pick up some groceries and a flat-screen TV before leaving, it makes the purchase just a bit more profitable for Walmart. (In addition, Walmart may or may not be looking to purchase a pharmacy company that provides mail-order medications to people with chronic diseases. Which ties in nicely with Humana’s chronic condition strategies and the possibility of expanding retail clinics into Walmart stores.)

For health insurer Cigna, which recently purchased pharmacy benefit manager Express Scripts, the acquisition offers new and cost-effective ways for Cigna to generate new revenue as it removes links from the prescription medication supply chain, making it easier for health plan members to get the medications they need.

The End Game

These are a few of the recent announcements shaking up the healthcare industry. And there are surely more to come in the weeks and months ahead.
It’s important that this confluence of deals come together to create a better experience—and lower costs—for the healthcare consumer. Impacting the nation’s healthcare spend is especially important when you consider how much money we collectively dedicate to healthcare each year. In 2017, we spent $3.58 trillion on it in the U.S., an increase of nearly 5% compared to 2016. So building more just to build more isn’t going to work and will, instead, harm healthcare and make it even more difficult for patients to understand and pay for healthcare than it already is.

While it’s still too early to say exactly how any of these developments will impact us at the doctor’s office, it’s safe to say that healthcare consumerism, technology and revenue stream development will continue to push the entire healthcare industry forward and bring new ideas and innovation to healthcare consumers. And that’s a good thing for anyone who needs to see a doctor.
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