- Currently, 84% of Fortune 50 companies are involved in healthcare, up from 76% in 2013, according to a new report by PwC’s Health Research Institute (HRI).
- Last year saw a total of 967 deals in the U.S. health services market. Notable examples include UnitedHealth Group’s acquisitions of Optum and DaVita Medical Group and Cigna’s purchase of Express Scripts.
- The report divides recent transactions and partnerships into four categories: vertical integrators, employer activists, technology invaders and health retailers.
The report highlights the integration trends shaking up the healthcare industry and the ways big name brands are looking to move into the space.
Vertical integrations like the UnitedHealth and Cigna deals and the proposed CVS Health-Aetna merger create new capabilities and efficiencies by providing access to data and services in pharmacy benefits, claims, consumer preferences, value of care and more. The report notes several vertical integrators have said their new scale and negotiating power will allow them to reduce costs of services and products, although experts say such results require levels of execution that are difficult to achieve.
Employer activists include Amazon, J.P. Morgan and Berkshire Hathaway, which announced plans to form an independent company to lower their employees’ healthcare costs. The report echoed skepticism from the industry on the partnership's abilities, noting that while these employers are large and have ample resources, they still have relatively modest negotiating power. "You can’t just be a big company. You need to have effective purchasing power focused in a particular area to be able to drive costs down,” Paul Fronstin, director of EBRI’s health research and education program, told HRI.
Employers taking this track should consider ways to get buy-in from employees, according to the report. In an HRI survey, 67% of consumers reported they would be more inclined to get a flu shot or annual health exam if they earned rewards for doing so.
Amazon falls into the category of technology invader, selling branded, over-the-counter medical products and offering discounted Amazon Prime subscriptions to Medicaid enrollees. Other examples include Uber and Lyft, which have both ventured into healthcare with patient shuttling services.
More than half of consumers surveyed said they believe technology companies can improve the patient experience, reduce costs, simplify healthcare and increase their access to personal health information. But they also expressed concerns about the quality of products and services offered by tech companies and privacy of their information. For example, 36% said they would not be very comfortable getting diagnostic tests through a tech company and 36% were uncomfortable with the idea of a virtual doctor visit.
Consumers are, however, embracing health retailers like CVS Health, Walgreens Boots Alliance and Walmart. Slightly more than half said they would be very or somewhat likely to get a wound treated or get staples or stitches at a retail clinic, and 61% said they would use an at-home strep test purchased at a retail store. Payers like CVS are banking on these loyal retail customers to drive increased use of basic healthcare services at clinics.
One-fourth of those surveyed said they would be much more likely and 40% said they would be somewhat more likely to have a repeat elective treatment if a discounted subscription plan was available. Companies are picking up on that concern. For example, CVS is partnering with providers like Cleveland Clinic to help manage customers’ chronic conditions.