H E A L T H W E A L T H C A R E E R

FOR OFFICIAL USE ONLY

H E ALT H C A R E I N N O VAT I O N

I M P A C T S O N T H E D E L I V E R Y A N D M A N A G E M E N T I N H E A L T H C A R E T H R O U G H I N N O V A T I O N

M i c h a e l B . G a r r e t t , M S , C C M P r i n c i p a l A p r i l 2 0 1 7

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M I C H A E L B . G A R R E T T, M S , C C M P R I N C I PA L

Michael Garrett possesses more than 30 years of experience in managed care, care/case management, utilization management and review, chronic condition management, health information technology, healthcare quality, and population health management services. This has included operational leadership, business development, and consulting roles. His experience includes developing and implementing new care delivery models, such as patient centered medical homes and accountable care organizations (ACOs). Michael has experience working in a range of benefit programs, including self-funded health plans, workers’ compensation, Medicaid, and Medicare. He currently serves on URAC’s health standards committee and the editorial board of Professional Case Management. He has served as an author, editor, and contributor on six case/care management books as well as the author of numerous journal articles in the field.

Michael holds a Master’s degree in clinical psychology from the University of Idaho and a Bachelor’s degree in psychology from Gonzaga University. He is also a Certified Case Manager and a Nationally Certified Psychologist.

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P R E S E N TAT I O N O B J E C T I V E S

• Provide an introduction and background on healthcare innovation

• Identify the risks and opportunities of healthcare innovation

• Describe the explosion of innovations on the healthcare market by segment/domain

• Discuss the impact of healthcare innovation by stakeholder, including consumer, providers, administrators and plan sponsors

• Identify how the innovation adoption cycle impacts plan sponsors in embracing innovation

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27%

17%25%

14%

7%10% Unnecessary Services

Inefficient Care DeliveryExcess Admin. CostsInflated PricesPrevention FailuresFraud

$750 billion; 1/3 of total cost

…WITH GAPS IN QUALITY

T H E C A S E F O R I N N O VAT I O N

PERSISTENT COST PRESSURE

Preventive Health

Acute Care

Chronic Care

Patient Compliance 50% 70% 60%

Care Delivery 99% 70% 80%

Efficiency 50% 49% 48% B E F O R E P L AN

C H AN G E S AF T E R P L AN

C H AN G E S

I N F L AT I O N E AR N I N G S

…AND SYSTEM WASTE

Institute of Medicine – Best Care at Lower Cost: The Path to Continuously Learning Health Care in America

ADVANCEMENTS IN TECHNOLOGY

Everyday use of mobile apps

Emergence of cloud technology

“Big Data” deployment

Memorable experience

Immediate gratification

Desire for personalization

CHANGES IN CONSUMER PREFERENCE = DISRUPTIVE

INNOVATION

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Digital Health Venture Funding:

2012 2015

$1.1B

$4.5B

$1.5B

$2.0B

2013 2011 2014

$4.3B $4.5B

1 Rock Health

D I G I TA L H E A LT H R I S I N G 1

• $4.5B in 2015, and over 2x higher than 2013

• Digital health accounts for 7% of total venture funding

• In 2015, 247 digital health companies each raised more than $2M

• Healthcare consumer engagement and personal health tools and tracking categories accounted for 23%

• 40% of activity is taking place in California’s Bay Area, followed by Boston and NYC

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H E A LT H I N N O VAT I O N O F F I C I A L LY A “ B U Z Z W O R D ? ”

“Innovation means never having to say you are sorry.” — Eric Grossman, Mercer (2012)

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H E A LT H I N N O VAT I O N C U R R E N T S TAT E O F E M P L O Y E R ( A N D C O N S U LTA N T ? ) I N N O VAT I O N

TRAILBLAZERS, at the leading edge of

health benef its innovation and driving the direct ion

of the road…

Trai lb lazer

T r a i l b l a z e r

…while many are EVALUATING from the

sidel ines, and looking for solut ions that are ful ly

tested/tr ied/true.

Evaluator

E v a l u a t o r E v a l u a t o r

E v a l u a t o r

Evaluator

E v a l u a t o r E v a l u a t o r

Evaluator Evaluator

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M A R K E T T R E N D S “ E X P L O S I O N ” O F I N N O VAT I O N

E M P O W E R E D C O N S U M E R

T O TA L W E L L - B E I N G

C O S T D R I V E R S

P E R K S

Emerging Innovation Trends

• Digital navigation & gamification • Advocacy/concierge • Quality provider navigation • Expert medical opinion

E N G AG E M E N T

• Mental and emotional health • Resiliency • Financial wellness • Family health, fertility

H E ALT H I M P R O V EM E N T

• Chronic disease • Musculoskeletal • Oncology • Centers of Excellence

M AN AG E C O S T

• Onsite services • Child care • Personal pampering/relaxation • Entertainment

AT T R AC T I O N & R E T E N T I O N

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The r isks of innovat ion

Will this fit my company culture?

So many new options – where do I start?

How do I fit it within my broader strategy?

Will this cost me a lot to implement?

What if it fails?

How will this impact my career?

H E A L T H I N N O V A T I O N W E I G H I N G T H E R I S K S A N D O P P O R T U N I T I E S

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Broad regulatory changes 1

Dramatic changes to payor/ provider roles 2

Multi-generational behaviors and needs 4

Industry consolidation (carriers and beyond) 5

Growing consumer accountability / expectations 3

Perhaps…not innovating is riskier than innovation itself

Unprecedented Industry Change New Players And New Options

H E A LT H I N N O VAT I O N W E I G H I N G T H E R I S K S A N D O P P O R T U N I T I E S

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…versus innovation portfolio diversification

Putting all of your eggs into one basket… (Strategy, vendor, etc.)

Low/Medium

Medium/High

High

High

Low/Medium

Low

Long-term risk

Return potential

Flexibility

Innovation is a Way of Diversifying Your Healthcare Portfolio

H E A LT H I N N O VAT I O N W E I G H I N G T H E R I S K S A N D O P P O R T U N I T I E S

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I N N O VAT I V E A P P R O A C H E S P R O V I D E A C T I O N A B L E C O S T C O N TA I N M E N T L E V E R S F O R E M P L O Y E R S A P L AT F O R M F O R A C T I O N

Condition Focus Emerging Core Components Across Programs

Navigation

• Directing members to the right solution at the right time

Type of Program

Advocacy

• Concierge level assistance to streamline the member experience

Delivery Infrastructure

• Delivery either through an employer-sponsored plan or an exchange

Incentives/Challenges

• Intrinsic or extrinsic motivators to promote program engagement

Communications

• Broad-based or personalized marketing materials to promote programs

Physical Activity/Wellness

Financial Wellbeing

Sleep

Weight/Nutrition

Resiliency/Mental Health

Condition-specific (e.g., Diabetes)

Pregnancy/Family

Smoking

Pharmacy

Transparency

Telehealth

2nd Opinion

Care Coordination

Onsite/Near-site

Narrow Networks

Centers of Excellence

Nar

row

Bro

ad

Nar

row

Bro

ad

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H E A LT H I N N O VAT I O N W E I G H I N G T H E R I S K S A N D O P P O R T U N I T I E S

NEW PLAYERS AND NEW OPTIONS

M E M B E R Smok

ing

Advocacy

Employer-Sponsored/Exchange

Communications

Incentives/Challenges

Navigation

Assessments/Testing

Broad

Big Data Analytics

Provider- Focused

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P L A N N I N G TO I N N O VAT E — “ T H E H O W- TO ” F O C U S I N G Y O U R I N N O VAT I O N E F F O R T S

RISK

COST

Low Risk 62% of members

Low Cost 12% of cost

Medium Risk 34% of members

Medium Cost 47% of cost

High Risk 4% of members

High Cost 41% of cost

WHAT PARTS OF YOUR POPULATION? WHAT ELEMENTS OF THE PROGRAM DESIGN AND DELIVERY?

Targeted point solutions (specific condition or mode of service delivery)

Provider network contracting/ administration

Member portal / engagement tools

Care management

Customer service / advocacy

Claims administration

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P L A N N I N G TO I N N O VAT E — “ T H E H O W- TO ” H E A LT H I N N O VAT I O N E M P L O Y E R P R O TO T Y P E S

Organizations at the leading edge of health benefits

innovation; actively disrupting traditional roles with an

interest in driving industry-wide change

A S P E C T R U M O F AP P R O AC H E S TO I N N O VAT I O N

“The Disrupter” “The Tester” “The Concentrator”

Organizations that are focusing their innovation efforts around

specific elements of the healthcare ecosystem (e.g., value based care,

transparency). Focus may be driven by philosophical or bandwidth considerations.

Organizations that are generally maintaining underlying program infrastructure, but are testing/

implementing one or more targeted point solutions to

address specific workforce or cost issues.

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I N N O VAT I O N A N D I N F O R M AT I O N

• Innovation and technologies are impacting the four kinds of information that matter in healthcare – Information about the state of your internal systems (from your imaging and

lab-test results, your genome sequencing) – The state of your living conditions (your housing, community, economic and

environmental circumstances) – The state of the care you receive (what your practitioners have done and how

well they did it, what medication and other treatments they have provided) – The state of your behaviors (your patterns of sleep, exercise, stress, eating,

drinking, sexual activity, adherence to treatments)

© MERCER 2017 16

HOME WORK/RETAIL PROVIDERS HEALTH PLAN

Biometric Testing

Provider House Calls

Onsite/ Near-site

Pharmacy

COE Narrow Networks

EMR Pharmacy Benefit Mgmt.

Mental Health

Nurseline

Disease Mgmt.

Care Mgmt.

Doctors Hospital ACOs

Retail Clinic

EAP Dental

Non

-clin

ical

C

linic

al

Telemed

Apps Nutrition/ Meal Prep

Wearables/ Trackers

Exercise Equipment

Social Support

Gyms Consumer Ratings

Grocery/ Farmer’s Markets

Spas

Workplace Challenges

Community Resources

Education/ Awareness

Wellness Cost Transparency

Concierge/ Navigation

Incubators, Accelerators, Investors, Entrepreneurs, NGOs, Associations

T H E C O N N E C T E D H E A LT H C A R E N E I G H B O R H O O D

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S E N S O R Y E N H A N C E M E N T I N N O V E G A ( V I S I O N ) S O U N D H A W K S C O O P , R E S O U N D ( H E A R I N G )

P H Y S I C A L M E A S U R E M E N T F I T G U A R D ( S M A R T C O N C U S S I O N M O U T H G U A R D ) S P I R E ( B R E A T H I N G , S T R E S S ) L U M O L I F T ( P O S T U R E , A C T I V I T Y ) A L I V E C O R ( E C G H E A R T M O N I T O R ) H E D D O K O , H E X O S K I N , C I T Y Z E N , O M S I G N A L , A T H O S a m o n g m a n y o t h e r s ( E M B E D D E D C L O T H I N G ) L ’ O R E A L M Y U V P A T C H ( M E A S U R E U V E X P O S U R E ) O M R O N ( 2 4 / 7 R E A L T I M E B P M O N I T O R )

F I T B I T , J A W B O N E , G A R M I N , M I S F I T a m o n g m a n y o t h e r s ( A C T I V I T Y , S L E E P ) O U R A ( S L E E P ) S E N S O R I A ( F I T N E S S , R U N N I N G )

P S Y C H O L O G I C A L M E A S U R E M E N T S M A R T C A P ( F A T I G U E ) M U S E ( B R A I N F I T N E S S ) E Q U I V I T A L ( S T R E S S ) H U M A N Y Z E ( B E H A V I O R ; E E B A D G E )

I N G E S T I B L E S P R O T E U S ( D R U G A D H E R E N C E ) P I L L C A M ( P H O T O G R A P H I C C O L O N O S C O P Y )

P H Y S I C A L R E H A B I L I T A T I O N L U M I W A V E ( I N F R A R E D H E A T T H E R A P Y ) H I N G E H E A L T H ( P H Y S I C A L T H E R A P Y )

S M A R T W A T C H E S A P P L E , S A M S U N G , P E B B L E , M O T O R O L A , a m o n g m a n y o t h e r s ( C E L L P H O N E E X T E N D E R S , A C T I V I T Y )

A P P S M Y F I T N E S S P A L , N I K E + , O V U L I N E , M A P M Y F I T N E S S , C A L M , S L E E P I O , a m o n g m a n y o t h e r s ( A C T I V I T Y , D I E T , W O M E N ’ S H E A L T H , R E S I L I E N C Y , S L E E P )

C H E M I C A L M E A S U R E M E N T G O O G L E / N O V A R T I S C O N T A C T L E N S ( B L O O D G L U C O S E , C A T A R A C T S ) S A N O ( M E T A B O L I C A C T I V I T Y )

L A B - I N - A - B O X C U E ( P O R T A B L E L A B T E S T S F O R I N F L A M M A T I O N , V I T A M I N D , F E R T I L I T Y , F L U , T E S T O S T E R O N E ) L I V O N G O ( S M A R T G L U C O M E T E R )

T H E C O N N E C T E D H U M A N B O D Y 2 . 0

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I N N O VAT I O N P H I L O S O P H I E S Al

pha

Gee

ks

• Venturesome • High risk

tolerance

Early

Ado

pter

s

• Opinion leaders

• Judicious and restless

Fast

Fol

low

ers • Value

shoppers • Focused on

usefulness Late

Maj

ority

• Skeptics • Slower to

adopt

Lagg

ards

• Resistors and traditional

• Averse to change

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ESTABLISHING • DPP, Telemedicine • Transparency • Concierge advocacy

EMERGING • Genetic, molecular

profile • Physician home visits • Personalized benefits

STANDARDIZED • Care management • Utilization

management

DEVELOPING • Metabolic syndrome • Wearables • Narrow networks

TESTED • Consumer driven

health • Health screenings • Incentives/

surcharges

T H E I N N O VAT I O N A D O P T I O N C Y C L E I N N O VAT I O N P H I L O S O P H I E S

CU

MU

LA

TIV

E

RE

PR

ES

EN

TAT

ION

“LATE MAJORITY”

Skeptics; slower to adopt

“LAGGARDS”

Resistors and traditionalists; averse

to change

“EARLY ADOPTERS”

Opinion leaders; judicious and restless

“ALPHA GEEKS”

Venturesome; high risk tolerance

“FAST FOLLOWERS”

Value shoppers; focused on usefulness

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P R E D I C T I O N S F O R TO M O R R O W I T ’ S A B O U T TO G E T M O R E C O M P L I C AT E D

Carriers’ desire for consolidation + new tech entrants disrupt the integrated health plan service model

Diverse workforce preferences means one size cannot fit all

Value-based care acceleration increase new care delivery options

Boom in personalized medicine, but the savings not yet realized

As a new healthcare market emerges, employers must capitalize on this formative period to redefine their role and shape the market to meet their strategic objectives

Payers Evolution

Provider Transformation

Consumer Diversification

Bio-medical Explosion

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F I V E K E Y I M P E R AT I V E S F O R H E A LT H C A R E I N N O VAT I O N

1 Making Value the Central Objective In isolation, efforts to either reduce costs or improve outcomes are insufficient; we need to do both through care coordination and shared information.

2 Promoting Novel Approaches to Process Improvement Instead of largely focusing on product innovation, we also must create an environment that encourages process improvement and acknowledges that “failure” represents an important component of experimentation and learning.

3 Making Consumerism Really Work Today, consumerism remains a strong idea with weak means of execution. We will achieve greater success when provides organize efforts around patient needs and when patients become more active agents in managing their own health.

4 Decentralizing Approaches to Problem Solving We should facilitate the movement of care delivery and healthcare innovation from centralized center of expertise out to the periphery, where more provides, innovations and patients can engage in collaborative improvement efforts.

5 Integrating New Approaches into Established Organizations Our future must build on past successes. Existing healthcare institutions must be reinforced with efforts to integrate new knowledge into established organizations and the communities they serve.

© MERCER 2017 22

P R E S E N TAT I O N S U M M A RY

• Provided an introduction and background on healthcare innovation

• Identified the risks and opportunities of healthcare innovation

• Described the explosion of innovations on the healthcare market by segment/domain

• Discussed the impact of healthcare innovation by stakeholder, including consumer, providers, administrators and plan sponsors

• Identified how the innovation adoption cycle impacts plan sponsors in embracing innovation

© MERCER 2017 23

PA R T I N G C O M M E N TA RY O N H E A LT H C A R E I N N O VAT I O N

Success is not delivering a project or product; success is learning how to make

your customers great at what your customers care about

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