What Health Plans Can Expect in 2011
HL: And healthcare costs aren't likely to retreat anytime soon …
Keckley: Underlying healthcare costs are going up at a minimum of 6 percent this year, if not higher, and Medicare is projected to go up 8.4 percent. There is also an urge to merge with doctors, hospitals, and long-term care providers consolidating into integrated delivery systems, which makes contracting a challenge. When these factors are combined with healthcare reform, it's the perfect storm for health plans.
HL: Sounds dire. Is there anything positive that health plans can hang their hats on?
Keckley: The notion that the industry is somehow mortally wounded is simply false. There is a degree of clarity about what will happen with healthcare reform. No one is delusional. Each company seems to be developing a number of future-state scenarios. It's not that the industry is going uniformly in a single direction. Companies are weighing a lot of options. We are seeing substantial investments of health plan resources in new service lines. They have an enormously rich asset in data. We're seeing some plans monetize their data in various ways. Many see themselves in the personal health management business selling services around how patients care for their health—wellness and healthy living as a major focus of new services. The fact is, the industry will remain very viable and in fact grow, but don't expect it to look quite the same in five years.
HL: I'm hearing more and more about health plans considering global markets. Is this a bona fide trend, or just a strategy for a handful of plans?
Keckley: Some believe the global market has more growth potential. But it's very difficult to break into another country's health system. You need a balance sheet with substantial liquidity to really make that bet.
[Editor's Note: To hear an audio interview with Keckley on the topic of ACOs, click here.]
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