Healthcare– Trends amid Chaos

It is common knowledge that in the delivery of healthcare most professionals believe that the trend will be away from “fee for service” and towards “fee for performance,” which means that providers will be paid to treat an entire population as opposed to being reimbursed for given visits or procedures. In practical terms, how will this trend play out?

James Agnew, Vice President of Corporate Development and Acquisitions for Tufts Health Plan and Tufts Health Ventures, an HMO unaffiliated with Tufts University but with an investment arm deploying capital into the marketplace, discussed some aspects of this trend at the Thursday morning breakfast meeting of the Boston Chapter, Association for Corporate Growth. Some high points are set forth below.

Big hospitals, providing healthcare in acute circumstances, are extremely expensive. One of the trends must be to bring healthcare out of the hospitals, to the extent possible, and provide healthcare through health systems, mobile medicine, in-home monitoring and similar solutions.

One overall consideration is how to deliver healthcare in the current regulatory environment. Cooperation between providers and payors (such as Tufts) will be essential. Tufts is active in all three healthcare delivery markets: commercial coverage, Medicare and Medicaid.

Electronic medical records is part of the solution, but extremely difficult to collect. Partners is paying about $1 billion dollars to install the EPIC software, after having spent hundreds of millions of dollars on a prior failed attempt. Agnew believes that ultimately electronic data will be aggregated and the companies which do the aggregation will be much like utilities; a provider or an insurer in search of data will buy the data from a central source the same way one buys electricity.

Tufts seeks investments or acquisitions in hospitals, regional health plans and companies that provide coordination of medical services. They are also interested in companies that foster “consumer engagement,” as healthcare moves more to the home and away from the hospital. They have an interest in wearables and telemedicine, but are slow to embrace direct investments in medical devices. They avoid the complexities of the pharma space.

The landscape is chaotic for healthcare today. The myriad directions in which Tufts is looking to expand and invest echo the complications of this environment.

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