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27% Of Healthcare Providers Say Current Business Model Unsustainable27% Of Healthcare Providers Say Current Business Model Unsustainable

KPMG study says healthcare providers, payers, and pharmaceutical firms have divergent views on changes coming to the industry, but all view health IT as crucial.

Ken Terry

August 30, 2012

4 Min Read

8 Accountable Care Organizations Worth Closer Examination

8 Accountable Care Organizations Worth Closer Examination

8 Accountable Care Organizations Worth Closer Examination (click image for larger view and for slideshow)

A new KPMG survey that plumbs the attitudes of health care providers, health insurers, and pharmaceutical companies toward healthcare transformation finds that all three types of businesses view health IT as a crucial factor in the impending changes in healthcare.

Beyond that, however, there was a divergence in attitudes among the three groups. Among providers, for example, 65% saw major changes coming to their industry in the next five years; only 41% of health plans and 24% of drug firms believed that. And 27% of providers viewed their current business model as unsustainable or not very sustainable, vs. 20% of health plans and 22% of pharma companies. To develop a more sustainable business model, providers placed a big emphasis on health IT: 92% of respondents in that sector said it was very or extremely important to deploy health IT across the continuum of care. Brad Benton, national account leader, healthcare, for KPMG, told InformationWeek Healthcare that the industry is still a long way from being able to do that. "The integration of the full care continuum is not common, and the deployment of information technology across that continuum is an effort that's some way down the road," he said. Nevertheless, he said he saw progress being made on health IT interoperability and the creation of "some kind of proxy of a single patient record. But there's a lot of work and a lot of capital investment required to achieve that goal." [ Most of the largest healthcare data security and privacy breaches have involved lost or stolen mobile computing devices. For possible solutions, see 7 Tools To Tighten Healthcare Data Security. ] In the KPMG survey, payers also saw value in health IT, with 44% saying it could be effective in holding down costs. By comparison, 32% of the health plans said that about pay for performance, and 22% said it about accountable care organizations. Benton cited a couple of reasons for health insurers' bullishness on health IT. "First, the health plans believe strongly in the data analytics and want to accelerate it, and they see health IT as an enabling platform to use those analytics. Second, they see the business model change on the horizon, and they know if they're going to be in the clinical game, they're going to need health IT to succeed in that game." He cited the recent deal between Aetna and Aurora Health Care,which are going to market with a joint insurance product based on an accountable care organization, as an example of health plans "being in the clinical game." The survey also found a high interest among pharmaceutical companies in leveraging various kinds of health IT to promote products. Among the modalities they viewed as promising were mobile applications, online social media with patients, patient registries for specific diseases or devices, product web sites for consumers and physicians, and online social media with physicians. The drug companies' views on these mobile and Web technologies, Benton commented, are not unexpected. "They are consistent with the opportunities that everyone thinks an Internet presence provides." KPMG believes that data analytics will be central to the coming healthcare transformation. This will be especially true, Benton said, under a scenario in which there's a rapid integration of healthcare systems and between providers and payers. "We think health IT is crucial to being able to affect a rapid integration scenario, and just as importantly, to be successful in that scenario. Management in a value-based payment environment, especially where the predominant part of your revenue comes from value-based payment, requires a level of health IT sophistication that we really don't have today." Interestingly, however, KPMG regards the transition to ICD-10, rather than the move to universal EHR adoption, as the key to applying these analytics to healthcare transformation. Noting that "the EHR is just a tool," Benton explained that healthcare organizations will have to find a way to "sweep together" all of their structured and unstructured and clinical and claims data to use it with analytics. "With the ICD-10 code set, at least now you have the opportunity to have something that has been through a pretty strong stress test. And it's a commonly held view that the data is granular and robust enough so we'll be able to do analytics against it in a trustworthy fashion." InformationWeek Healthcare brought together eight top IT execs to discuss BYOD, Meaningful Use, accountable care, and other contentious issues. Also in the new, all-digital CIO Roundtable issue: Why use IT systems to help cut medical costs if physicians ignore the cost of the care they provide? (Free with registration.)

About the Author(s)

Ken Terry


Ken Terry is a freelance healthcare writer, specializing in health IT. A former technology editor of Medical Economics Magazine, he is also the author of the book Rx For Healthcare Reform.

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