The COVID-19 pandemic has forced dramatic changes in healthcare delivery in the US. It has exposed the human and financial costs of the nation’s health inequity. And it has accelerated change — forcing us to shift to virtual health and more care delivery in the home. Yet the infrastructure and forces required to sustain this transformation continue to remain challenged – specifically, outdated payment models to seamlessly support in-home end to end care, disjointed patient (and caregiver) experience as patients navigate across different care settings, and the administrative overhead (aggravated by labor shortage) to solve for these limitations.
The technology revolution pre-COVID was more aggressive than the healthcare industry had an appetite for consuming, leading to lack of adoption – by physicians, payers & patients. COVID, not only mandated technology adoption by both patients and healthcare providers, but it has us challenging antiquated regulatory rules, rethinking prior authorization processes, activating and managing a remote workforce, and investing in technology.
In 2021, the HME industry’s historical challenges of regulations and reimbursement rates were further exacerbated by safety concerns, staff shortages and supply chain issues caused by almost two years of the COVID pandemic. In spite of these challenges, the HME industry has shown incredible resilience and demonstrated its value in the healthcare delivery ecosystem.
The good news is that the HME market is healthy, estimated to by around $56 billion and growing 6% annually – and it’s profitable. It is important to note the patient is paying an increasingly larger percentage of the HME bill. The attractiveness of the market is evidenced by the rapid pace of consolidation, the amount of investment money coming into the space and the success of the publicly traded HMEs.
At the heart of this crisis, the world became more resilient and learned the value of virtual care delivery. Virtual care delivery & in-home care is here to stay and will be the dominating force to drive digital transformation in the payer, health system, pharma, HME, home health and other home-based care providers’ businesses & operating models. Several such game changing market forces are currently in play that are likely to disrupt our industry in 2022 and beyond.
Historically the HME provider landscape was dominated by the traditional full line HME and medical supply companies. Today, new players are creating more competition. An increasing number of equipment manufacturers and distributors are HMEs with direct to patient models. There has been growth in niche players focused on narrow categories of equipment and supplies. There has also been the emergence of virtual HMEs trying to serve patients through telehealth solutions without physical locations and disrupting current referral patterns.
Big retailers are also expanding their presence. Amazon is viewed as the biggest threat by many with their history of using technology to transform markets and the consumer experience leveraging the incredible power of their data capabilities. Amazon sees healthcare as an industry ripe for disruption. AWS is the foundation of their healthcare strategy – store large amounts of data, predict healthcare events and personalize the patient journey.
CVS has been very public about expanding beyond retail and into other areas of healthcare such as HME and many HME products can be found in their new Health Hub locations around the US. And CVS owns one of the largest commercial payers.
Walmart also has the potential to disrupt the HME industry. They have demonstrated their ability to impact markets as they are significant players in the pharmacy, vision care and hearing care markets. In addition, they have incredible reach into rural markets, 90% of Americans live within 10 miles of a Walmart store.
These large retailers have access to large populations of consumers/patients, have large populations of self-insured employees and are increasingly providing healthcare services. Their relentless focus on the consumer/patient experience is vitally important for the HME industry to recognize
Amazon has transformed the consumer experience into a digital experience. Think about the numerous interactions we have with Amazon and almost no interaction with an actual Amazon employee. The digital consumer experience has now moved to healthcare impacting how we manage our prescriptions, book appointments, get appointment reminders, complete paperwork and review our clinical records. COVID has accelerated this trend and as it turns out, this digital experience is very efficient. The proliferation of a digital experience into many areas of healthcare such as pharmacies, physician and dentist offices, therapy monitoring (CPAP, diabetes) has led to the patient accepting this use of technology. The change occurring now is the patient shifting from accepting to expecting a digital experience.
HME patients want an efficient modern digital experience. They have come to expect a digital experience where first contact with providers is with digital communication, not human interaction (i.e. welcome texts, completion of paperwork). Patients want access to product/service descriptions and education materials. They want transparency knowing where they are in the care delivery process (waiting for paperwork, when is driver/therapist arriving, status of bill). Multiple modalities for communication must exist to utilize the most efficient and effective mode of communication (text, email, app notification, automated call and when necessary live phone call). The digital interactions speed up the process, offer efficiencies to the HME operation and improve customer satisfaction. We can all see why this has become good for patients and why patients want to interact with their healthcare providers similarly to how they interact with Amazon.
Payer incentives, both governmental and commercial, are driving more care into the home. For the payers, it’s straightforward. It’s cheaper and reduces cost. Patients and their families would rather experience care in the home than in a skilled nursing facility, institution, or hospital. We are entering a world where multiple providers can be at work in an uncoordinated fashion in the home. Imagine a scenario where a patient has a home health nurse, an oxygen concentrator from an HME, remote patient monitoring for their chronic condition and the payer has a care coordinator performing routine checks with the patient as well. Investment money is fueling existing and new players in this emerging market offering care coordination, hospital discharge management, remote patient monitoring, chronic condition management, and hospital in the home programs by way of devices and related services. Today’s HME needs to find its place in this crowded care coordination space.
So with all of these forces at work – competitive threats from non-traditional consumer savvy market disrupters, the changing expectations of the patient, and the focus on coordination of care in the home, how does an HME protect its patient base, its referral sources and its market share?
This is part one of two parts. Be sure to come back for part two and see how embracing digital transformation will benefit your patients, your staff, your referral sources, and the overall health of your organization.
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