This past week, Eric Grossman, CEO of NextHealth Technologies was interviewed in the GuideWell Insights Lounge at the 2016 Oliver Wyman Health Innovation Summit. Kate Warnock, GuideWell Social Media Manager and healthcare innovation inquisitor, teed up several topics for Eric to share his insight and thoughts on:
1. The X Factors driving health plans to exit from the ACA marketplace,
2. Effecting consumer behavioral change via artificial intelligence and SMS messaging,
3. The 3 C’s driving change in the health industry: Cost, Compression and Consequence,
4. “Exponential trends’ worth watching for.
The GuideWell Insight Lounge on YouTube!
You can see the entire interview here and all the other great interviews Kate gave during the #OWHIC summit at GuideWell’s YouTube channel here. Note: the following questions from Kate and responses from Eric were pulled verbatim from the interview recording. I’ve recently discovered that many YouTube recordings are transcribed and that it’s easy to pull the transcribed text. So while you may be thinking, “that guy Steve sure does have a lot of time on his hands,” this entire post – start to finish – took me about 20 minutes. Hopefully you, my reader, gets as ,much value out of it as I did.
Kate Warnock Interviews Eric Grossman
Could you have predicted the exit of so many health plans from the ACA marketplace? Could these exits have been avoided?
“You know I think it’s a great question. Hindsight’s 2020 and it’s easy to be a Monday morning, armchair quarterback. Yeah but I think sort of is my answer, you know, I’m first of all I’m a big proponent of market forces versus public policy, sort of driving the market. But we sort of had an untenable situation with all these uninsured Americans.”
“But I think there were really two X factors that you can I saw as sort of what may drive exit. I think the first is public policy around individual mandate and, unfortunately, it hasn’t been strong enough to keep the healthy people in to drive sort of the fundamentals of insurance which is you’ve got to have a balance risk pool. So without that we, you know health plans, have been left with a lot of expensive risk. And that kind of comes to the second X Factor which is market forces and unfortunately a lot of these smaller health plans, in my opinion, sort of followed the bigger ones in terms of their pricing. And a lot of the bigger ones kinda came in with a low-cost narrow network plan design and unfortunately because of the prior X Factor it created an environment with a lot of losses that little health plans couldn’t sustain so they had to exit.”
“So in hindsight those were X-Factors. We didn’t know how they would play out and it’s led to a lot of shake out but you know, as Obama says, I think they’re things that we can improve upon and and correct given that we have so many more people in the system there’s gotta be some benefits.”
You [NextHealth] are pros at doing [behavioral analytics] so you give the consumer some nudges to help change behaviors. Could you give us some scenarios where those nudges just might take place for and how they impact behavior?
“The first thing that that we do in in driving consumer behavior changes is find someone among millions of members who the analytics thinks that we can be successful in changing behaviors. You know a lot of people don’t want to change so or they’re too acute, too sick to change. So let’s take out of network usage: so we talked about narrow networks. That’s when you leave the health plans Network and get a higher deductible, a higher copay and higher negotiated rates. Not a good thing but the majority people when they go out a network they don’t know they go out-of-network and it’s could be thousands of dollars to any consumer, a health plan.
Sarah and SMS Nudges
Eric told the story of using analytics and SMS text messaging to help 25 year-old mother Sarah Gomez make better decisions about obtaining care for her two kids.
Let’s take a little bit look down the road. Okay so there’s some other trends that might disrupt the health industry and, from your perspective, what are some of those things that you think can really help change the way we’re doing business in the health industry?
“I think a block chain is a good example of how sharing data in an open-source, cloud-based environment has helped other industries like Bitcoin and others. I think one of the presenters here Chris K from Humana talked about block chain. But I don’t think there’s a silver bullet around, you know, some sort of sea change events. I do think that the sea change is large enough to drive major change in industry and I I think I like and I like the 3 c’s. So The Three C’s are the first one is cost obviously paying out $8 in claims costs for every one dollar in premium isn’t viable for any health plan regardless of your reserves. So that’s led to the second C which is compression. And you mentioned some of the sort of what’s going on in the market with ACA and then the last C is consequence: whether companies are going out of business or policy change in Washington so I think those three C’s breed innovation and there’s no better drive of innovation than desperation.”
One last question maybe a little bit closer to home. Any other trends worth watching for exponential growth in the efficacy of prescriptive analytics?
“So those are some big words. I’ll tackle those one at a time I typically don’t understand more than three syllables. I would say that the biggest trend is the continued losses stemming from the Affordable Care Act is driving health plans and hospitals to absolutely focus on solutions that are presented at this conference, that drive attributable medical cost savings and consumer behavior change. The word is attributable. How do we know that when I reach in with a screwdriver that it truly was my screwdriver that turned the screw? So that’s attribution. And I frankly don’t think health plan executives really care about the sausage machine; they need outcomes.
And it just so happens that prescriptive analytics or what to do next; the what and how well. And randomized control trials and machine learning are just absolutely no regret investments that you can make in the wake of all the market forces and all the headwind we’re up against.”