The potential for disruption and disaggregation of traditional and incumbent players is occurring across the health care ecosystem and care continuum, and may accelerate through the intended and unintended consequences of this innovative new venture. Is this partnership a seminal event in defining the future of health care? Author William Gibson said, “The future is already here – it’s just not very evenly distributed.” This statement applies as the future of health care fast approaches, but with variability across stakeholders, their businesses, and the communities in which they provide care as part of one of America’s largest industries. A diverse panelist group will bring a broad range of current perspectives and insights related to this partnership. From the base of the panelists’ unique perspectives, they will discuss their views on the likely near-, mid- and long-term implications of this announced venture on the ownership, organization, payment, and delivery of health care products, supplies and services in America.

1. Health Care "Prime" - The Future of the Ownership,
Organization, Payment, and Delivery of Health Care in
America 2.0
Jonathan K. Henderson, Julius W. Hobson, Jr., Christopher W. Kersey,
Patrick Pilch, Mark Prather

2. Panelist Introductions

3. Economics - Who Pays for $3.2T Healthcare?
3
Federal Government $ 1,000B
State Government $ 600B
Employer $ 1,100B
Out of Pocket (Individuals) $ 340B
Investment $ 160B

4. Who is Funding Healthcare?
4
2015 (in billions)
Medicaid ($545),17%
Other GovPrograms
($121),4%
Public Health and
Other ($328),10%
Out-of-Pocket ($338),
11%
Investment ($155),5%
Government’s
Growing Role As A
Payor Of Health
(51%)
Private Health Insurance
($1,072), 33%
Medicare ($646.2), 20%

5. 2016 Federal Cash Flow (Simplified)
5
Sources of Cash 2016 2018
Tax Revenue $ 3.500 3.350
Borrowings 0.600 1.050
$ 4.100 4.400
Uses of Cash
Healthcare $ 1.106
Defense 0.813 .948
Social Security 0.981
Interest on Debt 0.240 .300
Safety Net 0.366
Other 0.595 .760
$ 4.100 4.400
In Trillions ($)

6. High Cost Utilizers Are The Aging, A Growing
Population
0%
50%
100%
18-29 30-44 45-59 60 and older All
Cost Trends by Age
Aware of price
before receiving
care
Searched for
out-of-pocket
spending
Considered
going to another
provider
Source: Mehrotra,A, et al AmericansSupportPrice Shipping for HealthCare, But Few ActuallySeek Out Price Information,HealthAffairs vol. 36 no. 8
Source: US Census Bureau, 2010
Confidential Attorney Client Privilege

7. Source Kaiser foundation, 2017
Rising Employer Premiums and Workers’ Costs
Outpacing Workers’ Earnings and Inflation

8. Market and Innovation Themes
1. Convergence Of Molecular Biology & Computer Science
2. Emergence Of Mobile and Digital Technologies
3. Financial Risks – Return On Capital Going Negative
4. Integrated Supply Chains
5. Movement Of Care From Hospitals To Non-hospital Settings

9. Underpinnings of Value
1. Clinical Efficacy and Outcomes
2. Cost Savings
3. Complexity to Simplicity – commoditization is repriced
4. Transactional to Relational
5. Site Neutrality

10. Transparency
Value = Quality/
Price
Amazon competes
on Value and
Transparency
Amazon’s Approach to the
Disruption of Supply Chain

11. Does Pricing Transparency
Work in Healthcare?
• Hypothesis: Price transparency may create greater competition while
lower the total cost of healthcare…
• Findings: Multiple studies have shown that improved transparency
through health care pricing apps and websites don’t always help patients
spend less. In fact, patients rarely use them when offered.
• The Potential Amazon Effect: Amazon’s success has been attributed to
successfully changing purchasing behavior, having access to cheap
capital, and simplifying/ disrupting complex and inefficient distribution
models in a highly effective manner. Value created is reinvestment in
higher multiple investment – clinical value extension of high quality
providers and disintermediation of low quality providers in the supply
chain.

12. Potential Congressional Response
U.S. House of
Representatives
 Education and the
Workforce
 Energy & Commerce
 Financial Services
 Judiciary
 Small Business
 Ways and Means
United States Senate
 Banking, Housing &
Urban Affairs
 Commerce, Science &
Technology
 Finance
 Health, Education, Labor
& Pensions
 Judiciary
 Small Business
 Select Aging

13. Executive Branch Response
 White House
 Departments & Agencies
–Commerce
–Health and Human Services
–Labor
–Treasury
• Internal Revenue Service
–Federal Trade Commission

14. Potential Interest Group Reaction
 Physicians
 Non-physicians
 Hospitals
 Small
Businesses
 Health Insurers
 PhRMA
companies
 Pharmaceutical
Care
Management
Association
(PBMs)

15. Questions
JHenderson@Polsinelli.com
JHobson@Polsinelli.com
ckersey@havencrest.com
ppilch@bdo.com
mprather@dispatchhealth.com

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