A look at the top healthcare issues affecting healthcare providers and consumers in 2019 and beyond. Payment and practice patterns shifts are affecting when, where and how healthcare consumers are accessing and paying for care. Healthcare technology is fueling the change as providers struggle to keep pace and deliver high patient satisfaction and engagement. Consumer demands are growing as more of the cost burden is shifted to the employee as employer sponsored health plans see an unprecedented shift in the way they provide care for employees.

1. HealthcareTrends
2019 & Beyond
Issues impacting providers and consumers
Author: Nicholas S. Gaudiosi
Convergence Health
Copyright - Nicholas S. Gaudiosi - Do not distribute without authorized permissions

2. Top Healthcare Delivery Issues/Trends
The Future of the Provider Market
Demographic Shifts
Site of Service Shifts
Payment Pattern Changes
Practice Pattern Changes
Regulatory Issues
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

3. Provider Demographics
• Do physicians look, act, behave or respond to incentives the way used to?
• The newly practicing physician may be more interested in hospital employment, set hours,
predictable wages, etc.
• The over 50 physician may want to sell the practice before too long OR wait until an incredible
financial multiple is offered; likely suffering from burnout and low job satisfaction according to survey
results
• Medical schools and residency programs showing shifts in male v female, Caucasian v International
• Applications at Osteopathic schools greater than at Allopathic schools
• Physician shortage; relative to the number of patients (demand outpaces supply by 2030;
Resulting in 105,000 fewer docs than needed) certain specialties hit harder: ex: mental
health
• Significant increase in non-physician clinicians (NP, PA, CRNA, PT, RN, LPN)
• Greater push to have NP/PA with full practice authority (full; reduced; restricted level
governed by state)
• Merger Medicine - Aggregating physicians: Private Equity, Payers, MSOs, NationalChains,
Hospitals
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

4. Site of Service (where HC is delivered)
• Shifting care from Hospital to Out-Patient Centers (ASC, Specialty Hospital, etc)
• Providing cost effective care may require moving it outside of the Hospital walls
• Re-engineer care to direct more volume to community outpatient locations
• Population health, patient centered medical homes & value based contracting = trends accelerating the shift
• Telehealth moving from novelty to mainstream in major paradigm change
• Retail Medicine: the rise of Consumerism
• Aetna + CVS ($69 billion merger)
• Walmart + Humana: Deeper partnership or merger?
• PillPack + Amazon ($1 billion acquisition)
• Cigna + Express Scripts (PBM) – ($54 billion)
• Anthem + Beacon Health Options (Behavioral Health)
• Vertical Integration
• UHG Optum + Davita Medical Group
• Humana + Kindred Healthcare
• Amazon + (Who is Next!?)
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

5. Payment Patterns
• Physicians learning to bear financial risk as Fee For Service (FFS) gets
replaced by Value Based Care (VBC) : MACRA; MIPS
• Alternative Payment Models: Bundled Payments; Shared Savings;
• Physician Reaction : Grief; Shock;Anger: ”I went to medical school, not
business school” – “I bill for it I get paid for it” , “I became a physician
because I’m risk adverse” – all sound bites heard across the spectrum of
healthcare
• Payment Reforms: Category I, II, III, IV – a gradual scale moving away from
FFS to full episode and bundled payment. 2019-2023 sliding scale
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

6. Practice Patterns
• Ratio of Physician to Non Physician Clinician continues to decrease
• Telemedicine picking up in popularity; being provided in employer benefit plans;
gaining traction with states; more accepted by payers; no longer just novelty
• Concierge Medicine: a coalition of physicians who have “gone off the grid” to “do it
their way” for patients who can afford it – direct primary care
• Growth of physician staffing companies
• More employed physicians (67% of all practicing) working set hours
• Locums/ Part timers: partially driven by demographic shifts/ lifestyle choice
• Specialists: long wait times ; high demand
• Family Medicine – downstream commoditization; fewer independents
• Key Performance Indicators (KPIs) Physicians using new tools in an effort to gain
better access to data and report these metrics for value based contracts
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

7. Networks / Regulatory
• Physician aggregation trends following form
with health system, payer and pharma
consolidation/merger/acquisition trends –
Vertical Integration
• Regulatory environment and economic forces
requiring physicians to evaluate new
networks/financial arrangements and practice
patterns
• Economic Integration (non-physician led)
• Merger Med - By Private Equity, Payers, Insurers, Health
Systems and Hospitals
• Clinical Integration (physician and hospital led)
• Alternative Payment Methods (APMs)
• Clinical Integrated Networks (CINs), Integrated
Physician Network (IPAs), Management Services
Organization (MSO), AccountableCare Organization
(ACO)
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

8. 2023:Yikes!
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

9. Top Healthcare Consumer Issues/Trends
The Future of the Healthcare Consumer Market
Employer Sponsored
Health Plans
Healthcare Technology
Patient
Engagement/Satisfaction
Functional Wellness
Millenials Replacing
Boomers
Shift from Docs Office to
Retail Clinic
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

10. Employee Sponsored Health Plans
• More employers moving to self-funded plans (taking back control of rising rates
and plan design) – for most, an existential move
• Others moving to high-deductible plans shifting risk to employees – trends: care
avoidance, rise in medical bankruptcy
• Labor Unions and Major Employers forced to make unprecedented changes due to
escalating costs, especially amidst the rise of the chronically ill
• Some resulting in less elective procedures, more price shopping, greater
consumerism
• Consumers faced with reality physicians may no longer be in network (narrow
networks gaining popularity)
• Consumer may have to pay co-pay, or large deductibles before consuming care as
physicians face the real threat of bad debt, grapple with price transparency issues,
face reduction in procedures, etc.
Content Author: Nicholas Gaudiosi | Convergence Health | 2018

11. HealthcareTechnology
• Patients fed up with lack of engagement turn to alternative methods of
engaging with providers
• Medical apps focusing on “The Patient Experience” starting to gain traction
• Greater focus on patient facing healthcare technology interoperability
with physician practice technology (EMR)
• Internet of “health” things (Comcast + Independence Health) - ”Quil”
• Wearable data collection/data transmission
• Telemedicine putting a dent in unnecessary ER visits and widely becoming
part of employee sponsored health plan benefits – from novelty to
mainstream; cutting out gaps in care; used heavily in behavioral health
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

12. Lack of Engagement
• 15 minute visits are no longer an acceptable trade-off for the valuable hard fought
time a patient gives up to see a doctor (“failed value proposition”)
• Patients demanding to be connected across the care continuum
• Pareto effect: 80% of the healthcare spending is attributable to 20% – mostly
chronically ill who could be managed more proactively and continuously
• Therefore: employers are doing more to encourage engagement with providers,
rewards for active management of the sickest employee population and thus
consumerism is gaining traction
• Forced actionable information about healthcare purchasing
• Physician adapting to paradigm shift: treat patient as a customer (the physician
salesman) - patients want their moneys worth
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

13. FunctionalWellness
• By definition: more emphasis on the underlying causes of illness and less
focus on symptom management
• “think and link” vs “name and blame”
• Dr.Toby Cosgrove (Cleveland Clinic) partnership with Dr. Mark Hyman to
become the first academic medical center in US to focus on functional
medicine
• More employer sponsored plans offering Value Based Insurance (VBI) that
encourages behaviors and wellness plans that focus on functional health
and prevention
• Consumers getting smarter about diet, nutrition depletion, exercise,
genomic testing, biome testing, medication adherence, etc.
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

14. Shift from Docs Office to Retail Clinic
• A focus on “radical convenience” and price transparency
• A “retail movement” that is part-in-parcel the transformation in healthcare
consumption that millennials will lead
• May lead to the down stream commoditization of the physicians practice
• Vertical integration: CVS & Aetna = stronger ownership of the healthcare
consumer experience
• More than 3,000 retail clinics in operation; 1 in 3 healthcare consumers have
visited one
Content Author: Nicholas S. Gaudiosi | Convergence Health | 2018

15. Conclusions
• The HC Provider landscape will continue to evolve, with the biggest change
agents being those with the largest spending capacity: health systems,
private equity, venture capital and the mega-physician led organizations;
• Independent physicians will continue to fight for their existence, while the
number of physicians employed by a large entity will continue to rise;
• Payment reforms will become more real as physicians learn to deal with the
revenue consequences of MACRA – and choose an APM path, or the less
desirable MIPS path;
• ContinuedVertical Integration by insurance companies, PBMs and Retail
Clinics will put pressure on physicians and hospitals, potentially eating into
profits;

16. • Consumers will continue to demand more from providers and health systems as
their needs, wants and preferences become more defined by experiences they
know exists (radical convenience).
• As deductibles continue to rise, consumers will be more critical about care they
receive and more willing to write reviews, like they do for other products they
consume;
• Many employers are now facing an existential challenge with health care costs
escalation.They will respond by shifting more risk to employees (higher
deductibles), and many will implement new and better ways to manage their
chronically ill members.
• Functional medicine, genomics and a focus on mental health will be just a few
ways employers in self-funded plans begin to take back control
Nicholas S. Gaudiosi
Conclusion