In its first five years, the Affordable Care Act (ACA) has already left an indelible mark on the $2.9 trillion health sector. By energizing five fundamental shifts, the law has accelerated the rise of a New Health Economy predicated on value, according to a new report from PwC’s Health Research Institute (HRI), “Five Trends to Watch as the Affordable Care Act Turns Five.”
According to the PwC report, although much groundwork was laid in advance of the law’s enactment, health industry business models and imperatives will likely never be the same post-ACA. These five key trends fueled by the ACA have ignited sector-wide transformation:
1. Risk Shift: Raising the stakes for all healthcare players
The ACA added force to new payment models that reward outcomes and penalize poor performance such as high rates of readmission and hospital-acquired conditions. By championing models such as shared savings, bundles and pay for performance, the ACA has accelerated a shift in risk away from traditional insurers and onto providers, pharmaceutical companies and even consumers.
2. Primary care: Back to basics
Experimentation in new payment models and expansion of insurance coverage are making primary care once again the critical touch point
3. New entrants: Innovators in the New Health Economy
New entrants are rushing into the market to meet the demand for lower-cost, consumer-oriented care options in the post-ACA era. More than 90 digital health companies have been created since 2010, according to HRI analysis.
4. Health insurance: From wholesale to retail
Rapid enrollment in the ACA’s public exchanges has demonstrated the potential of retail-style health insurance and spawned renewed interest in private exchanges.
5. States: Reform’s pivotal stage
States have emerged as key players in the reconfigured healthcare landscape. From the design of exchanges to the decision over whether to expand Medicaid, states have notable discretion in implementing the law.
Strategies in the post-ACA world
Much like the last five, the ACA will continue to face political crosswinds. However, in its brief history, the health reform law has already had a profound, and likely irreversible, impact on the business of healthcare. With federal dollars, new regulations and the government’s role as a purchaser, the ACA has catalyzed fundamental shifts in an industry historically slow to change.
The report provides an outline as to what industry leaders should consider moving forward, to include:
1.Weigh the risks of taking on new functions as business models change. Revisiting strategies to emphasize saving over spending and quality over quantity, to serve more consumers effectively and demonstrate affordability.
2. Watching closely as the reimbursement pendulum swings from fee-for-service to accountable care. Shifting from fee-for-service to accountable care, consider ways to deliver quality care that satisfies the increased demand generated by the newly insured.
3. Innovating to meet the demands of the new healthcare consumer. Rather than trying to do it all, businesses will need to identify what they do best and then consider alternatives—such as partnerships—to fill in the gaps.
4. Target the Consumer. Pursuing opportunities to enhance consumer choice and engagement in selecting health benefits.
5. Work with states. Engage states as they continue to shape the future landscape and to assume an even bigger role in the management of healthcare costs.
The full report Five Trends to Watch as the Affordable Care Act Turns Five is available at http://www.pwc.com/us/en/health-industries/health-research-institute/aca-health-reform.jhtml.
