Health Tech Podcast

CVS, Amazon and the ‘mass freak-out’: How tech is reshaping the healthcare business

CVS acquired Aetna as the influence of tech on the healthcare industry continues to grow. The deal came just months after it was revealed Amazon is looking into selling perscription drugs online. (Bigstock Photo)

In October, something fairly normal happened: CNBC reported that Amazon might disrupt yet another industry, pharmaceuticals. The tech giant was considering selling prescription drugs online.

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“Since then, the market’s really kind of gone crazy. There’s been kind of mass freak-out,” said Christina Farr, CNBC’s health and technology journalist, who first reported on Amazon’s interest in pharmaceuticals.

Companies across the healthcare industry started scrambling, trying to figure out how they could compete with the pure market force of Amazon. This week, one company showed us how they’re planning to fight back: CVS, the largest pharmacy chain in the U.S., reached a deal to buy insurance giant Aetna for $69 billion.

That deal and the trends behind it are a case study in how technology giants like Amazon — and technology itself — are changing healthcare in the United States. While companies argue those changes will be a boon to patients, there are still serious concerns about how they are happening.

We explore those issues on this episode of GeekWire’s Health Tech Podcast. Listen below, follow the series here, and continue reading for the full story.

A main focus of the CVS/Aetna deal is creating community care hubs in CVS stores and other CVS locations, where customers can see a doctor, ask questions about their insurance, pick up their prescription — and maybe buy a Diet Pepsi while they’re there. The companies are also planning to start new digital health initiatives, like in-home health monitoring.

The hubs are an extension of the walk-in clinics that have been sprouting in drugstores and on street corners for years. Aaron Katz, a professor in the University of Washington Public School of Health, says these clinics have come and gone in the healthcare market.

He also says there are a few reasons these community clinics are attractive to companies.

“One of them is an attempt to capture patients — to capture a market of patients — and then to be able to funnel them to, for example, hospitals,” he said.

CVS doesn’t own any hospitals, but they have another reason to want people walking through the door: Amazon.

Drug stores have been losing customers to online stores like Amazon for years, and that trend will only speed up if customers start turning to the web for their prescriptions. The community care hubs might attract more people who will buy more of their goods and prescriptions at a CVS store.

Dr. Ivor Horn, a pediatrician and the chief medical officer of health technology company Accolade, said having an integrated care hub can also benefit patients, or as she calls them, consumers.

“It’s always great for a consumer to know that they can go to one location and they can have more more information about themselves, and the person that’s caring for them has the information that they need at the right time. The right information, the right time, in the right place is what’s really key,” she said.

So how will the change actually impact patients? And what can we expect from the health industry as tech continues to leave its mark?

CVS and Aetna, along with other companies, have argued that vertical integration in health will help make the system more efficient and lower costs for patients. That reasoning makes some sense, but Katz says we should be skeptical.

Dr. Ivor Horn, a pediatrician and chief medical officer at health tech company Accolade. (Accolade Photo)

“Our experience to date with all kinds of mergers and consolidations is that’s almost never the case. One reason is that larger, bulked up provider systems are better able to negotiate higher prices,” he said. “It’s somewhat counterintuitive, but that’s the way it works in the healthcare system.”

The consolidation also gives the companies immense power over how people get care.

“I think a possibility would be that people who have Aetna insurance may be restricted to CVS pharmacies, so that reduces the choice that patients have,” Katz said.

A third, and even bigger concern, has to do with the quality of care at the community hubs CVS is planning.

As patients have started to use new neighborhood clinics and telemedicine services, there’s been a rise in transactional medicine: A patient seeing a doctor for a one-time consultation, without any established relationship or history.

“Transactional relationships with health care providers, I think, are very problematic,” Katz said. “The research that’s been going on for decades pretty well shows that both patients’ experiences with health care and the outcomes of that care are related to continuity. So, the knowledge that a provider has of you as an individual, of your life, of your life circumstance, and your history going back. And an episodic interaction with a provider doesn’t carry that historical knowledge at all.”

There’s reason to be concerned that retail clinics, like the ones CVS has planned, will make more transactional medicine the norm. But technology may also hold the key to countering that trend.

One obvious example is communication: Tech means we can message or email our primary doctors for small health concerns instead of waiting days for an in-person appointment.

“I think sometimes there’s a misconception that technology is a silver bullet and that it’s going to solve everything and that it’s going to take over,” Horn said. But in reality, “healthcare is about service, and technology supporting and facilitating that service.”

Horn says another good example is providing doctors more data on their patients, including things like their housing and financial situation.

“We’re using that to personalize the way that we provide care such that I, as a provider, have information in front of me, and I can say, ‘these are better options for this patient.’ Because there’s data that’s pulled from thousands and millions of resources that I — as an individual, as a human — can’t possibly contain,” she said. “It means that I don’t have to contain everything in my brain and a person is not limited in my care by what I can remember.”

Technology is also a driving force behind some of the biggest shifts happening in healthcare today. One is a shift away from treating patients only after they get sick — in other words, thinking more about wellness and prevention to stop people from getting sick in the first place.

Before the merger, Aetna actually considered covering the Apple Watch as a healthcare device because it can help detect diseases. Horn also pointed out that people are using Amazon’s Echo devices to remotely monitor aging family members, helping them stay at home longer, which is a proven way to keep elderly patients healthier.

Aaron Katz, a professor in the University of Washing School of Public Health. (Photo courtesy of Aaron Katz)

“I think technology is allowing us to do that,” Horn said. “It’s allowing us to understand what happens when people are outside the four walls of a healthcare building.”

Another important trend is the way healthcare is paid for. For decades, the industry has used a “fee-for-service” model, charging patients and insurance for every service they get. But increasingly, health insurers are demanding proof of better patient outcomes before they pay up, something called a “fee-for-value” model.

Technology is instrumental to documenting patient outcomes and making that system work. It also helps providers pinpoint the real reasons behind costly health encounters like ER visits.

Coming full circle, Farr, the CNBC reporter, said the fee-for-value model actually encourages more consolidation among health companies, particularly to address patients’ lives outside the healthcare setting.

“How do we know whether or not this patient, after we send him home, has the right kind of housing, and social work, and the care that they need to make sure that they stay on those meds and don’t end up in the ER? I think in order to provide that type of a service, you do need to be more integrated,” she said.

The wheels are already spinning, so to speak, when it comes to tech in healthcare. And while there are real concerns to be addressed, there is also an immense opportunity to make positive change in the system.

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