Trilliant Health Chief Research Officer Sanjula Jain, Ph.D.

Value-Based Care

2023 Trends Shaping the Health Economy

There have been some amazing healthcare market updates published recently, but Trilliant Health’s 2023 Trends Shaping the Health Economy Report might just take the cake.

The expansive analysis highlights 10 trends that define the emerging landscape of the health economy, as well as the corresponding challenges for each stakeholder.

It goes deep… 147 pages deep to be exact, but it’s well worth the time if you can find it. That said, time is a hot commodity, so here’s the breakdown:

1. The commercial coverage market continues to erode
2. The physical and mental health of Americans is unraveling
3. Drug and diagnostic investments signal emerging patient needs
4. The tepid demand trajectory for healthcare services persists
5. Consumer behaviors are starting to manifest in patient decision making
6. The traditional care pathway is becoming disintermediated
7. New models of care further constraining provider supply
8. The monopolistic effects of provider M&A are overstated
9. Employers are facing higher costs for less care
10. The market yield has been revealed, and it’s lower than you think

Where do we go from here? Stakeholders that depend on the commercial population can no longer ignore the fact that healthcare is a negative-sum game, with costs outpacing the value that’s created. Demand is heading in the wrong direction, and we cover new entrants commoditizing services on a weekly basis. The way to “lose less” is to compete on value.

It’s the same strategy for every payor, provider, and pharma company. The tactics are what’s different. Pick your battles, cut losses early, and lose less frequently / by a smaller margin than the competition. There isn’t enough space to get into those here, but 147 pages definitely gets the job done. 

The Takeaway

These trends each stem from the fact that healthcare is a negative-sum game, and that every part of the health economy will be impacted by reduced yield. Demand is declining alongside the number of people with commercial health coverage, while at the same time new entrants are commoditizing services and making loyalty harder to capture. Although the answer to this problem isn’t nicely tucked away in the report, Trilliant does a masterful job highlighting the trends that might help find it.

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The Wire

• HealthComp-Virgin Pulse Mega-Merger: The M&A rut is quickly turning into a thing of the past, with PE-backed heavyweights HealthComp and Virgin Pulse merging into a $3B giant to create a unified platform for patients and employers to manage health plans. Joining forces will combine Virgin Pulse’s employee wellness platform with HealthComp’s revenue cycle suite to form a “health platform-as-a-service company” with 20M users and 1,000 employers. The transaction also marks Morgan Health’s second mega-merger in as many years after overseeing Vera-Castlight in 2022.

• Nuance Goes Live With DAX Copilot: Nuance announced the general availability of DAX Copilot, the AI formerly known as DAX Express, opening it up to over 550k active Dragon Medical users. DAX Copilot is the first ambient clinical documentation app to combine conversational AI with GPT-4 (not too surprising given Nuance parent Microsoft’s ownership in OpenAI), which allows it to securely generate draft notes for immediate review by eliminating the need for a human quality checker.

• CDC Weighs In On Obesity: In just ten years, the US went from having zero states with an obesity prevalence above 35%, to a whopping 22 states in 2022. That’s one of the main takeaways from the CDC’s recent obesity update, which showed particularly high obesity prevalence among Hispanic, Native American, and Black adults. This CDC Obesity Prevalence Map also does a great job telling the story visually.

• Tendo Acquires MDsave for $150M: Patient journey platform Tendo is acquiring MDsave, which operates a healthcare marketplace that lets providers browse and compare services. For patients, the acquisition is all about improving access. For providers, it should help with attracting new patients through better transparency and support for bundled procedures. Although Tendo probably has a long list of synergies that justify dropping a cool $150M, it also has the resources to level up MDsave’s provider enrollment efforts and the scale of the marketplace.

• ChatGPT Opens Its Eyes: Only half a year after ChatGPT made its world-changing debut, the LLM has officially gone multimodal after adding new functionality that allows it to see, hear, and speak. Users can now point their phones toward some clouds and simply ask ChatGPT how they were formed, dramatically expanding the model’s already wide set of use cases. There’s a million things to say about the update, but OpenAI’s blog post easily gets the point across that you’re now living in a time when you can just ask your phone if all those moving boxes will fit in your car.

• Costco Takes On Healthcare: Costco is teaming up with digital health marketplace Sesame to offer its members same-day virtual primary care for just $29. Other Sesame services are also available at costs only rivaled by Costco’s inflation-immune hotdogs, such as a full check ups and lab panel for $72 and virtual therapy for $79. Similar to other companies with prime membership bases, Costco wields unique unit economics that could spell tough competition for established players.

• Transcarent Launches Provider Network: Transcarent unveiled new partnerships with a network of 10 big-ticket health systems to improve access to high quality care for employees. The idea is that Transcarent can deliver better costs by contracting upfront with the health systems, which also gives those providers a way to get their services in front of a national audience. Although Transcarent probably won’t cause a surge of new patients from across the country, the partnership’s wide geographic coverage should be great for visibility and employers with nationwide staffing. 

• BrightSpring IPO Watch: In case you couldn’t tell from this week’s M&A moves, BrightSpring delivered yet another signal that the market is returning to life by confidentially filing for an IPO. Bloomberg reported that BrightSpring originally planned to go public in late 2022 but abandoned those plans to outwait the market gloom. This will be a great bellwether for investor appetite, since BrightSpring owns a wide range of home health and hospice businesses that manage complex populations.

• Generative AI Market Map: A beautiful Generative AI Market Map from Sequoia has been making the rounds with solid classifications for AI’s various healthcare use cases. A picture’s worth a thousand words, but the major buckets are divided between front office (patient engagement, documentation, care decision making), and back office (prior auths, coding, revenue cycle management).

• Texts Aren’t Enough: When Michigan Medicine gave cardiac rehabilitation patients fitness wearables and sent them daily smartphone text messages encouraging exercise, it still didn’t lead to more physical activity or better fitness over six months. Among 220 patients (59.6yr avg age), the intervention group who received text messages didn’t achieve statistically significant improvements in 6 min walk distances or average step counts. However, the trial did show some fitness improvements over three months, and participants with Fitbits actually improved more than those with Apple Watches.

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