10 Big Healthcare Predictions for 2016

Photograph by David H. Seymour — Getty Images/iStockphoto

In 2015 we learned that several unicorns need more time on the ranch before they get their magical powers, people still love tracking their steps, and Hepatitis C can be cured about as effectively as the flu. These observations led us to speculate about what will happen in 2016. Here are our 10 healthcare industry predictions for next year:

1. The FTC will block a major hospital merger based upon unequivocal data that consolidation leads to price increases more than quality gains.

2. “Wearables” become “Ther-ables”. A new category of wearables will enter the market and become substitutes for costlier medical therapies. They will offer less invasive but highly effective treatments for diseases and adopt business models based upon medical value creation instead of wellness, entertainment, and education.

3. End of life care grabs headlines, and hospice usage doubles among ACOs and capitated doctors. In response to increasingly expensive medications, high deductible plans and new payment models, doctors engage patients in the shared decision-making around end of life discussions. Over time, this will lead to pressure on drug pricing, higher Net Promoter Scores from patients, and higher incomes for doctors.

4. A major hospital system will divest itself from its employed doctors after losing too much money and avoiding the move into risk-based reimbursement. As a result, hospitals will begin unwinding the money-losing practices they have been acquiring over the last five years, similar to the 1990s when the physician practice management roll-ups failed.

5. The insurance innovation craze of 2015 will be a bust in 2016. Several noted provider-sponsored health plans and startups will struggle to achieve competitive premiums and, as a result, attract few members and hemorrhage cash. While compelling software experiences are cool (and needed), the “laws of physics” of health insurance favor mega-plans that can use their market power to get far better provider discounts and apply their armies of case managers to better manage high-cost patients.

6. Precision medicine cools, à la the Human Genome Project in 1999, and surges a decade later. The headlines translate into little immediate impact because biology is too complex, and care is simply not reliable enough to benefit from the fine-tuning imagined by precision medicine. Today, greater return on investment comes from prescribing a generic statin, making patients compliant, and hitting a generic LDL goal of <100, instead of spending $3,000 for sequencing to reaffirm that this generic “evidence-based guideline supported” approach is just fine.

7. Pop Health goes Pop. Some notable analytics companies will disappear or pivot to become medical providers because their current provider customers are unable to derive enough value from their pop health analytical tools. In fact, most of the current value from these tools comes from upcoding and gaming the risk – adjustment system for higher payment as opposed to complication avoidance. In addition, most providers already know which of their patients are high risk, making these tools dispensable.

8. In-person on-demand flops. The laws of high customer acquisition cost and limited ability of most people to pay high prices collide to make the market for on-demand doctors and prescription drug delivery very small. Instead, video-telemedicine will be the way people access care rapidly and at a fraction of the cost. We will continue to stand in line, at least in 2016, at retail pharmacies for prescription drugs.

9. PCSK9 cholesterol drugs make Solvaldi look cheap. The positive mortality data will make doctors want to lower cholesterol to the minuscule levels that only PCSK9s can deliver. Also, patients will view the weekly injection as more convenient than daily pills. The success of weekly injections to assure compliance with doctor’s orders will lead to more innovation in drug delivery strategies that remove the risk of patients forgetting to swallow pills.

10. Employers start to treat healthcare costs as seriously as travel expenses. Just as employers mandate preferred travel partners and per diems for travel expenses, they will become equally active in imposing rules to manage healthcare costs. Large employers may choose which doctors and hospitals employees visit, require second opinions before high cost procedures or treatments, recommend telemedicine before going to an emergency room, or require online tools for managing their conditions and out-of-pocket expenses.

While we would never claim to be soothsayers, we look forward to seeing how each of these predictions unfolds in 2016.

Bob Kocher and Bryan Roberts are partners with venture capital firm Venrock, where they focus on healthcare and healthcare-related investment opportunities.

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