Medicare for all? Socialist healthcare? Pay for outcomes? Value based care? We are awash with slogans, inundated with fear based campaigns, and are being warned that healthcare is changing – fast – and we need to react quickly. But where do we start?
As an industry (and as ageing patients), we are legitimately frightened that our payer business will be changed by a mixture of circumstance and policy, especially in light of the impending 2026 cliff where according to the US administrator for CMS “the program’s main trust fund for hospital services can only pay full benefits for seven more years”.
That said, even amidst the evolving healthcare landscape, the role of commercial payers has already evolved in the most significant way in modern healthcare history. For the first time, the majority of payers’ profits are intrinsically connected to patients health outcomes.
In 2010, the four largest commercial healthcare insurers were receiving only 45% of their revenues from government related healthcare programs like Medicare, totalling 93 Billion dollars, most of which are captivated or value related. In 2016 this swelled to 213 Billion dollars, now representing 59% of their total earnings.
In 2019, one-third (34%) of all Medicare beneficiaries – 22 million people – were enrolled in Medicare Advantage plans – capitated health plans.
In 2019, one-third (34%) of all Medicare beneficiaries – 22 million people – were enrolled in Medicare Advantage plans – capitated health plans. The Congressional Budget Office (CBO) projects that the share of beneficiaries enrolled in Medicare Advantage
plans will rise to 47% by 2029.
This shift to value-based contracting, now encompassing payers, is rewarding payers who deliver health outcomes in a new and innovative way. So what are some low hanging fruit that payers can implement to ensure that whatever external changes come our way, we can address? This paper explores one key area – patient empowerment through better medication management, as a way for payers and plans to ensure viability, profitability and manage this shift to value.
Today, over 80% of healthcare costs are spent on chronic conditions – diseases which patients live with every day of their lives.
One of the most profound shifts in healthcare is that today, over 80% of healthcare costs are spent on chronic conditions – diseases which patients live with every day of their lives. However, this change, offers the system the potential for self-management. One may have expected that over this time, we would see a re-orienting of the healthcare system away from bricks-and-mortar establishments (built to manage acute healthcare) towards self-care. However, here in the USA according the Centers of Medicare and Medicaid, up to 75% of healthcare spend goes to hospitals and Healthcare Professionals, suggesting our conditions are still for the most part being managed in institutions rather than where they should be managed – in the home.
As we gain greater cost accountability, we have to ask ourselves whether our enterprise, hospital and provider centric approach is a sustainable way to continue, or whether a reorientation toward the patient, who lives with their condition, and is likely, if appropriately primed, to have an oversized impact on their health, is the way forward.
If the noble objective of healthcare is the triple aim–reduced cost, and improved outcomes and experience, the solution cannot be a continuation of the status quo. The idea that healthcare only occurs in institutions, and that patients remain ignorant, perpetuates the current approach.
In the USA […] up to 75% of healthcare spend goes to hospitals and Healthcare Professionals
The only way to hit the triple aim is to empower the consumer, encouraging them to self-manage their chronic condition as much as possible with superior medication management, and empower them with their data, rather than hoarding data in closed enterprise systems. In an age where the knowledge gap is closing with the assistance of technology – surely this is possible?
We believe one of the first moves towards this self-management has to be focused on prescription management. According to Watanabe et al (2018, Ann Pharmacotherapy), mismanagement and suboptimization is a $528 Billion dollar problem – probably the single largest preventable issue that can deliver massive cost savings if we get it right. So if a payer was to make a move forward with patient empowerment with a focus on medications, how would one approach this?
Mismanagement and suboptimization is a $528 Billion dollar problem – probably the single largest preventable issue that can deliver massive cost savings if we get it right.
Every day, patients arrive at pharmacies that are closed, out of stock or out of network. Patients get confused and angry for inexplicably high prices, and unknown and changing formularies which reduce access. They lack access to their records and history to share with others, and are frequently uninformed on what the Rx is or its price before arriving at a pharmacy, whilst lacking information and instructions for use. It is no wonder that medication management is a painful, dangerous and expensive chore for our healthcare system – a process that is confusing, disempowering, cumbersome and outdated.
When one traces back these problems and their ensuing cost, every single problem starts with the actual prescription. So what is a prescription? In essence a prescription is a permission note, or a temporary licence for a consumer to procure a product from a pharmacy. But in all other intents and purpose it is valueless. It lacks warnings, reminders, habit forming triggers, cost comparisons, substitution information, education, encouragement, and shareability. And the patient, in today’s ePrescription world, has no access to even this licence.
Many patients today, leave their provider with only the vaguest understanding of the meds that are prescribed.
In a time when patients were not to be trusted with their medicines, fearful that they would double spend or tamper with their prescriptions, and believing that the only trusted systems in the prescription ecosystem were physicians and pharmacies, e-prescriptions were created in such a way that effectively bypassed the patient. Even though this reduced the need for two pharmacy visits by the patient (once to drop, and a second to pick up), this patient bypass approach exacerbated our medication mismanagement issue.
Many patients today, leave their provider with only the vaguest understanding of the meds that are prescribed. (This shouldn’t come as a surprise, because during a short session with a provider, patients are often diagnosed, counselled on their condition, and prescribed a treatment with a series of warnings, instructions, and information – that can be impossible to retain. The consumer is then told to head to their nominated pharmacy where the prescriber is hopeful that more detailed instructions will be shared. But then healthcare and life gets in the way – sticker shock, access issues, missing Rx’s, lack of understanding, travel, language barriers, educational information, etc).
25-30% of patients still never pick up their prescriptions, and 52% abandon their prescriptions by 6 months
The impact of this enterprise centric and paternalistic approach ensures 25-30% of patients still never pick up their prescriptions, and 52% abandon their prescriptions by 6 months – causing ill-health, hospitalisations, re-hospitalizations and wasted healthcare dollars (some early data suggested that abandonment rates were improved with ePrescribing compared with paper, but the evidence was weak, of poor quality and hasn’t been replicated).
So in a world with unsustainable increases in pharmacy costs, and in a healthcare environment where we must take a proactive role in keeping patients healthy and out of hospital, and where medication mismanagement is causing huge preventable healthcare costs, wouldn’t it make sense to convert a prescription into something that
- Can deliver value
- Is aligned to the Triple Aim of healthcare
- Can help support a consumer to make better medication choices
- Can reduce pharmacy spend, and help promote and drive patients to formulary medications, and
- Can reduce overall healthcare costs?
Over the last three years, we have spent significant time researching a better way for prescriptions, and believe that a new smarter prescription can help us tackle the $528B waste, direct patients to more cost effective medication choices – saving $39 billion annually, and bring a disenfranchised consumer from the sidelines to become an even more valuable partner in their own health outcomes.
- What if there was a way to empower patients with
- What if we could anticipate, based on how patients
are engaging with their medications, who might be
at risk of hospitalization?
- What if we could support patients in real time in an
automated and scalable way to make better
- What if we could find a way to reduce opacity on
pricing for patients?
- What if we could intervene before a patient got into
trouble with their medications to stop any
We have re-thought the way prescriptions flow, and in the process have inspired an empowering system that delivers the Triple Aim.
So we have re-thought the way prescriptions flow, and in the process have inspired an empowering system that delivers the Triple Aim. Our unique approach, allows for the creation of secure and unique digital prescriptions, sent directly from inside the provider’s own clinical software to an App on a patient’s phone (just select ScalaMed as the receiving pharmacy). These immutable, portable, and unique digital prescriptions can’t be tampered with or used twice, and deliver the patients a new level of empowerment.
ScalaMed patients can choose their pharmacy for prescription redemption based on convenience, price comparison, and formulary requirements. In real-time, patients can be advised if they are using medicines that are not on formulary and intervene to offer more cost effective and formulary based choices. ScalaMed also offers the patient a source of truth – their digital medication record. With the patient’s digital prescription, they can be educated (why they were prescribed this, how to take it safely and effectively), alerted (careful – there is an interaction here with your other meds or your allergy), and reminded (time to take your meds or get a new prescription). Patients can share their medication list with new providers, hospitals and carers, to ensure the game of charades that occurs with up to 40% of patients at some point in their health journey – “I am taking a green pill, starts with ‘S’”, can be avoided, making meds reconciliation safer, faster and easier.
But beyond just supporting and engaging the patient, this new approach can offer a real-time window into patient’s medication related behavior and offer a platform for intervention. Leveraging AI technology, and by pushing notifications and interventions directly to the consumer, the smart system can question, cajole, activate and motivate the patient, assess their response to the medicines, and recall patients deemed at risk to the clinic for support.
We can ensure a sustainable future for payers and plans, in this changing and evolving world of healthcare.
With an evolved healthcare landscape that is demanding more of plans and payers, focusing on the largest preventable cost item in healthcare – medications and medication mismanagement, can deliver outsized impact on the Triple Aim. We believe that as an entry point for changing the trajectory of medications, Smart Prescriptions offers a new way. A way to truly gain access to patients and support them on their medication journey in real time, a way to link them back into care, and a way to support them to stay healthy and out of hospital. By embedding a solution as described above, we can ensure a sustainable future for payers and plans, in this changing and evolving world of healthcare.
Dr Tal Rapke, founder and CEO at ScalaMed