With healthcare reform likely to limit their growth, health insurers are expanding into data management to create new revenue streams
Faced with swift changes in healthcare, many of which are not favorable to the traditional business model of private health insurers, the nation’s largest payers are positioning themselves to be major players in the management of “big data.” That may have interesting implications for clinical laboratories and anatomic pathology groups, which typically generate large quantities of medical laboratory test data.
In response to the multiplicity of mandates of the Affordable Care Act , health insurers are revising their business models to include new revenue sources, noted an article published by Modern Healthcare.
Some health insurers are trying to morph into provider organizations. Others are specializing in underwriting. But the most popular new business sector being adopted by major health insurance corporations is healthcare data analytics, according to industry experts.
“Now that real money is being put out, there are preparations being made to bring this into their main business model,” noted David Brailer, M.D.
“The fight over the control of [healthcare] data will be a very large struggle,” he predicted, noting that their current insurer business model is a losing proposition under healthcare reform.
Healthcare consultant David Brailer, M.D., who served as the first health information czar under President George W. Bush, isn’t surprised that health insurance companies, such as UnitedHealth Group, are buying up health analytics data vendors. He said it’s understandable that insurers are looking for new ways to generate revenue streams, because their current business model is a losing proposition under healthcare reform. (Photo copyright Health Evolution Partners.)
Brailer is Chairman and Founder of Health Evolution Partners, a San Francisco-based private equity firm specializing in healthcare investments. Formerly he was Director of the Office of the National Coordinator for Health Information Technology (ONC).
EHR Data Has High Clinical Value
Modern Healthcare noted that private payers have long been keepers of claims data, which extends over a patient’s life and across multiple providers. Now EHR-equipped hospitals and physicians are placing themselves at the top the healthcare data heap. IT-enabled providers are using health information exchanges (HIEs) or developing data consortiums like Anceta, a medical informatics subsidiary launched by the American Medical Group Association (AMGA) in 2002.
Data experts agree that provider EHRs produce richer, more clinically useful flows of health information than what is provided by claims data. In its recent annual report, AMGA claimed that Anceta clinical data performed about twice as well as models based on claims data. “It consistently identifies about 4% of patients who are responsible for 24% of admissions and emergency department (ED) visits, and 9% of patients who are responsible for 37% of hospital utilization, stated the AMGA report.”
One development involving Anceta last year shows the power of “big data.” It was a new predictive model created by Humedica that can identify patients with congestive heart failure who are most likely to have an ED visit or hospital admission within the next six months.
UnitedHealth Gains Data Supremacy with Purchase of Humedica
Optum, the data subsidiary of Minnetonka, Minnesota-based United Healthcare Group (NYSE: UNH) recently acquired Boston-based Humedica, a clinical intelligence company and EHR provider.
UHG already owned Axolotl, a HIE software and services provider, and Picis, a developer of EHRs for hospital emergency and other high-acuity facilities. Although the terms of the Humedica deal were not disclosed, industry experts valued the deal in the hundreds of millions, according to a report published by the Boston Business Journal.
UHG is not the only insurer getting into the healthcare data business. In 2010, Aetna acquired Medicity, a HIE software and services provider, for about $500 million.
At the moment, UnitedHealthcare Group appears to be winning the battle for healthcare data supremacy. The Optum deal represented more than just an insurance giant simply buying another health information technology company, noted Modern Healthcare. Industry experts consider it a major UHG victory in the ongoing battle for control of health data.
Humedica is a prize catch because of the company’s longtime relationship with Anceta. Humdica serves as Anceta’s chief technology and data analytics partner. It developed the technology that enables AMGA physicians to access and compare their EHR data across time and provider groups, noted the Modern Healthcare report.
Why Experts View Humedica and Optum as a Good Match
Robert Laszewski is a former insurance executive and President of Health Policy and Strategy Associates, a consulting firm. He told Modern Healthcare that UHG has a history of purchasing ancillary-type services.
“The data business is a profitable industry, and it appears that United is trying to create another profit center”, he said.
Laszewski scoffed at the notion that UHG would use EHR data for medical underwriting or other insurance-related purposes. With insurance companies gaining millions of new customers under healthcare reform, he said that they’ll do just fine without exploiting access to patient medical data. “It sounds deep and dark,” he said of an insurer buying a health data analytics firm, “but you can’t just go into a block of data and start mining it. It doesn’t work that way.”
Ashish Jha, an associate professor of health policy and management at Harvard University, noted, “Companies like United are looking to differentiate themselves and be a market leader in a whole lot of other businesses.”
He suggested that data technology vendors are attractive, because insurers recognize the value of sophisticated analytics made possible by the rich data streams created by EHRs.
Who controls health data should be of particular interest to pathologists and clinical laboratory professionals. That’s because medical laboratory data comprises 70% of a patient’s medical record. The ability to use clinical data to develop predictive algorithms adds significant value to lab test data, which is integral to this development, and the professionals creating it.
—Patricia Kirk
Related Information:
UnitedHealth deal is latest move in industry shift
Optum Buys Analytics Vendor Humedica
Sources: Boston’s Humedica acquired by UnitedHealth Group; deal valued in ‘hundreds of millions’
UnitedHealth Unit Buys Boston Health IT Firm Humedica
United Healthcare’s Humedica Buy Signals Analytics’ Clout
Optum follows Mayo deal with Humedica acquisition – Topix
Humedica, Anceta, and AMGA Partner to Improve Patient Care through Clinical Analytics
