What We're Watching: February 26, 2019

TRADITIONAL HEALTH PLANS AREN’T WORKING

Unsealed court documents have revealed new details on the Amazon, Berkshire Hathaway, and JPMorgan health venture. The companies have joined forces to analyze data to identify care quality and cost variation. Furthermore, they are looking at how to re-envision health insurance benefit design with the goal of incentivizing value. They are also analyzing pharmaceutical prices.

What we’re saying: This represents another avenue by which large employers are looking to lower healthcare costs. We’re also seeing health systems step up to do this for large employers through direct-to-employer contracts, where they cut out the traditional third-party payer to create customized value-based health plans for their employees. Premier has work underway with health systems and employers on these models to ensure their success.

DRUG PRICE PROJECTIONS

Last week, we released our inflation estimates for contracted and non-contracted pharmaceutical pricing for fiscal year 2020 (July 2019 – June 2020), projecting a 3.8 percent increase in total pharmaceutical costs. This inflation rate is ≈0.4 percent lower than Premier’s fiscal year 2018 projections.

What we’re saying: Premier has been able to secure top pricing across our portfolio, saving healthcare organizations millions of dollars over the estimates from last year. We anticipate a 2 percent increase in inpatient pharmaceutical costs and a 5.3 percent increase in non-acute items. Most of the inflation is on non-contracted items, which are typically on-patent, branded pharmaceuticals that do not go through the competitive group purchasing process. For on-contract purchases, Premier projects a net decrease of 0.2 percent, including for those drugs currently in shortage, which historically have been subject to pricing spikes when there is a lack of competition in the market.

A 5-POINT PLAN TO HEALING HEALTHCARE

Coming off our CEO, Susan DeVore’s HIMSS19 keynote address earlier this month, we have outlined the critical steps to move forward when it comes to the flow of information and data.

What we’re saying: The universal goal of a smarter, more responsive healthcare system that is consumer-centered, provider-led, and has data that flows seamlessly, is analyzed effectively and gets leveraged to guide decision making at the point of care is attainable. Here are our five suggested steps to getting there:

1. Transform data overload into actionable data
2. Move from actionable data to informed clinicians
3. Support informed clinicians with a robust infrastructure
4. Build on robust infrastructure with innovative apps
5. Unlock liquid, interoperable information to improve the health of populations

IN CASE YOU MISSED IT

• Premier Inc. Projects 3.8 Percent Price Inflation for Pharmaceuticals
• Five Keys to Healing the Healthcare Industry from Within
• Premier CEO Susan DeVore: We have 'a higher calling' to improve the U.S. healthcare system

What We’re Watching is a weekly blog focused on the current events Premier is following and their relevance to the work of Premier and its members.