Over the last ten years, we have discussed at length the expected changes in health care. Well, it has come to pass, and rapid mobilization has begun. What surprises me is that it has taken so long.
These are the oceanic changes that we should expect in the next decade:
The First Wave of Consolidation:
Opportunities abound for the brave and the imaginative. We are seeing Special Purpose Acquisitions Companies (SPACs) being generously utilized through their challenges can be many and onerous. Private equity and investors are eyeing this great chance of shoring up as many practices as possible and deploying their cash. For those looking for places to park their cash, it is still not too late. The train has not fully left the station and they may still catch up if they are willing to be adventurous. Though I would advise a deliberate and well-thought strategy with domain expertise before investments are made.
It is time to sit up and notice the market. Practices that would barely be sold for at an EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of five are now commanding a multiple of eight to ten easily and sometimes even more. The old approach of conservative management will no longer work and might be suicidal for the status quoits as things speed up. And yet, there are dangers of failure for those who are buying practices as speculators waiting to go public rapidly and there is much danger for the shareholders for entities that do not have the infrastructure to manage practices at scale. The vehicle of SPACs has its inherent limitations and costs that are couched beneath legalese.
The Second Wave of Integration and Innovation:
Those who wish to be ahead of the curve need not wait for the first phase to be fully over. This will need cutting-edge technology with very down-to-earth clinical needs. Not technology for the sake of technology either, as we saw with Watson but end-user driven and patient- and provider-oriented approaches that may be simple though sophisticated. Education of patients and providers will become critical and data analytics and process automation elementary. Artificial Intelligence Augmented and Extended Reality, the Internet of Things, communication systems, and networks will carry this wave, or perhaps we should call it the tsunami.
The Third Wave of Transformation:
This will happen as consumers drive the market along with payers, the most important of which is the government, and the consolidated entities that will manage a large share of primary care in a region or the nation. This will entail a rapid and demanding change in habits and thought process, methods of payment, a switch in incentives, focus on populations along with precision care, advances in medicine that are cost-optimized and medically appropriate, and fundamental primary care and preventive medicine. Once again, the third wave, in some ways has already begun and we can see it building at the not-too-distant horizon.
These seismic shifts have been in the making but were unwittingly accelerated once President Obama monetized the digitization of health care by creating incentives for electronic medical records, and once the regulations for patient health information and the Health Insurance Portability and Accountability Act were updated with the HITECH act. For as soon as information is digitized, exponential growth becomes possible, even inevitable. The time has come for which many of us have waited, some of us have dreaded, and most of us have been unprepared.