How could nationwide value-based payment become a reality in the next 5 to 10 years? Looking to today’s market for clues, our team envisioned several scenarios of how influential stakeholders could make that happen.

In each scenario, we describe what the future would look like, how it would unfold, and what it would mean for major stakeholders in healthcare — and what to do if this future doesn’t look rosy for your organization.

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In this scenario, technology companies (such as Amazon, Apple, Google) would fully commit to disrupting the healthcare industry. They would see an opportunity to expand their profits without cannibalizing existing revenue streams — a challenge incumbent players struggle to overcome. Each company would deploy strategies that reduce costs, make care easier to access, and improve consumer experience.

Technology companies are outsiders. While they are reliant on incumbent expertise, they aren’t beholden to incumbent priorities. Every dollar generated from their healthcare businesses is net new revenue, which means they can operate in lower-cost ways without eating into preexisting revenue streams leading to downstream cost reduction.

The result of this scenario would be a consumer-centric healthcare industry and a reduction in total cost of care.

1. The push toward greater tech enablement would expose digital inequities. Tech companies’ digital-first approach would force stagnant players to invest heavily in digital infrastructure and offerings. However, digital access, literacy, and trust in technology companies are currently barriers to adoption. Appropriately, all stakeholders (tech, providers, payers, and government) would have to make improving digital equity a top priority.
2. Other providers would be forced into capitated arrangements to compete with consumer-centric tech companies. Patients would grow accustomed to consumer-centric care delivery, which would force incumbent providers to make convenience and patient satisfaction more important. Reducing costs for incumbent providers often requires demand destruction — an unattractive position for businesses with already thin margins. For those providers looking to compete, adopting two-sided risk or capitated payments would be necessary to stay competitive.
3. Technology companies would rely on incumbents to fill necessary roles in the healthcare ecosystem, fostering an industry of giants. In the heavily regulated healthcare industry, tech companies are reliant on partnerships with incumbent players. The only alternative would be to buy a hospital or health plan, and it’s unclear whether tech companies want all the regulations and additional competition that comes with those purchases. Instead, under this scenario, tech companies would leverage their proficiencies as service offerings to major payers, health systems, and employers, further isolating local and regional players.

Tech companies have tried to disrupt healthcare before — with little to no success. They have a lot to prove when it comes to innovating the industry, but that hasn’t stopped them from trying. Their willingness to divest and fully pivot business priorities is a unique strength in healthcare. The industry is long overdue for change, and a high tolerance for risk (with the funds to back it up) might be the necessary factor to push us into a new era of care.

Instead of starting from scratch, tech companies in this model would have chosen to center their healthcare strategy on already viable models. Amazon’s acquisition of One Medical is a prime example. But the winning strategy won’t look the same for every player. Each company’s unique aims, approaches, and skill sets could allow them all to succeed independently while contributing to industry-wide change.

Tech companies’ distinct strategies primarily tackle cost and convenience. Central to each of their strategies is a focus on consumer experience, something that sets them apart from incumbent stakeholders. Below are three examples of business opportunities tech might capitalize on:

• Develop intuitive patient navigation services to connect patients with low-cost, high-quality providers.
• Replace outdated low-acuity care delivery with convenient, high-quality, digital-first care.
• Simplify and centralize the patient data experience.

Providing care that is accessible, digitally enabled, low-cost, and high-quality is most advantageous in a value-based payment environment. And we know tech companies often use a subscription payment design (not dissimilar to capitation).

• The risk is immense. No entity has ever delivered on truly integrating data and care delivery at this scale.
• Consumer trust in technology companies and concerns over patient privacy may stunt opportunities early.
• This scenario assumes telehealth and other digital care continue to be reimbursed, and patients continue to utilize the offerings.
• The provider supply is limited, and this scenario would require a critical mass of clinicians who would willingly work for these tech companies.

Not every stakeholder would be a winner in this future scenario. Here’s how key stakeholders would be affected and how they should respond.

Part three of our series examines one national health plan taking its vertical integration strategy to the extreme, controlling where care happens and how it’s paid for.