Author: AbhishekSingh

Oscar Health’s +Oscar Platform May Signal a Turning Point for Healthcare Payer Product Innovation

Product innovation has been lacking in the healthcare payer product space. But can this be changing? Oscar Health’s launch of +Oscar platform may lead to an uptick in new product launches.

Soon after officially going public in March, the US-based digital native health insurer introduced +Oscar, a tech-driven platform business designed to help healthcare clients drive improved efficiency, growth, and engagement with their members and patients. +Oscar offers a cloud-based service architecture and integrated data and analytics layer to serve clients spanning the individual, Medicare Advantage, and group lines of payer business.

What led to this move?

The healthcare payer industry is rapidly changing, marked by a seminal shift to value-based care, rise in consumerism and digitization, and demand for personalized member experience, among other factors. Despite the dynamic nature of the market, the healthcare payer product space has not evolved at the same pace.

With the launch of +Oscar following the January news of Optum’s acquisition of Change Healthcare, the tides could be changing in this space. We expect the spurt already witnessed in product development activities in the payer industry to continue and accelerated product launches to follow.

The payer product/platform space has traditionally been dominated by larger players such as Cognizant (TriZetto Healthcare Products), HealthEdge, and Oracle, which offer productized core administrative platforms. In addition, point solution providers such as Optum (Change Healthcare) and Cotiviti offer solutions addressing one or more segments across the payer value chain. While payers feel most of the available products/platforms lack the essential digital dexterity, we believe that Oscar’s digital native payer platform is one of the significant developments in addressing this issue.

Unpacking +Oscar


Below is the key business value proposition of +Oscar:

Picture1 12

 

What works in Oscar’s favor?

Everest Group conducted focused interviews in the fourth quarter of 2019 with ten senior executives (CIOs and COOs) across the payer spectrum to understand their challenges and approaches to a platform-led modernization approach (read more at A Platform-based Roadmap for Healthcare Payers). Here is how +Oscar aligns to the key themes that we explored in these interviews:

Oscar Health

One of the key takeaways from the executive conversations was increasing traction toward an affiliate partner model. An affiliate partner model offers multiple benefits such as combined resources and domain expertise to drive innovation, shared ownership of innovation risk, and economies of scale to drive down costs. Having a payer affiliate as an IT partner is advantageous for healthcare plans (specifically for the small ones), as the partner understands their culture and business dynamics better. Hence, the affiliate model that Oscar Health offers makes +Oscar more relevant in the market.

What’s next?                                                              

With the payer technology market witnessing a strong nudge to innovate, we believe the launch of +Oscar is an indicator of the things to come. With BigTechs (Amazon, Microsoft, Salesforce, ServiceNow) making big bets in the core healthcare segment (Amazon HealthLake and the Microsoft Nuance deal) and digital native payers externalizing their technology, traditional product vendors will need to up their games to remain competitive.

We are positive about this investment by Oscar Health. However, it remains to be seen how Oscar leverages an affiliate partner model as well as addresses the main issue of Return on Investment (RoI) to build a valid business case for +Oscar.

Reach out to us at [email protected] or [email protected] with your thoughts.

Microsoft Goes All in on Industry Cloud and AI with $20 Billion Nuance Deal | Blog

Yesterday’s announcement of Microsoft’s acquisition of Nuance Communications signifies the big tech company’s serious intentions in the US healthcare market.

We’ve been writing about industry cloud and verticalization plays of big technology companies (nicknamed BigTech) for a while now. With the planned acquisition of Nuance Communications for US$19.7 billion, Microsoft has made its most definitive step in the healthcare and verticalization journey.

At a base level, what matters to Microsoft is that Nuance focuses on conversational AI. Over the years, it has become quite the phenomenon among physicians and healthcare providers – 77 percent of US hospitals are Nuance clients. Also, it is not just a healthcare standout – Nuance counts 85 percent of Fortune 100 organizations as customers. Among Nuance’s claims to fame in conversational AI is the fact that it powered the speech recognition engine in Apple’s Siri.

Why Did Microsoft Acquire Nuance?

The acquisition is attractive to Microsoft for the following reasons:

  1. Buy versus build: If Microsoft (under Satya Nadella) can trust itself to build a capability swiftly, it will never buy. Last year, when we wrote about Salesforce’s acquisition of Slack, we highlighted how Microsoft pulled out of its intent to acquire Slack in 2016 and launched Teams within a year. Could Microsoft have built and scaled a speech recognition AI offering?
  2. Conversational AI: Microsoft’s big three competitors – Amazon, Apple, and Google – have a significant head start in speech recognition, the only form of AI that has gone mainstream and is likely to be a US$30 billion market by 2025. Clearly, with mature competition, this was not going to be as easy as “Alexa! Cut slack, build Teams” for Nadella
  3. Healthcare: This is another battleground for which Microsoft has been building up an arsenal. As the US continues to expand on its $3 trillion spend on healthcare, Microsoft wants a share of this sizeable market. That is why it makes sense to peel the healthcare onion a bit more

 

What Role Does Microsoft Want to Play in Healthcare?

While other competitors (read Amazon, Salesforce, and Google) were busy launching healthcare-focused offerings in 2020, Microsoft was already helping healthcare providers use Microsoft Teams for virtual physician visits. Also, Microsoft and Nuance are not strangers, having partnered in 2019, to enable ambient listening capabilities for physician to EHR record keeping. Microsoft sees a clear opportunity in the US healthcare industry.

  • Everest Group estimates that technology services spending in US healthcare will grow at a CAGR of 7.5% for the next five years, adding an incremental US$25 billion to an already whopping $56 billion
  • The focus of Microsoft and its competitors is to disrupt the multi-billion ($40 billion by 2025) healthcare data (Electronic Medical Record) industry
  • Erstwhile EMR has been a major reason for physician burnout, which the likes of Nuance aim to solve
  • Cloud-driven offerings such as Canvas Medical and Amazon Comprehend Medical are already making Epic Systems and Cerner sit up and take notice

It is not without reason that Microsoft launched its cloud for healthcare last year and has followed it up by acquiring Nuance.

What Does it Mean for Healthcare Enterprises?

Under Nadella, Microsoft has developed a sophisticated sales model that takes a portfolio approach to clients. This has helped Microsoft build a strong positioning beyond its Office and Windows offerings even in healthcare. Most clients in healthcare are already exposed to its Power Apps portfolio and Intelligent Cloud (including Azure and cloud for healthcare) in some form. It is only a question of time (if the acquisition closes without issues) until Nuance becomes part of its suite of offerings for healthcare.

What Does it Mean for Service Providers?

As a rejoinder to our earlier point about head starts, this is where Microsoft has a lead over competitors. Our recent research with System Integrators (SI) ecosystem indicates that Microsoft is head and shoulders above its nearest competitors when it comes to leveraging the SI partnership channel to bring its offerings to enterprises. This can act as a significant differentiator when it comes to taking Nuance to healthcare customers as SI partners can expect favorable terms of engagement.

Partners' Perceptions

Lastly, this is not just about healthcare

While augmenting healthcare capabilities and clients is the primary trigger for this purchase, we believe Microsoft aims to go beyond healthcare to achieve the following objectives:

  • Take conversational AI to other industries: Clearly, healthcare is not the only industry warming up to conversational AI. Retail, financial services, and many other industries have scaled usage. Hence, it is not without reason that Mark Benjamin (Nuance’s CEO) will report to Scott Guthrie (Executive Vice President of Cloud & AI at Microsoft) and not Gregory Moore (Microsoft’s Corporate Vice President, Microsoft Health), indicating a broader push
  • Make cloud more intelligent: As mentioned above, Microsoft will pursue full-stack opportunities by combining Nuance’s offerings with its Power Apps and Intelligent Cloud suites. As a matter of fact, it plans to report Nuance’s performance as part of its Intelligent Cloud segment

Microsoft: $2 Trillion and Beyond

This announcement comes against the background of BigTech and platform companies making significant moves to industry-specific use cases, which will drive the next wave of client adoption and competitive differentiation. Microsoft’s turnaround and acceleration since Nadella took over as CEO in 2014 are commendable (see the image below). It is on the verge of becoming only the second company to achieve $2 trillion in market capitalization. This move is a bet on its journey beyond the $2 trillion.

Picture2 5

What do you make of its move? Please feel free to reach out to [email protected] and [email protected] to share your opinion.

The Buzz and Promise around TCS’ New Tagline | Blog

What’s in a brand tagline? These catchy slogans with only a few words can say a lot about a company and its future direction.

With the announcement by TCS (Tata Consultancy Services) on March 30 of its new brand statement, this leading IT services, consulting, and business solutions organization has created quite a bit of buzz moving to “Building on Belief” from “Experience Certainty.”

While customers and competitors alike recognize that TCS has been true to its original tagline with its execution efficiency, pragmatic expectation setting, and adherence to contractual commitments, a change was needed after 15 years.

Why change now?

As all global organizations pivot to uncertain environments, preparing for a nebulous future has become everyone’s new mantra. The rebranding was long overdue. Although TCS may be a known brand in execution, in honesty, it is not recognized for owning risks or thriving in abstract situations.

Also, we have seen most of the competition already aligned to the “pivot to the fuzzy future” notion with taglines such as:

  • Infosys: “Navigate your next”
  • Accenture: “Let there be change”
  • Capgemini: “Get the future you want”
  • Wipro: “Empowering a resilient future”

It was just a matter of time before TCS as one of the industry leaders (it was ranked second in this year’s annual ITS Service Provider of the Year awards) would respond to this market dynamic.

What’s the buzz all about

Any brand expert will tell you that in branding, boring means dead. However, if folks are debating anything related to your brand (as long as it is not damning), it is creating what is called a buzz.

And word of mouth about this tagline is that it is way too abstract for a firm that has stood for “experience certainty.”

In the analyst community, some of my peers went so far as to suggest that TCS has perhaps “overshot the mark here,” with several in the community posing such pertinent questions as:

  • Is TCS asking clients to “believe” in it?
  • Is TCS expecting clients to “build” a business case for the future based on “beliefs”?

The most interesting part of this tagline right now is that everybody is debating it. Because of the conversation, in no time, the new TCS tagline is poised to reach a far larger audience than would normally follow this news. Whether or not TCS consciously thought of this strategy, it’s a brilliant move.

Tagline thoughts

Back to the controversy – has TCS overshot its mark by going for something too abstract? My assessment gives TCS the benefit of doubt. Here is why: Most high-end problem-solving in this world starts with an initial hypothesis (“belief”). As the journey proceeds, facts are collected that prove or disprove that premise to arrive at a solution.

In my opinion, TCS wants to convey the mutual trust it has with its clients to solve problems together and transform their businesses. Let’s remember that “belief” is an important component that keeps us on track when dealing with many of today’s fuzzy concepts such as blockchain, quantum computing, and cognitive, to name a few.

Net-net: TCS is already known for execution or “building.” Its new mission statement, “Building on Belief,” communicates its intention to execute while taking risk ownership, which is essential in these times. Given that TCS lived up to its last tagline, I have confidence it will work hard to make its brand promise more than just an interesting slogan to talk about and a new reality.

Amazon HealthLake: A Step Further in AWS’ Healthcare Strategy | Blog

It’s been close to a month since Amazon Web Services (AWS) announced Amazon HealthLake at its 2020 annual (and virtual) conference. After observing the reactions from various industry participants, we thought it was time to offer our opinion.

Amazon HealthLake is a HIPAA-eligible service that aims to support interoperability standards and further drive the use of big data analytics in healthcare and life sciences. The service is essentially a data lake tailored for the healthcare and life sciences industry. It will aggregate an organization’s data across various silos and disparate formats into a centralized AWS data lake, and automatically normalize this information using machine learning. It will be capable of identifying each piece of clinical information and tagging and indexing events in a timeline view with standardized labels so they can be easily searched. This structured data can then be offloaded to a service such as Amazon SageMaker to train machine learning models for advanced analytics. HealthLake will also structure all the data into the Fast Healthcare Interoperability Resources (FHIR) industry standard format to enable data sharing throughout the organization.

Exhibit 1: Amazon HealthLake

Amazon HealthLake

Source: AWS (https://aws.amazon.com/healthlake/)

What’s in it for the healthcare and life sciences industry?

This is definitely a positive step for AWS to showcase an industry-specific solution for its clients and prospects. Amazon HealthLake provides a contextualized solution for addressing some critical challenges the healthcare and life sciences industry is facing, namely working with siloed, unstructured, and incomplete data stored across multiple systems, lab reports, medical images, insurance claims, and time-series data (for example, heart ECG or brain EEG traces.) Putting data at the center of the business allows the development of innovative products and services and provides the opportunity to revolutionize business models. AWS’s approach enables healthcare industry professionals to focus on mission-critical activities while it manages the data complexity.

Some of the key use cases for HealthLake include:

  • Payers – HealthLake will help health insurance companies predict more accurate insurance premiums, design data-driven insurance policies, and carry out effective claims management by bringing together a complete view of a patient’s medical history.
  • Providers – Healthlake can integrate with other AWS machine learning and analytics services, like Amazon SageMaker and QuickSight, to improve efficiency and reduce hospital waste. Some of the core use cases include population health management, clinical decision support, revenue cycle management, scheduling optimization, reducing unnecessary procedures, and addressing privacy and security requirements.
  • Pharma/Biotech – Clinical researchers are struggling with ever-increasing volumes of data from trial sites, patients, CROs, and other vendors, as well as from newer resources like EHR and wearable technology. HealthLake can help life sciences enterprises revolutionize data-driven R&D, advance clinical research with predictive analytics, and enhance pharmacovigilance.

HealthLake fits perfectly in Amazon’s data-hinged healthcare strategy

Amazon is aiming to transform healthcare by putting a well-developed range of integrated technology solutions supported by a second-to-none data asset, similar to its disruptive approach in the retail industry with low costs, high customer convenience, and a great recommendation engine. A key prong of its strategy is healthcare cloud computing, as payers, providers, and life sciences enterprises adopt more cloud computing services to stay on top of the rising volume of patient data.

Amazon HealthLake is another sign that AWS views healthcare as an industry with massive growth potential for its cloud services. AWS has been steadily rolling out HIPAA-eligible computing tools over the past few years in a race with Google Cloud and Microsoft Azure as the industry cloud war intensifies in the nascent healthcare cloud computing space. ​In 2019, the company announced Amazon Transcribe Medical, a voice transcription service for physicians that inputs text directly into medical records. In 2018, it introduced Amazon Comprehend Medical, a service that uses AI to mine medical records for information that can be used to improve patient treatment and reduce costs.

While AWS’s long-term strategy for healthcare is anyone’s guess right now, it will certainly be an interesting player to watch as well as an exciting one to partner with and compete against.

Are IT Buyers Pushing for Discounts Due to the Pandemic?

Not surprisingly, we’ve been flooded with questions about the implications of COVID-19 on the IT services industry over the past two months.

Let’s take a look at the two most prevalent questions.

How are IT contracts being impacted?

Financial distress – such as a dip in revenue generation and restricted cash flow – is forcing enterprise IT to review their IT contracts. Clients are exploring three options:

  • Putting non-critical projects on hold
  • Deferring payments to keep critical projects running
  • Seeking discounts

Their preferred option is putting non-critical projects on hold. Clients are triaging to keep their business-critical functions – like transactions systems, call centers, datacenters, and supply chain systems – running. However, they’re putting non-critical engagements, such as new application development and feature upgrades, on the back burner.

Second in order of priority is deferring payments. We’re seeing deferral requests increase in frequency, especially in distressed industries such as travel, transportation, hospitality, and medical devices. And we’ve seen payment terms going up to 180 days in a few situations. However, an early trend that will soon establish itself as the IT industry norm is balance sheet (or cash pile) financing; vendor balance sheets have started to play a role in enabling billing deferrals and “deploy now pay later” models. For example, Cisco has set up a US $2.5 billion war chest leveraging its balance sheet to help some of its clients defer payments until 2021.

Our analysis shows that vendor balance sheets, both tech products and IT, are healthy. For example:

  • IT vendors’ (HCL, Infosys, TCS, Wipro, etc.) balance sheet assets over liabilities ratio ranges from 1.3x to 3.5x
  • Tech vendors’ (Adobe, Amazon, Microsoft, Oracle, etc.) balance sheet assets over liabilities ratio ranges from 1.1x to 3.4x.

And there is evidence that they may dip into them to help their clients out.

The third in priority is seeking discounts. We’re seeing anecdotal evidence of clients seeking discounts on contract value and in a few cases extending up to 50 percent of the annual contract value. But to clarify and qualify this:

  • The discount discussions are largely focused on time and materials (T&M) projects. Few are around fixed price and managed service engagements, which form a larger share of revenue profile for large IT vendors
  • And this means that smaller IT and staffing vendors – for which T&M constitutes larger share of the revenue profile – are going to be impacted more than the large IT vendors

Most importantly, we’ve seen enterprises being very flexible and collaborative with their vendors – working closely with them to keep initiatives running.

How will enterprises prioritize and fund IT initiatives during this crisis?

Enterprises are currently preparing their playbooks to navigate the ongoing recession. It’s important to note that recession does not mean that IT initiatives will be broadly deprioritized. Depending on the impact they see on their overall business and their anticipation of recovery, enterprise executives will triage their resources (cash, talent, vendors) to keep critical initiatives running.

Here’s a look at the framework we’re using to help buy-side clients prioritize their decisions:

  • Rescue business critical initiatives most severely impacted by the recession through financial engineering and aggressive cost takeout
  • Revitalize revenue-generating business functions that can gain from automation usage and cloud-driven agility
  • Reinforce the lowest impact portions of the revenue profile through M&A and product launches
  • Restructure those portions of the portfolio – such as vendors, locations, and talent – that already had redundancy and concentration risk issues

Portfolio approach by enterprises

In the coming weeks, enterprises will be using this framework to:

  • Triage between critical and non-critical IT spends
  • Build their blueprints for how they will reallocate budgets and engage with vendors
  • Identify new scope and financial models on which they’ll engage their vendors

Watch this space to see how this playbook evolves. If you have any questions or ideas on other approaches, please write to me at [email protected].

Koch Industries’ Takeover of Infor Signals Key Bet on Cloud ERP Market | Blog

Infor – a global leader in business cloud software specialized by industry – announced on February 4, 2020, that Koch Equity Development (KED) LLC, the private investment arm of Koch Industries, Inc., has entered into a definitive agreement to acquire Golden Gate Capital’s equity stake to take 100 percent ownership of Infor. Before the agreement, Koch Industries owned about 70 percent of Infor. While the official figures are not out, public sources peg the deal at close to US$13 billion, including preferred shares.

Why did Koch do this? Here’s our analysis of the key reasons.

  1. Riding the ERP demand bandwagon: Our recent analysis indicates that ERP-focused process transformation and modernization drove over 30 percent of all digital transformation initiatives in 2019. While Oracle and SAP are the largest players in this space, more than 35 percent of the market is still comprised of a long tail of bespoke ERP, where there is likely to be huge churn and consolidation. Infor promoters wanted to ride this growth opportunity through an IPO.
  2. SAP/Oracle in the equation: SAP is the largest player in the ERP market, and its current licenses are reaching end of life in 2025. Also, it’s well known that SAP is currently offering significant incentives to nudge enterprises to accelerate their move to S/4HANA, especially its cloud version. Oracle is using a similar incentive-oriented approach for its cloud-based applications. Promoters of Infor probably saw how this competitive dynamic would play out.
  3. Taking the private route instead of IPO: In a market driven by incentives, a privately-owned organization backed by a diversified cash rich promoter probably gives Infor a better shot at competing with its much larger competitors. For a listed firm, navigating a growth-oriented strategy (by de-emphasizing margins) would have been a tough nut to crack. Plus, competing with larger peers will require a significant investment in product modernization.
  4. The Koch portfolio companies: The jury is still out on whether Infor can credibly compete with SAP and Oracle in the broader ERP market. However, as the second largest privately-owned conglomerate in America (Cargill is the largest), the parent Koch Industries can enable a captive market for Infor to start with.

Deal implications

For Infor – potential growth through synergies: As we’ve already noted, this acquisition may give Infor access to a captive customer base in Koch Industries’ subsidiary and partner network. Given Koch’s presence in more than 60 countries, this may also allow Infor to expand the geographic footprint of its client base, especially in markets outside of North America where it has limited presence. This is coming at a time when enterprises in Europe and APAC are beginning to embrace SaaS offerings.

For Koch – potential RoI: We see this takeover as a typical private equity play to improve the value of an existing asset by riding the ERP demand wave. While Koch Industries has been making investments in its portfolio on the technology sector, we do not see this tweak in ownership as a sign of change in Koch’s portfolio mix. Given that a large chunk of Infor’s client base is still struggling with aging on-premises applications, Infor will need strong investment backing to convince its existing user base of its long-term cloud ERP vision.

For systems integrators – potential opportunities: Koch industries generated over US$100 billion in annual revenues in FY19. While we do not have estimates for the ERP transformation opportunities within Koch portfolio companies, it is likely to be a significant opportunity for systems integrators to focus on, using an Infor playbook.

For enterprises – better incentives, more supply-side investments: If Koch backs its investment with a large innovation fund, enterprises may gain on the following parameters:

  • Better incentives: Due to intensifying competition, enterprises may see more creative financial solutions and incentives around cloud-based ERP
  • Verticalized product offerings: Industry-focus and verticalization is gaining traction in the ERP space. Koch’s expertise in industries including manufacturing, chemicals, energy, petroleum, finance, and commodities may lead Infor to accelerate micro-vertical solutions faster than its competition.

The path forward

Infor has seen almost flat growth of around 3 percent over the past five years, due primarily to its long-term focus on SaaS revenues, which directly cannibalized its existing license revenues from on-premises offerings. In FY19, Infor’s SaaS revenue – which is about 20 percent of its overall revenue base of US$3.2 billion – grew at approximately 21 percent, while its licensing fees declined at about 12 percent. Given this strong focus on SaaS, Infor is well positioned in the manufacturing and allied verticals to overcome some of the critical cloud migration challenges and cater to some industries’ process-specific demands.

However, over the past year, there have been multiple big-ticket acquisitions in the enterprise platform market, geared to improving product capabilities – especially in areas related to cloud and analytics. In this hyper-competitive space, it will be challenging for Infor to compete credibly at scale based only on promoter-backed cash flow. Watch this space for more on how this move pans out.

Four Key Themes from J.P. Morgan’s 2020 Healthcare Conference | Blog

A couple of weeks ago in San Francisco, J.P. Morgan’s 38th annual Healthcare Conference brought together leading pharmaceutical, healthcare, and medical devices firms, global service providers, technology vendors, emerging start-ups, and members of the investment community. Because this conference happens so early every year, it usually sets the tone for the healthcare ecosystem each year.

Here’s our take on the top themes addressed during the 2020 conference.

Patient affordability – at front and center

Because 2020 is a US presidential election year, it’s no surprise that rising medication costs was a contentious topic of discussion at the conference, particularly as: several candidates are promising lower prescription drug costs; spending on drugs constitutes about 10 percent of the national health expenditure in the US; 25-30 percent of US patients find it difficult to afford the cost of their prescription medications; and, drug/device efficacy and health outcomes haven’t been improving in line with increasing prices. A recent Kaiser Family Foundation survey found bipartisan support for government action to lower prescription drug costs. And the government, healthcare payers, and patient groups alike are pressuring life sciences firms to take on more financial accountability and reconsider how they price their products.

From a services delivery perspective, we believe all this turmoil is creating a perfect environment for the adoption of innovative value-based payment models in the pharma industry. To support value-based contracts and orchestrate an integrated technology ecosystem to enable collaboration and transparency among patients, life sciences firms, and healthcare payers and providers, IT service providers will have to build capabilities like solutions for risk analysis, value analysis, and reward analysis, blockchain-based smart contracts, and IoT-based patient data capture.

Consumers continue to be the biggest disrupter in healthcare

With consumerism gaining ground in healthcare, health insurance program members and patients are demanding increased engagement, control, convenience, quality, and affordability. Thus, there were multiple discussions at the conference on digital health and wellness apps that operate outside of the realm of actual care delivery but augment caregivers’ abilities. There were also numerous sessions on why challenges such as outdated reimbursement and payment models, inadequate technological infrastructures, restrictive policies, resistance to change, and a lack of financial incentives have to be solved in order for telemedicine and telehealth options to be truly viable.

Although there are many obstacles, we’ve already seen some positive results from the implementation of telemedicine/telehealth in the form of cost savings and a vision for expanded care in the long term. At the same time, we believe the ecosystem is struggling to evolve a truly sustainable business model in consumer and digital health. Examples of these struggles include players like 23andMe, which laid off 14 percent of its staff in the wake of declining DNA test sales and is tightening its focus on the direct-to-consumer business and its therapeutics arm, and Proteus Digital Health, which is winding down its $88 million deal with Otsuka Pharmaceutical as it pivots toward oncology and infectious disease treatment adherence.

Data monetization – the new fuel for growth in healthcare?

The healthcare industry’s ever-growing repository of untapped data, from both clinical and non-clinical sources, may finally be a part of monetization use cases in the near future. Some conference participants referred to this unexploited data as “the oil of healthcare.”

The real question is if organizations will have the right resources to make data liquid, available, and accessible to the right stakeholders at the right time. In our view, the emergence of data exchange platforms (such as one announced by Amazon – AWS Data Exchange) can spur revenue generation for companies holding data assets; but that can only happen once the challenges around defining data integration, managing heterogeneous data, and extracting value from data are solved. At the same time, healthcare companies, researchers, and innovators may begin to realize improved innovation with requisite data up for purchase through data exchange platforms.

BigTechs marching into the healthcare sector

BigTechs Like Amazon, Apple, Facebook, and Google already have a track record of disrupting major industries such as retail and telecommunications. And because patient-/member-centric solutions are in high demand among resource-strained enterprises, these technology giants are now invading the lucrative healthcare industry, and many have already made and announced significant investments for transforming the industry.

At this point in time, the BigTechs aren’t competing with incumbents. Rather, their current market share lies largely outside the traditional scope of the healthcare industry (payer, provider, pharmacy benefits manager, etc.), in areas such as data and analytics, consumer devices, and transportation services. However, partnerships, like Google’s recently announced relationship with Ascension, can expand their role.

Here’s an illustration from our recent BigTechs in Healthcare: Reimagining the Ecosystem study that analyzed 11 large technology firm’s (Amazon, Apple, Facebook, Google, IBM, Lyft, Microsoft, Oracle, Salesforce, SAP, and Uber) investments in the healthcare industry The study took an objective look at the many ways BigTechs are impacting healthcare.

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Please contact us at [email protected], [email protected], and [email protected] if you’d like to hear more about these themes from J.P. Morgan’s Healthcare Conference, or learn more about our “BigTechs in Healthcare: Reimagining the Ecosystem” study.

Three Digital Healthcare Takeaways from HIMSS 2019 | Blog

I experienced three pleasant surprises at last week’s Healthcare Information and Management System Society (HIMSS) conference. They were all about a perfect storm that is building to correct all that has been wrong in the digital healthcare space all these years.

Healthcare Companies are Exploring Cures for Their #DigitalHeadache

Payers and providers alike are growing increasingly disillusioned with the outcomes of their digital programs. In fact, 78 percent of the healthcare leaders we surveyed in late 2018 indicated some sort of failure with their digital initiatives, whether big or small. The good news here is that most forward-thinking leaders are going back to the drawing board to redefine their digital strategy. Anthem, Intermountain Healthcare, and New York Presbyterian are great examples of organizations that have taken up the cudgels to fix digital healthcare where it fails – organization and culture.

There’s Increased Focus on “Enabling” the Patient Experience

To make the “patient experience” successful, enterprise leaders are taking a step back and focusing their attention on creating experiences for their workforce, clinicians, and partners (e.g., physician group, CMS, government agencies.) Don’t get me wrong, patients still need to be at the center of our universe. However, the personas that enable and deliver experience for patients need a fix first.

Innovation is Coming from Unexpected Sources

It was heartening to see the likes of Amazon, Google, Microsoft, and Salesforce steal the march from the big boys in the healthcare tech space – i.e., Cerner and EPIC – in asserting themselves as the technology visionaries in healthcare. Their focus on healthcare microservices is a relief for healthcare executives trying to navigate the “all or nothing” approach of the EMRs.

There is one player that seems keen on reinventing itself: Optum. Through a nimble product and services strategy, Optum is touching upon on all the hot buttons – MLR, analytics, PBM, and claims. Optum is the specialist vendor to watch out for when it comes to healthcare.

Last, but not least, what really took the cake were the innovative and exciting POCs related to clinical AI and visualization that Israel and Ireland – yes, the countries – showcased in their booths. These were some of the most fully baked solutions that I have seen in my 10 years attending HIMSS.

Hence, it’s with good reason that I left fairly impressed with the developing ecosystem knocking on the doors of healthcare organizations that are hungry for outcomes.

I will sign off by sharing an illustration from our recent study that analyzed the investments 27 of the leading healthcare payers and providers have made in artificial intelligence (AI), a key marker in the world of digital healthcare. This study objectively analyzed these investments from the perspective of ROI achieved.

Assessing 27 healthcare players (payers and providers) on their Artificial Intelligence investments

As you can see, there is a wide variance even within such a small sample set of healthcare organizations. FOMO (Fear Of Missing Out) pushed a lot of organizations to invest in the flashy new toy called AI. However, not all of them embarked on their investment journey by first enabling the core components of capability.

The difference between the best and the rest in healthcare is simply this: the ones to get the best ROI – those on the top right – are taking their journey through step functions that enable not only technology but also an organizational culture of innovation.

Please contact me at [email protected] if you’d like to hear more about my take-aways from the HIMMS conference or our study, named “Dr. Robot Will See You Now: Unpacking the State of Artificial Intelligence in Healthcare – 2019.”

 

Everest Group’s 3rd Annual Service Provider of the Year™ Awards: Did Your IT Services Provider Win? | Sherpas in Blue Shirts

2017 was a seminal year for IT services. Digital adoption finally broke free from the shackles of marketing’s lip service and moved from “pilot” to “program.” The of role CIOs resurged as business stakeholders relied on them to deal with an ever-growing supply landscape and procurement conundrum to deal with new-age technology. And growth challenges appeared to have bottomed out for the two key industry verticals: BFSI (the largest) and Healthcare & Life Sciences (the fastest).

Hence, our 2018 Service Provider of the Year™ awards for IT services providers – our third edition – recognize companies that not only weathered a challenging year but reinvented themselves to chart out a new phase of growth for 2018 and beyond.

Our methodology

We select the IT Service Provider of the Year award winners based on the consolidated scores they achieve in the Star Performer, Leader, Major Contender, and Aspirant positions on our PEAK Matrix™ evaluations. In 2017, 67 service providers participated in 24 PEAK Matrix evaluations.

Awards categories

This year’s awards categories:

  • Leader boards
    • ITS Top 20: A list that recognizes the top 20 service providers
    • Top 10 Challengers: New this year, this list recognizes the top 10 service providers with annual revenue less than US$2 billion that increasingly position in the PEAK Matrix evaluation segments as challengers to the established leaders.
  • Individual awards
    • Leader of the year: Recognizes the service provider(s) with the maximum number of Leader positions
    • Star Performer of the year (overall): Recognizes service provider(s) with the maximum number of Star Performer positions.

We awarded these recognitions in the following areas:

  • Overall IT Services
  • Application Services
  • Digital Services
  • Cloud and Infrastructure Services
  • Banking, Financial Services, and Insurance
  • Healthcare and Life Sciences

Highlights of 2018 Service Provider of Year Awards

Here’s a look at the top five on the ITS Top 20 leader board:

PEAK SP of the Year

  • Accenture and TCS took the top two positions in the ITS Top 20
    • Accenture retained its top slot from 2017
    • TCS moved into second place, leapfrogging Cognizant and IBM
  • Accenture won Leader of the Year (overall)
  • TCS won Star Performer of the Year (overall)
  • And in the new Top 10 Challengers category, LTI and Virtusa snagged the top two positions.

Wondering if your IT services provider – or the firm you work for – received one of these coveted awards? See the complete list of winners.

Innovation Tax for Service Providers: Pay Up or Go Belly Up! | Sherpas in Blue Shirts

“The Times They Are a-Changin” is an appropriate idiom to borrow from the great (and now Nobel Laureate) musician Bob Dylan to describe a conversation I had just a few days ago with a senior executive who leads sourcing for one of the largest pharmaceutical firms in the U.S.

Context: As you see in my most recent blog, I have been very cynical of the innovation strategies adopted by both service providers and enterprises. I have accused service providers of digital and cognitive “washing” that just pays lip service to innovation, and enterprises of resting in comfort zones where commodity and arbitrage still rule the roost.

I had no reason to tweak my view, until the discussion with this senior executive.

He was picking my brain on how to infuse innovation into his company’s existing application services engagements. He has been struggling to do so with some of the best-known names in the service provider world. When he asked, “Is there something I can do to make the service providers change?,” I responded:

  • Change is difficult in a business environment in which service providers must play both the arbitrage and digital games
  • The “arbitrage-first” service providers will push for traditional models if you blink
  • And “digital-first” providers will proactively offer innovative solutions even though they keep their arbitrage strengths handy

IT Innovation Maturity in Applications Services

IT Innovation Strategies in Application Services

The challenge is, there are more of the former than the latter, and the incentives for falling for arbitrage-driven models are still high for both procurement and service providers, irrespective of which of the above categories they belong to.

Hence, unless sourcing executives do the following, innovation will be difficult to come by.

  • Anchor: Define an innovation roadmap
  • Organize: Contract with service providers on a formal innovation program
  • Seek co-investments: Ask service providers to co-invest (put a financial stake) in your innovation roadmap

At this point, the senior pharma executive had an epiphany, and stated, “Aha. I don’t want to put it this way, but if I have to make my vendors change, I must institute an “Innovation Tax.”

There, my friends, is the sign of things to come. Enterprise sourcing executives are increasingly feeling compelled to show business value. If service providers refuse to bring value to the table, they will have to be ready for an “Innovation Tax.”

By the way, these recommendations are not a bunch of my opinions. The above was validated through a survey of 100 senior enterprise executives Everest Group conducted in late 2016.

See our reports, “How to innovate – A Comprehensive Guide to Innovation in Application Services,” and “Cracking the IT Innovation Code” for more details on how to infuse innovation into your existing and future sourcing contracts.

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