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UnitedHealth and CVS Health pose largest threat to healthcare providers, survey says

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Healthcare providers ranked UnitedHealth Group and CVS Health as the top threats to traditional healthcare delivery models, according to a report from Kaufman Hall.

A nationwide survey of hospital and health system leaders conducted by the consultancy and advisory firm found that 67 percent of respondents considered the nation’s largest insurer as either a strong or extreme competitive threat over the next five years.

That number was followed closely behind by CVS Health, for which 66 percent of respondents answered in kind.

UnitedHealth Group has been vacuuming up providers and practices through through their OptumCare subsidiary as they look to diversify their business into clinic operations and healthcare services. The company continues to grow the footprint of its outpatient care centers clinics and move up the acuity ladder with the opening of its first cancer-care center in Las Vegas.

One barrier to acceleration of the growth of the insurer’s care delivery business has been the long regulatory approval cycle for Optum’s $4.3 billion acquisition of DaVita Medical Group which would add an additional 300 medical clinics that treat more than 1.7 million patients annually.

The deal was initially announced in 2017 and has faced strong regulatory scrutiny that has already led the companies to lower the purchase price of the business.

CVS Health has made additional care delivery services a key part of their business strategy since their blockbuster acquisition of insurer Aetna last year. Earlier this week, the company announced plans to expand their HealthHub model to 1,500 locations nationwide by 2021.

The stores are intended to offer increased care delivery and wellness services like phlebotomy, lab and exam rooms for health screenings, while also dedicating more retail space for health-oriented items.

With a closer integration with CVS Health’s Aetna business, the hope is to have greater data assets on patients to help direct them to lower cost health options and develop longer-term and more personalized care plans.

Healthcare providers ranked Amazon as the next biggest threat, owing to the company’s expertise in providing a streamlined digital consumer experience, as well as its recent forays into healthcare including its PillPack acquisition and the launch of its Haven healthcare collaborative.

Ninety-eight percent of respondents said their organizations’ digital experience is either somewhat or significantly worse than Amazon.

That disconnect has led 81 percent of survey respondents identifying improving the customer experience as a high priority for their organization. Only 11 percent who said they had currently high capabilities to do so.

Developing more facility-based care sites continue to be a major emphasis in creating more access points to care, with 61 percent of health providers considering that to be a high priority. Compare that number to the 27 percent who said they considered offering a variety of virtual access points a high priority.

Also relatively low on the totem pole were providing price transparency tools, developing an outpricing pricing strategy and using consumer learning to guide strategy, all of which are problems being worked on by upstart disruptors.

Which goes to show that although existing hospitals and health systems consider new entrants as “serious threats” to their business, incumbent companies are still focusing on old measures of competitive advantage

“When asked what most differentiates their organizations from competitors, most respondents cited the quality of clinical outcomes, geographic coverage, and accessibility of care. At the other end of the spectrum, respondents indicated factors such as price and “innovative products and services” as the least differentiating factors,” the report stated.

Picture: uzenzen, Getty Images

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