WASHINGTON -- Companies specializing in
driving down spending on health care, whether through electronic
records, preventive care or consolidating services, are turning out to
be the biggest winners from the 2010 health care law.
analysts and policymakers say any business that can help health care
providers cut costs or keep patients from being readmitted to the
hospital soon after an in-patient visit is attracting more customers and
seeing more investment.
"We must drive down
the cost of, or maintain the cost of, health care," said Albert Waxman,
co-founder of Psilos Group, a health care venture and growth equity
fund. His firm is investing in companies specializing in controlling
administrative costs for health care providers.
He has company: Investing in health services rose from $261 million
in 2010 to $368 million in 2011; second-quarter 2012 investments are up
$11 million from second-quarter 2011 investments, says the National
Venture Capital Association.
information technology spending for the second quarter hit $293 million,
up from $86 million for the same period last year, according to Mercom
Capital Group, a market research group that looks at health care
technology. Those deals included telehealth technology, as well as
mobile devices that providers carry to keep tabs on patient data.
businesses traditionally associated only peripherally with health care
providers may also profit, because the law is forcing change in the way
the medical field operates.
There are now
221 accountable-care organizations made up of hospital and physician
groups, as well as insurer-based groups, according to a Leavitt Partners
report issued in June. Technology, administrative and home care
providers that help the ACOs save money stand to do well.
Any preventive-care organization that can help employers or insurers
cut costs by lowering rates of diabetes, heart disease and respiratory
issues â?? such as fitness plans or smoking-cessation programs â?? could
also see a sudden surge in customers, says Kenneth Thorpe, who
co-directs Emory University's Center on Health Outcomes and Quality.
invested in a company that uses information technology to monitor
employees' health habits and to reward them when they go to annual
health exams, get checked for chronic diseases and work to take care of
any potential health issues.
excited about the future," said Martin Watson, CEO of SeeChange Health.
"Without health reform, we figured we'd get to the $800 million mark (in
earnings) by 2016. With health reform, it looks like we'll hit $1.5
billion by 2016."
SeeChange works with clients
such as UnitedHealth by providing technology to cut premiums for
bene-ficiaries who engage in healthy behaviors, tracking claims data
to see which areas might need improvement, or adding cash to a health
benefits account if a person stops smoking or begins a weight-loss
Cigna health insurance began moving
toward accountable-care organi-zations in 2008 long before the law took
affect. But Matt Manders, who heads Cigna's accountable-care
initiatives, said the law has worked as an "accelerant." Cigna has 32
"collaborative accountable-care" organizations and plans to have 100 by
"It takes some time to have demonstrated
results," Manders said. "But more than half (of the 32) have seen
significant improvements in quality and cost reduction."
many for-profit organizations will benefit, non-profits could do well,
too. "In 2014, insurers can't profit by denying coverage anymore, so
they need to keep people healthy," said Thorpe. That could mean
prevention efforts, such as the YMCA's diabetes prevention program,
could see an influx of cash.
see potential in accountable-care organizations, which are included in
the Affordable Care Act. Private businesses have been working toward
them for a few years.
providers, insurers and pharmacists, as well as home health care and
palliative care providers, into a team. Those teams share data to avoid
errors and duplication of tests and procedures.
Sparer, health policy chair at Columbia University, cited Montefiore
Care Management, a not-for-profit health organization in New York's
Bronx, as a good example of a group that began making changes before
the law started taking effect.
Montefiore chief medical officer, said the group decided years ago to
be paid by patient, rather than service, to cut costs. Now, it's one
of 32 Medicare pilot sites.
As health care
continues to change, Chung said, he sees several financial winners. In a
non-fee-for-service system, primary-care physicians have an opportunity
for greater reimbursement. There will be a greater need for care
coordinators who keep patients well and out of the hospital. There
will also be a need for palliative and home care services, and for
community doctors to make sure they reach everyone in the community who
might use their hospital.
"The spotlight will be on plans like ours," Chung said.