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.
Investors, 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.
Health care 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.
Several 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 — such as fitness plans or smoking-cessation programs — could also see a sudden surge in customers, says Kenneth Thorpe, who co-directs Emory University’s Center on Health Outcomes and Quality.
Waxman 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.
“We’re very 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 program.
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 2014.
“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.”
While 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.
Investors also 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.
via Health care law’s impact on businesses varies | The Courier-Journal | courier-journal.com.