5 Key Takeaways from this Year’s JP Morgan Healthcare Conference

The annual JP Morgan Healthcare Conference is one of the year’s most influential healthcare conferences and sets the tone for what to expect on the healthcare landscape during the year — a litmus test for the entire pulse of the industry.

This year’s healthcare investment symposium at the Westin St. Francis Hotel in San Francisco, didn’t fail to disappoint as it brought together industry leaders, emerging fast-growth companies, innovative technology creators, and members of the investment community. Over 40,000 people attended the event, and health system attendees accounted for close to $125 billion in revenue. Moreover, all the organizations who participated represented about $300 billion or 10% of the actual healthcare spend in the U.S.

The conference took place in the aftermath of the Bristol-Myers $74 billion Celgene acquisition. The massive deal coupled with the significant challenges now faced by specific healthcare initiatives in Congress laid the foundation for the event. Below I will share 5 key takeaways from the conference and how they may shape the future of healthcare moving forward.

1. Health Systems Lead the Charge

Perhaps the most significant element of the symposium was the emerging transformation of health systems epitomized by visionaries like Dr. Marc Harrison, the president and CEO of Intermountain Healthcare.

Health systems are shifting away from traditional roles as brick and mortar healthcare providers to 360-degree care organizations that pride themselves on comprehensive clinical care for their patients. According to Dr. Harrison, the changes taking place at Intermountain represent a shift away from a revenue-maximizing strategy to a human-maximizing strategy.

In a recent CNBC interview, Dr. Harrison discussed his hospital's plan to manufacture its own drugs as a means to combat rising drug costs. “It’s all about our patients,” said Dr. Harrison. “Our patients increasingly cannot get a hold of the drugs they need, and when they can, the drugs are too expensive. We have come up with a plan to address it, and now is the time to get to work.” These sentiments are creating shockwaves across the healthcare spectrum and will shape the reality for the industry moving forward.

Another strategic shift being witnessed in healthcare is from defense to offense. With the advent of numerous and diverse care management programs and applications, health systems now realize the importance of creating a platform and building a data strategy to intervene and make sense of the changes currently underway in the industry. The new buzz word is "hub," and health systems are beginning to focus solely on what they do best and outsource other elements of their business that are not central to taking care of the patient.

2. Medicare and Medicaid - Models for the Future

Medicare, Med Advantage, and Medicaid as they expand, are making a strong case to be models for the future of healthcare. Where pharmacy cost is concerned, many stakeholders and industry leaders are under the impression that the system currently lacks the right health plans to cover the cost of drugs.

Tremendous strides in genomics have been made in the past 10-15 years especially in the field of rare and orphan diseases, and healthcare plans have yet to catch up. Who would have thought fifteen years ago that we would find a cure for Hepatitis C, for example? However, those types of products come with significantly high R&D costs, and there have to be some shifts to account for that.

Affordability was a central theme at the conference, and many organizations talked about what they could do to redistribute costs including the use of advanced cost accounting applications now being employed in major institutions.

3. The New Role of Consumerism

The evolution of consumerism is helping drive affordability. Civica’s efforts to develop a sole source of opportunity in generics demonstrate that transparency is now the order of the day. Drug shortages cripple many health systems across the country, and the most recent shortage report from the American Society of Health-System Pharmacists (ASHP) included over two hundred drugs identified by hospitals across the country.

Civica Rx will be an FDA-approved manufacturer of generic drugs or they will sub-contract manufacturing to reputable contract manufacturers. The company will produce and deliver fourteen key drugs here in the U.S. and ensure stable costs across the platform. Over 250 hospitals have signed up for the Civica model. It is an exciting time in healthcare with all stakeholders keenly watching how Civica's disruptive initiatives will play out in the generic marketplace.

4. The Amazon Buzz

An underlying current at JP Morgan was the speculation on what Amazon’s next move will be. Common sense tells us that if and when a company like Amazon or Google come into healthcare, they will drive costs down and efficiency up. JP Morgan invited many healthcare professionals to dinner the first night of the event, but they neglected to say anything about the JP Morgan-Hathaway-Amazon partnership to drive down healthcare costs. We should all be attentively watching their every move.

Employers are complaining about the increased cost of care for their employees and rightfully so. They want to provide the best care they can, but with increasing drug costs, this is proving more and more challenging. As well, the PBM market will continue to look for innovators outside of the big players to meet the needs of employer groups.

5. Opportunities for Synergy and Final Thoughts

It was evident that many synergies are happening across multiple platforms. Growing organizations need expanding software solutions. It is critical for businesses to set up platforms they can develop with. Behavioral health and mental health are two areas in addition to opioids that would do well to look at platform opportunities so they can leverage a business strategy that allows growth and scale as the marketplace dictates.

The lack of merger and acquisition announcements at the conference was surprising. Typically anywhere between five to fifteen announcements have been made at the symposium, and that was not the case this year. Has there been a holdback in purchasing activity due to fears about a recession? The subject was not touched upon - not surprising given how the JP Morgan conference usually frowns on negative talk. However, the lack of acquisition announcements should speak volumes to the rest of us.

Taking a look at the specialty pharmacy world in the coming year, changes should happen fairly quickly in the evolution of rare and orphan disease and who is handling those products. It may not be the usual players based on what we have witnessed so far this year.

Stay tuned.