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Date: 04.24.2015

Responding to Transformative Change in Healthcare

Matthew Dolan - President, IronHealth - Executive Vice President, Ironshore

Responding to Transformative Change in Healthcare

Today's healthcare sector is facing unprecedented challenges as it undergoes transformational change in the post Affordable Care Act (ACA) environment. Healthcare organizations are attempting to execute strategies designed to  enhance their organization's ability to achieve high quality, cost efficient care, even as they are confronted with unrelenting public policy and regulatory challenges.

Healthcare is the largest industry sector in the U.S., employing close to one-sixth of the country's work force. Annual expenditures on healthcare are reaching nearly three trillion dollars, more than the combined healthcare expenditures of the next ten largest countries.  And, it is projected that as a result of the ACA, the country will add close to 14 million new insureds within the next year, with some projections increasing that number to 30 million by 2022.

Today's healthcare system remains a fractured, costly and poorly coordinated approach to patient care. Realities that stand in stark contrast to the ACA's objectives of transforming our system into a highly coordinated, electonically connected system of interdependent providers offering accessible, affordable, high quality care.   As healthcare organizations attempt to evolve in response to these challenges, they are deploying strategies to enhance scale, diversify their patient demographics and enhance their ability to  provide care in sub acute, acute and post acute care settings. They are acquiring other hospitals, physician groups and expanding their outpatient care capabilities. The result is a larger, more integrated delivery care model.

As the entire system redefines itself, the risk profile of healthcare organizations is being transformed. Integrated delivery means integrated risk. The nexus of liability no longer emerges from conventional sources and often is associated with a combination of factors, like managed care, provider care and risk financing.  Conventional insurance products, designed in silos and more narrowly focused will not be applicable for the new healthcare delivery model.

The essential question is whether the insurance industry can respond to larger, multifaceted systems that present emergent and complex risk issues. Innovation will be critical. The industry's ability to offer relevant solutions in the "new normal" of healthcare, requires a deep contextual understanding of the drivers of healthcare change.

Matt Dolan
President, IronHealth
Ironshore Insurance