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Report: The ACA has spurred massive innovation in healthcare

While the politics of Obamacare remain as a divisive as ever, the Affordable Care Act […]

While the politics of Obamacare remain as a divisive as ever, the Affordable Care Act has helped usher an entire new health economy that has led to the creation of at least 90 new companies since 2010, centered primarily around consumer-driven innovations, according to a new report.

The report, from PwC, lists five key reasons following the ongoing pitched political battle of the ACA that have starkly altered the industry landscape, likely permanently: a shift in risk; emphasis on primary care; new entrants; a rapid change in insurance from wholesale to retail; and the role of states that have or have not embraced the law.

The report comes both as the Supreme Court mulls over the law’s future after yet another challenge and on the cusp of its five-year anniversary in less than a month’s time.

Anyone who’s followed the space knows the current landscape involves a seemingly endless string of digital health startups, much of it around big data, telemedicine, patient engagement and the consumerization of health insurance, among other areas. The PwC report seeks to quantify the above-mentioned five trends, noting that no other government-backed initiative since the American Telecommunications Act in 1996  has spurred such massive change across an entire industry. The healthcare sector is pegged at about a $2.8 trillion market.

“Although the ACA will continue to face crosswinds, it has already had a profound impact on the healthcare business,” said Kelly Barnes, PwC’s U.S. health industries leader, in a statement. “The ACA has catalyzed major changes in an industry historically slow to change.”

The law’s emphasis on prevention and reduced hospital admissions has spurred the industry — from insurers to hospitals, physicians, pharmaceutical companies and consumers alike — to spread and shift risk, from financial, enterprise, operational and market-share, according to the report.

“While the business strategy varies between sectors, the overarching goal remains the same: learning to compete under an evolving set of rules, limited resources, increased transparency and a focus on value rather than volume,” authors of the report said. “The ACA has fueled this trend.”

A palpable shift has been underway in how the industry views primary care, once the lowly commoner’s corner of healthcare versus high-end specialty care like cardiology or neurology, for example. It stands to reason, with so many new entrants to the system and thus creating a need for so-called physician extenders like nurse practitioners and physician assistants who have been increasingly called upon to both meet consumer demand and bridge a provider shortage.

“If the ACA is a balance between expanding insurance coverage and encouraging non-traditional ways to pay for and deliver medical services, then primary care is its fulcrum,” the report said.

And that has in turn spurred a wave of new entrants into healthcare, in the form of both startups and technology and retail giants like Apple, Samsung, Target and Walmart, to name a few. Not to mention the massive water fall of venture capital flowing into the digital health space, which last year topped $4 billion.

“The ACA has created massive interest in healthcare investing,” Derek Newell, CEO of startup Jiff, is quoted as saying in the report.

With respect to health insurance, the establishment of more competitive health exchanges, either by individual states or the federal government, along with guarantee issue has forced carriers to become more consumer-friendly, no longer focusing exclusively on big employer groups but rather the individual market, according to the report. Private exchanges are proliferating, too, meaning even with any group business, the interaction with individuals versus HR managers and brokers will be heightened.

“Employer-based coverage remains the core of the US insurance market, but the business model is changing rapidly
as employers explore alternatives— including private exchanges—to more cost-effectively deliver benefits that improve consumerism and enhance choice for workers,” the report said.

Lastly, the report notes that the varying degrees of adoption across states — often drawn sharply along political lines — could become more divergent than it already has, depending on how the Supreme Court rules.

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