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Perspective: The coming era of change in health care could put Nashville on track for an awakening about the role and durability of its powerhouse industry even as HCA Healthcare projects the company is in “a bit of a safe zone.”

 Photo by Clay Banks on Unsplash

A few questions float to mind each time stats about Nashville’s healthcare industry are heralded as an economic driver that keeps the metro area bustling:

To what extent do the Nashvillians running their weekly errands know about the reach of the industry — and frankly, do they care? Or is the economic underpinning of home as obtuse and foreign as the inner-workings of the health care system that they’d like to think about as infrequently as possible?

My educated guess, informed by countless interviews, is that those two topics are great ways to kill a potluck dinner conversation. But, hey, that could change.

The next era of health care is set to be defined by a simmering unease over the structure of how people pay for care, a push from tech agitators, and small communities that fear for the future of their access to care.

So, unless Nashville is magically the new epicenter of another back-office, compliance-heavy industry or two in the relatively near future, it is going to feel the effects of the changes that are on the horizon.

As the city’s leaders and health care boosters celebrate HCA Healthcare’s golden anniversary, it is important to recall that while Nashville is known for music — its current prosperity is indelibly tied to the enormous growth of HCA Healthcare over the last half a century.

By a recent tally from the Nashville Area Chamber of Commerce, there are 514 health care companies, of which only a handful own and operate hospitals. The distinction for being a health care services town is thanks to the founders and visionary leadership of HCA.

The industry’s grown since the last economic impact study in 2015 and now

  • contributes $46.7 billion annually to the local economy
  • owns and operates 3,453 facilities or locations across the country
  • manages locations in 49 out of 50 states

The soon-to-be CEO of HCA, Sam Hazen, doesn’t think disruption will grandly alter HCA. Talking at a Nashville Health Care Council event on Sept. 20 celebrating HCA, Hazen said the disruption everyone is talking about is coming for companies with low capital requirements and high margins — not high capital requirements and modest margins.

Translation: Not hospital operators that run expensive high-tech facilities.

The company, he said, has to pay attention to what forces are recasting parts of the industry but that it’s not the same given the size and scale of the company.

“I think we’re in a bit of a safe zone,” Hazen said.

Previously, Dr. Jonathan Perlin, HCA’s chief medical officer, said the company was insulated due to a strong demand for acute care given the high rates of chronic disease. The company’s also pursued a multi-touchpoint strategy in its markets that often make it a top contender for insurers looking for a system that can anchor a narrow network.

Aside from HCA and its hospital operator peers, Nashville’s sector is services and vendor centric although there is a blossoming concentration of health care IT companies. But Nashville is lacking a biopharma community, which exists in other health care-rich cities, such as Boston and San Diego, said Emily Evans, managing director with Hedgeye Risk Management, in an August interview.

“That’s a big hole in our strategy. That’s a big hole in our economic strategy in the city,” said Evans.

Health care industry experts expect M&A to continue so the region’s cornerstone corporate headquarters could be a different — and potentially smaller lineup — in the future. There’s been an up crop of addiction and and behavioral health services companies in the area but the size doesn’t rival the hospital sector.

Nashville’s roster of rural hospital operators is slated for a reshuffle. LifePoint Health and RCCH Healthcare Partners are merging while Community Health Systems is trying to manage an outsized debt load. Ardent Health Services and Quorum Health will have their own paths to traverse.

“I think what’s going to happen is we’re going to remain a center, and people who are interested in that disruption are going to be attracted to living here but the idea that these enormous services companies are going to continue to trot along is a pipe dream,” said Evans.

Potential political whiplash, struggling rural areas and maybe a watershed era

The political friction is plain to see. Repeal-and-replace efforts stalled in 2017 but executive orders and regulations reworked key federal components. Health care is an intensifying lightning rod.

It was evident in a speech by U.S. Secretary of Health Alex Azar on Sept. 27 at another Nashville Health Care Council event. The political battle over how the U.S. structures its health system is only heating up.

Azar blasted Medicare for All as he applauded state-level efforts such as modifications to Medicaid, short-term insurance plans and bespoke initiatives, a la reinsurance programs, as a glimpse of what the future of health care could be.

Additional decentralization could flag winners and losers out of existing hospital portfolios as well as their partners.

Regardless of whether policy whiplash stems from the coming election cycles, hospital operators and their partners will be hit by their late arrival to the data party.

Hal Andrews, CEO of Trilliant Health, travels around the country talking to hospital executives about the urgency with which they need to be using data like retail and tech giants to craft strategies that build relationships with patients.

But Andrews said rural economies are breaking apart just as there’s an acceleration of trends ranging from retail chains creeping further into care, opioid challenges, telehealth and stubborn uninsured rates that are reshaping the system.

“It’s Brownsville over and over again. There are dozens of them, and there are dozens more coming across the U.S.,” said Andrews. “What we’re trying to do is help the guys that don’t have any friends.”

HCA’s outgoing CEO Milton Johnson said at the 50th event he always reminds teams that HCA got its start and flourished because people “wanted to be healed and treated with dignity, respect and compassionate care. That was true then and I think it will be true 50 years from now.”

He also mused that Nashville could have been a very different place had an earlier wave of M&A made good on the possibility of moving HCA headquarters out of Nashville. There’s no way to know, he said, what that could have looked like.

In short, the coming years could put Nashville on track for an awakening about the role and durability of its powerhouse industry. It could be an opportunity for innovation and forward-thinking strategies. Certainly the Center for Medical Interoperability is trying to lead the charge.

As health care evolves, it will probably be a watershed era for Nashville.