Tag: value-based care

Despite years of provider attention focused on getting out in front of consumerism, health system performance metrics remain centered on transactions rather than the strength of patient relationships. 

Kaufman Hall’s 2023 State of the Healthcare Consumer Report explores the key findings distilled from a survey of 59 healthcare executives, each revolving around quantifying consumer relationships and incorporating that data into operations.

The use of consumer-focused measurement remains limited among health system leaders, and organizations over-rely on traditional transaction-focused metrics.

• An FFS model that incentivizes volume gives rise to performance metrics that track the same, such as visit volume (tracked by 100%), market share (89%), and revenue per visit (86%).

• Only half of respondents track at least one advanced consumer-focused measure, such as share of a patient’s total healthcare spend, their lifetime value to the system, or churn.

While traditional metrics provide valuable insights, they don’t capture the “stickiness” of patient relationships, a key driver of both better outcomes and business improvements.

• One exec noted that most health systems deliver a wide range of services, but they rarely package and articulate them to consumers in a way that provides more touch points along the care continuum.

• By contrast, financial-service companies lean in on consumer-facing metrics, which allows them to go after share of wallet and lifetime value through integrated solutions.

Kaufman Hall then offers a Glide Path to Success for health systems looking to recalibrate toward a more relationship-based strategy.

• Perform an assessment of each service line using consumer-centric metrics
• Identify loyalty drivers by analyzing how patient choices impact upstream utilization
• Identify services that could be improved or added to improve consumer metrics
• Measure ROI to determine whether changes are creating the expected return and pivot if they’re not

The Takeaway

If the industry intends to shift from volume to value, it’s important to continue asking what exactly it is that patients value in their healthcare. Asking them directly is an obvious option, but consumers vote every day with their wallets and their business, so tracking that data seems like a critical first step to delivering on what really matters.

There have been some amazing healthcare market updates published recently, but Trilliant Health’s 2023 Trends Shaping the Health Economy Report might just take the cake.

The expansive analysis highlights 10 trends that define the emerging landscape of the health economy, as well as the corresponding challenges for each stakeholder.

It goes deep… 147 pages deep to be exact, but it’s well worth the time if you can find it. That said, time is a hot commodity, so here’s the breakdown:

1. The commercial coverage market continues to erode
2. The physical and mental health of Americans is unraveling
3. Drug and diagnostic investments signal emerging patient needs
4. The tepid demand trajectory for healthcare services persists
5. Consumer behaviors are starting to manifest in patient decision making
6. The traditional care pathway is becoming disintermediated
7. New models of care further constraining provider supply
8. The monopolistic effects of provider M&A are overstated
9. Employers are facing higher costs for less care
10. The market yield has been revealed, and it’s lower than you think

Where do we go from here? Stakeholders that depend on the commercial population can no longer ignore the fact that healthcare is a negative-sum game, with costs outpacing the value that’s created. Demand is heading in the wrong direction, and we cover new entrants commoditizing services on a weekly basis. The way to “lose less” is to compete on value.

It’s the same strategy for every payor, provider, and pharma company. The tactics are what’s different. Pick your battles, cut losses early, and lose less frequently / by a smaller margin than the competition. There isn’t enough space to get into those here, but 147 pages definitely gets the job done. 

The Takeaway

These trends each stem from the fact that healthcare is a negative-sum game, and that every part of the health economy will be impacted by reduced yield. Demand is declining alongside the number of people with commercial health coverage, while at the same time new entrants are commoditizing services and making loyalty harder to capture. Although the answer to this problem isn’t nicely tucked away in the report, Trilliant does a masterful job highlighting the trends that might help find it.

If we’re in a digital health funding rut, Aledade definitely missed the memo. The primary care enablement company just raised what looks like its “last funding round needed” after securing an eye-popping $260M in Series F capital.

Aledade partners with independent primary care practices to establish tech-enabled accountable care organizations. It uses data analytics and guided workflows to help better manage high risk patients, then shares in the success of its partners’ value-based contracts.

• The company works with over 1,500 practices across 45 states, and the 500 that joined this year make it the country’s largest network of independent PCPs.

• Aledade’s 150+ VBC contracts cover more than 2M lives (including 1M Medicare Shared Savings Program, 250k Medicare Advantage), collectively controlling over $20B in total healthcare spending. 

• Although Aledade has many “fellow travelers” in this space (namely Privia, Agilon, et al.), it views fee-for-service as its real competition, and recently walked the talk by converting to a Public Benefit Corporation.

The funding is earmarked for accelerating the growth of Aledade’s primary care network and its strategic partnerships with payors, but it will also allow Aledade to keep an “opportunistic” eye on potential acquisitions.

• Aledade already picked up VBC analytics platform Curia in February, marking its second M&A move after acquiring end-of-life care planning company Iris Healthcare last year.

• The recent launch of Aledade’s Care Solutions division also gives it a way to help PCPs deliver wraparound services, and the companies that provide these services are high on the M&A target list (behavioral health and kidney care were honorable mentions).

The Takeaway

Aledade’s flywheel is clearly getting up to speed, with each practice that it signs making it easier to get payor contracts, which in turn makes it easier to sign practices. That virtuous cycle and a $260M Series F round might suggest that a public market debut is on the horizon, but in the words of Aledade’s CEO Dr. Farzad Mostashari, “An IPO is not a destination.” Aledade’s focus is on the journey of bringing value-based care to the masses, but “if we’re ready and the public markets are ready… then that’s what we’ll do.”

Biotech veteran Wah Yan made a big splash across digital health social media last week after putting out a fantastic article that explores how a playing field of well-intentioned actors has managed to turn healthcare into a Squid Game.

If you missed the wildly popular Netflix show, the article’s subtitle tells you everything you need to know: “why healthcare stakeholders keep trying to punch each other in the face”

Yan lays the foundation for the article by explaining how improving the US healthcare system is difficult due to the mismatch between how revenue is generated vs. how value is measured.

• Revenue is commonly generated per “unit of economic activity” (i.e. per visit or per procedure), so that increasing revenue depends on increasing activity.

• On the other hand, measurements of healthcare value (i.e. a healthier population) are often tied to decreasing healthcare activity (i.e. a healthier population = less visits).

While that might sound like Healthcare 101, Yan goes on to illustrate how this relationship creates an inherently hyper-competitive market because “the value of an innovation is often dependent on declining utilization of other products & services at the population level – even if they’re not in the same vertical.”

• The value of new interventions – whether a drug, a diagnostic, or a service – is increasingly defined by its impact on total cost of care regardless of the reimbursement channel.

• As a result, everything competes with everything else for revenue, regardless if the final payer is a health plan, employer, or patient (e.g. home care reducing hospital utilization, pharmaceuticals replacing procedures).

This hyper-competitive landscape is what Yan contends is accelerating a growing number of Squid Game dynamics, including a land grab for scarce resources and a tendency to favor control over collaboration (e.g. acquiring companies vs. remaining partners).

The Takeaway

Whether or not the shift to value-based care is creating a healthcare Squid Game, Yan’s article provides a great lens for looking at the incentives influencing stakeholder behavior (and vice versa). He goes into a lot more depth than we can cover here, so it’s worth checking out for anyone looking to understand some of the dynamics driving healthcare innovation.

“People familiar with the matter” are hitting a hot streak with market moving healthcare news, especially after one of them informed the Wall Street Journal that CVS Health is in talks to acquire tech-driven value-based care enabler Signify Health.

The setup for this headline barrage started last week when the WSJ ran a separate piece about Signify enlisting Goldman Sachs and Deutsche Bank to help identify “strategic alternatives” that included a potential acquisition.

• Signify’s platform helps payors and providers establish in-home care programs and transition to VBC – a combination that could draw interest from both private equity and managed care organizations.

• The initial offers are due this coming week, and although there’s no guarantee any agreement will be reached, there’s also a non-zero chance that something gets announced and makes this old news before it reaches inboxes on Thursday.

It would be tough to come up with a better company than Signify to meet CVS Health CEO Karen Lynch’s description of an ideal acquisition target: “primary care, provider enablement, and home health… with a robust management team, background in tech, and that can grow quickly.”

• Signify’s core VBC business already checks a lot of boxes, and its recent $300M acquisition of Caravan Health added ACO management and population health icing to the cake.

• With a $135B market value and plans to expand its in-home operations by the end of this year, it makes sense why CVS has emerged as a frontrunner to scoop up Signify, which popped 20% to a ~$6B market value on the announcement.

The Takeaway
As CVS looks to expand into primary care and in-home health, it can either build or acquire the pieces to make it happen, and it’s been pretty transparent about which strategy it prefers. That said, the last time CVS threw its hat in the ring to acquire a high-profile company was for primary care provider One Medical, and we all know how that turned out.