By Neil Smiley, Chief Executive Officer, Loopback Analytics
Twitter: @loopbackllc
There is much debate whether the long awaited ACO reimbursement model introduced through the Affordable Care Act (ACA) will be successful in achieving the goals of health reform. I think critics are missing the point. ACO’s are just one of many emerging and evolving reimbursement models that are moving U.S. Healthcare away from a fee-for-service, pay-for-volume approach to value-based payment models.
Even if the ACO structure is not it, the horse is out of the barn. Bundled payments, gain sharing, managed care, readmission penalties and value-based purchasing are just variations on the same theme. The growth in healthcare is moving toward payment models based on cost-effective outcomes.
The transition to a value-based payment system is going to be rocky. U.S. healthcare is broken into silos of care that are locally optimized based on a dysfunctional fee-for-service payment model. Poor hand-offs between these silos result in failed transitions that undermine clinical outcomes and waste a lot of money. In addition, there are significant gaps in visibility of outcomes, making it difficult to know what is (and is not) an effective clinical intervention. For example, up to 30% of hospital readmissions are patients that are discharged from one hospital, only to be re-hospitalized at another.
There are two potential approaches to fix the fragmented care silos. One approach is to vertically integrate. Essentially, buy up the resources required to deliver integrated care, rip out fragmented disconnected technology and replace it with an integrated platform that spans most or all of the key components of the healthcare delivery system. Kaiser Permanente is often held up as an example of what can be accomplished through a fully integrated model. Their EHR offers the kind of end-to-end integrated platform that aspires to manage virtually all aspects of healthcare delivery.
When the integrated model works well, it can be a wonderful thing in terms of improved visibility and better efficiency. However, it is incredibly difficult to pull off. The path is littered with acquisitions gone bad as the pendulum swings between waves of consolidation only to be followed by divestiture. Culture clashes, incentive misalignment and complex replacement or integration of technology systems are just a few of the barriers to overcome.
For most of the market, vertical integration, followed by a rip and replace systems strategy is just not an option. The challenge for Healthcare Technology providers in 2015 and beyond is to provide a credible alternative that leverages integration of disparate systems, spanning healthcare providers that are not financially integrated. In fact, we need technology that can enable coopetition: a care delivery system that will enable intervention solutions that span the care continuum to address the needs of specific populations, while still protecting the ability for the same players to be competitors in other parts of their business.
I see three significant trends developing as the healthcare delivery system struggles to find a path to a virtual integration model that works.
- Community Coalitions
- Narrow Networks
- Evidence-based Models
Community Coalitions
Healthcare is local, with the majority of healthcare costs incurred within a few miles of patient’s home. Some of the early Pioneer ACOs tried to manage the vertical integration path without the connectivity infrastructure in place and have already thrown in the towel. Too many of their patients were receiving care out of network. Not only did they have difficulty in impacting outcomes for these patients, they were not even able to track where they went until after the bills came in.
However, in some city markets, health coalitions comprised of competing healthcare providers are taking shape. Most of these participating providers have already invested heavily in EHR systems to improve care delivery within their own walls. Now they also need healthcare IT infrastructure to coordinate transitions of care beyond their walls – efficiently sharing data with selected partners, reducing gaps in visibility and improving care coordination and care transitions. To compete against vertically integrated rivals, these care networks need to span the care continuum, including hospitals, post-acute care, physicians, out-patient clinics, social service agencies, pharmacists and other community-based organizations.
The catalyst for forming a community coalitions vary – perhaps visionary hospital system or post-acute care provider, a grant funded pilot or a CMS demonstration project. In each case, some critical mass is required to get the ball rolling to establish sufficient value for other coalition partners to join. In 2015, Healthcare IT infrastructure will allow coalition providers to collaborate with other providers across the care continuum, without sacrificing each provider’s distinct competitive interests.
Narrow Networks
Health systems and other referral sources are no longer content to refer their patients to any and all post-acute providers. There are new incentives to form narrow networks of post-acute care providers that are committed to high quality and can provide credible outcome data. Until recently, health systems thrived if they kept their volume of admissions high and their length of stay low. Hospital discharge planners and case managers primarily served as expeditors to ensure that beds turned over. However, under changing reimbursement, it is no longer sufficient to get patients in and out. Health systems also need to ensure the downstream providers are capable of providing needed care so patients won’t be re-hospitalized.
In the past, very few hospitals have tracked the destination of patients leaving their facility. Even fewer have meaningful outcome data to assess which post-acute care providers have the right expertise to effectively manage high risk patients. New Healthcare IT solutions will be needed to enable networked coalition partners across the care continuum to operate as effectively as vertically integrated systems. In 2015, I believe we will see the traditional relationship-based referral process steadily displaced by data-driven informed referrals that match the right patient with the right care setting at the right time.
Evidence-based Models
Because of the growing emphasis on oncomes, there is strong interest in evidence-based models that have shown efficacy through a peer-reviewed study. Popular evidence-based models related to transitions of care include BOOST, STARR, RED, CTI, TCM, INTERACT and Bridge. However, when these academic models are implemented in the real world, the results can be disappointing. There is seldom any feedback system to ensure that the process steps of the original evidence-based models are followed. Enthusiasm for each new approach fades as the high variability of subsequent implementations fails to measure up to the results produced by the carefully controlled clinical trial.
A technology infrastructure is needed to make sure that providers can distinguish between problems with patient targeting, process execution or the model design. In 2015, Healthcare IT will enable providers seeking to build on success of evidence-based models to measure the fidelity of program and provide the teams tasked with the implementation a feedback loop that will ensure continuous improvement.
About the Author: Neil Smiley, a serial entrepreneur with a passion for transforming industries with data-driven solutions, founded Loopback Analytics in 2009 to deliver an advanced Software-as-a-Service platform healthcare providers can use to prevent costly readmissions. The Loopback Analytics team currently works with the largest pharmacy, hospitalist group, health system, payer and senior housing provider in the nation, providing proven intervention solutions that improve clinical outcomes and reduce the total cost of care. Prior to founding Loopback Analytics, Smiley launched Phytel, a population health solutions company that was successfully sold to a VC firm. Smiley began his career as an Accenture consultant and later as a partner with EY, working with Fortune 1000 clients. Smiley holds a computer science degree from Dartmouth College.