New Marketplace
New Risk, New Business Models

Survey Snapshot: Can Start-ups Rescue Health Care?

Insights Report · February 23, 2017

Like a majority of her fellow NEJM Catalyst Insights Council members, Irene Frohlich, MPH, Director of Analytics and Innovation at NYC Health + Hospitals’ Accountable Care Organization, thinks start-up companies will be the main source of disruptive innovation in major aspects of health care.

In the recently published NEJM Catalyst Insights Report on the New Marketplace of health care, 63% of respondents say new entrants into health IT are more likely to come from focused start-ups rather than traditional health care organizations, consumer industries, or business-to-business industries. Survey respondents also expect start-ups to lead innovation for hospitals and health systems (54%) and primary care (65%).

Disruptive Innovation in Healthcare: Source of Promising New Entrants

New Marketplace Insights Report. Click To Enlarge.

Frohlich, who in her role is intensely focused on how data can transform care delivery, says start-ups already have saturated the data collection, warehousing, and analytics markets, but will also be essential to transforming community services in hospitals and health systems.

“I want to see innovation that caters to the patient population we serve,” she says. “I want to see new entrants that can work in a resource-stripped environment with high-need patients.” Medicaid and uninsured patients represent nearly 70% of NYC Health + Hospital’s total hospital stays.

NYC Health + Hospitals has been able to pilot a service that trains local community members to be health workers. “The start-up finds people who are part of the community and speak the language of the community to work as community health workers, thus filling a critical void in hospitals and health systems,” she says.

Start-ups that seek advice from public health organizations and health care executives are more likely to build a solution that is sustainable and relevant to the market, according to Frohlich. Using a third-party broker, like an association, enables health systems to assess the sustainability of the model over the long term, she says.

But she shies away from using start-up firms for data collection tasks, as those relationships tend to be resource-intensive and few last long enough to make the effort worthwhile. “If we can’t afford to continue the engagement, the data is now lost,” she says.

Chet Robson, DO, MHCDS, FAAFP, Medical Director at Deerfield, Illinois-based Walgreen Co., says disruptive innovation, whether it be in hospitals and health systems, health IT, or primary care, tends to focus on a very small segment of the market with a very specific problem.

“Disruptive innovation in health care is rarely going to change the whole face of what you do,” he says, adding that Walgreens is approached by a stream of start-ups — upwards of 50 a week — with ideas that just aren’t feasible.

He believes that start-up firms are most effective when they partner with traditional organizations. “The best situation is when you get traditional health delivery organizations to work with new and sometimes disruptive technologies to figure out how to weave them together,” he says.

For instance, some health systems have used telemedicine to enable physicians to reach out to their remote and homebound patients, and to extend the reach of subspecialists such as neurosurgeons to rural areas that lack access. Walgreens is expanding its own ability to interact with patients with digital apps and streamlined telemedicine and teledermatology services.

“Using technologies and a ‘disruptive’ delivery model partnered with a traditional delivery system can provide evidence-based health care in more patient-centric ways,” he says.

William Henning, DO, CMO at UnitedHealthcare Community Plan of California, which offers low-cost and no-cost insurance plans for Medicaid, says the traditional EMR stronghold will be particularly hard for IT start-ups to break into. However, he is hoping to do just that by eliminating the point-and-click grid systems physicians use today to document patient exams.

Henning has pitched executives at the federal Centers for Medicaid & Medicare Services on a new platform that would use SmartApps development tools and maximize computing capabilities such as artificial intelligence, voice recognition, and an ICD-10 search engine to improve the physician-patient experience.

For example, Henning’s program would allow a physician to say “community-acquired pneumonia” as a diagnosis and immediately see the five best choices for ICD-10 coding, generated by the software based on patient history and acuity. After the appropriate code is selected, the application would generate a customized care plan with appropriate formulary and network options, based on the patient’s health plan. “The quality of care would be improved and the time would be shortened for everyone involved,” he says.

Henning says an application from a start-up like his, which is friendly to providers and can better capture critical data from electronic records, will be essential in the move to value-based care.

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