Regardless of what happens next in replacing coverage provisions in the Affordable Care Act, certain structural realities will continue to demand reform: unsustainable fiscal trends, rising out-of-pocket costs and levels of medical debt, suboptimal clinical outcomes, and patients and caregivers who often do not feel in control of the care they receive. These problems will continue to drive momentum and demand in the marketplace for solutions, as will the new payment models envisioned in the Medicare Access and CHIP Reauthorization Act (MACRA) and many state-based reforms.
Based on our own time in government, we are acutely aware that there is only so much that government can do to create solutions. Government can help convene, set broad goals, and revise payment systems and regulatory frameworks to try to facilitate solutions, but from there, actual solutions depend on those in the private sector. Several years into broad experimentation in new payment arrangements, we now see tremendous activity in some areas of solution-building — provider and payer learning collaboratives for the informal spread of lessons learned; lots of consultants ready to help providers craft business models or reengineer care processes; and increasingly sophisticated data analytic services to better understand populations of need and identify areas for improvement.
Yet to our eye, there remain vast areas of need for new and better tools, more efficient paths to collaborations and decisions that could improve care delivery, and more meaningful mechanisms for integrating the patient’s voice and control in the design of it all. These areas are crying out for further private-sector innovation; without it, delivery system reforms will take much longer to reach their full potential. These unmet needs could represent attractive business opportunities for creative entrepreneurs, as well as investment opportunities for venture capitalists, philanthropies, or, indeed, government itself. Here are five areas of need.
Financing options. The task of changing care processes and management to oversee system transformation takes hard work, time, and money, new infrastructure and staff, and new approaches to care. While large health systems likely have resources to make early investments, most clinicians and patients are in smaller and/or less resourced settings. For them and for those in safety-net organizations, it is a constant struggle to prioritize what new activities to embark on, or what tools to purchase within capital constraints: Do I buy a formal risk stratification tool before I hire the marginal nurse care coordinator? Half-hearted investments are unlikely to yield big impacts on outcomes, but bigger steps are both harder to finance and riskier for the practice if they fail.
Some private payers, including Anthem through its Enhanced Personal Care Program and Medicare through the ACO Investment Model, are testing whether giving providers support with up-front capital will ultimately yield better performance. But these efforts are not consistent across payers, and thus even in aggregate may not be sufficient for the practices they are intended to help. Providers need an adequate source of investment based on longer term (multi-year) expectations for returns. Savvy investors could develop criteria to identify provider organizations as sound investments, reflecting factors such as realistic practice reform plans, availability of supportive payment arrangements across multiple payers, and favorable market factors. This same expertise could support practices in making sound investments and practice reforms, and in evaluating and revising those reforms. Instead of charging consulting fees, these investors could share in the returns from success in new payment models.
The new payment models increasingly involve taking on new kinds of financial risk (a requirement in advanced alternative payment models [APMs]), and providers may find that risk level unacceptable even if they have support for up-front investments. Reinsurance and risk pools, as offered through some convening entities, are still relatively rare and are not accessibly priced for most providers. Providers need financial products that acknowledge the diversity of their capabilities and appetites for risk, and that are differentially priced so they can choose a level of protection they can afford. At one extreme of scale could be the securitization of risk across hundreds of provider entities, similar to the securitization of car loans or home mortgages. In contrast, arrangements such as those offered by some “provider enablement” companies charge small practices only modest fees and offer free ramp-up planning. As with assistance with up-front investments, private companies providing such risk management would require the capacity to assess likelihood of provider success and could perhaps use that same capacity to provide technical assistance.
To encourage such private-sector innovation, government would need to send clear, consistent signals of public commitments to payment reforms and consistency of reforms across payers. Government would also need to provide appropriate regulatory structures and safeguards for such financing products. For example, investors may be much more likely to offer significant financing with some level of government guarantee in place.
Accessible platforms for knowledge management and sharing. Even with adequate financing, the guesswork in prioritizing investments remains a major challenge for providers, which in turn makes investors nervous about assessing business plans. Learning collaboratives are great, but they may require substantial time investment and staff, and thus high member fees. Often, they offer anecdotal lessons, or lessons on general topics with broad appeal, rather than more systematic peer input on the specific topics relevant to an individual organization.
Imagine instead platforms that systematically collect participants’ experiences with specific care management approaches (or specific tools or vendors), along with ratings or other assessments by users, which could be stratified by the characteristics of the rater to find similar organizations. For example, a primary care practice in Georgia may care less what an integrated hospital system in Minnesota thinks about a specific patient portal, compared to the experience of a similarly sized practice in Florida. Consultants need not worry — such a platform would not substitute for, and might even increase demand for, customized support to an individual organization. Rather, this Yelp-like type of function would offer a happy medium between artisanal and generic decision-making, particularly for providers who can’t afford consultants.
Building this type of platform would first require building an adequate network of reviewers, an exercise that health care could learn from other industries, and that companies like PatientPing have had success with (albeit for other care management purposes).
Dynamic platforms to support tool development. Creative developers are flooding the marketplace with new tools for identifying and acting on opportunities to improve care, particularly in the domain of digital data acquisition and analytics. Yet many such companies find it hard to generate sufficient demand for their products. Conversely, clinical end users, who intimately understand the problems they need to solve and the constraints they would face in implementation, have little hope of finding a developer to build a solution for a “market of one.” A few firms such as AVIA are trying to address this disconnect in high-touch fashion through a kind of boutique matchmaking. A more accessible platform could better facilitate the efficient adaptation or co-creation of tools that adequately meet end user needs, by allowing end users to offer early and ongoing input to developers before a tool comes to market and as it is implemented. This would help weed out concepts that would never actually work, ultimately giving developers easier and more certain access to large numbers of customers. This combination of a Shark Tank and Match.com function would benefit not only providers and developers, but it would also benefit investors looking for more grounded information on where best to put their capital.
Bulk contracting tools. Another domain where web platforms would be useful is in bulk contracting between payers and providers. On a retail basis, contracting is time- and labor-intensive for both parties, particularly around issues of price and performance metrics, where there remains little standardization. Platforms that allow for bulk contracting from either side (with appropriate antitrust controls) would allow for a more wholesale approach. Some payers are ready to engage with large numbers of providers, especially if they can get help identifying providers likely to succeed, as described above. To avoid the administrative burdens of negotiating with individual payers, some providers might be willing to settle for one uniform fair price to offer all their payers, and/or start from a default price and adjust up or down within preset boundaries. For these actors, such a platform would reduce uncertainty and contracting costs, allow them to efficiently commit a more meaningful share of their book of business to APMs, and provide more time and resources to focus on the important work of care management.
Such a bulk contracting interface could leverage public and private efforts already underway to drive cross-sector alignment on those methodologies, such as through the Health Care Payment Learning and Action Network. Carrum Health is one example of such an approach applied to bundled payments. Medicare and states can support such efforts by increasing their participation in multi-payer payment reforms that rely on consistent reporting and other contract requirements to reduce provider administrative burden.
Holistic data. As a field, health care tends toward insularity in the types of data that we consider relevant to our work. We have historically relied largely on patient chart and administrative data on clinical services for everything from performance measurement to risk stratification and process improvement. Only over the past few years has interest grown in integrating socioeconomic data, and data from social service sectors such as education and housing, as pioneered in a few U.S. communities and other countries such as England. As ambitious as it is to coordinate data flows from multiple agencies, that could just be the tip of the iceberg. Imagine a world where truly holistic data, including consumer purchasing patterns, media and cultural preferences, and community-level information were all combined with health data. Such a data product could make possible a wide range of useful products: better risk stratification methods; more effective communication, messaging, and nudging approaches; more thoughtful care planning; deeper and more proactive engagement of social services and other community organizations that could be brought to bear on a patient’s or population’s health; and better self-help tools for patients and their families to access the health resources they need. For example, knowing that a patient recently changed addresses between clinic visits could help trigger reminders to update his or her address for receipt of medication purchases through a tool like PillDrill.
Combining such rich data sources might trigger new concerns regarding patient privacy and data security. Government could facilitate by proactively developing guidance and protections, including strong standards for hashing and other data protection methods.
How Government Can Enable the Private Sector
While we have focused here on private-sector opportunities to support innovative models for improving care and lowering costs, government can play important roles in supporting these innovations. Clear and consistent support for providers that improve outcomes and lower costs is a critical signal to support private-sector investment in enabling these reforms. This includes not only consistent support for payment reforms, but also greater transparency around total costs and outcomes to help consumers and providers make better choices about care.
While government shouldn’t pick market winners and losers, potential breakthrough innovations that address a critical need may warrant more support, such as meaningful incentives for limited early adopters. This could help generate data to determine the effectiveness of the enabling reforms. Once there is clear evidence of value, government might offer smaller but more widely available incentives to spread adoption and encourage competition. In important respects, this approach resembles the pilot “assess-expand-or-end” strategy of the Center for Medicare and Medicaid Innovation (CMMI) for Medicare payment reforms — but focused instead on supporting private-sector activity to enable payment and delivery reforms to succeed.
These initiatives seem particularly important for smaller physician practices and provider organizations, which otherwise face the greatest challenges in acquiring the capital and technical support they need. Without help like this, payment reforms may have unintended consequences of concentrating market power, resulting in higher prices. All the activities we have described are synergistic — for example, entrepreneurs who help providers gain access to needed capital would benefit from the activities of entrepreneurs who help providers choose the right tools to buy.
The need for delivery system transformation is greater than ever. Providers face real challenges to make transformation a reality. With some supportive policy steps, entrepreneurs have real opportunities to change that and to accelerate progress through private-sector innovation.
Acknowledgements: This publication reflects work conducted when Dr. Pham was a Senior Fellow at the Duke-Robert Margolis Center for Health Policy.