About the Author: Ian Chiang is a principal at Flare Capital Partners, a healthcare technology and services-focused VC firm. Prior to joining Flare, he was the SVP of product and innovation and a founding member of CareAllies, Cigna’s family of multi-payer provider services, population health management, value-based care enablement and home-based care businesses. Previously, he was a digital health entrepreneur and a former management consultant at McKinsey & Company.
Since the publication of “The pursuit of a 10X better value-based care enablement solution and the rise of primary care physician management platforms” in December of 2019 on MobiHealthNews, I have received numerous inquiries and feedback from entrepreneurs and innovators who are working tirelessly to accelerate value-based care (VBC). As I reflected upon many of the inquiries and subsequent discussions, I would like to offer a handful of additional suggestions to help innovators parse out some of the often unspoken challenges faced by the provider organization during the transition from fee-for-service (FFS) to fee-for-value (FFV). I hope these suggestions, which are based on years of frontline experience, could help shorten feedback loops, accelerate adoption of solutions and maximize impact.
Healthcare provider consolidation will likely accelerate; ramp up your team’s B2B sales experience
The healthcare delivery industry is more consolidated than ever. Fewer physicians own their practices than in the past. According to a new employment study by the American Medical Association (AMA), more physicians are now employed by a hospital or a hospital-owned practice than own their own practice. The continuing consolidation of the healthcare provider market could present unique opportunities for both solution platform players (i.e., meeting the needs of independent providers who need to compete against larger players in the market but do not have resources to string together best-in-class point solutions) and point solution players (i.e., providing services and technologies across a larger patient population). You will likely be selling to more and more sophisticated organizations that make capability sourcing decisions centrally. Your potential customers will be looking for immediate or near-term financial returns. Be prepared to put your fees at risk. Hire experienced and successful B2B sales executives. Surround your team with value-added investors and partners who could shorten the long sales cycle.
Do not underestimate the operational complexity and the importance of “transformational” services
Healthcare providers and technology vendors often think that there is a “silver bullet” solution out there to help them excel in VBC and generate disproportional financial returns. However, many of the challenges in delivering best-in-class VBC has more to do with the healthcare provider organization’s operating model, culture, talents and other issues than the technologies they are using.
I have seen healthcare providers switch from one population health management platform to another in search of that elusive return. I have talked to primary care providers who sourced real-time (or near real-time) ADT data but do not have the care management workflow and team to make use of this new data source. I have also met healthcare provider organizations that implemented cutting-edge analytics platforms but struggled to recruit analysts. On the other hand, I have encountered healthcare provider organizations use less than optimal technologies and achieved phenomenal results with their FFV contracts.
In the world of VBC, it is almost never just a technology solution that addresses provider problems. Providing transformational services (and continuing education to reinforce the learning) and change management support is just as important as bringing the best-in-class technologies to healthcare providers throughout their VBC journey.
Remember that most healthcare provider organizations are performing a delicate balancing act between optimizing FFS and FFV revenues
While VBC is on the rise and will continue to rise, FFS still plays an outsized role in the healthcare provider organization’s strategic decision making. While the percentage of healthcare payments tied to VBC reached 34% in 2017 based on a report from the Health Care Payment Learning & Action Network (HCP-LAN), the majority of healthcare provider’s revenue stream is still from FFS. Even some of the largest and most VBC-minded healthcare providers (e.g., integrated delivery networks, health systems with years of VBC experience) still have significant FFS volume. As digital health venture investors, we have seen many companies build their technologies and business models in anticipation of a drastic shift from FFS to FFV. From time-and-time again, we have seen slower adoption of their solutions and anticipated revenue ramp.
As someone who has personally lived through some of these challenges as a digital health entrepreneur and intrapreneur over the last decade, I would recommend digital health innovators perform detailed diligence on a prospective client’s (healthcare provider organization) commitment to VBC (see Dimension 1 in the previous published article) before, during and after the sales process. For aspiring VBC enablement solution platform players, providing value-added services to help providers manage their FFS lives could go a long way in earning their trust, deepening engagement and accelerating their path to FFV.
“Less is More.” Look to simplify workflow and reduce the administrative burden
Technologies, especially artificial intelligence, will significantly reduce administrative workload for payers and providers in the near future (I would recommend reading a recently published Harvard Business Review article: How Artificial Intelligence Is Changing Health Care Delivery). However, many healthcare providers and healthcare provider organizations tend to take a more cautious path in rolling out technologies due to a number of reasons. One of the reasons being that the existing care delivery workflow is very complicated. Adding more technologies without a thoughtful redesign of the workflow could easily backfire and jeopardize patient safety. In addition, many healthcare providers, especially primary care providers, are already spending a significant amount of their workday interacting with their EHRs (one study published in 2017 has shown that a cohort of 142 family medicine physicians in a south Wisconsin health system spent nearly six hours interacting with the EHR in an 11.4-hour workday). Practicing physicians rarely ask for more technology. Most physicians want “less” instead of “more.” We have often seen early-stage digital health companies in the VBC space create a new technology user interface or a new dashboard thinking that healthcare providers will be actively logging on.
More often than not, these companies experienced limited adoption and sustained engagement rates. I would encourage innovators to conduct ethnographic research and take on a user-centric approach in developing technology solutions. Invest in bi-direction data exchange with a healthcare provider organization’s EHRs. In addition, investment in client success and technology adoption team is a must.
Furthermore, think long and hard about who is the actual user of the technology. Sometimes it should be other clinicians or support staff, such as a medical assistant, using the technology rather than the physicians themselves. Lastly, be prepared to offer wrap-around services or staff augmentation to alleviate the workload.
There are often “too many cooks in the kitchen”
We have also observed the trend that many point solution innovators deploy client success teams and even provide wrap-around services to help drive adoption and deliver results. While some of the largest healthcare provider organizations have the internal project management resources to partner with vendors, many smaller healthcare provider organizations (or even many large ones) do not have the bandwidth to manage many point solution vendors at once. In addition, most healthcare provider organizations cannot have numerous third-party staffs going in and out of their practices.
As an example, while it would be ideal to implement best-in-class vendors to carry out medical care coordination, behavioral health care coordination, social determinant of health care coordination and other care coordination functions, healthcare provider organizations, especially smaller ones, by and large want to partner with one vendor who could support them across numerous needs. This is one of the many reasons that contributed to the rise of VBC enablement solution platform players in recent years. Of course, a solution platform player cannot be best in class across all technologies and services. Innovative, win-win partnerships can be formed between a solution platform and point solution players to accelerate the adoption of best-in-class solutions and help healthcare providers accelerate their path to FFV.