For decades, the American healthcare system incentivized providers based on the volume of patients they cared for. The belief was that if doctors saw a high volume of patients, people would get the care they needed more quickly, leading to fewer hospital visits, a healthier population, and lower healthcare costs. Unfortunately, the opposite happened. Healthcare costs in the United States have skyrocketed to some of the highest in the developed world and patient outcomes are some of the worst.
A system that only focuses on the volume of patients simply won’t create healthier populations, and the payers are taking notice. This is especially true for an aging population that will likely need more care, not less.
This recognition shift has led Centers for Medicare & Medicaid Services (CMS) and some private payers to take a different approach. Instead of insuring for volume as an indicator of outcomes, insurers are starting to use an array of value-based care models to hold managed care organizations (MCOs) accountable to patient outcomes. The lines between payers and hospital systems are blurring as health insurers continue to move downstream (owning care delivery) and large hospitals continue to move upstream (taking insurance risk). With a change in incentives, previously unaddressed efficiency gaps are now ripe for disruption and change. That’s where technology comes in, providing the tools that MCOs need to prioritize patient outcomes and increase operational efficiency.
The Evolution of Health Insurance to Outcomes
Ever-increasing healthcare costs, combined with poor patient outcomes and satisfaction, have led to an overhaul in the healthcare payment model from fee-based to value-based.
Value-based risk contracts operate like a fixed-income contract for MCOs. In return for a fixed revenue, they take care of a patient population supported by the contract. It’s like the prior insurance model for the most part, but with a few noted differences that realign the providers’ incentives to focus on patients’ health outcomes.
MCOs’ income is determined by patient risks and they take on 100% of the liability
Value-based risk contracts are priced based on a sliding scale of how much risk the patient has of a certain medical condition. This incentivizes different types of MCOs including Medicare Advantage Plans, Managed Long–Term Care (MLTCs), Accountable Care Organizations (ACOs), Independent Practice Associations (IPAs) to take on patients of various risk profiles. As part of their underwriting process, these organizations are incentivized to adequately diagnose and risk score all patients, since their income levels depend on it.
In exchange for being paid based on how much risk a patient has, the MCO takes on full responsibility for that patient’s healthcare costs. This aligns MCOs and practitioners to focus on less expensive, proactive interventions like telemedicine, home health care delivery by lower-level practitioners, or remote patient monitoring, among others, versus letting something fester and become a bigger issue that requires hospitalization.
Profit is determined by a combination of operational efficiencies and patient health outcomes
Once patients are adequately risk scored and an MCO receives its premium, profit is determined by both cost efficiencies and health outcomes. This eliminates the previous problem where profitability was solely based on volume.
Insurance Evolves, Administration Freezes
The advent of truly outcome-focused healthcare brought about an ugly side-problem: it revealed how inefficient the system had grown to be.
For example, one of the use cases for value-based care is in-home visits for health risk assessments and ongoing care whereby a practitioner can recommend proactive interventions and offer routine care that will help a patient get or stay healthier.
Planning the home visit, though, has become a logistical and supply-demand matching nightmare given the tangled web of regulation, compliance, and siloed data. For one simple at-home visit, a care coordinator has to:
- Find the right practitioners with appropriate credentials and onboard them quickly to meet the rising demand
- Identify which practitioner speaks the patient’s language to aid a specific patient
- Check the practitioners’ calendar for availability, as many work multiple jobs
- Send the patient’s address to the practitioner
- Send relevant patient health data to the practitioner
Due to HIPAA compliance, many of these steps are currently held in different databases, lacking interoperability and making scheduling a visit a highly manual task.
Once the home visit is booked, inefficiencies continue. The practitioner must:
- Take paper notes on the patient’s condition from a clinic desktop
- Identify navigation routes to the patient’s home
- Take paper notes during the at-home visit and transfer them onto their in-clinic desktop when they return
- Scan paper notes back to the MCO care team for the patient’s chart
All of these steps result in massive inefficiencies that waste time, cost money, and open up the system to human error that could result in worse patient outcomes.
A New Solution Must Unlock Supply and Efficiencies for Practitioners as They Focus on Patient Outcomes
In the past, technology either simply couldn’t handle the complex needs of the healthcare industry or it was cost-prohibitive. That’s no longer the case, as increases in data encryption capabilities and user experience make a technology solution not only possible but affordable.
But it’s not just about technology capabilities – there’s much more at play in the healthcare world. With that in mind, a new solution must:
Be compliant: Regulations like HIPAA are crucial to supporting and protecting patients. A new solution has to play within the rules, not try to avoid them.
Enable information sharing: Functions like holding credential certificates, scheduling, navigation, note-taking, and communication are possible through smartphones or tablets. A new solution has to leverage these tools to create a seamless – yet secure and compliant – information sharing system.
Unlock practitioner supply for in-home care: Many practitioners, including Nurse Practitioners and Registered Nurses, want the flexibility of working on a per-diem basis outside their full-time jobs inside of hospitals or physicians’ practices. A new solution that can adequately capture a practitioner’s desires and availability for this additional work can unlock a huge workforce supply to meet an ever-increasing demand.
Empower in-field practitioners and MCO care-coordinators: When hours are taken up for siloed administrative tasks and paperwork, patients don’t get the care and attention they deserve. A new solution must measurably reduce or eliminate the administrative burden to ensure that care managers can focus on patients.
A Multi-Sided Platform is the Missing Piece
For the first time in modern history, a payment model exists that ties provider profitability to both patient outcomes and operational efficiency. Further, technology has matured to the level where it can provide both efficiency gains and compliance.
When we built Hoolime, this is precisely what we balanced: the efficiency that care-coordination teams need to better serve patients and the privacy and compliance expected by HIPAA and other compliance regulations.
We are already capable of resolving many of the ailments that people currently suffer from. A big reason people are not receiving the care they need is due to misaligned incentives on an inefficient system. Under the current system, a patient would be left to wait out most illnesses. Sometimes waiting is the right strategy, but for every missed intervention opportunity, the patient faces not only personal discomfort but a large cost on the medical system if they end up hospitalized or in need of expensive therapies. When we built Hoolime, our platform focus was ensuring that ongoing care and early interventions were not only possible but easier and more efficient than the wait-and-see approach.
Centers for Medicare & Medicaid Services (CMS) and other private payers are beginning to re-align incentives with shifts to outcome-based healthcare through tools like value-based risk contracts. But that’s only half the equation. The reality is that the structure and distribution capability of the healthcare system is what will ultimately empower managed care organizations to deliver superior patient outcomes. Now that this structure aligns incentives, the challenge that’s leftover is unlocking practitioner availability, increasing operational efficiency and reducing administrative burden so that the care teams can focus on patients, which is what Hoolime is purpose-built to tackle.
