Value Based Health: No Success without Value-Based Technology Strategies

A September 16 2016 Bloomberg report once again provides the bad news for the US healthcare system, ranking it among the least efficient healthcare systems -50 of 55 countries surveyed in 2014. Despite the plethora of new regulations, payment models, technology mandates and incentives to promote greater efficiency and improved outcomes in the past 10 years, little has been achieved.

It is fair to say that the value-based model, the most recent strategy, is in its infancy, barely a glimmer in the 2014 timeline of the Bloomberg survey. Each time the US embraces a new business model (managed care, consumer defined health plans, Medicare Advantage, at risk payment models. ACOs, value based care), a wave of new technology development occurs, with the common result that new point solutions are piled on top of disconnected, disjointed legacy solutions. The Value Based Health Plan market joins its predecessors triggering extensive technology and solutions investment. The question is whether any of this will resolve the inefficiency that ails the healthcare system. The answer is not yet.

The value based market, as is well known, calls for a reordering of the US healthcare business, with reimbursements and incentives rewarding outcomes and efficiency, rather than volume. Among the keys to success are an increase in analytics to guide decision making, increased use of digital technologies, electronic and shared health records.  In response, the technology market has indeed focused on technologies that, seemingly, would contribute to increased efficiency – digital, wearables, analytics, consumer health information, population health solutions. However, despite their potential, the value and return on investment of many of these solutions faces considerable scrutiny in 2016.

The problem hasn’t changed: the new solutions add to healthcare fragmentation, information overload, costs and inefficiency, rather than contributing to greater program, product and market efficiency. Point solutions create only incremental value and rarely achieve full potential in the absence of a strong integration strategy and clarity on how the solution fits and adds value to the healthcare value chain.

Obviously, by any measure, past US healthcare technology strategies have not contributed to any improvement in healthcare status, outcomes or efficiency as measured by any number of international surveys. The fee for service model, in part, supported the inefficiency. The value based model, with reimbursements and incentives directly aligned with efficiency, cost containment and limited administrative spend will not sustain a fragmented business or technology market.

Value based health care requires not only that the healthcare business reorganized, but that the technology strategies realign around efficiency, cost containment and alignment to support the new business model. There are two baseline questions upon which technology developments should be founded in the value-based healthcare era:

1. It needs to fit together: Although interoperability has been a long term industry concept, the focus is frequently either at the end of development, or delegated to integration vendors and platforms to deal with. There is nothing value based about the resulting skyrocketing integration costs that are now only further perpetuated by the explosion of digital, analytic and social technologies. Rather than point solutions that then must be integrated into legacy and other proprietary technologies, vendors in a value based market should must with the question of integration and interoperability.
2. It needs to support an efficient healthcare value chain: beyond the integration challenges, healthcare technology solutions have historically been developed and markets for payers or providers or ACOs or medical homes – check out almost any vendors’ website. This leads to remarkable redundancy amongst these organizations, particularly as the business and financial lines are blurred. The market is creaking under a proliferation of redundant and disconnected solutions. In the value based market, the definition of a payer and a provider is blurred. Many new entities are emerging that include payer and provider constructs; there is no dominant model. The business models emerging in the value based market seek technology solutions to meet specific requirements within the healthcare value chain, not solutions that are developed for antiquated business definitions: payer and provider.

And, it is possible. I had the pleasure last weekend of watching a group of young engineers participate in a hackathon to identify new solutions for rehab care. This team used gaming software to develop a new digital solution for rehab services. It was built on free, open source and interoperable software that would easily integrate with any existing application. Furthermore, the development tool was workflow based with embedded analytics. The group started with the premise that any technology solution must meet what is essentially value based criteria: reduced costs, improved outcomes, interoperability, and focused on a value chain improvement that could be used by payers, providers or any delegated, “payvider” or joint venture in between.

Perhaps a hackathon is what the healthcare market needs….In the meantime, watch for new Chilmark research that will explore the value based business and technology models supporting the emerging payer provider continuum.