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Value-Based Care Monthly Insights: April 2024

Logo for InHealth Advisors' Value-Based Care Monthly Insights

InHealth Advisors is pleased to bring you a monthly summary of the latest thought leadership, news, and transaction activity in value-based care (VBC).  To assist busy healthcare executives in following VBC developments in a time-efficient fashion, we have assembled brief descriptions of and links to a curated list of the most insightful developments in VBC and provider alignment.

 

Summary of April 2024 VBC Trends

 

This edition of VBC Monthly Insights summarizes the continued evolution of value-based care.  Our Thought Leadership section returns to the topic of AI by covering groundbreaking funding, solutions, and integrations.  We also explore advancements in the efforts to address social determinants of health.  We touch on major Provider Initiatives from the c-suite of health systems to the newest digitally-integrated hospital campuses.  Payor Updates highlight new digital health partnerships with payors and innovations in managing post-acute care outcomes and spending.  We conclude with the latest summary of Transaction Activity involving physician practices acquired by Amazon and private equity firms.

 

Thought Leadership

 

AI, Yet Again (Various Articles Linked Below)

Stories involving generative AI solutions took top billing in our prior edition of this publication.  They remain front and center in the news.  This month, we have highlighted AI news from different ends of the wider market: the start-up venture space, established tech firms expanding their presence in healthcare, and electronic health record vendors:


  • Hippocratic AI banks $53M backed by General Catalyst, a16z, Memorial Hermann, UHS and other health systems (Fierce Healthcare).  Critical staffing shortages have been driving healthcare costs upwards, imperiling the financial sustainability of many healthcare organizations.  The potential for generative AI to fill the shoes of clinical support staff offers a highly-scalable pathway for mitigating the cost of workforce shortages.  Enter Hippocratic AI.  With financial backing from venture capital, health systems, and NVIDIA (among others) and partnerships with numerous health systems, Hippocratic is seeking to develop AI agents capable of performing lower-risk tasks around patient communication and care coordination.  The article explores these agents in greater detail, along with the very significant efforts and resources devoted to ensuring patient safety.  In its current phase of testing, 5,000 nurses and 500 physicians will be used for clinician-driven safety evaluation.

  • Google's healthcare AI ambitions: New model for personal health coaching and next steps for gen AI (Fierce Healthcare).  Google continues to expand their AI offerings in the healthcare space across a broad variety of uses.  Fitbit and Google Research are partnering to develop a large language model designed to use data gathered from Fitbit devices to develop personalized coaching based on health and fitness goals.  Google has also developed AMIE (Articulate Medical Intelligence Explorer)—a tool to guide the clinical information gathering process to reach accurate diagnoses quicker.  Finally, they have trained their Gemini model on multimodal data (imaging, medical notes, and lab data) to develop a language model tool for interpreting chest X-rays.  The article contains more detail on each of these fascinating use cases.

  • Epic’s bet on generative AI (Becker’s Healthcare).  Not to be outdone, Epic is developing over 60 applications that use AI fed by the EHR vendor’s systems.  The programs are intended to assist with revenue cycle (e.g., appropriate billing/coding and denial appeals), clinician workload (e.g., automating MyChart messages), and more.  Given the market penetration of their EHR and the centrality of their data to patient care, Epic is well positioned to capitalize on their generative AI solutions.

 

Compassionate crusade: The role of healthcare in addressing homelessness (HFMA)

This newsletter has previously covered innovations in addressing health-related social risks.  This outstanding piece from HFMA profiles the efforts of health system and community organization partnerships in tackling homelessness.  The profiles highlight the underlying characteristics of successful partnerships including: (1) real-time data sharing between health systems and community organizations that address homelessness, (2) care coordination meetings between clinical staff and community health workers to secure housing (even if temporary) after acute care episodes, and (3) using clinical outreach teams (e.g., for vaccinations in homeless shelters) to serve as conduits for connection to community resources providers.  These programs offer a rare opportunity to meaningfully reduce costs while improving health for at-risk populations.          


 

      

Provider Initiatives

 

Health system C-suites eye value-based care roles (Becker’s Healthcare)

As the prevalence of value-based reimbursement models increase, the need for health system leadership focused on success in value-based care rises.  This piece interviews a number of healthcare leaders who have prioritized value-based care as a strategy for their health system.  The various viewpoints discuss the emerging need due to pressure on reimbursement rates and market entry by new delivery providers including digital health and artificial intelligence solutions.  The interviewees span health systems located in varying markets from dense metropolises to rural communities, representing the broad and growing importance of value-based care to health system strategy.  Of note is the increasingly central role of effective coordination between patients, payors, and providers for success in value-based care, with recognition of the monetary and time costs necessary to make this coordination a reality.   


 

 

Tenet: Value-based care 'increasingly affecting' hospital operations (Becker’s Healthcare)

As implied by the article title, not all organizations view the expansion of VBC reimbursement models as an opportunity.  This piece explores comments to investors by leadership at Tenet Healthcare regarding the potential negative impact of “value-based purchasing and alternative payment models.”  Tenet flagged the combination of Medicare readmission penalties and mandatory bundled payment models as threats to future revenue.  They also noted that commercial payors are increasingly leaning into VBC reimbursement models, specifically citing claims denials related to preventable adverse events.  These comments underscore the importance of developing strategies to transition to VBC delivery models as the shifting sands of healthcare reimbursement migrate to risk-based payment structures.


 

 

HIMSS 2024 Recap and Major Announcements (digitalhealthwire)

The Healthcare Information and Management Systems Society (HIMSS) recently held their annual conference, with generative AI taking center stage.  This article provides an efficiently concise summary of the major developments from the conference, including some that impact VBC.  Innovaccer demoed its AI-integrated tablet, which is designed to address care and coding gaps, assist in clinical documentation, and facilitate diagnoses—all at the patient point of care; it also announced its acquisition of Pharmacy Quality Solutions, a technology platform that enables VBC by connecting payors to high-value pharmacies.  Microsoft announced its deployment of Nuance’s Dax Copilot (an AI solution to assist clinical documentation) at Stanford Medicine, WellSpan Health, and Providence.  There are many more developments worth exploring in the article.     


 

 

Inside Mayo Clinic's $5B 'digitized' hospital (Becker’s Healthcare)

Healthcare providers regularly report fatigue associated with a cornucopia of uncoordinated digital health solutions.  A growing strategy employed by health systems involves developing a fully-integrated digital experience from the hospital to the home.  This may have motivated General Catalyst’s contemplated acquisition of Summa Health.  This article explores the approach taken by Mayo Clinic with their new hospital campus in enhancing the patient experience with digital tools.  From ambient AI listening for documenting clinical notes to predesignated parking to customized music and lighting preferences for patients, Mayo representatives describe their philosophy regarding the design of next-generation healthcare facilities.         


 

 

Payor Updates

 

Humana prioritizes veterans through Louisiana digital health partnership (Fierce Healthcare)

In a growing trend among digital health providers, payors are engaging solutions that are developed for managing the health of targeted subpopulations.  This story discusses a chronic care management solution for veterans developed by DUOS and integrated with Humana’s Medicare Advantage health plan in Louisiana.  The program facilitates care coordination and seeks to improve outcomes and treatment adherence, while reducing no-show rates.  With a wider shakedown in the digital health industry, new partnerships between payors and digital health firms provide a glimpse into how digital care models are evolving.


 

 

Industry Voices—Strengthening long-term care providers' role in value-based care  (Fierce Healthcare)

Spending on post-acute / long-term care services comprise around 15% of Medicare’s total annual budget.  Various stakeholders have focused on this segment of the healthcare market as a key area for improvement in costs and outcomes through enhanced care coordination.  This piece explores partnership pathways between post-acute / long-term care providers and accountable care organizations.  In particular, it discusses recommendations around increasing skilled nursing facility (SNF) participation in Medicare shared savings and value-based care programs.  Strategies include revising patient attribution formulas, adjusting reimbursement to SNFs based on risk scoring, development of SNF-specific quality measures, and enhanced data reporting by Medicare on SNF utilization and costs.  Integration with ACOs can provide SNFs a pathway for generating sustainable revenues in unfavorable market conditions.

    

 

 

Transaction Activity

 

Amazon's physician acquisition strategy (Becker’s Healthcare)

Patsy Newitt from Becker’s breaks down the major moves Amazon has made in acquiring primary care providers (e.g., One Medical) and developing partnerships for specialty care with health systems.  As with other large corporate entities, such as Walmart, the partnerships with health systems for specialty referrals further VBC goals by directing patients in need of acute care to efficient providers of such services.  It remains to be seen how scalable this approach may be given that many health systems operate significant primary care service lines themselves, making One Medical a direct competitor.  However, if care coordination between primary care and specialty providers can succeed in bending the cost curve and delivering better quality care, both parties stand to gain through gainsharing and quality bonus opportunities from payors.   


 

 

Private equity-backed physician practices jump 600% (Becker’s Healthcare)

Ms. Newitt strikes again with this quick overview of the key data points related to private equity ownership of physician practices.  The 600% growth rate cited in the headline pertains to the period from 2012 to 2021, representing an annual growth rate of nearly 25%.  Primary specialties targeted for acquisition include cardiology, dermatology, gastroenterology, OB/GYN, oncology, ophthalmology, orthopedics, primary care, radiology, and urology.  Over the time period, dermatology, ophthalmology, and gastroenterology represented the lion’s share of acquisitions.  A major chunk of these transactions occurred in 2021, perhaps making up for lulls during the early stage of the COVID-19 pandemic.  The greatest proportion of activity occurred in states in the Southern US.


 

 

VBC Monthly Insights - April 2024
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