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Value-Based Care Monthly Insights: November 2023



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 November 2023 VBC Trends


The theme of this edition is boxes.  Our Thought Leadership section starts with an outside-the-box comparison of the aviation and healthcare industry and ends with a piece highlighting the importance of putting populations into the right boxes for meaningful identification of health-related social needs.  Our Provider Initiatives section covers the pitfalls of sealing our thinking about the delivery of healthcare into an unchanging lockbox.  For example, rural providers are exploring new VBC strategies like forming clinically integrated networks and our nation’s physicians demand innovative new care delivery models to solve the burnout crisis.  In the Payor Updates section, we unbox the latest moves by CVS and Optum to advance VBC.  Finally, our Transaction Activity section details how big-box retailers and other big firms are entering the healthcare space with an emphasis on VBC.


Thought Leadership


Healthcare Wants to Fly as High as the Aviation Industry. Can It? (Becker’s Healthcare)

Credit to Paige Twenter and Becker’s Healthcare for authoring this fascinating piece.  It draws comparisons between the healthcare and aviation industries to ask how the former can learn from the success of the latter in reducing accidental fatalities.  The article highlights comments from healthcare leaders on topics including: changing the clinical culture in organizations from focusing on “blame” to process improvement; and reducing inefficient clinical variation through standardized care pathways built into EHR systems.  It is worth a read for outside-the-box thinking on VBC.



What a Striking New Study of Death in America Misses (Vox)

A key recent development in healthcare in the United States is the stark increase in mortality due to suicides and drug overdoses—so-called “depths of despair.”   Much of this research has highlighted the mortality increases based on racial demographics.  However, the article presents an incredibly compelling case that the relevant subpopulation seeing the bulk of increases is people in rural areas who have not completed high school.  In addition, beyond suicide and overdoses, the article discusses how a lack of progress in combating cardiovascular disease is driving up mortality in this population.  The article underscores the need for granularity in evaluating data related to health equity and social determinants of health for optimal targeting of medical intervention.

        

Provider Initiatives


Clinically Integrated Networks Poised to Boost Rural Healthcare (Modern Healthcare – Subscription Required)

Keeping on the theme of rural health, this article from Modern Healthcare (subscription required) highlights a growing trend of rural healthcare facilities forming clinically integrated networks (CINs).  CINs allow for clinical coordination between separate provider entities, provided they are organized to advance value-based care goals such as controlling utilization and improving health outcomes; this coordination opens the door to joint contract negotiation with payors through accountable care organizations and other value-based delivery/reimbursement models.   Historically, the significant infrastructure requirements of CINs deterred rural healthcare providers from exploring this organizational option.  However, CINs have emerged as a pathway for financial sustainability in rural settings by facilitating economies of scale (without acquisition by an outside health system) and pooling smaller patient populations to enable access to value-based reimbursement programs that have minimum population, case volume, and/or care episode requirements.



Physician Burnout Patterns Are a Potential Threat to Patient Safety, Study Says (HFMA)

We have previously noted the disturbing trend of physician burnout and workforce shortages gripping the nation.  This article from HFMA highlights recent research into the topic.  The author notes a recent study that identifies burnout as being concentrated among female physicians, primary care physicians, and newer physicians.  Furthermore, another study found that providers prefer changes in care delivery models, rather than clinician wellness and resiliency programs, as a solution to burnout.  Combined, these observations highlight that, absent substantially increased staffing and elimination of administrative burden, the pathway to reduced burnout requires innovative care delivery models.



Payor Updates


CVS' Karen Lynch Wants Value-Based, not 'Volume-Based,' Care (Becker’s Healthcare)

This brief article spotlights significant quotes made by Karen Lynch, CEO of CVS Health, at Fortune’s Most Powerful Women Summit.  The article notes that CVS’s recent acquisition activity (e.g., Oak Street Health and Signify Health) is tied to their strategy to drive at value-based care.  As stated by Ms. Lynch, “…our strategy in a nutshell is connecting all the dots for someone on their healthcare journey.  And so we will be in the community, we will be in the home, and we will be digitally connected.”  These comments encapsulate the larger strategy of payors directly acquiring providers in a more hands-on effort to control healthcare costs and patient experience.



Optum, Uber Partner (Becker’s Healthcare)

As social determinants of health emerge as a key area of focus within the healthcare industry, payors are seeking resources outside of the industry in an effort to build cost-effective solutions to address health-related social needs.  This article from Becker’s details how Optum is partnering with Uber to offer a new benefit to Medicare Advantage (MA) patients.  Starting in 2024, MA members with benefits issued by Optum can purchase rides, groceries, and over-the-counter medical goods from Uber and have reimbursement for these purchases submitted directly to Optum.  This brilliant partnership model integrates patient convenience (simplified reimbursement process) with an essential data gathering process (assessing the impact of the utilization of transportation, food, and goods in overall healthcare costs).  We expect this data to inform future reimbursement programs developed by United Healthcare (Optum’s parent company).


 

Transaction Activity


Best Buy, Costco and More: 5 Companies Pivoting to Healthcare (Becker’s Healthcare)

Major retailers and tech companies are increasingly pivoting into healthcare.  Another great summary article from Becker’s details the major forays into healthcare made by Amazon, Best Buy, Costco, Meijer, and Uber.  The large companies have many incentives to explore partnerships with healthcare service providers, or even direct delivery of healthcare.  First, health insurance benefit expenses account for a large portion of costs in these organizations, which each employ tens of thousands of people.  Second, as companies that interact directly with consumers, these firms can bring a customer-centric process to the patient experience, potentially winning market share from traditional healthcare providers like health systems.  Finally, as organizations of massive scale, these companies can leverage their infrastructure or expertise in software to build scalable solutions that reduce the cost of care.


 

Amazon Pharmacy's Drone Delivery Service Lifts Off with Initial Service in College Station, Texas (Fierce Healthcare)

Speaking of leveraging existing scale and infrastructure, Amazon is exploring using drones to deliver drugs to patients.  This article from Fierce Healthcare outlines Amazon’s plan to utilize its Prime Air drone delivery system to bring prescription drugs from Amazon Pharmacy to consumers in the College Station, Texas marketplace.  Given the significant costs associated with poor medication adherence, a prompt and convenient option for access to medication has the potential to serve as a cost-effective means to improve health outcomes.



HLTH23: Google Cloud Rolls Out New Generative AI Search Tools for Doctors, Life Sciences Companies (Fierce Healthcare)

Fierce Healthcare attended the HLTH23 conference and summarized Google Cloud’s product unveiling of a generative AI search tool built into to its healthcare API and data engine.  The tool is intended to given clinicians a one-stop resource for getting access to patient information stored across a wide range of sources in their medical record.  The hope is for the solution to significantly reduce administrative inefficiencies associated with gathering patient information and getting data to physicians in a quickly digestible format.  In addition to this product, the article discusses Med-PaLM 2, a large language model tuned on medical research.  Google states that Med-PaLM 2 is capable of helping clinicians with complex medical questions that require a deep understanding of contemporary clinical research.  Combined, the products are expected to speed up the process of retrieval of key patient information while enhancing the medical decision-making of providers.



HLTH23: VC Firm General Catalyst Launches New Company, Plans to Buy a Health System (Fierce Healthcare)

Private equity is not the only investor-led player targeting transaction activity in the healthcare industry—enter venture capital.  Fierce Healthcare provides details into Health Assurance Transformation Corporation (HATCo), a new company formed by venture capital firm General Catalyst.  HATCo, led by the former CEO of Intermountain Healthcare, will focus on helping health systems shift to value-based care through better use of digital health technology and improved financial alignment between payors, investors, and the government.  HATCo seeks to develop a transformation playbook built on best practices that can be implemented in the many healthcare businesses in which General Catalyst invests.  It is looking to acquire and operate a health system in order to better develop its transformational approach.  Of note, General Catalyst stated that it expects a longer time horizon that its typical 10-year investment period, and that an effective approach involves an ecosystem of companies—"there’s no one single healthcare company that can transform this industry like Amazon did with retail.”



VBC Monthly Insights - November 2023
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