Healthcare’s pivotal digital moment

By Jeffrey Stevenson, VSS

Digital-IT and population-health businesses enabling providers – doctors, community and hospital systems – to better analyze data from electronic health records, claims and clinical treatment are poised to become tomorrow’s healthcare-IT winners.

This is happening as the industry’s transition from fee-for-service to value-based care has gained momentum.

Value-based reimbursement models are those that condition providers’ compensation on their ability to generate positive health outcomes and manage their resources more effectively.

Private-capital firms are supporting the providers and this transformation of healthcare. They’re investing billions into IT businesses that enable providers to make better data-driven reimbursement decisions. These investors have recognized the opportunity to build scalable, well-capitalized businesses that will be in demand for years to come.

Need for better data visibility

It’s no secret that the Centers for Medicare and Medicaid Services has been championing the shift to value-based reimbursement to save Medicare billions of dollars.

It recently said it planned to move 25 percent of Medicare beneficiaries out of traditional fee-for-service arrangements and launched new voluntary models designed to make value-based reimbursement easier for providers to adopt.

The industrywide move to value-based care has only continued to highlight the importance of analytical tools in helping providers make better use of their data and treatment resources.

A Deloitte Center for Health Solutions survey of 624 U.S. primary-care and specialist physicians in 2018 shows how lack of information has affected care providers.

The survey found that only 28 percent of respondents received enough cost or resource utilization information for patient care; 43 percent were unable to locate low-cost lab and imaging centers for patients; and 36 percent could not even identify high-quality skilled nursing facilities, rehabilitation centers or home health options for their patients.

Setting the stage for change

The sector’s move to value-based reimbursement was strengthened four years ago when CMS introduced the Medicare Access and CHIP Reauthorization Act of 2015.

The law included a value-based framework to compensate providers who generated lower costs and joined Medicare-accountable care organizations to shoulder financial risk and earn shared savings. ACOs are groups of providers that take responsibility for the entire cost and quality of care.

Since then, the drumbeat for value-based reimbursement has only grown louder. Forty-eight states have launched value-based care and payment programs.

This has led some state hospital associations to join with population-health-management companies to improve cost efficiencies and drive positive outcomes.

Florida Hospital Association and Idaho Hospital Association are two that have done so.

They’ve teamed with Caravan Health, the Kansas City, Missouri, population-health-management company that forms collaborative ACOs. Caravan Health (a portfolio company of VSS), helps hospitals and doctors retain autonomy, ease administrative burdens and collaborate to earn more than they would from traditional fee-for-service arrangements.

Silver lining

While fully leveraging the volume of clinical and claims data available within hospitals and physician practices will take time, healthcare providers are increasingly recognizing the importance of data in delivering measurable cost savings.

According to the Deloitte Center survey, 63 percent ranked cost and 56 percent ranked outcome data for treatment and medication options as most valuable at the point of care, and 72 percent indicated cost-related information at the point of care was valuable.

The good news is plenty of technology analytic tools, population-health and accountable-care programs are available to physicians and health-system executives to improve patient care and financial performance.

But to make the most of these resources, providers need to act like payers, embrace technology-enabled solutions and then assume responsibility for managing the best possible outcomes.

Providers with the sagacity to realize they can use actionable data analytics and proven processes to empower their practices and organizations have the opportunity to go beyond positioning their groups for success. They can help bend the cost curve of America’s healthcare in the right direction.

That’s a win-win for patients and physicians alike.

Jeffrey Stevenson is managing partner at VSS, a New York-based private investment firm that invests in the information, business services, healthcare and education industries. Reach him at 212-381-8122.