IT to enable agile collaboration in the ACO world
The accelerating move toward accountable care and other new reimbursement approaches will put a premium on care coordination that will extend the reach of providers to cover a wider continuum of care.
There have been some interesting discussions in the news lately that summarize why humans dominate the earth over other species, even though many animals exhibit social characteristics and some are much stronger than humans. Still, humans came to dominate the earth because we alone have the ability to cooperate with a variety of different species and strangers in extremely flexible ways.
If we extend the analogy to healthcare organizations, the organizations that will thrive in the future are those that can learn to cooperate with a multitude of other entities in the healthcare ecosystem. They must also do this in extremely flexible ways because regulatory reform is putting significant pressure on revenues, thus forcing a greater level of standardization of care and approaches.
This is particularly true as more healthcare organizations become involved in accountable care organizations and gain more experience with the environment. The number of ACOs and ACO contracts are growing rapidly.
Meanwhile, advances in technology with digital disruption and innovations in biotech soon will enable personalized medicine – providing care for one person at a time. These opposing pressures of standardization and personalization can only be met by cooperating with other players in the healthcare ecosystem.
Like any business, a typical healthcare organization is structured to cover a portion of a value chain and relies on suppliers and customers to cover other parts of the value chain. This type of a linear construct worked well because it reduces complexity and makes it easier to manage hand-offs’ with suppliers and customers. However, this model isn’t effective in an era of population health and personalized medicine.
A hospital that is about to discharge a patient with congestive heart failure will need to do some or all of the following:
In an era of personalized medicine, providers may have to engage with makers of specific molecules and drugs to target cancers and diseases for individual patients.
In such a model, the traditional lines between suppliers and customers get blurry, and providers require collaborative arrangements with relevant entities that can be quickly established for individual patients.
So what will it take to be agile and responsive? We think such a model requires three key foundational blocks.
1. Ability to innovate on commercial models
Rapidly setting up new relationships with partners requires the ability to be very innovative on commercial models, so all partners can obtain a reasonable return for their investment. In an environment where many traditional providers lack estimates for the cost of their services, this may seem a bridge too far, but is absolutely essential to get right.
We recently encountered a provider organization whose pricing approach for a program to reduce 30-day readmissions was an order of magnitude higher than what their payer customer was willing to pay. The payer had arrived at its numbers based on a calculation of value on a per member per month basis; the provider had arrived at its numbers based on a bottom-up effort estimate per episode. By talking to one another and being quite transparent on cost and value drivers, they were able to resolve their differences and agree on a model that was mutually beneficial.
IT has a critical role to play in facilitating these conversations by providing all the information needed to enable cost transparency and by rapidly setting up the ability to exchange information systematically with new partners.
2. Plug-and-play business processes and information
Collaboration with partners requires the ability to quickly share information and to align business and care processes to make all transitions seamless. Information sharing is still less than perfect and much has already been said about the industry challenge, which partly stems from lack of interoperability.
However, very little emphasis has been placed on integrating clinical and business processes. As a result, the patient often has to serve as the intermediator to coordinate their own care. Adopting a plug-and-play model, similar to how services companies deliver to customers, will ensure a seamless transition. For example, when a customer calls their bank, the typical call center is operated by a supplier, but the handoff is seamless and transparent to the customer. A similar model is required in healthcare.
IT has faced the challenges of integration for many decades and has much to teach a business about integration, which can make business process level integration much easier.
3. Alignment of incentives
Lastly, successful partnership requires ensuring that the incentive structures for all individual participants are aligned to ensure collaboration. Aligned incentives result in the right behaviors. One of the roadblocks in achieving coordinated care today is that incentives are not aligned and therefore, clinicians have less incentive to share information or to refer patients outside their organization.
For an accountable care model to work, these short-sighted approaches need to change. IT can enable this transition by automating much of the information sharing and taking the human being out of the decision making process to share (or not share) information with relevant stakeholders. Greater automation can enable a more coordinated approach to care.
We are rapidly moving to a new era in healthcare. The opposing pressures of standardization and personalization will only increase, and providers need to break free of the value-chain mindset and start engaging with partners across the ecosystem to ensure the best and most appropriate care is provided to all patients. Rethinking how the business is organized and run is the first step in this transformative journey.
If we extend the analogy to healthcare organizations, the organizations that will thrive in the future are those that can learn to cooperate with a multitude of other entities in the healthcare ecosystem. They must also do this in extremely flexible ways because regulatory reform is putting significant pressure on revenues, thus forcing a greater level of standardization of care and approaches.
This is particularly true as more healthcare organizations become involved in accountable care organizations and gain more experience with the environment. The number of ACOs and ACO contracts are growing rapidly.
Meanwhile, advances in technology with digital disruption and innovations in biotech soon will enable personalized medicine – providing care for one person at a time. These opposing pressures of standardization and personalization can only be met by cooperating with other players in the healthcare ecosystem.Like any business, a typical healthcare organization is structured to cover a portion of a value chain and relies on suppliers and customers to cover other parts of the value chain. This type of a linear construct worked well because it reduces complexity and makes it easier to manage hand-offs’ with suppliers and customers. However, this model isn’t effective in an era of population health and personalized medicine.
A hospital that is about to discharge a patient with congestive heart failure will need to do some or all of the following:
- Transition care to a home health agency.
- Share information with the patient’s primary care doctor.
- Coordinate care with other providers, if applicable.
- Monitor with the local health information exchange for any admission, discharge or transfer information on this patient at other providers in the area.
- Coordinate with a construction contractor to ensure patients are able to safely move around their house without exerting themselves by climbing stairs.
- Provide the patient with a mechanism to collect basic information daily (weight, steps walked) and collect that information back in a timely manner.
- If the patient lives without nearby access to healthy food, food suppliers may need to be engaged.
In an era of personalized medicine, providers may have to engage with makers of specific molecules and drugs to target cancers and diseases for individual patients.
In such a model, the traditional lines between suppliers and customers get blurry, and providers require collaborative arrangements with relevant entities that can be quickly established for individual patients.
So what will it take to be agile and responsive? We think such a model requires three key foundational blocks.
1. Ability to innovate on commercial models
Rapidly setting up new relationships with partners requires the ability to be very innovative on commercial models, so all partners can obtain a reasonable return for their investment. In an environment where many traditional providers lack estimates for the cost of their services, this may seem a bridge too far, but is absolutely essential to get right.
We recently encountered a provider organization whose pricing approach for a program to reduce 30-day readmissions was an order of magnitude higher than what their payer customer was willing to pay. The payer had arrived at its numbers based on a calculation of value on a per member per month basis; the provider had arrived at its numbers based on a bottom-up effort estimate per episode. By talking to one another and being quite transparent on cost and value drivers, they were able to resolve their differences and agree on a model that was mutually beneficial.
IT has a critical role to play in facilitating these conversations by providing all the information needed to enable cost transparency and by rapidly setting up the ability to exchange information systematically with new partners.
2. Plug-and-play business processes and information
Collaboration with partners requires the ability to quickly share information and to align business and care processes to make all transitions seamless. Information sharing is still less than perfect and much has already been said about the industry challenge, which partly stems from lack of interoperability.
However, very little emphasis has been placed on integrating clinical and business processes. As a result, the patient often has to serve as the intermediator to coordinate their own care. Adopting a plug-and-play model, similar to how services companies deliver to customers, will ensure a seamless transition. For example, when a customer calls their bank, the typical call center is operated by a supplier, but the handoff is seamless and transparent to the customer. A similar model is required in healthcare.
IT has faced the challenges of integration for many decades and has much to teach a business about integration, which can make business process level integration much easier.
3. Alignment of incentives
Lastly, successful partnership requires ensuring that the incentive structures for all individual participants are aligned to ensure collaboration. Aligned incentives result in the right behaviors. One of the roadblocks in achieving coordinated care today is that incentives are not aligned and therefore, clinicians have less incentive to share information or to refer patients outside their organization.
For an accountable care model to work, these short-sighted approaches need to change. IT can enable this transition by automating much of the information sharing and taking the human being out of the decision making process to share (or not share) information with relevant stakeholders. Greater automation can enable a more coordinated approach to care.
We are rapidly moving to a new era in healthcare. The opposing pressures of standardization and personalization will only increase, and providers need to break free of the value-chain mindset and start engaging with partners across the ecosystem to ensure the best and most appropriate care is provided to all patients. Rethinking how the business is organized and run is the first step in this transformative journey.
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