• Healthcare

Value-Based Care Sparks Innovation

June 05, 2023

The claim made by the authors that value-based care (VBC) encourages corporate consolidation and favors only large consumer companies is baseless. The involvement of established entities like CVS, Amazon, and UnitedHealth in aggressive investments does not indicate any inherent flaw in value-based care.

As highlighted in a McKinsey article, the progression of value-based care capabilities and the estimated savings potential associated with each initiative is outlined. 

Notably, McKinsey suggests that mature markets are entering a phase where significant operational and clinical performance improvement gains have already been realized. These gains primarily focus on coding accuracy, network leakage, and referral compliance.

This challenges the notion that aggressive risk coding and network control are indispensable tools for value-based entities. Whether due to the exhaustion of low-hanging fruit or the increasing sophistication of models, the initial phase of value-based care draws to a close.

The next phase entails more nuanced innovations that are already being implemented. To navigate this dynamic landscape effectively, advanced analytics, collaborative risk-bearing networks, automated workflows to reduce administrative burdens, and progressive virtual care delivery sufficiently advanced to solve for “last mile problem” are crucial. 

These capabilities do not necessarily favor prominent incumbent players but relatively agile startups that can adapt quickly to an evolving care delivery environment.

The current wave of value-based programs has sparked intense innovation, which may counterbalance consolidation. Companies like ChenMed and OakStreet have demonstrated how rethinking clinic operating models can positively impact access, efficiency, outcomes, and patient satisfaction. 

Aledade, Privia, and agilon health have shown that success can be achieved through partnerships with independent provider groups. New entrants like Vytalize, Upstream, and Wellvana highlight the vibrancy of companies focused on enabling providers in value-based models. 

Next-generation health plans like Oscar and Devoted have developed advanced tech stacks to modernize health insurance. Startups like Memora and PicassoMD leverage technology to provide intelligent care navigation and real-time support to primary care. 

Numerous other startups are emerging to support primary care in value-based constructs by developing innovative approaches tailored to specific patient cohorts and specialty capabilities. 

The integration of specialists into value-based care is rapidly accelerating. Pearl Health, empowers independent primary care providers through cutting-edge technology and careful risk-sharing.

However, concerns about consolidation remain. Corporate incumbents will inevitably acquire some successful novel enterprises. The presence of substantial budgets and complex financial mechanisms in an industry that demands consumption may undermine healthy market forces and lead to increased consolidation.

While acknowledging this concern should be addressed through regulatory advancements encouraging competition, enhanced antitrust oversight, and ongoing program rule revisions fostering disruption. 

We have yet to encounter convincing evidence that value-based care drives healthcare consolidation rather than being a separate development occurring within an existing trend of increased consolidation across industries. 

These challenges are not inherent to value-based care programs, but if they jeopardize the next chapter of healthcare’s necessary evolution, the government can take steps to mitigate them.

Sources:
https://www.healthaffairs.org/content/forefront/value-based-care-fuels-innovation-not-consolidation
https://www.mckinsey.com/industries/healthcare/our-insights/investing-in-the-new-era-of-value-based-care
https://medcitynews.com/2022/09/solving-healthcares-last-mile-problem-3-ways-to-better-reach-patients/
https://www.chenmed.com/news/chenmed-publishes-2021-impact-report
https://socialimpact.oakstreethealth.com/
https://resources.aledade.com/press-releases/aledade-has-saved-more-than-1-2-billion-in-unnecessary-health-care-spending
https://www.priviahealth.com/esg-overview/
https://www.agilonhealth.com/esg-social-impact-strategy/
https://www.vytalizehealth.com/our-solution
https://www.upstream.care/about-us
https://wellvana.com/
https://whatoscardoes.com/
https://www.memorahealth.com/platform
https://www.mckinsey.com/industries/healthcare/our-insights/the-gathering-storm-the-uncertain-future-of-us-healthcare
https://bfi.uchicago.edu/wp-content/uploads/2022/08/BFI_WP_2022-104.pdf
https://www.whitehouse.gov/cea/written-materials/2021/07/09/the-importance-of-competition-for-the-american-economy/#_ftnref3