Fixing healthcare in the U.S. is a seemingly impossible challenge. The current situation is astonishingly bad, and requires radical surgery, not Band-Aids. The Democratic presidential candidates are vying to one-up each other with cohesive, comprehensive solutions to fix a broken approach for delivering care. No simple solution presents itself.
So, how do we improve this complex and inefficient system? A number of companies have good new ideas. At the center is a move away from the so-called “fee-for-service” model, in which patients visit a doctor when they are sick and pay for the time and services. Instead, a value-based model is emerging, focused on wellness and preventive care. The goal is for patients to visit a doctor only when necessary. Medical practitioners in this framework get incentives to keep patients healthy.
This trend is changing how doctors work, and goes hand in hand with the demise of doctors as independent practitioners. “The proportion of new physicians entering private practice fell from 20 percent in 2004 to less than one percent in 2014,” says a report by William Blair analyst Ryan Daniels. “And we believe the decline in private practice physicians is likely to continue, if not accelerate, going forward—especially as a larger portion of the remaining private practitioners begin to retire in waves over the next five years.”
Many of those not retiring are going to hospital groups, writes Daniels: “As hospitals increasingly bear financial and quality risk for the care they provide (under accountable care organizations or other risk agreements), the ability to directly employ physicians and more actively manage their referral and spending patterns will become increasingly important.”
Other doctors are working for independent medical groups and companies developing innovative value-based primary care approaches. In what Daniels calls the “largest megatrend in the U.S. healthcare market today,” payers and providers are moving toward a “new middle.” So-called “payviders”—entities that both receive payments(fixed, pre-arranged monthly payments received by a physician, clinic, or hospital per patient enrolled in a health plan) for patients andare directly responsible for providing their care—are becoming more commonplace.
Among the companies supporting new approaches to medical practice are Privia Health, Iora Health, Village MD, and Agilon Health. Each embraces a different model, but all are breaking ranks with the traditional fee-for-service paradigm. Agilon partners with physicians groups to help them transition to value-based care by offering customizable proprietary technology for independent doctors to meet the unique demands of a given market. VillageMD offers care and practice management tools, analytics, and a proprietary operating system that breaks down information silos and integrates predictive algorithms to engage patients and generate clinical insights.
Shawn Morris is chief executive of Privia Health, which offers a proprietary technology platform, practice management tools, and care-coordination capabilities for doctors who wish to operate independently. According to Morris, Privia enables these doctors to “join a medical group that offers services and allows them to have autonomy and make choices about scheduling and employees, while gaining access to the tools enjoyed by large medical groups.”
“The fee-for-service model is built around ‘sick care’,” says Morris. “Patients are on a wheel—doctors need to get them in, get them out, and manage volume. Our approach allows doctors to slow down and hit the pause button to assess your total condition.” Priva’s platform enables doctors to “close the gap” by making sure their patients follow-up on any prescribed tests or procedures.
Iora Health offers primary care for adults on Medicare at about 50 practices across the U.S. Each patient gets a team dedicated to their care, including a physician or nurse practitioner, team nurse, behavioral health specialist, and health coach, who is a main point of contact and help patients achieve their health goals.
“Each of our practices offers exercise, nutrition, and health education classes,” says Iora chief growth officer Sonia Millsom. “Medicare patients struggle with social isolation, which research has shown to be a strong predictor of poor health outcomes. We have designed groups and classes that address this social isolation.”
Iora can provide a high level of service because of its reimbursement model. It partners with insurance companies that believe primary care is key to improving health. These partners pay a fee for each patient at a higher rate than primary care typically costs.
Steve Burrill, U.S. health care sector leader at Deloitte, says the shift to value-based care will lower costs. “If you’re a system focused on illness or injury,” he says, “the more you have of that, the more revenue you generate. Not that doctors hope for illness or injury, but the fact remains that it pays their bills. The model we’re moving to says let’s instead focus on wellness. Let’s manage it. This is less expensive than waiting for bad things to happen.”
Growth in value-based care may be crucial if the U.S. hopes to solve its healthcare problems. Value-based care “is the trend towards which all healthcare is moving,” says Burrill. “Doctors don’t have to embrace it, they can stay on a fee schedule. Or they can evolve and move forward.”
Growth in value-based care may be crucial if the U.S. hopes to solve its healthcare problems. The recent release of results from The Federal Centers for Medicare and Medicaid Services’ program for finding savings in Medicare suggests the industry is finding real success already. The program overall saved $740 million for the healthcare system in 2018, with Privia Health generating nearly ten percent, or $70m of those savings, across its four Accountable Care Organizations.
Value-based care “is the trend towards which all healthcare is moving,” says Burrill. “Doctors don’t have to embrace it, they can stay on a fee schedule. Or they can evolve and move forward.”