Remember that old folk song?
99 bottles of beer on the wall, 99 bottles of beer
Take one down, pass it around, 98 bottles of beer on the wall.
98 bottles of beer on the wall, 98 bottles of beer…
A silly counting game to pass the time. We passed some time of our own over the break digging through Leavitt Partners’ holiday gift to the analyst community: A report with updated figures and projections about the growth of the accountable care movement in the US. It’s a great analysis, with alternate projections based on how a number of different scenarios play out in Congress and in the market. The salient figure pinning these projections to the status quo: There are 782 Accountable Care Organizations (ACOs) in the US as of December 2015.
782 ACOs on the wall, 782 ACOs,
…you get the idea.
Don’t get us wrong: 782 is a lot, especially compared to the 150-something that existed less than four years ago. Of course, the exact number is a bit unreliable – other reputable firms like Oliver Wyman have landed on slightly different figures. Regardless of who you ask, tens of millions of lives are currently covered under ACO contracts.
But – what’s the point? In health IT, we’ve heard far too many vendors simply treat “the provider market” as if it were a big gumball machine of ACOs, jostling for a chance to cash in. Is this really what the progress of value-based healthcare looks like?
Markets for Value Based Care: Now Available in Many Flavors
It is 2016: Chilmark Research would love to see the industry develop a little more nuance in thinking about and discussing the market opportunities generated by health reform. While their growth in number and sophistication is laudable, it’s not just about the ACOs any more:
- Maryland: The state of Maryland shifted all of its hospital payments to global budgets in 2014. Take a moment to think about that. All of the hospitals in the state voluntarily agreed to scrap fee for service (FFS) payments in favor of an annual, pre-set budget. In just the first year, this move saved the Center for Medicare and Medicaid Services (CMS) $116M, more than a third of the program’s five year savings target. Word on the street is that Vermont may follow suit. ACO’s or not, these hospitals constitute a defined target market with a set of incentives that exist hardly anywhere else in the nation.
- New York: A little program called the Delivery System Reform Incentive Program (DSRIP) aims to reduce avoidable hospital use by 25% in NY state over the next few years. As part of the state’s Medicaid waiver, $6.25 billion is on the table for providers who demonstrate results, with pursestrings attached to use of clinical analytics and population health tools (among other things.) The vendors we’ve spoken to have assured us that this is not an easy or straightforward pool to wade into – think RFP’s, government-hired consultants, and lots of educating the market. Yet, this program works in part by getting “performing provider systems” (PPS) to help each other figure out the path to success – which can easily include recommending technology that is proven to work.
- Physician Practices: Congress replaced the sustainable growth rate (SGR) last year with the Medicare Access and CHIP Reauthorization Act (MACRA). You can find all of the wonky details elsewhere, but in a nutshell CMS will be issuing merit-based incentives for physician practices based on performance measured in 2017. This means doctors have a year to get ready (and select their technology dance partners). Too many vendors we’ve spoken to have waved off the ambulatory market with disdain – too fragmented, too small, too few enterprise sales opportunities. For those inclined to reconsider: this market needs help creating value, and there’s going to be money on the table. Think about the consolidation of delivery networks in communities, the integration of ambulatory with inpatient care, and the alignment of quality measures across care settings: these trends suggest getting a foothold in the outpatient game now could pay off down the road.
- Comprehensive Care for Joint Replacement (CCJR): On April 1, 800 hospitals across the US will start receiving one lump sum for every hip or knee replacement they install. We anticipate this issue being the talk of the town at HIMSS this year. An anecdote: Last month we spoke to a vendor of a questionnaire platform to collect patient reported outcomes (PRO) who said its tool has already been plucked up by hospitals in similar iterations of the CCJR program. I worked in the cancer survivorship space for two years from 2012-2013, and there was basically zero market outside of research for PRO tools at that time. A few years later, value-based models of care are finally creating an environment where technology – and patient care – can flourish as they should.
These are some of the major tides of value-based care that are creeping onto the shore in 2016. ACOs are an important part of this movement – but they don’t constitute a go-to-market plan in and of themselves. We’d love to start hearing more strategic market assessments in the form of more granular segmentation of “the provider market” from the vendors we hear from. This will require learning a few new acronyms beyond “ACO” – but for those companies able to get out in front, it could pay off.
For those content to sit and wait for ACOs to pile ever higher, feel free to grab one of those beers off the wall while you’re waiting.