At the 5th annual UC Berkeley-Haas Business of Health Care Conference, 250 students, academics, industry professionals and pundits gathered at the Haas School of Business to discuss healthcare innovation. With topics ranging from genetic testing and medical devices to former California HHS Secretary Kimberly Belshe’s talk on the state health insurance exchange, the Conference was an opportunity to network with thought leaders and forecast the future healthcare environment. Among the many student-run panels, three on accountable care organizations (ACOs), mHealth and health information exchange (HIE) examined how systems and technology may evolve to build the future backbone of healthcare – if, that is, we can enable a business case for innovation.
In a panel entitled “Accountable Care Organizations – Doing More With Less,” Arnold Millstein of Stanford University presented his framework for establishing innovation in healthcare delivery. Dr. Millstein’s framework creates a parallel to the super-efficient automobile, winner of the recent X-Prize, for how nimble entrepreneurs can create innovative designs despite being under-resourced. Indeed, Dr. Millstein’s pilot programs have shown real cost reductions in the market place using collaborative approaches in ambulatory settings with fragmented provider networks when consumers (in this case, large employers), stepped up and flexed their purchasing muscle to demand quality. Ironically, at contract renegotiation time, the networks in these pilots decided they deserved more than 50% of the established cost savings, causing the long-term arrangement to break down. What is the secret, Dr. Millstein asked his panel, to enable ACOs to sustain improvements in healthcare value?
Gordon Yenokida of Catholic Healthcare West and Lance Lang from Mercer engaged Dr. Millstein with their own delivery system and benefit design perspectives on ACOs. While constructing ACOs may be challenging enough, they said, their existence will not be enough to automatically realize cost savings. As many have observed, there will be a fine balance between cost savings due to efficiency and increased provider pricing power as a result of consolidation. Of three breeds of ACOs, Dr. Lang contends, health insurers will be less concerned about large, heavily matrixed, integrated health systems like Kaiser Permanente or diffuse alliances of community physicians. It is the third breed, the hospital / health system alliance with their contracted networks, that has insurers skeptical about cost savings.
With the inception of the recent CPMC / Brown & Towland and CHW/UCSF/Hill alliances with Blue Shield, it’s clear that not only do health systems see the potential in strategic consolidation, but so do progressive insurers looking for innovative business models. And the opportunities for cost savings are plentiful, stretching from fewer ER readmissions and over-utilized surgeries to better patient engagement. The panel contended that in ACOs formed under multi-year contracts, patients who better understand the real costs and benefits of their care, and are given a place at the table as a decision-maker, help return a substantial portion of savings to the community.
“Opportunities and Challenges of the mHealth Revolution” was the next panel, led by Elise Singer, co-founder of Doximity and Chief Medical Officer of CalHIPSO. With so much buzz over mHealth, between 3M’s digital stethoscope rocketing to the International Space Station and specialized incubators like Rock Health, the panelists debated how much of mHealth was fact vs. fantasy. The panel astutely observed that mHealth seems ubiquitously spelled with a small ‘m,’ perhaps because mobile applications are only valuable in the health system to the extent they improve health – by increasing quality and access or reducing the cost of patient care. So while there is tremendous potential with the adoption of smart mobile technology, the panelists gave only two examples of apps considered successful, one globally and one app playing in the US market.
At the risk of editorializing, the US example, WellDoc, is an elegant and value-add app, because, well, it improves outcomes for diabetics. The founders spent years gathering evidence, finally getting FDA approval only after showing that the app reduced HbA1C levels. These regulatory tribulations and recent partnership between WellDoc and AT&T illustrate how high the bar is to realize the potential of mHealth. Conversely, while there is much ado about the wellness app revolution, few sustainable monetization models have been proven. So while I am the first to advocate for a new wellness app ecosystem as a pillar of the long-term solution to a morbidly obese nation, if I were a short-term mHealth entrepreneur I would do as the panel recommended and follow the incentives. Make your venture capitalist proud: prevent a chronic illness with your app today!
“Understanding and Navigating the Health Information Exchange” was the final main panel of the day, which, in full disclosure, I helped organize with two of my fellow students. After Carladenise Edwards, CEO of Cal eConnect, spoke about the importance of health information exchange (HIE) to realize cost savings of health information technology, a diverse panel debated whether barriers to implementation would hamstring this promise. Ben Wilson, Director of Intel’s Global Healthcare Strategy, observed that interoperability is less of a technical constraint than an organizational barrier, a competitive advantage exacerbated by single-system platforms providing end-to-end solutions to large health systems. Andrea Sim, VP of Product Management for RelayHealth concurred, adding that it is precisely this competition from single-system solutions like Epic that is stimulating innovation from HIE vendors, so that providers using best-of-breed systems need not sacrifice performance.
Of course, such performance equivalence remains a few years out. As Howard Landa, Chief Medical Information Officer of Alameda County Medical Center argued, while HIE is among the most technically complex feature of health data systems, most of the Meaningful Use EMR incentives will be spent before providers demonstrate true electronic medical records data exchange. This suggests there is dubious evidence for a business model that will fund construction of America’s health information highway. Nevertheless, Jamie Ferguson of Kaiser Permanente commented that linking KP’s system with the VA is evidence that, when expertly implemented, health information exchange can be the difference between life and death for patients. As for where HIE adoption may be in 5 years, Ms. Sim seemed bullish that ACOs would enhance the business case for data exchange enabling interoperable HIT components. Dr. Landa and Mr. Wilson were more skeptical of this, while Mr. Ferguson seemed blissfully unwilling to prophesize. As he observed, with medicine requiring orders of magnitude more data elements than finance or real estate, constructing a health information highway may be critically important for the future of healthcare, but it is also one of the most challenging endeavors society has ever undertaken.
Stuart Kamin
MBA/MPH Candidate 2012
Haas School of Business
University of California, Berkeley
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