By Sarianne Gruber
Twitter: @subtleimpact
In his paper Disruptive Entrepreneurship is Transforming U.S. Health Care, Jonathan Rauch metaphorically and warmly refers to today’s entrepreneurs as “health care’s mammals”. A Senior Fellow with the Governance Studies at the Brookings Institution, Rauch envisions health providers, insurers and other health-related institutions as saurians, lizard like dinosaurs that once roamed the earth. These creatures limited by size, speed and “doomed in current form” are on the cusp of extinction. Rauch parallels the evolution of new agile creatures, breeding a new culture of “disruptive entrepreneurship”. Rauch states that “the U.S. health sector was a dinosaur ecology. The one-size fits all, hospital-centered medical culture, the fee-for-service payment structure, the insularity of health-care business executives, the third-party-payment system’s marginalization of consumers, and the federal government’s disincentives to improve efficiency all worked together to support large, slow-moving, wasteful institutions that got fat at the expense of the rest of the economy”. He sees the value-seeking business models and enterprises having a “place in the sun, and they are building a different ecology under the feet of the dinosaurs”.
The most fascinating learnings from his paper where the persons or “health care’s mammals” he selected to interview:
Dr. Brad Stuart, physician in his 60’s, had a hospital based career at Sutter Health in northern California. In 2013, he founded a startup called Advanced Care Innovation Strategies, a care management group for placing patients in post discharge care facilities. The fee-for-service model is losing market share to a new standard care model, population management, a value based care model. Within this framework, physicians will have to learn to manage patients within a set budget. If there is over spending or poor outcomes, physicians will not get paid. The only real incentive is for providers is to keep patients healthy.
Clayton Christensen, a Harvard Business School professor and a theorist of disruptive innovation, proclaims that a disruptor will often be a business-model innovator. It is not the technology and data. Those are only the disruptor’s tools.
Disruptive Entrepreneurs Change Healthcare Delivery
Late-life care: A trained engineer and Wharton graduate Mitchell Daitz in his late 40’s created a start up in New Jersey, he called Vital Decisions. He believed in the option for patients to stage their own end of life goals with a personal adherence plan. Daitz, as a health care consultant, witnessed how medicine tends to throw every treatment at chronically ill, late stage patients beyond at point of recovery. More often than not it is expensive and inhumane. Vital Decisions contracts with health plans for up to nine months of telephone counseling with patients. Today they have covered patient populations totaling 1.8 million lives.
Medication compliance: Josh Brenner, in his early 40’s is a trained pharmacist and PhD in health policy and management. He believed and learned that “we fail to use medicines correctly in this country”. And on that premise, he began RxAnte in 2011. Using health insurance data, the company created forecasts for outcomes to identify high risk patients and manage medication. RxAnte sells its services to health plans on a dollars-per-member basis. Brenner built his business on analytics and prediction. Last year, RxAnte had about 2,000 practices and was managing medications for over 9 million health-plan members.
Post-acute care: Clay Richards founded NaviHealth in 2012. Prior to discharge, acute care transitions are determined and facilities are selected. NaviHealth contracts with insurers and health systems to manage post-acute patient populations. A proprietary algorithm using patient health and demographics, provides direction on the select care placement for a patients, “guaranteeing significant savings below a health plan’s current spend”. Currently the company has about 400 employees and covers 1.8 million clients.
Preventable crises: A serial entrepreneur, at the start of 2014 McArthur VanOsdale and a partner founded of myNexus. A telehealth company, with the goal of enabling patients to monitor and manage their health at home. The company contracts with insurance plans for home-based benefits, and provides daily monitoring equipment to a patient’s home, coordinates care when alerts arise, and uses data and analytics to identify high-risk patient. MyNexus has proprietary analytics to identify high-risk patients in the insurer’s population, and a revenue model that also integrates “gainsharing”; whereby the company shares in savings such as preventing readmissions or ED visits.
Disruptive Entrepreneurs Change Roles and Responsibilities for Better Health
Wellness programs: James Currier, a serial entrepreneur founded JiFF in 2011. Capitalizing on employers needed to better manage and optimize health and wellness programs for employees, Currier set out to build a platform to help self-insured employers make data-guided choices between available health programs and interventions. Having a background in video games and “gamification”, he embedded analytics and built a social online platform. Four years later, JiFF has evolved into a giant data company to help employers’ needs to control health-care costs to build better value-driven businesses.
Healthcare coverage: How do we help the consumer looking for cost-efficient health plans? Change Health founder, Doug Gherter, had the answer, “You got to take the information to the consumer”. In 2007, he built an online service that offered personalized information on how much plans will cost. The service also analyzes insurance claims data to find patterns in health purchases and makes personalized recommendations. Change Health targets its services to health plans and self-insured employers. By 2014, they were under contract to cover more than 10 million people.
Population management: A different type of species, the population health model changes the health care ecosystem. A second-order disruptor, Seth Blackley, the president and co-founder of Evolent Health took the challenge and wrote a business plan on how to move away from fee-for-service in 2010. He believes population health is a better model of care. Today Evolent has 700 employees, and provides data analytics to identify high-risk persons, targeted interventions and care coordination for those high-risk people. A new market evolves to prevent illness rather than provide treatment.
To read the complete article by Jonathan Rauch click on Disruptive Entrepreneurship is Transforming U.S. Health Care.