Innovation in digital health and wellness also represents a significant cost for businesses. In the 2015 fiscal year, Medtronic spent $1.6 billion in research and development investment alone.
This year medical costs are expected to increase 6.5% with larger future surges forecasted. And, despite paying double the healthcare expenditures compared to equally progressive nations including Germany, Norway and Sweden, the US ranks eleventh in a combined measure of quality, access, equity and efficiency of care, reported speakers at MentorMate’s annual digital health conference earlier this year.
With the cost to seek care increasing along with the complexity to develop new solutions, where are smart brands placing their bets?
Countries and consumers are investing heavily in good health. Annually, the United States spends nearly $9,000 per person on healthcare costs. Increasingly, stakeholders are questioning whether our digital health and wellness investments are paying off.
Rule 1: Pay-for-performance marks the beginning of the exploration into reimbursement options.
As healthcare continues to transition from the fee-for-service to a pay-for-performance model, industry experts predict bonuses and penalties will be increasingly tied to outcomes. In just 1 year, ACOs were able to generate over $380 million in healthcare savings, according to research reported by industry expert and Medtronic Vice President Sheri Dodd.
Value-based care delivery along with digital health and wellness will only continue to evolve. This will be driven by industry efforts to manage the effect of bundled payments for episodic care and begin to push the boundaries even further to a system where payment occurs on a person-by-person basis within defined populations.
Rule 2: Help healthcare consumers get their “money’s worth.”
Who shoulders the burden of healthcare? Increasingly, it’s the consumer. From 2006 through 2014, the proportion of consumers enrolled in high-deductible health savings plans grew by a factor of five, according to Sheri. In today’s healthcare climate, consumers are physically and fiscally accountable for their care. That means their opinion holds more power for providers and practitioners.
In assessing the value of healthcare, often pure cost/affordability is the metric of choice. For another speaker featured at MentorMate’s annual digital health event Kaveh Safavi, Accenture Managing Director, believes the question is framed incorrectly. Rather than asking providers to drive down the cost of care to create less expensive options, Safavi argues consumers simply want their money’s worth. When asked what determines “value,” the 2011 Quintiles New Health Report found approximately 35% of patients said “neither cost nor outcome.” This presents the industry with a very different question. How can healthcare be more valuable for the consumer?
Setting a minimum expectation for success
When travelers fly, the expectation exists that they will move from point A to point B safely. This minimal expectation of technical competency then removes outcome from the value calculation. Instead, the quality of the experience is assessed by other intangibles including ease, simplicity and comfort. Safavi argues the same type of calculation should exist in healthcare. Providers’ ability to create compassionate care environments will set them apart from the competition and build brand loyalty rather than their technical ability to deliver the care.
What determines consumer value?
Rule 3: Assist providers in improving performance.
For the healthcare industry, 2018 and 2019 will be years of reckoning as the performance-related goals set by the US Department of Health and Human Services come due. This includes initiatives focused on hospital value-based purchasing, reducing hospital readmission rates and linking Medicare payments to alternative payment models.
90% of traditional Medicare payments will be tied to quality via programs including the Hospital Value-Based Purchasing and Hospital Readmissions Reduction Programs.
50% of fee-for-service Medicare payments will be tied to quality or value via Accountable Care Organizations or bundled payments.
Rule 4: Transparency wins.
The Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) created two value-based payment tracks for physicians that take effect in 2019.
Merit-Based Incentive Payment System. MIPS, as it’s known within industry circles, combines pay-for-performance systems into a single program. Value will be assessed by pre-defined metrics including meaningful EHR use, clinical improvement, resource use and quality.
Alternative Payment Models. APMs offer new methods to pay for care to Medicare users. From launch through 2024, participating healthcare providers will be given a single incentive payment. The system offers “increased transparency of physician-focused payment models,” according to the Centers for Medicare & Medicaid Services.
What MACRA means for leaders
Organizations will be compensated for clarity of physician-focused payment models.
Because more payments are at risk, MACRA implicitly incentivizes organizations to meet the outlined financial objectives
Takeaways for businesses directly involved in the healthcare experience and those serving them: focus on value, performance and transparency to win serving consumers and moving digital health and wellness forward.