Who takes on risk in a value-based care model?

At SplashX, it was discussed how patients and providers can take on some risk in emerging models

Last week, Vator teamed up with HP to hold the SplashX: Invent Health event, where we asked some of the most prominent VCs, entreprenuers and members of the health community to give us their thoughts about the state of the healthcare system.

The topic covered was value-based care: the road to accountable healthcare economics. Value-based care is when caregivers are paid on the basis of quality vs per service. But how is quality measured? How can caregivers deliver quality without patients also doing their part? There's a lot of challenges to this model, but a lot of upside for everyone.

Our second panel of the day, moderated by Archana Dubey (Global Medical Director, Hewlett-Packard) and Bambi Francisco Roizen (Founder and CEO, Vator), featured Stefano Bini, MD (Professor of Clinical Orthopedics, UCSF), Rick Altinger (CEO, Glooko), Todd Johnson (CEO & Co-founder, HealthLoop), Amar Kendale (SVP of Product Management, Livongo), Katie Simpson, MHA (Strategic Partnerships Manager, Design & Innovation, Sutter Health), Jim Winkler (Global Chief Innovation Officer, Aon Hewitt).

One of the topics that came up repeatedly during the conversation was about risk, and who shares it in the value based care model. That can even include the patient, who, until now, has mostly relied upon the insurance company to pay for everything. 

"In these new models and services, how do you get the patient involved in sharing in that risk, and are there incentives for them to make more decisions?" Francisco asked.

"I think healthcare providers are reluctant to move into at risk models because they're scared. It's a nervous thing to do to start to put your revenue at risk," Johnson replied.

He pointed to Mt. Sinai Hospital in New York City as one example of how to get patients more involved in the decision making process.

"For the first time, I heard a really cogent argument around how, and why, to be deliberate about moving to a more, I'm not going to use 'value based model,' I'm going to change the word: affordable models. And what I think was so interesting about their argument was, it actually doesn't matter, we continue to run up charges. With increasingly our health plans being high deductible, as individuals you're responsible for that 20 percent copay, their concern was the cost of services were going up so high that they would become unaffordable for patients just to make up their portion, let alone the whole pie," he said.

"So they have started to try and differentiate themselves in New York City as, 'Hey patients, we're looking out for your bottom line and trying to reduce your costs and your copay.' It's sort of a simple thing, it's like the buck stops with the check I just handed you, except you don't know how much to pay until you get the bill, and actually it's 12 bills after you visited the hospital and you get it 90 days later. So the gap there is a challenge, but patients bear an extremely high amount of the cost of medical treatment and it's only getting higher. Once we become aware that we have some choices that can actually impact the amount we pay out of pocket, then it will become easy for us to make decisions."

Simpson disagreed with what Johnson said about providers being afraid to get into risk based models. 

"I would say that it's exactly the opposite for us, and we've been trying to move into it as much as we can in terms of starting our own health plan and joining with Aetna. If we could flip everything over tomorrow, I think that we would," she said.

"There are a lot of things that we want to do that we know are the right things, that would be like community not for profit provider. As long as the PPO plans are still out there, as long as fee for service is still something that people are choosing at the moment, that's still something that we're going to serve, but we certainly would really like to have all of our patients be under the same bucket and be able to adjust our operations. Until that time happens, we're investing in things that make sense in a risk based system and not only free for service because I know it's the right thing and trying to make that flip at the right time."

"Providers feel nervous about moving to a risk based model, partly because there's a disconnect between providers and administrators and the CFO office, in general. I think what ends up happening is that they do not know the health system is going to support the activities that are driving them to outcomes. That is something that we constantly hear from medical directors," said Dubey.

Bini responded that only large groups can take risk, because, for a smaller group, on bad outcome would put them out of business. Since the he vast majority of care is still not delivered in large groups, fee for service will remain the standard.

Altinger countered that it's actually the opposite: that more physicians are in larger groups than they were 25 years go.

"When I got into healthcare in the early 90s, 85 percent of physicians worked in groups of 10 physicians or less. Now it's flipped. So the vast majority of groups of physicians in care are, and that's a key building block by the way, because in the early 90s, Palo Alto Medical Foundation, Sutter Health was a tiny, little entity. They've now rolled up Stanford and all the other groups. I think that's a key building block for us," he said. 

Dubey spoke again, and talked about how innovation is starting to happen in direct to consumer companies. 

"There's a lot of starting of smaller practices but they're supported with a financial model that is a concierge model, in which they are able to finance to sustain themselves, so if they have one poor outcome that doesn't wipe them out. They are able to sustain and weather that. Those are other things that we're starting to see. They are bringing value and going direct to the consumer, saying, 'we'll sell you value,'" she said.