Electronic Medical Records Are Not a Cure-All

We regularly work with clients that have developed innovative solutions to vexing, long-term problems confronting healthcare.  Some examples include:  enabling hospitals to quantify patient satisfaction, managing the release of patient chart information from the hospital, and providing meaningful drug and disease content to physicians in the course of their daily work.

In discussions with potential buyers and investors for these types of businesses, we regularly hear the following:  “Won’t widespread EMR adoption make this business obsolete?”   In the minds of many thinking about the HCIT industry:

Increased EMR Use = Fully Electronic Records = Integrated Data Whizzing Back and Forth

This is a welcome goal – and it’s theoretically possible that we could live in this world one day – but there are so many barriers to this future state that it’s very likely that none of us will be around to see it.

Consider the following:

• EMRs were first created in the 1960s and 1970s, but as recently as 2011, only about 1 in 3 of office-based physicians reported use of an EMR with basic functionality in place (i.e., medical history, electronic ordering, drug interactions, etc.)  Just over half of the respondents were using any EMR at all (to record basic patient demographics, for example).
• On the inpatient side, with more than $3.1B in Meaningful Use incentives paid out as of 2011, only 35% of U.S. hospitals have now adopted EMRs.
• CMS has been paying incentives for e-prescribing for the past two years.  In the framework of potential healthcare data described above, this is one of the most basic electronic transactions possible:  passing an error-free prescription from a provider’s EMR to a pharmacy.   As of the end of 2010, CMS reports that e-prescribing has grown tremendously – to where fewer than 12% of the nearly 700,000 eligible providers are now receiving incentive payments.

This is progress to be sure, and adoption is up significantly in the past few years.  However, EMR vendors still face a long road to achieving widespread adoption for basic functionality before they dive into the other challenges like data interoperability, clinical analytics, and payer-provider convergence.

In our view, new value-based reimbursement models via prospective population health management and coordination at the point of care simply have to run through the clinical data living in the EMR.   So, as stimulus dollars trail off in the coming years, we expect the more forward-thinking EMR vendors to start looking for tangential acquisitions outside of their core business that will help them make progress toward accelerating these reimbursement initiatives.

In other words, we expect that leading EMR vendors, in an effort to create differentiation in a still-crowded marketplace, will increasingly look to absorb – rather than displace – these innovative businesses that we see every day.  What is still an open question is whether the EMR vendors will be the buyers best positioned to reap the biggest benefits of owning these companies, or if other HCIT participants will put together the pieces that move us toward that future state where healthcare data moves around effortlessly.  In either case, we don’t see much evidence yet that EMRs are the standalone panacea that some seem to think they can be.

Let us know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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ACOs: Good News for Skeptics

As TripleTree continues to cover the rapidly evolving opportunities associated with health reform, I have remained an optimist about the potential for the many health reform experiments included in the healthcare reform bill to create meaningful healthcare savings in the long term.   In particular, I have been hopeful about the various shared savings programs to meaningfully impact cost and quality in the healthcare system, and momentum has continued to build, with CMS naming 32 organizations to the Pioneer ACO program in December.

This is what makes the recent news from CBO disheartening.  Last month, they released an analysis showing that ten different demonstration programs – six disease management and four value-based payment approaches – have usually not had any meaningful impact on reducing Medicare spending.    One of these value-based demonstrations “allowed large multispecialty physician groups to share in estimated savings if they reduced total Medicare spending for their patients.”

Sound familiar?  Troublingly, this program had little to no effect on Medicare expenditures.  (The only program of the four that did have an effect on costs used bundled payments for heart bypass surgeries.)

Adding to the bad news, Leavitt Partners released a study late last year showing that of the 164 accountable care organizations (ACOs) they have identified (note that the Leavitt definition of ACO overlaps with – but doesn’t perfectly align with – the CMS definition), were somewhat evenly distributed across 41 of 50 states.  However, these same 164 were found in just 144 of the 306 hospital referring regions (HRRs) – a benchmark of regional health care markets where patients are referred for care.   While a number of these HRRs had three or more ACOs, large swaths of the country had yet to see even one yet suggesting that perhaps ACOs are springing up largely to compete with each other, rather than focusing on finding geographic areas where a new care delivery model could meaningfully reduce costs.  This is one of the issues that skeptics of the model are concerned about, as my colleague highlighted recently.

In any case, critics of the healthcare reform have certainly gotten some new ammunition in the past few weeks – we’ll be keeping an eye out for some good news to highlight in a future post.   As before, I still remain optimistic about the change in mentality that CMS’s ACO program seems to have brought in how payers and providers are rethinking the traditional and rigid zero sum game of treatment and reimbursement, allowing new ways for commercial payers and care delivery organizations to partner to deliver quality care.

Let us know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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The Divide in the ACO Debate – Beltway Rhetoric versus Marketplace Cynicism

Amid the broader – and oftentimes highly opinionated and heated – ACO conversation occurring across Washington and the private sector, The Wall Street Journal published an interesting piece last week highlighting the specific views of three individuals:

• Don Berwick is the former administrator for CMS who just stepped down last December.  Don oversaw the creation of the ACO framework under the Medicare Shared Savings Program.
• Tom Scully is currently a General Partner at the New York-based private equity firm Welsh, Carson, Anderson & Stowe.  Tom formerly served as the CMS administrator from 2001 to 2004 and CEO of the Federation of American Hospitals.
• Jeff Goldsmith is a president of Health Futures, a healthcare consulting firm out of Charlottesville, VA and an associate professor of public health sciences at the University of Virginia.

What becomes immediately apparent in the three-way dialogue (done via email) is the lens through which various participants view the industry’s efforts to improve healthcare’s fundamental problem of shifting from the traditional fee for service to a value-based approach.  There aren’t any quick, silver bullet answers to the debate, but what is evident is the divide among those that represent Washington’s political rhetoric (Don) and those that must figure out ways to make the new framework work within a dynamic, private care delivery system (Tom and Jeff).

Several disagreements bubble to the surface related to:

The role providers will play

• Berwick: “The ACO premise is different. Beneficiaries don’t join an ACO; providers of care do.”
• Scully: “The biggest flaw with ACOs is that they are driving more power to hospitals—not to doctors. Very scary, and I am a hospital guy.” … “If the doctors had the capital to organize comprehensive ACOs to control their own fate and drive us to more efficient care, I would be bullish on ACOs. But doctors are again along for the ride, not driving the bus.”
• Goldsmith: “In practice, however, the ACO is more like asking the hungry horse to guard the granary. The major savings for Medicare are to be found by keeping people out of the hospital, and reducing the incomes of the specialists who dominate hospital politics. To get those savings, hospitals and their specialists have to turn their backs on five decades of making more by doing more.”

Emphasis on the patient

• Berwick: “…the formula for ACO success is clear: keep quality high, save money by improving—not by restricting—care, and remain attractive to beneficiaries, who could go anywhere for care.”
• Scully: “The best models for ACOs are doctor groups like Monarch HealthCare in Los Angeles or JSA HealthCare in Tampa. Give doctors lots of patient data, pay them to see patients more often, follow their drug use and health status more closely to keep them out of hospitals—and give them control of the cash!”
• Goldsmith: “The biggest problem with the ACO, however, isn’t the faulty business proposition, but the patient’s role.” … “In the ACO, providers are accountable to Medicare. Patients won’t get a dime of the savings, and no choice whether to participate or not.” “Despite all the rhetoric about ACOs being patient-centered, it is a paternalistic, “we’ll decide what you need” kind of model.”

Prospects for care improvements and financial success of ACOs

• Berwick: “Knowing full well the results of the PGP demonstration, the CMS office of the actuary estimated base-case Medicare savings of over $400 million in the first three years of the ACO program.”  … The “32 physician groups and health-care systems selected for the pioneer program, covering 860,000 Medicare beneficiaries, [are] projected to save $1.1 billion in health-care costs over the first five years.”
• Scully: “In the system we have, ACOs are conceptually right, in that the concept inches toward differential pricing for quality, and Don should be congratulated. But we need to step back out of the trees, look at the forest and question the financing system we have created.”
• Goldsmith: “Having each community, large or small, set up its own ACO is like setting up a backyard steel mill.” … “It is the incredibly heterogeneous 5% of the population that generates 47% of all costs that you need to focus on, and if you don’t have enough of them in your “attributed” population, you cannot concentrate the resources to change their care and lives.”

Startup costs of an ACO

• Scully: “The start-up cost of a real ACO is probably $30 million and up in a midsize market.”
• Berwick: “The actual barriers to entry appear a lot lower than the $30 million cost that Tom Scully mentions; CMS estimates are only a fraction of that.” “… the CMS Innovation Center has proposed a program of advance payment to provide front-end capital and extra operating funds for care coordination, information systems and the like.”
• Goldsmith: “A more credible estimate of setup costs for a provider system with no prior managed-care experience to participate in the shared savings program: $10 million to $15 million per health system (consulting, IT systems conversions, new staff, etc.).”

 Prospects for success

• Berwick: “Smart entrants, focused on seamless care, outcomes and beneficiary satisfaction, will both reduce Medicare’s expenditures and reap financial rewards for themselves.” … “I hope and expect that ACOs will honor the trust they have been given by doing the job—lower cost through care improvements. If they violate that trust, the costs to them and to the future of seamless, coordinated care in America will be high indeed.”
• Scully: “Don’s vision is great, and who can’t like what he has tried to do with ACOs… Except that the incentives are very small, the change will be slow, and we are just nibbling at real system reform.”
• Goldsmith: “There were a lot of good ideas in the Affordable Care Act for saving money and improving quality. Unfortunately, the ACO wasn’t one of them.” … “By pushing this edgy idea from the policy world and ignoring the real-world evidence of its own trials, CMS picked the wrong horse.”

In a final from Jeff Goldsmith: “One of the most serious problems with the health-care world just now is the gap between the policy world and the real world. The ACO is Exhibit A in this yawning disconnect.”  Jeff is right to point out that there’s a divide between the public and private domains, yet progress, however small, has arguably been made.

The real question is whether “the vision” put forth by Don Berwick will ultimately evolve into a pervasive performance-based delivery model in which quality, efficiency, and choice are the driving factors behind private sector reimbursement and profitability.  To those outside of Washington, there certainly seems to be a long way to go – let us know what you think.

Seth Kneller

Seth Kneller is a Vice President at TripleTree covering the healthcare industry, specializing in revenue cycle management, clinical software solutions, geriatric care and healthcare analytics. Follow Seth on Twitter or e-mail him at skneller@triple-tree.com.

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Hospital Readmission Stats Can Have a Meaningful Impact on Reimbursement

With the New Year fast approaching, and the start of the Centers for Medicare & Medicaid Services’ (CMS) fiscal year shortly behind us (it began October 1, 2011), it seems appropriate to evaluate the major initiatives implemented by CMS in FY 2012.  When doing so, one program stood out more than many others—the implementation of the hospital readmission reduction program. In short, CMS has implemented a program—consistent with its value-based purchasing program—designed to improve the quality of medical treatment provided to patients by penalizing hospitals that are deemed to have an excessive number of Medicare inpatient readmissions.

CMS’ program to curb readmissions, which began in 2009 when it started publicly reporting 30-day readmissions, is part of its overall effort to reduce costs and improve the quality and coordination of patient care.  The premise of the campaign against readmissions is to punish and dissuade providers from releasing patients that will likely need follow-up care for the same ailment as they were just treated, which, theoretically, will cause providers to make sure patients are provided with the necessary treatment the first time they are treated and, as a result, reduce the number of expensive follow-up trips to emergency rooms.  The program, which currently only covers readmissions for pneumonia, acute myocardial infraction (AMI) and heart failure, takes a step forward in FY 2012 from being a program that is intended to “shame” providers by making the 30-day readmission information publically available, as was done until now with CMS’ pay-for-reporting program, to being a true “penalty” program.

Beginning October 1, 2011, providers’ 30-readmission data will be collected and used to generate an overall score for each hospital for FY 2012.  This score will then be used to determine if a hospital’s readmission rate is higher than the Medicare-calculated “baseline” readmission rate (which was calculated by CMS using reported readmission information from July 1, 2008 through June 30, 2011).  If so, the total operating payments due to the hospital will be reduced by CMS, with the maximum reductions being as follows: FY 2013 =1%, FY 2014 = 2%, and FY 2015 = 3%. In addition, beginning in FY 2015, CMS can expand the list of covered conditions to broaden the impact of the program.

While the reimbursement risk associated with this program may seem insignificant to some, many providers are operating under very thin margins, which will make even a 1% reduction in Medicare reimbursement meaningful.  For example, if a hospital’s total inpatient operating payments for FY 2012 were $25mm, that hospital will have $250k at risk for reimbursement reduction pursuant to this program. With the maximum penalty increasing 1% per year until FY 2015, the penalty and dollars at risk will undoubtedly heighten providers’ focus on their readmission rates. It stands to reason that many will also look to new solutions, technologies, and programs to help them avoid being penalized. New solutions aimed at patient engagement as well as remote-patient monitoring are areas of opportunity that we think will continue to be instrumental in addressing the readmission dilemma providers are facing.  

Have a great week.

Jamie Lockhart

Jamie Lockhart is a Vice President with TripleTree covering healthcare software and service providers with a focus on consumer directed healthcare.  You can contact him at jlockhart@triple-tree.com

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Viewing Healthcare Consumerism through another Lens (pun intended)

As a senior analyst for a research based investment bank, it shouldn’t be surprising when personal health experiences and areas of focus for our strategic advisory practice collide.

With increasing frequency, TripleTree is discovering thriving healthcare solutions whose business model is based on consumerism.  This is a departure from traditional models where health plan reimbursement ruled the day, and fee-for-service payment models were avoided.

My recent experience with a Lasik consultation offered a terrific case study on the force multiplier of consumerism and prompted me to conduct a quick assessment of its impact on elective surgeries.  Done thousands of times each day at clinics in every community, elective procedures like Lasik are the apex of value pricing, where customer service is the only differentiator between providers.

• Patient experience:  After some online research, I scheduled an appointment with a clinic and my experience commenced in a flower-adorned office (resembling more of a day spa than an out-patient waiting room).
• Patient information:  First step…upon check in, an iPad was provided as a platform for capturing personal information and answers to a battery of questions.
• Patient preference:  Second step…a selection of color preferences was offered to support my experience.  Upon blurting out “yellow”…not only was a yellow folder and welcome packet presented, but now a range of “yellow themed” accoutrements will follow me through the procedure.
• Patient peace of mind:  Third step…a facility tour.  Here is where my yellow theme will come to life as the surgical procedure is staged and conducted in a glass surrounded room where lighting, music and temperature are tailored to my preference.
• Patient education:  Fourth step…dilate my eyes for pre-op consultation.  Again, an iPad was presented, but this time to play an informational video trumpeting the credentials of the surgeon, facility and post-procedure information.
• Patient access: Last step…a discussion with the surgeon including thorough Q/A session and the encouragement to contact him (phone or email) with any questions.

This all points to how aware this clinic was to my choices, and its local competition.  In fact, health information tools like Castlight Health show me that 10 Lasik clinics are within a 20 mile radius of my home.

Consumerism in healthcare isn’t a zero sum calculation…but when viewed through the lens of a Lasik consultation (sorry, pun intended); perhaps it can be considered as a formula that calculates the “economics of trust” as one weighs hope for improved eyesight with the decision of who can provide it.  Or:

“A provider’s ability to differentiate

as it relates to my health need”

+

“The level of frustration that my ‘other doctors’

don’t offer the same individualized approach”

Consumer engagement and consumerism is a primary theme of our research agenda for 2011 and we’re starting to see the emergence of “consumer as payer” drive a range of innovations…in Lasik and other more pressing areas like diabetes management.  Retail health settings (MinuteClinic); community health approaches (LifeLine Screening); tailored care (GetWellNetworks); drug prescription kiosks (InstyMeds); and other compelling innovations are converging on the consumer as health reform shifts payment models from pure fee-for-service to value-based approaches.

My Lasik procedure at $1200 per eye comes with a lifetime guarantee…but when its all said and done, my out of pocket will actually exceed $3000.  The side note (as my husband pointed out); is that because my out of pocket ‘elective’ procedure will help me say goodbye to my eyeglasses; he’ll happily elect to say hello to a new set of golf clubs to keep things in balance.

Let us know what you think!

Joanna

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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Linking Value Based Purchasing & the Realities of Tracking Care Provider Accountability

On April 29^th the Department of Health and Human Services (HHS) officially launched the Value Based Purchasing (VPB) initiative originally proposed by Centers for Medicare and Medicaid Services (CMS) in January.  The current form of the VBP rule was created in response to the enactment of the Patient Protection and Affordable Care Act (PPACA) in 2010, and was derived to ensure that providers are held accountable for the quality and type of care provided. What’s not as well-known is that although the VBP initiative won’t begin to impact reimbursement until the beginning of the federal fiscal year 2013 (Oct. 1, 2012), providers’ performance scores will begin being tracked this July.  This means the care being provided beginning on July 1, 2011 will have an impact on Medicare reimbursement in late 2012.

Because CMS will evaluate two separate clinical scores (achievement and improvement), CMS must establish a benchmark for each provider so that it can determine the improvement portion of each clinical measurement (score).  Then effective in 2012, CMS will track the performance of each qualifying provider from July 1, 2011 to March 31, 2012 to set the respective baselines for improvement. Given that this measurement period is quickly approaching, and the dollars that will be at risk for providers (estimated at $850 million in the first year) are so significant, we are puzzled to find a lack of VBP activity in the market (we note that there is a fair amount of patient satisfaction improvement initiatives and solutions, but few specific VBP offerings).

As a reference and based on the March 15 post by my colleague Adam Link, the graphic below represents key VBP data points that should be top of mind for hospital administrators:

source: TripleTree

While we continue to hear “value-based purchasing” thrown around a great deal, the impact of the initiative with regards to timing, structure and implementation schedule is widely unknown.  Further, it has become increasingly from our research and advisory based briefings that there are few technology enabled assets able to offer a comprehensive VBP reimbursement improvement platform.  Solutions do exist that can help providers assess “at-risk” reimbursement dollars and improve their HCAHPS scores and decision support solutions; which may be able to help providers improve their VBP clinical care scores/measurements.

However, we are unaware of any comprehensive, end-to-end VBP solution that will not only help providers measure and assess at-risk reimbursement, but can also analyze the relevant measures to help providers maximize Medicare reimbursement.  As we’ve opined in previous blog posts, we believe that such a solution will be highly valuable and coveted by providers as they appreciate the magnitude of the reimbursement dollars VBP will impact.  We’ll continue to watch this area and seek briefings with organization espousing market-ready VBP solutions. Let us know what you think and have a great week.

Jamie Lockhart

Jamie Lockhart is a Vice President with TripleTree covering healthcare software and service providers with a focus on consumer directed healthcare.  You can contact him at jlockhart@triple-tree.com

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ACOs: Millions of Web Hits…Dozens of Theories…One Bottom Line

Nine million. That’s how many web hits are returned during a Google search for “Accountable Care Organization,” and reflects the countless articles, white papers and opinions that have been published regarding the potential successes and more likely pitfalls of the proposed ACO mandate. As highlighted in my colleague’s recent post, our team is continuously evaluating the business development opportunities being fueled by the demands and requirements of these new provider organizations.  Last week, the members of our Healthcare Executive Roundtable recently discussed and debated an element of the ACO equation that is not typically highlighted and could become a critical component of ACO success (or failure)…Trust.

In boardrooms around the country, health care executives are focusing on the technical requirements for their future ACO’s clinical and administrative systems. They are pouring over spreadsheets and attempting to understand the data and analytical tools that will be necessary for adequate financial and quality of care reporting. Getting these operational elements “right” is important; however, these business leaders should also focus on designing a culture – and the corresponding behaviors, communication, and incentives that will fuel strong and collaborative relationships between the ACO and its community of providers.

As Ed Brown, CEO of Iowa Clinic puts it, “People are unclear about what the value-based world looks like, and they’re unsettled on what clini­cal integration really means. And nobody has really made it work.”  This lack of clarity around the value-based model will make it challenging for providers to leave the financial security blanket of the traditional fee-for-service payment engine.  Moreover, influencing them to modify their approach to patient care for the benefit of the system and the promise of shared savings is a monumental effort. Success by any measure will largely depend on the trust established between providers and the ACO organization itself. ACO’s should prioritize establishing trust with providers in three key areas:

• ACO Operations and Management:  Providers need to trust that the ACO is well run. Understanding the organizational governance, expertise of the management team and core capabilities (strategic assets) will help generate confidence that the ACO is well-positioned to generate enough shared savings to make participation worthwhile. In addition, it is critical that the ACO measure and report management performance metrics that demonstrate its accountability to the providers.
• Compensation Incentives:  Providers need to trust that they are getting their fair distribution of shared savings. Clinical algorithms defining quality and outcomes must be evidence-based; and the financial tools and risk-adjustment methodologies used to distribute payment must be easy to understand. Above all, the organization’s compensation schemes must be highly transparent and accessible so that providers can validate that they are being treated as an equally valued business partner in the organization.
• Confidence in Provider Team:  Providers need to trust their ACO provider colleagues. If the right incentives are in place to bring members within the organization together, providers will need to trust that their peers will also be active participants working toward fully coordinated care within the ACO. Under an accountabilities and outcomes-based model, it will be important that providers view their care responsibilities as extending beyond the encounter. Active provider participants should be practicing first-class follow-up care, improving patient satisfaction, and reducing re-admission rates which will achieve collective rewards.

The inclusion of ACOs as a provision of the Patient Protection and Affordability Act is a strategy to realign delivery systems in the US so that they provide high quality, coordinated care.  The bottom line for achievement might simply boil down to whether providers can engage in meaningful and integrated relationships with the ACO and with each other. Since relationships are based on trust—predictability, integrity, and reciprocity–it is imperative that ACOs make trust a deliberate priority.  Our research and advisory agenda is 100% focused on the possibilities of ACOs, and moreover the innovations and business models which will be required to make them successful.

Let us know what you think!

Emma Daugherty & Archelle Georgiou

Emma Daugherty is a Senior Analyst at TripleTree covering the life sciences sector with a focus on provider technologies and patient safety.  You can contact her at edaugherty@triple-tree.com.

Archelle is a Senior Advisor and Chair of TripleTree’s Healthcare Executive Roundtable, and focused on creating health through innovation.  You can follow Archelle on Twitter or email her at ageorgiou@triple-tree.com.

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Perpetuating the Increased Quality of Care Cycle through Value-Based Purchasing

With the majority of talk about healthcare reform centered on the individual / consumer mandate and universal coverage, many are missing another positive change proposed by CMS: value-based purchasing.

Value-based purchasing (VBP) has underlying implications on five themes:

• Measuring the patient experience
• Measuring clinical quality
• Market pricing, especially local market pricing
• Executive and clinician compensation
• The changing role of technology and technological requirements

The essence of VBP is that buyers of healthcare (including individuals and plans) should hold providers accountable for the quality of care provided.  Much like consumer satisfaction and pay-for-performance in other industries, healthcare providers are now being held accountable for not only providing the required care, but providing a quality product.  However, the question of rating the quality of care is a bit more difficult than showing compliance with a “Six Sigma” type of program.  By bringing together outcomes-based data with cost data, it is possible to show an improvement ratio such that increasingly positive outcomes are equated with reduced or targeted spending – below are a few considerations:

• Linking patient satisfaction and quality: Measuring the patient experience is trending toward monitoring key outcomes in 17 clinical measures (including patients’ views on communication with staff and doctors, cleanliness and quietness of the hospital and pain management) across five healthcare categories, including acute myocardial infarction, heart failure, pneumonia, healthcare associated infections and surgical care improvement.  Based on a hospital’s score across these measures and categories, this will impact diagnostics-related group (DRG) payments as soon as 2013.  By 2014, mortality outcome measures for additional health conditions and hospital-acquired conditions will be included.
• Clinical quality – another important VBP benchmark:   As providers are measured and compensated accordingly, top tier providers will begin to quickly separate from the pack.  However, critical access hospitals will need to remain accessible, regardless of their quality measurement.
• Market pricing and VBP:  With provider compensation schedules initially being implemented as a penalty rather than a bonus, areas with poor outcome metrics will see the cost of providing care rise. Additionally adding to the skewing of local market pricing, an incentives algorithm will be implemented, meaning high performing hospitals will continue to perform better than those being penalized, due to the financial incentives providing new resources for a high performing hospital.

The link between quality of care, the provider’s income statement, and executive and clinician compensation also becomes much more clear and real. As the provider receives additional incentives for increased quality of care, the employees of the provider will likely see performance compensation tied to the quality of care metrics for the hospital. A higher performing provider will attract higher paid experts with better backgrounds, perpetuating the increased quality of care cycle.

Underpinning all of this is the increasing role that technology will play in the healthcare system. In order to document the quality of care metrics, a clear link to data will need to be established at the point of care. This means that data warehousing and analytics will be paramount. Sophisticated pricing and measurements of quality and satisfaction will be derived from the data and technology in use.

Value-based purchasing has the potential to radically alter how both providers and patients view healthcare.  Our team is actively advising business leaders and investors with some thinking about how healthcare will cease to be an intangible product that is provided at any cost, focusing instead on how to plan the market dynamics or “rankings” and “customer service”.

Have a great week.

Adam Link

Adam Link is an analyst at TripleTree covering healthcare delivery models, specializing in software and wireless health.  Follow Adam on Twitter at AdamJLink or email him at alink@triple-tree.com.

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