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Healthcare Upside/Down: Incentivizing Healthcare the Right Way

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ECG’s radio show and podcast, Healthcare Upside Down, offers unfiltered perspectives on what’s working in US healthcare and what’s not. Hosted by ECG principal Dr. Nick van Terheyden, each episode features guest panelists who explore the upsides and downsides of healthcare in the US—and how to make the system work for everyone.

The healthcare industry has seen an extraordinary level of investment in recent years. The pandemic, in particular, seems to have spurred investors, with private equity deals in healthcare topping $77 billion in 2021.

But is all that investment translating to value for patients and providers? Despite the money flowing into the healthcare sector, and the emergence of innovative companies and technologies, the industry’s shift to value-based care continues to slog along at a torpid pace.

Part of the problem is that healthcare is an entrenched system that’s reluctant to move away from what works (or seems to work). Adopting a new model that challenges the traditional way of thinking and the flow of payments might result in better care and savings, but the benefits may not flow to the groups that delivered on that promise. Having great data, insights, and analytics does not automatically translate to better, more economical care; and the devil, in this case, turns out to be in the detail of execution and getting everyone unified behind an idea.

“How do you get all of the US healthcare system to want to act and behave in those same ways and teach them that a better way to make money is to keep populations healthy, rather than let them end up sick?” asks Michael Meng, who is the co-founder and CEO of Stellar Health.

Michael has been investing in healthcare organizations for over a decade and has served on boards at a wide range of successful companies, giving him a unique perspective on how to drive behavior change in healthcare. He believes investments should flow to the doers in healthcare based on incentives and system design.

Michael joins us on episode 16 of Healthcare Upside Down to talk about what it will take to get an entire industry to start pulling in the same direction. Here are three takeaways from our conversation.

Value-based care is a comprehensive commitment.

Healthcare organizations need to see value-based care as more than just a model involving risk and quality metrics. Value has to be a governing philosophy that involves everyone in an organization. “There are a lot of people out there who think that if you structure a value-based care contract, that solves the problem, Michael says. “I don’t think that’s true. It just creates a contractual arrangement. You then need all the stakeholders, their staff, and the people who are on the front lines to carry that out. It’s the delivery by all the different team members, how they carry it out, that actually goes to make up that company and the value that company brings.”

Granular incentives.

Michael’s company partners with payers and providers to reward the completion of granular value-based care actions. His platform delivers a simple checklist of recommended clinical actions to practices based on each patient’s medical history. The goal, he explains, is to ensure providers have accurate patient data during an appointment and incentivize them to act on it.

“In our country, 35% of women over the age of 50, who are supposed to get mammograms every other year, are not [doing so],” he says. “Mammograms are not expensive, so it’s not a cost question; it’s just not getting done.” In that instance, asking the patient to get a mammogram is the “type of behavior you want to reward for,” Michael explains. “You’re obviously not going to say to a 25-year-old male, ‘go get a mammogram,’ so you need to be targeted about when you use those incentives. And if you accumulate enough of those, the physician and their staff are rewarded. And that is what leads to hopefully better outcomes.”

Making the right thing the easy thing.

Everyone wants better outcomes. The trick is getting providers who like to do things a certain way to embrace change—without them feeling like they’re being micromanaged. For Michael, it’s a matter of creating a workflow that makes the right choice the easiest choice. He talks about lowering the “activation barrier” and ensuring that incentives are appropriately balanced with the effort required to achieve the reward. His company helps providers get paid in real time from health plans for value-based activities that have not been historically reimbursed.

“One thing you can do to help a doctor who’s short on time is make sure they know exactly what they could do when the patient’s in front of them. Make it easier, so they’re best positioned in that situation,” he says. “That’s how you can lower the activation barrier, and really make it easy to do.”

Are your organization’s investment dollars translating to value for patients and providers?

Michael further explains how a granular approach to value-based care can alter behavior and improve quality.

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