Editor’s Note: J.T. Treadwell is the Managing Director at Symphony Technology Group, a private equity firm where he focuses on analytics and healthcare technology. He has led a variety of Symphony investments, including health care IT companies Evidera, Symphony Performance Health, and Symphony Health Solutions.
The Affordable Care Act is the most far-reaching healthcare legislation in the U.S. since Medicare was introduced fifty years ago. In contrast to previous attempts to adjust our national healthcare system, focusing on tweaks and nudges, the ACA reframes healthcare priorities to focus on value and outcomes, rather than volume and cost of treatments. It’s a nuance worth unpacking, with staggering potential technological ramifications.
ACA puts the emphasis on results relative to money spent to determine the value of healthcare, or in other words, quality of care over quantity of care. Accounting for successful outcomes in place of numbers of procedures administered makes for more efficient medicine. Needless to say, the scope and density of the ACA’s implications for medical practitioners and patients are likely to be profound, although difficult to forecast. It raises very interesting questions: What is quality? What is a good outcome? How do you measure and quantify either? And how can we implement measurement with enough consistency and breadth to cover the care of 350 million people? These are major challenges that we need to address. It is clear that our new era of healthcare requires embracing technological innovation and analytics in order to execute a true strategic transformation embrace both the goals of the new paradigm and the methods required to achieve and document success within it.
This revolution cannot happen without data sharing. And data sharing cannot happen without aligned incentives. But those aligned incentives are coming. With capitation, for example –unlike healthcare’s historical fee-for-service payment system, the caps fundamentally incentivize effective treatments and rewards successful outcomes by allowing market participants to capture the value of improvement. And when payers, providers, and manufacturers share risk under capitation, the incentives for collaboration increase dramatically. But effecting change requires coordinated action, of which the linchpin is sharing information accurately, quickly, and enabling action. That is an information technology problem. This new frontier of digital health requires capturing the value of big data to ensure that patients receive the most effective course of medical treatment from their healthcare providers, and ensuring – and sometimes encoding – aligned incentives.
The messiest, and most promising area where we see this taking shape in in the case of accountable care organizations (ACO) – where we see the union of risk-based payment with accountability for the provision of care and the results of patients’ health. These systems range the spectrum in sophistication, and are still forming in a noisy market, but they are all realizing the critical role that seamlessly sharing information will be to effective results. With calibration and sharing, providers can intervene early to prevent cost escalation, avoid costly remittances, avoid unnecessary tests and procedures, gains efficiencies in digital record-keeping, raises compliance of cost lowering and outcome improving therapies, as well as improve overall patient experiences.
This is a complex transition. Naturally the majority of healthcare players are still making their way through the analysis and paralysis phase of market evolution while they figure out their needs in a noisy market with lots of structural change. The data input and coordination problem of HIT is so challenging that it cannot be assumed that health tech will play out like a lot of other tech markets in which any one, one-size fits all technology platform or network is going to dominate the space. Organizations will need help, and solution shapes will differ wildly. The challenge of how to solve a fragmented healthcare system is a vast landscape of opportunity for technological solutions and digital innovation, and for technology and solution companies willing to listen and understand their customer challenges.
Market and regulatory forces will continue to reshape healthcare, and the technology and services that support it need to shift with it. Healthcare doesn’t need more people working harder, it needs its providers working smarter. Smart HIT innovations that leverage data integration, sharing, and analytics, in partnership with thoughtful health systems ready to embrace the market change rolling through our system, will help lead the way for the for a much more value conscious, and more effective, healthcare system. I, for one, am excited to see it roll out.