Healthcare has historically been slow to adopt new or innovative technology, even as its inherent complexity frustrates providers and patients and its inefficiencies fuel public distrust. Health systems, plans, and providers are notoriously risk-averse—and understandably so, as a technology malfunction in this sector can have life-threatening consequences.
Yet, there are strong reasons to embrace innovation, not least due to financial imperatives. Recent analysis from PwC suggests that by 2025, commercial healthcare spending will increase to its highest level in 13 years. Additionally, excessive caution does not always yield better outcomes. Too many of us can share personal stories of how the healthcare system let us down or even caused harm.
Issues are broad and deep, involving a lack of interoperability between systems, data mismanagement, and conflicting and misaligned interests across the ecosystem.
In short, the framework is filled with challenges and misalignments that prevent progress and create systemic dysfunction. We need a tech-first approach to deliver personalized quality care.
Promote interoperability and data integrity to facilitate efficiency
Interoperability, where systems are connected and can seamlessly transfer data, is notably absent across the current healthcare sector. Millions of lives depend on accurate information and coordination. We need every single service line in a patient’s journey — from checkups to emergency room visits to transportation services — digitized and communicating end-to-end.
Data integrity is essential. Yet too many providers and payers still rely on humans to move the data around during a patient’s journey. We fill out our health information in pen when we visit a new health facility. The more times the data gets passed around, the more likely it is to be distorted, like a game of telephone with our healthcare information.
There’s no intentional wrongdoing; it’s the system that leads to misinformation. We’re playing the odds game, and too often, we lose.
Non-emergency medical transportation (NEMT), Kinetik’s focus, is just one part of the healthcare sector, yet it plays a crucial role in ensuring access to care. NEMT services are an essential data point in a person’s healthcare journey; people receiving these services are also engaging with different providers across the industry. You could look at a member’s transportation data and see their different touchpoints. If that data is missing, you aren’t seeing the patient’s complete journey. Any missing link in the data breaks the data flow.
Data mismanagement breeds inefficiencies, and these inefficiencies lead to increased costs, longer wait times for services, and ultimately, a growing mistrust in the system.
Build an infrastructure that enables data to be shared
During COVID-19, many of the persistent challenges with data capture and sharing, such as
a lack of standardization in a health plan’s administrative codes, were resolved to enable data sharing.
Information in a patient’s Electronic Health Record (EHR) can impact routine or even life-saving healthcare delivery. However, individual patient data sharing across healthcare systems is still not an accepted practice. We are mindful of the reasons, but believe that most people would be willing to share their data if it meant better, more effective treatment. We find that many are not as concerned about their data as we think. People are willing to share their information for a 10% off coupon for a coveted item. Every time we post on Instagram or TikTok we are voluntarily sharing data.
Insufficient and outdated technology infrastructures are also hindering data access. Many health plans still rely on outdated programming languages, like COBOL or DOS, which were common decades ago but are now obsolete. These systems are embedded in healthcare operations, but the programmers required to update them are few and far between. With these antiquated systems in place, data integrity is compromised.
Align capitation contracts with realistic utilization rates
The misalignment of incentives, where lower utilization rates are necessary for industry service providers to make money, also wreaks havoc.
The system is positioned to fail patients — and providers.
Managed care organizations (MCOs) are health plan entities or companies designed to save costs while providing higher quality care. But in the pursuit of savings, quality is often lost. The MCO wins a government bid to manage X amount of members within a particular state. The plan signs a capitated contract, as do their subcontractors, receiving a predetermined fee regardless of the patient’s utilization.
Using NEMT services as an example, MCOs typically outsource the transportation benefit management to a vendor who subcontracts with transportation providers to complete the trips. The transportation management vendor often has a capitated contract meaning they receive a predetermined fee – whether the members use the service five, 10, or 20 times within the month. The dollar gets squeezed as it flows from the government through the health plan to all the various subcontractors. You can see where this leads; since the contracted provider receives a fixed amount per member, the incentive is to provide fewer trip services, not the needed services.
Transportation management entities benefit from low utilization of the transportation benefit, as it drastically improves their profitability with reduced overhead and transportation service expenses. This isn’t the intent of capitated contracts; however, it is a consequence of them. The capitated pricing model is meant to control costs and promote more effective long-term healthcare planning due to cost predictability.
Utilization of all services across the healthcare continuum is higher than ever in this country. What does that mean for the intermediaries who are facing increased costs of doing business? It means they’re running businesses in the red. They can’t operate their businesses profitably because they signed capitated contracts.
The outcome? Contracted service providers are not motivated to improve the ride request process or other workflows that make the transportation benefit easier to navigate. Until we align incentives across all the stakeholders, we will continue to see utilization suppressed.
When systems are antiquated, and incentives are misaligned, fraud, waste, and abuse invariably follow. In the NEMT industry, intermediaries, transportation management partners, and transportation providers may begin to game the system. These entities bank on the fact that claims engines are broken, and payers are unable to verify a claim’s accuracy. As a result, fraudulent claims become rampant. Every so often, an audit will uncover millions in false claims, spotlighting the depths of the dysfunction. The burden of these systemic failures falls on patients, who face delayed care.
Misaligned incentives create an environment where players are rewarded for suppressing utilization or overspending, while the quality of care deteriorates. It’s not about malicious intent; it’s about a broken system that no longer serves the best interests of patients or providers.
The future of healthcare hinges on our ability to address these structural flaws. We must prioritize data integrity, connect stakeholders, embrace technological advancements, and align incentives to build a system that is optimized and delivers positive outcomes for all. But until that happens, suppressed utilization, fraud, waste, and abuse will persist, driving costs higher, delaying care, and eroding trust in the system.
About Sufian Chowdhury
Sufian Chowdhury is the Co-Founder and CEO of Kinetik, a venture-backed SaaS healthcare startup based out of New York City. Kinetik is developing innovative API & Platform solutions that connect key stakeholders in the non-emergency medical transportation (NEMT) industry. Sufian has over ten years of experience in management, fundraising, consulting, and technology, making him an excellent leader in the health tech industry.
