Lawmakers may end up repealing the Affordable Care Act, but it has been the law of the land for enough time that some of the changes it has brought will likely leave a lasting mark on the healthcare industry.
One of these changes is the shift away from fee-for-service payment models, where providers are paid for individual procedures and other units of care, rather than receiving outcome-based payments. Fee for service is giving way to what is known as value-based care, where providers are incentivized to keep costs as low as possible by keeping patients healthy.
For instance, the government now establishes target prices for particular procedures performed on Medicare beneficiaries, such as hip and knee replacements. This in theory creates an incentive for care providers to try to minimize costs, since they receive what amounts to a bonus if the procedure ends up costing less than the target price.
Another concept that has gained traction since the passage of the Affordable Care Act in 2010 is population health management. This practice is basically what it sounds like: defining a specific population, such as patients with Type 2 diabetes, and working to keep the entire population healthy. In certain cases, some of the people who make up a population that a healthcare organization seeks to manage do not receive care there, but live in the geographic area the organization serves.
Numerous companies sell software that they claim can help healthcare organizations with population health management, through features like performance dashboards and notifications that alert users when one or more patients may be at risk if a medical professional does not intervene. These software vendors include groups whose primary line of business is electronic health records (EHR) software, such as Kansas, City, MO-based Cerner (NASDAQ: [[ticker:CERN]]) and Verona, WI-based Epic Systems. Both companies have built digital tools that allow healthcare workers to do everything from schedule appointments, to document information on patients in clinical settings, to track charges that will later be sent to an insurer for reimbursement.
However, some groups and individuals in the industry say that when it comes to population health management tools, EHR vendors are not on the cutting edge at the moment and a healthcare organization that’s considering installing such tools today is better off getting them from a more specialized software company.
One of those voices belongs to Salt Lake City-based Health Catalyst, which develops software for healthcare organizations, including population health management tools. That makes Health Catalyst a competitor of Cerner, Epic, and other companies whose bread and butter is patient records software, though not a head-on competitor.
Health Catalyst says on its website that the health records software that’s currently on the market is “designed for a fee-for-service world … This makes it difficult to manage the health of populations—and difficult to understand the cost of care.”
Michael Greeley, general partner at the Boston-based healthtech investment firm Flare Capital Partners, echoes this opinion. Flare’s portfolio includes companies whose products fit into the category of population health management. One of them, Denver-based Welltok, works with insurers and other groups to create individualized programs that incentivize healthy behavior.
“The EHR systems for the most part were designed … to support a fee-for-service billing paradigm,” Greeley says.
The software made by EHR vendors works well for things like capturing data and
