Accountable Care is Healthcare’s New OS

The 1st year report card on Pioneer Accountable Care Organizations is out. Depending on who you talk to, the story changes dramatically. As Gregg Masters pointed out, reactions to the reports on the Pioneer ACOs would either have you believe that ACOs “succeeded” or that “Obamacare is a failure.”

Nine of the 32 pioneer ACOs (that could not find savings) are leaving the program , seven to shared savings (less risky) and two (reportedly) to private-payer ACO models. So, in fact, none are quitting the idea of accountable care so much as modifying their approach. Although some observers might believe that nine Pioneer ACOs leaving the program is evidence of failure, one would be hard-pressed to find someone who thought all ACOs would be successful.

Moving to a New OS

The Accountable Delivery Institute says “Value-based care is a transformational journey, not a backend contract driven program that you overlay onto your existing delivery system organization’s people, processes and technologies and expect different results.”

This is not easy, it’s like installing an entirely new operating system on our health care hardware and expecting it to work.

Tim O’reilly says “On a standalone computer, operating systems (OSs) like Windows, Mac OS X, and Linux manage the machine’s resources, making it possible for applications to focus on the job they do for the user.”

In other words, the OS abstracts away the difficulty in managing all the devices and processes the computer runs so applications can focus on what the user wants to do. When Microsoft entered the market in the 80s that was their value proposition, simplicity for developing new applications by abstracting away the other processes. Health care, under value-based payment, will soon have the same opportunity.

accountabilityLike a new operating system, moving to accountable care or a value-based system fundamentally changes the rules for the management of resources and the processes that are run so the system can focus on the job they do for patients rather than the “hardware” of institutions. Previously, the allocation of resources was tightly coupled to the institutions and workflows, “the hardware.”

Now, healthcare can simplify many of the processes to focus on what the “user” (patients) need. In a value-based system, the user is no longer buying processes and billing codes, they’re buying the result, they’re buying an abstraction of what all those activities produce.

As a result, EHRs will become less concerned with billing codes and more concerned with effectiveness of physician and patient shared decisions and communication and learning from each interaction and result.

As an interim step, billing codes have arrived for collaborative care. You can think of these new billing codes as a meta-code for improved outcomes. It’s not what’s actually done or how, it’s the intended result of collaboration with skilled nursing facilities.

The abstraction (communication and services no longer need to be performed at clinic) from the patients perspective will largely be produced by IT, which is why health IT venture funding looks to more than double this year, and remote monitoring is seen as the biggest opportunity.  And patients want it. According to a recent Cisco study, 76% of patients worldwide would choose telehealth over personal contact.

Time vs. Decisions: Changing the Allocation of Resources

Let’s take a look at one resource, physician time, that will be newly allocated and managed under healthcare’s new OS. In the days of volume-based care and fee for service, it was physicians’ time that was the limited resource. Physician time with patients, not surprisingly, has been driven down to six or seven minutes with each patient. Higher volume, do more with less time, more money.

In the new health operating system, it’s the quality of decisions that matter. The visit time, or even if the visit happens, can become irrelevant. One high quality decision (if it, say, stops a readmission) might be worth 10-fold or 100-fold or even 1000-fold more than what used to be billed for a patient visit. It’s not hard to imagine that a decision to correct the dosage of a medication could save the system over $100K in ED admissions over a $200 office visit. That’s a simple example of a 500X return. If one decision helps keep them from being admitted, it’s worth an order of magnitude more than physician time as it was previously billed.

So, moving from a volume-based OS to a value-based OS means moving from a time-driven OS to a decision-driven OS. In many non-surgical areas, resources will shift in focus from physician time as a limited resource to decision-making ability as a scalable resource. As Vince Kuraitis said at Healthcare Unbound, “it’s the movement from physical assets, then, to virtual and digital assets and a more distributed, platform architecture.”

So, with such a drastic change in how the business model, the care delivery model and the information architecture models are changing in health care, it’s not surprising that changes won’t always be successful at first pass, but it’s not much of a choice, either.

None of the Pioneer ACOs are going back to the “old way” at this time, because that likely won’t be an option for long, either.

UnitedHealthcare’s Chief Medical Officer Sam Ho says United is becoming a “platform” for value-based care and that there’s “no going back,” making a $50 billion bet on Accountable Care. Ho told Forbes, “We are shifting from a volume-based payment model to value-based. The American health care system cannot afford to go back.”

The old Operating System will not be supported by payers in the near future.

Echoing this sentiment, Mark Blatt, director of Intel Health said last week, also at Healthcare Unbound, that “we don’t care about your old processes and workflows. Your old workflows sucked. I don’t want to recreate those.”

Those workflows were part of healthcare’s old OS, and we now have the opportunity to develop new, better ways of connecting.

Next: Building applications for the new OS.

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Leonard is Principal and Co-Founder at VivaPhi, an agency that solves multi-disciplinary business problems involving data science, software, biomedical science, behavioral science, health care, product design, community development, marketing, consumer engagement and organizational design. He has been quoted in Forbes and other top-tier publications for thought leadership on patient and consumer engagement. In addition to his role at VivaPhi, he is Chair of the Marketing and Communications Group for the Collaborative Health Consortium. Prior to VivaPhi he held the position of Vice President of Operations at Capitis Healthcare International as well as executive positions with several startups. He started his career as a software requirements analyst on Qwest Communication’s highest priority IT project while earning a triad of advanced degrees from the University of Colorado. These included an MBA, a Master’s of Science in Information Systems and a Master’s in Biomedical Sciences (Thesis on System Dynamics in Parkinson’s Disease). Leonard earned a Bachelor’s in Zoology from Miami University in Oxford, Ohio. He’s interested in how systems evolve, and how to help them evolve, in a variety of unique contexts. Connect with Leonard: @leonardkish, LinkedIn and Google+

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