Health Care’s Tectonic Shift – What Payors Must Know to Succeed

We are in the midst of a tectonic shift of care to the home that is only going to accelerate in our current moment of increasing utilization and costs. With up to $265B in worth of care services for Medicare that could shift to the home by 2025 (up to 25 percent of the total cost of care for Medicare), there’s a tremendous opportunity to improve care and drive savings, and the innovators are paving the way.

At CareCentrix’s Health at Home Innovation Summit, I was joined by industry thought leaders Dr. Bob Kocher, partner at Venrock, and Aneesh Krishna and Alok Ladsariya, partners at McKinsey & Company, to discuss the future of care at home. There were a number of thought-provoking insights on the role of disruptors and the potential positive impact they can have on cost and quality for payors.

Innovation – Trust the Disruptors

The U.S. healthcare system is actually a pretty challenging system for classic innovative disruption. But there is a playbook for success. Start-ups succeed when their quantifiable positive cost arbitrage drives meaningful economic opportunity. Some recent examples include faster access to care, materially lower spend and administrative costs, and meaningful improvements in NPS. Needless to say, these are also clear areas of consumer and payor pain.

Regardless of how stuck our healthcare system is - it feels like disruption is accelerating. Innovators are increasingly much better funded than in the past. In the looser regulatory time of the COVID crisis, many innovators were given the opportunity to prove their value. And many health plans are responding by working with the disruptors to lower costs, help patients, and enhance their speed of innovation.

So much of the potential for disrupting care delivery revolves around moving more care to the home. According to McKinsey’s Krishna, $55B of the $250B in total EBITDA value in healthcare could be captured via at-home modalities. Plus, increased cost pressures with inflationary pressure on rates and utilization rebounding after COVID may suggest that health plans will be looking for ways to control costs, including moving more care to the home.

More specifically, the value that care at home can provide perfectly aligns with the keys for successful innovation, which Kocher described early on in the summit.

“Our research shows [care at home] does lower the total cost of care. It likely improves customer experience when you provide the right care in the home. It could [generate] better outcomes. It could ultimately improve access for patients, and there’s a revenue-generation opening for providers as well,” said Krishna. 

Maximizing the Potential of Health at Home

Home infusion therapy is an emerging care segment expected to grow at a 10-12 percent CAGR through 2025, driven by care shifting away from the hospital, patient preference, and payment policies. The explosion in new biologic therapeutics will also be an accelerating trend over the next decade.

There are significant opportunities to help manage plans’ medical loss ratio (MLR) with alternative sites of care, including the home, to control rising costs. COVID demonstrated that many of these infused therapies, like oncology, could be successfully administered in the home with happier patients at relatively lower costs.

To successfully shift care to the home, winners will be plans who incorporate next-level care, across a series of services, into a sustainable business model. Navigation services, care concierge, text reminders, on-demand appointments, and speed to answer go a long way to advance the member relationship – and specialized programs can be key health plan NPS enhancers.

Further, a robust home health ecosystem creates unique data opportunities to better drive interventions with shared insights across areas such as personal care services, infusion, DME, and home health. Krishna points out that a single platform partner could help plans manage the often-confusing and fragmented healthcare ecosystem.

With inflation and post-COVID utilization likely leading to spend and trend issues, along with the challenge of managing costs and competing for patients in an inflationary environment, the next enrollment cycle will be vitally important for health plans. Innovative, turnkey solutions that help health plans take full advantage of the home as an alternative will successfully offset these challenges, control costs, and maintain their strategic position.

Clearly, the demand for more care at home is prevalent among patients and payors alike, and the innovators that can partner seamlessly with health plans and providers will be the key to success.