Two weeks ago, I spent a full day talking to private equity companies, venture capitalists and others at the J.P. Morgan Healthcare Conference in San Francisco. The meetings gave me the opportunity to share what I’m seeing around Washington and the changes in the health care system I am seeing in our research. They also gave me some time to learn about pressing issues for some of the top investors in the health care industry.
Until recently, the value-based care conversation has centered on traditional players—hospitals, health plans and physicians. Many health plans are partnering with hospitals to share insurance and care functions, and many hospitals are working to align incentives and to clinically integrate with physicians—physicians from the practices they have acquired and physicians in the community.
The conversations I had in San Francisco echoed a question that many investors have been weighing: What does value-based care mean for other types of providers in the health care system? We know that accountable care and value-based care models call for performance on total cost of care, quality outcomes and patient experience measures. How does this translate to a new business model for outpatient providers?
Take urgent care clinics as an example. The Urgent Care Association of America estimates that 83 percent of these centers saw growth in utilization in 2013. They had nearly 14,000 patient visits in 2013, and handled an average of 40 visits per day.1
How do urgent care clinics, pain centers and others fit into health care’s value-based care future?
On the one hand, these organizations might be at a disadvantage in value-based care contracts if they are freestanding entities. Hospitals and their associated physicians might be more prone to direct patients to their own facilities so they can have better control of their patients’ care. Doing so might ensure they get the information they need about what services the individual got and allow them to easily follow up and coordinate care after procedures.
On the other hand, outpatient care providers – whether they are urgent care, retail or other clinics – that approach value-based care payers (health plans, health systems or others) might be able to show a value proposition that allows them to win business and competitive advantage. After all, most of the patients that are seen in urgent care clinics have a regular primary care physician.2
The business case for urgent care clinics has traditionally been rooted in two areas:
- Price: Obviously, providers that offer discounts for procedures (including for implantables and other high ticket items) below what they cost in other settings can help lower the overall cost of care.
- Patient experience and convenience: Many patients are attracted to the convenience outpatient provider settings offer – they may be closer to home, easier to find and easier to park at than hospital-based facilities. Deloitte’s 2012 Survey of U.S. Health Care Consumers found that 58 percent of consumers chose to visit retail clinics for their convenience, and 50 percent chose them so they could get in and out quickly and because they were available after normal business hours.3
As health care transitions toward a system based on value, I believe that both of these factors will likely continue to be important. But, I think the future could require more:
- Volume and appropriateness: “Cracking the nut” of total cost of care must go beyond getting lower prices for services. Providers that focus only on providing necessary services and helping patients choose the right procedures (even if that means choosing the less high tech or intensive ones sometimes) might help accountable care organizations (ACO) succeed in meeting performance goals.
- Safety: For outpatient surgery in particular, providers that can demonstrate low rates of infections, punctures and other errors could be more likely to be targeted for strategic relationships.
- Care coordination: ACOs and their associated physicians might be more successful if they have the ability to share clinical and other relevant information with outpatient providers that informs appropriateness and surgical risks before a procedure is conducted. ACOs also will likely want to receive information about how the surgery went and be able to follow up with the patient after he or she gets home to take the recommended steps for recovery, including medications as needed. This type of information requires not only technology, but a work process to use the information.
The real winners in the outpatient provider and retail health space may be those who can approach health systems and investors with information that shows they can deliver on the new business case and that they are prepared to make the transition with them to value-based care.
Supporting evidence for this case may need to come from clinical information systems that let outpatient providers analyze trends in financial and clinical performance on individual patients and physicians as well as the overall indicators that matter. A robust strategy for performance improvement – starting with measuring current baseline performance, working on identifying barriers to improvement and surmounting them – may also need to be part of the strategy, especially as other competitors also start demonstrating their value proposition. Finally, to deliver on coordination, the outpatient providers’ systems will likely need to collaborate with physicians and health systems.
Sarah Thomas is a director with Deloitte Services LP and the director of research for Deloitte’s Center for Health Solutions. Sarah has experience in public policy, ranging from reimbursement to addressing issues such as quality in Medicare, Medicaid and the private health insurance market, including health insurance exchanges and marketplaces.She has more than 13 years of government experience.