Innovation in healthcare can come in many forms.
We typically associate healthcare innovation with top digital health startups who are developing solutions with artificial intelligence and machine learning, prototyping consumer health products to help with patient care, software to optimize operational workflow, or a device to combat diabetes or the opioid epidemic. However, startups can play an important role in innovating organizations that work to support patient populations at the financial level: accountable care organizations.
What are accountable care organizations, and why are they important in healthcare?
Dr. Elliot Fisher from The Dartmouth Institute defines an accountable care organization (ACO) as a “provider-led organization that is accountable for the overall cost of a full spectrum of care for a defined population.”
ACOs have been developing in recent years in response to the ongoing shift to a value-based care healthcare system, compared to previous volume-based care system. The volume-based care system typically reflects a payment for individual services with less focus on quality or cost performance.
In contrast, the value-based care system works for populations and prioritizes quality, high-value care, and cost performance. For example, a value-based care system will allow patients to have more time interacting with their primary care physician, rather than physicians who prioritize seeing as many patients as possible.
ACOs are developing an alternative payment model to work within a value-based care system, which will reward high-value care. Over time, ACOs will play a greater role in healthcare by supporting patient populations while combatting the high costs we typically see in healthcare. Within a value-based care system, ACOs will work to reduce the financial burdens patients typically encounter when it comes to healthcare through financial incentives and collaboration efforts with insurance companies.
How will Massachusetts ACOs impact patient health?
In late 2017, Governor Baker and his administration announced a restructuring of the MassHealth program, allowing for 17 healthcare organizations to participate. In his announcement, 17 ACOs will be financially accountable for cost, quality, and member experience of over 850,000 MassHealth members. Some of these ACOs include: Community Care Cooperative, Atrius Health, Baycare Health Partners, Cambridge Health Alliance, Lahey Health System, and Wellforce.
The Baker administration hopes that ACOs will lead the charge in affordable, quality healthcare for Massachusetts residents, impacting population health and patient care.
Since Governor Baker’s announcement, the Commonwealth of Massachusetts launched the program in March 2018. The MassHealth ACO program today features 17 ACOs, all certified by the Massachusetts Health Policy Commission (HPC). The MassHealth ACO program also integrates physical and behavioral healthcare for patients and allows ACOs the ability to seek and provide reimbursements for “flexible services” which address social determinants of health, such as housing and nutrition.
According to the HPC, MassHealth will receive approximately $8B to support this new delivery system over the course of 5 years. This program hopes to manage population health and improve patient care in the state of Massachusetts.
How can startups drive innovation to ACOs?
In November, a Massachusetts HealthCheck, sponsored by the Scottish Development International, was held where influencers in the Massachusetts ecosystem discussed the challenges and opportunities of driving innovation to ACOs. (The event was co-organized by MassChallenge HealthTech, Brigham and Women’s Digital Innovation Hub, Massachusetts eHealth Institute (MeHI), and Massachusetts Health Policy Commission.)
Catherine Harrison of the Massachusetts Health Policy Commission gave an overview of Massachusetts ACOs and the MassHealth ACO program, where she explained how the 17 ACOs are looking to impact patient health.
Harrison also offered advice to startups who are looking to partner with ACOs. “Not all ACOs are alike – there is a huge amount of variety among them. Keep that in mind when pitching to these unique organizations.”
The ACO panel was a main highlight from the HealthCheck. Laurance Stuntz of Massaschusetts eHealth Institute (MeHI) moderated an engaging panel discussion featuring Liz Asai of 3Derm, Sree Chaguturu of Partners Healthcare, and Matt Mullaney of Community Care Cooperative, where they discussed the challenges and benefits of working with ACOs. They also highlighted the potential collaboration opportunities between startups and ACOs.
Sree Chaguturu discussed the benefits of a successful ACO: “Successful ACOs coordinate care, change the fundamental process of disease, ensure that patients get the right form of care, and make sure the right codes are sent to insurance companies so the right payment models are meant for the right patient.”
Chaguturu also remarked that ACOs need to innovate because the healthcare industry is not cost effective. “Healthcare is expensive because the industry is not labor-efficient. Innovation needs to happen in an area addressing care coordination, site of care, or a condition-specific area.”
Liz Asai shared insights on working with ACOs from the startup perspective. She remarked that although it is not the sexiest nor easiest type of work, it is rewarding nonetheless. “Organizations want to work with startups like [3Derm] because they want to reduce the number of no-shows and number of referrals.”
Asai offered further insight on altering the startup pitch since all ACOs are unique. “Craft your data-driven pitch for every single ACO you’re selling to. They’re different, and they’re unique.” Mullaney also commented that it’s important for startups to craft their pitches towards each ACO because their priorities and needs may be different even though all ACOs work towards a common goal.
Mullaney shared his thoughts on innovation from the ACO perspective. “The things that are most interesting to me about driving innovation to ACOs are startups that are addressing core competencies but in unique and innovative ways.” “ACOs are just waiting for the right companies to partner with,” Chaguturu described.
The panelists are hopeful that startups and ACOs will collaborate to drive innovation and impact. Chaguturu remarked “ACOs want to invest in digital health in order to drive innovation.”
We look forward to seeing future collaboration opportunities between startups and ACOs to drive innovation.