Timid Federal Health Care Policy Sets Digital Innovators Up for Failure

For years, health care industry experts have been talking about the need to link provider reimbursement to quality, outcomes and cost management as the path to better, cheaper health care.

We’re still waiting to see such a shift.

According to our fourth-annual State of Population Health Survey, progress toward such accountability has stalled. In large part, this is because progress requires providers to choose to put some portion of their revenues at risk, based on their ability to manage cost and quality.

Years of pilot programs by the Department of Health and Human Services with no clear goal in sight have left it to provider organizations to opt into such programs or to stay with the fee-for-service status quo. It’s no surprise the majority have opted for inaction.

This lack of policy pressure has also had a negative impact on startups that are taking on the core health care business model. Many such startups are coming to market with technology-enabled tools that make possible a new level of efficiency in care delivery. But a timid policy setting is pouring cold water on their market prospects.

Startup Call9 was the latest to announce its plans to close up shop. Call9’s telehealth platform was designed to eliminate unnecessary emergency room visits by nursing home patients.

ER visits following falls in the nursing home are common and are both expensive for payers and disruptive for patients. Call9’s platform enabled remote evaluation of patients’ injuries, providing an efficient triage process. It looked like a “slam-dunk.”

But Call9 had difficulty finding buyers. That’s because unnecessary trips to the ER punish patients and payers but not nursing homes. Unfortunately, nursing home administrators were the ones who made the buying decision and incurred the cost of the service.

Accountability for cost and quality would have made using Call9’s product an economically and clinically sensible move. Unfortunately, those incentives are even less likely to be found in nursing homes than in acute care hospitals.

Most nursing homes routinely send patients to the ER after a fall with any injury to mitigate legal liability. But without the necessary linkage to patient outcomes and total cost of care, Call9’s market chose to stick with the status quo.

The innovations that startups such as Call9 bring to market are good for consumers and would be good for providers — if those organizations were operating under a mandate to change and incentives to structure new ways of delivering care. But absent a federal push for value-based care, billions of investment dollars and thousands of technology products and services are beating on the doors of institutions largely indifferent to the value they offer.

Until health care policy begins to reflect urgency and focus on accountable, transparent and affordable care, we are likely to see many more failed startups, many with viable, worthwhile products, and the waste of investment capital and entrepreneurial energy on the rocks of timid federal policy.

As we have been saying time and again, we can’t keep moving in this direction. The health care industry needs change, and it’s time that health care policy delivers a very necessary push.


Michael Abrams, MA, is the co-founder and managing partner of Numerof & Associates, a firm that helps businesses across the health care sector define and implement strategies for winning in dynamic markets. 

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