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White Paper - Digital strategy and the shift to value based care

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Summary: The U.S. healthcare system is rapidly transitioning from fee-for-service to value- based care as part of massive and ongoing industry-wide transformation. Digital strategy is evolving to meet new challenges, help drive disruptive innovation, and better engage a large, growing audience of connected health consumers.

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White Paper - Digital strategy and the shift to value based care

  1. 1. 1 The Impact of the Shift to Value-Based Care on Digital Strategy Author: Terence Maytin, May 2016 The U.S. healthcare system is rapidly transitioning from fee-for-service to value- based care as part of massive and ongoing industry-wide transformation. Digital strategy is evolving to meet new challenges, help drive disruptive innovation, and better engage a large, growing audience of connected health consumers. Already complex and fragmented, the healthcare sector will look very different over the coming years. The Affordable Care Act (ACA) has spurred rapid innovation and disruptive change across the entire ecosystem in the quest for better quality care across the entire population at lower per capita cost. Payers are accelerating rollout of value- based payment models with providers, and the shift to pay for performance arrangements with Pharma companies is increasing as well. Moving an entire industry from volume-oriented reimbursement requires aggressive, innovative approaches to move from traditional “siloed” care to collaborative models with system-wide provider coordination, patient engagement and proactive interventions. Technology will continue to act as a critical change agent, enabling large- scale improvements in process efficiency, automation, connectivity, collaboration, interoperability and advanced analytics. With the convergence of healthcare and digital technology, industry stakeholders are reassessing their digital strategies to help tackle new business opportunities and challenges. Just a few years ago, digital health efforts largely focused either on acquisition marketing, community aggregation, or customer service portals designed to redirect volume from higher cost channels. However amid the current environment, digital offers much greater and far-reaching impact potential than ever before. Digital investments are ramping up to support the shift from volume to value, particularly in the areas of care coordination, patient engagement, post-discharge monitoring, measurement, and behavior change. Since 2014, venture capital has provided $10B in new funding for clinical tools, analytics, consumer engagement, mHealth, telemedicine, wearables, and business services. In 2016, firms have raised a record $1.8B. Two important trends drive home the relevance and importance of having a comprehensive, well articulated digital strategy: the rise of consumerism and nearly ubiquitous web/mobile adoption. Across all age groups, large audiences not only already consume digital services but also expect high quality, omni-channel experiences. In order to deliver on this promise, companies must design optimized, journey-based experiences that balance customer needs, preferences, and behaviors against desired business objectives and outcomes. Companies must embrace the concept of “putting the customer first” throughout the organization and across functions (e.g. strategy, product development, marketing, operations and technology). This also must be accompanied by an insights-driven, decision-making approach. Essentially, digital strategy will be most effective if viewed as an organizational imperative. Armed with a holistic vision and comprehensive strategy, stakeholders will be better able to leverage and capitalize on digital’s full disruptive potential to help solve some of the most pressing challenges facing healthcare today.
  2. 2. 2 Healthcare Industry Transformation The transformation of healthcare is multidimensional and complicated. Disruptive innovation, technology and consumer trends are upending traditional business models. The competitive landscape is getting ever more crowded with new entrants while at the same time, insurer and provider consolidation is accelerating. Consumers are motivated with more skin in the game and greater information access than ever before. Payment models are shifting from volume to value, and payers, providers, pharma, and medtech will need to collaborate and coordinate to a much larger degree within a more integrated care delivery system. These factors along with intense focus on quality improvement and evidence-based outcomes have big implications for the entire care delivery continuum. Over the past 30 years, technology has fueled innovation and consistent, incremental efficiency improvements. However, two major legislative actions altered the game and significantly accelerated the pace of change. In 2006, Med Part D expanded Rx coverage for millions of seniors, requiring large investments in data, clinical and content management solutions. This was familiar territory for PBMs and Payers who were challenged more from an executional rather than strategic standpoint requiring process innovation rather than new business models. The game changed four years later. The ACA was altogether different in scale and scope. Encompassing the full breadth of health insurance (medical, prescription, preventive, chronic, acute, etc.), the new law established coverage standards for all Americans while expanding access to millions of previously uninsured. Mandates and incentives were included to improve care quality, population health, EMR adoption and data interoperability. Consumerism and Digital Adoption Health consumers are increasingly bearing the cost for their healthcare as evidenced by the rising prevalence of HDHPs with higher average annual deductibles. For example, 1 in 4 adults covered by employer-sponsored insurance are enrolled in a CDH plan. Nearly half have a deductible over $1000. In addition, the ACA added millions to the rolls of formerly uninsured, cash-paying customers motivated to manage their spend. Mirroring other industries, web and mobile are heavily utilized by health information seekers, choosers and transactors. Web usage in the U.S. is at a historic high, and over 75% of adults seek health information online on regular basis. According to Pew Research, digital penetration (web and mobile) is near saturation for < 50 users (93%) along with a majority of senior citizens (58%). With rising financial burden, health consumers are highly motivated, emboldened and empowered to take charge of their healthcare decisions. They expect great customer service, tend to channel hop (digital for convenience, non-digital for complex tasks), and are less apt to stay brand loyal.
  3. 3. 3 Healthcare companies can increase the success of value-based care with the following consumer oriented digital strategies: • Build high-quality, omni-channel digital experiences (web, mobile, text, email, communities) for convenience, education and decision support • Make it easier to understand and manage costs (plan comparison, cost transparency, and network / pharmacy locater tools) • Encourage healthy behaviors with interactive programs, mobile apps, online coaching, and gamification / rewards. • Supply patient-provider engagement tools for post-discharge support, monitoring (self reported and wearables data), alerts, messaging, and telehealth. Faced with an annual turnover risk and a large audience of motivated choosers, health plans are adapting to a more dynamic B2C world where innovation, user experience and customer satisfaction are the highest priorities. Value-based care and the expanding role of digital strategy With rising complexity across the healthcare landscape, the potential scope of Digital Strategy has increased and is expanding. Figure 1: Digital Strategy in Healthcare - evolving and expanding amid industry disruption An overarching objective of the ACA is shift to value-based reimbursement, driving greater standardization, system efficiency, transparency, accountability and quality of care in order to achieve Triple Aim goals. For digital, innovation on such a grand scale has created a much larger playing field with far larger impact potential. Payers and
  4. 4. 4 providers must embrace digital solutions to improve outcomes, close gaps in care, and prioritize wellness rather than simply bringing in more patients. Not surprisingly, nearly half of healthcare organizations say they are behind (or lack) a digital health strategy (Validic survey, 8/15). For those seeking to partner vs. build on their own, options are numerous requiring extensive due diligence. The healthcare services vendor space is crowded, with mHealth entrepreneurs and traditional players offering care collaboration and population health solutions. Most players are targeting the same customer sets (payers, providers and pharma) with similar value props: • Support value based care mandates • Connect patients and care teams • Improve patient outcomes (individual and aggregate) • Reduce avoidable costs (readmissions, adverse events and ER visits) • Eliminate inefficiencies (workflow and operational) New entrants are often finding commercialization more challenging than expected with much longer business development timelines in their quest for internal sponsors. To be fair, payers and providers are often deluged with multiple potential vendors. Care models are still evolving, and RFPs aren’t fully baked. Healthcare organizations’ goals and ROI expectations differ as well depending on their degree of digital sophistication. Healthcare leaders are likely aware of Digital’s theoretical potential to positively affect value-based care outcomes (e.g. quality scores, more engaged patients, fewer readmissions, etc.). Essentially, the most valuable product capabilities to support value based care must have many, if not all of the following characteristics: • Intuitive, easy to use, available to all provider roles to fully embrace it • Cloud-based, hardware agnostic (web and mobile, Android and Apple) • Connectivity to multiple EMRs / organizational data / systems • Rich dashboards and data visualization • Ability to transform data into actionable insights - gaps in care alerts -> real time at point of care OR post-discharge - predictive analytics -> population OR patient-specific due to trends • Enable seamless patient-centric care coordination across disciplines / sites • Remote patient monitoring (e.g. adherence, PRO, vitals tracking via wearables) with rule based alerts for early detection and proactive outreach • Facilitate direct provider-patient communication (secure messaging, televisits) For Health Plans actively transitioning towards value-based care, digital strategy should consider solutions for all key stakeholders, recognizing benefits to each will differ: Provider Partners: - Tools to proactively engage patients outside the hospital setting - Access to data if/when necessary to help with quality measurement (e.g. out of network clinical information and claims) - B2B payer/provider capabilities (reports, dashboards, information, inquiry and issue resolution)
  5. 5. 5 Consumers: - Excellent service experience to proactively manage their benefits - Ability to seamlessly access via channel of choice - Provider engagement and behavior change management tools Internal Stakeholders: - Member service: Ability to serve customers efficiently and effectively regardless of channel - Analytics: Integrate digital with enterprise data (individual or population) - Ability to assess effectiveness/performance of new VBC plans - Sales and marketing: Develop value story (comparative effectiveness and advantages) and give brokers tools to effectively demonstrate VBC plan benefits vs. traditional offerings in consumer friendly language. PBM partners / Pharma: - Patient tools to optimize medication therapies, adherence and risk management (MTM, reminders, interaction checkers, education) - Data analytics to assess utilization and impact of drug utilization on medical spend /clinical outcomes (CER, HEOR, ePRO, trial recruitment) Designing great, customer-centric experiences Digital strategy is most effective when undertaken at the enterprise level with broad leadership support, placing the consumer at the center of enterprise-wide strategy - instead of the health system, provider, channel or technology. Reorienting organizations to “think digital” requires championing a “customer first” mentality in the mindset of all key functions responsible for successful product and service delivery – whether customer-facing or not. Developing digital-only solutions is not the goal. Rather, “customer first” is all about designing great customer experiences to meet their needs and expectations. In other words, providing the best product or service, at the best price, for the most value, at the preferred location, time, and touch point. For healthcare companies to be successful in a digital world, they must embrace the concept of digital consumers who value choice, convenience, savings and service quality over all else. Typically channel agnostic but often preferring online and mobile, digital consumers expect a seamless experience across all touch points. Channel choice is use case driven. Digital for research, transactions, mobility, and convenience. Human interaction for more complex tasks (e.g. prior authorization, issue resolution). Successful customer experience design principles include: 1. Develop a deep understanding of customer needs, pain points, preferences, motivations and behaviors. Sources for insights include direct customer feedback and focus groups as well as input from customer-facing CSRs, plan sponsors, B2B stakeholders, and competitors’ offerings. 2. Rigorously test concepts to avoid developing solutions for problems that don’t exist. In addition, anticipate customer needs even if not explicitly stated; give customers what they need before they need it.
  6. 6. 6 3. Adopt a persona-based approach to drive strategy, content, marketing, and UX design decisions. Define personas to embody logical customer groupings, taking into account various wellness stages (e.g. caregivers, healthy, worried well, acute, chronic, and complex) in addition to classic segmentation criteria. 4. Design intuitive interfaces and user flows tailored to each persona. Perform concept and usability testing during pre-development. Champion personas across functions to demonstrate and reinforce the customer-centric vision. 5. Invest in analytics and reporting. Identify KPIs during requirements and fully instrument digital assets. Consistently monitor metrics and feedback to quickly identify errors, unhappy flows and potential enhancements. Integrate digital and non- digital analytics. Perform comparative analyses to measure ROI. Proving value is a fundamental challenge in value-based care and population health. Digital offers unique potential to distribute and collect valuable insights (e.g. behavioral, preferences, patient-reported data) to supplement predictive analytics, health economics and outcomes research. 6. Constantly test, learn and iterate to optimize customer experience, product performance and business outcomes. Pursue flawless delivery through CQI. Measure and monitor post-launch product and campaign performance. Conclusion The transition to value-based care along with interrelated Triple Aim objectives is transforming the role of digital strategy across the healthcare industry. Large consumer audiences are highly connected, motivated and increasingly engaged in their healthcare decisions. Payers require a larger B2C focus to attract, engage and retain customers via efficient online, mobile and email channels. At the same time, payers are developing new care and payment models partnering with providers and pharma to improve quality and reduce costs. This has expanded the playing field for digital strategy to act as a positive, disruptive change agent. Recognizing this potential, external investment in digital innovation is at record highs. Payers must pursue a rational, balanced approach: data-driven decision making, lean startup methods, and external licensing/partnerships with technology and service providers whenever possible. Those who successfully leverage digital solutions migrating from volume- to value-based care will reap the rewards: increased margins, competitive advantage and customer loyalty. In order to truly become digital health companies, organizations must embrace a “customer first” orientation across functions - with full C-Suite backing and support. Digital strategy is not necessarily channel specific, though information and processes need to be in harmony across all touch points. Customers’ channel usage and preferences often differ by use case and segments. The most successful strategies will deploy customer-centric, optimized experiences designed around personas and omni- channel service excellence. The healthcare system is complex, fragmented and evolving rapidly. Design and implement digital strategy for the journey rather than the destination.

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