April 14, 2012

ACO & PCMH Vendors in Race To "New Middle Market" by Jim Bloedau

Regardless of healthcare reform being upheld by SCOTUS, both providers and payers are moving from traditional to disruptive models of structure, care and reimbursement due to competitive and the long term effects of an ongoing move toward greater consumerism and competitiveness.  Everyone is getting skin in the game.  From the top down, hospital systems are starting to develop accountable care organizations within their referral base and payers are working from the bottom up with primary care providers to support them in delivering integrated, coordinated care.   

These developing strategies are producing a race to the “new middle market” where both competitors are pursuing very similar quality models to gain advantages in the market. What is also clear is that the foundational base unit of delivering these healthcare transformations will be the patient centered medical home built on IT structures that include support for preemptive efforts that manage a patient’s health rather than merely addressing an episode of care and the billing cycle.

The Implication: 
Even thought there appears to be a race to the “new middle market”, it’s the early days and the historical adversarial roles that the providers and payers have played in the past are giving way to calls for "collaboration.” 

As we think about this, it is wise to keep in mind that organizational change is mainly driven by the flow of money - it's still about moving product, controlling share and optimizing returns. To do so each competitor will need to retool their products and services to capture and secure the “new middle market.”  In doing so, we should keep in mind:

  • To position a product as “new” or “disruptive” would be risky in that it calls for substantial financial girth and long times-to-market to educated the buyer and overcome the natural resistance to something new.
  • Given healthcare’s reluctance for being an early adopter, new tools may only require a reformulated or enhanced product that reapplies methods and technology already proven to healthcare.  
  • These tools would be like those in any advanced arenas which call for active surveillance, sentinel event alerts, rudimentary predictive modeling and virtual "advise, consent and coaching" workflow enhancements to mitigate risk.
  • A new tool set to match a workflow and communication processes that is common to both payer and provider means minimal reconfiguration, if any, for each market.  
  • Despite much of healthcare and the delivery and consumption of it being highly stylistic, these new strategies and resultant models call for a common way for all participants, including the patient/consumer, to have a similar, but unique experience. 
Finally, because of the overall workflow for care outside the walls of the acute care hospital, this space is a logical extension to the utility that ambulatory and remote care vendors (e.g. PMS, HIE, portals, home health, disease management) offer.  We can expect most are considering defensive and offensive strategies and joint ventures and thus offer numerous opportunities for strategic partnering.

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