Population Health Investments Catastrophically Misaligned

A Post-Copernican View of Population Health

There is no better place to generate staggeringly high bills than at a hospital. For entirely rational reasons, healthcare providers invested vast sums of money on IT systems optimized to maximize billing opportunities. Unfortunately for hospital-based health systems, this is the polar opposite of what will drive success in the future. From a revenue-generating perspective, ordering as many procedures and interventions as possible created success in the old reimbursement model that is currently in its death throes.

Even for people with chronic conditions that consume 80% of healthcare resources, hospitalizations should account for less than 1% of their life. Yet, the vast majority of health IT budgets have been centered on large hospital-based health systems. In the rapidly growing population health-based ecosystem of the future, it’s well recognized that a hospitalization represents an abject failure in the vast majority of incidences — something that should have been caught earlier or prevented entirely that results in a high-cost, high-risk hospitalization. In other words, paying attention to the other 99% of the individual’s life that the traditional system largely ignores. 

The graphic below from Massachusetts shows how the misallocation of resources has damaged various social determinants of health. As is often said, zip code is more important than DNA code when it comes to health outcomes. Fortunately, there are proven antidotes to this "stealing" that the sick care is doing from overall well-being. For example, when healthcare dollars aren't squandered and are reinvested in social determinants, it has been shown to reduce crime by 67% and more than double high school graduation rates from 45% to nearly 100%.

The most powerful exponential technologies are human centered

In the past, healthcare has been organized around providers and medical technologies, which led to a highly siloed and uncoordinated system creating waste and even medical harm. There is strong desire to avoid repeating mistakes of the past and simply have new exponential technologies perpetuate the siloization of healthcare. During her always compelling “Unmentionables” session at Exponential Medicine, Alexandra (Alex) Drane (Co-Founder, Chief Visionary Office & Chair of the Board of Eliza Corporation) shared vivid details of how a healthcare system that doesn’t take into account the realities of people’s lives will be destined to under-perform. Alex described a shift in perspective that I view as significant as Copernicus’ conclusion that the earth (hospitals/technology in a healthcare context) isn’t the center of the universe. Rather, being patient-centered shouldn’t be simply a catchy marketing trope. A truly human-centered view causes a health organization to completely change their perspective .

In fact, the biggest edge that I see the next-generation healthcare delivery organizations (e.g., CareMore, ChenMed, Iora Health, Qliance, South-central Foundation, Vera Whole Health, ZOOM+ and others) have over traditional healthcare delivery organizations is a visceral understanding of this radically different, post-Copernican view. It’s what allows them to greatly out-perform on the Quadruple Aim objectives. They recognize that health outcomes are primarily determined by the 99+% of an individual’s life when they are away from the clinic. I intentionally focus on the quadruple (not just triple) aim as the top performers have the common sense to know that if you want to optimize outcomes, it's virtually impossible without optimizing the caregiver/clinician and patient experience.

It struck me that legacy health IT infrastructure reflected the old world and a new framework is needed. Consequently, I’ve been working with Cascadia Capital’s healthcare practice on a new industry taxonomy that reflects a modern population health view of the industry . As you can see in the schematic below, the framework necessarily depicts the individual at the center of the healthcare “universe.” As one of the most active investment banks in the digital health and healthcare services sectors, Cascadia has seen the acquirers of Cascadia’s M&A clients struggling to make the shift from looking at the world through a provider-centric lens. The flawed reimbursement system implicitly reinforced this pre-Copernican view in legacy EMR systems. 

The framework below helps incumbent organizations hoping to stay relevant in the next generation of healthcare understand where they have gaps. This will allow them to win in the population health era of healthcare. The schematic below is a mashup of the following items:

• RWJF commissioned the University of Wisconsin’s Population Health Institute to do a study of studies to assign percentages to the various factors driving health outcomes. Each of the four main categories outlines the sub-elements and a percentage. For example, the conclusion of the study was that one could assign 20% of outcomes to the quality of and access to clinical care.
• Each of the four main categories is then mapped to the elements of the Health Rosetta (represented as a vector in the schematic) that reflect what drives the best outcomes as measured by the Quadruple Aim.
• Within each vector, there are a variety of health technology and service categories that serve the various elements of the Health Rosetta.

Graphic courtesy of Cascadia Capital: The Future Health Ecosystem Today – Overview

It has been estimated that 88% of health dollars go to Clinical Care despite the fact that it only impacts 20% of health outcomes. While the majority of health systems are tax-exempt and their mission statements outline that they strive to be stewards of their community’s health, the evidence is clear most are falling far short.

Next generation health leaders recognize that items that fall far outside of traditional healthIT are imperative. For those of us building population based startups and investment funds, we see as big or bigger opportunities in the "other" 80% of drivers of health outcomes. In the Slideshare framework, it outlines other categories beyond those associated with the sick care system.

Unfortunately for incumbent healthcare organizations, most are at risk of repeating history, of falling into the same trap that newspapers fell into. That Zero Sum Game thinking led to catastrophic damage to those organizations. The smartest healthcare organizations have overcome the understandable, albeit misguided, belief that if they spent a gazillion dollars on a large EMR system it will position them for the future. Instead, they recognize they must not only adopt new capabilities focused on clinical care but also invest in the other three big buckets of health outcome drivers.

The framework in the Slideshare inserted above outlines some of the areas that must be addressed. This is a small preview of a longer presentation entitled The Future Health Ecosystem Today released Cascadia Capital (sign up for the newsletter below to be notified of updates). In that presentation, we drilled down on the myriad new categories of digital health and health services required in the population health era. In the meantime, I encourage you to read the Health Rosetta Principles that lays out a set of guiding principles for success in the next generation of healthcare.

This article was also published in Forbes. 

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