Innovative Players Shaping Care Delivery Competition · 2020-05-12 · Innovative players1 • K Health • OnMed • Bright.md • Zipnosis • Eden Health • Babylon Health Advancements

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Innovative Players Shaping

Care Delivery Competition

Eight sources of emerging disruption

RESEARCH REPORT

Market Innovation Center CSOs, strategic planners, and

market analysts 90 min.

advisory.com2© 2020 Advisory Board • All rights reserved

Table of contents

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Convenient care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Virtual care providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

On-demand risk models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Primary care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Direct-pay primary care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Population health managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Specialty care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Chronic condition management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Single specialty management platforms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Payer networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Centers of excellence networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Health plan network innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

https://www.advisory.com/


Executive summary

Hospitals, health systems, and physician groups face threats of disruption on several fronts. Long-

standing industry pressures—unsustainable cost trends and shifting consumer expectations—

have not abated, which has attracted the attention of out-of-industry companies and private

equity-backed entrepreneurs who bring new solutions to bear. New competitors see opportunities

to rebuild the delivery system from the ground up, pioneer new business models, and push the

boundaries of clinical and technological innovation. Many are driven by a limited strategic focus

that is quickly adaptable to market shocks, enabling them to outmaneuver incumbents who have

too many strategic directions and maintain a risk-averse culture to transformational change.

To protect market share, incumbent providers must understand how non-traditional competitors

are establishing a differentiated value proposition and positioning themselves for growth. This

report provides an overview of the major trends and innovative players emerging in the market

across four domains:

1. Convenient care: A growing network of alternative ambulatory care options, including retail

clinics, urgent care centers, virtual care providers, and home care providers that are appealing

to consumers by offering on-demand access to care and superior levels of service.

2. Primary care: Medical groups that are creating a direct-pay market by offering concierge-level

services and/or partnering with payers to manage patients with polychronic health needs.

3. Specialty care: Providers that appeal to purchasers by building care models for a specific

disease state, condition, or procedure, rather than taking a one-size-fits-all approach.

4. Payer networks: Health plans and independent third parties that are selectively driving

business to high-performing facilities—on their terms.

Not all innovators in this report are equal in terms of their source of differentiation and future

growth outlook. For each group, Advisory Board analyzed the following value drivers.

Offers a differentiated

consumer experience

• Enhances access and/or

convenience

• Offers a frictionless end-

to-end health journey

and transaction

• Delivers economic value

to end users

Attempts to improve

clinical outcomes

• Improves patient-

desired outcomes and

quality of life

• Reduces misdiagnoses

and complications of care

Possesses a sustainable

operating model

• Utilizes efficient processes

to generate cost savings

• Operates with a competitive

expense structure

• Appeals to clinical and

administrative workforce as

an employer

Utilizes a scalable

business model

• Develops intellectual

property not easily

replicated by competitors

• Accesses capital with

relative ease to cover

infrastructure costs

• Partners with stable, long-

term customers to fill unmet

demand and serve a large

addressable market

Source: Market Innovation Center interviews and analysis.

Criteria for evaluating innovators



Road map

1

Convenient care

Section



Access standards elevated to new heights

Non-traditional competitors capturing patient loyalty by offering on-demand access

Introduction: convenient care

1. Primary care physician.

2. Advisory Board 2019 Primary Care Consumer Choice Survey.

Expanded breadth of services

Innovators continue to expand their

services beyond immediate care,

vying to be a single go-to resource not

only for urgent care but also primary

care, wellness, select specialties, and

even hospital-level care.

Experimentation with new

financing models

While convenient care sites remain

reliant on direct-to-consumer

business and walk-in care,

innovators are experimenting with

bundled subscription services and

B2B partnerships with risk-bearing

entities and retailers to tap into new

growth channels.

Despite efforts to improve ambulatory

access, provider shortages and growing

demand continue to prolong wait times and

stretch provider capacity. Medical groups

face intensifying competition from non-

traditional access points—including urgent

care centers, retail clinics, and virtual care

providers. These new competitors are not

just offering on-demand access to care, but

also positioning themselves to serve as a

patient’s regular provider for longitudinal

health care needs.


1 2Virtual care

providers (page 6)

On-demand risk

models (page 14)

Innovators profiled in this report

SPOTLIGHT

53%

40%

Loyalty to a traditional PCP1 declines, 2015 vs. 2019

Percentage of survey respondents who would “definitely” stay

with their PCP over the next year2

-13%

2015 2019

Emerging trends in convenient care

Heightened focus on the

digital front door

Disruptors are attempting to attract

customers farther upstream in the

care journey through digital

applications to capture new patient

relationships and influence

downstream spending.



Virtual care: on the path to widespread adoption

Virtual care providers

Source: “FH Healthcare Indicators® and FH Medical Price Index® 2019,” FAIR Health, April 2019; Market Innovation Center interviews and analysis.

Virtual care providers

DESCRIPTION

Providers who remotely diagnose and/or treat patients

through real-time or asynchronous audiovisual

information exchange.

• 98point6

• TytoCare

• Carbon Health

• Amazon Care

• Nurx

• HeyDoctor

Current growth strategies used by

telehealth incumbent and start-ups

Future predictions on growing the

role of telehealth in care delivery

Innovative players1

• K Health

• OnMed

• Bright.md

• Zipnosis

• Eden Health

• Babylon Health

Advancements in remote diagnostic

technologies expand virtual capabilities

Medical device, diagnostic testing, and

consumer technology companies will

continue to develop at-home diagnostic tests,

handheld diagnostic tools, and smartphone

sensors to expand clinicians’ capabilities to

diagnose and treat remotely.

Hybrid in-person and virtual models

take shape

Start-up primary care companies are

offering the ability to connect with one’s

regular PCP virtually to improve access

while preserving care continuity.

Niche telehealth providers attempt to

create direct-to-consumer market

A growing number of telehealth providers

offer focused solutions specializing in a

narrow set of services, such as

reproductive health and mental health, but

few gain traction in the market without

significant marketing funding.

Artificial intelligence-powered platforms

manage patient intake and triage

Virtual care providers will offer free or low-

cost chatbots and symptom checkers as a

means to connect with new patients

searching for a provider online. Advanced AI

platforms will automate diagnostic and

treatment plan tasks, significantly enhancing

provider productivity.

Dedicated “virtualists” compete for

patient relationships nationwide

As demand grows and virtual providers

expand their capabilities beyond urgent

care, more clinicians will spend 100% of

their time dedicated to telehealth and join

virtual medical groups that compete to

establish long-term relationships with

patients nationwide.

B2B partnerships drive growth

Even though virtual visits only accounted for

an estimated 0.11% of all commercial claims

in 2017, telehealth providers continue to grow

at a rapid pace, thanks in large part to

partnerships with health plans, retailers, and

consumer technology companies that help to

increase awareness and utilization.

1. Organizations in bold are profiled in this report.



Automation powers 98point6’s low-cost, text-first virtual care platform

98point6

1. Video also available.

Virtual care start-up lowers barriers to use for consumers

98point6 is a telehealth start-up that offers a text-first solution for treating low-acuity health care needs. The

company aims to overcome many of the hurdles impeding the adoption of virtual visits, including strict regulatory

and licensing requirements, sub-optimal consumer engagement, and poor reimbursement. Since its founding in

2015, 98point6 has rapidly expanded its nationally-licensed virtual medical group, built out its technology platform,

and entered into new partnerships with large retailers and health plans to expand utilization of its service.

98point6Telehealth provider with 31 physicians • Seattle, Washington

CASEEXAMPLE

Minimal out-of-pocket costs

Offers employer and direct-to-

consumer plans with low per-visit

fees; the direct-to-consumer

subscription model is $20 for the

first year ($120 for subsequent

years) and each visit costs just $1

Nationwide virtual medical group

Board-certified physicians with equity

stake in company provide 24/7

coverage and are licensed in all 50

states and DC

AI responsible for 90% of virtual visit

50% 10%Diagnose and treat

38%Care plan and charting Follow up

2%Gather findings

• Physician spends 100%

of time reviewing patient

report and interacting

with the patient via in-

app messaging

• AI algorithm gathers details from

patient’s history

• Patient history and reported

symptoms are pulled into a report

for PCPs treating the patient

• Care plan and visit notes are

automatically created

• App sends next steps and

treatment reminders to the

patient post-visit

98point6’s telehealth offering


At the heart of 98point6’s telehealth platform is its AI-powered algorithm that automates approximately 90% of

the interactions with the patient, from gathering diagnostic information to creating a care plan. With its text-

based chatbot, 98point6 is able to preserve its physicians’ time for higher-level tasks, which vastly improves

productivity of its physicians and lowers overall operating costs.

AI-powered technology platform

Intuitive, text-first platform1 offers a

digital experience on par with leading

social media and e-commerce

applications and automates much of

the patient interaction



Virtual care bundled with pharmacy, dental, vision to enhance appeal

98point6-Sam’s Club

Source: Flees, L, “Sam’s Club Launches Innovative Pilot to Help Make Healthcare More

Affordable,” Sam’s Club (September 26, 2019); Market Innovation Center interviews and analysis.

Wholesale model appeals to budget-conscious consumers

98point6 has sought out B2B partnerships as its primary growth lever. A recent partnership with Sam’s

Club couples 98point6’s virtual care platform with services already offered by Sam’s Club, including

dental care, eye exams, and pharmaceuticals. With just a $50 annual membership fee, consumers can

see a 98point6 physician for $1 per visit in addition to receiving other Sam’s Club health services at a

significant discount. Their highest-cost premium membership offers an expanded array of health

services for up to six family members.

Sam’s Club’s Care Accelerator membership offerings

Core telehealth

$50 per year

Core dental

$50 per year

Preferred

$100 per year

Premium

$240 per year

Medical care: text-based doctor visits

24/7 for $1 through 98point6

Pharmacy: generic medications

offered for free for select medications

Dental care: savings on dental

services within Humana’s dental

network

Optometry: $60 for eye exams and

20% off eyewear at Sam's Club

Prepaid debit card: a $5, $40, or

$100 prepaid health debit card, for the

$50, $100, and $240 plans,

respectively

Preventive care: free preventive

health screening at Quest Diagnostics

Discounts: up to 30% off alternative

medicine (chiropractic, acupuncture,

and massage therapy) and 10% off

hearing aids at Sam's Club

Given that virtual visits offered by other vendors often cost upwards of $50 per visit, consumers could

begin reaping financial savings from the Sam’s Club Accelerator membership after the first visit. Currently,

the membership offerings are only available in Michigan, Pennsylvania, and North Carolina. If the company

observes high demand at its pilot sites and is able to capture increased spending at Sam’s Club stores

among members for non-health care goods, the company could offer the membership nationwide.



TytoCare’s technology expands the scope of services virtual providers can offer

TytoCare

Source: Baxt, J, “TytoCare takes telehealth retail,” (MedCityNews, November 13, 2019),

“TytoCare Launches TytoHome Nationwide at Best Buy Stores” (PRNewswire, November

13, 2019); Market Innovation Center interview and analysis.

Diagnostic tools enable remote, in-home physical exams

TytoCare is a telehealth company that offers both a platform for virtual visits and an at-home device

for remote diagnostics. Like 98point6 and other virtual care providers, TytoCare has sought out

partnerships with health systems and vendors to expand utilization of its telehealth platform. The

company now sells its direct-to-consumer TytoHome product for $299.99 in 300 Best Buy stores.

TytoCareTelehealth company • New York City, New York and Netanya, Isreal

CASEEXAMPLE

TytoCare’s TytoHome product capabilities

Virtual visit

For $59, consumers can connect to

physicians for a virtual examination

using high resolution exam camera

In-home virtual visit

Stethoscope

Listen to heart, lung, and

stomach/bowel sounds

Otoscope

Examine the ear

and ear drum

Thermometer

Measure body temperature

Tongue depressor

Examine throat and

tonsils

Bluetooth connectivity

Connect to additional devices that

measure blood pressure, oxygen

saturation, and weight

Unlike other virtual care providers, TytoCare does not employ its own clinicians. TytoCare is instead

placing its bets on developing digital diagnostic technologies that supplement virtual care platforms.

The company partners with telehealth company, American Well, and health systems such as Ochsner

Health System, Novant Health, and Sanford Health to staff its platform 24/7, 365 days a year.

TytoCare has also joined Epic's App Orchard marketplace to promote care continuity with patients'

regular providers. Data captured by TytoCare devices is automatically transferred to Epic's electronic

health record.

As digital diagnostic technologies continue to develop, the range of addressable conditions that can be

diagnosed and treated from the comfort of a patient’s home will expand. The cost of digital

diagnostics, as well as consumers’ comfort and experience with using the devices, will determine the

extent to which these technologies play a role in care delivery going forward.



Carbon aims to be the go-to platform for all urgent, primary, virtual care needs

Carbon Health

Source: Truong, K, Dietsche, E, “Carbon Health pulls in $30M to become the Starbucks of

Healthcare”, MedCityNews (June 6, 2019); Market Innovation Center interviews and analysis.

Hybrid virtual, physical network offers full-service solution

Carbon Health is a Silicon Valley start-up that offers

an integrated EHR1, consumer-facing smartphone

application and managed services (scheduling,

billing, etc.) for urgent care centers and primary care

clinics. The company aims to reinvent the health

care experience by offering consumers a modern

and intuitive digital experience on par with

interactions one would have with e-commerce and

social media applications.

Carbon’s goal is to create a nationwide care delivery

network. To do so, they have adopted the “networks”

approach pioneered by companies such as Uber and

Airbnb—creating a large network without owning any

of the associated assets. When consumers need

medical care, they have the option of using any one

of the urgent care centers or primary care clinics on

Carbon’s practice management software.

Alternatively, consumers can opt for a virtual visit

within the application.

Carbon HealthPrimary and urgent care provider and technology vendor with clinics across four markets • San Francisco, California

CASEEXAMPLE

Concierge consumer-oriented digital services

Clinic administrative services

Carbon Health’s technology-enabled

software solution

• Carbon’s technology serves as the EHR, patient

portal, and scheduling and billing system

• AI-powered clinical decision support system and

chatbot gathers symptoms and history before visits

to improve provider efficiency; suggests the correct

diagnosis for a patient with 90% accuracy

• Carbon collects 7% of practice revenue for its

managed services

Carbon is not the only start-up attempting to create a nationwide care delivery network using a hybrid virtual and

in-person model. Others including Crossover Health, Eden Health, and Firefly Health are relying on virtual care to

scale and increase their presence across a wider geography in a cost-effective manner. This strategy appeals to

employers that want to launch occupational health clinics but have widely-dispersed employee populations. It also

enables providers to introduce patients to virtual options available to them for future needs while they are in a

physical clinic.

Virtual care

Urgent care

Primary care

Explains symptoms

and history to AI-

powered chatbot

Chooses virtual or

physical visit with

physician • Visit notes, medical images, lab results, scheduled

appointments, referrals, and treatment plan appear

on a single consumer-facing app

• Patients can access pricing information, schedule

same-day appointments, pay bills, refill

prescriptions, and request home delivery of

prescriptions within the app

• Users can chat with their doctor, submit health

information from wearables, and schedule

medication reminders

Patient interaction within Carbon’s app

1. Electronic health record.



Amazon

Source: Evans, M, “Amazon Joins Trend of Sending Workers Away for Health Care,” Wall Street Journal (October 15, 2019), Jang,

R, “Introducing New Alexa Healthcare Skills” Amazon Alexa (April 4, 2019), Landi, H, “Amazon acquires startup Health Navigator to

build on its Amazon Care program”, FierceHealthcare (October 24, 2019); Market Innovation Center interviews and analysis.

Big tech positioned to compete for the digital front door

Amazon has announced a series of health care acquisitions and product announcements that indicate it

is setting its sights on health care as a future avenue for growth. With a large base of over 310 million

active customers and 100 million Prime members, Amazon has the loyal customer base, technological

prowess, and capital to test and scale a direct-to-consumer health care offering with wide appeal.

AmazonRetailer with 100 million prime users and 640,000+ employees • Seattle, Washington

CASEEXAMPLE

June 2018Acquired online

pharmacy PillPack for

$753 million

January 2019 Amazon, Berkshire

Hathaway and J.P. Morgan

launched Haven joint

venture to “move the needle

on health care expenses”

Amazon’s major health care moves

April 2019Launched HIPAA-

compliant Alexa skills

with six organizations

September 2019Launched Amazon Care,

which provides video visits,

text-based nurse chat

services, prescription

delivery, and home care to

its employees

October 2019 Acquired Health

Navigator online

triage platform

October 2019Haven announced insurance

plan for its employees that

offers free preventive care,

no coinsurance or

deductible, and $15 in-

network PCP visits

November 2019Announced first wearable

device, “Echo Buds” that

track workouts

Today, there is not a single digital platform for consumers to search, schedule, and receive care on a

nationwide scale. Given its growing collection of health care assets and existing relationships with

consumers, Amazon is positioned to be a prominent channel consumers use to get connected to the

delivery system

Triage function via Alexa

and digital chatbot

Patients prompted for details

regarding their symptoms,

such as severity, duration,

and history and directed to

appropriate care sites

Scheduling platform for

select, participating providers

Patients ask Alexa to schedule

same-day appointments at

participating health systems

(already working with Atrium Health

and Providence St. Joseph Health)

Connection to virtual and

home-based care

Patients access Amazon’s

virtual provider partners

though Amazon Care platform

Amazon’s potential role in the digital patient journey



Amazon’s occupational health offering couples virtual and home care access

Amazon

Source: Farr C, “Amazon launches Amazon Care, a virtual medical clinic for employees,”

CNBC, September 24, 2019; Market Innovation Center interviews and analysis

“Amazon Care” makes its debut

In 2019, Amazon launched an app-based occupational health service that connects its employees in

Seattle to providers from Oasis Medical Group. The program offers virtual and home-based services

and is available from 8 a.m. to 9 p.m. on weekdays and 8 a.m. to 6 p.m. on weekends.

Amazon Care

Text-based chat with a

nurse can be initiated

within Amazon’s app

Chat function

Virtual visits with a doctor

or nurse practitioner can

resolve low-acuity care

needs and/or provide

referrals

Nurses can be

dispatched to home or

office for in-person

exams, diagnostic

testing, and treatment

Prescriptions can be

delivered same-day to

patients’ home or office

Virtual services

Video visits House calls Prescription delivery

Home care

While Amazon Care is currently only available to Amazon employees, the design of Amazon’s

occupational health program may preview a more widespread direct-to-consumer health care service

in the future. Along with its Haven insurance product, all signs point to Amazon taking a more active

role in managing health care costs.

Services offered to Amazon’s employees



Innovation scorecard


Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

98point6

TytoCare

Amazon

Carbon

Health

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present

Element is foundational

to value proposition

LEGEND

Has a large existing

user base and

considerable access

to capital

Large addressable

market, but requires

market-by-market

partnerships and

conversion of existing

medical record platform

Offers 24/7 access with

user-friendly, text-

based communication

Uniquely positioned to

bundle health and non-

health care services at

affordable price point

Private equity backing

and partnerships with

well-known national

retailers and health

plans supports growth

Diagnostic tools

may improve ability

of remote clinicians

to formulate an

accurate diagnosis

and treatment plan

Software foundation

enables cost-effective

replication across new

customers

Enhanced primary

care access may

improve outcomes on

par with other virtual

care providers

Easy access to

clinician, treatment

plan, and health data

may improve

engagement long-term

Enhanced access

may improve

outcomes on par

with other virtual

care providers

Technology will likely

need to come down in

price to generate cost

savings for consumers

Exclusive Best Buy

partnership creates

highly visible sales

channel nationwide

Product expands

range of needs able

to be resolved from

home setting

Scale of the company

may enable it to offer a

more cost-effective

solution than alternatives

Offers services

normally only offered

in subscription-based

concierge medical

practices at no cost

AI-enabled platform

creates productivity

gains; continues to hire

3-4 PCPs per month to

staff its platform



Risk-bearing entities partner to reduce hospital and emergency department costs

On-demand risk models

Source: “2019 Primary Care Consumer Choice Survey,” Advisory Board,

September 5, 2019; Market Innovation Center interviews and analysis.


2. Employs the NYU ED Algorithm developed by the NYU Center for Health and Public

Service Research, which was developed to help analyze unnecessary ED utilization.

3. Fee-for-service.

On-demand access a growing imperative for risk management

On-demand risk models

DESCRIPTION

Urgent care centers, retail clinics, virtual care providers,

and house call companies that partner with employers,

health plans, and/or risk-bearing providers to offer on-

demand alternatives to higher cost settings such as the

emergency department (ED).

• Humana-Doctor

on Demand

• CVS Health-Aetna

• Dispatch Health

• CityMD-Summit

Medical Group

Current trends on the expanding role of

alternative care sites

Future predictions on the role of alternative

care sites in value-based care models

25.4%

25.0%

12.6%

13.1%

32.0%

31.6%

30.0%

30.3%

2018

2015

Not emergent ED care needed; preventable

Emergent but ED care not needed ED care needed; not preventable

ED avoidable visit assessment, 2015 vs. 2018

Advisory Board Avoidable ED Assessment tool2; Medicare FFS3 claims

Innovative players1

Alternative care sites diversify their

service offerings beyond emergent care

Innovative convenient care groups are

attempting to expand primary care, behavioral

health, wellness, and chronic care offerings; a

select few have created specialized models

(ex: orthopedic urgent care centers), but some

struggle to gain traction with payers

Digital gatekeepers manage patient care

As consumers become more comfortable with

utilizing alternative care sites for regular care

needs, health plans will launch more digital-

first products to manage low-acuity needs and

direct members to high-value downstream

providers when necessary

Deeper integrations with risk-bearing

entities lead to total cost reductions

Convenient care sites will leverage payer

benefit design to drive business to their

access points and utilize clinical and claims

data to better manage risk

Non-traditional sites serve as regular

providers for longitudinal health needs

In 2019, over 50% of patients ages 18 to 29 and

nearly one in five patients overall used an

alternative care site as their main source of

primary care; this number will continue to grow as

traditional primary care clinics shift their focus to

serving patients with complex, chronic care needs

• MedExpress-Optum

• Walgreens-Humana

• Medically Home

• Contessa

• ConvenientMD

Higher-acuity hospital services moved

to the home setting

Mobile health teams will iterate on the

Hospital at Home model to provide a

lower-cost alternative to hospital stays

ED diversion continues to be elusive

The growth of alternative care sites over the past

decade has not led to a corresponding decrease

in avoidable ED visits, indicating that increased

access alone will not move the dial on ED

avoidance—especially for unmanaged populations



Humana-Doctor On Demand offer virtual-first health plan to employers

Humana-Doctor on Demand

Source: “Humana and Doctor on Demand launch virtual primary care plan to bring more services with lower costs

to patients, insurers, and employers,” Business Wire, April 24, 2019; Livingston S, “Humana announces virtual

primary care plan,” Modern Healthcare, April 24, 2019.

Gatekeeper model makes a digital comeback

Humana-Doctor on DemandHealth insurance company with over 16M covered lives; partnering with telehealth

company, Doctor on Demand • Louisville, Kentucky

CASEEXAMPLE

Humana has invested in primary care delivery assets through its Partners in Primary Care and

Conviva subsidiaries to better manage patients with chronic care needs and control downstream

costs. In 2019, the health plan introduced a new plan called On Hand that tests whether virtual PCPs

can effectively guide patients to the right sites of care for their needs.

Members are assigned a Doctor on Demand PCP and must first consult with their virtual care team for

any primary or specialty care needs. Doctor on Demand’s clinical capabilities extend beyond just

urgent care. Patients have access to behavioral health professionals, dieticians, care coordinators,

and pharmacists. With this expanded care team, Doctor on Demand can resolve approximately 92%

of cases virtually. For the other 8% of needs, physicians will refer patients to providers within the

Humana network.

Humana’s On Hand health plan

Affordable coverage

Out-of-pocket costs include a $0

copay for video visits and a $5 copay

for lab tests and prescriptions.

Downstream navigation

Doctor on Demand’s smart referrals

feature ensures all referrals remain in

Humana’s high-value provider network.

Lower costsVirtual access to services

Virtual PCP

Members assigned dedicated PCP

from Doctor On Demand and can

see the same physician over time.

Medical device kit

Members are given digital blood

pressure cuff, thermometer, and log for

submitting data to virtual providers.

Humana expects premiums for the On Hand plan to be priced nearly 50% below comparable

industry-standard plans. The ability to lower costs with a virtual-only plan relies on a combination

of lower per visit fees compared to alternative sites of care (ex: emergency departments) and an

enhanced ability to send patients to high-value providers for downstream care when necessary.

The On Hand product is being piloted in Florida and Texas as a self-funded product for small

businesses. Further expansion is possible depending on the success of the pilot.



CVS Health plans rapid expansion of its HealthHub store redesigns

CVS Health

1. Continuous positive airway pressure.

2. Body mass index.

Retail 2.0: an entryway for wellness and chronic care needs

With the acquisition of Aetna, CVS hopes to bring together its most

important assets—brick and mortar stores and claims data—to engage

consumers in health and wellness and generate revenue-enhancing

synergies in their HealthHub stores.

The company has already announced plans to rapidly scale the

HealthHub model nationwide—in areas with high Aetna penetration—to

have a total of 1,500 HealthHubs by 2021. Given that approximately

71% of the U.S. population lives within 5 miles of a CVS, there is a high

likelihood that a HealthHub could be coming to a location near most

incumbent providers sooner rather than later.

CVS HealthPharmacy, retailer, PBM, and integrated Aetna health plan with 22.8M members • Woonsocket, Rhode Island

CASEEXAMPLE

CVSHealth

1,500HealthHub locations

planned by 202145%Of CVS survey respondents

say they would get primary

care from the retailer

Source: “CVS Health testing new HealthHUB store format,” CVSHealth, February 13, 2019; LaVito A,

“CVS to open 1,500 HealthHUB stores over next two years,” CNBC, June 4, 2019.

Staffing

• Pharmacists conduct

medication reconciliation for

high-risk Aetna members

• Nurse practitioners provide

medical services

• Dieticians and respiratory

therapists counsel patients

with chronic care needs

• Care concierge assists

consumers with navigating

service offerings and events

Products and services

• Offers approximately 80% of medical

services provided by a PCP

• Medical equipment for sale includes

wheelchairs, walkers, CPAP1 machines,

yoga equipment, and electronic activity

monitors

• In-house diagnostic capabilities include

onsite lab for blood work, kiosks to

measure blood pressure and BMI2, and

diabetic retinopathy imaging

• Classes are available for smoking

cessation, weight management, and

nutrition counseling

• “Learning tables” equipped with tablets

allow consumers to explore health and

wellness applications and CVS products

and services

Store design

• At least 20% of store space is

dedicated to health services

• Each location has 3 medical

exam rooms

• Group events are hosted in a

wellness room (nutritional

seminars, insurance benefits

education, Zumba, yoga,

mindfulness classes etc.)

• Stores are open Monday-Friday

until 7:30 pm and Saturday and

Sunday until 4:30 pm

Features of CVS’s HealthHubs

DATA SPOTLIGHT



Financial ROI expands beyond pharmacy and retail cross-sale revenue

CVS Health

1. According to early results reported by CVS leadership.

Aetna partnership unlocks new sources of value

Unlike its MinuteClinic stores, CVS has clearly designed its HealthHub stores around health care rather than

retail. At least 20% of its retail space has been reallocated for health and wellness products. By 2021, CVS

projects that its HealthHub store strategy will result in $850 million in new incremental revenue for the

company.

Its alignment with Aetna unlocks additional sources of value beyond cross-selling pharmaceuticals as its

MinuteClinics were designed to do. Not only can Aetna provide financial incentives to use HealthHub services

through benefit design, but it can also use its physical assets as channels to enroll non-Aetna consumers in

Medicare Advantage plans, engage high-risk members in managing their chronic disease, and provide lower-

cost alternatives for routine health care needs.

Engage members in chronic disease

management and wellness

Utilizing Aetna claims data, high-risk members can be

called in to stores for screenings and group activities or

to be connected with remote monitoring devices,

disease management apps, on-site pharmacists, and

dieticians.

Reduce costly ED visits and influence

downstream site of care decisions

Convenient locations of stores and free to minimal

cost-sharing obligations for Aetna members

promote utilization of stores rather than higher-cost

EDs and urgent care centers.

Grow Medicare Advantage membership

Stores are designed to attract seniors, which provides

an opportunity to enroll non-Aetna consumers in its

health plan during open enrollment.

Synergies between CVS HealthHubs and Aetna

Source: Clifford T, “CVS CEO Larry Merlo says 600 remodeled HealthHUBs will be opened by

the end of 2020,” CNBC, January 13, 2020; Market Innovation Center interviews and analysis.

It may take time for CVS and Aetna to unlock the potential cost-saving benefits of owning both care

delivery and insurance assets. But CVS’s rapid expansion plans and bolstered health care offerings

mean that health systems across the nation can expect more direct competition for ambulatory services

in the near-term—and heightened expectations from consumers for co-located services, better care

coordination, and more timely access to care.

Cross-sell products and services

HealthHub stores have significantly higher foot

traffic and store sales compared to traditional CVS

stores as a result of the redesign and expanded

health care focus.1



DispatchHealth partners with risk-bearing entities to provide low-cost alternative

DispatchHealth

Source: Levine D et al., “Hospital-Level Care at Home for Acutely Ill Adults: A Randomized Controlled Trial,” Annals of

Internal Medicine, December 17, 2019; “DispatchHealth Furthers Nationwide Expansion and Announces New Health

System Partnerships”, PRNewswire (January 7, 2019); Market Innovation Center interviews and analysis.

1. Emergency medical technician.

2. Diagnosis related group.

3. Dispatch’s most common home hospitalizations include: pneumonia, CHF exacerbation,

COPD exacerbation, complicated UTI, cellulitis, and metabolic derangements.

4. Data not from Dispatch Health, but from randomized controlled trial of 91 adults admitted via

the ED to the Hospital at Home model at an academic medical center and community hospital.

Hospital-level care moves to the home setting

DispatchHealth was founded in 2013 to provide homebound

patients and convenience-minded consumers an option to receive

urgent care and ED-level services in the home, or in assisted

living and skilled nursing facilities. Today, the majority of

Dispatch's growth has not come from individual consumers, but

from risk-bearing provider groups aiming to avoid costly

emergency visits. In fact, approximately 60-70% of Dispatch visits

are initiated by clinicians and their partner organizations,

including home health, care coordinators, and care managers.

DispatchHealthHome-based provider operating in 18 markets across 12 states • Denver, Colorado

CASEEXAMPLE

It became apparent to me

that the facility-based care

model was starting to price

itself out of existence…We

mobilize the high-acuity

care that exists in the walls

of the hospitals and pull it

into the home.”

Mark Prather

CEO, DispatchHealth

Dispatch’s extended episode of care

• Mobile care teams

equipped to deliver

100% of the care

provided by an urgent

care center and 70% of

care provided by EDs

• Offers advanced ED-

level care such as on-

site blood work,

catheter and g-tube

placement, blood tests,

and stool cultures

• Contracts with private payers

to receive a reduced DRG2

payment compared to inpatient

DRG payments for home-

based hospital services3

• Patients receive daily visits

from Dispatch’s medical team,

remote patient monitoring, and

24/7 physician access for the

entirety of the episode (up to

30 days)

• Appointment

requested via app,

website, or phone by

the patient, care

manager, or physician

• Centralized triage

team determines level

of care needs

• Care team comprised of

nurse practitioners,

physician assistants,

EMTs1, and emergency

medicine physicians that

typically arrive within 60 to

90 minutes

• One physician manages

12 mid-level providers in

the field and connects to

the onsite care team via

telehealth

38%

Dispatch has announced a $33 million plan to expand into 25 markets in 2020 and offer advanced

hospital-level services in its existing markets. Patients with complex medical needs can now be

“admitted” to Dispatch’s Advanced Care and Extended Care programs instead of being admitted to an

inpatient hospital or discharged to a higher-cost post-acute location.

Average decrease in costs for a Hospital at Home

acute care episode compared to usual care4

$1,200 $20MAverage savings per

Dispatch intervention

Estimated savings to

physician group in FY 2019

Savings delivered to a risk-bearing physician group in a large urban market

DATA SPOTLIGHT

DATA SPOTLIGHT

In-home visit

requested

Staff dispatched

to patients’ home

Urgent and emergency

care treatment

Hospital inpatient-

level treatment





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

CVS Health

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Offers a one-stop shop

for services ranging

from wellness to

chronic care

Large infrastructure

of CVS stores

already in place;

able to leverage

benefit design to

attract patients

Utilizes mid-level

providers to lower

costs, but requires

cross-sell revenue and

total cost of care

reductions to achieve

substantial ROI

Leverages pharmacists

for medication

management; potential

to use Aetna claims to

identify high-risk patients

Dispatch

Health

Support from risk-

bearing entities and

funding sources

enhances ability to

enter into new markets

Usage of tele-

presentation and

mid-level providers

enhances cost

effectiveness

Home-based model

the ultimate form of

convenience; cost-

effective for patients if

out-of-pocket costs

lowered by health plan

Humana-

Doctor on

Demand

Members can access

providers 24/7 with

minimal out-of-pocket

obligation, but

gatekeeper approach

to specialty care may

be frustrating for some

consumers

Continuity with a

regular PCP supports

ongoing care

management; access to

claims data and an

expanded care team

including behavioral

health specialists may

enhance outcomes

Virtual visits are more

cost-effective for

members than other

alternative sites of care

Plan design promotes

utilization of virtual care,

but market demand is

largely untested

Home model enables

providers to address

social determinants of

health and bring care to

homebound patients



Next steps for building a convenient care strategy


• The Strategic Thinker's

Guide to Partnerships and

Affiliations

• Urgent Care Center Pro

Forma

• Vertical Integration:

Preparing for New

Competition

Compete with competitors to

control the digital front door

• Leverage technology to deliver a self-

service digital experience with

capabilities such as online

appointment scheduling, call ahead

functionality, physician research /

matching, and triage tools.

• Activate consumers in longitudinal

health management by offering a

single platform to view health records,

submit device data, and access

navigational resources.

• Transition some in-person interactions

to chatbots, centralized call center

staff, and low-cost virtual visits.

Optimize operations of existing

sites to offer on-demand

access to care

• Maximize efficiency of ambulatory

clinics by standardizing scheduling

templates, filling no-show

appointment slots, and enabling

top-of-license practice.

• Provide weekend and after hours

availability and reserve same and

next day appointment slots for

high-value patients.

Build or partner to supply

additional ambulatory capacity

• Enter into staffing or joint venture

arrangements with retail and urgent

care operators to gain core

competencies not available

internally.

• Co-locate highly-utilized ancillary

services such as pharmacy and lab

and consider providing on-site

specialty services (pediatrics,

orthopedics, behavioral health,

occupational health etc.) when

demand is sufficient.

Action steps and resources to support strategy

• Build Your Digital Front Door

• Creating a Consumer-Focused

Digital Strategy

• Next-Generation Patient

Contact Centers

• Ready-to-Present Telehealth

Industry Trends

• Wait Time Zero

• What Consumers Really

Want from Urgent Care

• Ambulatory Strategies

Compendium

Incumbent providers should closely monitor new entrants and the value proposition they offer to

determine potential business impacts and evaluate opportunities to compete or partner. The

action steps and resources listed below can be used to help organizations set a winning

convenient care strategy.

1 2 3


https://www.advisory.com/research/health-care-advisory-board/white-papers/2014/the-strategic-thinkers-guide-to-partnerships-and-affiliations

https://www.advisory.com/research/market-innovation-center/tools/2017/urgent-care-center-pro-forma

https://www.advisory.com/research/market-innovation-center/studies/2018/vertical-integration-preparing-for-new-competition

https://www.advisory.com/research/health-care-it-advisor/events/webconferences/2019/2019-health-care-it-advisor-virtual-summit/build-your-digital-front-door/ondemand

https://www.advisory.com/research/market-innovation-center/resources/2018/creating-a-consumer-focused-digital-strategy

https://www.advisory.com/research/market-innovation-center/studies/2015/next-generation-patient-contact-centers

https://www.advisory.com/research/market-innovation-center/studies/2015/next-generation-patient-contact-centers

https://www.advisory.com/research/health-care-advisory-board/research-reports/2020/wait-time-zero

https://www.advisory.com/research/market-innovation-center/research-reports/2019/urgent-care-preferences

https://www.advisory.com/research/service-line-strategy-advisor/resources/2018/ambulatory-strategies-compendium


Road map

2

Primary care

Section



Primary care: the chassis for radical delivery system reforms

Innovators adopt non-traditional financial models

Introduction: primary care

As convenient care sites proliferate

and redefine consumers’ service and

access expectations, primary care

groups are adopting innovative care

and business models with the goal of

keeping primary care at the center of

the delivery system. Some groups

attempt to match service and access

enhancements offered by competitors

while others differentiate on the basis

of their ability to effectively manage

patients with polychronic health needs.

Supported by alternative financial

models, innovators are meeting the

demands of the market while using

primary care as a launch point for

developing more comprehensive low-

cost delivery systems.

Low-cost delivery networks

Primary care groups are offering

ancillary and specialty services

traditionally offered in higher-cost

settings after building sufficient

regional scale.

Segmented primary care clinics

Rather than taking a one-size-fits-all

approach, clinics are designed to appeal to

niche population segments, including

seniors, patients with multiple chronic

diseases, consumers with expendable

income, or “bargain basement” shoppers.

Primary care innovators adopt alternative financial models

3 4Direct-pay primary

care (page 23)

Population health

managers (page 27)


SPOTLIGHT


Wholesale fee-for-service

An à la carte, pay-per-use model paid

directly by consumers or payers

Full capitation

Primary care practices

take responsibility for

the full cost of care

Carve-out memberships

Recurring fees paid by

consumers, employers, or payers

to cover all primary care needs

Level of

financial

risk

Services covered

Consumer-driven Payer-driven

Emerging trends in primary care

Non-traditional financial models

Innovators are adopting financial

models that don’t always profit off of

primary care itself, but rather from

cross-selling other products,

managing utilization, and decreasing

the total cost of care.



Direct-pay models emerge as supplement to insurance

Appealing to both underinsured and high-income earners

Direct-pay primary care

Source: Eskew P and Klink K, “Direct Primary Care: Practice Distribution and Cost Across the Nation,” Journal of the

American Board of Family Medicine, November 2015; Market Innovation Center interviews and analysis.

Direct-pay primary care

DESCRIPTION

A direct-to-consumer business model that collects fees

directly from patients rather than billing insurance. Some

practices charge a monthly or annual fee for enhanced

access to care and concierge services.

• Forward Health

• Walmart Health

• AtlasMD

• Babylon Health

• Galileo Health

Current drivers of growth for

direct-pay models

Future predictions on strategies used

to differentiate direct-pay businesses

Model Cost

Direct primary care membership $77 per month (average)

Telehealth-only membership $10-100 per month

Discounted fee-for-service rates 20-50% discount (estimate)

Concierge-lite (claims submitted to insurance) $200 annually (estimate)

Concierge executive health programs $183 per month (average)

• OneMedical

• SteadyMD

• Parsley Health

• MDVIP

• Medlion

Innovative players1

Rising deductibles expand market

opportunity for direct-pay models

Unlike traditional executive health concierge

models, today’s direct-pay primary care

models appeal to a growing number of

underinsured individuals who pursue

membership models as a means to lower

their out-of-pocket obligations.

Nationwide clinic operators emerge to

boost competitiveness

Primary care practices will join private equity-

backed firms and investor-owned companies

to achieve administrative efficiencies, acquire

digital capabilities, and appeal to employers

looking for geographically-dispersed primary

care networks.

PCPs specialize in whole-person care

Providers will push the bounds of

personalized care by offering genetic testing

or co-located wellness services (diet and

exercise support, etc.) to address a fuller

continuum of health needs; co-location of

specialists may be possible in locations with

high patient volume.

Administrative burdens drive PCPs

to alternative financing models

Burnt out with heighted demands,

physicians in small practices are turning

to direct primary care membership

models which offer autonomy without

high overhead.

Direct-pay financing models

Digital technologies enable concierge

service enhancements

Technologies that facilitate communication

with the care team and create a personalized

experience through integrations with apps

and remote monitoring devices—will be the

primary basis of differentiation.

Wide variation in pricing structures

Membership-based models range from low-

cost telehealth-only offerings to high-touch

concierge offerings that compete for a more

limited, wealthier customer base.




Standalone health centers test viability of cash-only market

Walmart Health

By 2023, Walmart projects that its customers will spend an additional $750 billion out-of-pocket for health

care compared to $250 billion for retail goods. The company hopes to capture a share of that out-of-

pocket spending with its Walmart Health Centers, which house an expanded array of services in large,

freestanding facilities.

1. Electrocardiogram.

2. According to Healthcare Bluebook’s fair price for “Office Visit, Established Patient (~25 min.)”.

Walmart brings everyday low prices to health care

Walmart HealthRetail corporation with 1.5M employees • Bentonville, Arkansas

CASEEXAMPLE

Source: Lee J, “Walmart Opens Its First In-Store Health Center: An Interesting Avenue for Growth,” The

Motley Fool, October 15, 2019; LaVito A, “Walmart makes reducing health-care costs a top priority — for

customers, too,” CNBC, October 12, 2018; Market Innovation Center interviews and analysis.

Format

• 10,000 square feet (relative

to its 19 existing 1,500

square feet retail clinics)

• Separate entrance from main

retail store with modern look

and feel

Pricing

• Services cost 30-50% less than those of

competitors

• Prices are made available before receiving

services and financing options are available

• Primarily targeting self-pay consumers

• Currently accepts Medicare and the

Walmart employee health plan, but may

negotiate to accept other private insurers

over time

Services

• Co-located primary care, dental care,

behavioral health, optometry,

pharmacy, lab, X-ray, EKG1, hearing,

pharmacy, counseling, preventive

health and wellness education,

insurance education and enrollment,

and pet care

• Online scheduling and walk-in

appointment availability

Features of Walmart Health Centers

DATA SPOTLIGHT

Walmart Health

$40

CVS Minute Clinic

$89

Typical PCP office2

$210

Out-of-pocket price comparison for general office visit

Walmart’s prior forays into health care delivery focused on low-acuity, one-off patient interactions, Their new

strategy is designed to create longitudinal patient relationships and address complex health needs. By co-

locating services under one roof, Walmart can cross-sell services to sustain its low price points. They have

also looked to integrate specialty services into their care model, starting with mobile mammography and

women’s health.

Walmart’s first health center in Dallas, Georgia, has generated 30-40% higher volume than initially projected

by the company and the company opened a second center in Calhoun, Georgia in early 2020. While the

timeframe for future growth is still undetermined, the company is positioning itself to be a nationwide primary

care provider. It recently announced an opportunity for its employees to pursue bachelor's degrees in health

care fields for just $1 a day—building a pipeline for a skilled workforce to staff its new health centers.



Tech-enabled Forward Health sets new bar for direct primary care memberships

Forward Health

Source: Eskew P and Klink K, “Direct Primary Care: Practice Distribution and Cost Across the Nation,” Journal of

the American Board of Family Medicine, November 2015; Market Innovation Center interviews and analysis.

Boutique membership models target high-end consumers

Founded by former Google and Uber executives, Forward

Health is a venture capital-backed primary care start-up from

Silicon Valley that aims to deliver a modern, technology-

enabled health care experience on a nationwide scale. The

company does not accept insurance, but rather charges a

monthly fee of $149 for unlimited primary care visits and

leading-edge technologies and amenities.

Forward HealthDirect primary care provider with 8 clinics • San Francisco, California

CASEEXAMPLE

Technology-enabled experience

• Blood testing with results in 12 minutes, facilitated

by portable infrared vein finders

• Dermascope that enables remote analysis of skin

lesions by a dermatologist

• Body scanner to measure vital signs including

heart and metabolic rates, body temperature, pulse

oximetry, arterial health, body composition, and

weight

• iPads for appointment check-in

• Large interactive touchscreens in exam rooms

• Remote scribes to record visit notes

• Online scheduling, direct care team messaging,

and medical record access via a mobile app

Concierge service offerings

• Unlimited visits to Forward locations, with no per-visit

co-pay

• 60-minute visit blocks where physicians discuss

medical, lifestyle, and wellness needs, including sleep,

diet, exercise, stress, and genetic predispositions

• On-site diagnostic services including genetic testing,

blood testing, pap smears, STD testing, and cancer

screenings

• 24/7 messaging with care team

• Monitoring of health data submitted from wearables

and devices through Forward’s app

• Hospitality-focused design and amenities, including

free sparkling water, wearables for sale, and large

exam room recliners

Forward Health’s direct primary care membership offerings

Forward’s monthly membership is nearly twice as expensive

as typical direct primary care memberships, which will likely

attract higher-end consumers with significant health needs and

the means to pay a premium for a first-class experience. The

company is placing its bets on proprietary in-house technology

as its core point of differentiation, investing heavily in direct-to-

consumer marketing to build its patient panels, and offering $0

initiation fees to demonstrate that their re-envisioned health

care experience is worth the expense.

$149 Forward Health

$77Average direct primary

care practice

Cost of monthly membership

DATA SPOTLIGHT

Image credit: Forward Health





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Forward Health

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Personalized care

approach and high-tech

service offerings create

distinct experience

unmatched by traditional

primary care locations, but

high membership fees may

limit appeal to wealthier

consumer segments

Greater access to

physicians and

ongoing monitoring

of personal health

data may promote

better management

of chronic conditions

Low panel sizes and

reduced administrative

burden attractive to

PCPs; circumventing

insurance reduces

costs, but substantial

time and expense

required to build

panels

Substantial capital

required for technology,

amenities, and rent in

high-traffic, wealthy

communities, but private

equity backing and in-

house technological

intellectual property open

unique opportunities to

quickly expand into large

urban markets

Walmart Health Existing store

presence, significant

access to capital, and

high foot traffic creates

opportunities to expand

on a wide scale—

including in non-urban

communities not

traditionally targeted by

disruptors

May improve access to

care in underserved

geographies, especially

for Walmart employees;

co-location with

pharmacists and

integration with

specialists may promote

continuity of care

Pricing model

requires significant

cross-sell revenue to

generate meaningful

profits long-term

Transparent pricing and

one-stop shop model

creates attractive and

distinct value proposition,

especially to underinsured

consumers and consumers

without a regular PCP



Payers delegate risk for populations with chronic care needs

Primary care practices adopt high-touch care models to control costs

Population health managers

Source: “APM Measurement Effort,” Health Care Payment Learning & Action

Network, 2019; Market Innovation Center interviews and analysis.

Population health managers

DESCRIPTION

Primary care groups that enter into value-based arrangements

with payers and receive a significant portion of their revenue from

capitated payments or shared savings. These groups typically

adopt a high-touch care model focused on controlling costs for

small panels of patients with chronic health needs through a

combination of utilization, network, and care management.

• Heal

• ChenMed

• VillageMD

• Oak Street Health

• Iora Health

• Landmark Health

Current growth of primary care models

for population health management

Future predictions on growth and influence

of value-based primary care groups

• CityBlock Health

• CareMore

• Aspire Health

• Aledade

• Vera Whole Health

• Partners in Primary

Care

17.2%Percentage of Medicare Advantage

payments tied to population-based

payment models in 2018 (an

increase from 10.3% in 2017)

5.1%

30.7%

25.1%

39.1%Upside-only rewards

and/or upside and

downside risk

Population-

based payments

FFS with performance payments

Traditional fee-

for-service

Breakdown of 2018 payment models, across all payer segments

HCP LAN2; represents 77% of insured population (226.5 million Americans)

Innovative players1

Medicare Advantage (MA) leads the charge

toward alternative payment arrangements

Health plans and primary care groups enter into

full-risk capitated agreements for MA lives due to

risk-adjusted payments from Medicare and

favorable unit economics that come with

managing a previously unmanaged population.

Capitated models expand to new populations

Payers will look to delegate risk to PCPs beyond

MA populations. Medicare’s new Direct Contracting

payment model pilot offers capitation for the

general Medicare population, vastly expanding

market opportunities for value-based primary care

management companies.

Senior-focused models grow at a rapid clip

Clinics designed for high-need senior populations

offer greater access to physicians due to smaller

panel size, free concierge services (ex:

transportation to appointments), and on-site

wellness events and ancillary services.

Primary care groups create vertically-

integrated networks—bypassing hospitals

Clinic operators will invest in onsite ancillary

and specialty services, such as pharmacy, lab,

home care, and surgical center assets once

they have sufficient patient volume in a region.

Practice management groups accelerate the

transition to value-based clinic models

Managed service organizations are equipping

existing clinics with the data, analytics, and

personnel to succeed under value-based

contracts, creating a more scalable and expansive

solution compared to senior-only models.

De facto narrow networks take shape

As risk models expand and primary care groups

increase their density within a market, clinic

operators will attempt to shift referral decisions

away from physicians in order to route patients

to lower-cost sites for downstream care needs.


2. Health Care Payment Learning & Action Network.



Heal combines house calls with technology to coordinate care

Heal

Source: Landi, H “California house call app Heal acquires Doctors on Call, expands to NYC market,”

(FierceHealthcare September 23, 2019; “Heal Launches First-Ever Contextual, Data-Driven Telemedicine

Solution,” Business Wire, May 30, 2019; Market Innovation Center interview and analysis.

A clinic-less approach to managing high-need patients

Founded in 2014, Heal offers home-based primary care services to patients across 12 U.S. markets.

Historically, Heal relied on a direct-to-consumer, fee-for-service business model, but the company has

recently shifted its strategy toward wholesale purchasers and value-based contracts to fuel its growth.

HealHome-based primary care provider • Los Angeles, California

CASEEXAMPLE

By visiting patients in the home setting, Heal

providers report that they are better able to

understand social, economic, and lifestyle

factors that impact health outcomes.

Combining this information with data from

health records and remote monitoring

devices enables care teams to better

manage the health of the populations they

serve and reduce the overall cost of care.

71%Reduction in ED and urgent care

utilization reported by Heal 28%Reduction in hospital

admissions reported by Heal

Patients can view their provider’s schedule

within the Heal app and request in-home visits;

in-home visits are available from 8 a.m. to 8

p.m., 7 days a week, 365 days a year

Heal receives a per-

member-per-month fee

to manage the primary,

preventive, and urgent

care needs of high- and

rising-risk health plan

members

Members select a

preferred Heal provider to

manage their care over

time—replacing their

previous clinic-based PCP

Patients can choose voice or video calls for

follow-up appointments

Payers delegate risk

to Heal

Patients select

preferred Heal PCP

Heal manages care needs in

the home and virtually

Apple Healthkit and Epic integration

Health data stored in Epic and Apple Healthkit is

available to Heal providers and patients through the Heal

app (Heal is the only organization partnering with Apple

on its digitized record initiative).

Heal Hub remote monitoring device

A Bluetooth-enabled device wirelessly transmits health

data (blood pressure, heart rate, blood sugar and blood

oxygen saturation etc.) from FDA-approved remote

monitoring devices; AI-powered alerts notify providers

when a patient’s measures are out of the desired range.

Technology promotes care continuity

DATA SPOTLIGHT

Heal’s clinic-less approach to managing high-risk populations



Segmented care models for MA populations become more common

High-touch clinics build business around polychronic seniors

While disruptors have traditionally targeted healthier, commercial patients, many disruptors are now turning

to Medicare-aged patients with chronic conditions. Payer demand for primary care groups that aggressively

manage high-risk patients has increased as these groups demonstrate an ability to turn a profit from

traditionally unprofitable populations.

Source: Coutre L, “Primary care provider ChenMed to enter five new markets,” Modern

Healthcare, December 5, 2019; Market Innovation Center interviews and analysis.

Primary care group Date founded Growth and market presence

ChenMed 1985 in Miami,

Florida

• 65 practices across 14 markets in 2019

• Plans to enter 5 additional markets and add 20 new practices in 2020

• Compound annual growth rate of 35% from 2010 to 2019

Iora Health 2010 in Boston,

Massachusetts

• 48 locations in 11 markets in 2019

• Expects to build 15-20 new clinics per year

Oak Street Health 2012 in Chicago,

Illinois

• 54 primary care clinics across 6 states

• Payment: Full-risk capitation; typically

85% of the premium dollar delegated to

control total costs

• Target population: Seniors 65+ with

Medicare Advantage plans and multiple

chronic conditions

• Physician compensation: Based on

cost performance rather than productivity

and RVU1s

BUSINESS MODEL

• Small panels: Panels typically limited to

400-600 patients to enable high-touch

management

• Multidisciplinary care team: Includes

PCPs, health coaches, behavioral health

specialists, dieticians, and care managers

• Focus on prevention: Frequent contact

with patients and an emphasis on

preventive care such as health screenings

and medication adherence

CLINICAL MODEL

• Service utilization: Timely diagnosis of conditions

and adherence to preventive care strategies lead to

fewer hospitalizations and ED visits

• Site-of-care steerage: Referral coordinators and

technology platforms direct patients to lower-cost

settings and specialists when possible

COST SAVINGS

• Co-located services: On-site lab, imaging,

pharmacy, and specialty care

• Appointment availability: Typically longer

time with personal physician (45-60 minutes);

same- or next-day appointment slots; free

transportation to and from appointments

• Support services: Social and educational

events; 24/7 support line for questions

CONCIERGE SERVICES

Defining characteristics

Growth of industry-leading senior-focused primary care clinic operators

1. Relative value units.



ChenMed shifts market share to high-performing hospitals and specialists

Source: Singh J, “Redefining primary care,” Credit Suisse, April 22, 2019; Ghany R, et al., “High-touch care leads to better outcomes and

lower costs in a senior population,” American Journal of Managed Care, September 2018; “ChenMed Company Overview,” Deceber 26,

2019; Robeznieks, A, “Medicare-only Oak Street Health isn’t shy about taking big risks”, AMA (July 23, 2019); Market Innovation Center

interviews and analysis.

High-touch management impacts downstream utilization

Senior-focused groups take an aggressive approach to

prevent escalations of chronic illnesses because their

business models are dependent on reducing costs.

ChenMed, Oak Street Health, and Iora Health have all

reported reductions in hospital admissions, ED visits, and

specialist referrals due to their high-touch care models.

These groups encourage frequent interactions between

physicians and patients at their clinics to promote

preventive care. In fact, ChenMed reports that its PCPs

spend an average of 189 minutes annually with each

patient in their 400-500 patient panel.

When patients do need specialty or acute care services,

ChenMed relies on a limited number of high-value

partners. Administrative staff ensure that referrals are

sent to providers committed to two-way communication

with ChenMed PCPs when considering admitting the

patient to the inpatient setting or referring patients to

subspecialists. Those who don’t show a commitment to

shared-care planning and appropriate utilization will not

earn future referrals.

30%Fewer hospital admissions

reported by ChenMed compared

to Medicare benchmark

52%Reduction in ED visits

reported by Oak Street Health

Reduction in specialist

use reported by Iora

Health

35%

DATA SPOTLIGHT

High-value providers earn ChenMed referralsReferral ratio shifts to high-value hospitals over time

Hospital A Hospital B

2008

2013

2

1

1

4

Segmented senior care models will likely continue to experience steady growth for the foreseeable future,

particularly in pockets of the country with a large number of MA patients and a dearth of PCPs. In smaller

markets that cannot support such a specialized model, third-party managed service organizations may offer

an attractive alternative for existing practices struggling to transition to value-based models.



VillageMD partners with practices to accelerate transition to value-based models

VillageMD

1. Chronic obstructive pulmonary disease.

VillageMDPrimary care managed service organization with 3,000+ affiliated

and employed physicians across 9 markets • Chicago, Illinois

CASEEXAMPLE


Founded in 2013, VillageMD offers primary care providers a population health management

solution to support the transition to risk and value-based care. VillageMD does not focus on a

segment of a practice’s patient population but offers a multi-line-of-business platform for payer

contracting and population health management.

VillageMD practice management and population health support services

• Negotiates and manages value-based contracts with payers

• Provides data and analytics to analyze performance on utilization, coding, and quality measures for attributed patients

• Offers working capital to support physicians with technology investments (remote monitoring, telehealth, EHR solutions, etc.)

• Deploys best practice care models (ex: COPD1 patient management)

• Provides multidisciplinary care teams to support PCP in creating custom care plans, including nurse care managers,

resource coordinators, patient care coordinators, disease educators, and pharmacists

• Conducts proactive outreach via phone or electronic notifications to close care gaps and ensure ongoing patient attribution

• For owned Village Medical practice sites, offers an EHR solution in addition to revenue cycle management, marketing, staff

recruitment, and human resources support

VillageMD predominantly partners with existing

independent primary care physician groups rather

than building its own clinics. However, the

company now has 21 clinics that it owns and

operates through its brand, Village Medical. Five

of these clinics are located at Walgreens stores.

The Village Medical at Walgreens locations are

testing a new approach to retail health care. The

locations offer full-service primary and chronic

care, in addition to treatment for minor illnesses

and urgent care. By bringing the VillageMD

model to its stores, Walgreens will test whether

they can increase foot traffic and loyalty.

Village Medical at Walgreens

Format: 2,500 square foot, 7 exam room

locations co-located at Walgreens stores with

separate entrances

Services: Offers comprehensive primary care

services, same-day walk-in appointments, virtual

visits, lab services, and house calls

Staffing: Physicians and advanced practice

providers are employed by Village Medical

MSOs support clinics with population health



VillageMD focuses on network and site of service to control spend

VillageMD

Effective management of utilization generates cost savings

The payer contracts VillageMD negotiates range from pay-for-performance to shared savings and global

capitation. The ability to generate medical cost savings is due to absolute reductions in utilization, more

favorable contracting with specialists, and site-of-service shifts.


Contracts with specialists to accept

sub-Medicare rates for MA patients

• When payers delegate network management

to VillageMD, the company contracts with a

select number of specialists in the market

who are high-performing and lower cost.

• For select specialties such as oncology,

VillageMD will also enter into sub-capitation,

preferred status agreements with medical

group partners.

Two strategies for better managing utilization

Shifts site of service away from higher-

cost hospital networks

• When demand is sufficient, VillageMD will

provide funding to partner sites to add

services such as physical therapy, pharmacy,

lab, and/or imaging services (including

advanced CT1 and MRI2).

• Referrals for low-intensity, high-volume

procedures (ex: colonoscopies) are

intentionally sent to lower-cost sites of care.

• In the future, VillageMD plans to invest in

higher-acuity, specialized services, including

infusion centers and home-based inpatient

care (ex: Hospital at Home).

Houston market: patient volumes provide leverage

to assemble lower-cost specialty network

New Hampshire market: ASC joint venture provides

lower-cost alternative to hospital-owned sites

Cardiology group

Enjoys preferred relationship

with VillageMD

VillageMD

Negotiates reimbursement

rates below typical Medicare

rates for MA lives

Affiliated VillageMD physicians purchase

a plot of land adjacent to medical group

Local surgeons and VillageMD lease

land from PCPs, co-invest in ASC

VillageMD contracts with payers for an

in-network alternative to other hospital-

affiliated ASCs

1 2

1. computed tomography.

2. Magnetic resonance imaging.



VillageMD

Support services create revenue enhancements for PCPs


Village Medical at Home deployed to meet quality metrics and provide care to high-risk patients

VillageMD identifies that it is

seven MA patients short of

meeting annual hemoglobin

A1c compliance measure for

type 2 diabetics

Sends phlebotomist to

patients’ homes who have

not scheduled an in-person

appointment

VillageMD earns incentive

from meeting quality

measure under payer

contract and by avoiding

complications from diabetes

Today, VillageMD only participates in globally capitated MA

contracts. The organization is able to generate significantly

more cost savings from MA populations compared to younger

commercial patients. But because it accepts all patients, works

with existing practices, and accepts payment from multiple

payers, VillageMD is able to capture a critical mass of patients

in a market more quickly than senior-only clinic models. This

enables the company to invest in more services.

One service VillageMD is able to offer is home-based primary

care. Home-based care is especially valuable to patients with

mobility or transportation challenges and those recently

discharged from the hospital. Additionally, in the event that a

patient is unresponsive to outreach to schedule an in-person

appointment, VillageMD can deploy its clinical team to patients’

homes. By doing so, the organization can ensure it is meeting

quality metrics that are components of payer contracts and

earning pay-for-performance incentives.

160-200VillageMD

DATA SPOTLIGHT

240-250HMO plans

300Non-HMO plans

Sample of performance:

admissions per 1,000

population in Houston market

We view [VillageMD] as a new employment

opportunity. If you ask a physician practice what

their alternatives are, the alternative options are

to sell their clinic to a hospital or to sell their clinic

to a clinic aggregator, if they’re big enough. We

want to represent another employment

opportunity without having to become part of

an insurance company or without becoming

part of a hospital system.”

-Paul Martino

Co-founder and Chief Growth Officer, VillageMD

VillageMD offers a path to succeed in value-

based care models for small independent

practices with insufficient scale to invest in

population health-focused technology and

staff. Meeting performance standards in payer

contracts allows physicians to realize shared

savings revenue while providing higher

quality, lower cost care.





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Heal

VillageMD

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Senior-

focused

models (Oak

Street Health,

ChenMed,

and Iora

Health)

Offers convenience of

home-based care with

minimal out-of-pocket costs

when covered by health

plan; technology offerings

deliver a modern and

integrated experience

Practice management

services may offer a

superior working

environment for clinical

and administrative staff;

population health services

can be delivered more

cost-effectively

Has adequate funding

and the ability to

partner with existing

practices (rather than

build from scratch)

Colocation of services,

free transportation,

enhanced physician

access, and programs

designed for seniors

can be attractive, but

gaining access will

likely mean leaving an

existing PCP

Low patient panels and

a multidisciplinary care

team enable high-touch

management of chronic

health needs for the

most complex patients

Growing interest in

partnerships from

health plans and

health systems; aging

population expands

market opportunities

Usage of telehealth

enhances cost-

effectiveness of

deployment model

Health plan

partnerships and

funding sources

enable it to more

easily enter new

markets and make

acquisitions

Convenience of colocation

next to Walgreens is a

frequent consumer

satisfier; clinics may benefit

from technology,

personnel, and practice

management expertise

Capitated, risk-

adjusted payments

enable providers to

have low patient

panels, but revenue

may be susceptible to

changes to the MA

program’s risk

adjustment payment

methodology

Analytics platform and

additional care team

support may enable

PCPs to better

identify and manage

high-risk patients

Home-based model

enables providers to

address social

determinants of health

and reach homebound

patients while

preserving continuity

with a regular PCP



Next steps for building a primary care strategy


• Combating Physician Burnout

• Eight No-Regrets Investments for

Access and Population Health

• Advancing Your Approach to

Ambulatory Care Management

• 10 Imperatives for Primary Care

Today

Build closer integrations between

primary care groups and specialists

• Expand access to specialty care within

primary care clinics through rotating on-

site specialist models and telehealth

consultations.

• Secure PCP referrals by offering a

frictionless referral process, providing

timely access, and coordinating care with

PCPs throughout specialty episodes.

Diversify primary care network

with niche or concierge offerings,

when demand is sufficient

• Develop a diversified primary care

platform that appeals to distinct

customer segments, from healthy

millennials to high-needs seniors.

• Incorporate experience-enhancing

offerings in accordance with

consumer demand and local

competitor offerings.

Invest in support services to

enhance competitiveness of clinics

• Deploy a multidisciplinary care team,

including pharmacists, dieticians,

behavioral health specialists, and

health coaches to improve access,

quality, and coordination of care.

• Offer administrative services to clinics

that off-load tasks from primary care

staff, including technology for risk

management and revenue cycle

optimization.


• Creating a Primary Care Strategy

for Service Lines

• Oncology Referral Strategy

Playbook

• Maximizing Referral Integrity

• Guide to Profitable Colocation

• Medical Neighborhood Primer

• Consumer Preferences for a

Primary Care Clinic

• Assessing the Case for Concierge

Medicine

• Five Steps to Build the Advanced

Medical Home

• The Future of Primary Care



action steps and resources listed below can be used to help organizations set a winning primary

care strategy.

1 2 3


https://www.advisory.com/research/medical-group-strategy-council/white-papers/2016/combating-physician-burnout

https://www.advisory.com/research/medical-group-strategy-council/white-papers/2016/combating-physician-burnout

https://www.advisory.com/research/population-health-advisor/white-papers/2017/advancing-your-approach-ambulatory-care-management

https://www.advisory.com/research/medical-group-strategy-council/white-papers/2018/10-imperatives-for-primary-care-today

https://www.advisory.com/research/service-line-strategy-advisor/research-briefs/creating-a-primary-care-strategy-for-service-lines

https://www.advisory.com/research/service-line-strategy-advisor/research-reports/2018/oncology-referral-strategy-playbook

https://www.advisory.com/research/market-innovation-center/white-papers/maximizing-referral-integrity

https://www.advisory.com/research/service-line-strategy-advisor/research-briefs/2017/guide-to-profitable-co-location

https://www.advisory.com/research/population-health-advisor/white-papers/2015/medical-neighborhood-primer

https://www.advisory.com/research/market-innovation-center/research-briefs/2019/consumer-preferences-for-a-primary-care-clinic?WT.ac=GrayBox_MIC_ExRB_x_x_x_TGC_2020Jan30_Eloqua-RMKTG+Blog

https://www.advisory.com/research/medical-group-strategy-council/white-papers/2016/assessing-the-case-for-concierge-medicine

https://www.advisory.com/-/media/Advisory-com/Research/MGSC/White-papers/2014/8-No-Regrets-Investments-in-Population-Health_Advisory-Board.pdf

https://www.advisory.com/research/health-care-advisory-board/research-reports/2020/future-of-primary-care


Road map

3

Specialty care

Section



Dealing in specialists on principles of value-based care

Episode managers tackle conditions and procedures driving greatest spending

Introduction: specialty care

Hyper-specialized care models

Innovators are not just zeroing in on a

singular service line, but also forming

companies dedicated to a single

chronic condition or procedure that

drives a disproportionate amount of

spending. This allows them to adopt a

factory-focused, end-to-end care

model that is both efficient and

outcomes-oriented.

“Asset-lite” delivery networks

New entrants are able to offer low-cost

alternatives to hospital systems by

building from scratch and maximizing

use of digital and home-based care

modalities that don’t self-cannabilize

physical assets.

Wholesale partnerships with payers

Specialty groups are building sufficient

regional scale to enhance negotiating

leverage with payers. In some cases, they

are even offering cost savings guarantees

to promote adoption of payer policies

driving site of care shifts.

While primary care has been the focal point

for many value-based care initiatives,

approximately 93% of overall health care

spending can be attributed to specialty care.

The dollar opportunity associated with chronic

disease and procedural episodes has drawn

the interest of innovative digital health, ASC,

and physician-led companies that aim to

create and scale specialized care models. As

a result, these groups are accelerating shifts

in site of service away from higher-cost

hospital settings.

5 6Chronic condition

management (page 38)

Single specialty management

platforms (page 43)


SPOTLIGHT

Source: Bailit M et al., “Standardizing the Measurement of Commercial Health Plan Primary

Care Spending,” Milliman, 2017; Market Innovation Center interviews and analysis.

Mean primary care spending as a percentage

of total medical spending

2014; PPO members from 10 insurers

7%

93%

Primary care

Specialty care

Emerging trends in specialty care



Carving out chronic disease from traditional care ecosystem

Innovators develop low-cost digital and in-person solutions

Chronic condition management


Chronic condition management

DESCRIPTION

Programs designed to prevent the onset of chronic disease

and/or engage patients in long-term management to prevent

escalations of an existing disease, such as diabetes, pulmonary

disease, kidney disease, depression, or hypertension.

• Cricket Health

• Livongo Health

• Omada Health

• Glooko

• Propeller Health

• Virta Health

Current trends on emerging chronic

condition management solutions

Future predictions on the growth

potential for digitally-enabled solutions

• Lyra Health

• Hello Heart

• Vivante Health

• Ginger.io

• Somatus

43.2%

24.6% 20.9% 20.8% 18.2% 17.4%12.8% 11.8% 11.4% 10.6%

Highest utilizers of inpatient services by chronic condition

Percentage of inpatient volumes where condition is present; national all-payer estimate from

Advisory Board’s Chronic Conditions Inpatient Estimator

Hypertension Hyperlipidemia Diabetes Anemia Chronic

kidney

disease

Ischemic

heart

disease

Depression Heart

failure

COPD Atrial

fibrillation

Innovative players1

Market opportunities will expand beyond

self-insured employers

While many programs find early traction with

self-insured employers with less stringent

actuarial standards, fully-insured health plans,

brokers, and pharmacy benefit managers will

incorporate more digital therapeutics solutions

alongside existing products as ROI becomes

clearer; digital formularies and prescribing

platforms will promote utilization of programs.

Digitally-focused user experience

differentiates programs

Funding is not flowing to point solutions, but

rather to products that offer end-to-end

solutions that aggregate health data from

disparate sources, offer an intuitive technology

interface, and provide seamless access to the

care team when needed.

Risk sharing relationships with payers

encourage wide-scale adoption

As companies validate long-term clinical efficacy

and ROI of their models, an increasing number are

entering into outcomes-based payment

arrangements to accelerate adoption.

Locus of care management will exist

outside traditional delivery systems

For the highest-need patients, the majority of

patient interactions will likely occur virtually

with health coaches rather than physicians in

traditional office settings.

Personalized data insights activate patients

to self-manage conditions

AI-powered platforms offer a scalable way to

activate patients and drive behavior change by

using big data to deliver tailored guidance.

Users receive automated and personalized

nudges, resources, and educational content.

Digital therapeutics companies will expand

to new disease states

Today, programs for diabetes are most common,

but purchasers will pursue more comprehensive

solutions that address the needs of individuals

with multiple, comorbid conditions. Start-ups that

offer solutions for niche conditions or

comorbidities may be acquired by established

companies.




Cricket identifies early stages of disease and promotes home-based treatment

Cricket Health

Source: “HHS Launches President Trump’s ‘Advancing American Kidney Health’ Initiative,” HHS, July 10, 2019; “HHS To Transform Care Delivery for Patients with

Chronic Kidney Disease,” CMS Newsroom, July 10, 2019; Mishra K et al., “Machine Learning for Chronic Kidney Disease Detection & Risk Stratification,” Cricket Health,

2019; “Consortium Health Plans Names Cricket Health a Preferred Partner,” Cricket Health News, June 17, 2019; Market Innovation Center interviews and analysis.

Refocusing the kidney disease care model on prevention

Each year, patients with kidney disease account for approximately 20% of total Medicare spending. Of

the 125,000 Americans who begin dialysis each year to treat end-stage renal disease, one in five die

within the year. These poor outcomes are largely due to late identification. Approximately 90% of

patients with early stages of chronic kidney disease and 50% of patients with late stages are not

aware they have the disease.

Cricket Health is a provider and care extender founded in 2015 that aims to delay the progression of

disease and decrease costs associated with kidney care treatment.

Cricket HealthKidney care provider • San Francisco, California

CASEEXAMPLE

Screening algorithm generates

predicted glomerular filtration

rate value from claims data,

which is used to risk stratify

patients and identify individuals

at high-risk of undiagnosed

chronic kidney disease

Outreach sent to PCP or

specialists involved in

patients’ care; tests ordered

to confirm diagnosis,

including serum creatinine

and urinary albumin to

creatinine ratio

Patients with positive

diagnosis referred to Cricket

for disease management,

including education on

treatment options, 24/7 clinical

support, and home-based

dialysis services if needed

Cricket Health’s kidney care model

In 2019, Cricket partnered with Consortium Health Plans, a

collaboration of 21 Blue Cross Blue Shield plans

representing 25 million members, to be a preferred partner

for the Consortium’s national employer customers. Cricket

will take on financial accountability for health outcomes and

patient engagement.

In 2020, CMS1 will launch several new value-based

payment models for kidney care which would reward

providers like Cricket if they are able to improve transplant

rates and lower costs through greater use of home dialysis.

End-Stage Renal Disease Treatment

Choices Model

• Mandatory participation

• Adjusts payments based on home dialysis and

transplant rates

Kidney Care First and Comprehensive Kidney

Care Contracting Models

• Voluntary participation (four models)

• Nephrology practices or kidney contracting entities

receive fixed per-patient payments for managing

patients with late and end-stage kidney disease

Kidney care payment models launched by CMS

68%77%

28%

55%

Percentage of patientschoosing home as their

preferred dialysis modality

Percentage of patientsstarting dialysis outside of

the hospital

Cricket Benchmark

Cricket reports greater ability to shift dialysis

away from institutional settings2

1. Centers for Medicare & Medicaid Services.

2. Data reported by Cricket Health.



Programs integrate connected hardware, AI-powered software, and health coaches

Livongo

Source: Chu R, “Livongo Health: Revolutionizing Healthcare, 1 Patient At A Time,” Seeking Alpha, January 13, 2020; Whaley C, et al., “Reduced

medical spending associated with increased use of a remote diabetes management program and lower mean blood glucose values,” Journal of

Medical Economics, February 4, 2019; “Case study: Livongo demonstrates cost savings,” Livongo; Baum S, “Livongo playing a critical role in

helping employers disrupt healthcare,” MedCityNews, April 23, 2019; Market Innovation Center interviews and analysis.

1. Mean A1c reduced from 7.8% to 6.9%; Livongo reports

results for two of its self-insured employer populations.

Digital therapeutics emerge for chronic disease management

Livongo, founded in 2014, is an AI-enabled digital health company that offers chronic disease

management solutions for diabetes, hypertension, weight management, and behavioral health. In 2019,

Livongo went public and expanded its number of clients to 771, including 20% of Fortune 500 companies

and the federal government’s 5.3 million employees. Livongo also expanded into the Medicare Advantage

market with approval from CMS to be an official enrolled provider.

For a monthly subscription fee ($68 per-member-per-month for diabetes), Livongo helps patients manage

chronic conditions through 24/7 access to health coaches, personalized “health nudges” sent to users

(ex: reminders to take medication), and other benefits such as automated ordering of glucose test strips

and other supplies, if needed.

LivongoDigital health company with over 200,000 users • Mountain View, California

CASEEXAMPLE

Livongo’s digital chronic disease management solution

Data synced to Livongo’s app and

analyzed using AI platform

• Clinical data includes medical claims,

pharmacy claims, and data from connected

devices like glucose meters

• Lifestyle data includes self-reported diet and

exercise habits

$88Decrease in medical spending

PMPM (including a 24.6%

reduction in spending on office-

based services)

Over time, machine learning algorithms determine the messages, communication channels, and interventions that

result in changes to physiologic data. Livongo has validated their solution’s ability to improve health outcomes and

lower costs in over 30 peer-reviewed studies. Through a series of strategic partnerships, Livongo has positioned itself

as a comprehensive solution for users to manage their chronic conditions in a user-friendly, seamless manner.

11.5%Average reduction in HbA1c

levels for users of Livongo1

Personalized health nudges and coaching

prompt users to take action

• “Time to check your blood sugar.”

• “You are moving less, sleeping less, and not

interacting with people as much. These patterns

can indicate chronic pain and depression.”

• “Your blood pressure readings have been out of

range for the past three weeks. Would you like to

set up a coaching session to discuss?”

DATA SPOTLIGHT

Livongo partners with third parties to build a more comprehensive platform

Device manufacturers

Partners with Abbott and Dexcom to

integrate data from the companies’

continuous glucose monitors

Telehealth companies

Users can access physicians from

MDLive and Doctor on Demand

through the Livongo app

EHR and consumer

technology vendors

Integrates with Apple Watch, Alexa,

and EHR vendors to access and

track health data



Omada Health

Source: Polack, E, “Cigna Expands Personalized Diabetes Prevention Program in

Collaboration with Omada Health,” Cigna (Sept 18); Farr, C, “Health start-up Omada is

investing in virtual care so you can stop spending so much time at the doctor’s office,”

CNBC (June 26); Market Innovation Center interview and analysis

Payers adopt digital programs with outcomes guarantees

Omada Health was founded as a digital prevention platform for patients with diabetes. They have

since developed programs for hypertension, high cholesterol, and obesity. Like competitor Livongo,

Omada partners with risk-bearing entities and offers health coaching, support groups, and data

tracking services to participants. Omada has received over $200 million in funding to fuel its growth

and continues to demonstrate positive results from its programs through peer-reviewed studies.

The company is focused on creating close integrations with health plans as its primary growth lever.

It is paid through an outcomes-based pricing model meaning that total fees aren’t collected unless

program participants achieve positive outcomes such as hitting weight loss targets.

Omada HealthDigital health company with over 600 clients • San Francisco, California

CASEEXAMPLE

30% 16%Decrease in type

2 diabetes risk

Decrease in

stroke risk

13%Decrease in heart

disease risk

Payers contract

with Omada and

integrate access

to its services into

the health plan’s

mobile app

Participants receive

health monitoring

tools (ex: continuous

glucose monitor

device) and are

assigned dedicated

health coaches and

peer groups

Omada tracks health

data and provides

educational resources

such as nutritional,

stress management,

and time management

advice

Members can track

progress on health plan

app and receive

discounts and rewards

for healthy actions

Omada partners with health plans to engage members in chronic disease management

DATA SPOTLIGHT





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Digital

therapeutics

(ex: Livongo

Health and

Omada Health)

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Personalized nudges

and coaching engage

consumers to self-

manage their conditions

Effective use of AI and

health coaches

enhance cost-

effectiveness of digital

therapeutics

approaches relative to

in-person interventions

Market opportunity is

expanding as demand

increases from health

plans and employers; a

technology foundation

creates opportunities to

scale across markets

with relative ease

Cricket Health At-home care model

and support from health

navigators offers a

more attractive

alternative for kidney

care patients compared

to traveling to physical

locations for recurring

dialysis treatment

Proactive identification

of patients with kidney

disease enables care

team to engage

patients in ongoing

management before

condition worsens

Cost-effective means

to identify high-risk

patients; model relies

on ability to partner

with nephrologists and

referring PCPs

Partnering with

employers and health

plans to promote

growth, but the kidney

care market is currently

dominated by large

established competitors

Adoption of consumer

device technologies such

as continuous glucose

monitors and intuitive

mobile applications

enhance consumer

experience compared to

the status quo



“Platform companies” boost competitiveness of specialists

Single specialty management platforms

Source: “2018 Physician Practice Benchmark Survey,” American Medical

Association, 2018; Market Innovation Center interviews and analysis.

Single specialty management platforms

DESCRIPTION

A care and business model that focuses on only one specialty

rather than taking a one-size-fits-all approach. Physician or

ASC management companies often offer greater

administrative efficiencies and a more standardized approach

to practice management and care delivery compared to

independent practices and some hospital systems.

• OneOncology

• Advantia Health

• MUVE Health

• Maven Clinic

• Kindbody

• The US Oncology

Network

Current drivers of consolidation among

specialty physician groups

Future predictions on how specialized

companies will enhance market competition

70%Of physicians in single specialty

groups worked in practices with 10 or

fewer physicians in 2018

Innovative players1

Growth capital creates revenue opportunities

and alternative employment platforms

By partnering with private equity and investor-owned

firms, physician groups are able to access capital to

expand service offerings and recruit additional

physicians, while preserving independence from

hospital systems.

Platforms will develop advanced

capabilities beyond back-office functions

Groups will continue to pursue value-based

contracts with large purchasers and expand

availability of centralized, scalable service

offerings such as consumer-focused

technologies and standardized care pathways

to expand their cross-market appeal.

Specialty groups remain highly fragmented

While overall hospital employment of physicians

has never been higher, some specialties such as

orthopedics and gastroenterology remain largely

independent. Firms with substantial capital are

investing in physician practices due to their

relative stability during market downturns and

high revenue growth potential.

The shift of lucrative procedures to

outpatient settings will accelerate

Capital infusions enable organizations to build

new capacity and compete for a greater share

of hospital revenue. With greater scale, groups

may be able to partner with payers to promote

site of care shifts for high-cost, pre-scheduled

procedures (ex: knee arthroplasty).

Scale enhances relevance and influence

in a value-based market

In addition to administrative efficiencies gained

through centralization, large management

groups are better able to enter into value-

based contracting arrangements with payers—

on their terms.

Valuations will rise to new heights for an

expanded number of specialties

Private equity investors will focus on additional

specialties with high-revenue potential in

outpatient settings, but most will have a short-

term exit strategy (typically three to five years),

increasing purchase price for subsequent

buyers to 8x to 12x EBITDA2 for large practices.

DATA SPOTLIGHT

• U.S. Digestive Health

• Gastro Health

• United Digestive

• GI Alliance

• Rothman Orthopaedic

Institute


2. Earnings before interest, taxes, depreciation, and amortization.



Community-based providers join forces in response to cost, treatment complexity

OneOncology


Bringing a systems approach to oncology practices

OneOncology was founded in 2018 by three oncology practices representing over 225 oncology

providers: Tennessee Oncology, New York Cancer & Blood Specialists, and West Cancer Center.

The physician-led group was founded in response to pressing challenges placed on community-

based practices, including downward pricing pressure from value-based payment models, rising cost

and complexity of cancer treatments, and growth constraints from industry consolidation.

OneOncology offers practices a means to thrive in this challenging health care environment by

bringing the benefits typically found in large health systems to community-based, independent

physician practices.

OneOncologyOncology group • Nashville, Tennessee

CASEEXAMPLE

Economies of scale

• Cost efficiencies from centralization of

administrative functions including revenue

cycle and IT

• Improved buying power for supplies and

purchased services contracts

• More favorable value-based contract terms

• Expanded capacity for advanced, cutting-edge

treatments (ex: cellular therapies)

Economies of intellect

• Ability to share best practices around

operational efficiencies and patient

experience

• Development of standardized system-wide

performance measures

• Access to skills and expertise of individuals

with out-of-industry experience

• Shared resources for staying abreast of

new research and clinical trial opportunities

Benefits for oncology practices

OneOncology’s analytics, technology, and staff enable practices to move towards becoming

high-reliability organizations that deliver a more consistent and differentiated cancer patient

experience. Practices can benchmark their performance in key areas such as patient

engagement and leverage centralized staff with out-of-industry expertise to map patient

journeys and design solutions. This system approach ultimately aims to improve the

competitiveness of practices and keep cancer care within the community.



Advantia enables OB-GYN practices to keep pace with “femtech” start-ups

Advantia Health

Women’s health group enhances appeal to self-referrers

Advantia Health is a physician practice management group dedicated to women’s and maternal

health. The company’s approach is distinct in that it not only offers OB-GYN groups practice

management support to generate administrative efficiencies, but also invests in technological

tools and expanded clinic-based service offerings that create a differentiated experience for

women. Because the vast majority of consumers self-refer for OB-GYN services, innovative

companies have emerged to win preference, including Maven Clinic and Kindbody. By joining

Advantia, traditional practices can better compete with these new entrants by delivering a

positive experience.

Advantia HealthWomen’s health provider with 200+ physicians across the Mid-Atlantic and Midwest • Arlington, Virginia

CASEEXAMPLE

Consumer-focused investments to improve the women’s health experience

Technology tools

• Acquired the telehealth company, Pacify, to provide

unlimited, 24/7 video chat access to maternal and

pediatric physician extenders for services such as

lactation consultations

• Offers a secure messaging platform that allows

patients to text their physician, schedule

appointments, manage referrals, and refill

prescriptions

Co-located service offerings

• Building Women’s Health Hubs that offer

OB-GYN, mental health, primary care, and

ancillary services (ex: sonography, blood

work, pelvic floor physical therapy etc.)

• Expanding access to subspecialty care,

including gynecological oncology,

urogynecology, and pediatrics

Source: “Advantia Health Announces $45M Investment to Accelerate Expansion,”

Advantia Health, January 8, 2020; Market Innovation Center interviews and analysis.

Advantia not only commits capital to improving the competitiveness of its practices, but develops

centralized services that can move across markets. In 2019, the company acquired Heartland

Women’s Healthcare, an OB-GYN practice with 25 locations across Missouri and southern Illinois.

In early 2020, the company announced $45 million in additional funding to further grow its

services, acquire new practices, and recruit additional physicians to its platform.



MUVE’s niche focus enables shift of high-acuity joint procedures to ASC

MUVE Health

1. ASA is a classification system used as a perioperative tool to assess a patient’s risk of mortality and adverse outcomes.

2. Data represents all-time distribution of MUVE cases; in recent quarters, MUVE recorded 40% of its cases as ASA level 3.

Hyper-specialized ASC care model comes to orthopedics

MUVE Health has developed a hyper-specialized, ASC-based care model focused exclusively on total

joint replacements. By designing its facilities, staffing model, and clinical protocols around a narrow

set of procedures, the company unlocks more consistent and higher-quality outcomes, similar to

assembly lines for manufactured goods. An optimized care pathway enables the company to take on

more complex patients who would otherwise require surgery in an inpatient hospital setting.

MUVE HealthASC operator that expanded from 1 to 18 locations under development across 2019;

subsidiary of ValueHealth • Leawood, Kansas

CASEEXAMPLE

MUVE’s care model for joint replacement

• Nurse navigator

conducts interviews to

identify patients

eligible for its program

• Eligible patients and

their caregiver sign

compact agreeing to

adhere to recovery

program

Pre-operative

engagement

Standardized

procedural processes

Post-operative

recovery

365-day follow-up

• Staff follow standardized

clinical protocols related to:

Pain and comfort

management

Blood loss management

Blood clot prevention

Infection prevention

• Patient is discharged same-

day and ambulate to adjacent

“Stay Suites™” which offer a

four-star hotel experience

• Patient stays in the Stay

Suite™ for two nights and

receives physical therapy

and self-care readiness

education, free of charge

• Nurse navigator

speaks to patient 20

times, on average

• Utilizes in-house and

partner technologies

to track patient

recovery and care

plan adherence

MUVE estimates that 70% of total joint replacements performed in a hospital setting today are

suitable for MUVE’s ambulatory program. In fact, its patient selection criteria, protocol-driven

model of care, and patient engagement tactics are already enabling it to take on a greater share

of complex cases that would otherwise be performed in the hospital setting.

13%

59%

28%

ASA level 1 ASA level 2 ASA level 3

Distribution of MUVE procedures using ASA physical status classification1,2


More complex



MUVE offers 5x warranty to payers for complications and downstream costs

MUVE Health

1. Only one warranty has been triggered out of 748 cases recorded.

2. Actual savings vary by payer and region.

3. Registered nurse.

4. Benchmarks represent hospital performance, rather than ASC performance. MUVE has supplied

these benchmarks to Advisory Board only as a means for comparison. Benchmarks were

gathered by MUVE from a number of peer-reviewed studies and from publically reported data.

Guaranteeing positive outcomes with a warranty

MUVE enters into prospective, bundled-contracting agreements with payer partners and serves as the

adjudicator of the bundle. The company is so confident in its program that it is willing to assume risk

for any avoidable clinical complications and downstream costs associated with joint episodes for 90

days. It has already negotiated national and regional agreements with commercial payers and

employers to credit the costs of any complications associated with joint procedure episodes such as

falls with harm, readmissions, pneumonia, blood clots, and urgent care center or ED visits.

5xCredit given for costs associated

with adverse outcomes

<0.1%Of surgeries have resulted

in a warranty trigger1

30%Cost savings delivered to

payers per surgery compared

to hospital-based procedures2

MUVE’s warranty program delivers savings to payers

Quality metric MUVE performance Industry benchmark4

Surgical site infection requiring re-operation 0.41% 1.7%

Hospital readmission for hip replacement 1.7% 7%

Hospital readmission for knee replacement 1.9% 9%

Distance walked before discharge 2,798 feet <150 feet

Net promoter score 98 n/a

MUVE performance metrics compared to industry benchmarks


DATA SPOTLIGHT

MUVE collects hundreds of data points to perform under the

clinical complications warranty. Its dashboard includes real-

time data feeds on key clinical and operational indicators

that help clinicians and administrators make programmatic

improvements. In fact, data is collected from patients for a

full year after surgery from RN3 outcomes Navigators.

A sample of MUVE’s internal performance data (shown

below), illustrates MUVE’s performance against industry

standards on several leading quality indicators. MUVE

achieves these quality outcomes all while discharging

patients same-day. Patients spend two nights in its adjacent

Stay Suites™ to receive self-care readiness education,

rehabilitation, and care planning support.

Image credit: MUVE Health

Stay Suites™ gathering area





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Single specialty

groups (ex:

Advantia Health,

OneOncology,

etc.)

ASC

management

groups (ex:

MUVE Health)

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Practices are better able

to acquire and recruit

new providers, while also

investing in intellectual

property that can be

shared across the

network in disconnected

geographies

Centralization of certain

functions such as supplies

and purchased services

leads to substantial

reductions in cost

Same-day discharge,

navigation support, and

consumer-oriented

service offerings (ex:

MUVE’s Stay Suites™)

provide a superior

experience than the

typical hospital

Practices may have

an enhanced ability

to invest in digital

technologies,

colocate services,

and share consumer

experience best

practices compared

to being independent

Outcomes improvements

may be achievable over

time for groups that

develop and standardize

best practice clinical

protocols

Hyper-specialized

approach creates

significant operating

efficiencies that reduce

costs; models still rely

on ability to recruit

high-performing

surgeons

Partnerships with

existing physician

groups, hospitals, and

health systems may

enhance ability to

enter into new

markets where there

are capacity needs

Standardization of care

protocols and niche

focus may lead to more

consistent patient

outcomes compared to

models taking a one-

size-fits-all approach



Next steps for building a specialty care strategy


• 2018 Outpatient Shift Market

Update

• The New Rules of Ambulatory

Surgery Competition

• Build a Sustainable Outpatient

Joint Replacement Program

Design specialty care access

points to attract physicians

and self-referring consumers

• Appeal directly to self-referrers by

highlighting specialization,

communicating in patient-friendly

terms, facilitating word-of-mouth

marketing, competing on price,

and expediting access to select

services.

• Secure referral relationships by

offloading administrative functions

from physicians, marketing service

quality, and meeting market

access standards.

Deploy consistent care standards

for complex, high-cost episodes

• Establish a quality improvement

infrastructure that minimizes care

variation and creates demonstrable

performance improvements compared

to competitors.

• Develop scalable chronic disease

management programs using digital

consumer technologies, analytics,

and a cost-effective staffing model.

Develop a principled approach

to navigating the outpatient shift

• Continuously monitor outpatient

market share and payer policies to

ensure outpatient capacity is

sufficient to accommodate shifting

demand.

• Consider joint venture partnerships

with ASC management companies

and proceduralists to build new

capacity when necessary.

• Consider changes to contractual

terms and internal operational

workflows to preserve cost

competitiveness with alternative

care sites.


• The Retail Service Line

• Specialist Consumer Choice Survey

• Surgical Care Consumer Choice

Survey

• Creating a Primary Care Strategy

for Service Lines

• How to Build ASC Referrals

• The System Blueprint for Clinical

Standardization

• How to Scale Chronic Disease

Management Programs

• A Digital Strategy for Patient

Engagement and Chronic

Disease Management



action steps and resources listed below can be used to help organizations set a winning specialty

care strategy.

1 2 3


https://www.advisory.com/research/service-line-strategy-advisor/events/webconferences/2018/outpatient-shift-2018-market-update/ondemand?WT.ac=Inline_SLSA_Webcon+Post_x_x_x_TGC_2019Aug06_Eloqua-RMKTG+Blog

https://www.advisory.com/research/health-care-advisory-board/research-reports/2019/the-new-rules-of-ambulatory-competition?WT.ac=Inline_HCAB_ResRep_x_x_x_TGC_2019Jul25_Eloqua-RMKTG+Blog

https://www.advisory.com/research/service-line-strategy-advisor/research-reports/2018/build-a-sustainable-outpatient-joint-replacement-program

https://www.advisory.com/solutions/planning-2020/research-briefings/2017/retail-service-line

https://www.advisory.com/research/market-innovation-center/studies/2015/what-do-consumers-want-from-specialty-care

https://www.advisory.com/research/market-innovation-center/studies/2016/get-the-surgical-care-consumer-choice-survey-results

https://www.advisory.com/research/service-line-strategy-advisor/research-briefs/creating-a-primary-care-strategy-for-service-lines

https://www.advisory.com/research/service-line-strategy-advisor/research-briefs/how-to-build-asc-referrals

https://www.advisory.com/research/health-care-advisory-board/white-papers/2016/the-system-blueprint-for-clinical-standardization

https://www.advisory.com/research/population-health-advisor/research-briefings/2019/chronic-disease-management-programs?WT.ac=Inline_PHA_ResRep_x_x_x_CTC_2019Dec04_Eloqua-RMKTG+Blog

https://www.advisory.com/research/health-care-it-advisor/research-notes/2019/a-digital-strategy-for-patient-engagement-and-chronic-disease-management


Road map

4

Payer networks

Section



Network assemblers zero in on cost and quality variation

Introduction: payer networks

The coming era of radical network management

Health plans have always struggled to

perfect management of its provider

network in ways that balance access to

care with cost of care. On the one hand, a

broad network is needed to appeal to end

users’ desire for choice. On the other

hand, broad networks create variation in

performance. Efforts to promote consumer

shopping through high deductibles and

greater cost-sharing have largely been

ineffective. Health plans and employers

are now taking aim at variation in new

ways to root out avoidable spending.

Sophisticated performance analytics

Powered by big data and analytics

algorithms, network managers are gaining a

more granular, real-time view of provider

performance and putting that information in

the hands of referring physicians and

consumers to influence site of care

decisions.

Physician-level steerage

As provider groups merge and

consolidate payer contracts,

network managers are responding

by steering volumes to individual

high-performing physicians, rather

than whole provider groups.

Alternatives to high deductibles

Activist self-funded employers and

health plans are launching zero-

deductible, co-pay-only plans that

achieve affordability by taking aim at

the variability in provider prices.

Variation in risk-adjusted physician cost for back surgery

All non-outlier episodes of joint degeneration of the back with

surgery for one commercial payer in the Southeast; Optum

Advisory Services-Symmetry Advanced Analytics

n=123 physicians for 1278 surgeries

Average

episodic

cost

$0

$20

$40

$60

$80

$100

$120

$140

$160

Individual physicians

Median:

$16,000

Min:

$2,600

Max:

$165,000

7 8Centers of excellence

networks (page 52)

Health plan network

innovators (page 59)


SPOTLIGHT

Source: Optum Advisory Services-Symmetry Advanced

Analytics; Market Innovation Center interviews and analysis.

Emerging trends in payer networks



Employers double-down on COE programs

Third-party aggregators assemble high-performance provider networks

Centers of excellence networks

Source: “Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000

per Employee,” National Business Group on Health, August 7, 2018; Market Innovation Center interviews and analysis.

Centers of excellence (COE) networks

DESCRIPTION

Hyper-narrow networks consisting of providers that specialize

in certain procedures. COE programs incentivize consumers to

travel to preferred providers by lowering out-of-pocket

obligations and by offering concierge navigation services.

• Carrum Health

• Covera Health

• Embold Health

• Bridge Health

• Remedy Partners

Current status of COE programs Future predictions on COE program growth

Innovative players1

COE programs carve out highest-expense

services from broad network plan designs

Unlike traditional narrow networks, which are

frustrating for consumers, COE programs preserve

choice for the vast majority of services, while allowing

payers to drive volume to high-value providers for the

highest-cost procedures, such as non-emergent

transplant and musculoskeletal procedures.

Third-party network aggregators will enable

smaller employers to launch COE programs

Today, only large employers have the

sophistication and leverage to enter into direct

contracts with providers, but emerging third-

party purchasing coalitions offer smaller

employers a near turnkey opportunity to launch

their own COE programs.

• Edison Healthcare

• Surgery+

• CareChex

• Pacific Business

Group on Health

Positive brand reputation and concierge

navigation required for wider consumer adoption

Despite financial incentives, COE programs often fail

to influence consumer site of care decisions without

the reinforcement (or perception) of clinical superiority

at COE sites and a VIP travel experience.

Network aggregators will compete for

capacity of high-performing physicians

Because COE networks direct patients to

individual physicians rather than health

systems, demand for high performers may

extend wait times to unreasonable levels and

partnership criteria may become less

stringent as a result.

27%Of large employers with existing COE programs

will cover additional procedures in 2020

DATA SPOTLIGHT

Specialized performance analytics will

emerge to inform COE network formation

Today, network aggregators employ variable

and often imperfect methodologies to measure

provider performance, but companies dedicated

to quality analytics will emerge to offer more

accurate risk adjustment methodologies and

data on total episodic costs.

Large, self-insured employers expand COE

program scope and financial incentives

While COE programs have existed for some time,

activist employers are expanding the number of

procedures they cover through such programs

and in some cases, requiring use of COE

providers to receive coverage.

COE networks and/or quality analytics


COE stakeholders profiled in this report

• Network assemblers: create custom provider networks

• Data analytics companies: analyze cost and quality to inform

selection of preferred providers

• Employers: plan sponsor that offers COE programs to its

employees and pays claims



Carrum identifies surgeons meeting price and quality performance criteria

Carrum Health

1. Compared to the national average.

Hyper-narrow network lowers surgery spend

Founded in 2014, Carrum Health offers self-insured employers a platform for routing patients to low-

cost, high-quality surgeons in its custom-built COE network. Carrum negotiates discounted bundled

rates with providers covering the surgical procedure in addition to pre- and post-surgical care costs

associated with the episode. In exchange, providers are promised incremental volume and

prospective payment for a select set of non-emergent procedures.

Carrum HealthCenter of excellence network • San Francisco, California

CASEEXAMPLE

Fewer complications

57%Fewer readmissions

45%Avoided surgeries

25%

Carrum Health’s surgeons improve outcomes and reduce costs for employers1


DATA SPOTLIGHT

Willingness to accept discounted contractual rates

Preferred providers typically accept bundled rates that are 35% lower than the

rate negotiated by an employer’s plan administrator.

Geographic proximity to employer clients

Unlike some other network aggregators that require patients to fly to COE

locations, Carrum looks to partner with providers that are within a

reasonable driving distance of its employer clients’ employee populations.

Individual performance on quality indicators

Rather than just looking at aggregate health system performance, Carrum uses

analytics and public and private data sources to identify individual surgeons

meeting quality performance thresholds.

Carrum’s COE surgeons

Carrum Health’s network assembly process

All surgeons

in a region

Carrum has invested considerable time and resources in ensuring the patient experience is as smooth

as possible to encourage consumer utilization of COE providers. The company offers a care concierge

to help consumers understand their options and assist with navigation. It has also invested in

technology that helps to identify surgical candidates early on in the patient’s journey. When the time

comes to select a surgeon, consumers can access quality data via a mobile application that provides

data in a user-friendly, self-service manner.



Covera identifies high-performing radiologists to reduce misdiagnoses

Covera Health

Source: Galewitz, P, “Walmart Charts New Course By Steering Workers to High-Quality Imaging

Centers,” Kaiser Health News, May 15, 2019; “The Prevalence and impact of medical misdiagnosis

in radiology and beyond,” Covera Health, 2019; Market Innovation Center interviews and analysis.

Multidimensional quality analytics powers steerage strategy

Covera Health is a data analytics company that creates high-performance provider programs specifically for

radiology. While many assume that imaging is a commodity health care service, Covera has documented

wide variation in the performance of radiologists which leads to misdiagnoses, unnecessary downstream

utilization, and higher costs. The company enters into relationships with employers and health plans to

develop imaging centers of excellence for CT, MRI, women’s imaging, and nuclear medicine diagnostic

tests. Its first customer, Walmart, now provides financial incentives to its 1.1 million employees to use

providers in the Covera imaging program.

Covera HealthImaging clinical quality analytics company • New York City, New York

CASEEXAMPLE

Covera’s approach to building imaging COE programs

Providers share

data with Covera

Providers give Covera

access to de-identified

radiology images and

EHR data that are

reviewed on a recurring

basis to assess quality

performance (under a

legal data-sharing

framework).

Covera assesses quality

using several layers of data

• Practice characteristics such as

equipment quality

• Physician training, including

sub-specialization, scanning

protocols, and historical read

volume

• Peer review and proprietary AI-

based assessment of imaging

cases determine diagnostic

accuracy and significance of

errors

Providers meeting quality standards

included in COE program

Patients are incentivized to use preferred

providers best suited to diagnose their

condition. Outreach from utilization

management personnel and financial

incentives from employers promote

compliance.

All providers submitting data

receive performance feedback

Covera provides clinical performance

scorecards and ongoing feedback to

enable practice-driven improvements in

radiologist and equipment performance that

could enable future inclusion in its network.

As of 2020, Covera has preferred providers covering approximately 90% of the largest 100 metro areas in the

U.S. It differentiates itself from other COE network assemblers by focusing on radiology and prioritizing quality

over price in its performance assessments (price negotiations remain a responsibility of the plan sponsor).

Other factors such as geographic proximity to the patient and inclusion in the plan administrator’s network also

contribute to the matching process. In the future, Covera plans to expand its AI-enabled quality assessments

and further demonstrate how its program delivers downstream savings to its payer clients.



Walmart expands number of programs and mandates participation for coverage

Large self-insured employers develop mature COE strategies

As the largest employer both in the U.S. and in 22 states, Walmart is one of the largest purchasers

of health care in many local markets across the country. In 2013, the company launched its COE

program to incentivize its employees to use a select number of high-performing facilities for

complex, costly procedures. Walmart has recorded positive outcomes and cost savings, prompting

it to expand the number of procedures covered under COE programs and adopt greater financial

consequences for non-compliance. Employees will now receive no coverage for select procedures,

such as spine procedures, for care outside the COE network.

WalmartRetail corporation with 1.5M employees • Bentonville, Arkansas

CASEEXAMPLE


COE programNumber of COE

providers (2019)

COE network

coverage

In-network

coverage

Out-of-

network

coverage

Heart surgery (cardiac bypass and valve

replacements)3 locations

100% (no

deductible)

75% (after

deductible)

50% (after

deductible)

Breast, lung, blood, prostate, and

colorectal cancer medical record review

and onsite evaluation when recommended

3 locations100% (no

deductible)

75% (after

deductible)

50% (after

deductible)

Outpatient kidney dialysis or ESRD

medical record review

Newly announced

in 2020

100% (no

deductible)

75% (after

deductible)

50% (after

deductible)

Hip and knee replacement12 locations

100% (no

deductible)

50% (after

deductible)

50% (after

deductible)

Spine (spinal fusions and removal of spinal

discs)8 locations

100% (no

deductible)No coverage No coverage

Organ and tissue transplants (cornea and

intestinal transplant)3 locations

100% (no


Weight loss surgery (gastric bypass and

gastric sleeve)3 locations

75% (after


Walmart’s COE benefit coverage (excluding health savings account plans)

2013 2019 2020

Adjusts employee

cost-sharing to 50%

for select procedures

to promote use of

COE locations

Provides zero

coverage for spine,

transplant, and

bariatric procedures

at non-COE locations

Begins offering zero

cost-sharing for use of

a COE for heart, hip

and knee, and spinal

procedures

2017

Pilots programs to

steer employees

towards non-surgical

care, including

imaging and

physicians across

eight specialties

Evolution of Walmart’s COE strategy



For select services, surgery avoidance the primary avenue for savings

Patients routed to COE locations generate cost savings

While Walmart is the plan sponsor, there are several organizations working behind the scenes

to design and operate its COE program. An employer consortium called Pacific Business

Group on Health designs the COE programs and negotiates contracts with provider

organizations. Additionally, a third-party administrator is responsible for prior authorizations and

claims processing.

When a Walmart employee attempts to exercise their benefit, they will be contacted by

utilization management personnel to educate the patient on their options and route patients to

COE locations.

Source: Evans M, “Walmart, other employers get choosier about workers’ doctors,” The Wall Street Journal, April 4, 2019; Galewitz P, “Walmart charts

new course by steering workers to high-quality imaging centers,” Kaiser Health News, May 15, 2019; Market Innovation Center interviews and analysis.

Physician recommends surgery

• Patient visits local specialist

• Specialist recommends and

schedules patient for surgery at a

non-COE location

Plan administrator intervenes

• Prior authorization request is

sent, notifying plan administrator

• Plan administrator contacts

patient and explains travel

surgery benefit and additional

cost obligations for using a non-

COE location

Patient routed to COE

• Patient is connected to a COE

provider for a surgery consult

• Surgery scheduled when

recommended by COE provider

Process for routing patients to COE providers

Savings come from surgery avoidance, rather than price, for spine procedures

Have

surgery

Employees with COE consult

after recommended for surgery

Walmart payments

$32K $29K

COE location Non-COE location

Avoid

surgery 46% 54%

In addition to lower out-of-pocket cost sharing for care received at COE locations, Walmart covers

the full cost of travel, lodging, and meals for the employee and a caregiver when travel is required.

Even with this added expense, Walmart achieves overall savings on health benefit expenses. For

some procedures like spine, Walmart attributes the majority of savings to surgery avoidance and

reduced repeat procedures—rather than contractual price discounts.



Walmart incentivizes use of high-performing primary and specialty care physicians

Walmart

Test program expands COE strategy to non-surgical care

For the 2020 benefit year, Walmart is piloting a more expansive COE program in Orlando/Tampa,

Dallas/Fort Worth, and Northwest Arkansas that incentivizes employees to utilize high-performing

providers for non-surgical care, including diagnostic tests and physician office visits. Its Featured

Providers program uses data from Embold Health to identify high-performing primary care, cardiology,

gastroenterology, endocrinology, obstetrics, oncology, orthopedics, and pulmonology specialists.

Embold HealthData analytics company • Nashville, Tennessee

CASEEXAMPLE

Embold analyzes data from public sources and Blue Health Intelligence—a vendor with claims data from

over 200 million Americans—to identify high-quality physicians within a market. The physicians are

evaluated based on appropriateness (ex: medical necessity), effectiveness (ex: adherence to latest

scientific guidelines, patient outcomes), and cost of care.

Embold evaluates physician-

level cost and quality

performance in a market

Example evaluation criteria:

• C-section rate for low-risk

pregnancy

• Use of knee arthroscopy

within the first year of an

arthritis diagnosis

Subset of featured

providers are identified

• List is updated quarterly to

give physicians an

opportunity to improve

performance and move into

featured provider group

• Featured providers list is

loaded into employee-facing

navigational tool

Employees’ out-of-pocket

obligation is determined by

selection of physician

Coverage for specialist visits in

test markets:

• Featured provider: 100%

covered after $75 copay

• Non-featured provider: 50%

covered after deductible

• Out-of-network provider: no

coverage


Walmart’s Featured Providers program





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Third-party

COE networks

(ex: Carrum

Health)

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Quality

analytics (ex:

Covera Health)

Steerage to high-

performing providers

may reduce

misdiagnoses and

unnecessary utilization

Offers a cost-

effective means to

evaluate quality

The self-insured

employer market is

growing, creating

additional market

opportunities;

technology-based

model can be easily

scaled across markets,

but still requires

partnerships with

providers already

operating in the market

Despite quality-oriented

benefits, patients will

likely have additional

travel burdens and

disruption to physician

relationships

Model directs patients to

higher-quality surgeons,

leading to demonstrable

outcomes improvements

Ability to partner with

health plans, employers,

and providers will

determine growth potential

Cost-effective model

despite additional

costs associated with

travel and lodging

While navigators and

self-service mobile apps

facilitate a more

seamless patient

experience, there may be

additional travel burden

for the patient and

unwelcome disruption to

existing physician

relationships



Health plans deploy non-traditional steerage strategies

Consumer- and physician-directed alternatives to high-deductibles and risk models

Health plan network innovators

Source: Rae, Matthew et al., “Deductible Relief Day”, Kaiser Family

Foundation, May 2019; Market Innovation Center interviews and analysis.

Health plan network innovators

DESCRIPTION

Health plan start-ups that are using nontraditional

strategies to steer members to preferred providers and

generate cost savings.

• Centivo

• Bind

• Oscar Health

• Alignment Healthcare

• Bright Health

Current status of health plan strategies

to steer patients to high-value providers

Future predictions on steerage strategies

deployed more widely by innovators

Feb 28Mar 18

Apr 9Apr 30

May 14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

“Deductible relief day” trends later in the year as deductibles increase

Day of the year when average health spending for large group

members exceeds the average deductible in that year

• Collective Health

• Clover Health

• Devoted Health

• Zest Health

• Imagine Health

Innovative players1

Steerage strategies used by incumbents have

largely failed—start-ups are looking beyond

Incumbent health plans have shifted financial

responsibility to consumers and physicians to

promote value-oriented service utilization, but

these initiatives have failed to substantially

promote shopping or influence referral decisions—

startups are adopting a more activist network

management approach.

Competition for control of the “front door”

to the delivery system will intensify

Increasing competition for a limited supply of

high-performing PCPs will prompt more

drastic measures to guarantee network

participation, including acquisitions, joint

ventures, higher fee schedule rates, and

investments in provider training and recruiting.

Payers attempt to engage consumers

through digital platforms

To engage consumers upstream in the health

care journey, payers have made significant

investments in transparency tools, digital

wellness programs, and integrated telehealth

offerings, but many struggle to drive adoption.

Data analytics platforms will drive

informed decisions at the point of care

Activist network managers will develop

analytics platforms and deploy navigational

resources to provide relevant and accurate

insights to PCPs and consumers regarding

appropriate preventive health practices and

highest-value specialists for downstream care.

Plans will become more customizable and

incorporate dynamic pricing

Network innovators will offer products to

employers that create tiered-coverage models

and offer real-time adjustments to price based

on the value of the service, site of care, and

choice of physician.

Health plans diversity approach to reduce

spending

Rising deductibles have not promoted meaningful

consumer shopping. Health plans are now

pursuing alternatives to high-deductibles to

manage costs, including co-pay only plans, à la

carte product offerings, and tiered networks.




Centivo offers data insights and incentives to make appropriate referrals

Centivo

PCPs empowered to manage specialty costs

Centivo is a start-up health plan administrator focused on self-insured employers that has raised $34

million in series A funding. Their model relies on creating partnerships with high-performing PCPs who are

responsible for coordinating care for members. Unlike a traditional primary care gatekeeper model,

members still have access to a broad network of providers and can self-refer, but they will pay more for

doing so. When members coordinate their care with a Centivo Select primary care team, their out-of-

pocket obligation consists of a small co-pay, rather than a deductible or coinsurance payment.

CentivoHealth insurance start-up • New York City, New York

CASEEXAMPLE

Full network

• Rents broad network from

traditional health plan

• Uses reference-based

pricing for care at non-

preferred sites

Centivo Select providers

• Identify, reward, and support high-value primary

care practices to promote care coordination

• Pay a per-member-per-month amount to PCPs for

care coordination and access

• Provide actionable incentives for appropriate

referrals and tailored referral recommendations for

different patient demographics

Less expensive than a

comparable plan (estimate)

10-20%

Centivo’s network structure

Percentage of members who

have chosen a PCP through

Centivo’s app or concierge

92%

Source: Livingston, Shelby, “Some startup insurers are ditching the deductible”, Modern

Healthcare, September 2018; Market Innovation Center interviews and analysis.

Centivo’s partnership strategy is unique in that it offers

personalized referral recommendations to PCPs and

incorporates the appropriateness of specialist referrals in

incentive calculations. Centivo offers PCPs a data analytics tool

to help inform data-driven decisions at the point of care. It

determines the most appropriate specialist based on factors

that include: cost per episode, patient satisfaction, provider

availability, rates of negative health outcomes, and patterns of

high-value care.

It’s primary care-centric model is complemented by a modern

member-facing technology experience and a concierge

navigation team. These resources help improve the member

experience and activate consumers in their care.

DATA SPOTLIGHT



Bind unbundles insurance, requires consumers to pay extra for non-core services

Bind

1. UnitedHealthcare has an investment relationship with Bind. Advisory Board is a subsidiary of UnitedHealth Group, the parent

company of UnitedHealthcare. All Advisory Board research, expert perspectives, and recommendations remain independent.

Giving consumers responsibility and agency to shop

Bind is a health insurance start-up that offers “on-demand” health insurance to self-insured employers.

Unlike traditional plans, Bind’s product covers a core set of services that it deems to be high-value,

essential health services and allows members to purchase any other services not covered under its core

offering throughout the year as needed.

Bind1

Health insurance start-up • Minneapolis, Minnesota

CASEEXAMPLE

Bind’s portal: comparison of

choices for maternity delivery


• Preventive care

• Primary and

specialty care

• Urgent, emergency,

hospital care

• Planned procedures not covered

under core insurance

• Treatments with low efficacy and

wide variation in prices for the same

quality of care

Core coverage

Add-in coverage

Bind’s health insurance coverage model

DATA SPOTLIGHT

86%Of consumers choose

lowest cost provider when

selecting add-in coverage

Copays range from $15–$500 Additional copay, premium contribution

Plans are simplified to only consist of premiums and co-pays—rather

than deductibles and coinsurance—which appeals to those that value

upfront, cost certainty. Co-pays for add-on coverage are dynamically

adjusted based on several factors, including a provider’s historical

costs and outcomes performance (ex: complication rates), a

member’s site-of-care preference, and efficacy of treatments.

Bind’s model relies on the ability to train members to use the Bind

portal as their go-to resource for navigating care options before they

receive treatment. The portal enables members to find in-network

providers, compare costs, and understand their obligations upfront.

Approximately three quarters of members have an account on Bind’s

portal, which has enabled Bind to effectively steer members toward

the highest-value providers when care is needed.

Savings for employers

compared to traditional self-

insured products

10%–15%

• Chronic care

• Pharmacy needs

• Virtual visits (for $0

out-of-pocket)

Image credit: Bind





Differentiated

consumer experience

Attempts to improve

clinical outcomes

Sustainable

operating model

Scalable

business model

Centivo

Bind

Element is

absent

Element is

minimally present

Element is

moderately present

Element is

strongly present



LEGEND

Data insights from

payer may enable

PCPs to better identify

high-performing

specialists

Ability to generate

cost savings relies on

ability to partner with

high-performing PCPs

Employer market is

highly competitive, but

renting broad

networks from existing

plans offers ability to

enter into new

markets more freely

Ability to lower costs

depends on consumer

engagement with its

technology platform

and existence of

lower-priced sites of

care in the market

Employer market is

highly competitive, but

renting network from

UnitedHealthCare

offers ability to enter

into new markets

more freely

Primary care

gatekeeper approach

may only appeal to a

subsegment of

consumers that are

willing to exchange

choice for affordability

Dynamic pricing

structure may

encourage use of

higher-value providers

and services

Upfront price

transparency, free

access to virtual

providers, and access

to a broad network

enhances consumer

appeal compared to

traditional plans



Next steps for building a payer networks strategy


• Responding to Imaging

Steerage

• How to Grow Market Share with

Price Transparency

• Introducing New Pricing Models

to Attract Patients

• The Consumer Relationship

Platform

Formalize administrative

infrastructure for direct contracting

• Dedicate staff time and resources to

negotiations with employers and

network aggregators when

incremental volume is sufficient to

justify management burden.

• Design programs that are easy to

administer, customized to employer

needs, and produce demonstrable

cost and quality results.

Improve reliability and efficiency

of procedural episodes to become

purchasers’ network of choice

• Establish best-in-class acute care

destination centers that balance

regional accessibility with cost-

effective service distribution.

• Develop protocols to ensure care is

delivered in the most appropriate

location based on patient need.

• Build cost-discipline into

organizational culture and

operations, rather than relying on

one-off cost reduction initiatives.

Counteract steerage by

appealing directly to

consumers and physicians for

shoppable procedures

• Make quality metrics and price

estimates available and

meaningful to patients.

• Invest in navigational resources

to minimize leakage throughout

the episode of care.


• Developing Next-Generation

Employer Partnerships

• Occupational Health and Beyond

• 10 Keys to Risk-Based Contracting

with Employer Partners

• Strategic Employer Partnerships for

Cancer Care

• Guides for Service Line

Rationalization

• The Integrated Care Advantage

• Toward True Sustainability

• The New Cost Mandate



action steps and resources listed below can be used to help organizations set a winning payer

networks strategy.

1 2 3


https://www.advisory.com/research/imaging-performance-partnership/resources/2019/responding-to-imaging-steerage

https://www.advisory.com/research/market-innovation-center/studies/2014/how-to-grow-market-share-with-price-transparency

https://www.advisory.com/research/market-innovation-center/studies/2015/introducing-new-pricing-models-to-attract-patients

https://www.advisory.com/research/health-care-advisory-board/studies/2017/the-consumer-relationship-platform

https://www.advisory.com/research/market-innovation-center/studies/2012/developing-next-generation-employer-partnerships

https://www.advisory.com/research/market-innovation-center/resources/2017/occupational-health-and-beyond

https://www.advisory.com/research/market-innovation-center/studies/2014/10-keys-to-risk-based-contracting-with-employer-partners

https://www.advisory.com/research/oncology-roundtable/studies/2019/strategic-employer-partnerships-for-cancer-care

https://www.advisory.com/research/service-line-strategy-advisor/white-papers/2016/guides-for-service-line-rationalization

https://www.advisory.com/research/market-innovation-center/studies/2018/vertical-integration-preparing-for-new-competition

https://www.advisory.com/research/health-care-advisory-board/research-reports/2018/toward-true-sustainability?WT.ac=Inline_HCAB_ResRep_x_x_x_ATH_2019Jul03_Eloqua-RMKTG+Blog

https://www.advisory.com/research/health-care-advisory-board/research-reports/2018/the-new-cost-mandate?WT.ac=Inline_HCAB_ResRep_x_x_x_TB_2018Nov12_Eloqua-RMKTG+Blog


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Market Innovation Center

Project DirectorColin Gelbaugh

[email protected]

Research TeamAvery Morrison

Program LeadershipAnna Yakovenko

Alicia Daugherty

Shay Pratt


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Documents

Innovative Players Shaping Care Delivery Competition · 2020-05-12 · Innovative players1 • K Health • OnMed • Bright.md • Zipnosis • Eden Health • Babylon Health Advancements