Comprehensive Care Models
Following decades of reproach on the US health system’s persistently flailing return on investment, a new wave of startups has stepped back and reassessed the model driving care delivery. Evolving from a long history of value-based care initiatives—from HMOs, to ACOs, to CMMI’s recent Making Care Primary Model—these companies have forged a new, but unsurprising, space within healthcare: the comprehensive care model. Responding to the same reactive, fragmented healthcare system bridled by fee-for-service (FFS) payment structures, these companies design independent care models that improve patient outcomes while lowering costs, thereby holding their providers and systems accountable for driving value. Reimagining how primary and specialty care is delivered and, eventually, paid for, these companies aspire to drive value-based care from the outside-in.
By taking ownership of the entire care delivery system within their scope of practice—from the care team to the (digital) clinical infrastructure—these comprehensive care models serve as incubators for value-based care hypotheses. Promising to align incentives across patients, providers, and payers, these companies are often guided by three intertwining principles: holistic, preventative, and integrated care. Holistic care addresses the whole patient, rather than a condition in isolation, while preventative care aims to intercept, and even avoid, health escalations. Lastly, integrated care emphasizes seamless interaction with existing care delivery sites.
At a high-level, primary care models function as digital front doors to the health system, leveraging wellness-oriented programs and care coordination services to proactively engage patients and guide them to specialized resources as needed. Similarly, specialty care models hope to reduce the health and financial burden of highly prevalent chronic conditions by engaging patients with frequent touchpoints and personalized programs, while leveraging non-pharmaceutical interventions and lower-cost personnel when possible. Taken altogether, these companies continue to test the thesis that providing clear, consistent, and even preemptive support to patients will improve outcomes while simultaneously lowering costs.
Ignited by the shift towards virtual care, the past five years have witnessed rapid development in the comprehensive care model space. Recently, big ticket acquisitions and late-stage fundings—from Oak Street’s $10.6B acquisition to CityBlock Health’s $400M round—have fueled market growth. Whether measured by headlines or capital investment, widespread interest in these comprehensive care models seems to evidence society’s thirst for disruption of what many view to be a stagnated and inefficient healthcare system.
(Digital) Clinical Infrastructure
As no exception to the new status quo, the vast majority of comprehensive care models primarily interface virtually with their patients, leveraging digital hub platforms that facilitate telehealth appointments, messaging, care coordination, and condition management. Guided by value-based care principles, these companies can be defined by how they design the following aspects of their clinical infrastructure:
Comprehensive Care Teams: At the leading edge of patient interaction, care team structures largely define and function as the backbone of each care model. Comprehensive care teams—including nutritionists, social workers, health and lifestyle coaches, behavioral health providers, pharmacists, nurses, physicians, and other specialists—deliver care while managing costs. Many companies, for instance, utilize lower-cost health coaches to drive patient engagement through frequent touchpoints and reserve higher-cost physicians for annual appointments or behind-the-scenes guidance. Further, companies addressing social determinants of health may harness social workers, while those focused on diet may harness nutritionists.
Sustained Support: through systematic check-ins and unlimited messaging, many comprehensive care models strive to consistently support patients’ ongoing and urgent care needs. These companies hypothesize that greater upfront support will lower healthcare utilization in the long-term, while keeping patients healthy and out of the emergency room.
Care Coordination: rather than operating in isolation, many comprehensive care models build bridges to existing care delivery nodes. Integration is especially pertinent for primary care models, which act as digital front doors to the healthcare system by, for example, referring patients to specialty and emergency services, coordinating lab testing, and navigating insurance coverage.
Condition Management Tools: ranging from screening, to treating, to monitoring, to tracking, condition management tools function as the nuts and bolts of comprehensive care models, especially within specialty fields. While some primary care models provide generalized screenings and wellness checkups, specialty care models rely on condition management capabilities to improve outcomes for specific patient populations. Companies addressing diabetes, for example, harness meal tracking and blood glucose monitoring to lower insulin resistance, while renal companies leverage at-home dialysis and cardiovascular companies track blood pressure.
The first wave of comprehensive care models companies focused on primary care. By reimagining primary care with an eye on value, companies like Galileo, Village Medical, Forward, and Carbon Health have gained significant momentum within only a few years of existence. As primary care models continue to pave the way, specialty care has followed close behind. Aggregating into a sort of second wave in the care model space, these companies focus on specific conditions—including diabetes, renal, cardiovascular, gastrointestinal (GI), pulmonary, autoimmune, neurological, and musculoskeletal.
Considering the significant burden of chronic conditions on patients and payers, these care models aggregate condition-specific best-practices to better manage health outcomes while lowering long-term costs. Given their prevalence in the US, the associated financial burden on payers, and the drastic health and economic benefits of holistic interventions, conditions related to renal, diabetes, cardiovascular, and GI specialties have emerged as the most-saturated fields. Virta Health and Omada have forged ahead in the diabetes space with considerable capital investment, paralleled by Monogram Health and Somatus in the renal space. With the same overarching goal of improving outcomes while reducing costs, these companies apply similar mechanisms as value-based primary care models to their respective specialties.
Payment Structures & Business Models
Many comprehensive care models aspire towards prospective, value-based payment arrangements with risk-managing entities. Critically, however, they need to first prove that they can, in actuality, save payers money while improving the health outcomes of their beneficiaries. Thus, many comprehensive care models gain traction by initially accepting insurance, whether commercial or Medicare, with FFS billing. Although seemingly contradictory to their broader mission, recruiting patients by accepting insurance allows companies to assess, adjust, and ultimately validate their care models in order to pitch value-based contracts to payers.
To date, comprehensive care models have been pursuing risk-managing organizations including self-funded employers, commercial health plans, Medicare Advantage (MA) plans, and Medicaid Managed Care Organizations (MCOs). At a high-level, value-based arrangements with these entities would entail the entity providing a prospective payment, likely capitated or bundled, to the care model, who then manages the predetermined scope of care for their beneficiaries, with specific cost-sharing and quality benchmarking stipulations. If the care model’s thesis proves successful, the payer will save money, the patient will be cared for, and the company will be financially rewarded in turn.
A multitude of later-stage companies have successfully achieved such value-based contracts with varied types of payers. In the commercial health plan space, for instance, the primary care model Crossover Health partnered with Aetna to pilot Aetna Advanced Primary Health for employer-sponsored health plans at the start of this year. With a fixed-fee payment model, Crossover Health assumes responsibility for the total cost of primary care for these beneficiaries. Similarly, but in the specialty care space, a partnership initiated early last year brings Virta Health’s type 2 diabetes care model to Banner|Aetna's beneficiaries. With their proven diabetes-reversal program, Virta ultimately improves the quality of life for beneficiaries while drastically reducing prescription costs. Alternatively, within Medicaid populations, CityBlock Health partners with MCOs to manage primary care and assume financial risk for their beneficiaries. Other companies have demonstrated success in the self-funded employer space, whereby they manage risk for a particular scope of care among employees.
Given the demonstrated appetite for partnerships between comprehensive care models and risk-managing entities, early-stage companies accepting insurance are well-positioned to capitalize on the near-term revenue opportunity while gaining the traction and model validation necessary to enter value-based arrangements. Notably, while a sizeable portion of comprehensive care models strictly operate with a direct-to-consumer, self-pay, concierge model, these companies have a considerably lower ceiling for growth.
Lastly, as the comprehensive care model landscape continues to evolve, it will be important to keep an eye out for partnerships between these companies. A primary care model expanding their capabilities could, for example, collaborate with a specialty care model that would benefit a large portion of their beneficiaries, such as a kidney disease prevention and management program. As specialty care companies prove their value, acquisitions by larger primary care counterparts are likely to serve as key exit opportunities.
Areas for Differentiation
At a high level, the comprehensive care model market can be segmented based on target patient population. Companies effectively caring for patients underrepresented in the space, thus, carry a potential value proposition. Key opportunities exist within these unsaturated corners of the market, like primary care for underserved populations and specialty care for neurological conditions.
Within the actual care model and clinical infrastructure, companies are primarily differentiated based on their care team composition and structure. Recruiting personnel to support a unique element of the care model—for example, a behavioral health specialist for trauma-informed cardiovascular care—sets companies apart, even within a saturated patient population. Furthermore, developing a staffing model that boosts patient engagement while lowering costs represents a key opportunity for differentiation.
Comprehensive care models reimagine how care is delivered from a birds-eye view, integrating the disparate elements of traditional care and driving sustained patient engagement. Thus, instead of internally developing proprietary technology, many early-stage companies outsource different elements of their digital clinical infrastructure. Given the primacy of patient engagement, investing in a differentiated care team rather than in proprietary digital diagnostics or remote patient monitoring technology represents a higher return on investment for a company just entering the market. As such, differentiation based on proprietary clinical infrastructure technology is lacking among early-stage care models.
Significant areas for tech differentiation, however, exist within the “value-based,” rather than the “care,” elements of comprehensive care models. To truly activate a value-based care model—one that can be leveraged for value-based contracts with payers—specific technologies are needed. These include population health and risk management analytics to manage risk within the beneficiary group, for example by identifying and engaging high-risk patients. The measurement of value (i.e., quality and cost) is integral to negotiating a value-based contract. In order to determine the appropriate capitated payment or benchmarking strategy, healthcare outcomes and costs must become measurable and actionable. While these are less-common capabilities among comprehensive care model companies, which primarily boast the delivery of value rather than the measurement of value, the question remains as to whether these technologies will be built internally or outsourced.
The emergence of comprehensive care model companies pioneering and legitimizing value-based care within our healthcare system is an exciting and long-awaited shift in the industry. Supported by market momentum, these companies are poised to drive value-based care among commercial payers and other risk-bearing entities while the CMMI continues to pilot value-based care for their beneficiaries. From a tech-focused investor perspective, however, proprietary technology differentiation remains a key hurdle within this saturated space. As companies shift their focus from delivering value to validating and measuring value, we will be on the lookout for technologies enabling the long-term success of value-based contracts with payers.