By Claire McGee, Associate

Value-based care has been making headlines in the past few years, and we are now seeing a giant push in the healthcare industry to make the vision a reality. For example, the Centers for Medicare and Medicaid Services (CMS) wants to tie 100% of reimbursements to value-based contracts by 2025. However, only 20% of Medicare spending was value-based in 2020. In short, value-based care seeks to increase quality of care while decreasing costs through an emphasis on upstream, preventative care. Value-based care seeks to take advantage of the alignment of nearly every player in the healthcare game (patients, payers, providers, suppliers, society) – each wants to reduce the rate of hospitalization and sickness while decreasing the overall cost of care.

Provider and supplier earnings aren’t left behind either – value-based systems reward and incentivize providers to help their patients reach positive health outcomes so there is (theoretically) no loss compared to a fee-for service system. Value-based care is different from fee-for-service, the most traditional system in which providers have been incentivized to provide a larger quantity of treatments over quality.  “The “value” in value-based healthcare is derived from measuring health outcomes against the cost of delivering the outcomes.” Sounds great, in theory. Who wouldn’t want lower costs and better care outcomes? When the concept first emerged in 2006, many were skeptical. Health economist Uwe Reinhardt described it as “a utopian vision.”

Nevertheless, with large investments from Aetna, Centers for Medicaid and Medicare, Blue Cross Blue Shield, HHS, etc. many see value-based care as the United States’ most viable path to a high-quality health system that functions for everyone. However, the disjointed infrastructure and heterogenous reporting metrics of the US healthcare system prove to be a sort of labyrinth – but this does not mean that hope is lost. Some of the largest opportunities for value-based care are found in primary care and chronic disease management. Value-based care encourages providers and patients to manage their health early on, avoiding some of the long-term costs associated with conditions like cancer, diabetes, high blood pressure, COPD, or obesity.

This is where digital health comes in: digital health and health IT innovations serve to strengthen the data infrastructure of the US healthcare system, enabling health systems and payers to transition to value-based care. There are several areas in which digital health startups are beginning to enable value-based care implementation, including care coordination, home health enablement, patient engagement, risk adjustment technology, and more (see a recently-published value-based care market map from CBInsights). Here are some exciting startups in the game, each touching multiple pieces of the value-based care puzzle.

  • Aledade works with primary care providers to build out tech-enabled value-based care delivery systems. Through partnering with Aledade’s Accountable Care Organization, practices receive “360° support,” including workflow optimization, ACO governance, policy and contracting expertise, and access to their proprietary SaaS, Aledade App. Aledade App. The Aledade team works with organizations to maximize quality care delivery and lower costs through 4 strategic areas: Access and Quality, Care Transitions, Risk Stratifications, and Care Compass (referral and care plan management). Aledade is well on their way, closing a $123m series E raise in early June.

  • Vytalize, just recently closing a $50m series B round in April, focuses on strengthening the relationship between older adults and their primary care doctors, building a strong foundation which can then be used to facilitate value-based care. Starting as a Medicare-focused primary care practice, they now partner with other primary care practices to aid in the transition to value-based care from fee for service. Working in 16 states with 13,000+ Medicare patients, Vytalize provides physicians with data about their patients, practice, finances, and enrollment. The company also provides a risk-bearing entity with a unique, value-based care reimbursement model.

  • Clarify Health is making big moves, just recently announcing the close of a $150m series D raise, bringing their total amount raised to over $350m. Clarify works with a variety of players, including health systems, providers, health plans, and life sciences companies, utilizing claims data, SDOH data, and artificial intelligence to help stakeholders make informed decisions. Their software is then used to help clients construct value-based care contracts and manage financial decisions and settlements.

  • Etyon Health is an earlier-stage startup that uses AI-assisted financial determination algorithms to increase revenue per patient and cash per claim while maintaining quality care delivery. These decision engines were constructed utilizing tens of millions of historical financial outcomes data points and providing the provider with actionable insights and opportunities for improvement. They package this in various subscription deals and already have notable partnerships with industry giants Cleveland Clinic and Stanford Medicine.

  • Thoroughcare is similar to Etyon, raising $3m to expand their offerings in May. Their care coordination solutions, “support personalized health experiences, enable integrated, coordinated care, and help identify the next best actions at critical moments.” They work primarily with physician groups, at-risk provider organizations, and home health agencies to build out value-based care organizations.

  • Luma Health enhances patient and provider engagement. Luma closed a $130m series C round Q4 of last year to expand their patient/provider communication automation platform. Their software, the Patient Success Platform, touches several points on the care continuum, automating appointment reminders, scheduling, and some parts of patient education. The software integrates with over 80 electronic health systems to provide a seamless transition for health systems and providers.

Digital health innovations give us the opportunity to expand and scale value-based care delivery. Currently, 84% of hospitals report participating in value-based care while only 51% of provider practices say the same. In the coming years, we can expect companies like those described above to make a major contribution to the growth and development of value-based care initiatives in the United States.

Piecing Together the Value-based Care Puzzle

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