4 Ways Health Systems Need To Reinvent Themselves to Compete

Juan Pablo Segura, Co-founder of BabyscriptsFor about a decade, digital health has been slowly winning the battle against healthcare’s slow pace of change. Digital found an unexpected ally in Covid, as the pandemic forced health systems to adopt virtual solutions wholesale. 

As we start to come out on the other side, though, some health systems are contemplating returning to the status quo, especially as they’re feeling acute financial strain.

The majority, however, understand that the pandemic constitutes a sea change in the industry — that there is no more status quo. Competitors are rising up to take the place (and the patients) of health systems who aren’t willing to play by the new stakes.

These competitors are no longer just the health systems down the street, but non-traditional, venture backed organizations that are establishing stand-alone clinics with their own networks of providers — offering patients what they call “direct primary care” and targeting specific populations. 

Here’s what health systems need to do to remain competitive. 

Understand the new players in the field 

These new models of care began as a way to make care more convenient — companies like One Medical and Forward Health, which started by building and operating primary care clinics. They charge an annual fee to provide personalized and tech-enabled care, and cater to employers and wealthier individuals.

They were the forerunners. Now organizations are taking up the same model and transforming it, going beyond simple convenience to directly challenge the quality/cost equation. 

They’re finding better ways to deliver care to higher-end commercial patients through technology, but are also successfully taking on capitated risk in areas like Medicaid. They’re building their own clinics to control the cost of care while using technology to attract patients and deliver better population health. 

These organizations understand that in order to win the market, they have to control or reduce costs and show better outcomes across patient populations. In their playbook, this means winning over consumers and redirecting care from more expensive hospitals to less expensive, focused clinics. 

Cityblock is a great example of an organization that is doing this well, and garnering a lot of interest and funding. They’re using tech solutions to attract and improve the consumer experience, but that’s less of a revolutionary move and more the standard cost to play nowadays. 

Where Cityblock is truly differentiating itself is in primarily serving low-income and Medicaid populations. Where many health systems might dedicate one residency to the most at-risk populations and try to break even, Cityblock is actively seeking out a high-risk market. They’re going out into the community to get patients into care earlier, meeting patients at church or in the grocery store and significantly, hiring their care teams from the same community. 

And they’re getting a lot of attention from investors. In its latest funding round, Cityblock raised $160M, giving them a ton of financial runway to build their care management system from the ground up. Cityblock has garnered a lot of interest from payers as well, as insurers like Bluecross Blueshield are increasingly trying to incentivise providers to work in value-based arrangements.

So what does that mean for health systems? 

They have to invest in the digital front door. If health systems can’t roll out technology at scale, they’re going to lose to the new entrants who are building heavily around technology. A simple patient portal or interface like MyChart is not enough — the technology has to be sophisticated, dynamic, and truly engage and improve the patient experience, otherwise health systems will lose out in a feature set comparison.

They can’t continue to operate under a fee-for-service concept. Value, cost, and population health have to be central in the conversation. If health systems aren’t investing in value-based care, they’re going to lose payers, who are aggressively seeking out the organizations that are.

They need to take on more risk. On the same note, health systems that are unwilling to target high-risk populations face the danger of being placed out-of-network by insurance providers, and losing preferential reimbursement rates to organizations that are willing to do so.

Cityblock and others are reinventing the way that care is being delivered, and it’s only a matter of time before new models will arise to target the middle class in the same way that they are trying to corner the market on the low-income and Medicaid population. These new organizations should stand as an example in the field, a total transformation of the competitive landscape. Health systems will have to learn the game or risk being run off the field. 

About Juan Pablo Segura 

Juan Pablo Segura is an active voice in advocating to improve access to innovative models of care for the underserved. He is a board member of Heathtech4Medicaid and a frequent speaker on the subject of digital health for Medicaid and low-income populations. In 2014 he co-founded Babyscripts, a virtual maternity care company delivering a new model for prenatal and postpartum care that is transforming the way expectant mothers use technology to work with their healthcare providers.

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