I’ve been thinking a lot about pie. Lately, it’s become my go-to reference in thinking about risk as it relates to healthcare; specifically, I am referring to both the financial and medical risk a payer (this could be CMS, self-insured employers or a health plan) incurs in providing health insurance to a given member population. The pie metaphor becomes all the more useful, however, in thinking about that risk as it takes on an increasingly complex meaning in a post-reform context—that is, at Oxeon, we’ve seen a growing number of companies step up to the table and go “at-risk” in their business models, carving out slices of that pie and assuming the associated risk for a smaller subset of a payer’s population.
The emergence of these rapidly scaling businesses is transforming the way traditional payers are consuming risk around healthcare, from health plans offloading risk onto provider groups through innovative capitated care models, to employers shifting to defined contribution models that demand more active participation of consumers in their own wellness and healthcare decisions. This disaggregation of risk and dispersion across a growing number of players in the healthcare market—the slicing and serving of that pie—has correlated with a significant rise of the number of young, growth-stage companies edging their way onto the playing field.
In one approach, supported in many ways by the Affordable Care Act, we’ve seen a massive market push to better align incentives between payers and providers. It is not a new trend, but there are certainly a handful of notable innovators emerging against the backdrop of shifting risk from those who traditionally pay for care, and those who deliver it. One example of this approach is Oxeon portfolio client naviHealth, the Welsh Carson backed technology and services platform that began as the brainchild of board member, and former CMS Administrator, Tom Scully. NaviHealth’s technology platform assesses a given patient leaving the acute care arena and then determines the most appropriate care plans and settings. This patient roadmap through the care spectrum, coupled with bundled payment methodologies, has enabled the company to coordinate incentives across providers and enter shared savings agreements with the nation’s leading Medicare Advantage plans to carve out and manage post-acute populations on an at-risk basis.
Our client Evolent Health has taken a different approach, in a way building that entire pie from scratch, with leading health systems as the linchpin for population health management. Evolent, the joint venture between University of Pittsburgh Medical Center and the Advisory Board Company, is partnering with health systems across the country to aid in their transformation into Accountable Care Organizations. They are doing so, in part, by launching and managing local health plans which will be branded by those health systems while largely operated behind the scenes by Evolent. To better enable these health systems to effectively manage their respective populations, Evolent is also acting as a TPA in internally managing employee health benefits; they are, in short, sitting atop the shifting risk across payers, providers, consumers and employers. In this way, Evolent is “baking” pies with lots of local flavor—transitioning health systems to value-based models of care and enabling them to take on more of the medical and financial risk for both their own employee base as well as the surrounding communities.
This shift of risk between players across the healthcare continuum has naturally resulted in a growing list of technology and services companies supporting those entities taking on increasing levels of risk—I picture these as the lattice topping of a pie.
This list of “lattice” companies begins with the larger outsourcing businesses managing the backend components of an insurance company, offloading claims processing, adjudication, revenue cycle, fraud and abuse, etc. Processes and services get more complex with the rise of PBMs and later outsourced radiology, oncology and behavioral benefits management companies (the list goes on). A number of Oxeon clients play in this space as well, across a wide spectrum of services. RxAnte, for instance, has announced deals with Coventry and Wellcare to deploy its predictive medication adherence platform, which risk-stratifies and scores patients based on individual likelihood for non-adherence to their medication plans. Although they are not taking on a slice of that pie themselves, RxAnte enables far better management of risk on the part of the health plans, PBMs, self-insured employers and health systems they support.
Other Oxeon portfolio clients are addressing the shift of risk between employers and their employees. To this end, Liazon provides employers with the ability to personalize the level of risk by employee, and has stepped in to support over 2,400 businesses and aid in this risk customization through its Bright Choices platform. Liazon allows employers a far better ability to project and budget around healthcare benefits spending. And in a shift away from a one-size-fits-all mentality around benefits management, the platform provides a tool for employees to choose from a variety of plans and elect the one that best suits their specific needs. In short, Liazon has taken the cut and dry transaction of carving out and transferring a set slice of risk between two players and made it a far richer experience, allowing the consumer control over the flavor and amount of risk they are taking on.
At Oxeon, we are lucky to have a unique vantage point across the spectrum of organizations shifting risk between payer, provider, employer and consumer stakeholders, and to work with a growing portfolio of clients attacking this space with fresh and innovative approaches—the examples I’ve listed are merely a representative selection of the whole. Inspired by these entities taking innovative perspectives on risk, we take on risk ourselves at Oxeon, via financial investments in companies where we are recruiting world-class leadership teams, as well as in other early stage healthcare businesses.
While companies like RxAnte, naviHealth, Liazon and Evolent are working to mitigate traditional insurance risk by better managing population health, Oxeon seeks to mitigate the risk these start-ups take on by operating in this highly competitive market. As we all know when it comes to pie, there are only so many slices that can be carved out before it is all gone. Any risky business playing in this space will need some “special sauce.” For us, the secret ingredient is simple: great talent will make all the difference for these companies. In any case, no one wants to get caught eating pie alone; after all, the best pie is most fulfilling when enjoyed with great people around the table.