By all accounts, Covid-19 has transformed our assumptions about how and where healthcare should be delivered. Beginning last March with the immediate and widespread adoption of telehealth, we’ve seen glimmers of what a home- or virtual-first society will look like. And while the share of virtual care has declined since its peak in April and May, the recent experience of rapidly (and sometimes hastily) deploying telemedicine is challenging the industry to accelerate its thinking around where care can and should be delivered, and to what extent the home should be viewed as an acceptable site of care.
Few people question whether care delivery will continue to migrate out of the hospital into new settings such as the home. The better question is, what services – specifically – will migrate to the home, and what innovations are necessary to support these migrations?
The Pre- and Post-Covid Realities of Home Health
Prior to the public health crisis, home-based care delivery was in various stages of experimentation. From market to market, various payers, providers, and employers were piloting programs for narrowly defined populations or conditions. However, there was little consensus around what was clinically appropriate or reimbursable in the home. More importantly, there was little urgency or systemwide alignment around these efforts. And while the public health crisis has not necessarily changed everything, it did do two things. First, it has temporarily aligned the interests of payers, providers, and patients in favor of home-based healthcare. And second, it has led providers to re-imagine how and where care will be delivered over the long-term.
As an immediate response to the public health crisis, CMS issued over 200 temporary telehealth codes meant to keep people out of the hospital and other medical facilities while enabling care delivery to continue. Commercial payers took CMS’s lead and implemented broad-based telehealth policies that enabled reimbursement parity and waived various regulatory barriers for delivering care remotely. Not all of these changes will be made permanent, but that’s not the point. The point is, by calling a truce on the economic mis-alignments, we’ve moved past the experimentation phase and entered a phase of broader deployment where a wide variety of care has been delivered to a wide variety of people in their homes.
Coming out of the crisis, providers will have the opportunity to strategize how care is distributed – across their systems, within the community, and at the home. While there is sure to be a repatriation to traditional healthcare facilities, it’s unlikely that the new normal will simply be a reversion to the old. Too many factors will have been impacted for us to fully return. To name just a few:
- Financial pressures – It’s hard to imagine a scenario where health systems are made whole on the financial impact of Covid. While many systems at least partially rebounded following the suspension of elective services last spring, new and more chronic financial pressures have emerged as the crisis has moved into new phases. Payer mixes have become less attractive. Delays in diagnostics and care are leading to sicker populations that are costlier to manage. There are over 20 million Covid survivors, with varying degrees of lingering symptoms that will need to be managed indefinitely. Labor shortages are constant, forcing systems to pay above-market rates to fill in gaps or, worse, ration care. Stockpile thresholds of PPE and other essentials are higher and supply chains are being stressed.
Many of these financial challenges will linger well past the pandemic. Adjusting to the new financial reality may require systems to revisit their balance sheets and do more with less. This may involve shedding real estate or at least slowing the growth of plant/property/equipment. For systems that take this approach and choose to augment their physical footprints, the home must be viewed as a reasonable alternative site of care.
- Regulatory shifts – The impact that Covid has had on reimbursement only adds to the economic pressure. Some insiders expect that continued reimbursement for telemedicine will hinge on the regulatory push for, and implementation of, alternative payment models. If this plays out, health systems will be further motivated to do more with less and potentially move care out of the hospital.
- Public health – One lasting effect of Covid may be that the hospital is, itself, viewed as a public health risk. Whether this risk is perceived or real, it’s hard not to envision a scenario where a more distributed system of care emerges as the ideal for minimizing disease transmission.
- Consumer preference – With a general population of consumers having now experienced various forms of virtual care, the concept of home health is beginning to normalize. And while virtual care won’t be preferred by all, consumers will expect a choice where possible and appropriate.
The Path Home: How to Bring Care Home Successfully
With all of this in mind, it’s understandable that Covid-19 has given way to a groundswell of telehealth and remote care innovation. Last year easily set records for digital health investing and telehealth companies were the biggest beneficiaries, amassing a cumulative $4.3 billion in investments. However, to the overwhelmed and exhausted audience of healthcare buyers, the expanding universe of participants is confusing at best, and commoditized at worst.
The companies best positioned to emerge from the pack are those that (1) offer an exceptional customer experience, (2) meaningfully bend the cost curve, and (3) obsess about execution.
Getting customer experience right has both top-line and bottom-line implications for healthcare providers. At a topline level, for fee-for-service providers to confidently move care out of their facilities, a superior customer experience is critical to capturing market share that will offset the lower reimbursement rates. From a bottom-line perspective, to deliver care that effectively reduces costs and maintains (or improves) quality, home health businesses must successfully engage patients on their turf. They must naturally conform to patients’ lifestyles and preferences in a way that earns trust and promotes compliance. Take hospital-at-home as an example – it’s a business model that gained extraordinary attention in 2020. A successful h@h program will not only replicate the access and resources of a hospital (e.g. biometric monitoring, 24×7 virtual nursing), but it will also preserve the comfort and humanity of the home such that the patient actively engages and becomes part of his or her care team.
In addition, a viable home health business must effectively and meaningfully reduce healthcare costs. This may be as straightforward as lowering the unit cost of care delivery – through lower drug, equipment, facility, or labor costs – or it may be more a fundamental transformation, such as managing a full episode of care, a chronic condition, or a complex population. Regardless of the approach, the impact on cost must be real, repeatable, and significant, otherwise it is not worth the potential erosion in reimbursement or the organizational heartburn associated with re-architecting a system of care.
Finally, and maybe above all, execution is paramount. The elegance of a business model carries no value if it is not successfully implemented or properly supported. Effective execution includes all of the last mile considerations that often make the difference between success and failure – training, customer support, connectivity, redundancy, and ease of use. A remote patient monitoring (RPM) product is useless if the patient cannot figure out how to activate the device or if it relies on connectivity that a patient doesn’t have. Or maybe the device is easy to use and connectivity is not an issue, but the provider does not know how to interpret or react to the tidal wave of information it is receiving from various patients in their homes. An effective home health solution anticipates those last mile issues and solves for them. The concept of execution is not unique to home health or healthcare in general, but given the complex set of issues being addressed in the home, there are infinite points of potential failure, and the consequences of failure can be life or death.
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