The Future of Healthcare Labor Might Look a Lot Like a Treatment for Opioid Addiction

Opioid addiction afflicts more than 2.6 million Americans.  In response, healthcare organizations, policy experts, researchers, and health insurers are increasingly embracing the reality that one of the most promising treatment offerings for opioid addiction relies on human intervention, as well as a prescription.  Buprenorphine-based Medication-Assisted Treatment (“MAT”) is showing superior health outcomes to those of other widely available treatment protocols.  A large study of buprenorphine-based MAT showed that 44% of patients did not relapse during 24 weeks of observation.[1]  While a compliance rate of less than one-half seems lackluster, it is far superior to the compliance rate of the most common form of addiction treatment, commonly referred to as a 10-step program.  The increase in human hands needed to treat patients more successfully is costly but, in the long run, a long tent pole in improving health outcomes that sheds light on the future of America’s healthcare labor force.


Unlike many methadone-based treatment plans, buprenorphine-based MAT programs integrate counseling and care coordination into the standard of care.  At the turn of the twenty-first century, as the population of Americans addicted to opioids grew, addiction specialists sought to enlist the help of primary care physicians (“PCPs”) in treatment.  At that time, PCPs were experiencing declining incomes corresponding to reductions in reimbursement rates.  DATA2000 regulations offered PCPs a way to increase their declining incomes if they became certified with little more than one working day of training on buprenorphine-based MAT protocols.  The idea took early aim at expanding access to buprenorphine-based treatment.  Yet, middle- and upper-middle-class doctors were reluctant to welcome drug addicts into their waiting rooms, and outcomes during the following years taught the healthcare industry that medication alone was insufficient for the treatment of opioid addiction.[2]  These lessons triggered a change—including the addition of mandatory counseling—in buprenorphine-based treatment, and top clinics incorporated various elements of care coordination.   

Today, large-scale, buprenorphine-based MAT programs offered by companies like CleanSlate adhere to these standards.  Other outpatient MAT clinics have gone so far as to add, on top of counseling, primary care clinics and dentistry to their practices.  The added care catches costly and preventable conditions early.  The data so far indicate that successful treatment using buprenorphine requires more human hands to deliver care to its difficult-to-manage patient population.  More proverbial hands on the patient ensure better compliance with the treatment protocol.[3]

Healthcare delivery is time-consuming and inefficient work.  The work of repairing the human body, much like the similarly essential work of child-rearing and educating, proves resistant to productivity gains and is not terribly scalable.  Economists who subscribe to the theory of cost disease believe that costs, in service areas in which the reduction of labor hours is resistant to productivity gains, are bound to grow at a rate greater than inflation, thereby constraining our ability to control their costs.  If you’ve ever wondered why your stylist or barber keeps charging you more each year, cost disease explains it.  (If you’re interested in learning more about cost disease and its future impact on healthcare, email Splash 4 (jgrosshandler@splash4partners.com) to receive a copy of our upcoming white paper on the topic.  In the meantime, keep reading.)

The problem of rising costs in healthcare is explained by the story of America’s shifting labor force.  According to a McKinsey study published in 2016, more than half of retail jobs can—and without regulatory intervention likely will—be automated.[4]  Parts of Amazon’s visions system for managing retail, Amazon Go, might soon be in your local Whole Foods.  Some version of Go is likely to be repurposed and redesigned to support Amazon’s entrance into the pharmacy space, if mail and retail pharmacies are in Amazon’s future.[5]  The McKinsey study also states that roughly 60% of the 800 occupations it examined could have more than 30% of job functions automated.[6]  Less work for humans in manufacturing, logistics, retail, and sales/marketing will free up American labor to move into healthcare and other cost disease ridden sectors.

At the same time, an American baby boomer is turning 65 every eight seconds.  The 2.6 million patients in need of opioid addiction treatment are a drop in the bucket compared to the more than 76 million baby boomers who will need more and more healthcare with each passing year.  Furthermore, four of ten Americans live with a chronic illness, according to the National Health Council,[7] meaning that more than 57 million Americans younger than 65 need elevated levels of care and attention.

A cursory look at the literature on patient compliance shows that many patients don’t adhere to “simple” fixes with a daily pill, further underscoring the need for more advanced interventions.  Companies like Omada Health are making great strides in leveraging technology to improve patient compliance and outcomes, but the technology is just one leg of the stool.  Omada pairs its patients with health coaches and enables its platform to connect users to a peer support network.  Omada is used by small segments of patients who are diabetic, pre-diabetic, or at risk for heart disease.

The limited market share served by companies like Omada Health leaves an estimated $470 billion of unpaid care[8] to be delivered by 40 million family members and friends[9].  That means 40 million volunteer care coordinators and caregivers are allocating hours away from learning new skills, working for their current employers, or searching for new employment.  More and more care is needed in the home, yet there are limits on the supply of unpaid care.  Either those hours are capped, or they pose a threat to companies that depend upon conspicuous consumption when volunteer caregivers forego income.  Here is yet another reason to short Blue Apron stock and a further tentpole explanation of Amazon’s test pilots in the healthcare sector.

Successful behavior change, care coordination, and patient compliance simply are body-based propositions.  Pockets of American healthcare have embraced this, but far greater pockets rely on a patchwork of solutions managed by patients and their families.  The most successful MAT programs Splash 4 has encountered make use of a greater number of touchpoints between patients and caregivers, providing one rough roadmap to a future of healthcare costs.  Health insurers are paying significant reimbursement rates in many areas of the country most afflicted by opioid addiction in order to expand and ensure a sufficient supply of MAT providers.  Following the standard pattern of reimbursements, as sufficient supply is onboarded, rates will eventually come down.  As they do, the need for a body-based approach to treatment won’t go away.

Whether in treating addiction, managing chronic illness, or providing end-of-life care, the human element will play an increasing role in healthcare.  This stands in stark contrast to the style of care our nation has opted for and actively built, volume-based care, primarily paid for on a fee for service basis.  Not surprising for a country’s whose prominence was forged in large part thanks to industrialization. Technologies from the digital revolution, like telemedicine, algorithmic scheduling, and remote telemetry applications will prove to be valuable in select segments of volume-based care, to be sure.  Healthcare technology applications alone, though, likely will not provide the productivity gains historically seen in manufacturing and supply chain management.  The labor component is just too sticky and life savings interventions ultimately add to the aggregate demand for healthcare services.

A probable future of healthcare looks a lot like banking in the ATM era—more jobs, mostly lower-paying jobs, and a proliferation of points of service delivery.  Banking giants predominately chose to chase scale and diluted service in that pursuit.  We are all along for the ride to see what quality levels and fee structure healthcare providers, payors, and employers collectively and individually choose.  Based on the theory of cost disease, humans are the batteries not yet included in the market of healthcare IT solutions but coming to market in the future. Although, the jump ball questions are what parts of the growing labor bill will third-party providers cover and at what rate?

To some extent, the increase in humans in healthcare is already underway.  The number of healthcare call and operation centers is on the rise, home health remains one of the fastest growing industries, and the number of medical scribes more than doubled between 2014 and 2016.  Healthcare’s tooth-to-tail ratio is increasing, giving life to new jobs alongside improvements in care and hopes for cost savings.  Yet costs continue to rise.  Successful MAT treatment programs might afford a preview of future U.S. healthcare and its labor pool.  The question for MAT clinics that provide more human touchpoints in delivering care remains how much and how long the system will pay to obtain superior but not perfect outcomes.  This allegory will extend far into other segments of care delivery in the coming years and is being debated every time one hears the phrase value based care.  

 

 

[1] https://www.vox.com/science-and-health/2017/11/15/16653718/study-buprenorphine-naltrexone-suboxone-vivitrol

[2] S4P research and analysis.

[3] S4P research and analysis.

[4] https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet

[5] S4P research and analysis.

[6] https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet

[7] http://www.nationalhealthcouncil.org/sites/default/files/NHC_Files/Pdf_Files/AboutChronicDisease.pdf

[8] https://www.caregiver.org/caregiver-statistics-demographics

[9] http://www.pewresearch.org/fact-tank/2015/11/18/5-facts-about-family-caregivers/

Jacob Grosshandler

Competition Rising for EHR Providers

At Epic’s user conference in late September, CEO Judy Faulkner called for a name change to the electronic health record (EHR).  The label change would rebrand EHRs as comprehensive health records (CHRs). To read the coverage, one would think healthcare on-demand  was well under way beyond the physician’s office and hospital walls.  Last I checked, a number of healthcare REITs were doing quite well, indicating that the promise of remote patient monitoring and healthcare without hospital campuses  remains a distant one.

Splash 4 finds that, the number of physicians a patient might see has risen over the past two decades.  Anecdotally, my friend’s coverage has changed four times in as many years due to changes in coverage by his employer.  Then the healthcare exchanges have led him to see a new primary care physician every year for the last four years.  Such an increased number of care settings leads to fracturing of the patients’ EHR.  In most such cases, the patient must take charge of centralizing his own records.  Out of the 8.3 million Veterans Affairs patients, more than 50% see a specialists, many of whom are located at facilities separate from their primary point of care, or outside the VA all together.  In response to the fractured health records of their patients, the VA is building a costly health information exchange to centralize patient records, thereby improving treatment outcomes.

Given that channels for delivering care continue to increase—minute clinics, urgent cares, and direct-to-patient telemedicine applications—and the rate of specialization in healthcare persists, the problem of fractured health records will only continue to grow as telemedicine opens the frontier for care delivery.  Second opinion services—Best Doctors, Grand Rounds—and care coordination companies—Care Sync—already stand poised to help build comprehensive health records on a patient-by-patient basis.  In the case of second opinion services, third party payor reimbursement is not an option, which places the cost of a comprehensive medical record on the patient in the form of time, money, or both.

Epic’s called-for name change from EHR to CHR is not driven by care  delivered far from hospitals, but by the rising rate of coordination in patient care .  Telemedicine platforms designed and distributed by Avizia, Teladoc, American Well, and MDLive pose an omnipresent threat to dominant EHR incumbents, like Epic and Cerner.  Payors increasingly want to pay for value and results, not simply fee for service, and comprehensive health records help providers manage toward value-based care.

Epic and Cerner’s answer to the growing crowd of HCIT companies has been to serve as the cornerstone of digital health software for providers by allowing for APIs, and, when prudent, acquiring software companies to extend feature functionality.  Both EHR companies have developed their own telemedicine modules that allow physicians to cue up consults from the EHR.  However, other homegrown features, such as patient charts accessible in Spanish, have been lost in the gaudy, Christmas-tree design—too many features for the user to intuitively find—that now plagues most EHRs.  

Payors have embraced the expansion of points of care in an attempt to lower their reimbursement costs by getting care to patients outside of the emergency departmentProvider networks have adopted direct-to-patient (DTP) telemedicine programs, alongside the acquisition of primary care practices over recent year in order to expand the number of lives they serve in a gambit to gain negotiating power with third-party payors.  Without changes to reimbursement incentives, the fracturing of patient medical records is not going away.  In recognition of this fact, in 2015, CMS unveiled a new CPT code to encourage care coordination for patients with chronic conditions that require treatment by multiple clinicians. 

Logically, one would assume EHR companies will continue to invest in their own telemedicine applications and support software interoperability with third-party providers.  Further fueling their investment is the increase in features that pull telemedicine platforms closer to an EHR.  Telemedicine and increased brick-and-mortar healthcare services locations have ensured the battle over patients involves a growing number of technology vendors.  Providers’ IT budgets can only grow so large.  Therefore, consolidation is likely to occur over the next three-to-five years as interoperability becomes an industry standard and feature functionality converges across HCIT platform providers.

Jacob Grosshandler

Capturing the Facility Fee with Telehealth

The facility fee has historically been an opaque charge, often derided by popular media as a $600 band-aid.  Hospital administrators, however, claim that the facility fee is critical in keeping their lights on and managing for profitability. While hospitals aim to divert low-acuity patients away from emergency departments (EDs), they miss out on facility fees when a patient opts for urgent care via telemedicine applications. .  The profit-earning holy grail for hospitals is the efficiency that combines fast patient throughput with capture of maximum reimbursement.

To date, direct-to-patient (DTP) telemedicine covers millions of lives in America and is available to nearly everyone with a credit card and high-speed internet access for a charge of about fifty dollars.  Yet utilization of DTP primary and urgent care falls well below 10% for the industry.  As a result: patients continue to clog up emergency departments with common ailments that could easily be triaged and treated in lower-acuity care settings.  Telemedicine applications are rapidly evolving across care settings, including EDs.

At several New York Presbyterian/Weill Cornell Medicine emergency departments, Avizia’s telemedicine platform enables physicians to triage and treat low-acuity patients remotely and onsite.  Nurses and physician assistants handle initial screening and, when necessary, provide additional hands-on examinations and basic services while the physician is situated in a separate room.  This arrangement facilitates streamlined efficiency in flowing from assessment to triage to documentation with minimum effort.  The patient, sitting in an exam room with a mounted camera and tablet, can receive orders and scripts that print out like receipts from an ATM.  Thus, patients are seen in less than an hour—rather than waiting for several—while the hospitals still capture facility fees and accelerate the throughput of their emergency departments.  The holy grail of emergency department management achieved.

Telemedicine might be slowly opening care beyond the walls of traditional provider settings for some, but its largest adoption rates and financial gains have occurred in traditional care settings.  Time will tell if the expansive use of telemedicine in hospitals and other traditional care settings will contribute to the proliferation of remote, off-premises consults.  What is clear is that the most successful healthcare IT (HCIT) and healthcare tech-enabled services firms are those that find ways to support the entrenched players of the system, existing payors and providers.

Jacob Grosshandler