I presented this opinionated look at why the Medicare Shared Savings plans, ACOs and other outcomes-driven payment models are being promoted over fee for service (FFS) models and what that means for service providers and integrators. Evidence driven healthcare is required to help reduce costs and data drives evidence – the problem is that institutions are having trouble pulling together all the data they need. Current health IT systems integrate poorly and anyone that can improve that data integration to help with pricing transparency, cost transparency, care coordination, and population health management will have work for years.

1. Shift from fee for service to outcomes-
driven care will drive opportunities for
SIs and solution providers
Smart VAR Healthcare Summit
May 2014
Shahid N. Shah, CEO

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Who is Shahid?
• Serial healthcare IT entrepreneur, advisor to
numerous startups, blogger, healthcare futurist
• 20+ years of software engineering and multi-site
healthcare system deployment experience in
Fortune 50 and Government sectors.
• 12+ years of healthcare IT and medical devices
experience (blog at http://healthcareguy.com)
• 15+ years of technology management experience
(government, non-profit, commercial)
• 10+ years as architect, engineer, and
implementation manager on various EMR and EHR
initiatives (commercial and non-profit)
Author of Chapter 13, “You’re
the CIO of your Own Office”

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What’s this talk about?
Questions answered
• Is disruptive innovation in
healthcare possible?
• What does innovation in
healthcare mean and how do
you help customers make it
happen?
• Where are the major areas in
healthcare where innovation
is required and can you grow
your business by helping your
customers achieve them?
Key takeaways
• Go narrow, specialize, dive
deep
• Understand PBU: Payer vs.
Benefiter vs. User
• Understand why healthcare
businesses buy stuff so you
can serve them in ways
they find you indispensable

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What does “disrupting healthcare” mean?
This is $1 Trillion and the
Healthcare Market is about
$3 Trillion
This is $1 Billion

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No, your innovation will not
disrupt healthcare.
I promise.
The good news
is that doesn’t
have to.

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No, your big data or mobile ideas
will not disrupt healthcare.
But if you can use them to add or extract value
from the existing system, you’ll do just fine.

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No, your EHR/PHR or app will not
be used by enough doctors or
patients to disrupt healthcare.
But if you can get even a fraction of them
to use your software, you’ll do just fine.

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No, your innovation will not be
accepted by permissions-oriented
institutions.
Find customers with a problem-solving culture
willing to accept risks and reward failures.

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No, your innovation will not be
easily integrated into regulated
device-focused clinical workflows.
Incumbent vendors will not entertain the potential of
new legal liabilities without someone to share it with or
new competition without direct compensation.

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You have made the job of
identifying, diagnosing,
treating, or curing
diseases faster, better, or
cheaper for clinicians
through the use of
information technology
(IT) or business models.
You have made the job of
self-diagnosing, self-
treating, or preventing
diseases and improving
overall wellness of
patients through the use
of new incentives,
business models, or IT.
What I mean by “actionable innovation”
You can help your customers achieve practical, relevant, actionable solutions

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Life expectancy is increasing…
…but the rate of growth is slowing

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Bacteria used to kill us the most…
Per 100k population, Historical Statistics of the United States, Millennial Edition

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We’ve got most infections beat…
…except the flu and pneumonia
Per 100k population, Historical Statistics of the United States, Millennial Edition

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Top killers today
Heart disease Cancer
Chronic lower
respiratory
diseases
Top killers in 1900
Pneumonia
and influenza
TB
Diarrhea and
enteritis
Infectious diseases used to kill us…
…but what’s left seem only to be “manageable” not easily “curable”
Per 100k population, Historical Statistics of the United States, Millennial Edition

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Death by age group, 1900 Death by age group, Today
From cures to management…
…young people don’t dye of diseases often now
http://siteresources.worldbank.org/INTHSD/Resources/topics/Health-Financing/HFRChap1.pdf

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What Is the Business of Health Care?
• It's always better to define a business by what
consumers want than by what you can produce or
build
– For example, whereas doctors and hospitals focus on
producing health care, what people really want is health
• In the future, successful doctors, hospitals, and health
systems will shift their activities from delivering health
services within their walls toward a broader range of
approaches that deliver health – how will you be able
to help them achieve those goals?
What business are you in? The Emergence of Health as the Business of Health Care
Source: http://www.nejm.org/doi/full/10.1056/NEJMp1206862

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PBU: Payer vs. Benefiter vs. User
Payer
Benefiter
User
If you don’t understand the exact interplay between PBU your product will fail
The payer is the
person/entity
that writes the
check for your
product.
The person or group
that benefits most
from the use of the
product.
The person or group that
actually uses the product.

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What kinds of users are your customers targeting?
Help your customers go narrow and deep not wide and shallow
• Obesity Management
• Wellness Management
• Assessment – HRA
• Stratification
• Dietary
• Physical Activity
• Physician Coordination
• Social Network
• Behavior Modification
• Education
• Health Promotions
• Healthy Lifestyle Choices
• Health Risk Assessment
• Diabetes
• COPD
• CHF
• Stratification & Enrollment
• Disease Management
• Care Coordination
• MD Pay-for-Performance
• Patient Coaching
• Physicians Office
• Hospital
• Other sites
• Pharmacology
• Catastrophic Case
Management
• Utilization Management
• Care Coordination
• Co-morbidities
Prevention Management
26% of Population
4% of Costs
35% of Population
22% of Costs
35% of Population
37% of Costs
4% of Population
36% of Costs
Source: Amir Jafri, PrescribeWell

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Shift from Fees for Service (FFS) to Value (FFV)
The Shift
The clinical model is shifting
away from treatment of
chronic conditions and
focusing more on prevention,
wellness, obesity intervention,
behavior and lifestyle
modification.
Implications
Clinical operations are shifting to hospital and
physician ‘centered’ services that will rely heavily
on health information technologies to monitor,
coordinate, and manage care.
• Successful Transition in Care resulting in
Reduced Hospital Readmission Rates
• Proactive population management
• Patient engagement and collaboration
• Disease prevention through wellness and
obesity management
• Chronic disease management
• Care coordination and collaboration
• Metrics and analytics

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How Digital Health helps in shift
Successful Transitions of
Care
Reduced Hospital
Readmissions
Innovative Practice
Models like Patient
Centered Medical
Homes
Prevention, Wellness,
Obesity intervention
Behavior adjustments
and modification
Physician Marketing
Personalized
Concierge-Like
Medicine
Total Population
Management

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How to best identify your customers
FFS vs. FFV?
Target health
sector?
Number of
employees?
Annual sales
volume?
Geography?
Number of
hospital beds?
Number of
patients?
Type of
patients?
The list goes on
and on…be
specific!
Help them stay away from market segmentation, focus on identifying PBU particpants
Identifying your
customers will depend
on helping your
customers identify theirs

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How will your customers get paid for innovation?
Direct Payment
• Your best option
• Very few truly disruptive
technologies can be
directly paid for by
providers within the USA
• Limited adoption of
‘traditional’ pay for service
reimbursement for next
generation technology
Direct Reimbursement
• Second best option
• Improvements in
technology are outpacing
payer adoption
• Reimbursement will come
but its time consuming and
difficult
Indirect Reimbursement
• Emerging option
• Payer requirements for
improved quality and
efficiency are creating
indirect incentives to adopt
innovative solutions
• Solutions targeting new
value-based
reimbursement incentives
are highly useful to medical
providers
If you haven’t figured it out for them, customers will not figure it out for themselves

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Your customers’ innovation fit determines your opportunities
Therapies
Therapeutic
Tools
Diagnostic
Tools
Patient
Administration
Patient
Education
Most RegulationLeast Regulation
Be aware of regulations, don’t fear them, use them as
a competitive advantage

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Problems your customers looking to solve
Improve
medical
science?
Improve access
to care?
Reduce costs?
Improve
therapies?
Improve
diagnostics?
Improve drug
design?
Improve drug
delivery?
Create better
payment
models?
Focus on jobs that customers need to be done, not what you want to build

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What you need to know these days
Consumer Health,
mHealth, eHealth
Health IT Product
Development
Wireless & Mobile
Strategies
Collaboration,
Social Technologies
Cloud Computing
Strategies
MedTech Product
Development
Content &
Document
Management
(CMS/DM)
Enterprise
Architecture, SOA
Regulated Product
Management
Trust Models &
Regulated Privacy,
Security Planning
Technology Due
Diligence

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Problems you can solve for your customers
Patient Discovery
•Website
•Pre-Patient
Provider Search
•Patient Connect
•Patient
Scheduling
•Reminder call,
scheduling,
Ensuring Patient
show up
•Patient Intake
Practice
Management
•Patient
Scheduling
•Charge Capture
•Practice
Management /
Billing Tools
•Revenue
Analytics
•Claims Scrubing
•Billing Services
•Pricing
Management
(Aggregated
Billing Data
analytics)
•Reviews /
Feedback
Infrastructure
•DaaS
•Network
•Office
Automation
Clinical
Management
•MU2 Compliant
EHR
•eRX
•Voice
Recognition
•Clinical Language
Understanding
Integration
•Patient Connect
integration to PM
•HIE
•Labs
•Device
Connectivity
•Image storage /
EMR Access
•Clearing Houses
•Gateways
Consulting
Services
•ICD
•HIPAA
•Practice
Consulting
•Revenue
Planning
•Legal and
Compliance
•Clinical Workflow
Optimization
•Billing to Clearing
House
Integration
•Records
Management /
Migration
Focus on jobs that customers need to be done, not what you want to build

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The business needs
• Quality and performance
metrics
• Patient stratification
• Care coordination
• Population management
• Surveys and other direct-
from-patient data collection
• Evidence-based surveillance
The technology strategy
• Aggregated patient registries
• Data warehouse / repository
• Rules engines
• Expert systems
• Reporting tools
• Dashboarding engines
• Remote monitoring
• Social engagement portal for
patient/family
Do you have ideas in payment design?
Payment models going fee for service to outcomes-driven care

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Can you repurpose or enhance health data?
ProteomicsGenomicsBiochemicalBehavioralPhenotypicsEconomics
Can you help customers use data to create new diagnostics or therapeutic solutions
IOT sensorsAdministrative

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Some stuff not to focus on
• Don’t go for simple incremental innovation if
you can be bold and “disruptive” but make it
look like you fit into the existing ecosystem
nicely
• Don’t look at mHealth, look at mobility in
healthcare
• Don’t look at apps, look at entire systems
Incremental innovation is easier, disruptive innovation is probably more useful

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Forget mobile apps, focus on health IOT
• With all the attention being paid to mHealth
there’s been an useless focus on mobile apps
• For the mobile apps, instead focus on
mobility in healthcare through “health
internet of things (IOT)” and self-care
technologies

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Healthcare Industry Fallacies
• Healthcare folks are neither technically challenged nor
simple techno-phobes (they’re busy saving lives)
• Most product decisions are no longer made by clinical
folks alone, CIOs are fully involved
• Complex, full-featured, products are not easier to sell
than simple, stand alone tools that have the capability
of interoperating with other solutions are
• Hospitals will not buy unless one proves value.
• Selling into doctors offices is not easy.

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What makes your products successful
• Easy to explain
• Defendable and differentiated
• Attractive partnership opportunities
• Word of mouth opportunity
• Potential for PR
• Scaleable staff and systems
• Scaleable product — build once, sell many times
• Uncomplicated
• Focused
• Sales model is scaleable and predictable
• Own relationship with and information about customers

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Why healthcare businesses buy stuff
Increase
revenue
(topline)
Maintain
capabilities
Reduce costs
(bottomline)
Attract new
patients
Increase staff
productivity
Find your
reason
Healthcare businesses have complex buying processes – figure out why and what they buy

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The Customer Relationship
Customer Gives
You Get
• Money
• Time
• Energy
• Commitment
• Referrals
• Past experience
• Expectations
• Knowledge
You Give
Customer Gets
• Product
• Price
• Value
• Convenience
• Selection
• Service
• Warranty
• Brand
If you can’t figure out why they buy, see if any of the things below make sense

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Health technology sector has many ups and downs
Make sure you understand where your product fits in the hypecycle
Source: Gartner; “Hype
Cycle for Healthcare
Provider Applications and
Systems, 2010”

36. Thank You
Visit
http://www.netspective.com
http://www.healthcareguy.com
E-mail shahid.shah@netspective.com
Follow @ShahidNShah
Call 202-713-5409