KLAS Tracks Evolution of VBC Enablement Services Firms

The rise of value-based care (VBC) and risk-based payment models has led to a new technology and services category: VBC enablement services firms. KLAS Research’s Benjamin Cassity and Andy Paulsen, the authors of a recent report on the topic, recently joined Healthcare Innovation for a chat about trends in this new space. 

KLAS’ January Value-Based Care Enablement Services study is the second part of  a two-part study. The first asked vendors what they do; this report maps what the providers say that they do. Basically, with these firms’ services and technology offerings, organizations can aggregate more data, develop care management models, and more effectively manage risk-based contracts. The next planned study will look at what outcomes provider groups are getting from these partnerships.

Among the companies discussed in the report are Aledade, Pearl Health, Guidehealth, CareAllies and Palm Beach ACO (PBACO). KLAS said that it currently does not have enough client feedback to share performance data for other vendors such as Health Catalyst, Lightbeam, Navvis Healthcare, and Premier.

Healthcare Innovation: What are some things that these provider groups commonly struggle with when they're moving to value-based arrangements that these firms can offer them? Are there a common set of services or expertise that these firms offer?

Paulsen: A few years ago there was a big increase in investment in these tools, and then not a lot of ROI. Now we're seeing two different groups, one is doubling down, and one is pulling back. This group is doubling down. They are trying to  find a viable financial path with these contracts, and whether that's just having access to their platform and guidance from them, or a more in-depth partnership of shared risk, that’s kind of the spectrum that we're seeing. Basically they are saying they have to figure out how viable it is to continue to invest and what partnership level is going to make that happen.

HCI: Do these types of vendors typically have their own tech platform infrastructure or has the customer usually already made an investment in a pop health platform and they use that? 

Cassity: Depending on who you're talking about, it's a little bit of both. In most cases, they will already have a data and analytics tool. But there are a lot of different flavors of this. That's what's so intriguing about this space. If I think of a company like Guidehealth, they're very services-heavy. They're going to be boots on the ground, and very labor-intensive with humans actually helping with the change management. And then you go to the other side of that spectrum with a Pearl Health, and they are very tech-heavy. They are still service-based, but they rely very heavily on the technology. So it's a very diverse mix. Whether you're talking about an Aledade or a CareAllies, they're all solving for the same problem, but they're all going about it a little bit differently.

HCI: I understand there are several different types of business models and contract arrangements. Is the most common one where the vendor only earns money when the customer is successful in these value-based care arrangements such as the MSSP?

Paulsen: That is the most common one that we're seeing. What we thought we saw before was more interest in fully integrated partnerships. We called it becoming an appendage of the vendor. But when we were talking to customers, we didn't really see any that were involved in that level of partnership. More of them were split between either access to the tools and guidance, or a split in the the risk investment.

HCI: Is Aledade the largest of the companies you were working to validate here in terms of their footprint and revenue? I just got a press release from the company stating that Aledade now serves over 3,000 primary care partners that care for more than 3 million patients in value-based care programs.

Paulsen: Aledade is very big and they do continue to grow. They do have a huge footprint, both in what we see in the market and who we were able to talk to.

HCI: And from talking to their customers, is there something that stands out about them that people say they like? 

Paulsen: I would say the catering to the ACOs. They had a much less invasive contract arrangement as far as the risk-sharing agreement down the road. So it was much more accessible for people with varying levels of risk and how they wanted to invest.

HCI: I wasn't as familiar with Pearl Health. Are they on the newer side? 

Cassity: Yes. Pearl is going to be an interesting one to keep an eye on, based on the fact that they are very tech-heavy. My gut feel is that they'll likely have an easier time scaling because of that. But whether they are going to deliver the outcomes that we see with the more services-heavy vendors remains to be seen.

HCI: And is the Palm Beach Accountable Care Organization more regional? 
 
Cassity: They’re expanding. They're much more prevalent on the eastern side of the country, but I am pretty sure they're in Texas and they’re moving west.

HCI: In doing this research, is there anything else you found interesting about how the market's changing or about the relationship between these vendors and their customers?

Paulsen: I found interesting the variation between the acute and the ambulatory market, especially when we looked at what types of services they use the vendor for. Our report notes who is using their technology in different types of integration, who is using them for network development, who is using them for VBC contracting and enterprise management. So we did see a difference there in terms of what was important for acute and ambulatory.

HCI: Yes, we have interviewed Farzad Mostashari, M.D., Aledade’s CEO, who stresses that the ambulatory players do better in value-based contracts than hospital-based ACOs do because their incentives are different, and because primary care clinics are in a much better position to impact people with chronic health issues.

Cassity: The financial crunch that organizations are experiencing nationwide is very real, and how they're attacking that varies — whether you're talking about an ambulatory clinic or an acute clinic, and frankly, the margins are very different. I've spoken with rural health systems that are saying last year we were at a 3% margin; this year we're at a 1.5%, so I think you've got a couple of different dynamics here. 

First, the ambulatory clinics, if they're really struggling, they're really struggling, so they're going to be a little more excited to actually move the needle and make that change happen, whereas the acute organizations might have a little bit more capital and might not be hurting as much. And then on the flip side of that, you think about a large acute organization, the change management that is associated with that is immense. It's going to be a much bigger animal to tackle. Whereas the smaller you are, perhaps you have a little bit easier path once you actually start going down the path of transitioning into that high risk, high reward.

HCI: Anything else? 

Cassity: This is an exciting space. There's a lot of momentum here. I’m not going to say it's causation, but we've seen it correlate a little bit with a constriction of the population health tools. So the hypothesis we’re going to have to watch to see if it continues to prove out is that we've got organizations that have had these tools now for quite a few years, pre-COVID some of them, and ultimately they have not seen the value out of them that they expected. And they're now turning to to these organizations to help solve this problem. They are saying, ‘Help me figure the strategy part of this out so that I can make use of my tools.’

We're also living in a world where providers are demanding a deeper level of partnership from their technology vendors. So the need is not going to go away, and we'll have to just see how this plays out over the next few years.