Value-based care (VBC) models (which I’ve previously discussed) focus on reducing cost and improving health outcomes for defined “episodes” of care, with the expected cost of these episodes determined based on health needs and care outcomes. New care models can bring much-needed economic efficiencies without sacrificing quality, which is essential for addressing the distressing fact that the United States ranks below other developed economies in a variety of health metrics, including (but, sadly, not limited to): life expectancy at birth, all-cause mortality, premature death, maternal mortality, obstetric trauma, and chronic disease-related hospital admissions.
While VBC opens the door to new care models that can address unnecessary spending and healthcare utilization driven by prevailing fee-for-service approaches, they alone cannot solve another key driver of healthcare costs: many people are diagnosed late in their disease progression when care costs are higher. The likelihood of a positive outcome is much lower. For example, higher health service costs are associated with delayed diagnosis of functional neurological disorders, and delayed diagnosis of patients with pulmonary arterial hypertension leads to increased economic burden. Similarly, costs of cancer care increase with stage of disease at the time of diagnosis. One study found that the mean three-year cumulative out-of-pocket costs for commercially insured patients with lung cancer were nearly 60% higher when the disease was diagnosed at stage IV ($35,253) compared with stage I ($20,730) – let alone the cost of the fully burdened patient care. The same study found that cumulative costs were higher for other cancers diagnosed later.
Consequently, investing in new technologies that enable earlier detection, more frequent monitoring, and enhanced treatment is essential for delivering timely and effective care before people reach advanced stages of disease. Increasing access to, and decreasing the cost of routine and preventive care could also significantly improve health outcomes and the economic benefit .
The Human Algorithm: What AI Can’t Replace in Pharma Engagement
At a time when AI is reshaping pharma, Reverba Global CEO Cheryl Lubbert explained in an interview why empathy, context, and ethics still require a human touch.
A novel liquid biopsy approach for early cancer detection, the FirstLook blood test developed by Delfi Diagnostics, exemplifies the value of investing in new diagnostic technologies. Only 6% of the 15 million people eligible for lung cancer screening get screened each year, even though screening has been shown to reduce lung cancer deaths and all-cause mortality by 20% and 6.7%, respectively. The machine learning-enabled “fragmentomics” technology used in the FirstLook test allows testing at lower cost and without the need for expensive laboratory equipment compared with other liquid biopsy approaches, making it more cost-effective and easier to distribute. This can reduce socioeconomic and geographic barriers to screening. Importantly, FirstLook achieves high sensitivity for early-stage lung cancer with a very low rate of false negatives. This reduces the number of people that need to be screened to provide value and improves the risk/benefit ratio of lung cancer screening.
Vergent Bioscience is developing a novel visualization technology using a tumor-targeted fluorescent imaging agent that helps ensure the complete surgical removal of cancerous cells. As residual cancer cells can give rise to metastasis or disease recurrence, Vergent’s molecule, which is being evaluated in clinical trials, could be a powerful tool for providing durable outcomes after cancer surgery.
Beyond cancer, companies such as Cleerly, HeartFlow, Bodyport, Artrya, Sensydia, and Cardiosense are innovating new technologies for the improved diagnosis and/or management of patients with, or at risk for, cardiovascular disease. ChromaCode is developing breakthrough genetic and genomic analysis approaches that allow faster and more informed clinical decision-making. This technology doesn’t enable discovery of new markers, but instead reduces costs of diagnostic tests, broadening access to clinically actionable data that can enable optimal health outcomes and reduce health inequities across various disease indications. Viz.ai and Aidoc are applying cutting-edge artificial intelligence (AI) technologies to improve diagnostics, treatment, and clinical workflows.
The potential of these innovations can only be realized through the development of VBC models that incentivize their use. Toward this end, consultants, clinicians, insurance executives, and actuaries who develop these models — and the investors that provide critical funding for innovation — need to be aware of the devices, diagnostics, and therapeutics in development to (1) encourage their use early in the disease detection phase, when they can yield the greatest value and (2) have the knowledge to package these advancements effectively into a bundle of payments that facilitates their adoption and reduces clinical and financial barriers to their widespread use.
What Are Healthcare Organizations Getting Wrong about Email Security?
A new report by Paubox calls for healthcare IT leaders to dispose of outdated assumptions about email security and address the challenges of evolving cybersecurity threats.
These innovative diagnostics and therapeutics manufacturers must also apply VBC principles to their pricing and go-to-market approaches. Accountability for outcomes is increasingly vital to payors, so manufacturers that want adequate unit pricing and quick market entry must respond accordingly. Value-based purchasing (VBP) is taking hold for breakthrough cell and gene therapies due to the high price tags associated with these new treatments. For example, Lyfegen is a company that helps payors and drug manufacturers implement novel VBP contracts on a global basis for these types of high-priced therapies.
Diagnostics and therapeutics manufacturers must also build their real-world evidence base quickly. FDA approval isn’t enough to ensure product success if physicians, hospitals, and payors don’t see the value in prescribing, purchasing, or adequately reimbursing the product. Early-stage R&D companies ignore this drive toward value at their peril, especially as the value-based bar for market entry will only rise.
Early diagnosis and more timely and effective intervention are essential for reducing costs and improving outcomes in our health system. The same applies to companies developing the diagnostics and therapeutics to achieve these critical goals. Considering VBC and VBP models at the earliest stages of innovation and generating the data that demonstrate the value of your product in the context of these models is vital to realizing the transformative potential of healthcare innovation.
Editor’s Note: The author has no financial relationship with any of the companies / products mentioned.
Correction: An earlier version had a factual error about the FirstLook test.
Photo: atibodyphoto, Getty Images
Jason is the Founder and Chief Solutions Officer for Helgerson Solutions Group, a health care consultancy firm focused on helping organizations successfully transition to a value based world. HSG works with private companies, governments and non-profit organizations that need assistance in implementing value-based payment approaches and new care models that will lead to improved patient outcomes and lower overall costs. HSG is also a trusted advisor for private equity and venture capital firms as they look for new investment opportunities and work with companies to drive growth and profitability. Prior to founding HSG, Jason was New York’s Medicaid Director. Jason ran the $70 billion program for over 7 years and was recognized as one of the nation’s most effective healthcare leaders. Jason is a senior advisor to Windham Capital Partners. Prior to New York, Jason was Wisconsin’s Medicaid Director where he led the state’s nationally recognized Badgercare Plus program. When Jason left public service to found HSG, he was the nation’s longest standing Medicaid Director.
This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.