KLAS Research has just released a report on the current decision-making processes of large acute-care organizations around population health management (PHM) solutions. The report notes that the market has cooled considerably, with only 10 percent of interviewed organizations reporting a recent or in-progress PHM purchase decision. Three KLAS researchers recently spoke with Healthcare Innovation to discuss the significance of their new Decision Insights report.
Healthcare Innovation spoke with KLAS’ Benjamin Cassity, director of research and strategy; Andy Paulsen, director of customer insights; and Paul Warburton, senior market research analyst.
Healthcare Innovation: I think the big headline from your report is that there's been some cooling in interest in the population health management market. Could you guys talk a little bit about why you think that's happening?
Paulsen: These large organizations in the acute-care space made their initial choices in venturing into population health. Now the types of organizations that are looking at investing more into downside risk are evaluating: Does the solution work for that or do we need to go to another third party? Where we are seeing change is among people who are trying to get a better ROI on the investment into value-based care initiatives. Whereas those who are not leaning into that as much are fine with the functionality that they have, and we're not seeing a lot of change for those larger organizations, apart from consolidation and either rolling into their EMR solution or mergers that are forcing them to switch to another solution.
Warburton: We see a really big divide between large organizations that have added the sophistication they need to actually assess downside risk and those that haven’t. The ones that have made the effort have put up things like PHSOs [population health services organizations] that can help the focus on growing that risk-based population and working directly with payers, while the other side of the organization can still be focused on extracting value from fee for service. Sadly, at this point, the number of providers that have walked that line and done it well is quite small.
That is why when you go to a lot of these population health meetings, people say, ‘Man, the money's just not there,’ or ‘we haven't seen reimbursements like we'd expect.’ So it appears like there's a little bit of letting off the gas for a big portion of these large organizations. But what’s happening under the covers is that they haven’t pushed to figure out downside risk either.
We're seeing exactly what was intended — that eventually the upside risk-only things would be harder and harder to achieve, and you need to jump. And we're just seeing some big hesitancy still around large organizations willing to make that jump. Some are seeing great returns by doing that, but it still is a big chasm for many large organizations, especially when they've seen reimbursements decrease like they have and the stresses put on them by inflation and wages. They said, ‘We need to move to a place of safety.’ They know fee for service. So a lot of the investment is focused on operationalizing revenue cycle software rather than investing in things like analytics tools to assess risk.
HCI: Benjamin, do you see it the same way?
Cassity: I would say there is a 20/60/20 thing going on. You've got roughly 20% of those organizations that are succeeding in moving out of that low- risk, low-reward into the high-risk, high-reward. I would say there's probably 60% of the organizations that have run up to the edge of the pool and either stopped and are dipping their toe in, but not ultimately jumping in and even retracting. And then there's about 20% that have never even considered that move.
What we've also seen market-wide is this move to try to consolidate the tech stack. When you pair those things together, you've got all of these technologies that are designed to help these individuals navigate this maze, so to speak, and it feels like we're seeing movement in what we're calling the value-based care enablers, which is your ACO enablement, your value-based care managed services. In that, we've got roughly 80% of the market that ultimately doesn't know how to move into that high-risk, high-reward phase of value based care. These enablers are saying, we're going to hold your hand. We're going to not only help you navigate, but we're going to go at risk with you, and by the way, we're going to help you build out the strategy, and potentially, for some of these vendors, put boots on the ground to help you navigate this successfully and ultimately deal with the high degree of change management and the difficulty in ultimately adopting a successful value-based care strategy.
HCI: What are some of the capabilities that the health system customers value the most when they're looking at these population health management vendors?
Warburton: At the end of the day, once we're looking at pop health 1.0, tools versus 2.0 tools, a lot of it comes down to the risk stratification technology that they need. Risk stratification relies on a lot of data and the integrations from different data sources to do it well. People are moving to this smaller subset of tools that have performed well around risk stratification and integrating multiple data sets from different things. That includes bringing together the claims and clinical data, but there's also so much more of that now that's really being asked. They need to bring in credit score data and social determinant of health assessments into this. Where we see this market coalescing is around the solutions that are most aggressively doing that type of work.
HCI: Are there some pros and cons that people mention about using their EHR vendor like Epic for population health management?
Warburton: Talking about EHR health tools in general, the number one reason why people want to consolidate is because they can reduce third-party purchases.
Most EHR vendors’ population health solutions do come at additional cost. Epic’s Healthy Planet, at the end of the day, will have an additional cost, because interfaces and anything you integrate, you’ve got to pay for that. Nevertheless, when I work with Epic and I say, ‘Hey, I'm going to go with Healthy Planet,’ the Epic side says, 'Well, we're going to turn this on for you,’ and they flip that switch, and it's on.
Oracle has a tremendous breadth of population health technologies. However, when I look at the adoption rate among their customers, it's quite low, because each piece is an additional cost. They will work with you to build a strategy, and they will recommend which pieces you need. However, it's very common for an Oracle customer to say, ‘Oh, Oracle doesn't do this quality metric reporting or it's only a subset of what we need, or I can't get the dashboard that shows that.’ Is any of that true? Oracle sells all of those things. They even have a few customers that have driven great success using those things. But it is a small subset that has put in the money to buy those things.
Cassity: Epic is one of the four vendors being coalesced around. We don't see the other EHR vendors being coalesced around, and it’s because of the cost hurdle.
HCI: For the customers who are thinking about replacing or discontinuing a solution they already have, are there some common issues they cite?
Warburton: Going all the way back to 2017, let’s say they had one analytic solution, they had an EHR, and then they ended up buying something else. All of a sudden they started to see blur and redundancies, and all these tools have interfacing with them, OK? They start asking: Couldn’t I do this in my EHR? Couldn't I do all this in Arcadia or Lightbeam? They’ll think, I can replace one of these other analytic solutions I'm paying a lot for. They ask: Should we be paying for and maintaining all these different interfaces to three different analytic solutions or should we standardized to one?
HCI: If we went back in time a few years and looked at the previous population health management solution reports you’ve done, would the same vendors be on it getting similar comments from customers?
Warburton: Well, if we went back to 2017, you would have been talking about IBM Watson and Philips Wellcentive, and those things aren't even here now.
HCI: So among the ones that are newer to the list is Innovacer, right?
Warburton: If you went back in time in that space, you would have still seen Arcadia, Lightbeam, and Epic, of course, but you would not have seen an Innovacer, or it would have been very nascent. But now Innovacer has high energy; they don't have amazing market share relative to some of those others but they haven't been around as long.
Paulsen: The last time we did this particular report was in 2018, so it has been six years. At that time, referring to Health Catalyst, for instance, customers told us that the reason they were considered, but not chosen, was because they thought that their tools were too complex for their needs. So that kind of speaks to the idea that back then, they were just looking at getting the tool and getting it implemented. And now those organizations that are interested in more complexity are evaluating if those solutions can do what they're claiming.
