Connected Health Solutions Could Be Reality Sooner Using Pay for Success

By Brendan O’Connor

Last week, the Center for Medicare and Medicaid Services (CMS) released updated payment rules for MACRA, one of the largest federal efforts to move healthcare to a quality-based system.

The previous Thursday I was on a panel at the Connected Health Conference (#Connect2Health) discussing the role of impact investing to scale connected health. I’m sure many of the aspiring entrepreneurs and vendors present at #Connect2Health are still digesting the new CMS payment rules, some of whom are likely ecstatic and others disappointed.

Quantified Ventures’ Brendan O’Connor (second from right) at the Connected Health Conference in Boston

Buried within the thousands of pages of payment rules were several areas that indicate CMS is moving in the right direction when it comes to digital and connected health. New billing codes were introduced related to telemedicine, doctors will be incentivized to consult patient-generated health data via wearables, and progress is being made to allow doctors to bill for remote patient monitoring.

All of these moves will allow doctors more flexibility to be reimbursed for their interactions with patients, which isn’t important solely for the purposes of modernizing how doctors treat patients (which should create efficiencies and reduce costs) — it also opens up the realm of possibilities for how we should use technology to support those with significant challenges accessing care. These changes could be life-saving for the community in rural Alaska with no mental health professionals for hundreds of miles, or the low-income mother in urban Atlanta, who does not have the time to take her four children to see a Primary Care Provider during normal business hours.

Where connected health will have the greatest impact is not in serving fitbit wearing health nuts, but in helping the disadvantaged. It is these populations that represent the greatest opportunity to improve health outcomes and drive down avoidable costs. If digital health entrepreneurs wish to be successful in serving this population, they should keep cultural competence, health literacy, and “meeting the patient where they are” top of mind in all product development decisions. If not, they risk developing the next “shiny” product that doesn’t actually meet the individual’s needs, while leaving behind the population who could benefit most from the immense talents of healthcare innovators and entrepreneurs.

Where connected health will have the greatest impact is not in serving fitbit wearing health nuts, but in helping the disadvantaged.

CMS is moving in a positive direction on connected health, but there remains plenty of opportunity. For instance, CMS determined that the Diabetes Prevention Program (DPP) cannot be reimbursed when provided by way of telehealth. For the digital health organizations who have amassed significant evidence demonstrating the efficacy of their telehealth DPP solutions, this will be a hugely disappointing decision.

The good news is that we may not have to wait for regulators to come all the way around to digital health solutions. In fact, there is a ripe opportunity for impact investing to plug that payment gap. Worldwide, investors are seeking to deploy their capital into impactful solutions to challenging health issues, with the goal of improving health outcomes for the vulnerable, while also receiving a financial return on investment. Estimated at $25 billion in the United States alone, and growing at a nearly 25% rate, this capital is available right now to scale promising digital health solutions. Through innovative financing models, such as Health Impact Bonds (e.g., Pay for Success financing), health plans and health systems can tap into private impact capital to pilot these solutions on a large scale, while only paying if the solution actually achieves its stated outcomes.

Worldwide, investors are seeking to deploy their capital into impactful solutions to challenging health issues, with the goal of improving health outcomes for the vulnerable, while also receiving a financial return on investment.

When I speak with health innovators and entrepreneurs, I always ask them about their barriers to scale. More often than not, their answer is one or both of the following: 1) capital and 2) lack of pilot opportunities. Pay for Success may just be the bridge to growth that digital health solutions need. Aside from the promise of up-front capital to be able to scale, the model demands a focus on measuring outcomes, which, when combined, can enable a well-funded, rigorously measured pilot project with a future client. For those digital health entrepreneurs whose solutions are not yet reimbursable by CMS or health plans, Pay for Success could be the boost needed to expand their evidence base while scaling their service or solution.

Brendan O’Connor is Associate Director at Quantified Ventures, where he brings deep healthcare consulting, project management, and advocacy experience, as well as a demonstrated track record of developing and advancing strategic relationships among parties with differing priorities — a necessity in the world of impact investing. In 2012, Brendan co-founded Raise Your City, a social venture that raised significant funding for DC-based nonprofits by lowering barriers for young DC residents to engage directly in local philanthropic initiatives and events. A North Carolina native now residing in Denver, Brendan earned his B.A. in International Studies from Elon University.