This is Part 5 of a series. Here’s the Overview, Part 1, Part 2, Part 3, and Part 4.
Where are we now?
On March 9, 2020, the Department of Health and Human Services finalized two rules that will start to loosen the stranglehold of the data bottleneck. In a high-level summary, the rules:
- Define and prevent information blocking practices (as an extension of the Cures Act)
- Establish requirements around a FHIR-based Patient Access API that supports a patient’s ability to access and control their electronic health data from providers for free, through third-party applications
- Require health plans in Medicare Advantage, Medicaid, CHIP, and on federal Exchanges to share claims, encounter, and clinical data electronically with patients and their EHR, with an implementation deadline of 1/1/21
- Require payers regulated by the Center for Medicare & Medicaid Services (CMS) to implement a FHIR-based Provider Directory API, with an implementation deadline of 1/1/21
- Require all Medicare and Medicaid participating hospitals to send notifications of patient events (admission, discharge, transfer) to other providers
- Require payer-to-payer data exchange at the request of the patient, starting 1/1/22
- Require EHR vendors to enable an export of all patient records when a provider switches between vendors
There are some concerns to note. For now, these rules aren’t enforced through monetary penalty. When such penalties are established, it remains to be seen whether systems will see them as a cost of doing business. Additionally, the deadlines have been described as “extremely aggressive” and difficult to realistically and properly implement. Epic, on brand with its history of being uncooperative towards interoperability, rallied together almost 60 health systems against the rules.
However, despite these concerns, it is still difficult to overstate the potential impact of these regulations when combined with recent industry trends. We are most certainly at a definitive inflection point in healthcare. To recap:
- The patient is becoming king in the patient-provider-payer dynamic.
- The digital health industry is growing as companies seek to either solve problems for the patient or empower providers and/or payers in creating a better patient experience.
- The COVID-19 pandemic has dramatically increased attention, pressure, and demand on the healthcare system to improve its inefficiencies.
- The problems associated with healthcare data (lack of interoperability and standardization, negative influence of legacy players) have been core contributors to recent American healthcare inefficiencies and the bottleneck to effective digital health solutions.
By requiring compliance from providers, payers, and vendors to play along, the new rules start the breakdown of pre-existing barriers that will enable healthcare organizations to first bring healthcare into the 21st century.
An opportunity in healthcare
Concurrently, the time is now extremely ripe for a healthcare API infrastructure solution that facilitates interoperability and connection of healthcare’s multi-sided marketplace. In a recent a16z podcast episode (a must listen), general partner Julie Yoo outlined the most compelling implications of the above rules, the most notable being the potential emergence of interoperability infrastructure players in healthcare.
Josh Nussbaum’s post on API startups lists the key factors that need to be at play for the success of an API startup, among which are (paraphrased):
- Industry large enough to support a large number of API calls
- Recent changes that increase need for API’s data and/or functionality
- Core to a “new economy”
- API’s data and/or functionality is difficult to manage
- Creates net positive value
- Creates network effects that add to business defensibility
Sound familiar?
In the paraphrased words of Balaji Srinivasan (a16z general partner, former Coinbase CTO), a function that takes simple inputs with high backend complexity is a billion-dollar function. API startups that provide developer-first products for industry bottlenecks have the capacity for tremendous growth — for instance, take payment processor API startup Stripe’s growth over little more than a year.
Perhaps the most potent analogy to this scenario is Plaid’s impact on the financial services industry. Much like the healthcare industry, the financial services industry suffered from data interoperability issues that impeded fintech innovation and consumers lacking robust access to their financial data. By building the developer-friendly API infrastructure that enables connections between the consumer, banks, and third parties while also providing operational flexibility for financial institutions, Plaid became the backbone behind the modern consumer financial experience, powering companies such as Venmo, Coinbase, Acorns, and Betterment.
Similarly, the cream that rises to the crop of healthcare interoperability players will bridge the gap between healthcare’s present and its tech-empowered future. First, these solutions will gain market share by aiding panicked providers and payers meet rule deadlines and connecting them to digital health solutions that expand their capacity to combat COVID-19. Among the most notable companies currently developing API solutions to these problems are the following:
- Ribbon — Provider data, care & insurance navigation, cost & quality (with Julie Yoo on their board)
- Particle — EHRs (care coordination, reimbursement, operations, access)
- Redox — EHRs (care coordination, patient engagement, telehealth, devices)
- Noyo — Health insurance
- Eligible — Revenue cycle management and billing
- Truepill — Pharmacy
Of these, the most compelling are likely the ones laser-focused on provider data and patient access (due to the pressure exerted by the new rules), such as Ribbon, Particle, Redox.
*Not an API startup, but PatientPing, which provides real-time care coordination notifications, is also noteworthy here in light of the new rulings.
Once the most urgent needs are met, these interoperability players and others will be key in ushering in the new age of healthcare as new digital health companies take advantage of the more freely flowing data pipelines to build much-improved, patient-centric healthcare experiences. This will potentially include, but certainly will not be limited to:
- Deeper incorporation of current healthtech solutions into healthcare value chain
- Deeper utilization of consumer health data in care delivery
- Patient autonomy over medical records (and an experience around sharing them)
- Holistic care coordination (of all dimensions of care — acute, ambulatory, behavioral, home, etc.)
- Optimal matching of provider to patient
- Consumerized healthcare engagement experience, involving frictionless access provider/payer shopping experience based on price and quality transparency
- Real-time health insights and care management for patient (especially in chronic care)
- Unlocking insights from compiling real-world evidence
- Deeper personalization of coverage and care payment
- Disruption of EHRs
All such solutions will depend on the infrastructure created by these and other API companies to deliver on their value proposition. Each instance of a potential API call represents potential revenue for these infrastructure players in becoming billion-dollar companies.
In sum:
- The HHS released new rulings that require stakeholders to promote interoperability, through API implementation and unimpeded data exchange.
- This, combined with recent trends, points to the current moment being an inflection point in healthcare.
- Solutions to the new rules’ requirements, such as API interoperability infrastructure, will lay the groundwork for the new era of tech-empowered healthcare. Companies providing these solutions can follow the precedent of startups in other industries (Stripe, Plaid, etc.) in becoming unicorns.
