01 White Paper Application of Hospitality Inventory Distribution Models in Healthcare - Part II In the previous white paper, we have examined the Inventory Monetization model in the Hospitality industry and its potential pitfalls. Let’s try to crystallize what should be the salient attributes of an Inventory Distribution and Monetization model in the Healthcare industry. We can then proceed to explore possible models and then evaluate them in the current context. Attributes of a good Inventory Distribution model in Healthcare: • Wide coverage: For patients to have a meaningful healthcare ‘shopping’ experience, not only all services but also multiple options to select from should be available. In an ideal world, all elective medical procedures and services should be available. Also, all inpatient, ambulatory service providers along with auxiliary medical facilities such as pathological labs, imaging centers, and retail pharmacies should be available to choose and compare with. • Package A typical Healthcare other single service providers. Sometimes, involvement of the service providers is known beforehand. For example, an inpatient stay might be followed with a stay or visits to a rehabilitation center or nursing facilities. Or say, involvement of travel and hospitality agents, if a patient chooses to have a specialized procedure performed at a location away from home. In such cases, it is prudent to have the patient pick and choose from options for each individual service. • Price transparency: This is in continuation with the discussion regarding package cost of individual services. And then, be able to by search criteria. • Payer integration: From a patient perspective, it is imperative to have an accurate view of ‘out-of-pocket’ expenses before booking a payer systems will help in determining not only the eligibility, but also the quantum of applicable co-pay or co-insurance for the • Standardization and open architecture: To reduce implementation complexity and improve predictability, it is important that all transactions are based on open standards. This should include both syntactic and semantic interoperability. This will also prevent dominant service providers and technology platform vendors in creating walled gardens,
Transcript
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White Paper
Application of Hospitality Inventory Distribution Models in Healthcare - Part II
In the previous white paper, we have examined the Inventory Monetization model in the Hospitality industry and its potential pitfalls. Let’s try to crystallize what should be the salient attributes of an Inventory Distribution and Monetization model in the Healthcare industry. We can then proceed to explore possible models and then evaluate them in the current context.
Attributes of a good Inventory Distribution model in Healthcare:
• Wide coverage: For patients to have a meaningful healthcare ‘shopping’ experience, not only all services but also multiple options to select from should be available. In an ideal world, all elective medical procedures and services should be available. Also, all inpatient, ambulatory service providers along with auxiliary medical facilities such as pathological labs, imaging centers, and retail pharmacies should be available to choose and compare with.
• Package A typical Healthcare
other single service providers. Sometimes, involvement of the service providers is known beforehand. For example, an inpatient stay might be followed with a stay or visits to a rehabilitation center or nursing facilities. Or
say, involvement of travel and hospitality agents, if a patient chooses to have a specialized procedure performed at a location away from home. In such cases, it is prudent to have the patient pick and choose from options for each individual service.
• Price transparency: This is in continuation with the discussion regarding package
cost of individual services. And then, be able to
by search criteria.
• Payer integration: From a patient perspective, it is imperative to have an accurate view of ‘out-of-pocket’ expenses before booking a
payer systems will help in determining not only the eligibility, but also the quantum of applicable co-pay or co-insurance for the
• Standardization and open architecture: To reduce implementation complexity and improve predictability, it is important that all transactions are based on open standards. This should include both syntactic and semantic interoperability. This will also prevent dominant service providers and technology platform vendors in creating walled gardens,
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thereby improving the overall transparency and competitiveness of the market.
• Userfeedbackandsocialmedia: With the widespread adoption of Internet and digital social media technologies, healthcare itself has become most social. Just like any other consumer service, patients want to review experiences of others before deciding upon a particular clinical service provider. Hence for a transparent marketplace, it is imperative that patients be allowed to share their feedback and rate a clinical facility or a service.
• Regulatoryoversight: Involvement of regulations might sound contrary to the marketization espoused in this document.
Specified the sensitive nature of the industry, it will be a good idea to have some kind of regulatory insight. Particularly, insight pertinent to standardizing transaction frameworks, regulating margins and maximum profits on transactions, and deciding the role of wholesalers and other third-party intermediaries, among others is essential.
An Inventory Monetization and Distribution system espousing the salient features we just discussed can most ideally be completed in a centralized distribution model. A high-level overview of the ecosystem of such a centralized Inventory Distribution and Monetization model can be pictorially depicted as the following.
Patient
Meta-search/ Aggregators
Medical Transparency Retailers
Payer 1
TravelIntermediaries
Paye
r Sw
itch
NHIN Switch
Payer 2
Payer n
LabSystems
Path Labs
Radiology Labs
PharmacySystems
Retail Pharmacy
EMRSystems
Hospital Nursing Homes
Ambularory Hospice
Ambulatory Surgical Centers
Rehabilitation Centers
Core Delivery Landscape
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Let’s take a closer look at some core components of this model:
• Centralizedswitches: This model proposes the use of centralized switches for interaction with care delivery (and associated ancillary) systems and insurance companies. The primary purpose here is to ensure open standards for integration and reduced setup and integration complexity. More importantly, the purpose is to ensure a level playing field for smaller players, thereby promoting innovation and growth:
o NationalHealthInformationNetwork(NHIN)switch: Specified that the aim is to cover all medical facilities including code care delivery systems, laboratories, and pharmacies, it is ideal that this switch will be a federally operated infrastructure. Some functionality provided by this switch includes the following:
- Discovery and search of medical facilities - Discovery and search of available medical
services - Booking of appointments
Such a centralized booking system is not unheard of. NHS (UK) has a central e-referral service allowing General Practitioners (GPs) to refer and book appointment slots for their patients with other participating GPs.
o Payerswitch: This can be a federal or industry operated switch, allowing stakeholders to connect to any insurance company and determine eligibility and coverage of a specified patient for a particular medical service with a chosen medical service provider.
• CareDeliverysystems: All Care Delivery systems including both core and ancillary will have to maintain interoperable interfaces to facilitate search and discovery of services, availability of rates, and booking of appointments.
• MedicalTransparencyRetailers(MTRs): MTRs can be compared with the over the air (OTA) players of the Hospitality industry. They will be the primary gateway for end consumers (patients). These players can and/or will have an agreement with individual care delivery centers, integrated with payer systems. They can have an arrangement with travel and hospitality intermediaries to provide unified experience to patients. Patients should be able to search for a particular medical service within and across localities, compare rates and feedback, and combine multiple services to form a comprehensive care package. By integrating with payer systems, MTR platforms will be able to accurately predict out-of-pocket expense for patients.
Let’s take a closer look at the advantages and disadvantages of the model just discussed:
Advantages
• Low integration complexity• Enforcement of open standards• Level playing field for smaller players, thereby accelerating innovation• Access for an MTR player to all available medical services across all facilities
Disadvantages
• Implementation of a federally owned transaction switch is a tall order• As the experience with the Insurance marketplace (healthcare.gov) suggests, such an approach is fraught with teething issues of highest order• It will take years for such a federally backed initiative to take off
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Specified the disadvantages, it makes sense to look at an alternative model for inventory distribution and monetization that does not involve central or federally owned infrastructures.
Following is one such distributed model.
Patient
TravelIntermediaries
LabSystems
Path Labs
Radiology Labs
PharmacySystems
Retail Pharmacy
EMRSystems
Hospital Nursing Homes
Ambularory Hospice
Ambulatory Surgical Centers
Rehabilitation Centers
Core Delivery Landscape
Intermediaries
Switch Players
Phar
mac
yN
etw
ork
(Sur
escr
ipts
)
LAB
Net
wor
ks
HIE
Meta-search/ Aggregators
As compared to the previous centralized model, let’s take a closer look at some contrasting features of the distributed model.
• DistributedCareDeliveryswitches: Here, an MTR can operate differently from a centralized, federally maintained (NHIN) switch. An MTR
can leverage more than one Health Exchange player such as lab networks, regional health information exchange, electronic medical record (EMR) networks, and pharmacy networks. The number of switches integrated by a specified MTR will depend on the targeted facilities covered. This also implies
Payer 1
Payer 2
Payer n
Med
ical
Tr
ansp
aren
cyRe
taile
r
Faci
lity
Port
als
Med
ical
e-
com
Com
pani
es
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that an MTR might not have access to all facilities or available medical services.
Similar to the Hospitality world, over time the situation here might evolve. Switches will guarantee coverage to all medical care facilities.
• DistributedPayerintegration: Instead of a centrally managed payer switch, an MTR will have to directly connect with individual payer families. This can depend on the patient profile targeted by an MTR player. For example, to target the senior demography, an MTR may choose to integrate only with a Content Management System (CMS) and those players who offer Medicare Advantage plans within the specified target geography.
• DirectCareDeliveryintegration: Unlike the centralized model, the MTR and individual care delivery facilities can choose to have a direct integration.
Whatworksforthedistributedmodel? • Involvement of a centralized authority or
federal government does not exist. This often implies the probability of such an initiative getting off the ground quickly. Actually, the working is much higher.
• The implementation and collaboration is purely driven by market forces.
Whatcanbeanissueforthedistributedmodel?
• Specified the distributed nature, the interoperability complexity handled by the MTR players will be much higher. And some of this complexity will be transferred to participation of care delivery and payer stakeholders also.
• It is highly likely that an MTR player will not have access to all medical facilities and services, thereby defeating the whole purpose of price transparency
and consumer choice. This problem can however be alleviated by meta-search or aggregators.
StandardsrequiredforInventoryDistribution models
Currently, standards that are a perfect match to handle interoperability requirements of the models just discussed do not exist. Fortunately, healthcare is standard-driven. A few standards that can either be referenced or tweaked to achieve the discussed goals exist. These are the following:
• IntegratingHealthEnterprise(IHE)family of standards: IHE is a collaborative industry initiative to create interoperability frameworks to handle key clinical and administrative workflows. The focus here is on both syntactic and semantic interoperability. For the purpose of inventory distribution, the standards which can be leveraged in the IHE family are the following:
o IHEPCCXBeR-WD: The IHE Cross-enterprise Basic eReferral Workflow Definition (XBeR-WD) profile in the Patient Care Coordination technical framework defines interoperability workflow and interface specifications for searching and booking appointments. This, however, is in context of an individual.
o IHEITCSD:The IHE Care Services Discovery (CSD) profile in the IT infrastructure technical framework defines interoperability specifications to query information about available facilities, medical services, and physicians. It also allows physicians to prepare eReferrals. For facility and medical service discovery so far, this is the most comprehensive standard available.
• NwHIN: Nationwide Health Information Network (NwHIN) is set of standards, services, and policies that enable all participating
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players to interchange care information securely in the US geography. Please note that NwHIN is a network and not a custodian of patient data.
• HL7 FHIR: HL7 Fast Healthcare Interoperability Resources (FHIR) provides a RESTful interoperability among participating care delivery applications. In the current context, it can be used to integrate an MTR interface
consumerism will most likely be driven by patients, this might have limited applicability.
• The HL7 SIU family: The HL7 Scheduling Information Unsolicited (SIU) family of standards deals with exchange of information related to appointments, creation of bookings, and cancellation. In the current context, it can be used for a direct integration between MTR and care delivery facilities, which have an existing HL7 implementation. This can
comprehensive IHE implementation.
Why inventory distribution models are inevitable?• Advent of consumerism: Rise in
deductibles and out-of-pocket expenses, explosion of the Internet, usage of smartphone devices, and experiences in other industry verticals are slowly changing the behavior of a typical Healthcare consumer.
• Information asymmetry: Though a Healthcare user is becoming more consumeristic, there is tremendous information asymmetry, which has not been exploited yet. For example, the price of a mammogram in New York can vary from USD 50 to USD 607.
• Market inefficiency:
• Existing players:
• Market size:
As compared to other industries, productivity and utilization rates in healthcare are terribly low. Consumerism and movement of industry towards a value-based model will put pressure on suppliers to better monetize their unutilized capacity.
There are players such as Castlight and Zocdoc already operating in the Price Transparency market. Though their focus is primarily on outpatient visits, they have seen tremendous success and recognition by market. Castlight IPO received a valuation of more than USD 1 billion in 2014.
The market size is huge and offers tremendous potential. As per the CDC Summary health statistics of 2012, around
place, of which 55 percent were to primary physicians. Similarly, the total number of hospital visits was about 35.1 million. If we were to exclude emergency department visits resulting in hospital visits (16. 2 million) or critical care unit (2.1 million), we are still looking at 16.8 million hospital visits where a patient could supposedly ‘shop’ for the right hospital.
