PUBLISHED BY RECOMMENDED FOR READING TIME
Innovative Players Shaping
Care Delivery Competition
Eight sources of emerging disruption
RESEARCH REPORT
Market Innovation Center CSOs, strategic planners, and
market analysts 90 min.
advisory.com2© 2020 Advisory Board • All rights reserved
Table of contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Convenient care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Virtual care providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
On-demand risk models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Primary care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Direct-pay primary care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Population health managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Specialty care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Chronic condition management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Single specialty management platforms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Payer networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Centers of excellence networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Health plan network innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
advisory.com3© 2020 Advisory Board • All rights reserved
Executive summary
Hospitals, health systems, and physician groups face threats of disruption on several fronts. Long-
standing industry pressures—unsustainable cost trends and shifting consumer expectations—
have not abated, which has attracted the attention of out-of-industry companies and private
equity-backed entrepreneurs who bring new solutions to bear. New competitors see opportunities
to rebuild the delivery system from the ground up, pioneer new business models, and push the
boundaries of clinical and technological innovation. Many are driven by a limited strategic focus
that is quickly adaptable to market shocks, enabling them to outmaneuver incumbents who have
too many strategic directions and maintain a risk-averse culture to transformational change.
To protect market share, incumbent providers must understand how non-traditional competitors
are establishing a differentiated value proposition and positioning themselves for growth. This
report provides an overview of the major trends and innovative players emerging in the market
across four domains:
1. Convenient care: A growing network of alternative ambulatory care options, including retail
clinics, urgent care centers, virtual care providers, and home care providers that are appealing
to consumers by offering on-demand access to care and superior levels of service.
2. Primary care: Medical groups that are creating a direct-pay market by offering concierge-level
services and/or partnering with payers to manage patients with polychronic health needs.
3. Specialty care: Providers that appeal to purchasers by building care models for a specific
disease state, condition, or procedure, rather than taking a one-size-fits-all approach.
4. Payer networks: Health plans and independent third parties that are selectively driving
business to high-performing facilities—on their terms.
Not all innovators in this report are equal in terms of their source of differentiation and future
growth outlook. For each group, Advisory Board analyzed the following value drivers.
Offers a differentiated
consumer experience
• Enhances access and/or
convenience
• Offers a frictionless end-
to-end health journey
and transaction
• Delivers economic value
to end users
Attempts to improve
clinical outcomes
• Improves patient-
desired outcomes and
quality of life
• Reduces misdiagnoses
and complications of care
Possesses a sustainable
operating model
• Utilizes efficient processes
to generate cost savings
• Operates with a competitive
expense structure
• Appeals to clinical and
administrative workforce as
an employer
Utilizes a scalable
business model
• Develops intellectual
property not easily
replicated by competitors
• Accesses capital with
relative ease to cover
infrastructure costs
• Partners with stable, long-
term customers to fill unmet
demand and serve a large
addressable market
Source: Market Innovation Center interviews and analysis.
Criteria for evaluating innovators
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Road map
1
Convenient care
Section
advisory.com5© 2020 Advisory Board • All rights reserved
Access standards elevated to new heights
Non-traditional competitors capturing patient loyalty by offering on-demand access
Introduction: convenient care
1. Primary care physician.
2. Advisory Board 2019 Primary Care Consumer Choice Survey.
Expanded breadth of services
Innovators continue to expand their
services beyond immediate care,
vying to be a single go-to resource not
only for urgent care but also primary
care, wellness, select specialties, and
even hospital-level care.
Experimentation with new
financing models
While convenient care sites remain
reliant on direct-to-consumer
business and walk-in care,
innovators are experimenting with
bundled subscription services and
B2B partnerships with risk-bearing
entities and retailers to tap into new
growth channels.
Despite efforts to improve ambulatory
access, provider shortages and growing
demand continue to prolong wait times and
stretch provider capacity. Medical groups
face intensifying competition from non-
traditional access points—including urgent
care centers, retail clinics, and virtual care
providers. These new competitors are not
just offering on-demand access to care, but
also positioning themselves to serve as a
patient’s regular provider for longitudinal
health care needs.
Source: Market Innovation Center interviews and analysis.
1 2Virtual care
providers (page 6)
On-demand risk
models (page 14)
Innovators profiled in this report
SPOTLIGHT
53%
40%
Loyalty to a traditional PCP1 declines, 2015 vs. 2019
Percentage of survey respondents who would “definitely” stay
with their PCP over the next year2
-13%
2015 2019
Emerging trends in convenient care
Heightened focus on the
digital front door
Disruptors are attempting to attract
customers farther upstream in the
care journey through digital
applications to capture new patient
relationships and influence
downstream spending.
advisory.com6© 2020 Advisory Board • All rights reserved
Virtual care: on the path to widespread adoption
Virtual care providers
Source: “FH Healthcare Indicators® and FH Medical Price Index® 2019,” FAIR Health, April 2019; Market Innovation Center interviews and analysis.
Virtual care providers
DESCRIPTION
Providers who remotely diagnose and/or treat patients
through real-time or asynchronous audiovisual
information exchange.
• 98point6
• TytoCare
• Carbon Health
• Amazon Care
• Nurx
• HeyDoctor
Current growth strategies used by
telehealth incumbent and start-ups
Future predictions on growing the
role of telehealth in care delivery
Innovative players1
• K Health
• OnMed
• Bright.md
• Zipnosis
• Eden Health
• Babylon Health
Advancements in remote diagnostic
technologies expand virtual capabilities
Medical device, diagnostic testing, and
consumer technology companies will
continue to develop at-home diagnostic tests,
handheld diagnostic tools, and smartphone
sensors to expand clinicians’ capabilities to
diagnose and treat remotely.
Hybrid in-person and virtual models
take shape
Start-up primary care companies are
offering the ability to connect with one’s
regular PCP virtually to improve access
while preserving care continuity.
Niche telehealth providers attempt to
create direct-to-consumer market
A growing number of telehealth providers
offer focused solutions specializing in a
narrow set of services, such as
reproductive health and mental health, but
few gain traction in the market without
significant marketing funding.
Artificial intelligence-powered platforms
manage patient intake and triage
Virtual care providers will offer free or low-
cost chatbots and symptom checkers as a
means to connect with new patients
searching for a provider online. Advanced AI
platforms will automate diagnostic and
treatment plan tasks, significantly enhancing
provider productivity.
Dedicated “virtualists” compete for
patient relationships nationwide
As demand grows and virtual providers
expand their capabilities beyond urgent
care, more clinicians will spend 100% of
their time dedicated to telehealth and join
virtual medical groups that compete to
establish long-term relationships with
patients nationwide.
B2B partnerships drive growth
Even though virtual visits only accounted for
an estimated 0.11% of all commercial claims
in 2017, telehealth providers continue to grow
at a rapid pace, thanks in large part to
partnerships with health plans, retailers, and
consumer technology companies that help to
increase awareness and utilization.
1. Organizations in bold are profiled in this report.
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Automation powers 98point6’s low-cost, text-first virtual care platform
98point6
1. Video also available.
Virtual care start-up lowers barriers to use for consumers
98point6 is a telehealth start-up that offers a text-first solution for treating low-acuity health care needs. The
company aims to overcome many of the hurdles impeding the adoption of virtual visits, including strict regulatory
and licensing requirements, sub-optimal consumer engagement, and poor reimbursement. Since its founding in
2015, 98point6 has rapidly expanded its nationally-licensed virtual medical group, built out its technology platform,
and entered into new partnerships with large retailers and health plans to expand utilization of its service.
98point6Telehealth provider with 31 physicians • Seattle, Washington
CASEEXAMPLE
Minimal out-of-pocket costs
Offers employer and direct-to-
consumer plans with low per-visit
fees; the direct-to-consumer
subscription model is $20 for the
first year ($120 for subsequent
years) and each visit costs just $1
Nationwide virtual medical group
Board-certified physicians with equity
stake in company provide 24/7
coverage and are licensed in all 50
states and DC
AI responsible for 90% of virtual visit
50% 10%Diagnose and treat
38%Care plan and charting Follow up
2%Gather findings
• Physician spends 100%
of time reviewing patient
report and interacting
with the patient via in-
app messaging
• AI algorithm gathers details from
patient’s history
• Patient history and reported
symptoms are pulled into a report
for PCPs treating the patient
• Care plan and visit notes are
automatically created
• App sends next steps and
treatment reminders to the
patient post-visit
98point6’s telehealth offering
Source: Market Innovation Center interviews and analysis.
At the heart of 98point6’s telehealth platform is its AI-powered algorithm that automates approximately 90% of
the interactions with the patient, from gathering diagnostic information to creating a care plan. With its text-
based chatbot, 98point6 is able to preserve its physicians’ time for higher-level tasks, which vastly improves
productivity of its physicians and lowers overall operating costs.
AI-powered technology platform
Intuitive, text-first platform1 offers a
digital experience on par with leading
social media and e-commerce
applications and automates much of
the patient interaction
advisory.com8© 2020 Advisory Board • All rights reserved
Virtual care bundled with pharmacy, dental, vision to enhance appeal
98point6-Sam’s Club
Source: Flees, L, “Sam’s Club Launches Innovative Pilot to Help Make Healthcare More
Affordable,” Sam’s Club (September 26, 2019); Market Innovation Center interviews and analysis.
Wholesale model appeals to budget-conscious consumers
98point6 has sought out B2B partnerships as its primary growth lever. A recent partnership with Sam’s
Club couples 98point6’s virtual care platform with services already offered by Sam’s Club, including
dental care, eye exams, and pharmaceuticals. With just a $50 annual membership fee, consumers can
see a 98point6 physician for $1 per visit in addition to receiving other Sam’s Club health services at a
significant discount. Their highest-cost premium membership offers an expanded array of health
services for up to six family members.
Sam’s Club’s Care Accelerator membership offerings
Core telehealth
$50 per year
Core dental
$50 per year
Preferred
$100 per year
Premium
$240 per year
Medical care: text-based doctor visits
24/7 for $1 through 98point6
Pharmacy: generic medications
offered for free for select medications
Dental care: savings on dental
services within Humana’s dental
network
Optometry: $60 for eye exams and
20% off eyewear at Sam's Club
Prepaid debit card: a $5, $40, or
$100 prepaid health debit card, for the
$50, $100, and $240 plans,
respectively
Preventive care: free preventive
health screening at Quest Diagnostics
Discounts: up to 30% off alternative
medicine (chiropractic, acupuncture,
and massage therapy) and 10% off
hearing aids at Sam's Club
Given that virtual visits offered by other vendors often cost upwards of $50 per visit, consumers could
begin reaping financial savings from the Sam’s Club Accelerator membership after the first visit. Currently,
the membership offerings are only available in Michigan, Pennsylvania, and North Carolina. If the company
observes high demand at its pilot sites and is able to capture increased spending at Sam’s Club stores
among members for non-health care goods, the company could offer the membership nationwide.
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TytoCare’s technology expands the scope of services virtual providers can offer
TytoCare
Source: Baxt, J, “TytoCare takes telehealth retail,” (MedCityNews, November 13, 2019),
“TytoCare Launches TytoHome Nationwide at Best Buy Stores” (PRNewswire, November
13, 2019); Market Innovation Center interview and analysis.
Diagnostic tools enable remote, in-home physical exams
TytoCare is a telehealth company that offers both a platform for virtual visits and an at-home device
for remote diagnostics. Like 98point6 and other virtual care providers, TytoCare has sought out
partnerships with health systems and vendors to expand utilization of its telehealth platform. The
company now sells its direct-to-consumer TytoHome product for $299.99 in 300 Best Buy stores.
TytoCareTelehealth company • New York City, New York and Netanya, Isreal
CASEEXAMPLE
TytoCare’s TytoHome product capabilities
Virtual visit
For $59, consumers can connect to
physicians for a virtual examination
using high resolution exam camera
In-home virtual visit
Stethoscope
Listen to heart, lung, and
stomach/bowel sounds
Otoscope
Examine the ear
and ear drum
Thermometer
Measure body temperature
Tongue depressor
Examine throat and
tonsils
Bluetooth connectivity
Connect to additional devices that
measure blood pressure, oxygen
saturation, and weight
Unlike other virtual care providers, TytoCare does not employ its own clinicians. TytoCare is instead
placing its bets on developing digital diagnostic technologies that supplement virtual care platforms.
The company partners with telehealth company, American Well, and health systems such as Ochsner
Health System, Novant Health, and Sanford Health to staff its platform 24/7, 365 days a year.
TytoCare has also joined Epic's App Orchard marketplace to promote care continuity with patients'
regular providers. Data captured by TytoCare devices is automatically transferred to Epic's electronic
health record.
As digital diagnostic technologies continue to develop, the range of addressable conditions that can be
diagnosed and treated from the comfort of a patient’s home will expand. The cost of digital
diagnostics, as well as consumers’ comfort and experience with using the devices, will determine the
extent to which these technologies play a role in care delivery going forward.
advisory.com10© 2020 Advisory Board • All rights reserved
Carbon aims to be the go-to platform for all urgent, primary, virtual care needs
Carbon Health
Source: Truong, K, Dietsche, E, “Carbon Health pulls in $30M to become the Starbucks of
Healthcare”, MedCityNews (June 6, 2019); Market Innovation Center interviews and analysis.
Hybrid virtual, physical network offers full-service solution
Carbon Health is a Silicon Valley start-up that offers
an integrated EHR1, consumer-facing smartphone
application and managed services (scheduling,
billing, etc.) for urgent care centers and primary care
clinics. The company aims to reinvent the health
care experience by offering consumers a modern
and intuitive digital experience on par with
interactions one would have with e-commerce and
social media applications.
Carbon’s goal is to create a nationwide care delivery
network. To do so, they have adopted the “networks”
approach pioneered by companies such as Uber and
Airbnb—creating a large network without owning any
of the associated assets. When consumers need
medical care, they have the option of using any one
of the urgent care centers or primary care clinics on
Carbon’s practice management software.
Alternatively, consumers can opt for a virtual visit
within the application.
Carbon HealthPrimary and urgent care provider and technology vendor with clinics across four markets • San Francisco, California
CASEEXAMPLE
Concierge consumer-oriented digital services
Clinic administrative services
Carbon Health’s technology-enabled
software solution
• Carbon’s technology serves as the EHR, patient
portal, and scheduling and billing system
• AI-powered clinical decision support system and
chatbot gathers symptoms and history before visits
to improve provider efficiency; suggests the correct
diagnosis for a patient with 90% accuracy
• Carbon collects 7% of practice revenue for its
managed services
Carbon is not the only start-up attempting to create a nationwide care delivery network using a hybrid virtual and
in-person model. Others including Crossover Health, Eden Health, and Firefly Health are relying on virtual care to
scale and increase their presence across a wider geography in a cost-effective manner. This strategy appeals to
employers that want to launch occupational health clinics but have widely-dispersed employee populations. It also
enables providers to introduce patients to virtual options available to them for future needs while they are in a
physical clinic.
Virtual care
Urgent care
Primary care
Explains symptoms
and history to AI-
powered chatbot
Chooses virtual or
physical visit with
physician • Visit notes, medical images, lab results, scheduled
appointments, referrals, and treatment plan appear
on a single consumer-facing app
• Patients can access pricing information, schedule
same-day appointments, pay bills, refill
prescriptions, and request home delivery of
prescriptions within the app
• Users can chat with their doctor, submit health
information from wearables, and schedule
medication reminders
Patient interaction within Carbon’s app
1. Electronic health record.
advisory.com11© 2020 Advisory Board • All rights reserved
Amazon
Source: Evans, M, “Amazon Joins Trend of Sending Workers Away for Health Care,” Wall Street Journal (October 15, 2019), Jang,
R, “Introducing New Alexa Healthcare Skills” Amazon Alexa (April 4, 2019), Landi, H, “Amazon acquires startup Health Navigator to
build on its Amazon Care program”, FierceHealthcare (October 24, 2019); Market Innovation Center interviews and analysis.
Big tech positioned to compete for the digital front door
Amazon has announced a series of health care acquisitions and product announcements that indicate it
is setting its sights on health care as a future avenue for growth. With a large base of over 310 million
active customers and 100 million Prime members, Amazon has the loyal customer base, technological
prowess, and capital to test and scale a direct-to-consumer health care offering with wide appeal.
AmazonRetailer with 100 million prime users and 640,000+ employees • Seattle, Washington
CASEEXAMPLE
June 2018Acquired online
pharmacy PillPack for
$753 million
January 2019 Amazon, Berkshire
Hathaway and J.P. Morgan
launched Haven joint
venture to “move the needle
on health care expenses”
Amazon’s major health care moves
April 2019Launched HIPAA-
compliant Alexa skills
with six organizations
September 2019Launched Amazon Care,
which provides video visits,
text-based nurse chat
services, prescription
delivery, and home care to
its employees
October 2019 Acquired Health
Navigator online
triage platform
October 2019Haven announced insurance
plan for its employees that
offers free preventive care,
no coinsurance or
deductible, and $15 in-
network PCP visits
November 2019Announced first wearable
device, “Echo Buds” that
track workouts
Today, there is not a single digital platform for consumers to search, schedule, and receive care on a
nationwide scale. Given its growing collection of health care assets and existing relationships with
consumers, Amazon is positioned to be a prominent channel consumers use to get connected to the
delivery system
Triage function via Alexa
and digital chatbot
Patients prompted for details
regarding their symptoms,
such as severity, duration,
and history and directed to
appropriate care sites
Scheduling platform for
select, participating providers
Patients ask Alexa to schedule
same-day appointments at
participating health systems
(already working with Atrium Health
and Providence St. Joseph Health)
Connection to virtual and
home-based care
Patients access Amazon’s
virtual provider partners
though Amazon Care platform
Amazon’s potential role in the digital patient journey
advisory.com12© 2020 Advisory Board • All rights reserved
Amazon’s occupational health offering couples virtual and home care access
Amazon
Source: Farr C, “Amazon launches Amazon Care, a virtual medical clinic for employees,”
CNBC, September 24, 2019; Market Innovation Center interviews and analysis
“Amazon Care” makes its debut
In 2019, Amazon launched an app-based occupational health service that connects its employees in
Seattle to providers from Oasis Medical Group. The program offers virtual and home-based services
and is available from 8 a.m. to 9 p.m. on weekdays and 8 a.m. to 6 p.m. on weekends.
Amazon Care
Text-based chat with a
nurse can be initiated
within Amazon’s app
Chat function
Virtual visits with a doctor
or nurse practitioner can
resolve low-acuity care
needs and/or provide
referrals
Nurses can be
dispatched to home or
office for in-person
exams, diagnostic
testing, and treatment
Prescriptions can be
delivered same-day to
patients’ home or office
Virtual services
Video visits House calls Prescription delivery
Home care
While Amazon Care is currently only available to Amazon employees, the design of Amazon’s
occupational health program may preview a more widespread direct-to-consumer health care service
in the future. Along with its Haven insurance product, all signs point to Amazon taking a more active
role in managing health care costs.
Services offered to Amazon’s employees
advisory.com13© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
98point6
TytoCare
Amazon
Carbon
Health
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Has a large existing
user base and
considerable access
to capital
Large addressable
market, but requires
market-by-market
partnerships and
conversion of existing
medical record platform
Offers 24/7 access with
user-friendly, text-
based communication
Uniquely positioned to
bundle health and non-
health care services at
affordable price point
Private equity backing
and partnerships with
well-known national
retailers and health
plans supports growth
Diagnostic tools
may improve ability
of remote clinicians
to formulate an
accurate diagnosis
and treatment plan
Software foundation
enables cost-effective
replication across new
customers
Enhanced primary
care access may
improve outcomes on
par with other virtual
care providers
Easy access to
clinician, treatment
plan, and health data
may improve
engagement long-term
Enhanced access
may improve
outcomes on par
with other virtual
care providers
Technology will likely
need to come down in
price to generate cost
savings for consumers
Exclusive Best Buy
partnership creates
highly visible sales
channel nationwide
Product expands
range of needs able
to be resolved from
home setting
Scale of the company
may enable it to offer a
more cost-effective
solution than alternatives
Offers services
normally only offered
in subscription-based
concierge medical
practices at no cost
AI-enabled platform
creates productivity
gains; continues to hire
3-4 PCPs per month to
staff its platform
advisory.com14© 2020 Advisory Board • All rights reserved
Risk-bearing entities partner to reduce hospital and emergency department costs
On-demand risk models
Source: “2019 Primary Care Consumer Choice Survey,” Advisory Board,
September 5, 2019; Market Innovation Center interviews and analysis.
1. Organizations in bold are profiled in this report.
2. Employs the NYU ED Algorithm developed by the NYU Center for Health and Public
Service Research, which was developed to help analyze unnecessary ED utilization.
3. Fee-for-service.
On-demand access a growing imperative for risk management
On-demand risk models
DESCRIPTION
Urgent care centers, retail clinics, virtual care providers,
and house call companies that partner with employers,
health plans, and/or risk-bearing providers to offer on-
demand alternatives to higher cost settings such as the
emergency department (ED).
• Humana-Doctor
on Demand
• CVS Health-Aetna
• Dispatch Health
• CityMD-Summit
Medical Group
Current trends on the expanding role of
alternative care sites
Future predictions on the role of alternative
care sites in value-based care models
25.4%
25.0%
12.6%
13.1%
32.0%
31.6%
30.0%
30.3%
2018
2015
Not emergent ED care needed; preventable
Emergent but ED care not needed ED care needed; not preventable
ED avoidable visit assessment, 2015 vs. 2018
Advisory Board Avoidable ED Assessment tool2; Medicare FFS3 claims
Innovative players1
Alternative care sites diversify their
service offerings beyond emergent care
Innovative convenient care groups are
attempting to expand primary care, behavioral
health, wellness, and chronic care offerings; a
select few have created specialized models
(ex: orthopedic urgent care centers), but some
struggle to gain traction with payers
Digital gatekeepers manage patient care
As consumers become more comfortable with
utilizing alternative care sites for regular care
needs, health plans will launch more digital-
first products to manage low-acuity needs and
direct members to high-value downstream
providers when necessary
Deeper integrations with risk-bearing
entities lead to total cost reductions
Convenient care sites will leverage payer
benefit design to drive business to their
access points and utilize clinical and claims
data to better manage risk
Non-traditional sites serve as regular
providers for longitudinal health needs
In 2019, over 50% of patients ages 18 to 29 and
nearly one in five patients overall used an
alternative care site as their main source of
primary care; this number will continue to grow as
traditional primary care clinics shift their focus to
serving patients with complex, chronic care needs
• MedExpress-Optum
• Walgreens-Humana
• Medically Home
• Contessa
• ConvenientMD
Higher-acuity hospital services moved
to the home setting
Mobile health teams will iterate on the
Hospital at Home model to provide a
lower-cost alternative to hospital stays
ED diversion continues to be elusive
The growth of alternative care sites over the past
decade has not led to a corresponding decrease
in avoidable ED visits, indicating that increased
access alone will not move the dial on ED
avoidance—especially for unmanaged populations
advisory.com15© 2020 Advisory Board • All rights reserved
Humana-Doctor On Demand offer virtual-first health plan to employers
Humana-Doctor on Demand
Source: “Humana and Doctor on Demand launch virtual primary care plan to bring more services with lower costs
to patients, insurers, and employers,” Business Wire, April 24, 2019; Livingston S, “Humana announces virtual
primary care plan,” Modern Healthcare, April 24, 2019.
Gatekeeper model makes a digital comeback
Humana-Doctor on DemandHealth insurance company with over 16M covered lives; partnering with telehealth
company, Doctor on Demand • Louisville, Kentucky
CASEEXAMPLE
Humana has invested in primary care delivery assets through its Partners in Primary Care and
Conviva subsidiaries to better manage patients with chronic care needs and control downstream
costs. In 2019, the health plan introduced a new plan called On Hand that tests whether virtual PCPs
can effectively guide patients to the right sites of care for their needs.
Members are assigned a Doctor on Demand PCP and must first consult with their virtual care team for
any primary or specialty care needs. Doctor on Demand’s clinical capabilities extend beyond just
urgent care. Patients have access to behavioral health professionals, dieticians, care coordinators,
and pharmacists. With this expanded care team, Doctor on Demand can resolve approximately 92%
of cases virtually. For the other 8% of needs, physicians will refer patients to providers within the
Humana network.
Humana’s On Hand health plan
Affordable coverage
Out-of-pocket costs include a $0
copay for video visits and a $5 copay
for lab tests and prescriptions.
Downstream navigation
Doctor on Demand’s smart referrals
feature ensures all referrals remain in
Humana’s high-value provider network.
Lower costsVirtual access to services
Virtual PCP
Members assigned dedicated PCP
from Doctor On Demand and can
see the same physician over time.
Medical device kit
Members are given digital blood
pressure cuff, thermometer, and log for
submitting data to virtual providers.
Humana expects premiums for the On Hand plan to be priced nearly 50% below comparable
industry-standard plans. The ability to lower costs with a virtual-only plan relies on a combination
of lower per visit fees compared to alternative sites of care (ex: emergency departments) and an
enhanced ability to send patients to high-value providers for downstream care when necessary.
The On Hand product is being piloted in Florida and Texas as a self-funded product for small
businesses. Further expansion is possible depending on the success of the pilot.
advisory.com16© 2020 Advisory Board • All rights reserved
CVS Health plans rapid expansion of its HealthHub store redesigns
CVS Health
1. Continuous positive airway pressure.
2. Body mass index.
Retail 2.0: an entryway for wellness and chronic care needs
With the acquisition of Aetna, CVS hopes to bring together its most
important assets—brick and mortar stores and claims data—to engage
consumers in health and wellness and generate revenue-enhancing
synergies in their HealthHub stores.
The company has already announced plans to rapidly scale the
HealthHub model nationwide—in areas with high Aetna penetration—to
have a total of 1,500 HealthHubs by 2021. Given that approximately
71% of the U.S. population lives within 5 miles of a CVS, there is a high
likelihood that a HealthHub could be coming to a location near most
incumbent providers sooner rather than later.
CVS HealthPharmacy, retailer, PBM, and integrated Aetna health plan with 22.8M members • Woonsocket, Rhode Island
CASEEXAMPLE
CVSHealth
1,500HealthHub locations
planned by 202145%Of CVS survey respondents
say they would get primary
care from the retailer
Source: “CVS Health testing new HealthHUB store format,” CVSHealth, February 13, 2019; LaVito A,
“CVS to open 1,500 HealthHUB stores over next two years,” CNBC, June 4, 2019.
Staffing
• Pharmacists conduct
medication reconciliation for
high-risk Aetna members
• Nurse practitioners provide
medical services
• Dieticians and respiratory
therapists counsel patients
with chronic care needs
• Care concierge assists
consumers with navigating
service offerings and events
Products and services
• Offers approximately 80% of medical
services provided by a PCP
• Medical equipment for sale includes
wheelchairs, walkers, CPAP1 machines,
yoga equipment, and electronic activity
monitors
• In-house diagnostic capabilities include
onsite lab for blood work, kiosks to
measure blood pressure and BMI2, and
diabetic retinopathy imaging
• Classes are available for smoking
cessation, weight management, and
nutrition counseling
• “Learning tables” equipped with tablets
allow consumers to explore health and
wellness applications and CVS products
and services
Store design
• At least 20% of store space is
dedicated to health services
• Each location has 3 medical
exam rooms
• Group events are hosted in a
wellness room (nutritional
seminars, insurance benefits
education, Zumba, yoga,
mindfulness classes etc.)
• Stores are open Monday-Friday
until 7:30 pm and Saturday and
Sunday until 4:30 pm
Features of CVS’s HealthHubs
DATA SPOTLIGHT
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Financial ROI expands beyond pharmacy and retail cross-sale revenue
CVS Health
1. According to early results reported by CVS leadership.
Aetna partnership unlocks new sources of value
Unlike its MinuteClinic stores, CVS has clearly designed its HealthHub stores around health care rather than
retail. At least 20% of its retail space has been reallocated for health and wellness products. By 2021, CVS
projects that its HealthHub store strategy will result in $850 million in new incremental revenue for the
company.
Its alignment with Aetna unlocks additional sources of value beyond cross-selling pharmaceuticals as its
MinuteClinics were designed to do. Not only can Aetna provide financial incentives to use HealthHub services
through benefit design, but it can also use its physical assets as channels to enroll non-Aetna consumers in
Medicare Advantage plans, engage high-risk members in managing their chronic disease, and provide lower-
cost alternatives for routine health care needs.
Engage members in chronic disease
management and wellness
Utilizing Aetna claims data, high-risk members can be
called in to stores for screenings and group activities or
to be connected with remote monitoring devices,
disease management apps, on-site pharmacists, and
dieticians.
Reduce costly ED visits and influence
downstream site of care decisions
Convenient locations of stores and free to minimal
cost-sharing obligations for Aetna members
promote utilization of stores rather than higher-cost
EDs and urgent care centers.
Grow Medicare Advantage membership
Stores are designed to attract seniors, which provides
an opportunity to enroll non-Aetna consumers in its
health plan during open enrollment.
Synergies between CVS HealthHubs and Aetna
Source: Clifford T, “CVS CEO Larry Merlo says 600 remodeled HealthHUBs will be opened by
the end of 2020,” CNBC, January 13, 2020; Market Innovation Center interviews and analysis.
It may take time for CVS and Aetna to unlock the potential cost-saving benefits of owning both care
delivery and insurance assets. But CVS’s rapid expansion plans and bolstered health care offerings
mean that health systems across the nation can expect more direct competition for ambulatory services
in the near-term—and heightened expectations from consumers for co-located services, better care
coordination, and more timely access to care.
Cross-sell products and services
HealthHub stores have significantly higher foot
traffic and store sales compared to traditional CVS
stores as a result of the redesign and expanded
health care focus.1
advisory.com18© 2020 Advisory Board • All rights reserved
DispatchHealth partners with risk-bearing entities to provide low-cost alternative
DispatchHealth
Source: Levine D et al., “Hospital-Level Care at Home for Acutely Ill Adults: A Randomized Controlled Trial,” Annals of
Internal Medicine, December 17, 2019; “DispatchHealth Furthers Nationwide Expansion and Announces New Health
System Partnerships”, PRNewswire (January 7, 2019); Market Innovation Center interviews and analysis.
1. Emergency medical technician.
2. Diagnosis related group.
3. Dispatch’s most common home hospitalizations include: pneumonia, CHF exacerbation,
COPD exacerbation, complicated UTI, cellulitis, and metabolic derangements.
4. Data not from Dispatch Health, but from randomized controlled trial of 91 adults admitted via
the ED to the Hospital at Home model at an academic medical center and community hospital.
Hospital-level care moves to the home setting
DispatchHealth was founded in 2013 to provide homebound
patients and convenience-minded consumers an option to receive
urgent care and ED-level services in the home, or in assisted
living and skilled nursing facilities. Today, the majority of
Dispatch's growth has not come from individual consumers, but
from risk-bearing provider groups aiming to avoid costly
emergency visits. In fact, approximately 60-70% of Dispatch visits
are initiated by clinicians and their partner organizations,
including home health, care coordinators, and care managers.
DispatchHealthHome-based provider operating in 18 markets across 12 states • Denver, Colorado
CASEEXAMPLE
It became apparent to me
that the facility-based care
model was starting to price
itself out of existence…We
mobilize the high-acuity
care that exists in the walls
of the hospitals and pull it
into the home.”
Mark Prather
CEO, DispatchHealth
Dispatch’s extended episode of care
• Mobile care teams
equipped to deliver
100% of the care
provided by an urgent
care center and 70% of
care provided by EDs
• Offers advanced ED-
level care such as on-
site blood work,
catheter and g-tube
placement, blood tests,
and stool cultures
• Contracts with private payers
to receive a reduced DRG2
payment compared to inpatient
DRG payments for home-
based hospital services3
• Patients receive daily visits
from Dispatch’s medical team,
remote patient monitoring, and
24/7 physician access for the
entirety of the episode (up to
30 days)
• Appointment
requested via app,
website, or phone by
the patient, care
manager, or physician
• Centralized triage
team determines level
of care needs
• Care team comprised of
nurse practitioners,
physician assistants,
EMTs1, and emergency
medicine physicians that
typically arrive within 60 to
90 minutes
• One physician manages
12 mid-level providers in
the field and connects to
the onsite care team via
telehealth
38%
Dispatch has announced a $33 million plan to expand into 25 markets in 2020 and offer advanced
hospital-level services in its existing markets. Patients with complex medical needs can now be
“admitted” to Dispatch’s Advanced Care and Extended Care programs instead of being admitted to an
inpatient hospital or discharged to a higher-cost post-acute location.
Average decrease in costs for a Hospital at Home
acute care episode compared to usual care4
$1,200 $20MAverage savings per
Dispatch intervention
Estimated savings to
physician group in FY 2019
Savings delivered to a risk-bearing physician group in a large urban market
DATA SPOTLIGHT
DATA SPOTLIGHT
In-home visit
requested
Staff dispatched
to patients’ home
Urgent and emergency
care treatment
Hospital inpatient-
level treatment
advisory.com19© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
CVS Health
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Offers a one-stop shop
for services ranging
from wellness to
chronic care
Large infrastructure
of CVS stores
already in place;
able to leverage
benefit design to
attract patients
Utilizes mid-level
providers to lower
costs, but requires
cross-sell revenue and
total cost of care
reductions to achieve
substantial ROI
Leverages pharmacists
for medication
management; potential
to use Aetna claims to
identify high-risk patients
Dispatch
Health
Support from risk-
bearing entities and
funding sources
enhances ability to
enter into new markets
Usage of tele-
presentation and
mid-level providers
enhances cost
effectiveness
Home-based model
the ultimate form of
convenience; cost-
effective for patients if
out-of-pocket costs
lowered by health plan
Humana-
Doctor on
Demand
Members can access
providers 24/7 with
minimal out-of-pocket
obligation, but
gatekeeper approach
to specialty care may
be frustrating for some
consumers
Continuity with a
regular PCP supports
ongoing care
management; access to
claims data and an
expanded care team
including behavioral
health specialists may
enhance outcomes
Virtual visits are more
cost-effective for
members than other
alternative sites of care
Plan design promotes
utilization of virtual care,
but market demand is
largely untested
Home model enables
providers to address
social determinants of
health and bring care to
homebound patients
advisory.com20© 2020 Advisory Board • All rights reserved
Next steps for building a convenient care strategy
Source: Market Innovation Center interviews and analysis.
• The Strategic Thinker's
Guide to Partnerships and
Affiliations
• Urgent Care Center Pro
Forma
• Vertical Integration:
Preparing for New
Competition
Compete with competitors to
control the digital front door
• Leverage technology to deliver a self-
service digital experience with
capabilities such as online
appointment scheduling, call ahead
functionality, physician research /
matching, and triage tools.
• Activate consumers in longitudinal
health management by offering a
single platform to view health records,
submit device data, and access
navigational resources.
• Transition some in-person interactions
to chatbots, centralized call center
staff, and low-cost virtual visits.
Optimize operations of existing
sites to offer on-demand
access to care
• Maximize efficiency of ambulatory
clinics by standardizing scheduling
templates, filling no-show
appointment slots, and enabling
top-of-license practice.
• Provide weekend and after hours
availability and reserve same and
next day appointment slots for
high-value patients.
Build or partner to supply
additional ambulatory capacity
• Enter into staffing or joint venture
arrangements with retail and urgent
care operators to gain core
competencies not available
internally.
• Co-locate highly-utilized ancillary
services such as pharmacy and lab
and consider providing on-site
specialty services (pediatrics,
orthopedics, behavioral health,
occupational health etc.) when
demand is sufficient.
Action steps and resources to support strategy
• Build Your Digital Front Door
• Creating a Consumer-Focused
Digital Strategy
• Next-Generation Patient
Contact Centers
• Ready-to-Present Telehealth
Industry Trends
• Wait Time Zero
• What Consumers Really
Want from Urgent Care
• Ambulatory Strategies
Compendium
Incumbent providers should closely monitor new entrants and the value proposition they offer to
determine potential business impacts and evaluate opportunities to compete or partner. The
action steps and resources listed below can be used to help organizations set a winning
convenient care strategy.
1 2 3
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Road map
2
Primary care
Section
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Primary care: the chassis for radical delivery system reforms
Innovators adopt non-traditional financial models
Introduction: primary care
As convenient care sites proliferate
and redefine consumers’ service and
access expectations, primary care
groups are adopting innovative care
and business models with the goal of
keeping primary care at the center of
the delivery system. Some groups
attempt to match service and access
enhancements offered by competitors
while others differentiate on the basis
of their ability to effectively manage
patients with polychronic health needs.
Supported by alternative financial
models, innovators are meeting the
demands of the market while using
primary care as a launch point for
developing more comprehensive low-
cost delivery systems.
Low-cost delivery networks
Primary care groups are offering
ancillary and specialty services
traditionally offered in higher-cost
settings after building sufficient
regional scale.
Segmented primary care clinics
Rather than taking a one-size-fits-all
approach, clinics are designed to appeal to
niche population segments, including
seniors, patients with multiple chronic
diseases, consumers with expendable
income, or “bargain basement” shoppers.
Primary care innovators adopt alternative financial models
3 4Direct-pay primary
care (page 23)
Population health
managers (page 27)
Innovators profiled in this report
SPOTLIGHT
Source: Market Innovation Center interviews and analysis.
Wholesale fee-for-service
An à la carte, pay-per-use model paid
directly by consumers or payers
Full capitation
Primary care practices
take responsibility for
the full cost of care
Carve-out memberships
Recurring fees paid by
consumers, employers, or payers
to cover all primary care needs
Level of
financial
risk
Services covered
Consumer-driven Payer-driven
Emerging trends in primary care
Non-traditional financial models
Innovators are adopting financial
models that don’t always profit off of
primary care itself, but rather from
cross-selling other products,
managing utilization, and decreasing
the total cost of care.
advisory.com23© 2020 Advisory Board • All rights reserved
Direct-pay models emerge as supplement to insurance
Appealing to both underinsured and high-income earners
Direct-pay primary care
Source: Eskew P and Klink K, “Direct Primary Care: Practice Distribution and Cost Across the Nation,” Journal of the
American Board of Family Medicine, November 2015; Market Innovation Center interviews and analysis.
Direct-pay primary care
DESCRIPTION
A direct-to-consumer business model that collects fees
directly from patients rather than billing insurance. Some
practices charge a monthly or annual fee for enhanced
access to care and concierge services.
• Forward Health
• Walmart Health
• AtlasMD
• Babylon Health
• Galileo Health
Current drivers of growth for
direct-pay models
Future predictions on strategies used
to differentiate direct-pay businesses
Model Cost
Direct primary care membership $77 per month (average)
Telehealth-only membership $10-100 per month
Discounted fee-for-service rates 20-50% discount (estimate)
Concierge-lite (claims submitted to insurance) $200 annually (estimate)
Concierge executive health programs $183 per month (average)
• OneMedical
• SteadyMD
• Parsley Health
• MDVIP
• Medlion
Innovative players1
Rising deductibles expand market
opportunity for direct-pay models
Unlike traditional executive health concierge
models, today’s direct-pay primary care
models appeal to a growing number of
underinsured individuals who pursue
membership models as a means to lower
their out-of-pocket obligations.
Nationwide clinic operators emerge to
boost competitiveness
Primary care practices will join private equity-
backed firms and investor-owned companies
to achieve administrative efficiencies, acquire
digital capabilities, and appeal to employers
looking for geographically-dispersed primary
care networks.
PCPs specialize in whole-person care
Providers will push the bounds of
personalized care by offering genetic testing
or co-located wellness services (diet and
exercise support, etc.) to address a fuller
continuum of health needs; co-location of
specialists may be possible in locations with
high patient volume.
Administrative burdens drive PCPs
to alternative financing models
Burnt out with heighted demands,
physicians in small practices are turning
to direct primary care membership
models which offer autonomy without
high overhead.
Direct-pay financing models
Digital technologies enable concierge
service enhancements
Technologies that facilitate communication
with the care team and create a personalized
experience through integrations with apps
and remote monitoring devices—will be the
primary basis of differentiation.
Wide variation in pricing structures
Membership-based models range from low-
cost telehealth-only offerings to high-touch
concierge offerings that compete for a more
limited, wealthier customer base.
1. Organizations in bold are profiled in this report.
advisory.com24© 2020 Advisory Board • All rights reserved
Standalone health centers test viability of cash-only market
Walmart Health
By 2023, Walmart projects that its customers will spend an additional $750 billion out-of-pocket for health
care compared to $250 billion for retail goods. The company hopes to capture a share of that out-of-
pocket spending with its Walmart Health Centers, which house an expanded array of services in large,
freestanding facilities.
1. Electrocardiogram.
2. According to Healthcare Bluebook’s fair price for “Office Visit, Established Patient (~25 min.)”.
Walmart brings everyday low prices to health care
Walmart HealthRetail corporation with 1.5M employees • Bentonville, Arkansas
CASEEXAMPLE
Source: Lee J, “Walmart Opens Its First In-Store Health Center: An Interesting Avenue for Growth,” The
Motley Fool, October 15, 2019; LaVito A, “Walmart makes reducing health-care costs a top priority — for
customers, too,” CNBC, October 12, 2018; Market Innovation Center interviews and analysis.
Format
• 10,000 square feet (relative
to its 19 existing 1,500
square feet retail clinics)
• Separate entrance from main
retail store with modern look
and feel
Pricing
• Services cost 30-50% less than those of
competitors
• Prices are made available before receiving
services and financing options are available
• Primarily targeting self-pay consumers
• Currently accepts Medicare and the
Walmart employee health plan, but may
negotiate to accept other private insurers
over time
Services
• Co-located primary care, dental care,
behavioral health, optometry,
pharmacy, lab, X-ray, EKG1, hearing,
pharmacy, counseling, preventive
health and wellness education,
insurance education and enrollment,
and pet care
• Online scheduling and walk-in
appointment availability
Features of Walmart Health Centers
DATA SPOTLIGHT
Walmart Health
$40
CVS Minute Clinic
$89
Typical PCP office2
$210
Out-of-pocket price comparison for general office visit
Walmart’s prior forays into health care delivery focused on low-acuity, one-off patient interactions, Their new
strategy is designed to create longitudinal patient relationships and address complex health needs. By co-
locating services under one roof, Walmart can cross-sell services to sustain its low price points. They have
also looked to integrate specialty services into their care model, starting with mobile mammography and
women’s health.
Walmart’s first health center in Dallas, Georgia, has generated 30-40% higher volume than initially projected
by the company and the company opened a second center in Calhoun, Georgia in early 2020. While the
timeframe for future growth is still undetermined, the company is positioning itself to be a nationwide primary
care provider. It recently announced an opportunity for its employees to pursue bachelor's degrees in health
care fields for just $1 a day—building a pipeline for a skilled workforce to staff its new health centers.
advisory.com25© 2020 Advisory Board • All rights reserved
Tech-enabled Forward Health sets new bar for direct primary care memberships
Forward Health
Source: Eskew P and Klink K, “Direct Primary Care: Practice Distribution and Cost Across the Nation,” Journal of
the American Board of Family Medicine, November 2015; Market Innovation Center interviews and analysis.
Boutique membership models target high-end consumers
Founded by former Google and Uber executives, Forward
Health is a venture capital-backed primary care start-up from
Silicon Valley that aims to deliver a modern, technology-
enabled health care experience on a nationwide scale. The
company does not accept insurance, but rather charges a
monthly fee of $149 for unlimited primary care visits and
leading-edge technologies and amenities.
Forward HealthDirect primary care provider with 8 clinics • San Francisco, California
CASEEXAMPLE
Technology-enabled experience
• Blood testing with results in 12 minutes, facilitated
by portable infrared vein finders
• Dermascope that enables remote analysis of skin
lesions by a dermatologist
• Body scanner to measure vital signs including
heart and metabolic rates, body temperature, pulse
oximetry, arterial health, body composition, and
weight
• iPads for appointment check-in
• Large interactive touchscreens in exam rooms
• Remote scribes to record visit notes
• Online scheduling, direct care team messaging,
and medical record access via a mobile app
Concierge service offerings
• Unlimited visits to Forward locations, with no per-visit
co-pay
• 60-minute visit blocks where physicians discuss
medical, lifestyle, and wellness needs, including sleep,
diet, exercise, stress, and genetic predispositions
• On-site diagnostic services including genetic testing,
blood testing, pap smears, STD testing, and cancer
screenings
• 24/7 messaging with care team
• Monitoring of health data submitted from wearables
and devices through Forward’s app
• Hospitality-focused design and amenities, including
free sparkling water, wearables for sale, and large
exam room recliners
Forward Health’s direct primary care membership offerings
Forward’s monthly membership is nearly twice as expensive
as typical direct primary care memberships, which will likely
attract higher-end consumers with significant health needs and
the means to pay a premium for a first-class experience. The
company is placing its bets on proprietary in-house technology
as its core point of differentiation, investing heavily in direct-to-
consumer marketing to build its patient panels, and offering $0
initiation fees to demonstrate that their re-envisioned health
care experience is worth the expense.
$149 Forward Health
$77Average direct primary
care practice
Cost of monthly membership
DATA SPOTLIGHT
Image credit: Forward Health
advisory.com26© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Forward Health
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Personalized care
approach and high-tech
service offerings create
distinct experience
unmatched by traditional
primary care locations, but
high membership fees may
limit appeal to wealthier
consumer segments
Greater access to
physicians and
ongoing monitoring
of personal health
data may promote
better management
of chronic conditions
Low panel sizes and
reduced administrative
burden attractive to
PCPs; circumventing
insurance reduces
costs, but substantial
time and expense
required to build
panels
Substantial capital
required for technology,
amenities, and rent in
high-traffic, wealthy
communities, but private
equity backing and in-
house technological
intellectual property open
unique opportunities to
quickly expand into large
urban markets
Walmart Health Existing store
presence, significant
access to capital, and
high foot traffic creates
opportunities to expand
on a wide scale—
including in non-urban
communities not
traditionally targeted by
disruptors
May improve access to
care in underserved
geographies, especially
for Walmart employees;
co-location with
pharmacists and
integration with
specialists may promote
continuity of care
Pricing model
requires significant
cross-sell revenue to
generate meaningful
profits long-term
Transparent pricing and
one-stop shop model
creates attractive and
distinct value proposition,
especially to underinsured
consumers and consumers
without a regular PCP
advisory.com27© 2020 Advisory Board • All rights reserved
Payers delegate risk for populations with chronic care needs
Primary care practices adopt high-touch care models to control costs
Population health managers
Source: “APM Measurement Effort,” Health Care Payment Learning & Action
Network, 2019; Market Innovation Center interviews and analysis.
Population health managers
DESCRIPTION
Primary care groups that enter into value-based arrangements
with payers and receive a significant portion of their revenue from
capitated payments or shared savings. These groups typically
adopt a high-touch care model focused on controlling costs for
small panels of patients with chronic health needs through a
combination of utilization, network, and care management.
• Heal
• ChenMed
• VillageMD
• Oak Street Health
• Iora Health
• Landmark Health
Current growth of primary care models
for population health management
Future predictions on growth and influence
of value-based primary care groups
• CityBlock Health
• CareMore
• Aspire Health
• Aledade
• Vera Whole Health
• Partners in Primary
Care
17.2%Percentage of Medicare Advantage
payments tied to population-based
payment models in 2018 (an
increase from 10.3% in 2017)
5.1%
30.7%
25.1%
39.1%Upside-only rewards
and/or upside and
downside risk
Population-
based payments
FFS with performance payments
Traditional fee-
for-service
Breakdown of 2018 payment models, across all payer segments
HCP LAN2; represents 77% of insured population (226.5 million Americans)
Innovative players1
Medicare Advantage (MA) leads the charge
toward alternative payment arrangements
Health plans and primary care groups enter into
full-risk capitated agreements for MA lives due to
risk-adjusted payments from Medicare and
favorable unit economics that come with
managing a previously unmanaged population.
Capitated models expand to new populations
Payers will look to delegate risk to PCPs beyond
MA populations. Medicare’s new Direct Contracting
payment model pilot offers capitation for the
general Medicare population, vastly expanding
market opportunities for value-based primary care
management companies.
Senior-focused models grow at a rapid clip
Clinics designed for high-need senior populations
offer greater access to physicians due to smaller
panel size, free concierge services (ex:
transportation to appointments), and on-site
wellness events and ancillary services.
Primary care groups create vertically-
integrated networks—bypassing hospitals
Clinic operators will invest in onsite ancillary
and specialty services, such as pharmacy, lab,
home care, and surgical center assets once
they have sufficient patient volume in a region.
Practice management groups accelerate the
transition to value-based clinic models
Managed service organizations are equipping
existing clinics with the data, analytics, and
personnel to succeed under value-based
contracts, creating a more scalable and expansive
solution compared to senior-only models.
De facto narrow networks take shape
As risk models expand and primary care groups
increase their density within a market, clinic
operators will attempt to shift referral decisions
away from physicians in order to route patients
to lower-cost sites for downstream care needs.
1. Organizations in bold are profiled in this report.
2. Health Care Payment Learning & Action Network.
advisory.com28© 2020 Advisory Board • All rights reserved
Heal combines house calls with technology to coordinate care
Heal
Source: Landi, H “California house call app Heal acquires Doctors on Call, expands to NYC market,”
(FierceHealthcare September 23, 2019; “Heal Launches First-Ever Contextual, Data-Driven Telemedicine
Solution,” Business Wire, May 30, 2019; Market Innovation Center interview and analysis.
A clinic-less approach to managing high-need patients
Founded in 2014, Heal offers home-based primary care services to patients across 12 U.S. markets.
Historically, Heal relied on a direct-to-consumer, fee-for-service business model, but the company has
recently shifted its strategy toward wholesale purchasers and value-based contracts to fuel its growth.
HealHome-based primary care provider • Los Angeles, California
CASEEXAMPLE
By visiting patients in the home setting, Heal
providers report that they are better able to
understand social, economic, and lifestyle
factors that impact health outcomes.
Combining this information with data from
health records and remote monitoring
devices enables care teams to better
manage the health of the populations they
serve and reduce the overall cost of care.
71%Reduction in ED and urgent care
utilization reported by Heal 28%Reduction in hospital
admissions reported by Heal
Patients can view their provider’s schedule
within the Heal app and request in-home visits;
in-home visits are available from 8 a.m. to 8
p.m., 7 days a week, 365 days a year
Heal receives a per-
member-per-month fee
to manage the primary,
preventive, and urgent
care needs of high- and
rising-risk health plan
members
Members select a
preferred Heal provider to
manage their care over
time—replacing their
previous clinic-based PCP
Patients can choose voice or video calls for
follow-up appointments
Payers delegate risk
to Heal
Patients select
preferred Heal PCP
Heal manages care needs in
the home and virtually
Apple Healthkit and Epic integration
Health data stored in Epic and Apple Healthkit is
available to Heal providers and patients through the Heal
app (Heal is the only organization partnering with Apple
on its digitized record initiative).
Heal Hub remote monitoring device
A Bluetooth-enabled device wirelessly transmits health
data (blood pressure, heart rate, blood sugar and blood
oxygen saturation etc.) from FDA-approved remote
monitoring devices; AI-powered alerts notify providers
when a patient’s measures are out of the desired range.
Technology promotes care continuity
DATA SPOTLIGHT
Heal’s clinic-less approach to managing high-risk populations
advisory.com29© 2020 Advisory Board • All rights reserved
Segmented care models for MA populations become more common
High-touch clinics build business around polychronic seniors
While disruptors have traditionally targeted healthier, commercial patients, many disruptors are now turning
to Medicare-aged patients with chronic conditions. Payer demand for primary care groups that aggressively
manage high-risk patients has increased as these groups demonstrate an ability to turn a profit from
traditionally unprofitable populations.
Source: Coutre L, “Primary care provider ChenMed to enter five new markets,” Modern
Healthcare, December 5, 2019; Market Innovation Center interviews and analysis.
Primary care group Date founded Growth and market presence
ChenMed 1985 in Miami,
Florida
• 65 practices across 14 markets in 2019
• Plans to enter 5 additional markets and add 20 new practices in 2020
• Compound annual growth rate of 35% from 2010 to 2019
Iora Health 2010 in Boston,
Massachusetts
• 48 locations in 11 markets in 2019
• Expects to build 15-20 new clinics per year
Oak Street Health 2012 in Chicago,
Illinois
• 54 primary care clinics across 6 states
• Payment: Full-risk capitation; typically
85% of the premium dollar delegated to
control total costs
• Target population: Seniors 65+ with
Medicare Advantage plans and multiple
chronic conditions
• Physician compensation: Based on
cost performance rather than productivity
and RVU1s
BUSINESS MODEL
• Small panels: Panels typically limited to
400-600 patients to enable high-touch
management
• Multidisciplinary care team: Includes
PCPs, health coaches, behavioral health
specialists, dieticians, and care managers
• Focus on prevention: Frequent contact
with patients and an emphasis on
preventive care such as health screenings
and medication adherence
CLINICAL MODEL
• Service utilization: Timely diagnosis of conditions
and adherence to preventive care strategies lead to
fewer hospitalizations and ED visits
• Site-of-care steerage: Referral coordinators and
technology platforms direct patients to lower-cost
settings and specialists when possible
COST SAVINGS
• Co-located services: On-site lab, imaging,
pharmacy, and specialty care
• Appointment availability: Typically longer
time with personal physician (45-60 minutes);
same- or next-day appointment slots; free
transportation to and from appointments
• Support services: Social and educational
events; 24/7 support line for questions
CONCIERGE SERVICES
Defining characteristics
Growth of industry-leading senior-focused primary care clinic operators
1. Relative value units.
advisory.com30© 2020 Advisory Board • All rights reserved
ChenMed shifts market share to high-performing hospitals and specialists
Source: Singh J, “Redefining primary care,” Credit Suisse, April 22, 2019; Ghany R, et al., “High-touch care leads to better outcomes and
lower costs in a senior population,” American Journal of Managed Care, September 2018; “ChenMed Company Overview,” Deceber 26,
2019; Robeznieks, A, “Medicare-only Oak Street Health isn’t shy about taking big risks”, AMA (July 23, 2019); Market Innovation Center
interviews and analysis.
High-touch management impacts downstream utilization
Senior-focused groups take an aggressive approach to
prevent escalations of chronic illnesses because their
business models are dependent on reducing costs.
ChenMed, Oak Street Health, and Iora Health have all
reported reductions in hospital admissions, ED visits, and
specialist referrals due to their high-touch care models.
These groups encourage frequent interactions between
physicians and patients at their clinics to promote
preventive care. In fact, ChenMed reports that its PCPs
spend an average of 189 minutes annually with each
patient in their 400-500 patient panel.
When patients do need specialty or acute care services,
ChenMed relies on a limited number of high-value
partners. Administrative staff ensure that referrals are
sent to providers committed to two-way communication
with ChenMed PCPs when considering admitting the
patient to the inpatient setting or referring patients to
subspecialists. Those who don’t show a commitment to
shared-care planning and appropriate utilization will not
earn future referrals.
30%Fewer hospital admissions
reported by ChenMed compared
to Medicare benchmark
52%Reduction in ED visits
reported by Oak Street Health
Reduction in specialist
use reported by Iora
Health
35%
DATA SPOTLIGHT
High-value providers earn ChenMed referralsReferral ratio shifts to high-value hospitals over time
Hospital A Hospital B
2008
2013
2
1
1
4
Segmented senior care models will likely continue to experience steady growth for the foreseeable future,
particularly in pockets of the country with a large number of MA patients and a dearth of PCPs. In smaller
markets that cannot support such a specialized model, third-party managed service organizations may offer
an attractive alternative for existing practices struggling to transition to value-based models.
advisory.com31© 2020 Advisory Board • All rights reserved
VillageMD partners with practices to accelerate transition to value-based models
VillageMD
1. Chronic obstructive pulmonary disease.
VillageMDPrimary care managed service organization with 3,000+ affiliated
and employed physicians across 9 markets • Chicago, Illinois
CASEEXAMPLE
Source: Market Innovation Center interviews and analysis.
Founded in 2013, VillageMD offers primary care providers a population health management
solution to support the transition to risk and value-based care. VillageMD does not focus on a
segment of a practice’s patient population but offers a multi-line-of-business platform for payer
contracting and population health management.
VillageMD practice management and population health support services
• Negotiates and manages value-based contracts with payers
• Provides data and analytics to analyze performance on utilization, coding, and quality measures for attributed patients
• Offers working capital to support physicians with technology investments (remote monitoring, telehealth, EHR solutions, etc.)
• Deploys best practice care models (ex: COPD1 patient management)
• Provides multidisciplinary care teams to support PCP in creating custom care plans, including nurse care managers,
resource coordinators, patient care coordinators, disease educators, and pharmacists
• Conducts proactive outreach via phone or electronic notifications to close care gaps and ensure ongoing patient attribution
• For owned Village Medical practice sites, offers an EHR solution in addition to revenue cycle management, marketing, staff
recruitment, and human resources support
VillageMD predominantly partners with existing
independent primary care physician groups rather
than building its own clinics. However, the
company now has 21 clinics that it owns and
operates through its brand, Village Medical. Five
of these clinics are located at Walgreens stores.
The Village Medical at Walgreens locations are
testing a new approach to retail health care. The
locations offer full-service primary and chronic
care, in addition to treatment for minor illnesses
and urgent care. By bringing the VillageMD
model to its stores, Walgreens will test whether
they can increase foot traffic and loyalty.
Village Medical at Walgreens
Format: 2,500 square foot, 7 exam room
locations co-located at Walgreens stores with
separate entrances
Services: Offers comprehensive primary care
services, same-day walk-in appointments, virtual
visits, lab services, and house calls
Staffing: Physicians and advanced practice
providers are employed by Village Medical
MSOs support clinics with population health
advisory.com32© 2020 Advisory Board • All rights reserved
VillageMD focuses on network and site of service to control spend
VillageMD
Effective management of utilization generates cost savings
The payer contracts VillageMD negotiates range from pay-for-performance to shared savings and global
capitation. The ability to generate medical cost savings is due to absolute reductions in utilization, more
favorable contracting with specialists, and site-of-service shifts.
Source: Market Innovation Center interviews and analysis.
Contracts with specialists to accept
sub-Medicare rates for MA patients
• When payers delegate network management
to VillageMD, the company contracts with a
select number of specialists in the market
who are high-performing and lower cost.
• For select specialties such as oncology,
VillageMD will also enter into sub-capitation,
preferred status agreements with medical
group partners.
Two strategies for better managing utilization
Shifts site of service away from higher-
cost hospital networks
• When demand is sufficient, VillageMD will
provide funding to partner sites to add
services such as physical therapy, pharmacy,
lab, and/or imaging services (including
advanced CT1 and MRI2).
• Referrals for low-intensity, high-volume
procedures (ex: colonoscopies) are
intentionally sent to lower-cost sites of care.
• In the future, VillageMD plans to invest in
higher-acuity, specialized services, including
infusion centers and home-based inpatient
care (ex: Hospital at Home).
Houston market: patient volumes provide leverage
to assemble lower-cost specialty network
New Hampshire market: ASC joint venture provides
lower-cost alternative to hospital-owned sites
Cardiology group
Enjoys preferred relationship
with VillageMD
VillageMD
Negotiates reimbursement
rates below typical Medicare
rates for MA lives
Affiliated VillageMD physicians purchase
a plot of land adjacent to medical group
Local surgeons and VillageMD lease
land from PCPs, co-invest in ASC
VillageMD contracts with payers for an
in-network alternative to other hospital-
affiliated ASCs
1 2
1. computed tomography.
2. Magnetic resonance imaging.
advisory.com33© 2020 Advisory Board • All rights reserved
VillageMD
Support services create revenue enhancements for PCPs
Source: Market Innovation Center interviews and analysis.
Village Medical at Home deployed to meet quality metrics and provide care to high-risk patients
VillageMD identifies that it is
seven MA patients short of
meeting annual hemoglobin
A1c compliance measure for
type 2 diabetics
Sends phlebotomist to
patients’ homes who have
not scheduled an in-person
appointment
VillageMD earns incentive
from meeting quality
measure under payer
contract and by avoiding
complications from diabetes
Today, VillageMD only participates in globally capitated MA
contracts. The organization is able to generate significantly
more cost savings from MA populations compared to younger
commercial patients. But because it accepts all patients, works
with existing practices, and accepts payment from multiple
payers, VillageMD is able to capture a critical mass of patients
in a market more quickly than senior-only clinic models. This
enables the company to invest in more services.
One service VillageMD is able to offer is home-based primary
care. Home-based care is especially valuable to patients with
mobility or transportation challenges and those recently
discharged from the hospital. Additionally, in the event that a
patient is unresponsive to outreach to schedule an in-person
appointment, VillageMD can deploy its clinical team to patients’
homes. By doing so, the organization can ensure it is meeting
quality metrics that are components of payer contracts and
earning pay-for-performance incentives.
160-200VillageMD
DATA SPOTLIGHT
240-250HMO plans
300Non-HMO plans
Sample of performance:
admissions per 1,000
population in Houston market
We view [VillageMD] as a new employment
opportunity. If you ask a physician practice what
their alternatives are, the alternative options are
to sell their clinic to a hospital or to sell their clinic
to a clinic aggregator, if they’re big enough. We
want to represent another employment
opportunity without having to become part of
an insurance company or without becoming
part of a hospital system.”
-Paul Martino
Co-founder and Chief Growth Officer, VillageMD
VillageMD offers a path to succeed in value-
based care models for small independent
practices with insufficient scale to invest in
population health-focused technology and
staff. Meeting performance standards in payer
contracts allows physicians to realize shared
savings revenue while providing higher
quality, lower cost care.
advisory.com34© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Heal
VillageMD
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Senior-
focused
models (Oak
Street Health,
ChenMed,
and Iora
Health)
Offers convenience of
home-based care with
minimal out-of-pocket costs
when covered by health
plan; technology offerings
deliver a modern and
integrated experience
Practice management
services may offer a
superior working
environment for clinical
and administrative staff;
population health services
can be delivered more
cost-effectively
Has adequate funding
and the ability to
partner with existing
practices (rather than
build from scratch)
Colocation of services,
free transportation,
enhanced physician
access, and programs
designed for seniors
can be attractive, but
gaining access will
likely mean leaving an
existing PCP
Low patient panels and
a multidisciplinary care
team enable high-touch
management of chronic
health needs for the
most complex patients
Growing interest in
partnerships from
health plans and
health systems; aging
population expands
market opportunities
Usage of telehealth
enhances cost-
effectiveness of
deployment model
Health plan
partnerships and
funding sources
enable it to more
easily enter new
markets and make
acquisitions
Convenience of colocation
next to Walgreens is a
frequent consumer
satisfier; clinics may benefit
from technology,
personnel, and practice
management expertise
Capitated, risk-
adjusted payments
enable providers to
have low patient
panels, but revenue
may be susceptible to
changes to the MA
program’s risk
adjustment payment
methodology
Analytics platform and
additional care team
support may enable
PCPs to better
identify and manage
high-risk patients
Home-based model
enables providers to
address social
determinants of health
and reach homebound
patients while
preserving continuity
with a regular PCP
advisory.com35© 2020 Advisory Board • All rights reserved
Next steps for building a primary care strategy
Source: Market Innovation Center interviews and analysis.
• Combating Physician Burnout
• Eight No-Regrets Investments for
Access and Population Health
• Advancing Your Approach to
Ambulatory Care Management
• 10 Imperatives for Primary Care
Today
Build closer integrations between
primary care groups and specialists
• Expand access to specialty care within
primary care clinics through rotating on-
site specialist models and telehealth
consultations.
• Secure PCP referrals by offering a
frictionless referral process, providing
timely access, and coordinating care with
PCPs throughout specialty episodes.
Diversify primary care network
with niche or concierge offerings,
when demand is sufficient
• Develop a diversified primary care
platform that appeals to distinct
customer segments, from healthy
millennials to high-needs seniors.
• Incorporate experience-enhancing
offerings in accordance with
consumer demand and local
competitor offerings.
Invest in support services to
enhance competitiveness of clinics
• Deploy a multidisciplinary care team,
including pharmacists, dieticians,
behavioral health specialists, and
health coaches to improve access,
quality, and coordination of care.
• Offer administrative services to clinics
that off-load tasks from primary care
staff, including technology for risk
management and revenue cycle
optimization.
Action steps and resources to support strategy
• Creating a Primary Care Strategy
for Service Lines
• Oncology Referral Strategy
Playbook
• Maximizing Referral Integrity
• Guide to Profitable Colocation
• Medical Neighborhood Primer
• Consumer Preferences for a
Primary Care Clinic
• Assessing the Case for Concierge
Medicine
• Five Steps to Build the Advanced
Medical Home
• The Future of Primary Care
Incumbent providers should closely monitor new entrants and the value proposition they offer to
determine potential business impacts and evaluate opportunities to compete or partner. The
action steps and resources listed below can be used to help organizations set a winning primary
care strategy.
1 2 3
advisory.com36© 2020 Advisory Board • All rights reserved
Road map
3
Specialty care
Section
advisory.com37© 2020 Advisory Board • All rights reserved
Dealing in specialists on principles of value-based care
Episode managers tackle conditions and procedures driving greatest spending
Introduction: specialty care
Hyper-specialized care models
Innovators are not just zeroing in on a
singular service line, but also forming
companies dedicated to a single
chronic condition or procedure that
drives a disproportionate amount of
spending. This allows them to adopt a
factory-focused, end-to-end care
model that is both efficient and
outcomes-oriented.
“Asset-lite” delivery networks
New entrants are able to offer low-cost
alternatives to hospital systems by
building from scratch and maximizing
use of digital and home-based care
modalities that don’t self-cannabilize
physical assets.
Wholesale partnerships with payers
Specialty groups are building sufficient
regional scale to enhance negotiating
leverage with payers. In some cases, they
are even offering cost savings guarantees
to promote adoption of payer policies
driving site of care shifts.
While primary care has been the focal point
for many value-based care initiatives,
approximately 93% of overall health care
spending can be attributed to specialty care.
The dollar opportunity associated with chronic
disease and procedural episodes has drawn
the interest of innovative digital health, ASC,
and physician-led companies that aim to
create and scale specialized care models. As
a result, these groups are accelerating shifts
in site of service away from higher-cost
hospital settings.
5 6Chronic condition
management (page 38)
Single specialty management
platforms (page 43)
Innovators profiled in this report
SPOTLIGHT
Source: Bailit M et al., “Standardizing the Measurement of Commercial Health Plan Primary
Care Spending,” Milliman, 2017; Market Innovation Center interviews and analysis.
Mean primary care spending as a percentage
of total medical spending
2014; PPO members from 10 insurers
7%
93%
Primary care
Specialty care
Emerging trends in specialty care
advisory.com38© 2020 Advisory Board • All rights reserved
Carving out chronic disease from traditional care ecosystem
Innovators develop low-cost digital and in-person solutions
Chronic condition management
Source: Market Innovation Center interviews and analysis.
Chronic condition management
DESCRIPTION
Programs designed to prevent the onset of chronic disease
and/or engage patients in long-term management to prevent
escalations of an existing disease, such as diabetes, pulmonary
disease, kidney disease, depression, or hypertension.
• Cricket Health
• Livongo Health
• Omada Health
• Glooko
• Propeller Health
• Virta Health
Current trends on emerging chronic
condition management solutions
Future predictions on the growth
potential for digitally-enabled solutions
• Lyra Health
• Hello Heart
• Vivante Health
• Ginger.io
• Somatus
43.2%
24.6% 20.9% 20.8% 18.2% 17.4%12.8% 11.8% 11.4% 10.6%
Highest utilizers of inpatient services by chronic condition
Percentage of inpatient volumes where condition is present; national all-payer estimate from
Advisory Board’s Chronic Conditions Inpatient Estimator
Hypertension Hyperlipidemia Diabetes Anemia Chronic
kidney
disease
Ischemic
heart
disease
Depression Heart
failure
COPD Atrial
fibrillation
Innovative players1
Market opportunities will expand beyond
self-insured employers
While many programs find early traction with
self-insured employers with less stringent
actuarial standards, fully-insured health plans,
brokers, and pharmacy benefit managers will
incorporate more digital therapeutics solutions
alongside existing products as ROI becomes
clearer; digital formularies and prescribing
platforms will promote utilization of programs.
Digitally-focused user experience
differentiates programs
Funding is not flowing to point solutions, but
rather to products that offer end-to-end
solutions that aggregate health data from
disparate sources, offer an intuitive technology
interface, and provide seamless access to the
care team when needed.
Risk sharing relationships with payers
encourage wide-scale adoption
As companies validate long-term clinical efficacy
and ROI of their models, an increasing number are
entering into outcomes-based payment
arrangements to accelerate adoption.
Locus of care management will exist
outside traditional delivery systems
For the highest-need patients, the majority of
patient interactions will likely occur virtually
with health coaches rather than physicians in
traditional office settings.
Personalized data insights activate patients
to self-manage conditions
AI-powered platforms offer a scalable way to
activate patients and drive behavior change by
using big data to deliver tailored guidance.
Users receive automated and personalized
nudges, resources, and educational content.
Digital therapeutics companies will expand
to new disease states
Today, programs for diabetes are most common,
but purchasers will pursue more comprehensive
solutions that address the needs of individuals
with multiple, comorbid conditions. Start-ups that
offer solutions for niche conditions or
comorbidities may be acquired by established
companies.
1. Organizations in bold are profiled in this report.
advisory.com39© 2020 Advisory Board • All rights reserved
Cricket identifies early stages of disease and promotes home-based treatment
Cricket Health
Source: “HHS Launches President Trump’s ‘Advancing American Kidney Health’ Initiative,” HHS, July 10, 2019; “HHS To Transform Care Delivery for Patients with
Chronic Kidney Disease,” CMS Newsroom, July 10, 2019; Mishra K et al., “Machine Learning for Chronic Kidney Disease Detection & Risk Stratification,” Cricket Health,
2019; “Consortium Health Plans Names Cricket Health a Preferred Partner,” Cricket Health News, June 17, 2019; Market Innovation Center interviews and analysis.
Refocusing the kidney disease care model on prevention
Each year, patients with kidney disease account for approximately 20% of total Medicare spending. Of
the 125,000 Americans who begin dialysis each year to treat end-stage renal disease, one in five die
within the year. These poor outcomes are largely due to late identification. Approximately 90% of
patients with early stages of chronic kidney disease and 50% of patients with late stages are not
aware they have the disease.
Cricket Health is a provider and care extender founded in 2015 that aims to delay the progression of
disease and decrease costs associated with kidney care treatment.
Cricket HealthKidney care provider • San Francisco, California
CASEEXAMPLE
Screening algorithm generates
predicted glomerular filtration
rate value from claims data,
which is used to risk stratify
patients and identify individuals
at high-risk of undiagnosed
chronic kidney disease
Outreach sent to PCP or
specialists involved in
patients’ care; tests ordered
to confirm diagnosis,
including serum creatinine
and urinary albumin to
creatinine ratio
Patients with positive
diagnosis referred to Cricket
for disease management,
including education on
treatment options, 24/7 clinical
support, and home-based
dialysis services if needed
Cricket Health’s kidney care model
In 2019, Cricket partnered with Consortium Health Plans, a
collaboration of 21 Blue Cross Blue Shield plans
representing 25 million members, to be a preferred partner
for the Consortium’s national employer customers. Cricket
will take on financial accountability for health outcomes and
patient engagement.
In 2020, CMS1 will launch several new value-based
payment models for kidney care which would reward
providers like Cricket if they are able to improve transplant
rates and lower costs through greater use of home dialysis.
End-Stage Renal Disease Treatment
Choices Model
• Mandatory participation
• Adjusts payments based on home dialysis and
transplant rates
Kidney Care First and Comprehensive Kidney
Care Contracting Models
• Voluntary participation (four models)
• Nephrology practices or kidney contracting entities
receive fixed per-patient payments for managing
patients with late and end-stage kidney disease
Kidney care payment models launched by CMS
68%77%
28%
55%
Percentage of patientschoosing home as their
preferred dialysis modality
Percentage of patientsstarting dialysis outside of
the hospital
Cricket Benchmark
Cricket reports greater ability to shift dialysis
away from institutional settings2
1. Centers for Medicare & Medicaid Services.
2. Data reported by Cricket Health.
advisory.com40© 2020 Advisory Board • All rights reserved
Programs integrate connected hardware, AI-powered software, and health coaches
Livongo
Source: Chu R, “Livongo Health: Revolutionizing Healthcare, 1 Patient At A Time,” Seeking Alpha, January 13, 2020; Whaley C, et al., “Reduced
medical spending associated with increased use of a remote diabetes management program and lower mean blood glucose values,” Journal of
Medical Economics, February 4, 2019; “Case study: Livongo demonstrates cost savings,” Livongo; Baum S, “Livongo playing a critical role in
helping employers disrupt healthcare,” MedCityNews, April 23, 2019; Market Innovation Center interviews and analysis.
1. Mean A1c reduced from 7.8% to 6.9%; Livongo reports
results for two of its self-insured employer populations.
Digital therapeutics emerge for chronic disease management
Livongo, founded in 2014, is an AI-enabled digital health company that offers chronic disease
management solutions for diabetes, hypertension, weight management, and behavioral health. In 2019,
Livongo went public and expanded its number of clients to 771, including 20% of Fortune 500 companies
and the federal government’s 5.3 million employees. Livongo also expanded into the Medicare Advantage
market with approval from CMS to be an official enrolled provider.
For a monthly subscription fee ($68 per-member-per-month for diabetes), Livongo helps patients manage
chronic conditions through 24/7 access to health coaches, personalized “health nudges” sent to users
(ex: reminders to take medication), and other benefits such as automated ordering of glucose test strips
and other supplies, if needed.
LivongoDigital health company with over 200,000 users • Mountain View, California
CASEEXAMPLE
Livongo’s digital chronic disease management solution
Data synced to Livongo’s app and
analyzed using AI platform
• Clinical data includes medical claims,
pharmacy claims, and data from connected
devices like glucose meters
• Lifestyle data includes self-reported diet and
exercise habits
$88Decrease in medical spending
PMPM (including a 24.6%
reduction in spending on office-
based services)
Over time, machine learning algorithms determine the messages, communication channels, and interventions that
result in changes to physiologic data. Livongo has validated their solution’s ability to improve health outcomes and
lower costs in over 30 peer-reviewed studies. Through a series of strategic partnerships, Livongo has positioned itself
as a comprehensive solution for users to manage their chronic conditions in a user-friendly, seamless manner.
11.5%Average reduction in HbA1c
levels for users of Livongo1
Personalized health nudges and coaching
prompt users to take action
• “Time to check your blood sugar.”
• “You are moving less, sleeping less, and not
interacting with people as much. These patterns
can indicate chronic pain and depression.”
• “Your blood pressure readings have been out of
range for the past three weeks. Would you like to
set up a coaching session to discuss?”
DATA SPOTLIGHT
Livongo partners with third parties to build a more comprehensive platform
Device manufacturers
Partners with Abbott and Dexcom to
integrate data from the companies’
continuous glucose monitors
Telehealth companies
Users can access physicians from
MDLive and Doctor on Demand
through the Livongo app
EHR and consumer
technology vendors
Integrates with Apple Watch, Alexa,
and EHR vendors to access and
track health data
advisory.com41© 2020 Advisory Board • All rights reserved
Omada Health
Source: Polack, E, “Cigna Expands Personalized Diabetes Prevention Program in
Collaboration with Omada Health,” Cigna (Sept 18); Farr, C, “Health start-up Omada is
investing in virtual care so you can stop spending so much time at the doctor’s office,”
CNBC (June 26); Market Innovation Center interview and analysis
Payers adopt digital programs with outcomes guarantees
Omada Health was founded as a digital prevention platform for patients with diabetes. They have
since developed programs for hypertension, high cholesterol, and obesity. Like competitor Livongo,
Omada partners with risk-bearing entities and offers health coaching, support groups, and data
tracking services to participants. Omada has received over $200 million in funding to fuel its growth
and continues to demonstrate positive results from its programs through peer-reviewed studies.
The company is focused on creating close integrations with health plans as its primary growth lever.
It is paid through an outcomes-based pricing model meaning that total fees aren’t collected unless
program participants achieve positive outcomes such as hitting weight loss targets.
Omada HealthDigital health company with over 600 clients • San Francisco, California
CASEEXAMPLE
30% 16%Decrease in type
2 diabetes risk
Decrease in
stroke risk
13%Decrease in heart
disease risk
Payers contract
with Omada and
integrate access
to its services into
the health plan’s
mobile app
Participants receive
health monitoring
tools (ex: continuous
glucose monitor
device) and are
assigned dedicated
health coaches and
peer groups
Omada tracks health
data and provides
educational resources
such as nutritional,
stress management,
and time management
advice
Members can track
progress on health plan
app and receive
discounts and rewards
for healthy actions
Omada partners with health plans to engage members in chronic disease management
DATA SPOTLIGHT
advisory.com42© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Digital
therapeutics
(ex: Livongo
Health and
Omada Health)
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Personalized nudges
and coaching engage
consumers to self-
manage their conditions
Effective use of AI and
health coaches
enhance cost-
effectiveness of digital
therapeutics
approaches relative to
in-person interventions
Market opportunity is
expanding as demand
increases from health
plans and employers; a
technology foundation
creates opportunities to
scale across markets
with relative ease
Cricket Health At-home care model
and support from health
navigators offers a
more attractive
alternative for kidney
care patients compared
to traveling to physical
locations for recurring
dialysis treatment
Proactive identification
of patients with kidney
disease enables care
team to engage
patients in ongoing
management before
condition worsens
Cost-effective means
to identify high-risk
patients; model relies
on ability to partner
with nephrologists and
referring PCPs
Partnering with
employers and health
plans to promote
growth, but the kidney
care market is currently
dominated by large
established competitors
Adoption of consumer
device technologies such
as continuous glucose
monitors and intuitive
mobile applications
enhance consumer
experience compared to
the status quo
advisory.com43© 2020 Advisory Board • All rights reserved
“Platform companies” boost competitiveness of specialists
Single specialty management platforms
Source: “2018 Physician Practice Benchmark Survey,” American Medical
Association, 2018; Market Innovation Center interviews and analysis.
Single specialty management platforms
DESCRIPTION
A care and business model that focuses on only one specialty
rather than taking a one-size-fits-all approach. Physician or
ASC management companies often offer greater
administrative efficiencies and a more standardized approach
to practice management and care delivery compared to
independent practices and some hospital systems.
• OneOncology
• Advantia Health
• MUVE Health
• Maven Clinic
• Kindbody
• The US Oncology
Network
Current drivers of consolidation among
specialty physician groups
Future predictions on how specialized
companies will enhance market competition
70%Of physicians in single specialty
groups worked in practices with 10 or
fewer physicians in 2018
Innovative players1
Growth capital creates revenue opportunities
and alternative employment platforms
By partnering with private equity and investor-owned
firms, physician groups are able to access capital to
expand service offerings and recruit additional
physicians, while preserving independence from
hospital systems.
Platforms will develop advanced
capabilities beyond back-office functions
Groups will continue to pursue value-based
contracts with large purchasers and expand
availability of centralized, scalable service
offerings such as consumer-focused
technologies and standardized care pathways
to expand their cross-market appeal.
Specialty groups remain highly fragmented
While overall hospital employment of physicians
has never been higher, some specialties such as
orthopedics and gastroenterology remain largely
independent. Firms with substantial capital are
investing in physician practices due to their
relative stability during market downturns and
high revenue growth potential.
The shift of lucrative procedures to
outpatient settings will accelerate
Capital infusions enable organizations to build
new capacity and compete for a greater share
of hospital revenue. With greater scale, groups
may be able to partner with payers to promote
site of care shifts for high-cost, pre-scheduled
procedures (ex: knee arthroplasty).
Scale enhances relevance and influence
in a value-based market
In addition to administrative efficiencies gained
through centralization, large management
groups are better able to enter into value-
based contracting arrangements with payers—
on their terms.
Valuations will rise to new heights for an
expanded number of specialties
Private equity investors will focus on additional
specialties with high-revenue potential in
outpatient settings, but most will have a short-
term exit strategy (typically three to five years),
increasing purchase price for subsequent
buyers to 8x to 12x EBITDA2 for large practices.
DATA SPOTLIGHT
• U.S. Digestive Health
• Gastro Health
• United Digestive
• GI Alliance
• Rothman Orthopaedic
Institute
1. Organizations in bold are profiled in this report.
2. Earnings before interest, taxes, depreciation, and amortization.
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Community-based providers join forces in response to cost, treatment complexity
OneOncology
Source: Market Innovation Center interviews and analysis.
Bringing a systems approach to oncology practices
OneOncology was founded in 2018 by three oncology practices representing over 225 oncology
providers: Tennessee Oncology, New York Cancer & Blood Specialists, and West Cancer Center.
The physician-led group was founded in response to pressing challenges placed on community-
based practices, including downward pricing pressure from value-based payment models, rising cost
and complexity of cancer treatments, and growth constraints from industry consolidation.
OneOncology offers practices a means to thrive in this challenging health care environment by
bringing the benefits typically found in large health systems to community-based, independent
physician practices.
OneOncologyOncology group • Nashville, Tennessee
CASEEXAMPLE
Economies of scale
• Cost efficiencies from centralization of
administrative functions including revenue
cycle and IT
• Improved buying power for supplies and
purchased services contracts
• More favorable value-based contract terms
• Expanded capacity for advanced, cutting-edge
treatments (ex: cellular therapies)
Economies of intellect
• Ability to share best practices around
operational efficiencies and patient
experience
• Development of standardized system-wide
performance measures
• Access to skills and expertise of individuals
with out-of-industry experience
• Shared resources for staying abreast of
new research and clinical trial opportunities
Benefits for oncology practices
OneOncology’s analytics, technology, and staff enable practices to move towards becoming
high-reliability organizations that deliver a more consistent and differentiated cancer patient
experience. Practices can benchmark their performance in key areas such as patient
engagement and leverage centralized staff with out-of-industry expertise to map patient
journeys and design solutions. This system approach ultimately aims to improve the
competitiveness of practices and keep cancer care within the community.
advisory.com45© 2020 Advisory Board • All rights reserved
Advantia enables OB-GYN practices to keep pace with “femtech” start-ups
Advantia Health
Women’s health group enhances appeal to self-referrers
Advantia Health is a physician practice management group dedicated to women’s and maternal
health. The company’s approach is distinct in that it not only offers OB-GYN groups practice
management support to generate administrative efficiencies, but also invests in technological
tools and expanded clinic-based service offerings that create a differentiated experience for
women. Because the vast majority of consumers self-refer for OB-GYN services, innovative
companies have emerged to win preference, including Maven Clinic and Kindbody. By joining
Advantia, traditional practices can better compete with these new entrants by delivering a
positive experience.
Advantia HealthWomen’s health provider with 200+ physicians across the Mid-Atlantic and Midwest • Arlington, Virginia
CASEEXAMPLE
Consumer-focused investments to improve the women’s health experience
Technology tools
• Acquired the telehealth company, Pacify, to provide
unlimited, 24/7 video chat access to maternal and
pediatric physician extenders for services such as
lactation consultations
• Offers a secure messaging platform that allows
patients to text their physician, schedule
appointments, manage referrals, and refill
prescriptions
Co-located service offerings
• Building Women’s Health Hubs that offer
OB-GYN, mental health, primary care, and
ancillary services (ex: sonography, blood
work, pelvic floor physical therapy etc.)
• Expanding access to subspecialty care,
including gynecological oncology,
urogynecology, and pediatrics
Source: “Advantia Health Announces $45M Investment to Accelerate Expansion,”
Advantia Health, January 8, 2020; Market Innovation Center interviews and analysis.
Advantia not only commits capital to improving the competitiveness of its practices, but develops
centralized services that can move across markets. In 2019, the company acquired Heartland
Women’s Healthcare, an OB-GYN practice with 25 locations across Missouri and southern Illinois.
In early 2020, the company announced $45 million in additional funding to further grow its
services, acquire new practices, and recruit additional physicians to its platform.
advisory.com46© 2020 Advisory Board • All rights reserved
MUVE’s niche focus enables shift of high-acuity joint procedures to ASC
MUVE Health
1. ASA is a classification system used as a perioperative tool to assess a patient’s risk of mortality and adverse outcomes.
2. Data represents all-time distribution of MUVE cases; in recent quarters, MUVE recorded 40% of its cases as ASA level 3.
Hyper-specialized ASC care model comes to orthopedics
MUVE Health has developed a hyper-specialized, ASC-based care model focused exclusively on total
joint replacements. By designing its facilities, staffing model, and clinical protocols around a narrow
set of procedures, the company unlocks more consistent and higher-quality outcomes, similar to
assembly lines for manufactured goods. An optimized care pathway enables the company to take on
more complex patients who would otherwise require surgery in an inpatient hospital setting.
MUVE HealthASC operator that expanded from 1 to 18 locations under development across 2019;
subsidiary of ValueHealth • Leawood, Kansas
CASEEXAMPLE
MUVE’s care model for joint replacement
• Nurse navigator
conducts interviews to
identify patients
eligible for its program
• Eligible patients and
their caregiver sign
compact agreeing to
adhere to recovery
program
Pre-operative
engagement
Standardized
procedural processes
Post-operative
recovery
365-day follow-up
• Staff follow standardized
clinical protocols related to:
Pain and comfort
management
Blood loss management
Blood clot prevention
Infection prevention
• Patient is discharged same-
day and ambulate to adjacent
“Stay Suites™” which offer a
four-star hotel experience
• Patient stays in the Stay
Suite™ for two nights and
receives physical therapy
and self-care readiness
education, free of charge
• Nurse navigator
speaks to patient 20
times, on average
• Utilizes in-house and
partner technologies
to track patient
recovery and care
plan adherence
MUVE estimates that 70% of total joint replacements performed in a hospital setting today are
suitable for MUVE’s ambulatory program. In fact, its patient selection criteria, protocol-driven
model of care, and patient engagement tactics are already enabling it to take on a greater share
of complex cases that would otherwise be performed in the hospital setting.
13%
59%
28%
ASA level 1 ASA level 2 ASA level 3
Distribution of MUVE procedures using ASA physical status classification1,2
Source: Market Innovation Center interviews and analysis.
More complex
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MUVE offers 5x warranty to payers for complications and downstream costs
MUVE Health
1. Only one warranty has been triggered out of 748 cases recorded.
2. Actual savings vary by payer and region.
3. Registered nurse.
4. Benchmarks represent hospital performance, rather than ASC performance. MUVE has supplied
these benchmarks to Advisory Board only as a means for comparison. Benchmarks were
gathered by MUVE from a number of peer-reviewed studies and from publically reported data.
Guaranteeing positive outcomes with a warranty
MUVE enters into prospective, bundled-contracting agreements with payer partners and serves as the
adjudicator of the bundle. The company is so confident in its program that it is willing to assume risk
for any avoidable clinical complications and downstream costs associated with joint episodes for 90
days. It has already negotiated national and regional agreements with commercial payers and
employers to credit the costs of any complications associated with joint procedure episodes such as
falls with harm, readmissions, pneumonia, blood clots, and urgent care center or ED visits.
5xCredit given for costs associated
with adverse outcomes
<0.1%Of surgeries have resulted
in a warranty trigger1
30%Cost savings delivered to
payers per surgery compared
to hospital-based procedures2
MUVE’s warranty program delivers savings to payers
Quality metric MUVE performance Industry benchmark4
Surgical site infection requiring re-operation 0.41% 1.7%
Hospital readmission for hip replacement 1.7% 7%
Hospital readmission for knee replacement 1.9% 9%
Distance walked before discharge 2,798 feet <150 feet
Net promoter score 98 n/a
MUVE performance metrics compared to industry benchmarks
Source: Market Innovation Center interviews and analysis.
DATA SPOTLIGHT
MUVE collects hundreds of data points to perform under the
clinical complications warranty. Its dashboard includes real-
time data feeds on key clinical and operational indicators
that help clinicians and administrators make programmatic
improvements. In fact, data is collected from patients for a
full year after surgery from RN3 outcomes Navigators.
A sample of MUVE’s internal performance data (shown
below), illustrates MUVE’s performance against industry
standards on several leading quality indicators. MUVE
achieves these quality outcomes all while discharging
patients same-day. Patients spend two nights in its adjacent
Stay Suites™ to receive self-care readiness education,
rehabilitation, and care planning support.
Image credit: MUVE Health
Stay Suites™ gathering area
advisory.com48© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Single specialty
groups (ex:
Advantia Health,
OneOncology,
etc.)
ASC
management
groups (ex:
MUVE Health)
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Practices are better able
to acquire and recruit
new providers, while also
investing in intellectual
property that can be
shared across the
network in disconnected
geographies
Centralization of certain
functions such as supplies
and purchased services
leads to substantial
reductions in cost
Same-day discharge,
navigation support, and
consumer-oriented
service offerings (ex:
MUVE’s Stay Suites™)
provide a superior
experience than the
typical hospital
Practices may have
an enhanced ability
to invest in digital
technologies,
colocate services,
and share consumer
experience best
practices compared
to being independent
Outcomes improvements
may be achievable over
time for groups that
develop and standardize
best practice clinical
protocols
Hyper-specialized
approach creates
significant operating
efficiencies that reduce
costs; models still rely
on ability to recruit
high-performing
surgeons
Partnerships with
existing physician
groups, hospitals, and
health systems may
enhance ability to
enter into new
markets where there
are capacity needs
Standardization of care
protocols and niche
focus may lead to more
consistent patient
outcomes compared to
models taking a one-
size-fits-all approach
advisory.com49© 2020 Advisory Board • All rights reserved
Next steps for building a specialty care strategy
Source: Market Innovation Center interviews and analysis.
• 2018 Outpatient Shift Market
Update
• The New Rules of Ambulatory
Surgery Competition
• Build a Sustainable Outpatient
Joint Replacement Program
Design specialty care access
points to attract physicians
and self-referring consumers
• Appeal directly to self-referrers by
highlighting specialization,
communicating in patient-friendly
terms, facilitating word-of-mouth
marketing, competing on price,
and expediting access to select
services.
• Secure referral relationships by
offloading administrative functions
from physicians, marketing service
quality, and meeting market
access standards.
Deploy consistent care standards
for complex, high-cost episodes
• Establish a quality improvement
infrastructure that minimizes care
variation and creates demonstrable
performance improvements compared
to competitors.
• Develop scalable chronic disease
management programs using digital
consumer technologies, analytics,
and a cost-effective staffing model.
Develop a principled approach
to navigating the outpatient shift
• Continuously monitor outpatient
market share and payer policies to
ensure outpatient capacity is
sufficient to accommodate shifting
demand.
• Consider joint venture partnerships
with ASC management companies
and proceduralists to build new
capacity when necessary.
• Consider changes to contractual
terms and internal operational
workflows to preserve cost
competitiveness with alternative
care sites.
Action steps and resources to support strategy
• The Retail Service Line
• Specialist Consumer Choice Survey
• Surgical Care Consumer Choice
Survey
• Creating a Primary Care Strategy
for Service Lines
• How to Build ASC Referrals
• The System Blueprint for Clinical
Standardization
• How to Scale Chronic Disease
Management Programs
• A Digital Strategy for Patient
Engagement and Chronic
Disease Management
Incumbent providers should closely monitor new entrants and the value proposition they offer to
determine potential business impacts and evaluate opportunities to compete or partner. The
action steps and resources listed below can be used to help organizations set a winning specialty
care strategy.
1 2 3
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Road map
4
Payer networks
Section
advisory.com51© 2020 Advisory Board • All rights reserved
Network assemblers zero in on cost and quality variation
Introduction: payer networks
The coming era of radical network management
Health plans have always struggled to
perfect management of its provider
network in ways that balance access to
care with cost of care. On the one hand, a
broad network is needed to appeal to end
users’ desire for choice. On the other
hand, broad networks create variation in
performance. Efforts to promote consumer
shopping through high deductibles and
greater cost-sharing have largely been
ineffective. Health plans and employers
are now taking aim at variation in new
ways to root out avoidable spending.
Sophisticated performance analytics
Powered by big data and analytics
algorithms, network managers are gaining a
more granular, real-time view of provider
performance and putting that information in
the hands of referring physicians and
consumers to influence site of care
decisions.
Physician-level steerage
As provider groups merge and
consolidate payer contracts,
network managers are responding
by steering volumes to individual
high-performing physicians, rather
than whole provider groups.
Alternatives to high deductibles
Activist self-funded employers and
health plans are launching zero-
deductible, co-pay-only plans that
achieve affordability by taking aim at
the variability in provider prices.
Variation in risk-adjusted physician cost for back surgery
All non-outlier episodes of joint degeneration of the back with
surgery for one commercial payer in the Southeast; Optum
Advisory Services-Symmetry Advanced Analytics
n=123 physicians for 1278 surgeries
Average
episodic
cost
$0
$20
$40
$60
$80
$100
$120
$140
$160
Individual physicians
Median:
$16,000
Min:
$2,600
Max:
$165,000
7 8Centers of excellence
networks (page 52)
Health plan network
innovators (page 59)
Innovators profiled in this report
SPOTLIGHT
Source: Optum Advisory Services-Symmetry Advanced
Analytics; Market Innovation Center interviews and analysis.
Emerging trends in payer networks
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Employers double-down on COE programs
Third-party aggregators assemble high-performance provider networks
Centers of excellence networks
Source: “Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000
per Employee,” National Business Group on Health, August 7, 2018; Market Innovation Center interviews and analysis.
Centers of excellence (COE) networks
DESCRIPTION
Hyper-narrow networks consisting of providers that specialize
in certain procedures. COE programs incentivize consumers to
travel to preferred providers by lowering out-of-pocket
obligations and by offering concierge navigation services.
• Carrum Health
• Covera Health
• Embold Health
• Bridge Health
• Remedy Partners
Current status of COE programs Future predictions on COE program growth
Innovative players1
COE programs carve out highest-expense
services from broad network plan designs
Unlike traditional narrow networks, which are
frustrating for consumers, COE programs preserve
choice for the vast majority of services, while allowing
payers to drive volume to high-value providers for the
highest-cost procedures, such as non-emergent
transplant and musculoskeletal procedures.
Third-party network aggregators will enable
smaller employers to launch COE programs
Today, only large employers have the
sophistication and leverage to enter into direct
contracts with providers, but emerging third-
party purchasing coalitions offer smaller
employers a near turnkey opportunity to launch
their own COE programs.
• Edison Healthcare
• Surgery+
• CareChex
• Pacific Business
Group on Health
Positive brand reputation and concierge
navigation required for wider consumer adoption
Despite financial incentives, COE programs often fail
to influence consumer site of care decisions without
the reinforcement (or perception) of clinical superiority
at COE sites and a VIP travel experience.
Network aggregators will compete for
capacity of high-performing physicians
Because COE networks direct patients to
individual physicians rather than health
systems, demand for high performers may
extend wait times to unreasonable levels and
partnership criteria may become less
stringent as a result.
27%Of large employers with existing COE programs
will cover additional procedures in 2020
DATA SPOTLIGHT
Specialized performance analytics will
emerge to inform COE network formation
Today, network aggregators employ variable
and often imperfect methodologies to measure
provider performance, but companies dedicated
to quality analytics will emerge to offer more
accurate risk adjustment methodologies and
data on total episodic costs.
Large, self-insured employers expand COE
program scope and financial incentives
While COE programs have existed for some time,
activist employers are expanding the number of
procedures they cover through such programs
and in some cases, requiring use of COE
providers to receive coverage.
COE networks and/or quality analytics
1. Organizations in bold are profiled in this report.
COE stakeholders profiled in this report
• Network assemblers: create custom provider networks
• Data analytics companies: analyze cost and quality to inform
selection of preferred providers
• Employers: plan sponsor that offers COE programs to its
employees and pays claims
advisory.com53© 2020 Advisory Board • All rights reserved
Carrum identifies surgeons meeting price and quality performance criteria
Carrum Health
1. Compared to the national average.
Hyper-narrow network lowers surgery spend
Founded in 2014, Carrum Health offers self-insured employers a platform for routing patients to low-
cost, high-quality surgeons in its custom-built COE network. Carrum negotiates discounted bundled
rates with providers covering the surgical procedure in addition to pre- and post-surgical care costs
associated with the episode. In exchange, providers are promised incremental volume and
prospective payment for a select set of non-emergent procedures.
Carrum HealthCenter of excellence network • San Francisco, California
CASEEXAMPLE
Fewer complications
57%Fewer readmissions
45%Avoided surgeries
25%
Carrum Health’s surgeons improve outcomes and reduce costs for employers1
Source: Market Innovation Center interviews and analysis.
DATA SPOTLIGHT
Willingness to accept discounted contractual rates
Preferred providers typically accept bundled rates that are 35% lower than the
rate negotiated by an employer’s plan administrator.
Geographic proximity to employer clients
Unlike some other network aggregators that require patients to fly to COE
locations, Carrum looks to partner with providers that are within a
reasonable driving distance of its employer clients’ employee populations.
Individual performance on quality indicators
Rather than just looking at aggregate health system performance, Carrum uses
analytics and public and private data sources to identify individual surgeons
meeting quality performance thresholds.
Carrum’s COE surgeons
Carrum Health’s network assembly process
All surgeons
in a region
Carrum has invested considerable time and resources in ensuring the patient experience is as smooth
as possible to encourage consumer utilization of COE providers. The company offers a care concierge
to help consumers understand their options and assist with navigation. It has also invested in
technology that helps to identify surgical candidates early on in the patient’s journey. When the time
comes to select a surgeon, consumers can access quality data via a mobile application that provides
data in a user-friendly, self-service manner.
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Covera identifies high-performing radiologists to reduce misdiagnoses
Covera Health
Source: Galewitz, P, “Walmart Charts New Course By Steering Workers to High-Quality Imaging
Centers,” Kaiser Health News, May 15, 2019; “The Prevalence and impact of medical misdiagnosis
in radiology and beyond,” Covera Health, 2019; Market Innovation Center interviews and analysis.
Multidimensional quality analytics powers steerage strategy
Covera Health is a data analytics company that creates high-performance provider programs specifically for
radiology. While many assume that imaging is a commodity health care service, Covera has documented
wide variation in the performance of radiologists which leads to misdiagnoses, unnecessary downstream
utilization, and higher costs. The company enters into relationships with employers and health plans to
develop imaging centers of excellence for CT, MRI, women’s imaging, and nuclear medicine diagnostic
tests. Its first customer, Walmart, now provides financial incentives to its 1.1 million employees to use
providers in the Covera imaging program.
Covera HealthImaging clinical quality analytics company • New York City, New York
CASEEXAMPLE
Covera’s approach to building imaging COE programs
Providers share
data with Covera
Providers give Covera
access to de-identified
radiology images and
EHR data that are
reviewed on a recurring
basis to assess quality
performance (under a
legal data-sharing
framework).
Covera assesses quality
using several layers of data
• Practice characteristics such as
equipment quality
• Physician training, including
sub-specialization, scanning
protocols, and historical read
volume
• Peer review and proprietary AI-
based assessment of imaging
cases determine diagnostic
accuracy and significance of
errors
Providers meeting quality standards
included in COE program
Patients are incentivized to use preferred
providers best suited to diagnose their
condition. Outreach from utilization
management personnel and financial
incentives from employers promote
compliance.
All providers submitting data
receive performance feedback
Covera provides clinical performance
scorecards and ongoing feedback to
enable practice-driven improvements in
radiologist and equipment performance that
could enable future inclusion in its network.
As of 2020, Covera has preferred providers covering approximately 90% of the largest 100 metro areas in the
U.S. It differentiates itself from other COE network assemblers by focusing on radiology and prioritizing quality
over price in its performance assessments (price negotiations remain a responsibility of the plan sponsor).
Other factors such as geographic proximity to the patient and inclusion in the plan administrator’s network also
contribute to the matching process. In the future, Covera plans to expand its AI-enabled quality assessments
and further demonstrate how its program delivers downstream savings to its payer clients.
advisory.com55© 2020 Advisory Board • All rights reserved
Walmart expands number of programs and mandates participation for coverage
Large self-insured employers develop mature COE strategies
As the largest employer both in the U.S. and in 22 states, Walmart is one of the largest purchasers
of health care in many local markets across the country. In 2013, the company launched its COE
program to incentivize its employees to use a select number of high-performing facilities for
complex, costly procedures. Walmart has recorded positive outcomes and cost savings, prompting
it to expand the number of procedures covered under COE programs and adopt greater financial
consequences for non-compliance. Employees will now receive no coverage for select procedures,
such as spine procedures, for care outside the COE network.
WalmartRetail corporation with 1.5M employees • Bentonville, Arkansas
CASEEXAMPLE
Source: Market Innovation Center interviews and analysis.
COE programNumber of COE
providers (2019)
COE network
coverage
In-network
coverage
Out-of-
network
coverage
Heart surgery (cardiac bypass and valve
replacements)3 locations
100% (no
deductible)
75% (after
deductible)
50% (after
deductible)
Breast, lung, blood, prostate, and
colorectal cancer medical record review
and onsite evaluation when recommended
3 locations100% (no
deductible)
75% (after
deductible)
50% (after
deductible)
Outpatient kidney dialysis or ESRD
medical record review
Newly announced
in 2020
100% (no
deductible)
75% (after
deductible)
50% (after
deductible)
Hip and knee replacement12 locations
100% (no
deductible)
50% (after
deductible)
50% (after
deductible)
Spine (spinal fusions and removal of spinal
discs)8 locations
100% (no
deductible)No coverage No coverage
Organ and tissue transplants (cornea and
intestinal transplant)3 locations
100% (no
deductible)No coverage No coverage
Weight loss surgery (gastric bypass and
gastric sleeve)3 locations
75% (after
deductible)No coverage No coverage
Walmart’s COE benefit coverage (excluding health savings account plans)
2013 2019 2020
Adjusts employee
cost-sharing to 50%
for select procedures
to promote use of
COE locations
Provides zero
coverage for spine,
transplant, and
bariatric procedures
at non-COE locations
Begins offering zero
cost-sharing for use of
a COE for heart, hip
and knee, and spinal
procedures
2017
Pilots programs to
steer employees
towards non-surgical
care, including
imaging and
physicians across
eight specialties
Evolution of Walmart’s COE strategy
advisory.com56© 2020 Advisory Board • All rights reserved
For select services, surgery avoidance the primary avenue for savings
Patients routed to COE locations generate cost savings
While Walmart is the plan sponsor, there are several organizations working behind the scenes
to design and operate its COE program. An employer consortium called Pacific Business
Group on Health designs the COE programs and negotiates contracts with provider
organizations. Additionally, a third-party administrator is responsible for prior authorizations and
claims processing.
When a Walmart employee attempts to exercise their benefit, they will be contacted by
utilization management personnel to educate the patient on their options and route patients to
COE locations.
Source: Evans M, “Walmart, other employers get choosier about workers’ doctors,” The Wall Street Journal, April 4, 2019; Galewitz P, “Walmart charts
new course by steering workers to high-quality imaging centers,” Kaiser Health News, May 15, 2019; Market Innovation Center interviews and analysis.
Physician recommends surgery
• Patient visits local specialist
• Specialist recommends and
schedules patient for surgery at a
non-COE location
Plan administrator intervenes
• Prior authorization request is
sent, notifying plan administrator
• Plan administrator contacts
patient and explains travel
surgery benefit and additional
cost obligations for using a non-
COE location
Patient routed to COE
• Patient is connected to a COE
provider for a surgery consult
• Surgery scheduled when
recommended by COE provider
Process for routing patients to COE providers
Savings come from surgery avoidance, rather than price, for spine procedures
Have
surgery
Employees with COE consult
after recommended for surgery
Walmart payments
$32K $29K
COE location Non-COE location
Avoid
surgery 46% 54%
In addition to lower out-of-pocket cost sharing for care received at COE locations, Walmart covers
the full cost of travel, lodging, and meals for the employee and a caregiver when travel is required.
Even with this added expense, Walmart achieves overall savings on health benefit expenses. For
some procedures like spine, Walmart attributes the majority of savings to surgery avoidance and
reduced repeat procedures—rather than contractual price discounts.
advisory.com57© 2020 Advisory Board • All rights reserved
Walmart incentivizes use of high-performing primary and specialty care physicians
Walmart
Test program expands COE strategy to non-surgical care
For the 2020 benefit year, Walmart is piloting a more expansive COE program in Orlando/Tampa,
Dallas/Fort Worth, and Northwest Arkansas that incentivizes employees to utilize high-performing
providers for non-surgical care, including diagnostic tests and physician office visits. Its Featured
Providers program uses data from Embold Health to identify high-performing primary care, cardiology,
gastroenterology, endocrinology, obstetrics, oncology, orthopedics, and pulmonology specialists.
Embold HealthData analytics company • Nashville, Tennessee
CASEEXAMPLE
Embold analyzes data from public sources and Blue Health Intelligence—a vendor with claims data from
over 200 million Americans—to identify high-quality physicians within a market. The physicians are
evaluated based on appropriateness (ex: medical necessity), effectiveness (ex: adherence to latest
scientific guidelines, patient outcomes), and cost of care.
Embold evaluates physician-
level cost and quality
performance in a market
Example evaluation criteria:
• C-section rate for low-risk
pregnancy
• Use of knee arthroscopy
within the first year of an
arthritis diagnosis
Subset of featured
providers are identified
• List is updated quarterly to
give physicians an
opportunity to improve
performance and move into
featured provider group
• Featured providers list is
loaded into employee-facing
navigational tool
Employees’ out-of-pocket
obligation is determined by
selection of physician
Coverage for specialist visits in
test markets:
• Featured provider: 100%
covered after $75 copay
• Non-featured provider: 50%
covered after deductible
• Out-of-network provider: no
coverage
Source: Market Innovation Center interviews and analysis.
Walmart’s Featured Providers program
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Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Third-party
COE networks
(ex: Carrum
Health)
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Quality
analytics (ex:
Covera Health)
Steerage to high-
performing providers
may reduce
misdiagnoses and
unnecessary utilization
Offers a cost-
effective means to
evaluate quality
The self-insured
employer market is
growing, creating
additional market
opportunities;
technology-based
model can be easily
scaled across markets,
but still requires
partnerships with
providers already
operating in the market
Despite quality-oriented
benefits, patients will
likely have additional
travel burdens and
disruption to physician
relationships
Model directs patients to
higher-quality surgeons,
leading to demonstrable
outcomes improvements
Ability to partner with
health plans, employers,
and providers will
determine growth potential
Cost-effective model
despite additional
costs associated with
travel and lodging
While navigators and
self-service mobile apps
facilitate a more
seamless patient
experience, there may be
additional travel burden
for the patient and
unwelcome disruption to
existing physician
relationships
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Health plans deploy non-traditional steerage strategies
Consumer- and physician-directed alternatives to high-deductibles and risk models
Health plan network innovators
Source: Rae, Matthew et al., “Deductible Relief Day”, Kaiser Family
Foundation, May 2019; Market Innovation Center interviews and analysis.
Health plan network innovators
DESCRIPTION
Health plan start-ups that are using nontraditional
strategies to steer members to preferred providers and
generate cost savings.
• Centivo
• Bind
• Oscar Health
• Alignment Healthcare
• Bright Health
Current status of health plan strategies
to steer patients to high-value providers
Future predictions on steerage strategies
deployed more widely by innovators
Feb 28Mar 18
Apr 9Apr 30
May 14
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
“Deductible relief day” trends later in the year as deductibles increase
Day of the year when average health spending for large group
members exceeds the average deductible in that year
• Collective Health
• Clover Health
• Devoted Health
• Zest Health
• Imagine Health
Innovative players1
Steerage strategies used by incumbents have
largely failed—start-ups are looking beyond
Incumbent health plans have shifted financial
responsibility to consumers and physicians to
promote value-oriented service utilization, but
these initiatives have failed to substantially
promote shopping or influence referral decisions—
startups are adopting a more activist network
management approach.
Competition for control of the “front door”
to the delivery system will intensify
Increasing competition for a limited supply of
high-performing PCPs will prompt more
drastic measures to guarantee network
participation, including acquisitions, joint
ventures, higher fee schedule rates, and
investments in provider training and recruiting.
Payers attempt to engage consumers
through digital platforms
To engage consumers upstream in the health
care journey, payers have made significant
investments in transparency tools, digital
wellness programs, and integrated telehealth
offerings, but many struggle to drive adoption.
Data analytics platforms will drive
informed decisions at the point of care
Activist network managers will develop
analytics platforms and deploy navigational
resources to provide relevant and accurate
insights to PCPs and consumers regarding
appropriate preventive health practices and
highest-value specialists for downstream care.
Plans will become more customizable and
incorporate dynamic pricing
Network innovators will offer products to
employers that create tiered-coverage models
and offer real-time adjustments to price based
on the value of the service, site of care, and
choice of physician.
Health plans diversity approach to reduce
spending
Rising deductibles have not promoted meaningful
consumer shopping. Health plans are now
pursuing alternatives to high-deductibles to
manage costs, including co-pay only plans, à la
carte product offerings, and tiered networks.
1. Organizations in bold are profiled in this report.
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Centivo offers data insights and incentives to make appropriate referrals
Centivo
PCPs empowered to manage specialty costs
Centivo is a start-up health plan administrator focused on self-insured employers that has raised $34
million in series A funding. Their model relies on creating partnerships with high-performing PCPs who are
responsible for coordinating care for members. Unlike a traditional primary care gatekeeper model,
members still have access to a broad network of providers and can self-refer, but they will pay more for
doing so. When members coordinate their care with a Centivo Select primary care team, their out-of-
pocket obligation consists of a small co-pay, rather than a deductible or coinsurance payment.
CentivoHealth insurance start-up • New York City, New York
CASEEXAMPLE
Full network
• Rents broad network from
traditional health plan
• Uses reference-based
pricing for care at non-
preferred sites
Centivo Select providers
• Identify, reward, and support high-value primary
care practices to promote care coordination
• Pay a per-member-per-month amount to PCPs for
care coordination and access
• Provide actionable incentives for appropriate
referrals and tailored referral recommendations for
different patient demographics
Less expensive than a
comparable plan (estimate)
10-20%
Centivo’s network structure
Percentage of members who
have chosen a PCP through
Centivo’s app or concierge
92%
Source: Livingston, Shelby, “Some startup insurers are ditching the deductible”, Modern
Healthcare, September 2018; Market Innovation Center interviews and analysis.
Centivo’s partnership strategy is unique in that it offers
personalized referral recommendations to PCPs and
incorporates the appropriateness of specialist referrals in
incentive calculations. Centivo offers PCPs a data analytics tool
to help inform data-driven decisions at the point of care. It
determines the most appropriate specialist based on factors
that include: cost per episode, patient satisfaction, provider
availability, rates of negative health outcomes, and patterns of
high-value care.
It’s primary care-centric model is complemented by a modern
member-facing technology experience and a concierge
navigation team. These resources help improve the member
experience and activate consumers in their care.
DATA SPOTLIGHT
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Bind unbundles insurance, requires consumers to pay extra for non-core services
Bind
1. UnitedHealthcare has an investment relationship with Bind. Advisory Board is a subsidiary of UnitedHealth Group, the parent
company of UnitedHealthcare. All Advisory Board research, expert perspectives, and recommendations remain independent.
Giving consumers responsibility and agency to shop
Bind is a health insurance start-up that offers “on-demand” health insurance to self-insured employers.
Unlike traditional plans, Bind’s product covers a core set of services that it deems to be high-value,
essential health services and allows members to purchase any other services not covered under its core
offering throughout the year as needed.
Bind1
Health insurance start-up • Minneapolis, Minnesota
CASEEXAMPLE
Bind’s portal: comparison of
choices for maternity delivery
Source: Market Innovation Center interviews and analysis.
• Preventive care
• Primary and
specialty care
• Urgent, emergency,
hospital care
• Planned procedures not covered
under core insurance
• Treatments with low efficacy and
wide variation in prices for the same
quality of care
Core coverage
Add-in coverage
Bind’s health insurance coverage model
DATA SPOTLIGHT
86%Of consumers choose
lowest cost provider when
selecting add-in coverage
Copays range from $15–$500 Additional copay, premium contribution
Plans are simplified to only consist of premiums and co-pays—rather
than deductibles and coinsurance—which appeals to those that value
upfront, cost certainty. Co-pays for add-on coverage are dynamically
adjusted based on several factors, including a provider’s historical
costs and outcomes performance (ex: complication rates), a
member’s site-of-care preference, and efficacy of treatments.
Bind’s model relies on the ability to train members to use the Bind
portal as their go-to resource for navigating care options before they
receive treatment. The portal enables members to find in-network
providers, compare costs, and understand their obligations upfront.
Approximately three quarters of members have an account on Bind’s
portal, which has enabled Bind to effectively steer members toward
the highest-value providers when care is needed.
Savings for employers
compared to traditional self-
insured products
10%–15%
• Chronic care
• Pharmacy needs
• Virtual visits (for $0
out-of-pocket)
Image credit: Bind
advisory.com62© 2020 Advisory Board • All rights reserved
Innovation scorecard
Source: Market Innovation Center interviews and analysis.
Differentiated
consumer experience
Attempts to improve
clinical outcomes
Sustainable
operating model
Scalable
business model
Centivo
Bind
Element is
absent
Element is
minimally present
Element is
moderately present
Element is
strongly present
Element is foundational
to value proposition
LEGEND
Data insights from
payer may enable
PCPs to better identify
high-performing
specialists
Ability to generate
cost savings relies on
ability to partner with
high-performing PCPs
Employer market is
highly competitive, but
renting broad
networks from existing
plans offers ability to
enter into new
markets more freely
Ability to lower costs
depends on consumer
engagement with its
technology platform
and existence of
lower-priced sites of
care in the market
Employer market is
highly competitive, but
renting network from
UnitedHealthCare
offers ability to enter
into new markets
more freely
Primary care
gatekeeper approach
may only appeal to a
subsegment of
consumers that are
willing to exchange
choice for affordability
Dynamic pricing
structure may
encourage use of
higher-value providers
and services
Upfront price
transparency, free
access to virtual
providers, and access
to a broad network
enhances consumer
appeal compared to
traditional plans
advisory.com63© 2020 Advisory Board • All rights reserved
Next steps for building a payer networks strategy
Source: Market Innovation Center interviews and analysis.
• Responding to Imaging
Steerage
• How to Grow Market Share with
Price Transparency
• Introducing New Pricing Models
to Attract Patients
• The Consumer Relationship
Platform
Formalize administrative
infrastructure for direct contracting
• Dedicate staff time and resources to
negotiations with employers and
network aggregators when
incremental volume is sufficient to
justify management burden.
• Design programs that are easy to
administer, customized to employer
needs, and produce demonstrable
cost and quality results.
Improve reliability and efficiency
of procedural episodes to become
purchasers’ network of choice
• Establish best-in-class acute care
destination centers that balance
regional accessibility with cost-
effective service distribution.
• Develop protocols to ensure care is
delivered in the most appropriate
location based on patient need.
• Build cost-discipline into
organizational culture and
operations, rather than relying on
one-off cost reduction initiatives.
Counteract steerage by
appealing directly to
consumers and physicians for
shoppable procedures
• Make quality metrics and price
estimates available and
meaningful to patients.
• Invest in navigational resources
to minimize leakage throughout
the episode of care.
Action steps and resources to support strategy
• Developing Next-Generation
Employer Partnerships
• Occupational Health and Beyond
• 10 Keys to Risk-Based Contracting
with Employer Partners
• Strategic Employer Partnerships for
Cancer Care
• Guides for Service Line
Rationalization
• The Integrated Care Advantage
• Toward True Sustainability
• The New Cost Mandate
Incumbent providers should closely monitor new entrants and the value proposition they offer to
determine potential business impacts and evaluate opportunities to compete or partner. The
action steps and resources listed below can be used to help organizations set a winning payer
networks strategy.
1 2 3
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Market Innovation Center
Project DirectorColin Gelbaugh
Research TeamAvery Morrison
Program LeadershipAnna Yakovenko
Alicia Daugherty
Shay Pratt
655 New York Avenue NW, Washington DC 20001
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