On the Brink of Widespread Adoption: Care
Transition Systems

In a simple world, success in digital health care business might be expressed like this: c = c (a,b). The amount of funding a startup has earned is a, b is the number of years it’s been open for business, and c ― a function of a and b ― is the number of clients the startup has. In reality, a company can raise many millions and can be around for half a decade before it reaches even a handful of clients. Not so unfortunately, success is defined in different ways, especially within the many subcategories of health care technology.

Since it’s impossible to develop equations for success, Health 2.0 Advisors, with the support of the Gordon and Betty Moore Foundation, developed aids for startups working in the care transition field. These types of companies are developing systems and applications that ensure that after a patient leaves the hospital, the odds of avoiding readmission are stacked in their favor. Health 2.0′s research, to be released in February, also includes a guide for hospitals that are implementing this kind of technology.

Spending on preventable readmissions costs Medicare an estimated $12 billion each year, according to a 2007 Medpac report. On Oct. 1 2012, the health care reform law started to target this huge expense by using an excess readmission ratio to determine penalties for hospitals that readmit patients too often. The goal of the CMS Readmissions Reduction Program is to keep the patients that don’t need to be in the hospital out. This requires that what happened in the hospital is communicated with the provider who takes care of the patient after they leave. In part, this is the type of coordination that Accountable Care Organizations (ACOs) aim for.

ACOs are relatively new on the scene. In 2010 they were only a concept, but in June 2012 Leavitt Partners reported that there were already 221 in existence.

“Think about how many times you see new types of organizations emerge in health care and go to several hundreds of organizations,” said Marco Smit, president of Health 2.0 Advisors and coordinator of the care transition market research.

Changes to the way providers are reimbursed ― as a result of both penalties and quality-based payments that come with ACOs ― have happened quickly. But as hospitals’ technological capabilities have improved with the installation of electronic medical record systems, they are in a better position to adapt to these changes than before. That isn’t to say that the transition is happening seamlessly or painlessly.

“There’s a disconnect between the pace at which these systems are developing and the pace of change that’s necessary,” Smit said.

Companies in this field have seen delayed adoption of their products for reasons that mirror what’s happening in health care in general: for one, hospitals weren’t certain that health care reform would survive the 2012 election, and they were holding off on making certain decisions. Two, now that Present Obama has been reelected and his law will stand, there is a scramble to figure out how to react to changes as they now take effect, and hospitals are overwhelmed with information.

Another hurdle that companies face might be technology itself. Hospitals have made huge investments — as much as hundreds of millions of dollars — in their EMR systems. If a new system doesn’t integrate well with its EMR, the hospital will have to reject it.

“If they’ve invested tons of money into an existing EMR system, even if it’s not the latest, greatest, newest technology, they will still want to make things work within the confines of the system,” Smit said.

Health 2.0 Advisors also launched a database of 200 tech companies that work in care transition. Smit said he was surprised by the number of companies currently working in the field, especially considering the quick rise and fall nature of startups.

“You would expect that, if this is 200 today, there are probably 300 who started ― 100 that have already died in the meantime.” Smit added, “And out of 200, I still would expect a significant number to not survive.”

There might not be any equation that these care transition companies can look at to ensure success as hospitals begin to adopt their products. However, within the next few years, we might be able to indirectly measure how they’ve collectively done ― by looking at how many clients they have, how hospital readmission rates have improved (or not improved), and how Medicare spending on readmitted patients changes.