Accretive Health (EF, Wednesday, Week 13)
entrepreneurial-financeyear-twoWhat's wrong with healthcare?
Herzlinger: Consumers don't have information or incentives to make sensible choices.
Porter: Ineffective competition in healthcare does not produce greater consumer surplus.
Christensen: Muted incentives and artificial barriers to entry prevent disruptive entrants.
Accretive => "plump" startup >> Initially, small team of senior execs. Sell Clearview on taking over their revenue cycle; instantly have $100M in revenue.
"Don't spend the money to build capabilities; sign the client first. It worked at Accenture. We (Accretive) started with eight people." -- Etienne Deffarges
Other nice things: high touch, no upfront cost to hospitals, hospitals pre-pay = negative OWC. Dual focus on (1) reducing revenue leakage and (2) cutting cost of collections.
Etienne Deffarges:
The revenue cycle model is basically a zero-sum game (gains to hospital come at the expense of payors). Not too much opportunity to take cost out of the system.
Basic model for QTCC (building an ACO):
Go to the payors, get them to agree to reimburse at 98% of last year's rates. Then, cut cost by 20%. Split the savings between providers, hospital, and Accretive.
More sophisticated model for QTCC:
Large incentive payments to PCPs to alter care allocation. Then, hospitals increase number of PCPs (more PCPs per specialist/ER doc.).
=> Instead of PCPs spending 15 minutes on every patient, pay more attention to high-risk patients and follow up. Use metrics like hospital readmission.
=> Five percent of patients = 50% of healthcare cost. Ten percent of patients = 67% of healthcare cost.