The unending desire to provide quality care at an affordable cost and develop a model that benefits all the stakeholders in the healthcare spectrum – patient, provider, payer, and pharma – has posed a big challenge. The industry is eagerly looking for disruptive ideas to offer relief from the vicious operating cycle, the inability to provide desired care and, mounting costs. With that in mind and the switch to retail-ization for the healthcare industry, we would like to present the concept of Just in Time (healthcare) Contracts (JITC). In a nutshell, JITC is a proposed facility to establish a contractual obligation, i.e., healthcare insurance contracts between payers and providers for a given case and ascertained period.
With the evolution of technologies such as blockchain, AI, and advanced analytics and integration standards like FHIR, this will become the norm in the coming years. JITC will empower payers to have a greater understanding of the risks to be covered, providers to have greater clarity on reimbursements, and patients to have better knowledge of their obligations.
Forging a plan: JITC Implementation
The proposed model will help providers avoid the need to choose between avoiding financial risks and providing care. JITC can help deliver care with minimized risks by using advanced technologies. Key determinants of the contract will include:
- Deployment of blockchain-based consortiums that leverage smart contracts.
- Use of patient data in the contracts for establishing the care risks including financial risks.
- Putting out the risk parameters, along with the current care needs, to payers and providers.
- A contract will be drafted with the nearest provider or provider of choice and with payer(s) willing to underwrite the care risk at an affordable cost for the patient.
- The contract will continue to serve as the vehicle till the complete financial and care transactions between all the parties are settled.
Ideally, with this setup, the provider should be paid for the service under the contract within two to three days, bringing down the AR period. Among many opportunities for payers, JITC will ensure retail-ization of health insurance and create a market for product innovation. It will also break the shackles of network rigidity and complex actuarial models to sculpt networks. Instead, these efforts will be directed towards providing better care to patients. JITC will also provide an opportunity to directly deal with individual members rather than depending on an institutional average to understand the care risk, which is the paradigm all the payers strive towards.
Data-driven risk assessment strategies
We believe JITC will become a reality only when all the stakeholders of the healthcare continuum can accurately understand the relevant risk of coverage sought under the contract. For this, the payers may assess the risk based on numerous factors including but not limited to:
- Individual’s personal, social, and clinical profile
- Individual’s preferred provider profile
- Knowledge on the medical condition under coverage
- Knowledge on treatment outcomes from the specific provider for the specific medical condition
Similarly, providers may assess the risk based on:
- Individual’s profile
- Outcomes of previous treatment
- Reimbursement experience with specific payers
Undoubtedly, data – about individuals, conditions, providers, outcomes, etc. – is crucial for stakeholders to equip themselves with risk assessment capabilities. Wealth of data, effective organization of data, and advanced data analytics employing machine learning techniques will form the backbone of JITC. Here, data analytics will help in risk evaluation, contract pricing, best provider identification, exclusion assessment, and even enable contextualized, value-added services beyond JITC. For example, if the contract sought involves any hospitalization for post-operative/post-discharge care, individuals can be offered suggestions to connect with skilled nurses, laboratories, or caregivers that are already plugged onto the consortium network.
We believe, just like Uber transformed transportation and Airbnb changed hospitality, JITC has the potential to drive a considerable shift within the healthcare segment. Uber Eats, that has created last-mile integration for many small restaurants that required logistics to reach end customers, is a good example. Currently, we are evaluating a single dimension of JITC, however we believe, it can drive wide change in the existing models of healthcare delivery.
Additionally, JITC has the potential to ensure right care for the right price at the right time and also open new avenues for care. The contract will make room for a variety of providers not backed by a large organizational umbrella to provide care, thus driving the industry into a disruptive transformation fueled by evolving digital technologies. In our opinion, sooner or later, JITC will be embraced as the norm for providing care.