a16z Podcast: How to Pay for Healthcare Based on Health

Key takeaways

Value-based care focuses on patient outcomes rather than the volume of services provided.
Addressing social determinants of health, such as food and transportation, can lead to significant improvements in health outcomes and reduce costs.
Long-term investments in social determinants have measurable returns and should be prioritized.
Regulatory changes can often drive more impactful healthcare reform than legislative changes.
Technology must be leveraged efficiently to address social health needs and streamline care coordination.
Enthusiasm for value-based care is growing; successful models indicate a promising future for healthcare reform.

Summary

Introduction to Value-Based Healthcare

The podcast opens with a focus on the urgent need for healthcare reform—that is, moving away from a fee-for-service model towards a value-based care system. Patrick Conway, CEO of Blue Cross Blue Shield North Carolina, shares his insights into what value-based care truly means, emphasizing its potential to improve outcomes rather than simply increasing the number of services rendered.

Social Determinants of Health

Conway discusses the significant role that social determinants play in healthcare. He identifies factors such as food insecurity and transportation challenges as critical to a person's overall health. The conversation provides evidence showing how addressing these determinants—like providing transportation to doctor's appointments—can drastically reduce hospital readmission rates and overall healthcare costs.

Investment in Long-Term Changes and ROI

A point of discussion centers on the long-term investment required to address healthcare issues stemming from social determinants. Conway illustrates through concrete examples, like the annual costs of a child's hospitalization due to food insecurity, that investing in prevention offers a clear return on investment (ROI). This section emphasizes that stakeholders must recognize the value in funding interventions even when immediate outcomes may not be evident.

The Role of Policy and Regulation

Conway highlights his experiences in both Democratic and Republican administrations while discussing the complexities of healthcare policy. He stresses that effective change often comes more from regulatory adjustments than from legislative changes, encouraging listeners to think about how small policy shifts can lead to substantial improvements in healthcare delivery.

Challenges and Opportunities for Technology in Healthcare

Technology's role in addressing social determinants of health is examined. Conway argues for the need to create systems that streamline the coordination of care across different areas of health services. This includes using technology to identify and address patients' needs quickly, akin to how prescriptions are filled electronically.

Future of Value-Based Care and Healthcare Optimism

In the concluding part of the podcast, Conway expresses his optimism regarding the future of value-based healthcare. He cites the success of changing payment models towards value-based structures in both public and private sectors, believing that the ongoing transition will ultimately lead to better patient outcomes and more efficient healthcare delivery.

Show notes

There's been a lot of talk about the need for our healthcare system to shift away from volume and fee-for-service, where you pay by appointment, procedure, etc, to value-based care, where you pay for both quality and outcomes—essentially, good health. But there's also been a real dearth of seeing how that might work in action, or concrete models for how to implement it at scale. In this episode, CEO of Blue Cross Blue Shield North Carolina Patrick Conway dives deep into how exactly we can make the move towards this kind of healthcare a reality, in conversation with a16z's General Partner Jorge Conde, Venkat Mocherla and Hanne Tidnam.

Conway—also a pediatrician, and formerly Deputy Administrator at the Centers for Medicare and Medicaid Services (CMS) and Director of the Center for Medicare and Medicaid Innovation (CMMI)—gets into what value-based care really means; different ideas for how payors can implement the shift away from fee-for-service and volume-based care towards outcomes; as well as the critical role social determinants (food insecurity, transportation, and more) play in our health—and how tech can be a driver of change. And finally, Conway shares thoughtful analysis from an insider’s point of view from the Hill on how to actually effect change in policy and regulation in healthcare to move the entire system in this direction.

This podcast was recorded on April 10, 2019. As of September 25, 2019, Patrick Conway is no longer CEO and President of Blue Cross Blue Shield North Carolina.

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