What can we learn from the Caresync story?
As an entrepreneur trying to innovate in the healthcare market, I have a soft spot in my heart for others taking on the challenges of changing what may be the most regulated, conservative, bureaucratic and risk averse market in the American economy. The point of this article is not to take any pleasure in the failure of another’s attempt at innovation in this tough space. In fact, I deeply respect the effort Caresync, and many others that met the same fate in this industry, have made to improve our health system by lowering costs. But the silver lining of any failure is the learning that it grants us, which has made me ask the question, What can we learn from the Caresync story?
I think the easy answers are too much funding too fast, excessive spending in advance of real traction, lack of management control, lack of Board control, etc., etc. I am sure there is some truth in all of this, but the end state of the Caresync journey wasn’t a down round, management replacement or some predatory financing that pushed the initial investors down the stack. They closed the doors on the company, it’s business model and $50M in invested capital. How does this happen? No asset sale? No stock merger? No IP sale? Just shut the doors and stop the spend without recouping any of the investment at all? To me this means that something was fundamentally and incurably wrong with their business model.
I must start by saying that I fundamentally believe that the concept of coordinating patients for providers to improve outcomes will be a requirement in the future. While my sincere belief may not sway every reader (LOL), I would point to the significant and increasing incentives coming from CMS as another indicator. These incentives are consistent with, although not as financially aggressive as, the incentives put in place to accelerate EMR adoption. The result of that governmental push is adoption rates crossing 90% nationwide. Secondly, as Caresync had created an outsourced coordination model, they must have assumed that providers would not be able to fully staff coordination in the future. I guess the jury is still out on that, but in my experience, with our 100+ hospital clients, we constantly see staffing issues cause delays in advancing care coordination objectives, so I believe my experience is that they were likely right here as well. In my opinion, these two primary factors are of the reasons they won the HIMSS Most Promising Startup in 2014, just 4 years ago. So, they were focused on care coordination in an outsourced model… Does anyone believe that this concept is so far off base that it would cause investors to shutter a company so completely, so quickly?
So what happened? A look at Caresync’s own description provides a clue…
“Founded in 2011, CareSync combines technology with 24/7/365 clinical services to facilitate care coordination among patients, families, caregivers, and healthcare providers. Care coordination solutions include support for Chronic Care Management (CCM), Annual Wellness Visits, Transitional Care Management, CPC+, MACRA (MIPS or Advanced APM track), and more.”
I once heard a story that when Microsoft was founded their vision was a computer on every desk, but when Apple was founded their vision was a computer in every home. One critical word change in their mission drove Apple to innovate in education, music, fitness and personal applications while Microsoft innovated in Word, Excel, Powerpoint and email. In the end they were both successful, but how you focus on a market matters. I believe the failing of Caresync was likely their focus on CMS billing-related value points and measures as the heart of their value proposition. We now know that billings for CCM payments for instance, are significantly depressed from original expectations. Beyond making these billing codes available, these care management efforts required practices to re-think their patient-side processes, particularly for chronic patients. CMS is pushing care coordination to the PCP with these incentives, but most care is currently coordinated from larger acute care providers and healthcare systems, or through payers and ACOs, just due to the economics of a PCP practice these days and their limited ability to absorb and apply technology. Because the government insists that only one provider bill many of these codes for each patient, even those providing extensive coordination, like an Oncology center of excellence, commonly don’t pursue the billing because they only treat one of the patient’s diagnoses rather than the whole patient.
My premise on Caresync is that they were possibly focused on the wrong numbers. Incentives are meant to accelerate adoption in areas where investment is required to better the business. It isn’t meant to be a business model in itself. The case for coordinating care is rooted in these numbers:
- There are approximately 300M people in the US
- 150M have at least one chronic, complex condition
- 100M have two or more
- The 100M most complex patients account for 71% of your healthcare spend
- 15% of those are Medicare recipients, where CCM reimbursement is pervasive
You don’t coordinate care for the reimbursement. You coordinate care to better and more efficiently manage 71% of your overall costs. You must target and measure better treatment compliance, better timeliness of chronic care, reduced duplicate tests, reduced avoidable readmissions, maximizing MDs operating primarily at the top of their license, better leverage of MD extenders and non-clinical staff, etc. This is the business model. It is well documented that these activities lead to both better financial outcomes AND better clinical outcomes. The fact that you earn incentives doing them only allows you to invest in coordinators and technology more quickly. The true business model is better outcomes – and therefore a deeper relationship with clients.
Now, I am not saying that the aggressive spending in a market where adoption is of technology is often not just (Expected Adoption Timeline) x 2, but more likely (Expected Adoption Timeline)2, wasn’t exacerbating the problem. Nor am I saying management doesn’t bare some of the blame for this outcome. But in the end, you need to focus not just on numbers, but the right numbers.