Going to the hospital was once a move of last resort. In fact, up through the 1930’s, 40% of healthcare services were delivered in the home. But as medical technology grew more advanced (and bulkier, and more expensive), and fee-for-service began to rule the roost, the center of gravity of the U.S. healthcare system moved to high-end specialty care in facilities—and utilization rates of healthcare at home began to decline.
But over the last several years, we’ve seen the pendulum begin to swing back. Risk-based payment models under value-based care (VBC)—which reward providers who keep patients out of high-cost facilities—have gained steam, and the “silver tsunami” of the growing elderly population in our country increasingly prefers to “age in place”. By 2018, total home health spend in the U.S. had risen to $108B. And now, the COVID-19 pandemic has given most patients no choice but to stay home, even as they deal with ongoing, non-COVID-related healthcare needs. This current public health crisis has put home healthcare squarely in the spotlight, and illuminated all the gaps in our current ability to fully support patients where they are.
What is needed to deliver high-quality home-based care? First, a mobile and distributed clinical staff (e.g. nurses, physical therapists, social workers, etc) is obviously foundational, as is support for the social determinants of health, like access to healthy food. The ability to remotely monitor patients, take mobile measurements during home visits, and communicate amongst distributed care teams is paramount. Efficient drug supply chain logistics are critical as well, so patients can access and comply with their medication regimens. Finally, many patients—especially those recently discharged from a hospital—often need durable medical equipment (DME) to manage their conditions, like ventilators, catheters, or prosthetics.
This type of equipment represents a $60B market today, and is the second fastest growing area of healthcare spend. Utter the acronym ‘DME’ to any payor or provider executive, and it’s likely you’ll get their attention fast. Not only does this category keep rising in spend, it also has significant downstream cost and outcome implications when its processes are poorly managed. For example, discharges from hospitals are often delayed because of the inability to reliably order DME for the patients who need it in their homes. A whopping 20-40% of hospital readmissions can be attributable to a patient having the wrong equipment or delays in home delivery.
And anyone who has personally dealt with DME knows how broken the patient experience is. Imagine your dad who has COPD being sent home from the hospital with paper-based instructions (written in esoteric terminology) for using live oxygen, waiting in respiratory distress for his oxygen equipment to arrive at his house; 3 days later, he learns that the DME company sent too few oxygen tanks to last until the next delivery date, resulting in having to call the doctor for a revised prescription and insurance authorization, which takes another 5 days. This time, to save yourself from the delay of mail delivery, you decide to just drive to the local mom-and-pop DME retail store to pick one up, if they have the right model in stock. But before you can get there, your dad deteriorates in the middle of the night and ends up back in the emergency room. And that’s just with one piece of equipment; many post-acute patients need 3 or more devices to be able to manage their care at home.
The fact that most DME providers aren’t able to provide virtual services is another major friction point. DME orders are usually placed manually by discharge coordinators at the hospital, through phone calls and faxes—a slow and antiquated process to begin with. But as COVID has pulled front-line staff into new priority areas, patients have been increasingly left to their own devices to figure out how to get what they need. This can feel ridiculously hard; DME providers rarely have websites, let alone any means to allow patients to self-serve or check order status online. Payors, too, rarely offer a means to check the status of authorization requests for reimbursed DME, except for through phone calls to their now overburdened and low-staffed call centers. The COVID crisis has pushed us to a tipping point we were already reaching: the DME process must be transformed so that it can actually meet the needs of sick, home-bound patients across the country.
I first met Vijay Kedar when Tomorrow Health was a vision built around the concept of “reimbursed commerce for home health”. Vijay had seen first-hand the challenges of home healthcare while overseeing the care of his mother, as she recovered at home from a lung disease. He saw DME as an important first segment to tackle, drawing from the difficulties his family had experienced in coordinating and managing a range of medical equipment and supplies critical for his mother’s recovery. Since it was such a fundamental component of home health patients’ needs, especially in the elderly population where 40% of Medicare beneficiaries utilize some sort of DME, building a platform to serve that segment would enable the company to improve the care of a significant base of home health patients before expanding further.
Vijay had previously run the Texas market operations for Oscar Health, and he had insight from that experience on what was needed to drive true change in the care delivery landscape. Rather than try to paper over a broken infrastructure, he sought to rebuild that infrastructure entirely, launching Tomorrow as a full-stack, accredited provider that could own the end-to-end home health journey for patients, and create true value for payors through direct cost savings and improved care management. Vijay’s co-founder, Gabe Flateman, the co-founding CTO of Casper, brought another set of superpowers to the team: how to build a modern tech stack that could rewire the end-to-end supply chain and payment logistics of an ossified industry, and transform the customer experience through simplicity and high-touch, virtual service.
Vijay and Gabe mapped out all the components of the end-to-end home health service delivery model, and identified the key areas where a grounds-up rebuild was both needed and possible: namely, the logistics side of home healthcare, which is a combination of real-time supply-demand matching and end-to-end supply chain management; the reimbursement side, which means aggregating and streamlining complex medical policies and reimbursement rules across hundreds of health plans nationwide; and last but not least, the customer experience side, for both providers and patients. There is no lack of opportunity to enable tech-enabled automation, optimization, and transparency across that landscape. Bringing together all of those components into a unified platform will be a step change for the industry in and of itself.
This pandemic has forced many healthcare companies to shift and rethink their strategies in order to pave a new path for themselves through a new and rapidly changing set of norms. Tomorrow Health only needed to accelerate its already existing plans to ensure that their vision for tech-enabled home health could be fulfilled for not just those impacted by COVID, but for all patients—as quickly and as smoothly as possible. It’s a privilege to be backing Vijay, Gabe, and the whole Tomorrow Health team as they build a better home health experience for all of us and our families.