Rahul Lakhanpal, Chief of Staff, & Sean Kelly, SVP at SpectraMedix, on Modernizing Value-Based Contract Managemen

[00:00:01] This podcast is produced by Outcomes Rocket, your healthcare exclusive digital marketing agency. Outcomes Rocket exists to help healthcare organizations like yours to maximize their impact and accelerate growth. Visit outcomesrocket.com or text us at 312-224-9945.

[00:00:35] Hey everyone, welcome back to another episode of The Beat recorded here in Nashville, Tennessee at the VIVE event. Today I have the privilege of hosting two awesome leaders in healthcare. First, I want to introduce you to Rahul Lakhanpal. He is the Chief of Staff at SpectraMedix. And we also have Sean Kelly with us, who is the Senior Vice President of Growth and Business Development. Gentlemen, welcome to the podcast. Thank you. Thank you.

[00:01:02] Yeah, it's a pleasure to be here with you guys. How was day one of VIVE for you? Pretty busy. I think there's a broad spectrum of folks representing different parts of the industry. A lot of good conversations around our area of focus, which is value-based care and value-based contracting. We've had the chance to meet with both health plans and health system leaders, as well as a lot of really interesting vendors and partners here. That's awesome. Glad to hear it. Glad to hear it. What about for you, Rahul?

[00:01:29] No, it's great. It's great to see a lot of familiar faces from payers, providers, investors. It's just a good place to be. Agreed. Agreed. All right. So let's get into it, gents. How is your organization helping to drive change within healthcare? Well, Spectrum Edics is really focused on delivering a technology solution focused on value-based contract administration and management for both health plans and health systems.

[00:01:54] Traditionally, these sorts of activities have been managed through finance or actuarial teams, etc. But because they place such an emphasis on particular clinical activities and the ownership, if you will, in many types of contracts of the outcomes of how the patients are performing in the delivery system and their own health, they need to integrate solutions into clinical activities, into what typically were siloed departments, either separated by lines of business or the type of membership.

[00:02:22] A care advantage might be separated from commercial or Medicaid in a particular health plan. So we've built a platform that allows those different departments to come together, administer their contracts, see how they're performing and where there are opportunities for improvement, and build that next generation that will allow for a fruitful and mutually beneficial dynamic between the providers and the health plans for basically the financial success of the healthcare continuum. Interesting.

[00:02:49] So it's about contract administration and about making sure that everything is flowing well. Designing contracts, putting into place the key things people need to know if you do this, you get an incentive, or if you do this, it has this type of penalty. You have to be measured by something that is typically not in the doctor's workflow. A value-based contract is usually locked in a digital cabinet, if you will, in the legal department or some other division. So how do they translate those things to the front line?

[00:03:17] How do they translate them to the regular engagement that all the parties involved in like an ACO would get together and evaluate? Who's doing well on quality? Who's doing well on readmissions? Where are we seeing challenges there, et cetera? And it translates what the rules are of the contract into the things people need to do and the regular measurements. Cool. Super cool. And I'll just add to that. I think historically, all these value-based contracts were done on Excel, right? So we're talking to our customers.

[00:03:46] They're saying, hey, we have to go search our inboxes for these contracts. We've really developed a software platform where you can track all your contracts, see how you're performing. And really more importantly is tell your providers, tell the doctors who are the ones who are providing the care what to do to perform better on these value-based arrangements, increase quality, reduce costs, and make better healthcare system. That's fantastic. Thanks, Jets. Really understanding what you guys do now here. That's really helpful.

[00:04:13] What differentiates you from other value-based care analytics platforms? So I think we're seeing a trend in the industry where the term value-based care is hot. It's probably second now to AI as many industries have certainly embraced that term. But I think our focus is we actually filter things through the prism of the value-based contract, we say. There's a lot of vendors that do things that once we called population health that now talk about value-based care. And they are doing those clinical things very well.

[00:04:43] They're doing quality measures and gaps in care and risk coding, et cetera. How those things come together and impact a value-based contract are different. So, Saul, we could have a contract where you have downside risk and there's more that we need to pay attention to on cost and utilization. Rahul and I could have a contract that has not got a downside dimension, it's more about quality. And so there are different rules that we each need to play by. And when you're a health system, you typically have many contracts with many different payers.

[00:05:12] And so how that portfolio comes together, you need to bring them in a way that doesn't overburden the providers and the delivery system. And so it's about translating them into a concise view, into a concise set of activities, a concise set of measurements, and the ability to make the certain comparisons and deductions that you need to do to determine, do I continue in this arrangement? Do I take on more risk for a better potential upside? Do I not work with this particular provider group?

[00:05:36] Because no matter what they do, no matter how good the care is, they are not going to be able to thrive financially in this type of arrangement. And they need to be in another vehicle with us or maybe on their own. So I think that's a key component of where we see ourselves differentiating, is taking the evolution of what was quality and pop health into real value-based contract oversight and translating it into how care is delivered. Yeah.

[00:06:00] And I can understand how with multiple contracts like these, it could get pretty hairy quickly and overwhelming. And I'll add to that too, where I think even looking across lines of business, right? So Sean and I always say like there's a crawl lock run, right? So some health plans are crawling in value-based care where others are running. And then if you add on Medicaid, it's all very state focused. So each state has its own regulations. Like Michigan, there's health equity.

[00:06:26] So each state, you need to focus on what are the priorities they're focusing on their value-based arrangements to help the health plans and providers there as well. Yeah, that's fascinating. And I think we're at a point in the industry where the majority of people's revenues are going to start becoming tied to value-based contracts if they're not already. The federal government is pushing to have 100% of Medicare in value-based contracts by 2030. Medicaid and other state agencies are pushing for a similar flow.

[00:06:53] The commercial plans are moving independently of that regulation, but see the financial value of risk transference to a health system. And so now it's becoming a component of critical infrastructure to run a health system. If you don't have your people on top of these things and you're managing them in spreadsheets where you can have errors and things of that nature, or don't know where it ties to the right components of a contract,

[00:07:18] it becomes very difficult to succeed in the new world order, if you will, of predominantly value-based contracts. Yeah. And I was having a conversation earlier today that even employers, large self-paying employers are now pursuing value-based and contracting in this way. Yeah. It's all about how do we find a way to be economically efficient with the premium dollars that are coming in. And it's just like any other business. Costs for everything are rising.

[00:07:45] If you're an independent business, healthcare has always been one of your number one costs outside of labor. And it continues to drive up the cost of running a business. Same thing with the healthcare paradigm. The plans only get so much. And with a lot of employers switching to self-funded models, they're going to want to see that if we enter into this thing where I do have a risk, what mechanisms can you bring to the table? And that might choose one to pick a national carrier over a regional carrier. So these are fundamental economic forces in our world. That's great. Right.

[00:08:13] What value and ROI do you bring to both health plans and health systems? Yeah. So I'll think I'll talk about it from a line of business and an infrastructure perspective, right? So as Sean mentioned, our technology allows you to have the infrastructure to store and manage your value-based contracts, right? Keep it organized and really have a clear line of sight on what needs to be done. If you go line of business by line of business, it's like Medicaid, right?

[00:08:41] So Medicaid value-based care is coming up more and more with an RFP, right? So they're saying, okay, how are you really helping providers in rural areas? How are you incenting providers in behavioral health and health equity? How are you ensuring they're performing well in quality, right? So very high ROI for Medicaid health plans. On Medicare, again, it's stuff like quality, risk adjustment. And then commercial, it's a lot of them are still crawling in value-based care.

[00:09:07] And they're saying, look, it's all in total cost of care management or chronic care management. How do I push my providers into being comfortable going to shared savings or shared risk, right? So it's really helping them all move forward on the value-based paradigm. I think ROI at the tactical level, too, gets into how do we make organizations more efficient when they have to manage more of these contracts, both in quantity and value. It's a lot of manual processes that historically have been done in Excel in different systems.

[00:09:38] When we talk to a health plan, for example, they will have lots of challenges around siloed data for the line of business separation that Rahul's talking about. But also just, they have point solutions. They bought a vendor who really focused on risk and another one who really focused on quality and somebody else manages their claims and all that jazz. How do they bring them together is a very laborious process. It burdens their IT teams, which are already overworked worrying about threats from abroad.

[00:10:00] Or we were talking with somebody who was here the other day who was presenting around the risk to the healthcare system from an international security perspective. They have to focus on those things. So how do we lessen the menial tasks of, can I have this file from this system and that system and bring it together? So there are operational efficiencies. The other thing is, as I mentioned, the trend of these things becoming more common in the health plans as the plans change and the health systems evolve as well. They now can invest in purpose-built infrastructure that once was done manually.

[00:10:28] So there's a human capital ROI savings. I think then there's also the tangential one on a specific contract. So we have clients where by our analytic capabilities, we're able to tell them which practices are costing you the money in the contract, which providers specifically, and why. And it's not a witch hunt. It's really just a way of understanding, I can attribute this underperformance to this group. They don't have the right mix of services. Maybe we can help them. Maybe they shouldn't be in this contract entirely.

[00:10:58] Maybe there's something in the middle. And so that analysis allows organizations to start to develop the next generation of more efficient and well-paired participants in these contracts. And then there are other forms of efficiency that I think will just continue to grow in terms of reducing the burden on providers to meet the material requirements of these contracts. One of our clients is a very prominent thought leader in the health space as a physician.

[00:11:25] And he had said the average provider would need 27 hours a day to meet all the expectations of all the quality that they are expected to meet. And that's an unrealistic expectation. So how do we translate these things into easy to-dos? How do we synthesize information so that we don't have to waste time reading what I have to do for this MA contract, this Medicaid contract, these three commercial contracts, et cetera? There's a lot of ROI that comes out, I think, ultimately in trying to improve the delivery system as well.

[00:11:53] And I think the provider enablement is a great point, Sean. I think the doctors ultimately, right? You have health plans, you have the big health systems, but the individual doctor is the one providing the care. So we also have how do you make their life as easy as possible? How do you enable them with real-time financial incentives, right? So if you're a doctor and you're doing all this good stuff, but the money's going to the health plans and health systems, that's not really fair, right?

[00:12:20] So our platform allows the doctor to really see, look, if I do this and I increase quality, decrease cost as a doctor or provider, there's financial incentives for me. And to that point, by giving people this information regularly and frequently, they can make decisions that might have been delayed. So, for example, one of the challenges in incentive-based contracts are that providers would find out 18 months after the contract started, some 18 months after the term, the year, the contract even ended.

[00:12:50] And so they don't make decisions where the upside of a contract might have influenced how they could spend money. So, for example, if I'm a small practice and I'm evaluating, could I hire another MA and the hiring of him or her is dependent upon a certain amount of revenue from these bonuses? If I don't find out for a year and a half, I haven't hired them for 18 months. But if I find out along the way, I can say, oh, I can budget to hire them and I can hire them now and the quality of care I can deliver is better. My office is more efficient. Patient satisfaction is better, et cetera.

[00:13:17] And so the timeliness of information is also a huge ROI because it allows people to make decisions. Yeah, no, it's fantastic. Sounds very interesting. And we've been here at the conference and there's been a lot of mention of AI, as you guys said, cybersecurity, different trends, right? In your view, what is going to change healthcare over the next five years the most? Can we split that into the AI piece and then what might change it?

[00:13:45] Because they might be AI is dominating the new. If you turn on CNBC, it's in every block of news. It's on everybody's thought, the tip of their tongue. And I think in our industry, everybody's trying to find a way to embrace it. AI will clearly start to solve a lot of the menial tasks for everyone. You know, our focus is how do we apply it to some of the things that have really become challenging for our clients, for health plans, especially those with hundreds of value based contracts. If you want to work with them, someone's got to read them.

[00:14:14] Well, we've invested in AI based solution to ingest those and use large language models to decipher what components of the contract are relevant to then apply to the analytic capabilities we bring to our clients. I think for the industry as a whole, our focus and where we really see the trend is the continued emphasis on value based contracting dominating the top line of the income statement. The revenue stream will come from more and more value based contracts.

[00:14:41] How does that filter down through everything people do, whether they are a health plan administering these relationships or a health system delivering care and continuing to figure out how do they shift from what was once the, you know, the hospital capacity model to one that is more focused on preventative and ambulatory care. And then I think there are nuances around the advancement of the value based trend.

[00:15:04] How do they get into specialty programs, bundles and things of that nature, which are sort of the second generation or maybe even the third generation, I should say, of the value based journey. Yeah, I think completely agree with Sean on the whole AI aspect that it is a sexy word right now. And I think healthcare, there's always this argument of, hey, is it how much technology do you want in a very human touch industry, right? You want, yes, you can have AI, but still people want a lot of doctors to take care of them.

[00:15:34] So we're doing it on contract ingestion. I think, again, with this new administration, there might be a lot of changes in value based care. There's new regulations in Medicaid and Medicare. There's shifting to V28 as well. So I think it will be in value based care. There'll be a lot of new initiatives and it's just be funny to track them. Thank you guys. Now, really fascinating the way that's evolving and certainly appreciate your insights.

[00:15:59] What are some exciting 2025 and future looking initiatives that you and the team are excited for at SPMD? Yeah. So one thing we serve both health plans and health systems, right? And both have similar goals in value based care. I think one really interesting project I'm looking forward to is how do we make two of our customers come together and really add more value to the health care system, right? So we have multiple health plan customers. We have multiple health system customers.

[00:16:27] I really want to try this year to say, is there a pilot that they can utilize on our platform to really move value based care forward? Really showing the interoperability of both the health plan and health. Yeah. I think that provider enablement piece that Rahul is speaking to is critical. In markets where we have multiple plan relationships and multiple provider relationships, they want to ease the burden and not have path for this plan versus that plan.

[00:16:52] I think the continued investment in managing value based contracts and being able to decipher the insights is really what's exciting. We spent a lot of time building the solutions to ingest this information, render and analyze it in appropriate places. Now being able to take it to that next step of here's how you fine tune it. That's really what's exciting for me because it's no longer just measure what you're into. It's how do I figure out my future, that crawl, walk, run process that Rahul was talking about. I think those things are really important.

[00:17:21] So allowing health systems to compare their performance in different contracts by doing really well with this carrier and not with this one. There are health systems that are making decisions on no longer contracting with certain plans for certain reasons. How do we help them make the best decision for their organization and mutually for both the health plan and the health system? Because we want the plans to be able to work with as many providers as possible, just the same as we want the providers to work with as many plans as possible, because that allows the most people to get the most care. Love that. Yeah, no, great points there.

[00:17:50] I know we've had a lot of conversations around reducing complexity and ultimately enabling the physicians at the front lines to understand and make decisions quicker. If you had to sum it up to the biggest pain point your organization helps solve, what would you say that is? I think you have to separate it into the two customer types. We primarily serve the health plans and the health systems, and even then you can get more nuanced. On the health systems, it's take control of your own destiny. Figure out how to manage and succeed in the value-based paradigm.

[00:18:20] You are on this journey that's going to continue to take years where you shift from having hospitals that operated like hotels and airplanes at capacity to make money into more focus on preventative, ambulatory care, etc. That these value-based contracts incent and they disincent the filling of those hotels and airplanes, the hospitals. I think on the plan side, it's how do you continue to be the best in class of delivering the right partnership? We say transparency equals trust.

[00:18:49] How do you give the right information to the providers to show them how they will thrive? How do you improve your operational efficiency of giving them information that's timely and beneficial and insightful so that they want to continue to partner with you? Because if we continue to have this loggerheads-like relationship between health systems and payers, we as the consumers suffer. We pay more in premiums. We don't get access to certain services. We have to navigate from place A to place C instead of being able to A and B.

[00:19:17] So I think that the whole focus on trying to make it a more efficient, effective process is where I think we stand in the market. And I'll go the other side of the thing, third time where I think Sean was talking about the sexy Ferrari that you see. But if you open the hood, I think it all starts with data, right? So a lot of these health plans and health systems are, I don't want to say, they're older institutions where they don't really have strong data infrastructure. They're all transitioning there now.

[00:19:47] But really when we take in data, it's complex, it's disorganized, it comes from multiple different sources. So really putting all those disparate data sets together and then providing that in a clean environment where then you can do actual insights. And that ties to what Sean was saying. That's really the first step.

[00:20:07] And even with our customers, really the first few months is cleaning the data and helping them understand their own, what they have and what they don't have, right? And that makes actual insights a lot easier. That's fantastic, gentlemen. Well, thank you guys so much. It's been insightful, an insightful discussion. What closing thoughts would you leave our listeners with and where can they reach out to learn more? They can find information at www.Spectramedix.com.

[00:20:36] S-P-E-C-T-R-A-M-E-D-I-X. I think our closing thought would be that if your organization is really struggling or wants to be better at how you negotiate your value-based contracts, manage and see how you're performing them, enable your providers, design the next generation of contracts, make the right decisions financially based on the performance in them.

[00:22:12] Outcomes Rocket, your healthcare-exclusive digital marketing agency. Outcomes Rocket exists to help healthcare organizations like yours to maximize their impact and accelerate growth. Visit OutcomesRocket.com or text us at 312-224-9945.