Improving Healthcare Efficiency with Incentives: Interview with Ben Kraus, CEO of Stellar Health

by WeCare Marketing
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Doctors are a busy bunch! From an endless stream of patients to frequent team meetings, from piles of paperwork to hours in the operating or emergency room – the list goes on. In a drastically slow and often back-logged healthcare system, physicians often feel the need and responsibility to get through as many patients as possible in a given day.

With the arrival of the Affordable Care Act, many insurance companies were beginning to feel a financial pressure that could only be alleviated if healthcare providers started to change the way they deliver their service. Stellar Health is a new startup working to bridge the incentive gap between insurers and providers using a unique technology platform. We had a chance to chat with Stellar Health’s CEO and co-founder, Ben Kraus, about some of the challenges the industry faces and how Stellar aims to solve them.

Mohammad Saleh, Medgadget: Can you tell us about your background and how you came to be a part of Stellar Health?

Ben Kraus, Stellar Health: I began my career as an analyst at a hedge fund, where I covered the healthcare and technology sectors. I was exposed to early concerns around the Affordable Care Act of 2010 (ACA) and its mandate to shift healthcare from a volume to value-based service. In 2012, I earned an MBA from Wharton, and then spent several years at McKinsey & Company focused solely on helping healthcare delivery systems manage their evolution to value-based care models. By 2014, four years into a post-ACA world, the challenges were the same, but the urgency had increased. Payors and providers were starting to feel the pain where it hurts most – their wallet. Payors like Aetna and United Healthcare were spending massive amounts of money to answer the question: How does one motivate a physician to transform her way of thinking, when she is not your employee and has her own things to worry about?

To be honest, there weren’t a lot of great answers in the market, so I started seeking out innovators that were focused on this challenge. I joined a very “homegrown” company that was founded by twelve physicians in 2010 when they hired an engineering team to build software to support their own practice’s evolution to value-based care. They created a technology platform that allowed physicians to manage their patients more efficiently and in accordance with the new rules of the post-ACA world. I spent three years helping to grow the business, all the while learning the ins and outs of practice management, managed care delivery and technology’s role in it all.

In 2018, building on this positive momentum, I founded Stellar Health with three former colleagues. Mike Meng was a principal at Apax Partners, investing $3b out of their healthcare group since 2008. Ari Brenner, a former McKinsey healthcare expert and close friend, and Octavian Costache, an ex-Google engineer that helped build the original Google Finance platform back in 2006. The four of us teamed-up to attack the problem on a larger scale. My previous company had built a solution to address ten thousand patients. We were asking ourselves: How do build something to address ten million patients?

Our mission was to build a scalable technology platform that facilitates dynamic information-sharing and incentives to bring payors and providers onto the same team, rather than opposite sides of the pitch. We realized that solving the behavioral economic roadblock was the answer to the same $4 trillion questionmentioned earlier: How does one motivate a physician to transform her thinking and behavior?

Medgadget: For our readers who are not familiar with the term, could you clarify what value-based care is?

Kraus: Before the Affordable Care Act or “Obamacare” was passed in 2010, our healthcare system was based on a “fee-for-service” payment model. This meant each individual physician provides a service, like a mammogram or an x-ray, and is paid a set fee for that specific service, regardless of whether that service was necessary or helpful for that patient’s overall health. Unfortunately, no one was accountable for thinking about how these discreet services added up to a healthy patient at the end of the day.

The problem with a pure fee-for-service model is that it does not inherently incentivize healthcare service providers to keep people as healthy as possible. Instead, it incentivizes more services. And more services we have gotten. We will reach $4 trillion in annual healthcare spend in the U.S. in 2019, which is 20% of our GDP. The system was not designed to force healthcare delivery systems to think about efficient ways to keep patients healthy over long periods of time. In 2010, our government, the largest single payor of healthcare services, decided to make a change.

The ACA created what is now more commonly known as a “value-based” reimbursement model. Post-ACA, the government began paying for health outcomes, rather than healthcare services. A practical example is rather than a group of providers receiving payment for each of their individual services, now they are graded as a unit on how well they manage the health of a group of patients. Compensation is now directly tied to the health outcomes of a population – in other words, the value created by those health services.

That was a huge transformation in the industry. It was an overnight change that created a massive knee-jerk reaction to figure out how to make it work. It’s a really a hard task to transform from a world where you do a service, get paid and call it a day, to having to organize among a variety of service providers to achieve a coordinated positive outcome.

Medgadget: How does Stellar Health’s mission factor into this and how you are working to achieve it?

Kraus: Our mission is singular: help providers keep their patients healthy in an efficient manner.   We accomplish this by influencing the way primary care physicians engage with their patients on a daily-basis. We provide them with the information and incentives needed to inspire a wholesale change in the way they operate their business.

The ACA re-wrote the rules and created incentives for those who could deliver care efficiently. Our government laid it out plainly: “Keep people healthy, do it efficiently, and you will do very well financially.” Unfortunately, it’s already 2019 and those incentives have not fully trickled down to the frontlines, where the real difference can be made. There are two major gaps that persist today: (1) data-sharing to give providers the right information at the right time, and (2) fully aligned incentives among payors, providers and patients.

Stellar Health bridges the information and incentive gap between the insurance company and the provider. The insurance company has a lot of data that is helpful, in terms of managing populations, but not very accessible to frontline providers. A lot of providers today are relying on the electronic health records (EHRs) and maybe collecting some of their own actionable information on each patient, but that EHR is missing most of what the provider actually needs to delivery care efficiently.

We have a technology platform that brings together data from not just one, but many sources, including EHRs, billing and claims data, reimbursement schedules, and real-time alerts from hospitals. We present simple reminders to the provider at the point-of-care. For example: “There are two things that you really need to do for this patient today, based on their history.”  It simplifies everything and prioritizes the actions that contribute to a healthier patient in the long-run. Trying to use an EHR to do this doesn’t work because EHRs were designed to serve as a complete clinical record of a patient, which is cavernous and lacks actionability. EHRs were not designed to align payor and providers incentives and create a prioritization framework to maximize health outcomes.

There are innovative companies out there today that have done much of what we do. Our little bit of differentiation centers around working with payors to allocate an additional budget to sweeten the pot for providers to act on our platform’s recommendations.  Today, most providers bear all of the financial risk for spending more time to do what’s right for their patients. That’s because many high-value actions are not compensated. Stellar Health helps payors and providers fill in those incentive gaps.

What has been observed in this industry, is if you just present the information of “You can do these extra things for better outcomes,” more often than not, nothing happens because providers are already busy and running full speed to make ends meet. There’s a lot of white noise and every provider we’ve talked to is feeling a financial burden because of this massive transition. You really need to pair the information with an immediate and incremental incentive.

Medgadget: What would a Stellar Health client hospital look like compared to the status quo, both from a patient experience and a provider perspective?

Kraus: Imagine you are a primary care physician who is responsible for 2,000 patients – they are attributed to you. You are busy. With the influx of red tape and paperwork, you are busy all of the time. If one of those patients comes in needing a prescription for hayfever, you’re going to get him in and out as quickly as possible because you have 30 patients to see today, you have 3-hours of paperwork after the doors close and you are already behind schedule. The problem is this patient that just walked out of your exam room with a prescription for an antihistamine, was also a 68-year old diabetic that stopped taking his medicine 6 months ago and is about to go down a bad path. But in most situations today, there is no way for you to have known that.

Now imagine you’re a Stellar client. You walk into your room and immediately see a prompt: “Dr. Saleh, this patient is noncompliant with his diabetes medication. If you spend 5 minutes to get him back on his medicine, you will be reimbursed an extra $100 for your efforts.” Now it’s meaningful. You understand the clinical importance, but you also have extra funding so you can afford to spend the extra time with that patient to address the bigger issue.



Medgadget: How does your system pick up that the patient is noncompliant?

Kraus: In addition to our data connections to insurance claims, which provide a broad medical history, we ingest pharmacy and lab data. For all Stellar patients, we have a clear picture of their chronic and acute conditions. Our system can see when a prescription is missed and alert the appropriate provider to intervene.  But our system isn’t just monitoring your 2,000 patients. We’re monitoring 100,000 patients and hope to someday be responsible for 10 million patients. Allowing providers to return to the aspects of being a doctor that they enjoy, like spending time talking to, understanding, and motivating their patients.

Medgadget: Are these prompts just for doctors or do you also provide a platform for nurses and other care providers?

Kraus: On the average care team, the physician is actually spending the least amount of time in our application. A lot of interaction with our system is by nurses, medical assistants, and front office staff. Most office staff huddle in the morning to go over the logistics of patients that are coming in. They look up insurance coverage, skim through past clinical notes and write sticky-note reminders on the patient chart. As a part of that workflow, Stellar office staff print out a one-page summary for each Stellar patient. In less than a second, the Stellar app scanned millions of lines of data, to reveal the three most important action items for that patient today. The physician simply glances over that one-pager when she walks into the exam room, and now is informed on a couple actions she should think about taking for this patient.

A good example of when office staff can use the app without having a physician involved at all, is for referral management. A big problem today is that many simple services are being done at very expensive facilities. A primary care office might be referring all their x-rays to the nearby Yale Medical Center, a great institution for complex neurosurgery, but not necessary for a simple x-ray scan.  These expensive facilities might charge $2,000 for an x-ray that costs $300 at a free-standing office down the street. Here’s the kicker: it’s the same doctor looking at the images at the end of the day. In this example, our app prompts office staff to make a high-value referral before the patient walks out of the office. We have seen many of our clients advance from 20% high-value referrals, to 80% in a single year. It’s a huge efficiency benefit for the whole system.

Medgadget: Medicine is a very complex field. How are you able to include every single scenario and account for it in your algorithm’s recommendations?

Kraus: The short answer is we don’t. We seek out the most impactful actions to take at a given moment. We help prioritize and remind providers at critical moments. We do not try to tell a doctor how to practice medicine. Which simplifies things immensely. There are plenty of research institutions and biotech companies trying to figure out new cutting-edge techniques to practice medicine. We’re doing something much less glamourous – we remind providers to keep up with existing standards in an increasingly complex environment.

Medgadget: Stellar Health is a pretty young company. Where have you rolled your system out so far?

Kraus: Today we serve medical groups in Florida and New Jersey. By the June 2019, we will also be in Connecticut, New York, Pennsylvania, Michigan and Illinois.

Medgadget: What are some next targets you want to achieve for Stellar Health?

Kraus: We currently manage 10,000 patients, and we are going to improve the care for these individuals. Our ultimate goal is to manage 10 million patients. We want to get to 1 million patients by 2022. At the end of the day, we’re only valuable to our clients if we execute consistently and continue to make their lives easier as they fight on the frontlines to deliver high quality care. It won’t be easy, but I believe we are up to the task.

For more information, check out the Stellar Health website!

Article by: 

Mohammad is a Masters in Immunology student at the University of Toronto. He completed a Bachelors degree in Applied Sciences and Engineering from UToronto, majoring in Biomedical Systems Engineering. His research revolves around vaccine design and HIV. His interests and previous work at UToronto and Harvard Medical School encompass immunoengineering, developmental immunology, tumor immunology, and regenerative medicine.

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