Today’s biggest health care trends create opportunities for KC small businesses.
Everybody knows health care is important. The men and women who work in this field literally save lives. But that fact sometimes obscures the industry’s economic impact on the greater Kansas City region. Because, despite its humanitarian mission, health care is also a business.
According to the Mid-America Regional Council, health care and social assistance accounted for nearly 140,000 area jobs in 2014, second only to government employment. Over the course of 10 years, it created more than 30,000 positions, outperforming any other sector, even during the Great Recession.
The demand for service has led to several construction projects, too, creating work for the region’s construction, engineering and architecture firms.
In many cases, these are not small projects. The University of Kansas Hospital is building a $280 million tower in Kansas City, Kan., and a new $100 million building in south Overland Park. North Kansas City Hospital is planning a five-building medical office park near Kansas City International Airport.
Along with the growth, there’s also disruption on a level that few industries are undergoing right now. The $3.2 trillion sector is facing a wave of trends—financial, political, technological—that are transforming how care is delivered in the United States.
The Affordable Care Act is at the top of the list, obviously. While the law has allowed more Americans to receive health insurance, individuals are shouldering a greater portion of the costs as high-deductible plans become more common.
The ACA has also inspired a wave of M&A activity among hospitals, medical practices and health insurers, according to the Pwc Health Research Institute. Just last year, St. Joseph and St. Mary’s medical centers changed ownership.
But these shifts—even as they lead to larger and larger organizations—have also created opportunities for Kansas City startups and small businesses to introduce products and services that not only reduce costs, but improve care for the average patient.
‘Practicing Medicine Like I Wanted to Practice’
Nationally, more physicians are starting practices under a direct primary care model. Instead of sending a patient’s bill to their insurer or collecting a co-pay, these practices charge a monthly membership fee. There’s no other cost for most care that can be delivered in the office.
Because the practice doesn’t spend as much time submitting forms to the insurance company, it doesn’t need as much office staff, reducing the cost of overhead. It also has the nice side benefit of allowing the doctors to spend more time with patients, making them better advisers and advocates.
“This is really a way for me to get back to practicing medicine like I wanted to practice,” said Dr. Kylie Vannaman, who last year co-founded Health Suite 110, a direct primary care practice in Overland Park.
Vannaman and her business partner, Dr. Haseeb Ahmed, are able to consult with patients how they see fit. Sometimes that means a phone call, a text message, a videoconference or an old-fashioned house call. Many insurers only reimburse for care provided inside a doctor’s office.
“We’re accessible,” Ahmed said. “We’re personally a text message away.”
The Health Suite 110 team doesn’t discourage private insurance. In fact, they recommend it. They say services like theirs are a good complement to high-deductible plans. A monthly membership fee may be more manageable than trying to meet a high annual deductible.
Dr. Shelley Alexander, the owner of New You Health Studio, operates a specialty practice that focuses more on anti-aging, hormone replacement therapy and other services. Despite requiring payment directly from patients, her practice is thriving.
Why don’t more doctors go into business for themselves?
“We’ve more or less been trained to be an employee,” Alexander said. In medical school, “there aren’t any business classes. There’s not really any of that learning the business aspect of medicine.”
Giving Greater Priority to Quality
The Affordable Care Act is also changing how Medicare reimburses health care providers for visits. Under the old rules, doctors and hospitals would bill on a fee-for-service basis. Under the ACA, though, a greater percentage of reimbursement hinges on “quality of care” measures.
PatientsVoices, a young company from Kansas City, Kan., has developed a proprietary system for analyzing and reporting patients’ feedback on their quality of care, which can affect Medicare reimbursement.
Sphere3 has developed Aperum, a real-time analytics software that helps hospitals to reduce patient falls, improve response times and otherwise improve patient satisfaction. Doing that in real time is the key. Previously, feedback from patients was received well after the care provider’s ability to help them.
“We translate that into behaviors at the point of care so the hospital has the ability to fix problems before you’re discharged,” said Kourtney Govro, Sphere3’s founder and CEO.
One benefit to being based in Kansas City, she said, is local health care providers are often more willing to try out emergent technologies. Centerpoint Medical Center in Independence helped pilot Aperum—and saw real improvement in patient experience.
Another quality-of-care measure is readmission rates. Many large health systems are looking for help in this area, and that’s opened the door for another local startup, CareConnext.
The company has come up with a set of tools and support systems that assist people with heart failure. CareConnext helps them make (and stick with) lifestyle changes that will improve their quality of life and keep them out of the hospital.
It can be tough for patients to handle on their own because a diagnosis of heart failure can feel “overwhelming,” said Elizabeth Blanchard Hills, CareConnext’s founder. One in five patients dies within five years, but for many, lifestyle changes can make a major difference.
“They assume they’re dying when they’re not,” Blanchard Hills said.
While these kinds of interventions are important for individual patients, the entire health care system has a lot at stake. Heart failure, diabetes, obesity, cancer and other chronic diseases represent a large and growing problem—one that could only become more expensive as the population ages.
“They’re going to bankrupt the system unless we change the way we manage and care for these patients,” Blanchard Hills said.
‘Next Generation of Health Care Management’
Another major trend affecting health care? Technology is making it easier for everyone to get the health data they need when they need it.
You can see it in the growth of Cerner, a world leader in electronic health records. Last year, the company reported revenue of $4.43 billion.
But smaller Kansas City businesses are succeeding with their solutions, too:
» Rx Savings Solutions allows customers to find the best possible prices on their medications. The young company has signed up major clients like Blue Cross Blue Shield of Kansas City and American Century.
» Local startup iShare Medical has created a system for “cradle to grave” medical records that patients can seamlessly share with all their health care providers. The company has won a major federal contract.
» Bardavon Health Innovations has developed a cloud-based solution that lets employers better analyze and manage their workers’ compensation programs. Bardavon’s analytics allow companies to see which occupational and physical therapists deliver the best results for their workers.
“I really believe it is the next generation of health care management and evaluation,” said founder Matt Condon, who launched Bardavon after starting another successful health-based business in Kansas City, ARC Physical Therapy+.
Condon’s new company is growing, too. Last year, Bardavon employed about 10 people. Now, it’s closer to 50.
In the last few years, Condon said, he’s definitely noticed an increase in the number of Kansas City companies bringing tech and health together. In fact, sometimes there’s a little friendly competition for talent.
Even that’s ultimately for the best. Job candidates from the coasts will be more likely to move to Kansas City if they see several healthy businesses where they might work.
“We’re rooting for each other,” Condon said. “We need those companies to grow and be successful.”