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Drive Innovation November 06, 2015

Innovation Diffusion: CEO Sachin Jain on Carrum Health’s Cloud-based Bundled Payment Marketplace

CEO, Carrum Health
Key Takeaway
Paying more for care doesn’t mean we get better outcomes - @CarrumHealth CEO Sachin Jain

San Mateo, CA-based Carrum Health enables employers to purchase care directly from top-quality hospitals through an innovative online marketplace. Their solution is designed to simplify payments with a single transparent bundled rate for the entire episode of care and apply big data analytics to yield insights that can optimize care outcomes. CEO Sachin Jain shares more with Oliver Wyman Associate Terrance Wallace on how this approach can help catalyze the next generation of value-based care:

Terrance Wallace: I imagine there are a few people out there who haven’t heard the Carrum story. Could you give us an overview?

Sachin Jain: My background is in healthcare consulting. I specialized in new reimbursement models such as bundled payments and Accountable Care Organizations (ACOs) that shift the focus of paying for healthcare from volume to value. After learning about the challenges of adopting such models from the nation’s largest health plans and provider organizations, I felt there must be a way to accelerate the transition and help proliferate the benefits of value-based care, which is how the idea for Carrum Health was born.

TW: What problem are you working to solve? What’s your mission?

SJ: The cost and quality of care varies tremendously from one geography to another, and even within the same geography, the price variation for standard procedures can be significant. Paying more for care doesn’t mean we get better outcomes. In fact, low-quality providers tend to cost more due to readmissions and complications, which are paid extra in today’s fee-for-service reimbursement model. At Carrum Health, our mission is to make healthcare more affordable and consumer-centric. We achieve this through our bundled procedure marketplace that directly connects purchasers of healthcare to high-quality, cost-efficient “Centers of Excellence” providers. Our solution generates cost savings, improves care outcomes, and delivers a superior patient experience.

TW: That sounds like a “win-win” for all stakeholders involved. How does your solution make it happen?

SJ: It truly is a “win-win” because our model aligns the incentives across those who purchase, consume, and deliver healthcare. For employers, our solution generates up to 50% cost savings on common and expensive procedures using predetermined bundled payment prices eliminating price variance and lack of predictability. For employees, we give exclusive access to the top-quality providers both within their market and nationally. Employees typically don’t receive any bills while being personally guided by a care-concierge person throughout the entire journey. For providers, we are a direct-to-employer distribution channel that rewards high-quality care and minimizes administrative complexity.

TW: What is the level of readiness among providers to take on bundled payments?

SJ: There are significant regulatory tailwinds in this space and the Centers for Medicare & Medicaid Services has played an instrumental role in pushing and guiding providers to take on bundled payments. As part of its Bundled Payments for Care Improvement (BPCI) initiative, over 400 hospitals are already taking risk under bundled payment arrangements; 800 additional hospitals are going to join this group because of the new Comprehensive Care for Joint Replacement (CCJR) initiative. Together these hospitals constitute over a fifth of all hospitals in US and this number is only going to grow. These numbers do not include providers that are not participating in CMS programs but are already implementing bundled payments. A recent hospital survey conducted by Strategy& (formerly Booz&Co) found that more than half of large hospitals were already implementing bundled payments.

TW: What advice would you offer to a healthcare provider that’s thinking about direct-to-employer contracting?

SJ: Although the benefits of direct-to-employer contracting are quite clear, it comes with a host of challenges to providers including pricing, sales, contracting, and patient engagement. Building a new employer facing sales force isn’t something that most providers are prepared to do. That’s where Carrum Health comes in to help. We offer analytics-driven pricing guidance and serve as the sales channel to access employers. We also standardize and manage contracting and partner with providers to help reduce readmissions and complications after the procedure is done.

TW: Along those lines, why do you think employers are ready to engage more in the design of their employee health benefits?

SJ: Employers have been struggling to manage rising healthcare costs, with premiums nearly doubling over the past decade. We hear employers are unsatisfied with fully funded health plan-based models that have not done much to bend the cost curve. As a result, more employers, especially in the small-to mid-size range, are turning towards self-insurance to gain more direct control over the design of their health benefits. This allows them to implement new and innovative solutions to manage costs, such as Carrum Health which targets the most common and expensive surgical procedures.

TW: What does the future of healthcare look like to you?

SJ: I see the healthcare system continuing its shift towards value-based care. Medicare recently announced mandatory bundled payments for joint replacements in 75 markets across the US. By 2018, it is estimated that 50% of Medicare reimbursements will be tied to value-based models. As Medicare leads, the rest of the industry typically follows and we are already seeing evidence in the commercial sector with some of the nation’s more progressive employers getting into the mix with value-based benefits for their employees. Carrum Health lowers the barriers for employers and providers to make this transition to value-based care. Our full turnkey solution is built on Enterprise SaaS platform and big-data analytics to make it scalable and easier to adopt.

TW: What would define success for Carrum Health?

SJ: Our stated mission is to make healthcare more affordable and consumer-centric, so ultimately success to us comes down to the outcomes and experience of each patient that uses our program. If you are experiencing a medical condition, you should be able to go to the best hospitals and physicians for that specific condition without having to worry about your network or surprise bills. This is the way we think healthcare should be, and we are working hard every day to make it a reality for everyone.

About the Interviewer
Terrance Wallace is an Associate in Oliver Wyman's Chicago office. He has received numerous honors and awards for his clinical expertise in geriatrics. He now brings this perspective to strategy work in healthcare.

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