For Finance Specialists

Economic Value Added - Healthcare Capital

Background

The rising cost of America's healthcare threatens the economic security of individuals, communities, businesses, and the nation. According to Constellation Research, total healthcare costs are projected to consume >25% of the GDP by 2025. In 2016, healthcare costs in the U.S. were ~$3.4 trillion. Roughly 80% of that total was spent on chronic disease, indicating that the "care" delivered was mostly ineffective at resolving chronic health conditions. Given the overwhelming cost of chronic disease and the paucity of hard evidence at the foundation of much of what is done in clinical medicine, one is compelled to ask – what exactly is wrong here?

Historically, healthcare capital allocation has always been driven by a conflicted supply chain that failed to incorporate any measure of efficiency in the design or operation.

NuraHealth and EVA

The analytical engine to Nura Health's technology Platform can legitimately be described as a tool to drive Economic Value Added (EVA) into the allocation of healthcare capital. That language has little meaning to a clinician but an experienced finance specialist gets it. Bennett Stewart, father of EVA and a Nura advisor, has confirmed that no technology such as Nura's Platform has ever existed.

NuraHealth is honored to have the counsel of Bennett Stewart as well as Alfred Berkeley III, former Vice Chairman of the NASDAQ stock market. We have other PhDs in Finance and CFAs, all of whom work on the design and integration of analytical model development. This finance brain trust, like the clinical and scientific talent on the Nura team, has enabled the development of a perspective that is unique to NuraHealth.

Reality Check for the Self-Insured Payer

Nura focuses on self-insured payers (large employers and state medicaid programs) because they have the greatest economic incentives, operational ability and legal flexibility to institute Demonstration projects.

Though employers cite escalating healthcare costs as a top three threat to their business, the root cause of runaway costs lay in the design and operation of the billing/payment system. Historically constructed as an invoicing mechanism for physicians, the payment system captures no data on the efficacy of clinical procedures. Patient care is paid for because it is delivered – whether it worked well for the patient or not at all. Alternatives to conventional care practices are typically not offered because the payment system does not include procedure codes that enable reimbursement for such care.

Of the few IM compatible codes that do exist, the underlying algorithm that determines provider reimbursement is not patient outcome driven and leads to a miniscule payment. Even if one was discovered, an inexpensive "cure" for a chronic disease is very difficult to promote in a marketplace that would see a decrease in revenue as a result of championing for that cure.

This leaves patients and payers of care (employers, state) as the most plausible (aligned in purpose) drivers for determining the effectiveness of patient care methods. Historically, neither of these stakeholders has had a tool with which they could identify patient care procedures that work, let alone work best—until now.