10 Questions for startups transitioning to Value-Based Care
Question 1: What are the primary value drivers of our solution?
Understanding your solution & core value drivers is pivotal. Whether it impacts affordability, quality, risk adjustment, patient/provider experience, or health equity, you need to have a clear grasp of where your strengths lie.
Red Flag: If your solution does not align with any key value drivers or if you are unsure of its primary impacts, re-evaluation is essential.
Question 2: How many of those value drivers can measured?
Measurable results underpin credibility. Being able to measure critical factors such as engagement, clinical outcomes, utilization, and total cost of care is vital in value-based contracting.
Red Flag: If a significant portion of your value drivers remain intangible, unmeasurable, or early in the value chain, it may weaken your negotiating position.
Question 3: Can we use current data to model financial impact?
Data-driven modeling offers predictive power. Startups should assess their capacity to model impacts on utilization, cost, quality measures, membership growth, or retention.
Red Flag: Relying on aggressive assumptions or outdated data when modeling can decrease credibility or drive misguided strategies.
Question 4: Which value drivers go into a pitch deck vs. a contract?
Discerning the most compelling and measurable domains for presentations ensures alignment and clarity with potential partners. Pay for performance or gainshare contracting focus on the subset that is easiest to measure.
Red Flag: Overpromising in contracts without specificity of patient populations, tangible performance metrics, or regression to the mean can lead to mistrust and payment delays.
Question 5: What type of risk are we ready to take?
Risk appetite can be a marker of startup maturity and growth trajectory. Determining how much of your fees you & willing to risk in exchange for potential value returns is requires understanding of internal unit economics and confidence in driving partner outcomes.
Red Flag: Failing to set clear risk boundaries may result in unfavorable contracts, cashflow concerns, or more severe financial distress.
Question 6: Do we have the capital to on downside risk?
Diversified revenue or robust capital access can cushion against delays in value-based payments, ensuring financial stability.
Red Flag: Over-relying on a single revenue stream from initial value-based contracts, especially with delayed payouts, can jeopardize the startup's longevity.
Question 7: How will value based contracts impact team, operations, and culture?
Adopting value-based contracts may necessitate organizational shifts, from hiring practices to operational adjustments.
Red Flag: Resistance to change or an inability to evolve can hamper growth and diminish the value proposition.
Question 8: What is our projected rate of growth and maturity?
Balancing current capabilities with future projections is essential when negotiating contracts that may take a long time to finalize.
Red Flag: Overestimating growth and maturity rates can impact budgets, investors, and potential partners.
Question 9: How quickly can we ramp up and enroll patients after signature?
The speed of operational execution post-contract signing indicates readiness and reliability. Ensuring the other party is incentivized or contractually bound to drive enrollment can be beneficial.
Red Flag: Delays in ramp-up can harm reputation, trust, and financial prospects.
Question 10: How will employee turnover impact contract success?
Staff continuity is often key to maintaining consistent service quality. Identifying vital clinical and operational stakeholders and having contingency plans in place is imperative.
Red Flag: Neglecting the potential disruptions caused by turnover can lead to service gaps, contract breaches, and underperformance in value-based outcomes.
Written By: Reza Alavi, MD, MHS, MBA at Quintuple Aim.
