The intellectual and developmental disabilities (IDD) treatment space will likely see an increase in technology investment.
This is a much-needed development if the segment is to realize its potential, according to panelists at the Behavioral Health Business event INVEST.
More digital tools could help expand access to care and care management, decrease health care spending, improve profitability through updating antiquated business systems, and better management of workforce challenges.
“These are largely mom-and-pop providers,” Michael Kotzen, CEO of Community Based Care, said. “What excites me in the near term is professionalizing that work — making it more automated and getting rid of carbon copies and paper which does continue to exist and the companies we acquire.”
Out-of-date systems can eat into a profit and EBITDA margins by limiting an organization’s ability to collect reimbursements. This part of tech innovation “may sound a little boring” but points out that incremental improvements in business efficiency can have a big impact, according to Tom McMahon, VP of IDD programs at Circulo.
“If we are collecting 92% of what we bill for various reasons … and I take that 92% and make it a 97%, I just dropped 5% to the bottom line,” McMahon said.
That may sound simple, he added. But, billing and collecting in IDD is more complicated than other sectors because it is so heavily regulated.
Strong tech systems like these play a vital role in helping organizations scale up but have been lacking across the IDD space.
“There’s not a lot of IT that has been implemented yet in the sector,” Matt Pettinelli, founder and CEO of CapGrow Partners, said.
There are several data points that show behavioral health generally struggles with electronic health record adoption. The panelist made it clear this is especially true in the IDD space.
About 37% of private mental health organizations that access Medicaid use electronic health records (EHRs). Additionally, 32% of private substance use disorder treatment providers accepting Medicaid use EHRs, according to a report by the Medicaid and CHIP Payment and Access Commission (MACPAC).
Only 49% of psychiatric hospitals and 61% of psychiatric practices use an EHR compared to most other specialties using EHRs at rates of 85% and higher, according to another MACPAC report.
Tech’s role in combating workforce woes
Many in the IDD sector are looking to technology as a way to help retain staff. These providers largely include in-home health care providers and non-clinical caregivers such as direct support professionals (DSPs). The latter are typically low-education-attainment wage workers that have seen major wage growth across all sectors of the economy, making it hard to find and keep workers.
“We had focused so much of this year on recruiting; our hope is by adding some technology, making the work a little easier, that we can reduce our turnover and also just make it easier to perform the services that our staff has to work through,” Kotzen said.
Circulo’s business model is based on using technology to streamline the work of DSPs and track and support its clients.
The workforce’s turnover rates of late have shifted his company’s historic expectations of long-term retention. In prior years, Kotzen said that employees staying past the one-year mark increased the odds of long-term retention. Now, that number is down to 90 days.
Still, the present workforce shortage in the IDD has forced some to begin rethinking care models altogether. Pettinelli suggested that remote patient monitoring technologies and other sensor technology could provide basic oversight while staff could operate in another space until needed.
“So many individuals now want to work from home,” Todd Rudsenske, partner at the investment firm Webster Equity Partners, said during the panel. “Are there ways to have individuals or locations in close enough geographic proximity to one another that somebody can monitor them in a way that provides a safe environment for that person … to live an even more independent life but, if you are in a moment of being scared or challenged in some way, then you can press a button and somebody’s there at your home within a few minutes?”
Why tech could help the IDD space adopt a value-based care model
Further, the IDD space could be prime for widespread value-based care adoption.
Spending on long-term services, a broad category of care that many patients with an IDD might receive, in the U.S. totaled $400 billion in 2020, about 10% of all national health care expenditures. And yet people receiving this type of care make up only 2% of the population, according to a Kaiser Family Foundation estimate, making the IDD space an intriguing one for innovators and entrepreneurs.
“The other piece maybe not in 2023 but going forward that we’re super enthusiastic about is some sort of shared savings or value-based care,” McMahon said of his outlook for the IDD segment. “There just isn’t enough money in the system to pay for the things that we need to pay for — to provide that living wage, to have a career ladder that folks desire.”
McMahon contends that tech-enabled care coordination and delivery would drive down the health care spending of people with IDDs.
In June, a Nashville, Tennessee-based startup called Carebridge landed a $140 million funding round, largely backed by health plans and their investment arms, to expand a tech platform meant to magnify the work of home-based providers. It does so at-risk with its payer partners.
While private equity investors have taken a shine to the IDD space — The Braff Group tracked 26 deals in 2021 — it hasn’t seen the same rush as the rest of behavioral health over the past three years or so.
However, heavy exposure to Medicaid forces operators to deal with major operational, reimbursement compliance issues across the states.
And it’s the very challenges that attract some to the IDD space that repel others.
“You’re going to see a lot more investment coming in; it’s just getting going,” Pettinelli said. “This has evolved tremendously over the last five to six years … It’s just getting going and people are scared of what they don’t know. Figuring out the IDD industry is not easy, and Medicaid scares a lot of people.”
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