What hinders healthcare innovation? How can health insurance providers and other stakeholders be more innovative?

Healthcare innovations aim to make healthcare better and/or more economical. Important starting points and components (without claiming to be exhaustive) are in particular: process optimization with a view to the entire treatment chain, the development of incentive mechanisms for prevention, remuneration models with a focus on the quality of results and not on the quantity and number of services, and active patient participation.

>> When health insurance funds plan to implement healthcare innovations through selective contractual legal bases such as integrated care pursuant to Sections 140a et seq. of the Social Code (SGB V), high development and investment costs often pose an insurmountable hurdle. While the costs are incurred immediately, returns can only be expected in the medium or even long term. This is especially true when preventative elements are part of the innovation concepts. This poses major problems for health insurance funds, as the Morbi-RSA system prevents them from accurately estimating their financial situation in the long term; on the contrary, they only know their precise financial standing retrospectively for each year. Insured members may also leave the health insurance fund during the long period until the return on investment (ROI) of a healthcare innovation is achieved. Additional investments can therefore lead to serious problems for the funds in the competition for additional contributions and contribution rates.
The start-up funding for integrated care, which was abolished at the end of 2008, was fundamentally an effective means of addressing the health insurance funds' financing problem for expenditures in this area. In order to promote innovation, it is therefore important to once again offer financial support for health insurance funds' expenditures in research and development (R&D), e.g., through the provision of funds from the health insurance fund. Politicians clearly have this in mind, as they have announced the establishment of a €300 million innovation fund, with €225 million earmarked for the promotion of innovative, cross-sectoral forms of care and the remaining €75 million for health services research. The allocation of the funds is to be controlled by the Federal Joint Committee (G-BA) – and therein lies the problem. It is difficult to imagine that such a corporatist-oriented procedure for the use of these funds will lead to the promotion of innovative, cross-sectoral approaches in the selectively contracted area.
If one concedes that high upfront investments are necessary for care innovations and that funds from the health fund should also be made available for this purpose, then the current regulation in Section 53, Paragraph 9 of the Social Code Book V, according to which selective contracts (which are offered as optional tariffs according to Section 53, Paragraph 3) may not be more expensive overall than standard services, is also inappropriate. A corresponding amendment to Section 53 would therefore be logical and should also be implemented in the interest of promoting innovation.
Wrong incentives for service providers
Remuneration of service providers is more volume-oriented than benefit- and quality-oriented. Sectoral thinking and sectoral remuneration prevent adequate incentive systems. Each sector only focuses on its own profitability, so that sector-specific sales and revenue maximization is the goal of its efforts, not the patient's health outcomes and overall economic efficiency. The current remuneration system either fails to adequately consider long-term effects and reduced utilization in other sectors, or does so inadequately, leading to short-term planning on the part of service providers. Bain & Company (Hültenschmidt 2011) concludes that: "(...) new remuneration systems are a key lever for cost- and quality-oriented changes."„
Improved, cross-sectoral outcome quality could be rewarded through the introduction of outcome-based compensation models. Corresponding "pay for performance" compensation models are already being partially tested and implemented in the selective contract sector. Many detailed problems have so far prevented a major breakthrough. Since these models generally stipulate that better or additional compensation for above-average quality is offset by compensation deductions for poor quality, negotiations with service providers regarding the compensation deductions can sometimes be difficult. Such a compensation system also requires well-functioning quality measurement and assurance that are accepted by all contracting parties. Despite all the detailed difficulties, outcome-based compensation models are undoubtedly correct and forward-looking.
Cross-sectoral quality assurance (SQA) is a fundamental prerequisite for improved cross-sectoral outcome quality and a reimbursement strategy aligned with it. This has so far been almost completely hampered by sectoral isolation. True implementation of SQA is likely impossible without fundamental structural changes anchored in the German Social Code (SGB V), such as the standardization of coding rules and documentation standards for all sectors. While politicians have placed the topic of QA on the political agenda for this legislative period, there is no indication that such fundamental reforms will be addressed.
Promotion of research and
Development culture
Health services research requires money, but also platforms for exchange between science, payers and service providers.
A corresponding (healthcare) research and development culture is the foundation for the further development of new forms of care and for the development of innovations. However, due to the financial restrictions already described, health insurance funds can only provide limited funding for health care research. There is currently little incentive for health insurance funds (as well as for service providers) to allocate budgets for research.
The provision of EUR 75 million annually from the Innovation Fund for health services research, as promised by politicians, is in principle a suitable way to eliminate funding bottlenecks in this area, although concerns have already been raised regarding the proposed procedure for the use and distribution of the fund's resources.
In principle, joint funding and financing projects between statutory health insurance (GKV) and other organizations are a good way to improve the funding basis for health services research. One example of this is the funding priority of health services-related research, patient orientation, and chronic diseases. The sponsors – GKV, private health insurance (PKV), German Pension Insurance, and the Federal Ministry of Education and Research (BMBF) – provided a total of just over €20 million for this funding priority. The BMBF's financial contribution of more than 50% of the total amount, in addition to the intrinsic value of this funding cooperation, was a strong argument and incentive for the other sponsors to contribute financially.
An important insight from this funding priority is that, in addition to providing appropriate funding for health services research, the creation of contact points and platforms for exchange between academia and health insurance providers is also of great importance. The transfer of research findings into health care practice is often a major hurdle, made more difficult by the fact that, according to researchers, they are often inadequately informed about the structures, processes, and contacts on the part of health insurance providers.
As part of promoting a research and development culture, consideration should also be given to promoting investments in healthcare innovations. Hildebrandt GesundheitsConsult GmbH (Hildebrandt et al. 2008) aptly describes the problem in the following sentence: "Development and investment take place where, with sufficient certainty, sustainable profits can be made through entrepreneurial commitment." This certainty is lacking. Reasons for this include the high upfront investments required for complex new process developments and end-to-end IT solutions. The expense is further increased by the need for dual billing channels when selective and collective contracts exist side by side. With regard to refinancing for private investors, there is also some uncertainty about the long-term stability of the healthcare policy framework.
Startups seeking to engage in healthcare innovation also face significant challenges, as financing options in Germany are very limited. The following figures clearly illustrate this: In 2012, fundraising through venture capital financing in Germany amounted to €204 million across all sectors, not including pure healthcare service innovations. In the USA, $20.6 billion in venture capital funds were invested in startups in the same year (Diemer 2013). The digital health market alone is currently experiencing a veritable boom there.
A capital fund could be established to promote investments in healthcare innovations and the involvement of start-ups in this sector. One possibility is economic policy funding, for example, through the Kreditanstalt für Wiederaufbau (KfW), or health policy funding through the Health Fund (Hildebrandt et al. 2008).
Upcoming changes
in relation to selective contracts
The coalition agreement provides that „health insurance companies will be given more freedom to design good contracts in competition and to be able to do justice to regional peculiarities.“.
The regulations in detail:
• Alignment of the „legal framework and removal of existing obstacles to the implementation of integrated and selective forms of care“
• Uniform regulation of evaluation
• Proof of economic viability to the responsible supervisory authority after four years
• Repeal of the regulations on minimum duration and substitution of standard care
• Simplification of the cleanup process
• Transfer of suitable forms of care into standard care
• Removal of remuneration restrictions for general practitioner contracts
• Structured treatment programs must become part of the HZV contracts as far as they concern general practitioners.
• To promote innovative cross-sectoral forms of care and for health services research, an innovation fund of EUR 300 million (half financed by the health fund and half by the health insurance funds) is to be set up.
Conclusion
Overall, the regulations are moving in the right direction. However, some of the existing problems and hurdles on the path to more healthcare innovations are not being addressed, or are not being addressed consistently enough. For example, the proposed innovation fund is fundamentally a good idea and a suitable means to address the financing problems of innovative, cross-sector healthcare projects and improve the funding basis for healthcare research. However, organizing the allocation of these funds through the Federal Joint Committee (G-BA) and criteria to be determined by it carries the risk that the fund's money will be sunk into collective bargaining agreements, leaving the health insurance funds unavailable for innovative, selectively contracted projects and their own healthcare research ideas.
Existing regulations in Book V of the Social Code (SGB V), according to which selective contracts may not be more expensive than standard benefits (Section 53 (9) SGB V), also represent a major hurdle for innovative, selective contract projects, which policymakers have not yet planned to eliminate. The same applies to requirements regarding the economic efficiency of health insurance funds (particularly Section 197b SGB V), which severely restrict the possibilities for implementing selective contracts and, for example, virtually rule out the involvement of management companies in the implementation of such contracts.
Policymakers clearly recognize the topic of quality assurance as urgent and important, but the draft of the Statutory Health Insurance Financial Structure and Quality Development Act (GKV FQWG) does not indicate that the fundamental structural changes necessary for quality assurance will be addressed. Without quality assurance, however, improved, cross-sector outcome quality is hardly achievable.
There are also no plans to promote investments in healthcare innovations, for example by setting up a fund.
To eliminate all identifiable barriers to healthcare innovation, further reforms would be necessary, going beyond those announced by politicians and, in some cases, already initiated. Some of these additional changes are very fundamental in nature. Others relate more to detailed regulations that could ensure that the innovation potential of selective contractual options and the impact of the Innovation Fund can fully unfold.