Episode #122: The Home is where Healthcare is Heading, with Raphael Rakowski – Founder & Executive Chairman, Medically Home

Friends,

With the onslaught of the Covid-19 pandemic, numerous hospital systems across the country rapidly adopted the hospital at home model in an effort to deal with overcapacity.  Many systems are planning to continue this service – even after the pandemic. The reasoning is simple. It’s a much lower-cost alternative. It’s much more personal and customized care. It’s a lot more convenient and comfortable for patients and their families. And, it’s going to be a major clinical delivery approach in the future; a major source of revenue, as well as a source for patient growth and retention.

Our guest today, Raphael Rakowski, is one of the most significant entrepreneurial leaders in this rapidly advancing and transformative trend in healthcare delivery.  In 2010, years before most of us even heard of it, Raphael Rakowski led a team of engineers and clinicians in the creation of Clinically Home, the first commercially scalable model to enable safe hospitalization at home. In 2017, Raphael and his team created a next-gen version called Medically Home and joined forces with Atrius Health (a large multi-specialty medical group in eastern MA) to bring the program to market.  In 2020, after his role as CEO & Founder, Raphael was named Executive Chairman of Medically Home Group, Inc.  Medically Home operates in over 15 states at the time of this interview with a large number of strategic partners, and has most recently partnered with the Mayo Clinic & Kaiser Permanente.

In this episode, we’ll learn about:

• Why – according to Raphael – the financial and business model for facility-based hospital care is misguided, misaligned and maladapted to the needs and safety of patients and their families.
• Why the shift to decentralized healthcare is necessary if we are to have a sustainable system, and how it’s consistent with the path that other industries, such as banking and retail have taken.
• The four operational pillars that allow Medically Home to deliver a much higher acuity level of care in the home than other ‘hospital at home’ models.
• The superior outcomes that Medically Home is achieving compared to traditional facility-based hospital care.
• How Medically Home is addressing some of the challenges in delivering high acuity care in the home setting.

According to Raphael, the reason facility-based hospital care is suboptimal is that it has been fashioned like an industrial factory. He backs up his statements with powerful observations, compelling data and intelligent reasoning. For example – according to Raphael, 65% of hospital costs are due to the fixed costs of their bricks and mortar infrastructure. This overhead creates a “tax on care”, leaving only 35% for medical care. On the other hand, the cost savings Medically Home is achieving are about 25%.  Patient satisfaction is at or above hospital levels. Mortality and morbidity reductions are 10%, and fall rates and infection rates are dramatically better than facility-based hospitals.

Raphael also reframes our notion of acute care and post acute care.  As he puts it, “The point of the Medically Home model is that you’re reliably integrating three things that should never have been siloed – acute care, post-acute care,and population health… There is no such thing as post-acute care. It was invented as an artifact of reimbursement. You should be cared for by the same care team until you’re not sick anymore.  This is one of the reasons for the high readmission rates we see in hospitals across the country…  We combine these together in a single episode called “stay with the patient until they’re well and you understand what it will take for them to stay well…”  

At the present moment, the home-based care market in the US is approximately $140B in revenue, and predicted to grow to over $200B within the next 4 to 5 years. One can view this rapidly emerging home-based care market as a threat to hospital systems – or, as an opportunity.  For those hospital systems willing and capable enough to be early entrants – it is a huge opportunity to diversify their business models and revenue stream, and to de-risk the unprecedented market disruption that is almost certain to occur this decade. From a mission-based perspective, it is an opportunity for our healthcare systems to do what we need them to do: improve care and care outcomes, lower costs, and provide a more compassionate and convenient care experience.

Until Next Time, Be Well.

Zeev Neuwirth, MD