The news: Value-based care (VBC) giant Signify Health is acquiring accountable care organizations (ACO) network Caravan Health to accelerate VBC payment models in the US. Signify is purchasing Caravan for $250 million, with up to an additional $50 million contingent on future performance.

Why it matters: Together, Signify and Caravan will have one of the largest VBC footprints in the US.

• Signify’s existing network includes 3,000 physician practices in VBC contracts and now it can add Caravan’s network of 200+ health systems, 100 Federally Qualified Health Centers (FQHCs), and 10,000+ primary care practices.
• Their combined footprint will better enable providers in their network to coordinate VBC, and this could help Signify attract more payer customers.
• Signify’s cloud-based platform will have access to more provider and healthcare data that’ll improve how its analytics identify patients’ health risks and other VBC factors.

How digital health can enable VBC: VBC models depend on actionable, quality metrics that can accurately assess and analyze healthcare costs, quality, and outcomes.

• For example, health tech company ApolloMed uses AI tech to automate admin functions and identify VBC key performance indicators to help providers deliver higher quality care.
• In another example, Clarify Health’s AI-powered cloud analytics platform optimizes VBC contracts between providers and payers by analyzing metrics like provider performance and real-time population health insights.

Digital health solutions like virtual care and RPM can help power preventative healthcare and allow providers to deliver better health outcomes.

• For example, digital health startups like Oak Street Health and Cityblock Health are implementing community-based, preventive care models that also primarily operate within value-based environments.

The challenge: Many providers are still hesitant to take the financial risk of VBC. Plus, as private equity’s role in healthcare grows, VBC could take a step back.

• Many health execs (about 1 in 5) said the threat of financial loss was the main barrier preventing them from deploying value-based care models, per a 2021 State of Population Health report by Numerof & Associates.
• PE investment in healthcare has been burgeoning—and often, the focus of PE is to generate revenues, not necessarily deliver higher quality of care.