With over 160 specialties and sub-specialties in the US, there has been no shortage of venture-funded, value-based specialty care organizations over the last ten years. Examining these specialties, there are several factors that make for an attractive opportunity:

• High cost: If the specialty is costing insurers and patients a lot of money, there is more opportunity for savings.
• Variable cost: If there’s a significant difference in the amount of money spent on different care pathways, there is more opportunity to improve cost.
• Variable quality: If there’s significant difference in the quality of care and patient experience across different care pathways, there is more opportunity to improve quality.
• High patient level costs: If costs are concentrated with fewer patients, it is easier to leverage targeted interventions and have an outsized impact on cost in a smaller population.
• Independent specialty: If the specialty is owned and operated independently, rather than by an incumbent risk-bearing entity or health system, the independent specialists are more likely to need assistance in transitioning to risk.
• CMS model: The factors above contribute toward CMMI’s creation of models, but a model has always been a tried-and-true way of spurring innovation.

If a statistic in this section does not have a source, it likely comes from here👇

William Blair Report on Specialty Value-Based Care.pdf

Kidney care

Kidney care is well-suited for risk-based models because it is a high cost and discrete condition. In these risk-based models, kidney clinicians (aka nephrologists) deserve accountability for total cost of care due to the discrete nature of the condition, which policy makers and CMS have recognized.

First, let’s take a look at cost. Medicare is expected to spend $130B per year on kidney care and $51B on ESRD. ESRD patients comprise 1% of traditional Medicare enrollment but 7% of spending. The average ESRD patient costs ~$100k PPPY and there are ~800K ESRD patient (68% of whom are on dialysis). This high cost allows for more opportunity for savings.

Next, looking at the condition, Chronic Kidney Disease (CKD) affects roughly 15% of the population, much more prevalent in Medicare (38%) than other populations, as you can tell from the cost numbers above. Despite its prevalence, it is estimated that [90% of patients](https://pmc.ncbi.nlm.nih.gov/articles/PMC8740927/#:~:text=An estimated 37 million Americans,people at risk for CKD.) with CKD don’t know about their condition. Kidney disease is a discrete disease state where a specialized care model improves outcomes, reduces costs, and increases patient satisfaction. Deploying this specialized care model, nephrologists often are the quarterbacks of the condition as a relatively independent specialty (not employed by health systems). This dynamic is dissimilar to a condition like diabetes, where PCPs manage the condition because of its prevalence, familiarity, and straightforward management protocols. In this care journey, nephrologists and care managers can positively impact the care journey in a number of areas:

• Slowing disease progression
• Increasing optimal starts (when a patient starts at home dialysis, receives a preemptive transplant, or starts in-center hemodialysis with a permanent access)
• Reducing hospital admissions / readmissions
• Movement from in-center to home dialysis

Due to the significant effect on the government’s budget and senior’s health, policy makers have also stepped in to induce change. The first wave of kidney care ‘hype’ started in 2021 with 21st Century Cures and Kidney Care Choices (KCC). 21st Century Cures allowed all ESRD patients to be eligible for enrollment in MA plans (the Social Security Amendments of 1972 allowed people with ESRD to enroll in Medicare). KCC, and the Comprehensive ESRD Care Model (CEC) before it, ****created some of the first specialty specific ACO models, giving Nephrologists the option to take on risk, similar to how PCPs take on risk for MSSP.

These policy tailwinds have created two primary lines of business in value-based kidney care: population health management and full-risk nephrology. Kidney Care Choices (KCC), a CMMI model, gave rise to many businesses focused on ‘enabling’ nephrologists to take-on full-risk in the program, similar to what Aledade does for PCPs. These business create Kidney Care Entities (similar to ACOs) in Traditional Medicare which are similar to Management Services Organizations (MSOs) in Medicare Advantage. Even before KCC, businesses managed patients and risk for larger organizations with lots of at-risk lives (health systems, health plans, medical groups) because of the cost problem.