The U.S. healthcare industry has undergone a fundamental transformation over the past decade, driven by the shift from volume-based to value-based care delivery models and the growing recognition that fragmented care systems contribute to suboptimal patient outcomes and inflated costs. Care coordination services have emerged as a critical infrastructure component, bridging the gaps between primary care providers, specialists, hospitals, post-acute care facilities, and community-based organizations. This evolution has been accelerated by federal government initiatives including the Medicare Shared Savings Program (MSSP), accountable care organizations (ACO), and various payment models from the Centers for Medicare & Medicaid Services (CMS) Innovation Center that financially incentivize coordinated care. Healthcare providers increasingly rely on dedicated care coordinators, nurse navigators, and interdisciplinary care teams to manage complex patient populations, reduce readmissions, improve medication adherence, and ensure seamless transitions across care settings. The COVID-19 pandemic further highlighted the essential nature of these services, as the healthcare industry scrambled to maintain continuity of care while managing resource constraints. As healthcare continues its trajectory toward more risk-based contracts and population health management, the strategic importance and financial value of care coordination services have become paramount considerations for healthcare executives, investors, startups, and other industry stakeholders. This first installment in a five-part series on the valuation of care coordination services provides a brief overview of care coordination.

While there is no universal definition of care coordination (a 2007 systemic review identified over 40 different definitions of the term¹) the Department of Health & Human Services’ (HHS’s) Agency for Healthcare Research and Quality (AHRQ) defines care coordination as:

“the deliberate organization of patient care activities between two or more participants (including the patient) involved in a patient’s care to facilitate the appropriate delivery of health care services. Organizing care involves the marshalling of personnel and other resources needed to carry out all required patient care activities and is often managed by the exchange of information among participants responsible for different aspects of care.”²

The principal goal of care coordination “is to meet patients’ needs and preferences in the delivery of high-quality, high-value health care,” which requires the patient’s needs and preferences to be known and communicated to the correct parties at the pertinent time, in order to “guide the delivery of safe, appropriate, and effective care.”³ On a macro level, care coordination may be a key strategy to improve the effectiveness, safety, and efficacy of the U.S. healthcare system.⁴

In achieving these goals, a number of different parties must be involved in care coordination, including:

1. The patient and the patient’s family (or other informal caregivers);
2. Healthcare professionals (e.g., physicians, nurses, social workers, care managers, supporting staff);
3. Healthcare entities (e.g., primary care or specialty care practice, hospital or hospital department, urgent care clinic); and,
4. Systems of care (e.g., accountable care organizations, independent physician associations).⁵

See below a pictorial description of what AHRQ has termed a “care coordination ring”:

Exhibit: Care Coordination Ring⁶

Perhaps more simply, care coordination often commences with the referral of a patient from primary care to specialty care. As specialty care has become an important element of outpatient care, primary-to-specialty care referrals have increased exponentially.⁷ This referral is “a critical first step in coordination of specialty care” and should “convey a clear question and sufficient historical information about the patient and their condition to focus the consultation (i.e., the clarity and completeness of the referral).”⁸ However, primary-to-specialty care referrals “can be difficult to coordinate, and shortcomings are longstanding.”⁹ While “[a]ppropriate, clear, and complete referrals increase the likelihood that the specialist can provide timely, thorough, and efficient care,” referrals that do not meet these standards (a common issue) can result in delayed, duplicative, or incomplete specialty care evaluations, which could negatively impact the quality of patient care.¹⁰ Therefore, the quality of the primary-to-specialty care referral is necessary in order to properly coordinate services and ensure the patient receives high-quality care.

Given the current conditions of the healthcare industry, and specifically, the care coordination sector, the increasingly important role of, and demand for, care coordination services is clear. Given that primary care referrals to specialists (the first step in care coordination) are increasing, yet are often substandard, leading to delayed, duplicative, or incomplete specialty care evaluations, there is a significant market for those who can perform some or all of these services on behalf of the primary care provider (PCP). This market opportunity is further underscored by both the primary care shortage and the dearth of available time that PCPs currently have to conduct administrative tasks such as care coordination services. These services are an important piece of the healthcare system that can: help bridge gaps between the supply and demand for healthcare services and between higher quality and lower cost of care; allow PCPs to spend more time providing clinical tasks; and, promote successful transitions of care between the PCP and the specialist. Further, demand for care coordination services is anticipated to increase, driven by the aging Baby Boomer population and the continuing paradigm shift in the U.S. healthcare delivery system, from volume-based to value-based reimbursement models. The next installment in this five-part series will explore the competitive environment in which the providers of care coordination services operate.