I was diagnosed with anorexia at 10 years old. Over the next several years, my family and I navigated a healthcare system that was mostly focused on how many days I stayed in a hospital bed instead of whether I was getting better.
I spent my entire freshman year of high school in and out of facilities, counting down 45-minute therapy slots while fighting a brain disorder that forces you to battle your own mind upwards of six times a day. The bills came in, claims were processed, and the checkboxes were ticked, but I was still struggling with anorexia.
Decades later, now as a founder and CEO of an eating disorder treatment program, I realize my teenage experience embodied the traditional healthcare business model to a T.
THE ONLY INDUSTRY WHERE PRODUCT FAILURE IS PROFITABLE
In traditional healthcare, revenue is tied to volume: More time in session results in more revenue. The more appointments booked, the more the facility can bill; the longer someone stays in treatment—and the more times they relapse—the more profitable the facility becomes.
If any consumer tech or hardware startup ran on this model, it would fail fast. It’s like going to an auto repair shop that charges by the hour, sends you home with a car that still stalls, and then charges you again when you have to tow it back into the shop.
The main problem is industry alignment. Fee-for-service models reward visit volume and usually lead to fragmented, episodic care. Value-based outcome models, on the other hand, tie reimbursement directly to clinical and financial outcomes. If we want a healthcare system that can keep up with rising costs and demand, we need to align incentives around real, measurable outcomes.
BUILD WHAT WORKS
Tying financial compensation to real-world outcomes gives leaders the flexibility to build better products that result in positive outcomes for all parties involved. In healthcare, that means patients, their families, providers, and health insurance plans.
For example, when we started Equip, we knew that once-a-week therapy wasn’t enough to address a complex eating disorder, but the traditional fee-for-service billing system made it nearly impossible to bill for anything else. By partnering with forward-thinking health insurance plans to develop value-based payment structures, we designed the treatment model families needed: a team of doctors, dietitians, therapists, and coaches delivered virtually. This approach provides the right dose of care when patients need it, without uprooting their daily routines or stopping them from building a life worth living.
WHAT DOES “GOOD” LOOK LIKE?
The catch, however, is that the healthcare industry has historically lacked a consensus on what “good” means. Defining quality is particularly difficult in eating disorders, where recovery isn’t as simple as a blood test or a healed bone. The field uses two tools—the EDE-Q and the PARDI-AR —to set severity thresholds, but neither gets into what “getting better” means. It also requires a long-term view, which can clash with an industry where most health insurance plans operate on 12- to 24-month budget cycles.
When I was 10, that meant staying in a hospital bed long enough for my vitals to stabilize. But as I found out through many cycles of treatment, that didn’t lead to me getting better.
To solve the national mental health crisis, we need an economic framework where doing good and doing good business are the same. By replacing the traditional model with outcome-based partnerships, we aren’t just building more efficient companies, but delivering on healthcare’s biggest promise: building a product that works.
Kristina Saffran is cofounder and CEO of Equip.
