A physician leader with international experience shares his views on healthcare's most daunting challenge, his plans for the health system's continued growth, and his experience as a cancer patient.
Marc Harrison, MD, had his dream job.
As a pediatric intensivist at the Cleveland Clinic, he thought he had achieved his calling helping patients one on one. But that began to change when he was put in charge of solving revenue challenges that were interfering with the Clinic's ability to add resources, such as increased intensive care unit staff and nurse practitioners.
"I started to poke around and saw we had some opportunities to bill for some of the work we were already doing," he says.
He was repeatedly put in charge of other initiatives afield of patient care, such as recruiting more partners. Or developing a pediatric critical care transport program. Success led him to a promotion to department head.
Then he received a bladder cancer diagnosis.
After successful treatment at the clinic, he says he refocused on expending all the energy he has each day because another is not guaranteed.
"People say cancer is a blessing. It is not, but you can make good things come out of bad things," he says.
Following multiple promotions which led to his most recent position as the first CEO of the Cleveland Clinic Abu Dhabi, Harrison left the familiar and friendly confines of the Clinic when he was named president and CEO of Intermountain Healthcare last May.
He fully took over following the retirement of his predecessor, Charles W. Sorenson, MD, 64, in mid-October. HealthLeaders recently spoke to Harrison as he prepared to take over for Sorenson, under whose leadership Intermountain gained a national and international reputation as an industry leader. The following transcript has been lightly edited.
HealthLeaders: What do you like about administration?
Harrison: At the time I started in it, all I knew about administration was that it feels really good to help systems get better so we can take care of patients better on a macro level. Although I still love seeing patients one on one, that macro view is really interesting and impactful.
HealthLeaders: What did the board say stood out about your candidacy?
Harrison: To be honest I never had that conversation with them. I gathered that physician leadership was something they were interested in and I was a clinical leader who also had business competency. I think my own personal set of values is highly aligned with Intermountain and given the way this organization lives its values, I suspect that was a big factor in choosing me.
Not to say the other candidates didn't have that too, but this idea of keeping people healthy, keeping care affordable, and being a model system. Those feel like my wheelhouse.
HealthLeaders: What led to your going overseas?
Harrison: I was chief medical operations officer with the Clinic at the time, and had relatively recently been treated for bladder cancer there. I was feeling particularly grateful for the care I received and loyal to [Cleveland Clinic President and CEO] Dr. [Delos "Toby"] Cosgrove.
When he asked if I would consider going to Abu Dhabi, I needed a good reason not to do what he asked. The bonus for me is that it was a great opportunity to learn an enormous amount.
HealthLeaders: What did you learn there that you probably wouldn't have learned had you stayed Stateside?
Harrison: Many great organizations, like the Clinic, can sometimes believe that all the smart people in the world are at their main campus. The Clinic is less affected by that given its history of hiring people from around the world, but even there it can be static. It's amazing to see that there are plenty of smart people outside, and they can get on board with a culture that is patient oriented.
HealthLeaders: Should we expect further brand extension for Intermountain, given your international experience?
Harrison: I'm not interested in brand expansion solely for such purposes. When we grow, it will be thoughtfully and on purpose. There are no immediate plans to place an Intermountain facility abroad, for example, but we already have Asian contracts for some of our precision genomic work.
If I were to guess, I would say the international activities will revolve around services, intellectual property and education. Dr. Sorenson will be leading our leadership institute and he and I both hope the individuals who graduate from there will be international as well as domestic.
HealthLeaders: On a macro level, what is the most daunting problem facing healthcare?
Harrison: It comes down to alignment. If we're going to take care of populations, how do you get the payer, provider, and physicians but also the patients aligned around staying well and using resources in a wise fashion? That's hard.
I really worry about how we'll get aligned with folks who are poorer or who have complicating or mental problems. One of our big areas of work is in integration of mental health, dealing with social determinants of health and how they impact utilization.
HealthLeaders: What is your top goal at Intermountain?
Harrison: If we are going to ask people to exercise, they need to have safe places to do that. If we ask people to eat well, do they have access to clean food? To get plenty of sleep: are they working two jobs?
Several years ago Intermountain's 22 hospitals put in place subsidized "Live Well" meals for purchase. In the first year, they served about 10,000 meals. Last year we served 300,000. That's a drop in the bucket, but you have to chisel away at things and have a vision and we'll get there. Affordability is a part of alignment. I'm particularly interested in putting power in the hands of the patients.
What happens outside the hospital is increasingly important to success, so healthcare leaders need to influence or control care across the continuum.
This article first appeared in the November 2016 issue of HealthLeaders magazine.
If you're running a hospital, one irony in the transformation toward value in healthcare is that your future success will be determined by care decisions that take place largely outside your four walls. If you're running a health system with a variety of care sites and business entities other than acute care, the hospital's importance is critical, but its place at the top of the healthcare economic chain is in jeopardy.
Certainly, the hospital is the most expensive site of care, so hospital care is still critically important in a business sense, no matter the payment model. But if it's true that demonstrating value in healthcare will ensure long-term success—a notion that is frustratingly still debatable—nonacute care is where the action is.
For the purposes of developing and executing strategy, one has to assume that healthcare eventually will conform to the laws of economics—that is, that higher costs will discourage consumption at some level. That means delivering value is a worthy goal in itself despite the short-term financial pain it will cause—never mind the moral imperative to efficiently spend limited healthcare dollars.
So no longer can hospitals exist in an ivory tower of fee-for-service. Unquestionably, outcomes are becoming a bigger part of the reimbursement calculus, which means hospitals and health systems need a strategy to ensure their long-term relevance. They can do that as the main cog in the value chain, shepherding the healthcare experience, a preferable position; but physicians, health plans, and others are also vying for that role. Even if hospitals or health systems can engineer such a leadership role, acute care is high cost and to be discouraged when possible.
That revolutionary value-based concept economically justifies investments by the formerly acute-focused organization into nonacute care proficiency. Nonacute care—including not only home health, skilled nursing, rehabilitation, long-term care, and hospice, but also primary care—is now the focus of cooperation and investment for organizations that recently saw anything outside the hospital environment as peripheral and important only as a destination for discharged patients or a source for inpatients.
While no one prescription fits all, an intricate dance is underway in which smart organizations are weaving nonacute capabilities inextricably into the fabric of what has historically been a hospital-dominated revenue stream.
Strong business case
If your organization seeks to own parts of the postacute experience, repurposing acute care space is one way to bring better and more comprehensive capabilities to the forefront.
"The bottom line for hospitals and health systems is that there will be excess capacity. What happens with that? Do hospitals start utilizing those beds in a different way? Do they close?"
There's a general trend toward more and more care not being done in the acute setting, says Kerry Weiner, MD, the chief medical officer for hospital and postacute care medicine at TeamHealth, a provider of hospitalists and other specialist physicians to hospitals and postacute care providers. Indeed, total inpatient days in community hospitals have steadily declined between 1994 and 2014, from more than 207,000 in 1994 to more than 180,000 in 2014, according to the American Hospital Association. At the same time, total outpatient visits at the same organizations increased from just more than 382,000 in 1994 to more than 693,000 in 2014.
"That could free up beds on the acute side. And as technology progresses, more care can be done at a lower level," Weiner says. "The bottom line for hospitals and health systems is that there will be excess capacity. What happens with that? Do hospitals start utilizing those beds in a different way? Do they close?"
Some will, and some have.
Baton Rouge General Medical Center chose a slightly different option when it closed the emergency department and the acute care operations at one of its hospitals in April 2015 in a strategic move to accomplish two goals at once.
Mark Slyter, the hospital system's former president and CEO, saw an opportunity in the fact that one of its hospitals, Baton Rouge General Mid City, a 325-licensed-bed hospital, was losing an astounding $2 million a month. The reasons were various. Much of the losses stemmed from the closure of Louisiana's so-called charity hospital system combined with a period of years of strain with the state budget. In any case, the financial situation was untenable, says Slyter. Just more than 33% of patients visiting the hospital's emergency department had no insurance of any kind, and only 13% of inpatients were commercially insured. The rest, around 54%, were Medicaid and Medicare patients.
But an interesting discovery was that four out of five patients being treated in that hospital's ED were really not emergency patients, Slyter says, and could be more effectively treated in a nonacute setting. The decision to close that hospital's emergency department in April 2015 was difficult politically, he says, but was a no-brainer both for patient care and for financial reasons. To help navigate the resistance to the closure from a skeptical community, Baton Rouge General worked on developing partnerships with community groups, including the Louisiana Business Group on Health, to create the Better Access to Care Coalition, a program that helps patients find the appropriate site of care for their issues instead of just going to the ED.
"As we developed our plan for Mid City, we talked to around 5,000 members of the community, physicians, stakeholders, and industry forecasters to create a new vision for healthcare in Baton Rouge that is not only sustainable but that meets the needs of the community," says Kenny Cole, MD, Baton Rouge General's chief clinical transformation officer.
The plan was to reinvent Mid City and add to the continuum of care in areas that either it did not provide or that were critical to keeping the nonemergent patients out of the ED but still within Baton Rouge General's ecosystem.
After Baton Rouge General reviewed its survey of community members and recommendations from physicians and employers, it decided to transform the hospital by making it, in effect, not a hospital. Much of the survey focused on the types of services local residents wanted added or retained at Mid City. There were some minor variations; for example, Mid City residents rated access to pharmacy care 8.5 out of 10 in terms of importance while the community as a whole rated it 8.9, but the results were fairly consistent. Based on the surveys and input from industry consultants, ultimately the board made the decision on what services to retain or add with input from the senior leadership team. At Mid City, chronic disease care, senior care, behavioral health services, and postacute services received the lion's share of investment in the "reinvented" Mid City location. The hospital still has the same number of licensed beds, but now some have been reallocated to expanded services in areas such as behavioral health.
"By doing that we've been able to continue services there—over 20 of them—and kept over 800 people employed there," Slyter says. "We've taken a situation that's pretty difficult to work with and improved its performance both financially and in what the community gets out of it."
Slyter says it's difficult to reinvent such a large organization, but big changes being forced upon hospitals also force nimble decision-making and a sense of urgency. Employment is down from 1,100 prior to the ED closure, and services are down from 25, but Mid City, which once was losing $2 million a month, is now ahead of schedule financially, says Meghan Parrish, the health system's director of marketing and communications, who adds that the former hospital is on track to break even within the year.
"When you're evaluating what you aspire to be, there's only a few levers you can pull," Slyter says. "You can build it, buy it, or partner."
Mid City's transformation represents at least part of the "build it" angle.
Slyter says he doesn't see Baton Rouge General as particularly interested in buying other pieces of the care continuum, but the system is embracing the partnership idea wholeheartedly because postacute coordination is where it will generate savings and demonstrate value to purchasers, whether such purchasers are governmental entities, private-sector employers, or individual patients.
The biggest partnership is, perhaps ironically given the focus, with another organization largely known for its hospitals, Ochsner Health System in New Orleans, a nonprofit academic, multispecialty health system that owns, manages, or is affiliated with 25 hospitals and more than 50 health centers. Ochsner and Baton Rouge General announced in late March a letter of intent to execute a joint operating agreement for Baton Rouge General's three hospitals and 31 clinics, but the deal stops short of a merger or acquisition.
Indeed, Ochsner is far from the only partner for Baton Rouge General's effort to focus on influencing nonacute care. The health system is partnering with Lafayette, Louisiana–based LHC Group for home health, and Boca Raton, Florida–based Promise Healthcare for long-term acute care. Although patients are explicitly told through conversation and through discharge forms and other means that they can choose any organization they want for postacute care, the health system can more efficiently share information with those on its preferred provider list and verify that the partner organizations follow the health system's quality protocols.
"With Ochsner what we were looking for is clinical integration options within the partnership to improve access and enhance the quality we were already well known for, and do that in a more affordable environment," says Slyter. "You need the access points. Their complementary primary care and specialist locations dovetailed well with the locations we had, so both of us immediately came out with much better access."
He also says the possible agreement with Ochsner adds depth and breadth to both organizations, and that Ochsner's investments in IT are generally compatible with Baton Rouge General's. While the adoption of value-based reimbursement is slow from the commercial side in the region, Baton Rouge General is moving into more shared savings arrangements. Slyter would rather the pace pick up, in fact, because he says as a low-cost provider, Baton Rouge General is in position to be a disrupting force pushing value.
"Some markets look at this as responding to the market. In our case, since we are the more affordable provider in the market and more efficient, we have an opportunity to drive the market and bring value before it's directed to us by a payer," he says. "In doing so we'll be in a better strategic position because it will be harder for our competitors to adapt to that."
Baton Rouge General already owns a 4,000-member health plan for its own employees with statewide access, focusing on large employers. Slyter says the health system is using that health plan as a vehicle to tailor products and take on risk. In addition to that, Ochsner has some contractual arrangements with payers that Slyter says "move the needle on value and shared savings."
"As we work on this partnership, we would hope they would help us participate in those as well," he says. "If anyone's paying attention to value-based purchasing … and the transformational shift from SGR to MACRA, those are absolutely driving us to change the delivery system. You either need to embrace or fight it. We're embracing it because we believe it's the right way to deliver care."
The other way around
While many health systems are diversifying into other delivery capabilities, away from a historic focus on acute care, some health plans are also shifting the way they do business by vertically integrating with the provider side.
"There doesn't need to be one or two models that will ultimately win," says TeamHealth's Weiner. "There are a number of approaches and it will take years to shake out. A lot of it depends on the local environment and who the big risk-takers are in that environment. That's sometimes a health system, sometimes a health plan, and sometimes a medical group."
There's already a lot of local variation in these models, based on factors such as the level of competition within a market for acute care services, the number of payers competing in a market, and a variety of other considerations such as population demographics. Weiner has seen many organizations attempt this transformation, and recommends, at least initially, seeing what can be accomplished by collaborating.
"That's where we've done well with health plans and hospitals."
But collaboration can also be an intermediate step.
One of the more well-known and ambitious attempts at this transformation is the development of Pittsburgh-based Allegheny Health Network by Highmark Health, an entity created in 2013 that includes payer, provider, and other established healthcare organizations that generated consolidated revenues of $17.7 billion in 2015. Allegheny, a subsidiary of Highmark Health, focuses on providing care. It's an integrated delivery network with seven hospitals and about 400 outpatient offices in western Pennsylvania.
Cynthia Hundorfean, Allegheny Health Network's president and CEO, took over in February after serving as chief administrative officer at the Cleveland Clinic since 2005. She says her most important challenge is standardizing how the health system interacts with the various structures added onto the hospital and nonacute network that her predecessor, John Paul, developed in his five years as president and CEO.
"We still have a lot of variation both from a system and clinical perspective, and that's why postacute provides such a huge role for us in pulling together a common strategy," she says.
The system has a good head start toward standardization because a lot of the strategy for nonacute services has been executed, says Hundorfean of the work of Brian Holzer, MD, president of Highmark Health Home and Community Services, and his team, which began work upon his arrival in 2013.
"We still have a lot of variation both from a system and clinical perspective, and that's why postacute provides such a huge role for us in pulling together a common strategy."
Holzer says he was brought on to construct a postacute network, fully scaled from scratch, in about a year and half. His guiding principle was to develop a set of end-to-end solutions for how he would expect all patients to be treated, with his parents as his totem. Holzer, who has an MBA as well as an MD, says he approached the challenge like any other business problem: How would you want to have your care created? "I was a total neophyte on this. The former CEO said 'postacute,' and I said, 'What?' " he says, laughing.
Two weeks later during a meeting with Paul, he wasn't smiling so much.
"I came into his office and said, 'I don't understand. If I do my job well, won't presidents of the hospitals be angry with me?' He said, 'Yes, and full speed ahead.' "
As it turned out, the CEOs of the hospitals had been encouraged to support his work despite its effect on the traditional metrics upon which hospital CEOs had been judged. The case had been made with them that healthcare was changing and they were to change with it. He says Allegheny Health Network's processes around postacute care simply didn't work well, "so we built something very different," that included owning much of what became the health system's postacute network.
"As an industry, we do a deplorable job of building consumerism into the equation and telling people what they should be thinking about when they consume healthcare services," Holzer says. "We believe that long term, people will pick us because of our competency in the postacute arena. No one wants to be in nursing homes or hospitals."
Holzer spent his first six months on the job integrating postacute services into five distinct service lines: home health, palliative care, hospice, home medical equipment, and home infusion. After they inventoried the service lines, the team determined the health system lacked scale and lacked expertise to quickly develop and operate a complete postacute network.
That put Holzer on the deal path for some services, and on the partnership path for others. Home health, hospice, home medical equipment, and infusion were identified for ownership, while strategic partnerships with entities that owned higher fixed-cost assets like skilled nursing and long-term acute care were preferred. He and his team took a service line approach when evaluating such deals.
"By bringing all this underneath the five service lines, we could focus on where we could have the most input over patient care without large capital outlays and other expenditures," he says. "When you look at the services required to deliver care into the home and community, we focused on not owning high-fixed-cost capital intensive segments that we will partner with going forward."
Allegheny developed a preferred network model in those spaces while seeking scale and expertise surrounding home healthcare. The health system bought a 25-year-old home medical equipment company with Johns Hopkins and bought into a joint venture with Mars, Pennsylvania–based Celtic Healthcare for home health and hospice companies, for example.
"So we clearly bought expertise and the ability to run home healthcare companies that others are finding very challenging from a cost and regulatory point of view," Holzer says.
He's particularly proud of a partnership between Allegheny and homecare and hospice organizations.
"Our flagship institution used over 100 home health companies in the year we started this," he says. "That comes with great variability, and so when we brought them under our own umbrella, we had to integrate the back office to deliver a seamless service to hospitals and discharge planners as well as the patients."
He says expectations were low with clinicians that the model would be able to demonstrate value. In 2014, the health system was referring approximately 45% of its inpatients to its legacy home health system, he says. But that's changed. Year to date in 2016, AHN's Healthcare @ Home model is getting referrals in the low 80% range.
All-cause readmission rates dropped 5% in 2015 compared to 2014, and by more than 8% in the high-risk population, he says.
Patients can still go anywhere they want for postacute care, but Holzer says the system was designed to make patients and their caregivers carefully consider all the reasons it might mean better care coordination to stay in Allegheny Health's ecosystem.
During development, one key exercise for the group was writing a new patient free choice form—given to patients as they prepare to transition out of acute care, he says. Writing the form anew was an opportunity to educate clinicians and other members of the patient care team on the right way to introduce postacute care options and importance of patients making their own choices. That exercise not only increased compliance with ensuring patient freedom of choice, but Holzer says patients are more often picking Network organizations as the better choice.
"We've also created a call center to streamline the intake process, and developed a shared EMR," he says. "What happened was we created an end-to-end solution that once freedom of choice is provided, we are most of the choice of our patients and their physicians."
Critical to success of the carefully linked care continuum that was created, Holzer says, was the sense of urgency in creating home health services within a large healthcare network.
"There was buy-in from Cindy and from the previous CEO, and they owned it," he says. "If some of those factors don't exist, you can't be successful. If you're trying to fill beds, this will never work, because if you do it right it will reduce your length of stay and your acute business. But I'm an MD by background; I went into this believing if you do right by the patient, the business thing takes care of itself."
Hospitals positioned well
In many cases, hospitals have positioned themselves to be in charge of the quality of the postacute experience, which also puts them in charge of absorbing extra costs. This is both a major challenge and an opportunity, says Bill Bithoney, MD, a former hospital executive who now is chief physician executive and consulting managing director in BDO's healthcare advisory practice. In a bundled payment program, for example, if a hospital partners with a nursing home with high costs, the hospital gets hit financially. Of course, hospitals, physician practices, and health plans can all serve as the base for such capitation. The important thing to remember, he says, is to pay attention to the Centers for Medicare & Medicaid Services' star ratings when choosing partners.
Bithoney's experience with risk is well earned. From 2008 to 2011, he served as chief medical officer, chief operating officer, and finally interim CEO of Sisters of Providence Health System, a Springfield, Massachusetts–based health system, which is now a member of Trinity Health in Livonia, Michigan. Bithoney says SPHS was a "good health system with good outcomes." Yet the health system was nevertheless experiencing huge losses under fee-for-service. The irony was that the hospital was well-positioned, given its nearly complete postacute network and largely capitated population, to take risk. In fact, Bithoney, before the passage of the Patient Protection and Affordable Care Act, recognized that finding a way to take risk was going to be the only way to save the health system financially.
"We decided to go full risk, with capitation in Medicare Advantage programs particularly," he says. "We found that we were able to deliver great care because we had a great postacute network. Going at risk made us profitable, so this is an incredibly powerful tool to turn a money-losing system into a surprisingly powerful system."
By the 2009–2010 fiscal year, the hospital made a profit of approximately $9 million on about a $400 million revenue base, according to Bithoney. "It was a big advantage to have all these pieces together," he says, mentioning that the health system already had behavioral health programs and a psychiatric hospital.
Whether they want to own or build or partner to achieve nonacute capacity is the decision hospitals and health systems have to make now, Bithoney says. Obviously, they need a method to determine the quality of potential providers and partner only with those who have good outcomes, he says. Bithoney says his definition of "good" means five-star providers as rated by CMS.
Critically, it's not just the postacute network that's important; the preacute network is also extremely important. Bithoney says hospitals and health systems should own or partner with practices that have been certified as patient-centered medical homes on some level, and they should use Medicare data that identifies physicians to make sure those partners are high quality and low cost. Ideally, they should partner only with those who are above the 75th percentile in outcomes while being below the 25th percentile in cost, Bithoney says.
"If you don't want to own your systems of postacute care, typically hospitals negotiate discounted fee-for-service contracts in lieu of increased volume," he adds. "If you'll send a lot of patients to them, you'll remunerate them at a lower level."
Although not one of Bithoney's clients, Dennis Murphy, who took over as CEO of the 15-hospital Indiana University Health in Indianapolis in May, agrees that hospitals are well-positioned to lead the move toward value. For three years prior to taking over as CEO, Murphy was chief operating officer at IU Health, where he worked at integrating the pieces of the continuum his predecessor, Dan Evans, brought together over his 14-year growth-oriented tenure, in which the system grew from three to 15 hospitals. That growth, perhaps more importantly, brought IU Health to ownership positions that would help the system achieve vertical integration.
"Hospitals seem to have the ability to bring these pieces together," Murphy says. "Like a lot of big health systems, we're developing some of that in-house—home care, durable medical equipment, dialysis, video visits, and urgent care centers are part of that structure."
Yet there are still pieces of the continuum that IU Health would prefer not to own, he says. Nursing homes, again, would be on the partnership docket, he says. The health system is creating what Murphy calls "really close partnerships with a select set of skilled nursing facilities where we can partner using joint protocols rather than owning and operating."
In his previous role as COO, Murphy says he spent much of the past two-and-a-half years thinking about how to integrate the assets the system already has, with the ultimate goal being a well-engineered system of care for patients rather than an individual set of pieces.
"We waited for patients in the past, and that's where our interactions began," Murphy says. "Now we're trying to be far more proactive about reaching out to patients and trying to keep them healthy."
Bithoney says risk stratification is critically important to getting the math right when you're building a system of care in which each part depends on the other to better manage patient risk and, thus, costs.
"We found that 3% of patients account for 49% of cost," Bithoney says. "So bringing an intensity of resources on those patients is where you're going to make your money and produce highly efficient and improved health outcomes."
At least at this point in healthcare's transformation, you can't distribute that kind of effort on all patients and expect to be successful taking on risk, he says.
"We're very much involved with workforce management," Bithoney says of his current work. "Targeting is incredibly important, and handoffs work only with interoperable EMR programs. Just sending an entire EMR across the continuum is of almost no value. If I send those notes in a standardized format that includes medication reconciliation, the patient's discharge summary, and recommended postacute care, that's much more valuable."
That kind of so-called precision medicine is the future, he says—and it will be abetted through a "big data overlay," he says. "That will help in predicting drug-on-drug interactions and avoiding them, for example. Physicians sometimes rebel against clinical guidelines and what they call 'workbook medicine,' but evidence-based medicine is here to stay, and we know it works."
Person-centered vs. hospital-centered
Ascension, the St. Louis–based Catholic nonprofit health system with 141 hospitals and 2,500 sites of care in 24 states plus the District of Columbia, is in the midst of a transformation of its own, aimed at creating a person-centered and personalized healthcare experience versus being organization-centered. It's a difficult leap, but Jesse Jantzen is at the forefront with the most complex patients as president and CEO of Ascension Senior Living, the division of the organization that handles interactions between the acute care side of the organization and its largely owned network of nursing homes and assisted living facilities.
Jantzen sees his role broadly as transforming the field of care for the aging, but he says that can only be accomplished through better coordination with all other aspects of a senior citizen's care. He contrasts person-centered care with organization-centered care: "When a person presents himself, if we say, 'You came to a skilled nursing facility, so we do this here,' or 'You came to a doc's office so we do this here'—that's more oriented to the business or the service line. If you're really person-centric, you start with what their needs are and how well we are integrated and connected so that we can quickly get them to the right place."
That's difficult, because for most organizations, what you have in terms of facilities and capabilities is foundational. Jantzen says a board chair told him many years ago that the shift toward customer-centrism has to be based on the system's capabilities and how well the people in that system can direct the customer to the right person or facility that will best meet his or her most immediate needs.
"In other words, if I'm a shoe store and all I have is red shoes, it doesn't matter who comes in. They will all leave with red shoes," he says.
Acute care has always been the "red shoes" of many organizations, even if their capabilities extended to rehab, imaging, and skilled nursing, among others.
"Senior living and nursing have not been the area that gets the most attention; it's been physicians and acute care, but a couple of things are changing," he says.
Jantzen says senior living services are extremely valuable in integrating systems of care in the postacute environment. He says, in general, the healthcare industry is waking up to the importance of postacute providers, and specifically senior living, as the industry transitions to a value-based environment. He says thanks in part to the IMPACT Act of 2014, which requires the submission of standardized data by long-term care hospitals, skilled nursing facilities, home health agencies, and inpatient rehabilitation facilities, postacute integration is now a prerequisite to drive quality in various Medicare value-based opportunities, while preparing for a more prominent shift in the future.
Jantzen is encouraged by commitment from Ascension's highest levels to support and enable the senior living agency to grow and thrive because of the important role it plays in systems of care.
"We are piloting collaborative work within our national health system to develop and implement clinically integrated systems of care across the continuum," Jantzen says.
He says that in cooperation with Ascension subsidiaries Ascension At Home and Ascension Medical Group, Ascension Senior Living is ideally positioned to deliver care in the right postacute setting at the right time. Simultaneously, he says the senior living organization is navigating its way in trying to define how it can best contribute to ACOs, narrow networks, the comprehensive care for the joint-replacement model, and other bundled payment models.
"Although a nursing home may not be the first choice, we are here to serve when people need us, with a wide range of services," Jantzen says. "Part of the transformation is meeting the needs of the person, agnostic of location. In the past, people thought the institution was the solution—if you move into our place, then we'll take care of you. But where do they want to be? The core of this is to meet the person where they are."
Though still a work in progress, UnityPoint Health's strategic plan calls for physicians to take the lead on managing populations.
This article first appeared in the November 2016 issue of HealthLeaders magazine.
As healthcare organizations take more responsibility for the quality and cost of the care they provide, they face complex problems that challenge existing norms governing how physicians and executives interact. Some people call that "soft stuff." But talk to anyone whose goal is to change a culture and "soft" is the last word they'd use to describe the task. Culture is at least as important as strategy—you can't execute on the latter without a firm foundation in the former.
Culture, and more specifically, physician culture, has a huge impact on how well health systems are meeting their ultimate goal of healing patients. Nowadays, healing is just half the expected outcome. It increasingly must be done cost-effectively, and no group has more of an impact on cost than physicians.
When you attempt to remake their culture, that's where trust comes in, and in many organizations, such trust can be in short supply, says Kevin Vermeer, president and CEO of UnityPoint Health in West Des Moines, Iowa. UnityPoint has been working to align the incentives of physicians and the organization since 2012, when the system began to move toward a value-oriented strategy. Consolidation of several legacy physician groups into a single unit was one important result of the cooperation Vermeer and his leadership team engendered with the organization's more than 900 employed physicians. The work to accomplish that outcome started with an effort to simplify the way the 17-hospital, four-state health system interacts with its physicians.
"We knew we had to move away from episodic, hospital-centric care, and that we needed to be patient-centric and physician-driven," Vermeer says. "But to do that, we needed physicians and providers in general to take the lead in how we manage a community population across the entire continuum."
But how do you get physicians to do that in the face of declining income, increasing regulation, and general frustration with the evolution of clinical practice into what physicians often see as a never-ending treadmill of checkboxes?
Opportunity knocks once
The rise of competition on both the outpatient side and in primary care provides a sense of urgency for many health systems to better cooperate with their physicians. So does the ratcheting down of admissions and readmissions targets for hospitals. Further pressure comes from the implementation of new payment methodologies that determine reimbursement based on much more than whether the organization delivers a service.
Those are just a few intimidating factors senior leaders and physicians must deal with that can be overwhelming strategically and which can place a huge strain on a health system that employs a big contingent of physicians. UnityPoint leadership decided that by transforming the organization into one that is physician-driven, senior leadership could better align the organization with accountability and value.
Executive leaders should welcome such challenges, because they provide momentum for perhaps a one-shot opportunity to recast the relationship between physicians and executives in ways that should help these two disparate groups work together more harmoniously and, ultimately, provide better healthcare, says Alan Kaplan, MD, CEO of UW Health in Madison, Wisconsin, who served as executive vice president and chief clinical transformation officer at UnityPoint until he took the helm of UW Health in April 2016.
He says that over time, generally, maintaining their business became more demanding for physicians, so something had to give. Often, that something was the relationship between hospitals and physicians—which took the form of physician apathy toward hospital goals. That relationship was something that didn't change just because they suddenly became health system employees.
"What we found was that the discourse between hospitals and physicians, that crevasse, grew," he says.
As the health system tried to evolve from a collection of hospitals to an integrated delivery system over a period of years, working on improving quality, building care teams, and coming up with techniques and services to better coordinate care for its 325,000-member ACO and other value-based structures that evolved later, the person missing from the table was often the physician, Kaplan says.
"We had physicians making less money, and we were asking more of them, so understandably, we saw empty rooms and apathy when a hospital committee meeting was in session," says Kaplan.
The question, says Vermeer, was how to bring physicians to that table in a meaningful way—so they understood the value they could bring to the organization through their participation.
As Vermeer and Kaplan discussed the issue with physician leaders over time, they found that the doctors didn't ask for authority or to be in charge, but that their input be integrated at all levels of governance and management to make decisions about patient-centered care together.
That's where Vermeer says they knew they could make good progress. The commitments from both sides from those early meetings coalesced into a philosophy that can be boiled down to physician-driven, patient-centered, Vermeer says. Concrete steps taken to achieve that vision included consolidating dozens of practices that historically had their own governance and compensation structures into one cohesive group practice that governed all employed physicians across the system. Critically, the physicians themselves would create the model.
The educational component
Physicians usually aren't trained to build governance structures and create expectations for themselves and their peers. UnityPoint decided to address this deficiency by building a physician leadership academy to train and develop employed physician leaders who could drive the transition to a physician-centric, patient-driven philosophy, Vermeer says. That vision continues to be a work in progress, but development of the physician leadership academy was a big step on the journey.
"The idea is that it would augment the skills they learned in medical school," Vermeer says.
A corresponding leadership academy was created for managers and directors, and much of the learning both groups do is not classroom-based—it's through real-world joint projects that can be enacted relatively quickly.
An added benefit is smoother cooperation going forward, as both groups mature through the organization, Vermeer says.
On the physician side, leadership academy students undergo training in financial and quality management, communication, participating in difficult conversations, leading a meeting, and other skills necessary to help bridge disagreements and form a cohesive strategy. More than 100 physicians have graduated from the academy since it was launched in 2010, with the first graduation in 2011, and 60% of those are currently in leadership positions at UnityPoint.
Perhaps the biggest task—and the most successful one so far for both groups—has been re-creating and consolidating the physician organization from eight legacy groups, each with its own compensation structure and governance, into one unified practice.
"At that time we had a collection of contracts with physicians but no governance, management, or committee structure," says Kaplan. "You can't just select some physicians to sit on the board and think you'll be physician-driven. You have to start with an organizational structure."
The ACO and the new physician group were eventually named UnityPoint Clinic. However, in the beginning of the process, they were referred to as "newgroup" to reinforce the idea that groups were not being merged into an existing structure but into a totally new one, with physicians writing the rules of engagement in cooperation with the executive team.
None of the work involved in creating the "newgroup" happened quickly.
"You can't do this without creating physician leaders," says Kaplan.
Taking on history
Every hospital once had a chief medical officer. Now successful organizations not only employ a CMO but also increasingly have a cadre of physician leaders that include a chief medical information officer, chief quality officer, and others from employed physician groups.
Because of the scarcity and demand for these skills, "you can't recruit them readily, and if you can, they don't come cheap," says Kaplan.
Thus the reason for the physician leadership academy, which has both on-site and online training curricula. The first graduates were instrumental in developing the consolidated medical group, starting in 2012.
"We took the 'newgroup' approach with graduates of the leadership academy," says Kaplan, because that removed an impression that some of the big groups would dominate the smaller ones.
"I told them we weren't going to merge them. Instead, we'd take everything we've learned through the physician leadership academy and design a new group [based on what] we learned from experience with the medical groups," he says. "This was the first example of empowering our employed physicians to do something important."
They started with perhaps the most potentially contentious issue: standardizing compensation, progressing through the governance and management structure. In the process, they built 70 National Committee for Quality Assurance—certified patient-centered medical homes within the newgroup's 281 clinic locations. About 40 of those have achieved Level III certification within the first two years. They also agreed to standards and, with executive participation, developed a 24-hour nurse call center, committed to offering patients the ability to make next-day appointments and e-visits.
Perhaps the organization's most impressive accomplishment has been its clinician recruitment record, says Vermeer, who adds that the group added 158 new providers last year and approximately 400 new providers since 2013, with a retention rate of 94%, which includes retirements.
"We are recruiting to small towns in Iowa and downstate Illinois, and yet we have only a 6% attrition rate, which includes retirements," says Kaplan. The newgroup has improved in-network referrals by 11%, even though such referrals can't be incentivized by financial means, he adds. The group has integrated with home health and medication management protocols, all of which helps immeasurably with care transitions, an important factor in ACO performance.
"At the time we started with the strategic planning in 2010," Vermeer says, "we felt like there was a fairly long time horizon before value-based arrangements would represent a preponderance of revenue, which was good, because this is a cultural transformation, which doesn't occur overnight."
He says that glide path was essential, because the organization continues to tinker with exactly what the physician-driven portion really means to the physicians as it matures. It boils down to proving through outcomes that the organization operates differently and more efficiently, to the benefit of patients and payers, not just physicians.
"We thought we were breaking this into digestible pieces, but those actually on the front lines in the transformation told us it was much more like drinking out of a firehose."
"As we've moved along this journey, part of this transformation is the pulling together of the UnityPoint Clinic," Vermeer says. "We're going to be physician-driven as a system, but within that, we've got true physician-led foundational components. Bringing those under a single group governance structure was a big piece."
Not that the transformation hasn't had its hiccups over the years.
"We thought we were breaking this into digestible pieces, but those actually on the front lines in the transformation told us it was much more like drinking out of a firehose," Vermeer says.
The biggest challenge in buying into the patient-centric, physician-driven culture piece revolved around physicians' perception of how the organization operated historically.
"There was a healthy and respectful skepticism about whether leadership that had operated in a hospital-centric way could really make that transition and change how we make decisions such that physicians and providers are at the center of clinical decision-making but their input is heard as a value partner, as part of the system as a whole," Vermeer explains.
The organization continues to work through that skepticism, but through the cross-pollination effort of the two leadership academies collaborating on various projects, Vermeer says some of that historical wariness has been overcome.
Too many livelihoods and groups are invested in the status quo, says a healthcare entrepreneur who is producing a film on the topic.
Healthcare costs a lot.
It's fun, in a painful sort of way, to try to wrap our brain around exactly how much.
Even at rates of increase that have moderated compared with the previous decade, spending for healthcare continues to outpace growth in GDP. The National Health Expenditures Report projects healthcare will grow at a 5.8% annual rate through 2025, at which point it will eclipse 20% of the U.S. economy.
But that's not even the scariest part about the web of regulations, strange payment relationships, and poor quality that contributes to healthcare's inefficiency and expense, says Dave Chase, a healthcare entrepreneur and executive producer of an upcoming film on the matter.
He blames the healthcare industry for a persistent financial hollowing out of the middle class over the past two decades, drawing dark parallels between healthcare costs and the rise of populism.
"If you look at what's going on with the most unique presidential election in my lifetime, one overriding issue is that there's wage stagnation, which is a nice way of saying the middle class has been in an economic depression for 20 years," he says.
"You don't have to look any further than 1930s Germany to see what can happen when masses of people are in financial distress."
Hyperbole?
Maybe, but "masses of people" aren't the only groups in financial distress. Employers are also spending far more than they did 20 years ago on employee healthcare. They are also at the end of their rope.
Unfortunately, their answer has been to pass along a greater share of the costs to their employees. That strategy may backfire spectacularly.
"We've gone to war for less than what healthcare is doing to America," Chase is fond of saying.
'Unbreaking' Healthcare
Solutions are available, but too many livelihoods and groups are invested in the status quo or in the case of employers, apathetic, he says. The film will address those problems and the solutions in an irreverent, satirical way.
"Solving the problem isn't all that complicated," he says. "There are companies spending 35% less per capita with a better health plan. "They're winning against perverse incentives because they purchase healthcare differently," he argues.
He plans to highlight both employers and healthcare services organizations in the film. One is Rosen Hotels & Resorts, an operator of several properties in the Orlando area, whose CEO has committed to using the money saved from not paying ever-rising healthcare premiums (about $10 million per year--$240 million since inception) to provide daycare, after-school care and college scholarships for people in an "adopted" underprivileged community.
Rosen employee turnover is sharply lower than other similar businesses (low teens annually versus nearly 60% in hospitality) and it pays the college tuition of full-time employees' children after the employee puts in at least five years of service.
The problem is that such solutions are not widely known, Chase argues, and that they require the CEO to insist that healthcare expenditures deliver value the same as any other purchase the company makes.
Many CEOs judge the success of their healthcare benefits plan by the number of complaints received from employees. Value is a distant second on the priority list. The film, he hopes, will change that.
Employers Failing in Fiduciary Duties?
Employers may soon be forced to change their stance on value due to regulatory and legal concerns.
Chase believes a simple determination by the Department of Labor or a verdict in a class action lawsuit will eventually force employers to be better stewards of healthcare spending.
A court decision that holds employers responsible for looking after the best interests of their employees in purchasing healthcare coverage, or a DoL finding of the same, would radically reorient the calculus.
A precedent may be found in the way employers already must safeguard employee retirement savings. Employers are heavily scrutinized on the choices they offer to employees around retirement programs such as 401(k) plans. What if the same standard applied to healthcare benefits?
By that standard, employers are failing, Chase says.
"There will be a moment in time… where the issue will be solved clearly," he says. "Employers take fiduciary responsibility with investments very seriously. You know you will get sued if you put employee money in Uncle Bubba's Investment Fund."
Why isn't that happening on the health benefits side? A historical argument that healthcare benefits are paid using the employer's money, making them exempt from fiduciary duties.
"High-deductible health plans are pretty much the norm now, with 70% of costs paid by the employer and 30% paid by the employee," says Chase.
"So if that argument ever held water, it doesn't now. All the Department of Labor needs to do is say this is the employee's money, and all hell will break loose, and there will be a level of scrutiny there's never been before."
The Big Heist, a documentary film now in pre-production, will lay the blame for middle-class economic stagnation on healthcare executives.
"For fifteen thousand years, fraud and short-sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did." – The Big Short
The healthcare industry has largely escaped furious documentaries that blame it for substandard quality, bankrupting people, and general economic malaise.
But that's about to change.
The Big Heist (working title) is a film that takes square aim at what might be called, with apologies to Dwight Eisenhower, the healthcare-industrial complex.
The film, now in production and set to be released next Fall, is being bankrolled and executive produced by Dave Chase, an author and venture capitalist. He founded Microsoft's healthcare business unit and Avado, a cloud-based patient relationship management solution, acquired by WebMD in 2013 for an eight-digit price tag.
Chase calls the movie a cross between The Big Short (a feature film) and An Inconvenient Truth, (a documentary) and hopes that by "following the money," the movie will expose the perverse incentives that maintain the status quo: a far from optimal healthcare experience that harms people and costs way too much money.
He hopes the film will catalyze change in the way healthcare is paid for and delivered.
Much of the film's satirical focus will be on how the status quo remains so, from federal lobbying to the construction of the employer-based health insurance model, to the broker-insurance dynamic, which Chase insists is completely disincented to reduce healthcare costs because profits depend on a getting a share of the cost pie. The only way to grow profits is to grow the pie.
"The disaster of the middle class is the employer-based health insurance model," he says.
'The Math Stops Working'
To employers, healthcare for decades was a nice benefit to offer employees, but not a material part of a company's expenses.
But with the power of "somebody else is paying" and the lack of focus by CEOs on getting value for their healthcare expenditures, costs blew up. Then companies started pushing costs directly onto employees through high deductible health plans.
"If you wanted to separate a company from its money, this was the perfect storm," he says. "Healthcare is made to be very complex and certainly is medically, but the financial side has been made so because of the convoluted system we have for a host of reasons. So what happens is they shove what they won't pay onto the employees' plate and then the math stops working."
Contributing to the problem is that the insurance companies aren't interested in lowering costs for healthcare despite their protestations, because it's against their self-interest, he says.
"The misconception is that health insurance companies have an interest in cost control where the opposite is true," he says. "It's easy to scare and bamboozle people when there are not a lot of employers around them who appear to be doing any better.
Executives need to recognize that this isn't a passing problem, Chase says.
"Dollars have gotten to breaking point and clinical teams are also incredibly frustrated," he says. "You would be amazed at the plotting that's going on right now to break free of these organizations and create new things."
Other healthcare luminaries who are funding and advising on the project include
Meghan O'Hara, who worked on Michel Moore's Sicko and Bowling for Columbine, will produce and Nick McKinney, who worked on The Daily Show, will direct. Right now, Chase and his team are finalizing the narrative, casting and filming a promo trailer, while simultaneously raising capital to produce and distribute the film, which they expect to release next fall.
"Most people won't watch a wonky documentary, but if it's entertaining, they will," says Chase.
"The absurd and outrageous make good satire and the only previous attempt I know of was Sicko, almost 10 years ago, but half the country won't listen to Michael Moore. This is not a right or left deal. In fact," he says, "the best way to preserve the status quo is to politicize healthcare. But when the country pulls together, big things can be accomplished."
A nascent partnership between Lyft and CareMore means less waiting and more reliability for one patient cohort: the population with the most chronic disease.
Sure, ridesharing has disrupted the taxi business, but can its technology do the same for healthcare?
CareMore, an operationally independent combined senior health plan and medical group subsidiary of Anthem Inc., is convinced it can, and recently published the findings from a pilot study in the Journal of the American Medical Association that it claims proves it.
President Sachin Jain, MD, says his organization's early partnership with ridesharing service Lyft has helped it achieve what he calls the "healthcare trifecta" of better outcomes, lower costs, and improved patient experience.
And CareMore is just getting started.
During the course of the May-through-June 2016 California pilot project detailed in the NEJM study, during which patients took 479 rides through a ridesharing service, paid for by CareMore:
Average wait times compared to the traditional medical transportation control group were down by 30% (to 8.77 minutes from 12.52)
Average per ride costs decreased by 32.4% (to $21.82 from $31.54)
The patient satisfaction rate was 80.8%.
Some traditional non-emergency transportation, says Jain, is plagued with poor service and high prices, and the Lyft partnership, which has been ongoing since the pilot ended, can address those problems.
Perhaps more significantly, says Jain, it can also address the problem of prevention and effective treatment of chronic disease, although this was beyond the scope of the study.
Still chronic disease treatment is a big issue among CareMore's patient population, which consists of Medicare beneficiaries through its Medicare Advantage offerings.
The company is essentially capitated through these plans, as it also provides care through its physician practices. So money spent in one area, transportation, can significantly affect areas far outside that narrow service, such as whether patients are effectively treated for their maladies. Transport to and from medical appointments is covered as a benefit to Medicare Advantage members of CareMore.
Transportation Has Been Tricky
"[Transportation] has always been one of the greatest satisfiers of our members but it's also one of the greatest sources of disappointment, because of the way the transport industry operates," says Jain.
"You can assume the patient will be picked up on time, usually, but as for returning them home from an appointment, that's unpredictable—we're not sure when it's going to end. If you've got COPD and CHF and you're standing and waiting for an hour, you're not going to be happy."
You might be unhappy enough to forego your next medical appointment for fear of inconvenience and discomfort, which could worsen your condition. That's why it's so incredibly important to get the transportation right beyond the issue of patient satisfaction because it has such potential to adversely affect the ultimate outcome and medical costs associated with that patient, Jain says.
Similar programs are emerging. But why haven't others moved more quickly to try to disrupt a costly and unreliable nonemergency transportation system to incorporate technology that has already improved basic transportation for the general public?
For one, most healthcare organizations still aren't capitated, which adds a powerful incentive for care providers to transform this dissatisfier.
CareMore does not just dispatch any Lyft driver for any patient. It takes into account the special needs of that patient, and has undertaken direct training for drivers interested in driving seniors to medical appointments.
"There's a difference between transporting people to airports versus an elderly population to medical appointments and they might need higher levels of assistance or support," Jain says.
"A Lot of Partnerships Yet to be Built'
The company initiated training for Lyft drivers to get them thinking about the different types of service they need to provide seniors through its CareMore Academy, which trains company partners ranging from ride companies to coders.
Also, the partnership extends to some of the traditional nonemergency transportation companies because of the need for specialty vehicles such as those that offer wheelchair assistance. National MedTrans, a nonemergency medical transportation benefits manager, handles the interface between members, who request medical transportation 24 hours in advance and drivers, which are dispatched using a web-based product called Concierge that allows organizations to request rides for customers through Lyft.
"One of the benefits of the CareMore model is that we're both payer and provider," says Jain. "That allows us the flexibility to do common sense things for our patients and this just one example."
He explains further that ridesharing has the potential to save time and dissatisfaction in other areas, such as getting patients out of the hospital on time. One of the barriers to discharging many patients is transportation. And there are other potential efficiency benefits.
"What if it could help patients after ambulatory surgeries? Could you turn over your ASC faster?" he muses. "There are a lot of partnerships yet to be built. The truth is you need to be in a full risk environment to be able to find the dollars to do these things."
Private exchanges' rapid growth has slowed recently, but is still strong. Hospitals and health systems should monitor private exchange growth locally and have a plan for how to deal with the disruption they can bring.
This article first appeared in the October 2016 issue of HealthLeadersmagazine.
Private health insurance exchange enrollment continues to grow, albeit at a slower rate in 2016. Yet as the growth continues, hospitals and health systems need to understand how private exchanges are different from traditional insurance plans in order to make informed decisions about whether and how to negotiate deals with them, and how to compete as their influence grows. The ultimate fate of these exchanges is uncertain, but will hinge on a couple of key points: Will hospitals and health systems be willing to accept rock-bottom rates in return for incremental volume? Will employees and their beneficiaries accept extremely narrow networks in return for lower premium costs? So far, the answer seems to be a qualified yes.
Their promise
Private exchanges were envisioned to mimic the Patient Protection and Affordable Care Act Health Insurance Marketplace exchanges in at least one key way—by injecting consumers into decision-making about healthcare expenditures, and making them choose a narrow network in which to consume services. By creating these networks, intermediaries, like AON Hewitt, Mercer, and Willis Towers Watson, among others negotiate big discounts in return for guaranteed volume. Like HMOs, private health insurance exchanges tend to heavily restrict where a beneficiary has coverage in a local market. The big difference is that instead of the employer forcing limited choice onto the employee, the employer makes a defined contribution to an employee's annual health costs, and asks the employee to choose from a few combinations of costs and benefits. This allows the employer to cap its healthcare costs, an extremely attractive feature for it. The employee, frequently, chooses the low-cost, narrow network option.
Private exchanges inject patients directly into value-seeking from healthcare providers—they have a limited pot of money to spend on benefits, and depending on the plan they choose, various levels of copay and coinsurance rates come out of pocket, a move that's meant to put downward pressure on rising healthcare costs through, in part, consumer value-seeking.
Private exchanges have been popular in pockets of the country, especially with small and midsize employers that have decided private exchanges are the only way they can continue to offer health insurance benefits, given the uncertain cost profile of traditional health plans.
Accenture estimated private health insurance exchange enrollment reached 8 million in the 2016 benefit year. While growth has slowed to 35% from 2015–16 compared with 100% between 2014 and 2015, enrollment was only 3 million in the 2014 benefits year, so growth over time has been significant. Accenture had predicted in 2015 that enrollment would approach 40 million by 2018, but that forecast is in doubt because the 8 million actual enrollees in 2016 fell short of Accenture's 12 million projection.
Despite the growth slowdown, "projections such as this should make any hospital or health system anxious, and it is important to develop plans accordingly should the market change quickly," says Keith Alexander, senior vice president and regional president for Memorial Hermann Health System.
Big discounts, but slow adoption
Texas has the second-highest enrollment in private exchanges (behind only Florida) and enrollment in the Houston area has reached approximately 350,000, says Alexander. Healthinsurance.org, a consumer-focused health insurance information resource, projects 1.3 million people enrolled in private exchanges in the state in 2016 (Florida had 1.6 million). So while 350,000 enrollees in Houston may sound like a lot, in a market of nearly 7 million, 350,000 is not huge.
In fact, Alexander says the buzz surrounding private exchanges has died down dramatically over the past couple of years, and while well-known purveyors of private exchanges are actively promoting them in the metro area, Alexander says the market is not responding as quickly as was anticipated.
That doesn't mean he's not preparing.
When preparing for private exchanges, "health systems will need to determine if they are willing to accept substantially discounted rates in return for projected incremental volumes," he says.
If they are, they need to be ready to ramp up direct marketing and education to individuals, he adds.
Memorial Hermann is going farther than that. In fact, health system leaders are investigating whether Memorial Hermann Health Solutions, the health system's provider-sponsored health plan, can become a viable private exchange option. Also, brand loyalty becomes ever more important as private exchange enrollment rises, Alexander says.
He adds that Memorial Hermann will focus on consistently demonstrating high-quality and cost-efficient care tied to high degrees of patient satisfaction, hopefully insulating against some of the business effects from a proliferation of private exchange-based health plans.
Further, Alexander says it will be critical to understand individual needs and decision-making triggers as well as maintaining strong physician relationships. Financially, he says the health system needs to critically assess the viability of alternate revenue streams and individual demands versus any type of broad pricing-reduction requests to participate in private exchange plans. Without a benefit design that would increase steerage into a health system's facilities and physician network, such a deal would be problematic from a variety of angles.
Be ready for bad debt
Enrollment in a private exchange plan can be a different experience than enrolling in an employer-sponsored commercial insurance plan. Among the variables enrollees and beneficiaries will encounter that they likely have not seen before are the complexity of plan designs, provider options, coverage, and out-of-pocket costs. And rather than the employer making a decision on behalf of dozens, hundreds, or thousands of employees and their dependents, with exchanges the enrollment process is one individual at a time, Alexander points out.
One concern for healthcare entities—and not just hospitals—is that private exchange members can move their network allegiance year to year, emphasizing the requirement that hospital and health systems must build brand loyalty with this population if private exchanges have gained a foothold in the market. Consumers increasingly are receptive to switching from services or goods that fail to meet their expectations, and healthcare, especially under private exchanges, will be no different. After all, consumers are bearing more of the financial burden associated with their care. In the past, they had been insulated from the cost of the services they consumed, but that is becoming more and more rare. As they experience more of the financial burden for their care through copays, deductibles, and coinsurance, they will expect to have consumer experiences that mirror the best of retail and other cash-based goods and services they consume.
The dark side of more patient responsibility for healthcare bills for providers is obvious: direct patient liability for bigger portions of the healthcare dollars expended on their behalf. Hospitals and health systems have to worry about that going forward, says Bruce Elegant, president and CEO at 176-staffed-bed Rush Oak Park (Illinois) Hospital, even if private exchanges are still a small part of the overall market in their region.
"The growth of private exchanges will result in a significant spike in patient liability for healthcare bills," he says. "Private exchanges pose challenges in verification of benefits and up-front collections."
These consumers will expect health systems to meet them on their own terms, through additional capability for telemedicine, for example, or expanded primary care office hours. If those elements are not provided, they could quickly gravitate toward organizations that do provide such features. Some are doing this already because of other competitive pressures that don't necessarily have anything to do with private exchanges, but private exchanges will exacerbate the trend.
"Hospitals of necessity will have to up their access for patients in terms of office hours and telemedicine capabilities," Elegant says. "Investments in care coordinators to assist patients in navigating a complex healthcare landscape are the single-biggest change that will provide dividends going forward."
Many little payers
Perhaps it helps to imagine each healthcare consumer who is covered under a private exchange as a payer––the catch-all term hospitals use for Medicare, Medicaid, and commercial insurers. Consumers in exchanges are each little payers, and that's becoming more true as more first-dollar coverage liability is shifted from employer to individual. Hospitals and health systems should recognize that consumers demand greater transparency, improved patient experience, accessibility, and convenience.
"It was only a few decades ago that the employer or the broker or the commercial health plan was calling all of the shots," says Memorial Hermann's Alexander. "Armed with the Internet and smartphone applications, consumers are now better able to make informed decisions on the quality of providers or health facilities."
Moreover, especially for health systems that plan to compete with their own health plan offerings, whether they be through the Patient Protection and Affordable Care Act Health Insurance Marketplace exchanges or any other mechanism, Alexander says it may be helpful to focus on the provider-sponsored health plan's "price position" in the local market. In other words, how competitively priced is your commercial insurance or exchange product relative to the competition?
"Armed with the Internet and smartphone applications, consumers are now better able to make informed decisions on the quality of providers or health facilities."
Alexander says if a health system has a health plan division, the published per member per month premium can substitute strategically as an expression of the efficiency of the delivery system as a whole. As a health system gains efficiency, its provider-sponsored health plan can lower its per member, per month costs, making it more competitive.
Consumers, meanwhile, will begin to compare total out-of-pocket costs as a fundamental and influential variable in choosing their health plan, including deductibles, copays, and coinsurance. And that's a big potential bright spot for health systems and hospitals as value-based healthcare matures, says Alexander. "Systems with contemporary plan design, an efficient provider network, strong chronic disease management programs, and robust data analytics will be able to price certain insurance products at 10%–15% less than their competitors."
More than 40 top healthcare CEOs met recently with their peers to share leadership insights and strategy tips.
A host of CEOs and a few other senior healthcare leaders gathered together last week in Hot Springs, VA, for the invitation-only 2016 HealthLeaders Media CEO Exchange, and I was fortunate to be there as a moderator.
The mood has changed significantly among this group since the first event five years ago.
CEOs seem less beleaguered and more optimistic about the competitive landscape and their place within it. While that's a broad generalization, most senior leaders at the event were generally positive about the prospects for their organizations in the coming years.
Yet many still expressed frustration with the lack of cooperation from insurers and employers, among others, in helping to shift financial incentives in healthcare toward value-based principles.
My observances could be skewed. The organizations represented at the Exchange are among the more forward-thinking in the country.
But I sensed a mood of frustration among senior executives who have largely embraced the idea that they need to move out of focusing exclusively on inpatient care and treating sicknesses that have developed over years, to embracing the idea that they should focus on health and prevention.
The problem: Employers and insurers, for different reasons, aren't buying into that vision fast enough, and competition is ramping up.
Here are several of the most insightful comments from top leaders of healthcare organizations nationwide about the competitive landscape and their struggle to get payers and employers to buy into the promise of greater value from a holistic healthcare vision:
1. Mark Herzog
President and CEO
Holy Family Memorial
Manitowoc, WI
"Our biggest competition is the poor match of the current broker-driven health insurance purchasing model with the needs of employers to innovate with providers to more intelligently use healthcare and lower long-term costs."
"This reinforces the status quo and inhibits understanding of Holy Family Memorial's value-driven approach. Even hard data and amazing results from a smaller provider in the market has a hard time getting noticed, and employers are leaving money and resources on the table."
2. Patricia Currie
President, Central Texas Operations
Baylor Scott & White Health
Dallas, TX
"We are facing competition from multiple players and industries, including Uber-like apps. We have been discussing [business] relationships with two such vendors. Regardless of who we choose, we fully expect the other to move into the market in competition with us. These apps will help us reach out to the patients in new ways, but payment mechanisms are still uncertain."
3. Jerry Fedele
President and CEO
Boca Raton Regional Hospital
Boca Raton, FL
"I don't worry so much about that competitor down the street, but I worry about technology. As younger patients who are more adept at technology use it to access care, it takes them out of the system not because it's necessarily any better system or better provider, but because there are incentives built in those apps that are not always in the patient's best interest. That really concerns me."
4. Kurt Barwis
President and CEO
Bristol Hospital and Health Care Group Inc.
Bristol, CT
"Marketing dollars flow from the bigger systems. Most of the billboards I see involve my competition in some way or another. I tell my staff and team it's very competitive and we can't just be as good as everybody else, we have to beat everyone else."
5. Bruce Elegant
President and CEO
Rush Oak Park Hospital
Chicago, IL
"Two or three years ago we would have said one of our top competitors was the big drugstore chains, but now they are getting out of the clinic business and selling it to the health systems."
6. John Phillips
President, Methodist Mansfield Medical Center
Mansfield, TX
"The good news is that we're in a strong market. But three and a half years ago we had zero freestanding EDs within a 15-mile radius of our hospital and last week the 14th opened."
7. Andre Boyd Sr.
Senior Vice President and CEO
Jackson North Medical Center
North Miami Beach, FL
"Competition is fierce in the Miami market. In addition to the large number of hospitals in the market, there is a significant amount of outpatient activity such as urgent care centers, ASCs, imaging centers, and freestanding ERs that continue to proliferate at a rapid pace. Given our mission at Jackson, which is to take care of everyone regardless of their ability to pay, we have to work diligently to compete for paying patients."
8. Patrick Charmel
President and CEO
Griffin Hospital
130 Division Street
Derby, CT
"You can drive 15 minutes in any direction from us and get to one of six hospitals that are larger and have more clinical capability than we do. Our belief is that we offer value in that we produce superior outcomes at a lower cost. So we were motivated to try to move the market more quickly to recognize value."
We did this by bringing together a group of hospitals that also offer better outcomes and lower cost into a Value Care Alliance. Initially, the market didn't appreciate our value proposition because insurers didn't differentiate high-value versus low-value providers in their plan design, nor did they educate health plan sponsoring employers and plan members about the differences."
"But now we've gotten to the point that we can go directly to employers and show them how they're being misinformed."
After a health system executive was diagnosed with cancer, her CEO tasked her with creating a systemwide initiative to transform end-of-life care.
Melissa Pherrell Phipps got a breast cancer diagnosis around Thanksgiving in 2010.
Predictably, it turned her world upside down. Doctors told her it was urgent to begin treatment as soon as possible, as the cancer could spread. They scheduled her bilateral mastectomy for the second week of December.
It was the time of year that made Phipps, then assistant general counsel for Novant Health, a 15-hospital health system based in Winston-Salem, NC, think twice. And though she's now cancer-free, at the time, uncertainty and fear ruled.
"From a medical perspective, you can't get any better than that," she says, of the quick diagnosis and treatment plan. "But when I hung up the phone, I started crying as I thought of all the things I hadn't done.
"I had four young children and when you're diagnosed with cancer, there's a whole lot of unknowns until you have your surgery. In my mind, not knowing what I didn't know, I was thinking: What if this is my last Christmas? I didn't want to miss it in the hospital."
She didn't. She rescheduled the surgery for after the first of the year. But she says she was lucky that she was in a position to make that decision herself. Many patients, especially near the end of their lives, are not.
Her passion had always been patient rights and advocacy work. As a Novant attorney, she spent a lot of time and effort in the end-of-life arena, navigating disputes among family members when treatment decisions needed to be made for incapacitated patients.
Following her own cancer diagnosis, however, Phipps had a new sense of purpose around better adoption and use of advanced directives. So did Novant President and CEO Carl Amato, but he told her she was thinking too small.
In 2013, instead of revamping the system's approach to advanced directives, he empowered her to create a plan to transform end-of-life care. I spoke with Phipps recently about the progress that has been made since then. The following has been lightly edited.
HealthLeaders:What was the biggest professional revelation from your experience with cancer?
Phipps: If I had been asked then what I was most afraid of, it would have been that that this is my last Christmas. I wanted to be fully present for my family. The trade-off was that if we postponed, my cancer could spread, but it was worth it to me.
When you get a diagnosis like this, you can get swept down the river of the next medical process. Life can get hijacked and that often really compounds the suffering. The more we can help our clinical team understand that aspect of it, and allow patients to partner with us, for me that's the primary goal of this multi-year effort.
HealthLeaders:Your CEO gave you your assignment in January 2013. What's been accomplished since then?
Phipps: We're not there yet, but the goal is to understand patients' wishes about the extent of care they want under certain circumstances. We'd like for every healthy adult to be asked at a wellness visit who you trust to speak for you if you're unable to make your own medical decisions.
For most people, that's a pretty easy answer, and that goes into advance planning directives, which we want our patients to consider when they are not in a time of crisis.
We're trying to shift our culture so the right questions are asked much earlier, and focusing on patient goals rather than asking nonclinical people questions about specific medical treatments that they don't really understand at a time when they're stressed or scared.
HealthLeaders:On some level, this involves retraining the staff to help put them in the patient's place. How have you gotten them to understand how important this is?
Phipps: At first we pulled together a multidisciplinary team to tackle the problem. We created Choices and Champions as an internal brand, and we focused on hiring people to start doing some of the work. We hired a corporate director for palliative care, one for hospice, and a corporate manager for advanced planning.
We spent a lot of time building the infrastructure. In 2014 we started doing pilots. We were training folks in a medical clinic, pushing for changes in our EMR because it was difficult to find and store these advanced directives.
We started working intensively with hospitalists. But we learned key lessons that caused us to hit the pause button. For instance, we had to address a huge misunderstanding about what DNR means. We had a lot of educating to do.
HealthLeaders:You said you learned this was more of a cultural issue that an operational one. What do you mean?
Phipps: If folks don't understand the why behind what we're doing, it will never work. In 2015, through an invitational program, we offered the book, "Being Mortal" (by Atul Gawande, MD) to our 26,000 team members. More than 8,500 people participated. It really created a lot of dialog and resonated with our docs. Gawande came to speak and engage with our team members.
We also created an educational course for our nurses called Mastering Conversations that Matter.
We're trying to culturally move from a place of awareness to engagement and adoption. We have other education modules to equip our team members as to why it's relevant, and to do their own advance care planning. We have to do that first before we launch it with our patients.
It's a long-term project, but by 2017 and 2018, we'll see a lot of movement on the patient side.
HealthLeaders:Is there a financial component to the urgency around this effort?
Phipps: This may surprise you, but that is not a part of what is driving me or what I'm using to build the strategy. If I do a really good job and am effective at transforming how we do end-of-life care, there will be a decrease in costs. But that's not what's driving me, so when folks want to go there in our brainstorming and strategy sessions, I remind everyone of that.
There's a danger of losing the mission, which is that we're trying to know and honor what our patients want. For some people that will be aggressive end-of-life care.
My belief is that most people, when they are provided the right information and asked the right questions, won't choose aggressive and expensive interventions if it will not change the outcome.
Healthcare can't fix poverty, but with the right focus, it can fix some of the challenges that can be attributed to poverty, claims a new book.
Social determinants can add greatly to healthcare costs, but focusing on waste and inefficiency in healthcare will only go so far, says Joe Valenti, MD.
In fact, he says, the current focus on ferreting out waste and inefficiency amount to tinkering around the edges of the real problem: poverty. It's a big cause for healthcare cost growth, and much of the ACA doesn't address it.
More concerning is that it appears to disincentivize many physicians and hospitals from treating poor patients more comprehensively.
Perhaps an introduction is in order.
Valenti is one of six physicians at a small obstetrics and gynecologic group practice in Denton TX, and he's supporting a bold book by a fellow physician who can't promote it himself.
The author of Poverty and the Myths of Health Care Reform, oncologist Richard "Buz" Cooper, passed away earlier this year at 79 from complications from pancreatic cancer. Valenti helped edit the book and shares a background in cancer research with Cooper.
Valenti is also a board member of the Physicians Foundation, a nonprofit founded in 2003 from the proceeds of class action lawsuit against third-party payers brought by physicians and 19 state medical societies.
He says Cooper's new book should be required reading for those who think overutilization is what's making healthcare unaffordable. Instead, he contends, as does Cooper in the new book, that the most important determinant of healthcare spending is poverty. Overutilization is one symptom.
Of course, healthcare can't fix poverty, but with the right focus, it can fix some of the challenges that can be attributed to poverty, Valenti claims. He says poverty is ignored in the ACA. That means the incentives aren't right within its regulatory constructs to address the heart of healthcare's cost problem.
Much of his argument, and that of the book, stems from the idea that the ACA, through its myriad regulatory hurdles, encourages physicians who might most be willing to treat low-income populations to abandon small practices and join ever larger organizations that might not share their commitment to caring for the vulnerable population.
Once they join those organizations, which he says include nonprofit health systems that are increasingly moving their facilities farther away from poor populations, physicians may no longer be able to treat the vulnerable. Further problems are exacerbated, he says, by the vastly different reimbursement rates depending on payer.
Finally, well-intentioned regulations aimed at creating better accountability add to the red tape small physician practices must contend with while actively encouraging physicians to neglect poverty and the social determinants of health.
"How are we supposed to incentivize docs to see Medicaid patients when in some states it pays less than half what Medicare pays, and Medicare pays only 70% of what commercial plans pay?" he says. "We need incentives, not penalties, to help docs who take care of those patients."
Poverty Contributes to Noncompliance
Valenti says doctors who treat poor populations generally do worse on quality and other accountability measures at least in part because their patients are noncompliant.
But, says Cooper in the book and Valenti in an interview, such patients are largely noncompliant not because they want to be, but because factors associated with poverty make compliance practically impossible for some patients.
"Often noncompliant patients have everyday problems that prevent them from being compliant, such as transportation, shelter, food and prescriptions," says Valenti.
"You may have a patient who's 20 years old, has 400 blood sugar, and he insists he's taking his insulin. But what comes out is he doesn't have a place to refrigerate it and insulin becomes inactive in high heat. So a college dorm refrigerator might solve that problem."
But who's willing to do things like buy refrigerators for insulin, or add a ramp to a disabled person's home, or any number of other simple and inexpensive improvements that might help patients be more compliant?
I know of several organizations that already do, but in the context of the nationwide healthcare picture, which is the scale upon with the ACA operates, it's a scattershot approach.
Hospitals and health systems need to at least dedicate resources to solve what is an obvious and under-addressed problem. Those can help tremendously, even if those resources are limited to a dedicated employee or two staffing a clearinghouse-type effort to connect patients with assets that already exist in a community to help with such challenges.
"Poverty makes people sick," says Valenti. "But approaching healthcare based on the whole person can be a savings for the hospital and savings for the community. There can be some win-wins."