Impact Advisors Leaders: Parsing the Lessons from Operating in a Pandemic Landscape

June 29, 2021
Andy Smith and Peter Smith of the Impact Advisors consulting firm, share their perspectives on some of the key elements making up the current complex operational landscape for patient care organization leaders

How has the COVID-19 pandemic impacted strategies and operations among the leaders of hospitals, medical groups, and health systems? In multiple ways, and significantly, say Andy Smith and Pete Smith, who are co-CEOs of the Naperville, Illinois-based Impact Advisors consulting firm. Both Pete and Andy Smith spoke recently with Healthcare Innovation Editor-in-Chief Mark Hagland regarding some of the challenges and opportunities facing patient care organization leaders in the current moment in U.S. healthcare. Below are excerpts from their recent interview.

When you look at the operational landscape right now, in June 2021, what kinds of lessons would you say that patient care organization leaders have learned through the past 16 months of managing through the COVID-19 pandemic?

Andy Smith: What we’ve learned is that we’ve learned to adapt and perform in a virtual world. We’re doing online training and at-the-elbow support, something we’d never anticipated. A lot of clients aren’t bringing their workforces back in force—even among their c-suites. And, given the level of mergers and acquisitions activity that’s been taking place, it almost doesn’t make sense to have a corporate headquarters anymore. What’s more, clients are pivoting into the digital front door, learning how to do telemedicine more effectively. They’re circling back and nailing down the foundations for virtual care. So our services are migrating to fill those needs. We’re excited, because telemedicine is a more effective, timely way to deliver care, with clinicians working at the top of their licensure.

Would you agree that the hospital-at-home concept, which had been predicted as emerging for years, has finally arrived?

We agree, and are excited about it.

Pete Smith: I think the whole concept of digital health and remote patient monitoring is going to be really huge. This is one area where the technology is outpacing the advances among the processes and the people-infrastructure. The real challenge for provider leaders will be setting up the infrastructure to respond and to do the data aggregation and analysis, so that they can create a satisfying patient/customer experience. A lot of work needs to be done around the foundations.

With regard to the hospital-at-home concept, do you think that patient care organization leaders are getting over their past fears of inadequate reimbursement?

Andy Smith: That’s exactly right. And I’m a huge believer in the hospital-at-home concept. We’re going to have to change and evolve into this model. Illinois just passed legislation that will continue to reimburse televisits the same level as in-person. And as for our clients moving to that model, the innovators, the thought leaders, are absolutely moving towards that model, recognizing they need a good primary care network in order to be relevant there.

Some of the hospital-at-home programs are being anchored by in-person visits, which really support the overall arrangements. How do you see that element?

Andy Smith: Yes, and we’re seeing a lot of our clients moving into provider-sponsored health plans for that reason.

And where is the industry right now with the development of provider-sponsored health plans?

Pete: Yes, and you’ll see an increase in HAH programs because of the broader trends involved. With the Spectrum Health deal with Beaumont, Health I would imagine that key to that deal was that Spectrum has Priority Health, and it will give Priority Health access to eastern Michigan now. [Smith was referring to the announcement this month of a merger between the Grand Rapids, Michigan-based Spectrum Health and the Royal Oak, Michigan-based Beaumont Health. Spectrum Health encompasses 12 hospitals, outpatient facilities, and a provider-sponsored health plan, while Beaumont Health encompasses eight hospitals and 155 outpatient facilities in southeast Michigan. As the June 17 press release announcing the merger stated, “The new organization will operate 22 hospitals and 305 outpatient locations, with more than 64,000 team members, including more than 7,500 affiliated, independent and employed physicians, more than 3,000 affiliated, independent and employed Advanced Practice Providers, and more than 15,000 nurses. The new system will operate dual headquarters in Grand Rapids and Southfield, and the President & CEO and senior executive leadership team will spend time on both sides of the state.” What’s more, per all this, Axios’s Bob Herman wrote on June 17 that “The coronavirus pandemic led to large drops in hospitalizations, procedures and tests at hospitals. But the pandemic did not affect Spectrum's financial position. And Beaumont, which treated more COVID patients than any other hospital system in Michigan, managed to stay well above water, according to financial documents.” And he noted that at Spectrum, “Revenue soared 14% to $8.3 billion in 2020, and operating income jumped 24% to $412 million,” while at Beaumont, “Revenue dropped 3% to $4.6 billion in 2020, and operating income fell 10% to $167 million”—but that, “The two systems, combined, are sitting on more than $8 billion of cash and investments as of March 31 of this year.”]

Beaumont Health and Spectrum Health are strong brands in their respective markets. There will be no immediate changes to the legacy brands. Those names will remain in their local markets pending adoption of the overall branding plan by the System Board. The new BHSH System will work together to determine a path forward that honors both legacy brands and will engage physicians, team members, donors and the community in that process. So it becomes a strategic asset for health systems. So I think you’ll continue to see it, unless some regulatory influence that might prevent it.

How do you see the federal policy landscape right now, per the transition to the Biden administration earlier this year?

Andy Smith: It looks like the Biden administration is still committed to providing the money needed for provider systems.

And what do you see in terms of the policy landscape around the ACO [accountable care organization] movement?

Pete Smith: I think you’ll see a climate where you’ll still have multiple payment streams. New administration, plus coming off COVID. A lot of executives are waiting to see what happens. My guess is that you won’t see a lot of major sea change for at least a year, until we get into a period of more stability. So I think we’ll still see different models going forward for now. That’s my gut feel right now.

Andy Smith: I do a lot of work with a behavioral healthcare provider that does a lot of substance abuse treatment. They’ve unsuccessfully for years been trying to move into APMs [alternative payment models]. But just in the past six months, they’ve had very constructive discussions with payers, to move into value-based or APMs. We’re very excited about that. But I agree with Pete’s hypothesis, we’re not going to be pivoting radically yet.

What kinds of stumbles have been taking place in the value-based world, and what kinds of advances or gains, in the past two years, in that context?

Andy Smith: The issue that our clients are having is that sometimes, they’re bringing a knife to a gunfight, right? The payers are much more skilled and sophisticated in going into contract talks. And with these provider-sponsored health plans, they’re bringing in the expertise, because they typically haven’t been very good at actuarial science. I know some clients that signed up for an ACO or value-based contract, and got burned.  Contracting and analytics are the big issues, where they’re stumbling.

Pete Smith: That’s right. And I would add, think about the concept: you’re asking organizations that have built their entire business model on sick people coming into the hospital, and now, you’re asking them to pivot to a model involving keeping people well. So at the very highest level, it’s pivoting to something that takes, time, effort, even physical effort. Even the physical spaces in hospitals aren’t geared towards the ACO model, towards hospital-at-home, etc. So it’s a great concept. But it’s going to take time.

So they’re getting into provider-sponsored plans, so they can learn actuarial science, analytics, and contracting?

Andy Smith: Absolutely. Analytics will be fundamental going forward.

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