On January 27, 2021, Healthcare Innovation hosted a virtual conference entitled “The New Landscape of Care Delivery in 2021 and Beyond.” On that day, four full discussion sessions were moderated, around the ongoing evolution in healthcare delivery; the growth of telehealth-based care delivery; data analytics challenges; and remote monitoring and care delivery trends.
The first session of the day was entitled “What’s Next in the Next 24 Months in Healthcare Delivery?” Healthcare Innovation Editor-in-Chief Mark Hagland moderated the panel. He was joined by four nationally respected industry leaders: Stephen Klasko, M.D., president and CEO of Thomas Jefferson University and the 14-hospital Jefferson Health, based in Philadelphia; Jeffrey Le Benger, M.D., CEO of the Berkeley Heights, N.J.-based Summit Medical Group/CityMD, with 900-plus practitioners and 80 locations across northern New Jersey and the New York City metropolitan area; Nick Lopocaro, CEO of the Huntington Beach, Calif.-based Landmark Health; and Adam Solomon, M.D., chief medical officer of the Long Beach, Calif.-based MemorialCare Medical Foundation.
Below are some excerpts from the panel’s Jan. 27 discussion.
Mark Hagland: We certainly do have very impatient purchasers and payers in healthcare. And the Medicare actuaries are telling us we will be going from $3.3 trillion in annual healthcare expenditures to about $6 trillion in the next several years—which clearly offers us a burning platform. So—are we coming up on a revolution or an evolution? And what might happen in the next two years, with regard to operations and payment? You’re all very involved in pioneering contracting arrangements.
Stephen Klasko, M.D.: It depends on two factors. It depends on whether our policymakers take up some courage; we’ve expanded access without changing the system. At the end of the day, we’re all part of the problem. And the pandemic proved the problems with the system: providers lost billions of dollars, and payers gained a ton of money. And we pay pharma retail. We know what things don’t make sense. So the problem is, are we willing to confront the root causes of healthcare expenditures? And second, will consumers have their “I’m they’re mad as hell and I won’t take it anymore” moment? I’m an obstetrician; I’m working with some companies that are doing remote patient monitoring for almost all non-stress tests. What’s interesting is that hospitals don’t want that happening, because we make a lot of money on that. But Doctors don’t want that, because of the reimbursement [loss involved]. But 28-year-old consumers who absolutely don’t view themselves as patients, will absolutely choose to stay at home for those monitoring tests.
Hagland: I know, Dr. LeBenger, that you will have something to say about that.
Jeffrey LeBenger, M.D.: I do think that fee-for-service payment and claims adjudication are not going away; most payer contracting is still based on the fee-for-service world. But you will see a move to value in that world. You’ll see the larger medical groups and hospital institutions looking at how to measure the risk of the patient, how to measure STARS ratings. Forget about being altruistic, you have to look at the medical economics of this world, and the margin is going to be compressed. And everyone will be looking to increasing that margin. In the hospital, for good or bad, it’s ancillary and bedding (filling beds). In the ambulatory world, we’re moving towards ambulatory networks in high-cost areas. So where is your model taking you? I feel for people who have a lot of fixed overhead, and have to justify that; we don’t. We’re very nimble. And you’re talking about margin compression of hospital systems…. There are a lot of things are happening around how you run risk in your organization. For us, there’s always the clinical model; that’s where the best savings are located.
Hagland: Dr. Solomon, you’re in Southern California, where you’ve had experience for many years with managed care and value-based contracting. You’re also affiliated with a large health system. How do you see it? Revolution or evolution? Will it be anything like the French Revolution, with fishwives with pikes and torches? Or something different?
Adam Solomon, M.D.: It might be employers with pikes and torches, or something a bit more gradual. We were doing more than half of our business virtually, but now we’re at the point where we’re between 14 and 22 percent of our visits being virtual. What I see is sub-segmentation. People expect convenience if they’re not doing something regularly. If I want to order out, I’ll do it on an app. Or I can text a friend whenever I want. Healthcare is a cottage industry; and you still see so many of these little independent offices practicing on paper, here in 2021. And even these large health systems that are on a large EMR; but in general, people still come in when they get sick; and I think there’s a segment of the population that has these intermittent interactions with the health system. And if I’m younger and healthier and I have a sinus infection or a bladder infection or any injury or something like that, I want to get the care that I need in the most convenient fashion. And if you do it conveniently for me this time but not the next, I’ll just go to someone else. The younger people don’t have any loyalty. But there’s a different segment of the population starting to have more chronic disease and they’ve struggled to navigate our really complex system, and are looking for someone who help them navigate their chronic disease. There’s a turning point where people want to have an attachment to an organization that’s looking out for their chronic needs. And those two things needed to be addressed, but right now, they’re being addressed in pieces, and it’s sub-fragmenting healthcare even more than it ever was fragmented.
Hagland: I completely agree, Dr. Solomon; many of us have children. And My daughter is 19, and when she was younger, I had to explain to her that there was a world before smartphones; that’s the millennials. And then, I have to explain to people outside healthcare that people are still using fax machines! Now, we all know there are younger people with chronic diseases; but of course, there are more who are older. And there’s this pincer movement, because many employers have forced their employees into these high-deductible plans, and that’s making people aware of pricing. And COVID made people aware as consumers of how the basic mechanics of healthcare work, such as around the basics of scheduling appointments. Plus, we’re all living in the world, right? We’re living in the Amazon world, we’re living in the Grub Hub world; and the level of inconvenience of healthcare that has been accepted until recently, is not going to be so accepted, going forward.
Consumer demands are shifting
Klasko: Let me give you an example from my world of obstetrics. When I was in private practice, what would happen is a woman might be late for her period, she would go to her 65-year-old male primary care doc who would give her a pregnancy test and send her to an obstetrician of his choice. And the woman would say, “Thank you very much, Doctor, I will go there.” The chances that a 26-, 27-year-old person will go to a 65-year-old male primary care doc and then decide for the most important thing in their life, to go where that person told them to go, are very low. They’ll say, “Well, that’s very nice; that might be where you would go if you got pregnant, which you won’t. but I’m going to talk to friends, go on the Internet, etc. So we actually started a Match.com for obstetricians and patients. So I’m Mrs. Jones, I’m 26 years old, I live in Bryn Mawr, Pennsylvania, I’d like to find a doctor who will accept my doula, and who will see me on Fridays, because that’s the only day I can get off; I have AetnaGold, I don’t want to spend more than $1,000 of my money; and I want to know what patents say about you, what your c-section rate is, etc. What’s interesting is that when we talk to obstetricians around the country, 50 percent will say, you know what? That’s it. I’m never practicing again. This is the end of medicine as we know it. The other 50 percent will say, that’s really cool! Where do I sign up. There’s a huge age and gender difference between the two groups.
LeBenger: One thing that COVID showed us that I think we have to think about, is that we were seeing 25,000 patients a day in urgent care and 11,000 in our integrated healthcare model, and in one day, we flipped a switch and went to 3,000 in-person visits to 7,000-8,000 virtual visits, literally within one day. So in terms of how medicine is going to change, it’s generational; we’re going to have to look at the access to healthcare differently, in terms of virtual, urgent care, and going to a primary care office. And I think that a lot of doctors are going to see that they can do a virtual visit for a sinus infection, UTI, an ear infection, and not go to the office; and it’s going to open up access to in-person care. I think that that’s one thing that will happen in the near future.
Hagland: Nick, you’re riding the wave of change, and your organization was organized based on skating to where the puck was, to begin with. So how do you see this change happening?
Nick Lopocaro: Well, I don’t know if your puck analogy was intentional, but I’m a Canadian, so that was a perfect refence! So per my colleagues’ comments, I want to touch on something that Stephen said first. When you think about “the system,” and you look at the patient, the payer and the investor, the patients want everything you can give them, the payers want to pay as little as possible, and the investors want double-digit returns. And that’s the reality for all of us, whether we’re with a for-profit, not-for-profit, whatever type. And that leads to this: I hope that we see a rapid evolution, borne of these mini-revolutions involving pikes and torches, And those will show up in models such as ours, where we come in and kind of poke the system in the eye, and show new models that work, including in telemedicine. And as terrible as the pandemic has been, it’s woken us up to the reality that these models can work. And if you don’t get on board, you’ll be disintermediated and the system’s going to continue.
And, per consumerism, forgive me for being a bit of a skeptic, but consumerism works if you have accountability. If that payer is not me, and that deductible is $50 and not $5,000, where is my accountability on wanting to stay healthy instead of depending on the healthcare system to take care of me? And in our model, we’re focused on the proverbial 80 percent of where the spend is. And hopefully over time, as we get the younger generations to become consumers of healthcare and become accountable, we’ll catch up, while we take care of this bolus of spend, here. And, obviously, being somewhat biased, we’ve made some progress there. And we’ve embraced the technology, but it’s not a panacea. In fact, 40 percent of my population has cognitive or hearing impairment, etc. That doesn’t mean we can’t use telehealth. Maybe we send someone in who’s not a clinician, to help the patient use the screen, etc. So to get back to your question, I hope that it’s an expedited evolution, based on these mini-revolutions.
The coming national healthcare system cost cliff
Hagland: I’m going to go back to the Medicare actuaries, who maybe are like the messengers of the fishwives of Paris calling for the King’s and Queen’s heads. And I’ve been talking to people on the policy side at some of the associations, as to what they’re seeing happening. And as you all know, basically, things are getting more expensive; and one of the top advocacy people at an association said to me, there are really only two options, when it comes down to it: severe provider payment cuts, and really pushing on value. So that individual said to me, I think there will be even more emphasis on value in the new administration and Congress, and that they’ll fix some of the challenges in the MSSP [Medicare Shared Savings Program], and move forward. And I know a lot of you are involved in MSSP and in private ACOs, and there’s a lot of discussion around benchmarks, etc. But in Washington, there’s going to be a very broad discussion in Washington on where to go. Dr. LeBenger, with your organization’s big success in MSSP, what’s your perspective on how value-based contracting might move forward, based on what people are learning in pioneering organizations like yours?
LeBenger: I do think they’re going to strengthen MA [Medicare Advantage]; one of the issues is that in MA, you can control the network. And in direct contracting, even though they can attribute to you, it’s a little more difficult. And we were in NextGen even before that. And you know, there’s consolidation in the marketplace, and then there’s integration in the marketplace. And when you have a really powerful, integrated model, where there’s one chart, and you can manage the patient really well and follow that patient around gaps in care and transitions of care, you really can save a lot more. So the government—they’re going to direct contracting and would like to move to a more capitated process, to control things. On the private side, the claims adjudication is such that it’s going to be difficult to move towards a capitated product, though profession cap exists in certain markets in the country. But in the New York market, you have a lot of ASO or self-insured business, and you can’t really go onto cap on that, but you can still manage the patient well in shared savings-based contracts. Per what Nick and others were saying, you really have to manage the 10 percent of sickest patients while monitoring rising-risk patients. On the private side, I don’t think their systems are up to it. We did a pilot study over seven years ago with Horizon Blue Cross Blue Shield of New Jersey, and now we’re moving to a fully capitated program in their fully insured business; but in the ASO business, it’s still going to be a shared-savings product. But we’re moving to that in the near future.
Hagland: Dr. Solomon, you’re in Southern California, where you’ve had experience with managed care and value-based contracting for many years? So, how do you see it? Revolution, evolution? Fishwives with pikes and torches? Maybe something gentler?
Solomon: Let me tell you about our medical group; we’ve been involved in managed care for 35, 40 years. And just maybe a decade ago, 90 percent of our business was full-risk cap; we were at risk for managing the population for both cost and quality. And because healthcare costs were continuing to escalate in general, employers said, we want to shift the burden of costs onto employees, and started to go into these PPOs, and little by little, they increased the deductibles. And there’s this assumption that employees will manage their own care, because they have financial risk. And there’s a conflict that occurs between choice and quality. And the assumption for the employer, and Medicare shares the same fallacy—that people should go and see whoever they want, and can find the best doctor. They have no idea of who the best doctors. And a lot of the times, even doctors don’t know who the best doctor would be in a situation. You really need to have an overview of people’s management of care over time. And so that hasn’t worked, and now these employees have this huge deductible that they can’t afford, and then they have this co-insurance that they have to pay, with their deductible, so that they just don’t come and seek out care. So we’re seeing a shift now to at-risk platforms where we collaborate with the employer, where if we’re able to improve outcomes and save costs, both we and the employers save. And conversely, if the costs are higher, the health system has to chip in some dollars back, so the employers aren’t on the hook.
And so employers will typically offer one HMO option and two PPO options. And one PPO option will be our network, which they call a high-performance network, or they can choose the full network, and that will hit them in terms of how much they have to contribute, how much is put into their health savings account, and what their deductible is. And patients get attributed, and so patients get attributed to us. But nobody tells the patients. Typically, the patients in Medicare and other ACOs don’t even know they’re in a network. So our assumption is that if I have these patients who have selected our system and I compare them to patients who have been attributed to our system, the assumption is that we’ll do better with the patients who selected us; but it turns out, with one of the large employers we’re contracted with, is that the opposite is true. The costs are almost double for the people who are attributed to us than those who have selected us and are designated. But for our management and our quality, the people who pick the full pool of providers are more amenable to outreach, to navigation, to coming in and getting their quality metrics done. They’re actually less cost-conscious, and are willing to spend the money to come in and get seen and get quality care; whereas the population who chose us are less include to spend any money on their care [coordination] and to collaborating with us on quality.
Hagland: Three years ago, I went to World Health Care Congress and saw a panel on direct contracting with providers. And Loews Home Improvement has direct contracts with major health systems, and these employers are setting up systems where if you need a total hip or knee replacement, they’ll send you to Johns Hopkins or Mayo Clinic or Cleveland Clinic, and will even fly your family there with you, and they’ve nationalized their approach. So they’re sending people from Idaho to Cleveland Clinic or Hopkins or Mayo. So everyone’s getting into the act in different ways; but it’s clear that employer-purchasers are becoming impatient and want to get the best value you can. So no longer are you competing with the hospital or medical group down the street, you may be competing with providers 1,000 miles away. So Dr. Klasko, how does all of that hit you, as a very large integrated system in a large city, where you have a couple of dominant managed care players?
Klasko: We’ve heard for 15 years that employers will send their employees to Hopkins or Mayo or Cleveland Clinic; but the direct-to-employer model just hasn’t really panned out as might have been expected. And apart of the reason has been immense lobbying. The key is going to be transparency and risk. So if you can ask, Penn, what is the chance of my being able to run a half-marathon a year later, and what are my costs? And then you compare that with Jefferson, Cleveland Clinic, and the two nearby community hospitals, etc. So I think people will take that risk if they can get real data. And in government, a lot of the issues are around the social determinants of health. In Philadelphia, 22 percent of people don’t have broadband, so telehealth was worthless and online education was worthless; until the government was willing to look at social determinants, digital technology won’t matter.
LeBenger: Just to pick up on the topic of the network. I think that networks will become narrow to take care of all the attributed patients. And as you move forward, you will see more preferred-provider contracts, where the payer says, if I give you volume, you’ll save me money, right? But the government doesn’t want to do that.
Klasko: You’ve got to remember that some of these employers and insurers are still smarting from the 80s and 90s gatekeeper phenomenon of economic gatekeeping. You’re not sending me someplace because you’re better, but because you’re saving money. That might not have been true, but a lot of those organizations got killed based on that old HMO model.
LeBenger: I agree, but when in the New York metropolitan area, where you have four or five major university centers, and the quality isn’t that different among all of them, if you could get a preferred-provider agreement to lower cost structure, that could really lower the total cost of care.
Solomon: The reason why the employer can afford to pay for the patient to fly, with their family, to get care at Mayo Clinic, get put up in a hotel and get evaluated there, is because half of those patients who were told locally, once they were evaluated, they were told, you don’t need spine surgery, you just need physical therapy. That’s where the savings come from, it’s from averting over-utilization. And as someone who manages the care of a quarter of a million people locally, I see which are the surgeons in my community whom I know, if you see them, you’ll get multi-level spine surgery, and if you see that one, you’ll get conservative care, and monitoring, with surgery as a last result, and you’ll get a good outcome.
Klasko: Unfortunately, for most American consumers, more is better. I think we experience some of that problem, too, from a consumer angle.
Hagland: So the private health plans are trying to create narrow networks; but the hospitals are just getting bigger and bigger to prevent being left out of every network. And if you’re in a mid-sized market with three health systems, you can’t leave one out of your network. So you’ve got this constant bulking up on the part of both plans and providers; and then you have dissatisfied employer-purchasers. And in theory, everyone wants the highest quality; but that’s disintermediated by so many different market dynamics impacted all of that. Do you all think that that dynamic will change, and we really will get to narrow networks and that some of the lessons from value-based contracts will come to fruition, and it will be clear that among ten systems in one market, five are great, two are OK, and three are not so good? Will that become clear, and will everyone make decisions based on those options? Or will things stay the same?
Solomon: Let me tell you a story from our local area. The health plans were competing with each other on price—ultimately, the network is broad, because employers want a broad network. So health plans would focus on the cheapest providers. And the employers would look at that and say, now you’re restricting our employees’ choice? We don’t want to take that.
So here in Southern California, Anthem had this idea of getting together the best health systems in the area, seven systems they brought together including us, and we all agreed to take financial risk, under this product called Vivity. But because we have UCLA and Cedars in this entity, our costs didn’t drop as much as we were hoping, so it hasn’t quite built out as far as we’d hoped. So yes, they want the higher quality and known names, but they’re not willing to pay for it, and were still hoping that they can control things.
Hagland: That’s exactly the web of tensions, right, Dr. Solomon? You can’t have unlimited choice, the very highest quality, the lowest costs, and everything else, all at once.
