Carrum Health Adds Employers, Expands Its Specialty Network
Carrum Health, which has grown its value-based Centers of Excellence (COE) network to more than 1,000 specialty providers, has announced a contract with Tennessee state government, which joins several other state government customers including Maine and Nevada. The Tennessee partnership expands Carrum's public sector footprint to over 1 million lives. The San Francisco-based company’s chief network officer, Christoph Dankert, recently spoke with Healthcare Innovation about the network’s growth.
Healthcare Innovation: Could you talk a bit about your role and the company’s business model?
Dankert: My role is to find high-quality providers across a range of service lines and contract with them in a way that the payers haven't been able or haven't been willing to. We use value-based contracts, bundled payments under the hood. We do something that is blatantly obvious, but nobody has done in healthcare, which is actually pay providers in a way that incentivizes them to deliver cost-effective care and high-quality care. We set up the contracts in the right way and set up the incentives in the right way so we don't have to micro-manage the providers; instead, the payment model itself makes sure they're doing the right things.
HCI: Could you discuss this recent announcement about the State of Tennessee choosing Carrum as its COE solution?
Dankert: It's not just the private sector that is driving a lot of the innovation. It's actually the public sector, too. It is a combination of state governments, local governments, and school districts. I’m actually quite excited that there's so much that the public sector is doing to drive some of these changes.
HCI: Carrum has been around for several years. Could you talk about the initial startup of the company? Was there a chicken-and-egg type problem to overcome? You have to have a network of specialists to offer the self-insured employers, but to attract the specialists, you have to have some employers lined up. How did that come together initially?
Dankert: That was an incredibly hard problem to solve. That's one of the reasons why it hadn't been done before. You needed to have grit and tenacity and vision to overcome this. We needed to find the first providers when we didn't have millions of lives to offer them. Similarly, on the employer side, we didn't have that national network with over 1,000 locations, right? It was very difficult. But it also means that once you have the model going, it's an incredible competitive advantage.
HCI: Are there a lot of other players in this Centers of Excellence model ecosystem?
Dankert: There are not a lot of players — exactly because of the chicken-and-egg problem. It's very, very hard to enter this market. It is a very attractive market and a lot of players try to enter, but it's difficult for them to do, because they have to overcome these barriers. You have companies like ourselves, where we have this national network. It's very challenging for anybody to do this from scratch. We pride ourselves on having the highest-quality network, right? We are the the pickiest, if you will, in terms of which providers we let into our network. We want providers who are the best of the best, and they're also willing to put their money where their mouth is.
HCI: I saw your CEO, Sach Jain, was quoted as saying that to impact the entire specialty care spend, you need to adjust the Center of Excellence model for each specialty. Can you talk a little bit about how Carrum does that?
Dankert: An ankle surgery is very different from a cardiovascular surgery, which is very different from treating somebody for substance use disorder and treating somebody for metastatic breast cancer, right? These are very, very different specialty areas. The way we solve for this is we put a lot of effort into really understanding each of the service lines and then figuring out how we structure the economic incentives in a way that the provider will actually do the right things. We are spending a lot of time on bringing a product to market. We added cancer three or four years ago; then we added substance use last year, and now we are adding more. We're just trying to be thoughtful, and trying to do it right.
HCI: Using one of those examples, could you talk about a couple of things that were challenging about creating a model?
Dankert: Let's look at cancer. The challenges become immediately obvious. You know, cancer is actually a lot of different diseases. And, the way you treat also varies a lot by the specific stage of cancer. With metastatic cancer, you might have a menu of 10 different things to try. Whereas with stage one breast cancer you check the genetics and then there’s one of three things that you do, and it's very settled. The way you solve for this, then, is for the early stage cancer, you can have these bundles that directly map to the clinical pathway. This chemotherapy and this radiation treatment — you can price it out. You can easily bundle this, and the provider can take risk for whether they are getting it right. If it's metastatic disease, you have to give the provider more flexibility. You should incentivize them to do the right things, but they have to have the flexibility to adjust the course of treatment depending on where the patient is. So that's an example of where we spend a lot of R&D.
HCI: Carrum just announced a major expansion of the network to over 1,000 locations. Can you talk about how this came about and why it's happening now? Is it because of expanding into new specialties that weren't part of the network before, or an even greater expansion than that?
Dankert: It's a greater expansion than that. We spend a lot of time figuring out how we can find high-quality surgeons and physicians, depending on the service line, and we made a lot of investments into that. Let’s say we pick Philadelphia. How do I know who are the great providers in Philadelphia? And then how can I have my team approach those providers and get them into an arrangement like this, paired with the strong employer demand for the model? Now instead of my team chasing all providers, they can go to the right ones and say you should see more patients if you're really good at what you're doing. So that has really helped. And, of course, adding the service lines helped, too, because it allowed us to tap a whole new set of providers.
HCI: In curating this high-quality group, does Carrum have its own proprietary model or is there a generally accepted way to look at outcome data to identify top specialists?
Dankert: I wish there was a generally accepted way to do this. There are some specialties like bariatric surgery or cardiovascular surgery, where there is general agreement on the metrics that matter. But there are other service lines where there isn't universal agreement. So we spend a lot of resources and energy into working with specialty advisors. We have leading experts in the field in each set of specialties who advise us on which metrics to look at. Then we have developed a methodology for how we weigh those metrics together. We have an algorithm that scores every provider, and then we pick the top 10% according to that score.
HCI: A lot of these specialists are coming from a fee-for-service-only space. So is there a cultural change to have them operate in more of a value-based setting, where you’re incentivizing them by linking payments to outcomes? Maybe they're not used to that.
Dankert: That is true. When we first started the company, and for a good chunk of the first 10 years, there were some providers around that were already doing the right things. But the vast majority of providers had not had that exposure. In order to scale the network we had to give providers a bit of a helping hand to come into this risk model. So there are a lot of things that we do to make it possible for providers that are in a complete fee-for-service model to come into this model and be successful.
HCI: Are there still specialties that you haven't tackled yet, but that you think you will in the future?
Dankert: One of the big ones that we’ve been doing some R&D on over many years is maternity. Our maternal mortality rate is not great, to put it charitably, and there are a lot of wrong incentives in place and there isn't a real focus on what ultimately matters to the mother and child. We have done research on how to set up a value-based model there. We have the blueprints written and now we are waiting for the moment to to scale this.
HCI: Sometimes I think we don’t write enough about the role of self-insured employers in healthcare transformation.
Dankert: Before I joined Carrum, it wasn't obvious to me how much change is actually coming from the employers. But once you're in this space, you realize that employers have, within reason, a fair amount of flexibility to design the healthcare benefits and to change how providers are paid. There's very little regulation. They can really be innovative, and they are innovative, so you have this interesting scenario where most of the payment innovations actually coming from employers.
HCI: We have written about the Business Group on Health, and they have introduced some interesting models focused on primary care.
Dankert: We admire the Business Group on Health. They're wonderful partners. There's a lot of inspiration that we draw from the pioneering work that they have done and continue to do. And if you ask me, you have the specialty care excellence model emerging with the primary care model, and that can be a template for how you can do healthcare pretty holistically, pretty differently. So I can see that avenue becoming stronger over the next few years as both of these models continue to mature.
