How Advanced Medical Groups Are Succeeding in the New World of Value—and Pulling Everyone Along With Them

April 16, 2019
Those wondering how integrated health systems will be able to move fully and successfully into risk-based contracting need to take cues from the advanced medical group leaders who presented at the APG Conference last week

At a time in U.S. healthcare when so many are panicking over the challenges facing providers, it was deeply encouraging to listen to the speakers at the APG Annual Conference, held last week at the Manchester Grand Hyatt in San Diego, and sponsored by America’s Physician Groups (APG), the association that represents more than 300 medical groups involved in value-based contracting. So many of APG’s member groups have “cracked the code” on value-based care delivery and contracting, and those who have, are forging a path that will be intensely valuable for their colleagues in other patient care organizations going forward.

Take for example the presenters in the pre-conference session held on Thursday, April 11, and entitled “How to Move from Upside-Only to Downside Risk.” In that session, Bart Wald, M.D., a consultant with APG, introduced three presenters—Adam Solomon, M.D., CMO of the Long Beach, California-based MemorialCare Medical Foundation; Mark Wager, president of the Lancaster, Calif.-based Heritage Medical Systems; and Narayana Murali, M.D., executive director and president of the Marshfield, Wisconsin-based Marshfield Clinic Health System, and also executive vice president and chief clinical strategy officer of MCHS, Inc. Each medical group leader shared with the audience his presentation, and then Wald led all three presenters in a panel discussion.

Each organization has its own individual story; at the same time, it’s also clear that all three organizations have clearly “cracked the code,” and are making a success of value-based healthcare, in a big way. “Each contract will be different, and there will be different things to focus on to be successful,” Dr. Solomon said at the beginning of his presentation. That said, he went on to say that, “Outside of the contract, the most important element to consider is your network. Who will you include? The basis is your primary care physicians,” he emphasized. “If you don’t select primary care physicians who naturally manage patients well—who utilize properly and don’t refer excessively—you won’t be successful. Physicians won’t alter their care, so thinking about that is essential.” Meanwhile, he added, the specialty physicians who participate in your network need to “utilize appropriately, utilize the right locations for cost-effective care, and communicate well with primary care physicians and patients. And the last element, of course, is facilities. You may have your own facilities that are part of the structure. But also, what is the ability of those facilities to collaborate and coordinate with us?”

Such elements may seem basic, but the reality, as anyone who has attempted to make such networks work, remains exceptionally difficult to execute, in practice. And how much more difficult is it that the Marshfield Clinic Health System, a rurally based integrated health system, is making it all work so well?

As Narayana Murali, M.D., Marshfield Clinic’s executive director and CEO, told attendees at the outset of his presentation, Marshfield Clinic is an unusual organization—a rurally based integrated health system that has been thriving on risk. With 50 clinical locations, including five hospitals, in 34 communities, across a service area that covers 40,000 square miles of north-central Wisconsin, the 10,500-employee organization, with $2.4 billion in annual revenues (expected to reach $2.9 billion by the end of this year), the Marshfield Clinic organization has been prospering while satisfying its patients, communities, and payers alike. Indeed, when it comes to both quality and satisfaction, MCHS ranks very high on all measures. “In 2016, we were in the top 5 percent of all participants in the Medicare Shared Savings Program (MSSP), Dr. Murali reported. “And our quality score under MACRA in 2018 was 100 percent,” he said, referring to quality measurement under the Medicare Access and CHIP Reauthorization Act of 2015, and going on to reference very high NCQA and patient experience scores.

Speaking of the organization’s position at the dawn of risk-based contracting, Murali said, “We were largely a provider-based institution with a health plan that was contracting with a hospital, and looking to lower cost of care. You can’t manage the total cost of care unless you have the acute care ambulatory care, and health plan—all three legs of the stool,” he emphasized. With all three elements combined, MCHS’s progress advanced rapidly, he told the audience.

Importantly, Dr. Murali cited five critical success factors: the need to have “congruent access to data—claims, EHR, and analytics (around baseline cost trends, risk corridors, and attribution, among other elements); control of both ambulatory care and acute-care facilities in key markets; contracts involving business rules that work for all payers; the development of care management programs that help to lower the total cost of care; among those, successful population risk stratification processes, the inclusion of the management of socioeconomic factors, control over the post-acute spend for attributed patients… and some control over pharmaceutical and procedure spending, especially on the commercial side.”

None of those are weird, obscure elements; all are in fact known factors of importance. But again, the execution around them is far more challenging than might appear at first glance. And, as Dr. Murali put it so eloquently, “Organization and execution are extremely important. Everyone has ideas, but it’s the execution that matters. And everybody needs to understand the direction you’re going.” He spoke at some length about the governance and management required to be successful, noting that, at the top level of governance, “You need a clinical council with a CMO from your organization and a CMO from the health plan, working together with your chief quality officer.” And he shared the details of the governance structure over risk contracting at the Marshfield Clinic organization.

He and Dr. Solomon, and Mark Wagar, whose Heritage Medical Systems for years has been one of the most successful organizations of its kind in managing risk and teaching fellow physicians to do so, laid out clear success factors for their audience on Thursday. And the kinds of gains they’re making were reinforced by the Atlas 3-focused session the following day, in which senior executives from the Oakland-based Integrated Healthcare Association presented publicly for the first time, following publication of a press release the day before, data that absolutely backs up the assertions being made about the value that these medical groups are bringing, to the consumers, purchasers, and payers of healthcare, as they consistently reduce or curb costs, while improving patient/plan member outcomes.

Indeed, as Jeffrey Rideout, M.D. and Dolores Yanagihara noted, the Atlas 3 project found both that clinical quality was higher on average among organizations involved in financial risk, and that total costs of care were 3.5 percent lower on average, for organizations involved in capitation.

Meanwhile, back in the downside risk session, Wagar noted that physician group and integrated health system leaders need to have a clear sense of strategic purpose as well, in order to truly succeed. “If you’re in a market where there’s not a lot of this yet, what is it that you’re creating, that’s different?” he asked. There has to be a clearly set out strategic goal at the outset, he emphasized. In addition, he cited three organizational readiness factors: a common leadership view; roles and expectations for the troops; and the functions and structures needed to architect the path forward. Per expectations, he said, “Leadership has to create the culture” to support the foundations for two-sided risk. Other factors Wagar cited: strong financial planning, and capacity-building; and “a culture of service, quality and urgency.”

Again, none of those elements should be surprising to anyone. But what’s important is that organizations like MemorialCare Medical Foundation, Marshfield Clinic Health System, and Heritage Medical Systems, are making it all happen: they’re lowering cost trajectories, improving patient outcomes, facilitating excellent patient experiences, and collaborating well with payers on population health management efforts.

Importantly, all are physician-led, physician-governed organizations. And their nimbleness, agility, and ability to innovate with alacrity, should all be noted. Will hospital leaders moving forward into delivery and contracting innovation, continue to face significant headwinds? Yes, they absolutely will. But the potential is absolutely there for them to follow the cues of these pioneering medical groups, and make risk-based and value-based contracting work for themselves, for the payers and purchasers of healthcare, and for their patients, plan members, and communities. It really is possible, and leading medical groups are leading the way. It is possible; it is doable. These groups are doing it. The challenge for hospital system leaders will be to figure out how to de-institutionalize their thinking—at least to some extent—and leap fully into the emerging world. But I can guarantee that those integrated delivery systems that are able to make the transition first will gain significant market traction in the new healthcare. Some are already beginning to do so.

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