Corporate Interest in the Delivery of Care

Now that the iProtean Symposium has concluded and we have a rich source of new material from our experts for the upcoming courses, we will from time to time feature select abstracts from our experts’ interviews. Subscribers will see new courses such as Health Care: We Have a Problem; Doing More with Less; Due Diligence on Deals; Alternative Sources of Revenue; Physicians and Value/Risk-Based Reimbursement; Involving Finance in Strategic Planning; Physician Burnout. Our experts include Dan Grauman, Marian Jennings, Nate Kaufman, Anne McGeorge and Brian Wong, M.D.

 

Today’s feature is from Dan Grauman and his thoughts on the recent interest by corporations in taking on healthcare.

 

Interviewer: Why is corporate America seemingly interested in taking on healthcare? Whether it be Amazon, Wall Street or Berkshire Hathaway or CVS/AETNA?

 

Health care continues get a lot of attention on a national scale by corporate America. Primarily this is because how significant a percentage of our economy goes to healthcare—nearly 20 percent. This includes hospitals, physicians, health insurers, pharmaceutical companies, medical device manufacturers, etc.

 

So when you have an industry that big and there’s disruption and change, all of which characterize our industry, there’s also opportunity. At the same time, large employers for years have been concerned about the cost of healthcare, the cost of the premiums that they have to bear for their work forces. So these large employers are paying attention as purchasers of healthcare services; they want to influence the delivery system and make sure it’s providing care in the most efficient way possible. They want to pressure the insurers and the pharmaceutical companies that are in the middle, if you will, and at the same time corporate American thinks it can do it better if it gets involved in a more meaningful way.

 

The new disruptive technology-driven companies are very sophisticated in terms of supply chain and other business processes and they look at their core competency and expertise and ask, “What if we translate and deliver this and apply it to healthcare delivery? Perhaps we can help this industry do better and at the same time help ourselves.

 

Interviewer: Will they better manage care and cost than the traditional players: hospitals, physicians and insurers?

 

There has been a long-term debate and discussion about whether anyone could help hospitals and physicians practice medicine in a better and more efficient way. Are the physicians, who have so much control about what care is rendered and how it’s delivered, the only ones who could really change the delivery of care?

 

The traditional model has been for health insurers, by threatening to deny payment for certain types of care, to try to influence care. It hasn’t worked very well and one of the well-known facts is that there are significant variations across the country in how medicine is practiced. There may be some valid reasons for some of those differences, but some of the differences are so stark that it doesn’t really make sense.

 

But the fact is that if you look at the way a particular disease or healthcare problem is handled in one market versus another across the country, you see significant variations. And the argument goes that if corporate America—the Amazons and Berkshire Hathaways and Googles—could reduce those variations and get more consistency about how medicine is practiced, then care and cost would be more favorable.

 

 

 

The Board’s Role in Leading Through Transition, iProtean’s latest advanced Governance course, now appears in your library. It features Karma Bass and Marian Jennings on issues such as dealing with uncertainty, new elements for evaluating the CEO, prudent risk-taking, critical questions, recommended practices, destination metrics and changing over time.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

HHS Head Plans to Get Aggressive with Value-Based Payments

The head of the U.S. Health and Human Services (HHS) said recently that the department will aggressively push to implement value-based payment, extending beyond ACOs and bundled payment initiatives.

 

“ . . . we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create a true competitive playing field where value is rewarded handsomely,” said HHS Secretary Alex Azar II at a recent meeting of hospital executives. (“Azar: Time to Move Value-Based Payment Beyond ACOs, Bundles,” HFMA Weekly, March 7, 2018)

 

He said he plans to use the Center for Medicare and Medicaid Innovation and MACRA to experiment with new payment models.

 

Keys to Transformation

 

Azar outlined four “engines of transformation.” The first, as noted above, involves revamping federal value-based payment programs.

 

The second engine of transformation involves reducing government rules and regulations that inhibit integration and collaboration. Examples of regulations include:

  • Medicare and Medicaid price-reporting rules
  • FDA communication policies that hinder innovative pharmaceutical company and payer collaboration
  • Anti-fraud protections that impede useful coordination and integration of services

 

Another engine of transformation involves giving consumers greater control over health information through interoperable and accessible health IT, giving patients control of their records in a useful format and giving them the means to bring their records to a new provider.

 

Finally, he wants to encourage transparency from providers and payers. Azar said he would begin by encouraging the healthcare industry to find solutions and would “lay out more powerful incentives if it doesn’t.”

 

Consumer Focus

 

The key theme uniting the Secretary’s four priorities was that value will be determined by “a marketplace of many players” and not by “arbitrary authorities or central planners.” (“Azar: Time to Move Value-Based Payment Beyond ACOs, Bundles,” HFMA Weekly, March 7, 2018)

 

He wants a consumer-centric approach and argues that this will make transformation easier, but not painless. The reorientation toward consumers will potentially require “uncomfortable” federal intervention because facilitating a competitive, value-based marketplace “is going to be disruptive to existing actors, he said.” (“Azar: Time to Move Value-Based Payment Beyond ACOs, Bundles,” HFMA Weekly, March 7, 2018)

 

 

 

The Board’s Role in Leading Through Transition, iProtean’s latest advanced Governance course, now appears in your library. It features Karma Bass and Marian Jennings on issues such as dealing with uncertainty, new elements for evaluating the CEO, prudent risk-taking, critical questions, recommended practices, destination metrics and changing over time.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

Some State Leaders Argue for Value-Based Payments

Health experts have long argued that value-based payment would both improve quality and decrease/control healthcare costs. Now, five state governors have put into writing a set of policies and initiatives they believe could reduce the share of the economy consumed by health care. Value-based payment figures substantially into their “blueprint” for improving health care.

 

They wrote: “Reorienting the system on value needs to be our greatest priority. Congress and the Administration should work with states and make a clear commitment to value-based healthcare purchasing.” (A Bipartisan Blueprint for Improving Our Nation’s Health System Performance, February 23, 2018)

 

Five governors—two Republicans, two Democrats, and an independent—issued the blueprint. They said a broader shift to value-based care requires several steps, including:

 

  • Measuring the value of all healthcare providers and payers and providing public transparency
  • Using information and incentives to drive an evolution of primary care to team-based care with accountability for the health and cost of populations
  • Holding providers accountable for the end-to-end costs and outcomes for episodes of care
  • Using Medicaid and state employee benefits to generate critical mass that can reorient the system toward value
  • Aligning priorities for value-based purchasing across all federal agencies

 

In addition to the focus on value-based purchasing, the blueprint includes several core beliefs:

 

  • Competition and Aligned Incentives. Material, lasting improvement to our health care system requires harnessing private sector innovation and competition to the benefit of all. When ingenuity and capital are focused on what we most value, we see incredible innovation and productivity gains. Enabling competition requires alignment of the incentives of all stakeholders with what we value, sufficient transparency, and appropriate regulation. In our current healthcare system, providers compete to provide more care, not necessarily better care. This misalignment of incentives, which rewards volume instead of value, is the most significant root-cause challenge in our system and addressing it should be our greatest priority.
  • Government Action. Targeted government action is justified and required when market forces, alone, will not achieve our objectives, such as protecting vulnerable individuals without the resources to independently secure health care.
  • Reform. Reform must address the underlying drivers of costs and cost increases, including the current lack of value-based competition in our health care delivery system (e.g., hospitals, medical service providers, and pharmaceuticals) and lifestyle-induced disease.
  • Consistent Expectations. Our expectations for our healthcare system should be consistent nationally. Every citizen in every part of the country deserves a high performing system. We need a single, holistic, integrated framework to improve our system over time. But within a national framework one size will not fit all. Many aspects of health care, such as population characteristics, market structure, and variance in local governance (e.g., tribal authorities), differ significantly across markets. The execution of a national strategy will necessarily vary by state and region.
  • Stability. It is more practical and less risky to build from the elements of our system that are stable. For example, our primary coverage and financing mechanisms – employer-sponsored insurance, Medicare, and Medicaid – are imperfect and would benefit from reform, but they are also well understood and much more stable than is often believed. These mechanisms should be the foundation of efforts to expand affordable health care coverage.

 

(From: “A Bipartisan Blueprint for Improving Our Nation’s Health System Performance,” February 23, 2018)

 

To read the document, click here.

 

 

The Board’s Role in Leading Through Transition, iProtean’s latest advanced Governance course, now appears in your library. It features Karma Bass and Marian Jennings on issues such as dealing with uncertainty, new elements for evaluating the CEO, prudent risk-taking, critical questions, recommended practices, destination metrics and changing over time.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.