Relentless Health Value

I wanted to resurface this episode because when it originally aired over a year ago, the topic may have been ever so slightly ahead of its time. Look, here we are right now with everybody trying to do three big things relative to measuring PCP (primary care provider) performance: Come up with a fair measure for PCP performance. Account for diverse populations with diverse risks so that some docs don't get dinged because their patient populations have lots of comorbidities or behavioral health challenges or live in food deserts, or any one of the other social determinants of health. Not make measuring performance a total procedural nightmare. Right? We want fair measures, we want to account for equity issues essentially, and we want this whole measurement fandango to be as easy as possible. Enter Rebecca Etz, PhD, and The Larry A. Green Center with a really well-validated "instrument," as she calls it, to measure primary care performance. I can think of more than one PCP frankly right off the top of my head who would be thrilled to be measured using this methodology. Even more so because it's one thing that's simple and not a jumble of numerators with various mix-and-match denominators. PCPs are really important to population health. Primary care is the foundation of any well-functioning health system, I am sure many listening to this podcast know well. For the Triple Aim to happen, patients really need access to robust primary care. This has been affirmed by almost anyone who looks into it. And yet, in this country, our system sort of anemically supports our primary care colleagues. As a general statement, poking and prodding and procedures are compensated at a far higher rate than anything requiring cognitive services. What a PCP or a pediatrician mainly does all day is really cognitive. It's listening and thinking and counseling and coordinating. But here is maybe an underappreciated point: If we're going to measure PCP performance, then we need the right measures to measure that performance. You might be doing this measurement as a basis for incentives or maybe for continuous improvement programs. Either way, if you don't have the right measures, then maybe great primary care is under-rewarded or your continuous improvement process is counterproductive—you're incenting the wrong things, you get the wrong activity. And to add to that, PCPs (ie, practices) can spend upwards of $40,000 a year of uncompensated time trying to add and subtract and tote up the difference in all these varied and potentially inapplicable measurement standards coming at them from all manner of directions. My guest in this healthcare podcast is Rebecca Etz, PhD. Dr. Etz and the team over at The Larry A. Green Center have worked hard to create a set of 11 performance measures for primary care. These measures went through the wringer as far as their creation and validation. These 11 measures take into account what patients want, what primary care clinicians (including pediatricians, nurse practitioners, and others) think is most important and possible to provide, and what payers want to pay for. These 11 measures are aligned across the three stakeholders, and they are actionable. Rebecca Etz, PhD, is associate professor of family medicine and codirector of The Larry A. Green Center, which is in Richmond, Virginia, at the Virginia Commonwealth University. You can learn more at green-center.org. Rebecca S. Etz, PhD, is an associate professor of family medicine and population health at Virginia Commonwealth University (VCU) and codirector of The Larry A. Green Center—Advancing Primary Health Care for the Public Good. Dr. Etz has deep expertise in qualitative research methods and design, primary care measures, practice transformation, and engaging stakeholders. Her career has been dedicated to learning the heart and soul of primary care through three main lines of inquiry: (1) bridging the gap between the business of medicine and the lived experience of the human condition, (2) making visible the principles and mechanisms upon which the unique strength of primary care is based, and (3) exposing the unintended, often damaging consequences of policy and transformation efforts applied to primary care but not informed by primary care concepts. As a member of the VCU Department of Family Medicine and Population Health and previous codirector of the ACORN practice-based research network, Dr. Etz has been the principal investigator of several federal and foundation grants, contracts, and pilots, all directed toward making the pursuit of health a humane experience. Recent research activities have included studies in primary care measures, behavioral health, simulation modeling, care team models, and adaptive use of health technologies. Dr. Etz currently leads the fielding of a weekly survey regarding the response to and impact of COVID-19 on US primary care practices. She also serves on the National Academies of Medicine consensus study, "Implem

This encore episode seemed really apropos at this moment in time, since we've just basically published a course in the specialty pharmacy ecosystem, including who all of the various stakeholders are and what their vested interests are. Weirdly, in many of the episodes in the series/course, you'll find the word patient in short supply. And that's not a weird oversight in our podcast production. It is actually an egregious oversight in the specialty pharmacy market, an oversight with real human consequences, which I talk about with Olivia Webb in this encore. Check out a playlist of all of the specialty pharmacy episodes that comprise our series here. If you listen to them all, let me know; and also let me know what you think and, I don't know, maybe we'll create a special certificate for you because at that point you will know more than 99.9% of the industry (even industry insiders) if you listen to the whole thing. Here's the cold hard truth: The whole specialty pharmacy operational model is not built to serve patients, a fact that becomes crystal clear when you're a patient. Instead, the specialty pharmacy model is, rather, pretty blatantly dedicated to the power struggle for revenue and captive patient populations. It's war between providers and the whole PBM/insurer/specialty pharmacy vertical consolidations. Employers and pharma manufacturers are, of course, on the battlefield as well. What is a drug that qualifies to be a specialty pharmacy drug? Usually, these drugs are complicated to store, dispense, to use, and/or they're expensive—generally, really expensive. Lots of zeros, completely unaffordable to pay cash for them as an individual. No one is using a GoodRx card and not using their insurance to pay for these puppies. They can cost as much as a house. Biologics, for example, usually considered specialty drugs—lots of cancer and immunology therapies, injectable medications, IV/infused medications—all these are usually considered specialty drugs. There's no one definition of a specialty drug. It's more that someone somewhere decided to not run the drug through your traditional retail pharmacy for any number of reasons. The problem with the current status quo, wherein the patient gets tossed around while everybody fights over them, is that some basic needs are not being met—like if a patient asks the person administering the drug maybe even a pretty simple question about the drug or its side effects. It's way more likely than it should be that the nurse or whomever doesn't know the answer. Not knocking nurses here at all but definitely knocking a system that allows that to happen. I mean, really now. We're injecting a six-figure therapy in someone's arm that will impact their body in a myriad of maybe frightening ways, some of which are a problem and some of which are not. Said another way, there's a really good financial and clinical use case for making sure that we're patient-centric at a specialty pharmacy point of service—if you care about the patient and cost efficiency, that is. But I guess therein lies the root cause of the trouble. In this healthcare podcast, I'm talking with Olivia Webb about what it would take and be like to create a "patient-first specialty pharmacy," as she has coined the term—a specialty pharmacy dedicated to patients not only having a half-decent experience but also one that might actually create better patient outcomes. Olivia Webb is author of the Acute Condition newsletter. I would certainly recommend subscribing. One last thing: If you're following the whole PBM/insurer/specialty pharmacy vertical integration skullduggery, keep an eye on a bunch of lawsuits against these combined entities (three examples here, here, and here) alleging that they are doing some not super upright and honest things with their massive market power. (Say it isn't so!) You can learn more at acutecondition.com. Olivia Webb is a healthcare strategist and writer. She publishes the newsletter Acute Condition, as well as working on other content across the healthcare and biotech ecosystem. She previously worked at Massachusetts General Hospital and Advisory Board Company. 04:43 Why did Olivia start thinking about a patient-centric specialty pharmacy? 06:05 "There's really no layer on top of it to make it look nice." 06:55 "You're kind of dealing with this vertical stack that doesn't really deal with patients frequently." 07:07 Is the specialty model more patient friendly or less? 07:39 What would a patient-centric specialty pharmacy look like? 08:29 "There's a lot of fragmentation; there's a lot of friction." 08:42 What's unique to specialty pharmacy prescriptions? 11:09 Why can infusion centers be a high-drama place? 12:44 What's "the question" around specialty pharmacy? 13:11 Who has the vested interest in ensuring patients take their medications correctly in specialty pharmacy? 15:08 "It's really just a unique area of healthcare where the people that I think of as the good guys and the bad

Members taking specialty drugs represent about 2% of any given employer's population but often consume as much as 30% of an employer's total cost of care. As Pramod John, PhD, in EP353 has said, this isn't just small companies we're talking about here. Some of the largest employers in the US are dropping big bucks on specialty drugs, and they are obviously overpaying and don't need to. No employer or plan really need pay any more than the pharmacy's acquisition price plus a reasonable professional fee. But so many employers pay way more than that. Let's just keep in mind that specialty pharmacy spend extends beyond just pharmacy spend. Medical claims for pharma drugs that are infused, for example, can be more than 50% of an employer or plan's specialty pharmacy spend. What I'm talking about now is buy and bill–type stuff where a hospital or physician practice bills for an infused pharmaceutical product under a patient's medical benefit. Listen to EP370 with Autumn Yongchu and Erik Davis about how some hospitals, for example, are managing to charge employers 6x the cost of specialty meds to infuse them and also EP365 with Scott Haas about PBM shenanigans. So, currently, specialty pharmacy spend is big; but it's grown bigger every single year. Every year, employers and the government/taxpayers alike spend more and more on these really expensive drugs. As you can see, there are billions and billions of dollars on the specialty pharmacy table here. Also, as you certainly know if you've listened to the recent series of specialty pharmacy shows that we've done lately, it's kind of a war out there. There are multiple healthcare industry stakeholders trying to capture all of the money. If you can get your hands on a specialty pharmacy patient and manage their care—or, probably more pointedly, manage to bill for their care—it can be incredibly profitable. This show kind of wraps up some loose ends for me. In this healthcare podcast, I'm speaking with Mike Baldzicki, who is chief brand officer over at AscellaHealth. A majority of Mike's background is in specialty pharmacy infusion, capabilities with an array of different healthcare companies. So, he is a great guy to wrap up some of these loose ends with. On the show today, we discuss how many/the percentage of self-funded employers who have taken their specialty pharmacy business from the "Big Three" or "Big Five" PBMs, how many of them have actively started steering their members and managing their benefit carefully. I talk with Mike about what these employers are doing and how they are doing it. From there, the conversation, of course, naturally flows into preventing hospitals from rapaciously buying and billing, which then segues into a discussion about hospital strategy … because if you can't do your buy-and-bill thing for a whole bunch of your patients, then it makes sense for you to do two things strategically: (1) stand up your own specialty pharmacy and/or (2) set up your own network of infusion centers. Mike and I talk about this. We also discuss how much trying to get a specialty pharmacy drug sucks for most patients, which I deeply investigated in EP337 with Olivia Webb. Also in this episode, you can hear me contend that maybe if Pharma and payers enter into outcomes-based contracts, maybe patients would be better served. It's kind of the pharmacy version of the whole "let's pay for value, not volume" thing. I ask Mike how many pharma outcomes-based contracts are out there in the wild, for reals. All of this and more … but you gotta listen to the podcast. Oh, by the way, acronym alert: SPP stands for specialty pharmacy provider. You can learn more at ascellahealth.com. Michael J. Baldzicki, CRCM, is chief brand officer (CBO) at AscellaHealth. As CBO, Mike supports the AscellaHealth Family of Companies comprehensive business strategy to increase brand awareness, boost perceived value, and improve lines of services in the marketplace. He is responsible for oversight of their Family of Companies based on sales and marketing to finance, client services, and specialty pharmacy strategies throughout the organization that drive strategic business initiatives. Within his roles, he enhances the success of the strategic projects and applies business development, contract negotiations, network advancement, and marketing and outreach strategies that cultivate opportunities for AscellaHealth and their Family of Companies. With more than 24 years of experience, Mike held roles in senior executive management within the specialty pharmacy supply group, pharmaceutical and biotech industry of managed markets, group purchasing organizations, specialty wholesale, and integrated delivery networks. He assumed roles within the pharmaceutical organization such as Bristol Myers Squibb, Enzon BioTech, Novo Nordisk, Baxter BioScience, as well as roles within the distribution channel of AmerisourceBergen specialty groups, BioMatrix Specialty and Infusion Rx, Diplomat/BioRx Specialty

Interoperability. Let's just review a few key points that probably everybody listening knows but certainly bear repeating because they matter. I don't want to dig into the technical or regulatory details of interoperability. That is above my pay grade. But I want to talk about the really important stuff that maybe doesn't get talked about a whole lot because you say the word interoperability and it's like the magic word that transports the unwary into the land of shadow and smoke and mist. It's like a self-published YA (young adult) novel half the time. But let's start here: First of all, consider that a lot of healthcare these days is conceived of as a scattering of micro-moments. It's not even like we think of patients one at a time. We think about patients one ICD-10 code at a time. And we think about those ICD-10 codes in 20-minute increments whenever a patient happens to show up in clinic. The average Medicare patient these days sees five specialists and more than one PCP a lot of times. So, we're not only breaking that patient down into codes per minute or something, but this is further broken down by clinician or practice. Now consider that everybody knows—and when I say everybody knows, I mean it's inarguable at this point—health happens at the whole-patient level, at the whole-person level, more accurately. It happens at the community level: 80% of patient outcomes are going to derive from what that patient does when they leave the office and whether they are able to and health literate enough to construct a reconciled treatment plan for themselves from the bits and pieces of information they've received scattered all over the place. You know in Star Trek when someone gets into the transporter to beam down to a planet and their whole body splinters into a gazillion little pieces? That's how our healthcare industry treats patients. They are frozen in that moment and rarely, if ever, become whole on the other side. So, when we talk about interoperability, what we're really talking about is a means to an end. What we are discussing is creating the ability to treat the whole patient or—Heaven forbid!—consider the whole community because we have enough data that we can accurately and adequately see the whole picture. We are able to avoid prescribing a treatment that is dangerous to the patient, inefficient, duplicative, or low quality—which is what happens over and over again. It's no amazing surprise that our healthcare industry wastes $1 in $4 we spend and doesn't net outcomes that are great in almost any respect when compared to other countries. Let me say this more bluntly, as if that wasn't already pretty blunt: If I don't know relevant and important details about my patient, then I cannot consistently deliver care that is high quality, safe, or cost conscious due to service duplication or uncoordinated care. I mean, how is anybody supposed to deliver evidence-based care when a lot of evidence may or may not be missing? So basically, without interoperability piping in the right patient information, I cannot succeed in any risk-based arrangement, right? If care provided is consistently lower quality, uncoordinated, unsafe, or inefficient, how am I supposed to optimize my care delivery? Said another way, interoperability is essential for anybody who wants to succeed in a value-based arrangement. I need all the data on my patients, and I need it in a way that I can separate the signal from the noise. Of course, getting 40 pages of duplicative SOAP (subjective, objective, assessment, and plan) notes that are semi-accurate and that no one bothers to look at is just unhelpful. Quick counterpoint: FFS (fee for service) loves siloed data. You know how much money everybody talks about could be saved if we eliminate duplicative services? Well, that's how much some fee-for-service health system is gonna lose if you make it easy for clinicians to see that the patient already got that CAT scan. So, in sum, interoperability is essential to high-quality, safe, and efficient care. A mark of a health system or provider practice who is really committed to patient outcomes is going to be their commitment to share data. The world has moved from a "Hey, you're permitted to share data if you really want to" to a "You are obligated to share your data." And right now, I am loosely quoting Micky Tripathi, PhD, MPP, who is the ONC's (Office of the National Coordinator for Health Information Technology) national coordinator and also the guy in charge of TEFCA (Trusted Exchange Framework and Common Agreement) and implementing the provisions against information blocking that was in the Cures Act Final Rule last year. In this healthcare podcast, I am speaking with the perfect person about interoperability, and that would be Lisa Bari, who is the CEO of Civitas Networks for Health, which is a national collaborative working to improve interoperability in this country to improve health. Since interoperability is a huge topic, what

Medicare Advantage (MA), otherwise known as the "money machine," is often the most profitable parts of many payers' business lines. Medicare Advantage plans can make a lot of cash if they are good at what they do. Look at any of these large, consolidated carriers' financial statements to get the magnitude of that statement. Also, in 2022, Medicare Advantage plans have enrolled 28 million participants between them, which represents 45% of all Medicare beneficiaries. This marks a three-point improvement in penetration over 2021 and a total program enrollment growth of 9%. All of this is not a secret. So, what's happening right now is that this administration is looking carefully at Medicare Advantage plans and what they have been up to. We have had an amping up of government oversight, including regulatory actions and program audits. In this healthcare podcast, I am speaking with Betsy Seals, who is CEO and cofounder of Rebellis Group, which is a managed care consulting firm working with Medicare Advantage plans. Betsy says (and this is what we talk about in the interview) that there's three main areas that the government is currently scrutinizing: Sales and marketing. There have been these third parties, it seems, these field marketing organizations who were hired to do marketing and sales for some of the Medicare Advantage plans. And because they were third parties, it seems that many of them felt themselves to be excluded from CMS (Centers for Medicare & Medicaid Services) regulations and able to basically mislead prospective members with sales pitches that were highly suspect. Betsy gives some examples of these, and when you hear them, you will see why CMS is cracking down. Recouping improper payments is another area that CMS is all over. Interestingly, as Betsy Seals says in this interview, this might be one area where the government is actually ahead of private sector plans from a technology and analytic standpoint. CMS seems to have better analytics capabilities and is better at detecting fraud schemes and improper payments than the plans themselves. These plans are not sophisticated enough to notice stuff that CMS detects when it gets ahold of the plan data. But as unusual as this situation is where the government is ahead of the business sector, I can't say I'm shocked. We have had one guest on this show after another talking about just how far in the past some of these health plans are lagging. Dan O'Neill probably said it most eloquently and notably (EP359). But I digress. So, recouping improper payments has the eye of CMS. This means two things largely. It means finding "outlier" codes that some MA plan paid for but which are clearly errors and should not have been paid. Another improper payment is when plans themselves do a little fancy upcoding so that they make more money than they should in their risk-adjustment payments. This has gotten some major attention lately. Let me quote from an OIG (Office of Inspector General) report: "Our findings raise concerns about the extent to which certain MA companies may have inappropriately leveraged both chart reviews and HRAs [health risk assessments] to maximize risk-adjusted payments. We found that 20 of the 162 MA companies drove a disproportionate share of the $9.2 billion in payments from diagnoses that were reported only on chart reviews and HRAs, and on no other service records." The sneaky idea here to get more money than they should from taxpayers is that someone somewhere puts down that a member has major depressive disease because someone somewhere said they did. But the patient clearly doesn't have major depressive disease because they aren't getting any treatment for it and nothing anywhere would indicate that they are suffering from a major depressive disease. So, the plan winds up getting more money from the government to care for a patient who is suffering from major depressive disease, but the patient doesn't require any additional care because they don't have major depressive disease. It's a great way to make some dollars for shareholders that is coming right out of the pockets of taxpayers. In sum, the #2 area of additional oversight is recouping improper payments either from paying claims that should not have been paid for or by wild upcoding. This is just kinda like the general sort of compliance oversight that CMS does, meaning grievances and appeals and formulary administration and models of care for SNP plans (special needs plans), compliance program effectiveness—normal stuff like this—which will be interesting given all of the articles coming out right now about how patients on Medicare Advantage plans are less likely to get more costly diabetes treatments and how often there's denials for cancer care or NCI cancer centers aren't covered, etc. One point of note here that's kind of thought-provoking on a few levels: If you're an MA plan, it is super important for you to get members in for their annual screenings. For one, CMS requ

So, let's put the last, I don't know, 300 episodes of Relentless Health Value into perspective here. The USA wastes about $1.5 trillion a year on some combination of paying way too much for low-value care, fraud, and waste—$1.5 trillion down the drain. As my guest, Dave Chase, says in this healthcare podcast, if this was a country, what we waste would be the 11th biggest GDP in the world. We could call it Healthcare-istan. Meanwhile, outcomes aren't anything to brag about on the world stage, and 41% of American adults have medical debt in this country. Also, all across the country, people making all kinds of healthcare decisions to save money that are clinically toxic. Financial toxicity is clinical toxicity, right? You know this already. You listen to this show. I just saw yet another study the other day—actually this one about cancer outcomes and how they are appreciably worse when patients are worried about how much money their treatment will cost. And a lot of people in this country—many people with a Part D plan, commercial insurance with big deductibles—there's a lot of people in this country who cannot afford tens of thousands of dollars in out-of-pocket spend every year. But let's change gears and talk about some good stuff, some inroads that are being made. Let's talk about Rosen Hotels for a moment. Rosen Hotels is a bright spot, for sure, in all of this. They are a leading indicator of what is possible. Rosen Hotels, which is a hotel chain in Florida, they saved over $450 million in healthcare costs and have healthier, happier employees. They spend 55% less per capita on health benefits despite having an employee population with significant health challenges. They saved so much money that Rosen was able to set up a scholarship fund so that not only kids of employees (and employees themselves) but also kids in the community can go to college. Turnover there is lower. Retention is higher. Employees are healthier. I mean, the ROI of a CEO and a CFO getting engaged and taking back control over their health benefits from third parties? It's huge. Check out this article about Rosen and also Dave Chase's TED Talk about Rosen. My guest today, Dave Chase, says that what they did at Rosen Hotels was actually an inspiration for Health Rosetta, which is the organization that he founded to help employers take control of the out-of-control dysfunctional health benefits market in this country. Dave Chase says that the Health Rosetta community knows something that most don't (yet). Dave Chase has said that healthcare is fixed/fixable. He said that healthcare actually isn't expensive. Clinicians only receive $0.27 of every $1 that's ostensibly spent on healthcare. What is expensive is price gouging, profiteering, administrative bloat, fraud, and inappropriate treatment. And Dave Chase has also said that we're already investing more than enough money to not only fund world-class healthcare for everyone but also take all that money from Healthcare-istan and fund what drives 80% of health outcomes (ie, income, education, career opportunities, and clean air and water). There's so much money that is being wasted in healthcare. But all of this other stuff could be funded if we simply pay what we should be paying. (See Dave Chase's LinkedIn post to learn more about this.) Health Rosetta currently has about five million lives stewarded through plans managed by their Health Rosetta advisors. That's probably another bright spot right there—five million lives. Another bright spot is the work of the Nuka System in Alaska. Listen to EP312 with Douglas Eby, MD, MPH, CPE. The Nuka System has won award after award for being one of the best health systems in the country, and it serves a challenging patient population for less money than most Medicaid plans. So, here you have two entities, Rosen Hotels and the Nuka System, dealing with (on a good day) patient populations with multiple chronic conditions, high maternal mortality … At Rosen, 56% of their pregnancies are categorized as high risk, which not only has generational human consequences, of course, but is also a notorious budget-buster, as Dave Chase has said. There's substance abuse issues. These are patient populations who are doing appreciably better and cost far less than if they were covered by almost any other health plan in this country. Here's yet one more bright spot example company, and that's Pacific Steel. During our conversation, Dave Chase mentioned that the CFO of Pacific Steel said that when they went from spending $8 million in health benefits a year to spending under $3.5 million—basically cutting their healthcare costs in less than half—the CFO said that in order to make that same amount of net income, Pacific Steel would have had to raise their top-line sales revenue by 25% to 30%. So, okay … you're a CEO, and here's your choice to appease your shareholders or make your own bonus. Option A: Go out right now and figure out how to sell 30% more. Or Option

In this healthcare podcast, I am speaking with Cora Opsahl, who directs the 32BJ Health Fund. This is the second conversation I'm having with Cora (last one was EP372), but these two conversations are not really linear—so listen in whatever order you want to. Important to know about Cora's background, in previous roles, she has worked deep in the inner sanctums of the healthcare industry. So, she came to 32BJ armed with a BS meter that's finely tuned, which is, as I said last week, an unfortunately essential skill for anyone trying to help patients and members relying on them to successfully navigate the healthcare industry. Here's a pivotal fact: 56% of total spend at the 32BJ Health Fund goes to hospitals. So, from a "making the juice worth the squeeze" perspective, focusing on hospital prices can have a lot of impact. This is doubly true because of the seriously huge price variations for the same exact types of services at different hospitals, even in the same local market. Because the 32BJ Health Fund demands and gets all of its own data, it can actually run reports and see the impact and nuances of hospital spend very clearly—unlike, frankly, the majority of employers and unions who have zero clue this is all going on behind their backs because they think some other party is actually the fiduciary and not them, which is false, of course. So, let's just linger on this really high hospital prices that are various across a market for one moment. Here's a Tweet from Rik Renard: "The price of CABG [coronary artery bypass graft] varies more than 10-fold across US hospitals (ranging from $44,824 to $448,038). There was no evidence to suggest that hospitals that charge higher prices provide a better quality of care." WHAT?! An employer could pay $44,000, or it could pay $448,000. Seriously? This is why we can't have nice raises—because some employer spent $400,000 not on raises but on overpriced hospital services. Ugh … so frustrating. When employers, almost willfully at this juncture, turn a blind eye to all of this because they think it might be disruptive, meanwhile they're worrying about employee retention and trying to figure out how to give raises. Okay, well, here's a suggestion: Get your healthcare house in order and then you'll have enough money for raises, but that aside … In the New York City market, 32BJ used all of the data that we talked about in the last episode (EP372). They used all of that data to deduce, quite crisply, that NewYork-Presbyterian is really, really expensive—even in comparison to other expensive health systems in the New York metro area. Furthermore, the Fund realized that it could not be sustainable without tackling the challenge of hospital prices. As Cora Opsahl says, "You can't reduce spend by benefit design alone." Which reminded me of that famous quote by Uwe Reinhardt, "It's the prices, stupid." Which, of course, reminded me of what David Contorno has said a million times, "You can't pay less for healthcare unless you pay less for healthcare." I can't overemphasize these points and their impact on employers and workers. It's really hard to be competitive in the global marketplace when shelling out an extra $400,000 here and an extra whatever tens of thousand dollars there for fringe benefits that do not actually add any value from the workers' standpoint and/or confer any additional health. This is just blatantly throwing money away. So, there's gonna be a few health system peeps listening here who will reflexively mutter under their breath a sentence including the terminology "razor-thin operating margin." It must be an AHA talking point because I talk to a lot of health system people from all over the country, and "razor-thin operating margin" is invariably the term that gets used. But let's just dig into that marketing-speak for a moment. While there are some hospitals who assuredly suffered under COVID (or were suffering even before COVID and definitely after), mostly these are rural ones—but let's not talk about them for a moment. Let's talk about the large, consolidated health systems who got billions in COVID relief. Are you kidding me with their razor-thin operating margin crocodile tears? Check out "New Study—Hospitals Hike Charges by Up to 18 Times Cost." Here's a few bullet points from that study: Hospital charges play a major role in mounting healthcare costs, with health expenditures closing in on one-fifth of the gross domestic product (GDP). Hospital profits/margins have mushroomed by 411% since 1999 to a record $88 billion in 2017. The rise in charges coincides with growing hospital mergers and acquisitions by large systems. (This is brutally apparent at this juncture.) The result is increased market consolidation, which leads to, again, higher profits and increased charges, not savings for patients as hospital systems often claim. Listen to the show with Kevin Schulman, MD (EP366). It explains a lot about how these "razor-thin operating margins" and the

In this healthcare podcast, I am speaking with Cora Opsahl, who directs the 32BJ Health Fund. Important to know about Cora's background is this: In previous roles, she's worked deep in the inner workings of the healthcare industry. So, she came to 32BJ armed with a BS meter that is finely tuned, which is, unfortunately, an essential skill for anyone trying to help the patients and members relying on them to successfully navigate the healthcare industry. So sorry to have to say that, but employers and unions, your employees and members need your help. If you do not help them, then your employees can find themselves defenseless against so many pit traps of financial toxicity and also clinical decision-making that is not made by patients and their clinicians in the service of improving patient outcomes but made by some other party in the service of financial maximization. It is really frightening what goes on in some cases. I really appreciated this interview with Cora Opsahl, which will be two shows, this week and next week. This whole conversation has been really a big bright spot for me and will provide hope, I think, for any employer/union who is seeking ways to protect their members and patients, the ones on their plans and therefore under their aegis and whom they have a fiduciary responsibility to look out for. It also should be a bright spot for dedicated clinicians out there suffering under the weight of moral injury because you are expected to do things that you know are not in your patient's best interest—or not do things, as the case may be. This whole conversation should put on notice health systems and others who have been really taking advantage of employers who are asleep at the wheel. Change is always really, really slow—until it hits a zeitgeist and then it's not slow anymore. I just attended the MTVA (Moving to Value Alliance) in Connecticut last month, and there were 30 employers there listening and learning. I hear similar numbers from business coalitions across the country penetrating their local markets (Houston, Indiana, for example). Also, spoiler alert, upcoming conversations with Dave Chase will continue this "yeah, there's good things happening out there" theme. So, let's start here with a little bit more about the 32BJ union and their Health Fund that we'll hear about in this episode. 32BJ represents about 200,000 members. They are mostly in residential and commercial real estate—so, for example, your doormen, your maintenance workers, your security, your cleaners, amongst others. Members are in about 11 states, but a lot of them are in the New York City metro area. These union members who are in the fund work for over 5000 different employers. The 32BJ Health Fund has zero-dollar premiums. Also, employees have no premium contribution. Wowza on that point—that's a huge benefit. Here's one more thing that I'm gonna say about the 32BJ Health Fund overseen by Cora Opsahl, my guest today. Let's talk about their amazing leadership, because I do not, nor should anyone else, take exceptional leadership for granted. We have had one guest after another on this podcast who, when asked what it takes to actually attain value for plan members or attain the quadruple aim, what it takes to navigate and overcome bureaucracy and inertia, every one of those thought leaders asked the "What does it take?" question came back with the following included in their list: It takes leadership. Real leadership. The mark of an exceptional leader is one who can conceive of a big mission statement, a goal to deliver better for their members at lower costs, and also the chops and determination to operationalize that vision. This operationalization requires brainpower and relentless dedication to untangle the deliberate opacity that some current healthcare stakeholders absolutely rely on as a business strategy. It takes work to get to the bottom of and disarm some deliberately labyrinthine and noncompetitive contract terms. Let me just pause for a beat on these basically egregious contract terms. Certain healthcare stakeholders seem to consider it somehow their birthright and their privilege to demand that employer and union customers sign on some pretty insane dotted lines—to the detriment of members and employees. By the way, if anyone is thinking CAA right now, I'm right there with you. Talking about the new Consolidated Appropriations Act that went into effect late 2021, and it's gonna take a lot of C-suite executives by surprise when they're named in class action lawsuits. So, there is another impetus to question bad contract terms if anyone at an employer or union needs an additional reason besides the health and safety of employees and members to justify getting their healthcare house under control. For more on the CAA, the Consolidated Appropriations Act, listen to the show with Christin Deacon (EP342). But as I mentioned a moment ago, we are breaking this conversation up into two power-packed episodes. Th

I wanted to remind everyone about this show from last year because it's becoming increasingly relevant. We have this weird thing going on where everybody seems to be talking about physician incentives and payments and financial implications but so often disregards patient incentives and payments and financial implications. Consider that we're at a place in the time-space continuum where it is inarguable that financial toxicity has become clinical toxicity. Patients are increasingly in huge numbers abandoning care, splitting pills, doing all kinds of things to save money that are clinically toxic. And these are patients with "good insurance" that we are talking about here. So, here's a role play: Provider organization is actually paying doctors for outcomes. In wanders a patient with a huge deductible. Doc says, "Wow, Patient … so important that you take your insulin or med as directed or get a follow-up on that scary colonoscopy finding." Patient says, "Sorry, Doc. Can't afford it." And the doc gets dinged because the patient outcomes are avoidably poor. That's what this show with Dr. Mark Fendrick digs into: aligning patient incentives (aka benefit designs etc) with value-based payments on the provider side. And with that, here's your encore: And here I thought I knew a lot about value-based care. In this healthcare podcast, I am speaking with Mark Fendrick, MD, who is the director over at the University of Michigan Center for Value-Based Insurance Design. This conversation is for those of you who already know pretty much about value-based care concepts. If you do not, I'd go back and listen to, say, Encore! EP206, with Ashok Subramanian, before this one. Dr. Fendrick talks in this healthcare podcast about what it takes for value-based care to happen in the real world. No kidding, it's about making sure that reimbursement is aligned with good things (no great surprise there). But two light bulb moments I had in this conversation with Dr. Fendrick: At the beginning of the year, how many doctors and nurses, inspired to do the right thing, have told their patients with diabetes, say, to go get an eye exam to check for diabetic retinopathy? No one would disagree that this is definitely a good idea. Diabetic retinopathy causes blindness. But here's the reality of that conversation. Doc says, "Go get an eye exam." And patient says, "I can't. My deductible is huge, and I can't afford it." So, the patient doesn't get the follow-up care and winds up in the hospital or blind. And the doctor gets dinged on his or her quality scores. Suboptimal outcomes all around, I'd say. This also happens on the pharmacy side of the equation, but I think a lot of us are a little bit more familiar with that scenario—like type 1 diabetics who can't afford to pick up their insulin because of a Medicare Part D or commercial deductible that they haven't met yet. I just never really connected the dots back to the provider getting black marks because their patient has a benefit design that's not aligned with the quality measures. In a majority of benefit designs, consumer price sharing is based not on the value of the service but on how expensive the service just happens to be. Wow! So, we're trying to get our plan members to be consumers and use the power of their wallets to make good healthcare choices. And what we're really doing is driving them toward cheap things or no care and discouraging them from indulging—and I say that sarcastically—in expensive things. But the expensive things might be the high-value care, and the relatively cheap things might be crap that's fully unnecessary or harmful and, over a whole population, adds up to a lot of zeros. Healthcare is not like a consumer market where the expensive things are usually a better version of the cheap things. For all you economists out there, you don't want the demand curve to be elastic when what's cheap and what's expensive has no correlation to quality or necessity. Nobody should be super flabbergasted when a $35 cure-all supplement peddled on YouTube makes some random influencer a millionaire. That's how supply and demand works. Much to ponder in this episode. You can learn more at vbidcenter.org. There's also a great newsletter you can sign up for there. A. Mark Fendrick, MD, is a professor of internal medicine in the School of Medicine and a professor of health management and policy in the School of Public Health at the University of Michigan. Dr. Fendrick received a bachelor's degree in economics and chemistry from the University of Pennsylvania and his medical degree from Harvard Medical School. He completed his residency in internal medicine at the University of Pennsylvania, where he was a fellow in the Robert Wood Johnson Foundation Clinical Scholars Program. Dr. Fendrick conceptualized and coined the term Value-Based Insurance Design (V-BID) and currently directs the V-BID Center at the University of Michigan (vbidcenter.org), the leading advocate for development, i

So, this is a 400-level episode in specialty pharmacy options for plan sponsors, meaning here are your prerequisites: You gotta know what buy and bill is, and you gotta know what pharmacy bagging is, meaning white bagging, for example. If you do not, I would listen to Encore! EP282 with Aaron Mitchell, MD, MPH, where we go deep on buy and bill. And then listen to EP369 for the skinny on pharmacy bagging. If you already know what buy and bill is and you already know what white bagging is, then not only do you know more than 98% of the people in the healthcare industry, but also, you're going to get as much out of this conversation with Erik Davis and Autumn Yongchu as I did. Last week's show was also with Erik Davis and Autumn Yongchu. Last week, we talked about how some hospitals and cancer centers are managing to ring up up to six times the cost of an expensive-already injected or infused drug through buy and bill. This is why pharmacy bagging became a thing, if we want to talk about this in historical perspective. It's a direct market response to buy and bill. Hospital systems start making egregious amounts of money marking up drugs that already cost hundreds of thousands of dollars, and their markups are hundreds of thousands of dollars on top of that. Hospital starts making a fortune off of drug markups. Plan sponsors need an alternative, and … enter pharmacy bagging (ie, carving out specialty pharmacy drugs to a PBM [pharmacy benefit manager]). In this show, we compare the potential benefits and problematic loopholes and/or patient concerns for plan sponsors who are trying to figure out whether to carve out specialty pharmacy benefits to a PBM or grin and bear it with the buy and bill. Or, as another option, whether to steer patients to specific infusion centers or specific provider organizations that might have more favorable contract terms for the plan sponsor. Or, hooking up with a home infusion company, again, who is willing to negotiate terms that might be far better for said plan sponsor than just letting some hospital have their way with employees and the health plan. As another alternative, of course, plan sponsors could consider medical travel, which some certainly are. My biggest takeaway from this whole conversation and from the episodes that we have had in this, dare I call it, series about pharmacy benefits, starting with the show with Scott Haas (EP365) where we talked about PBM contracts, moving to the show with Dr. Aaron Mitchell (Encore! EP282) where we talked about buy and bill, then going to the show with Keith Hartman (EP369) where we talked about pharmacy bagging, then last week's show how hospitals manage to buy and bill at 6x the price of these expensive pharmaceuticals … my takeaway from this whole specialty drug extravaganza is that specialty drug procurement is very different than retail drug procurement. Retail drugs, you worry about them en masse at scale almost at the population level. Specialty drugs? You can have one patient on a specialty drug, and that one patient costs as much as the entire rest of the member population combined. So, managing specialty drugs and their administration becomes almost a case-by-case operation. What drug is it? Where is the patient? What options are available? It's possible to save hundreds of thousands of dollars on that one patient, for that one patient's care, and get better patient outcomes by getting the right patient on the right drug that is administered in the right setting. You can learn more by connecting with Erik and Autumn on LinkedIn or by emailing them at [email protected] and [email protected]. Erik Davis, AAI, CIC, CRM, is senior vice president and principal consultant, managed care and analytics, at USI Insurance Services. He has over 30 years of experience in the insurance and risk management industry. Erik works to create an environment that supports the healthcare risk management goals of an organization while maintaining focus on compliance and financial accountability. He is instrumental in vendor negotiations, data benchmarking, population health strategies, claims analysis, recommendations in plan design, and communication strategies. In this capacity, Erik has been involved with development of rates, payment structures, and recommendations of changes in processes, policies, and procedures. He has a broad understanding of contract analysis, evaluating risk, auditing for correct payment, and structuring of excess loss and pharmacy programs. Erik's experience extends from overall employee benefits consulting to workers' compensation, as well as managed care organizations in Medicaid, Medicare, and commercial contractual risk arrangements. Erik earned his bachelor's degree in economics from Oregon State University. He holds Accredited Advisor in Insurance (AAI), Certified Insurance Counselor (CIC), and Certified Risk Manager (CRM) designations. Autumn Yongchu is a healthcare operational risk consultant at USI Ins

I have been on a mission to figure out why some health systems, particularly in the oncology space but not limited to the oncology space, could manage to mark up the price of infused specialty pharmacy drugs up to 6x. Some employers and patients are paying six times the cost of a specialty pharmacy drug in markup for some already incredibly expensive specialty pharmacy drug at some oncology centers. Read more about this in a study by Roy Xiao, MD, and colleagues. Let's not forget now or ever that financial toxicity is clinical toxicity. This 6x is exactly how financial toxicity is operationalized. Many patients are charged a coinsurance percentage based on their cost of care, after all; and like 20% of 6x is a huge number, it is a huge bankrupting bill for some patients—maybe many patients. That, plus their premiums go up because, of course, their employers are picking up the remaining 80% of that 600% markup. Families are already, on average, paying I think it's $22,000 in premium; and the trend line on that premium growth continues to go up steeply in the 2022-23 projections that I have seen. Bottom line: This 6x is not a victimless modus operandi is my point. But what I wanted to know is how they do it, these health systems. Charging 6x the cost of a super expensive specialty pharmacy drug in markup would seem to require some skill, right? And any time I see a Pandora's box, I have a terrible habit of trying to get in there. Autumn Yongchu and Erik Davis to the rescue. Today's show digs into how some health systems and hospitals stack the odds that no one will notice their 6x markups and just pay the bills. Here's the short version of the playbook, but you'll need to listen to the show for a more robust explanation. First off, keep in mind that while Medicare Part B tells hospitals to charge ASP (average sales price) + 6% (ish) when they buy and bill Medicare patients, there is no such guidance for commercial patients. Commercial insurers negotiate a fee off chargemaster rates, and as we all know, those chargemaster prices are, in general, based on absolutely nothing and are, in general, sky-high. So that's the first thing. The second thing gets into coding. Let me give you the general idea here, but we talk about this in some depth in the conversation to come. As you likely know, hospitals get paid by sending bills with codes on them—procedure codes, for example. We the hospital did this procedure, and our charge for this procedure is $4000—so, here you go. Code followed by dollar amount is shown on somebody's bill or explanation of benefits document. These procedure codes are standardized across the industry for the most part. It's not like every health system and/or payer is making up their own. This standardized set of procedure codes is called the Healthcare Common Procedure Coding System, affectionally known as HCPCS. So, if someone starts talking about a HCPCS code, all it means is that the code comes out of that standard set of codes. Now, J-codes are one kind of code in this common procedure coding system. They are procedure codes that start with a "J." These J-codes are for procedures involving (usually) specialty pharmacy drugs. A J-code identifies the specialty pharmacy drug that was used in the procedure. So, you'd think it'd be pretty easy to audit a hospital bill, right? You look at the J-code on the bill; you find the ASP, the average sales price, or whatever of the drug; and then you get out your trusty calculator and you do the math on what the markup is. And okay, maybe this works sometimes … but the problem is that so very, very often, the hospital doesn't put the actual drug's J-code on the bill. There's this miscellaneous J-code that doesn't specify the drug used, which is a quite common tactic, it seems. (I learned that in this episode.) Hospital just sticks "Miscellaneous chemotherapy" on a bill with a price after it, and nobody knows what drug was used. Or the hospital will send a bill that just includes revenue codes. I think about revenue codes as the name of the section of the bill. It's like on a menu: There's that section, that headline, that says "Seafood" with a whole list of seafood dishes underneath it. In this example, the Seafood header is like the revenue code; and the J-codes are the actual dishes. Some bills come from the hospital, and all they have on them are the revenue code. There was some seafood. We're not gonna tell you what dish or how much seafood, but yeah, seafood. The only thing we know about seafood is that there was some and it was very pricy. Here's a great example of a bill with some explanations. The main point here is that how health systems get away, in large part, with charging a whole lot for specialty pharmacy drugs is that their bills roll up charges into these very opaque codes that include lots and lots of stuff that is not broken out. When I interviewed Marshall Allen (EP328) and we talked about his book Never Pay the First Bill, he said st

Last week's show was an encore episode with Dr. Aaron Mitchell (Encore! EP282), and we talked about buy and bill. To continue our exploration of specialty pharmacy intrigue, let's talk about so-called "bagging." I wanted to get an overview of all of the different kinds of specialty pharmacy bagging. Bagging is a big deal. If you have anything to do with trying to control pharmacy costs or the clinical outcomes of specialty pharmacy patients, you too are going to want to understand what's going on here with bagging. I was thrilled to have a chance to chat with Keith Hartman, who is my guest in this healthcare podcast. He is the CEO of ContinuumRx. He's a pharmacist by education and has been in the pharmacy space for over 25 years now, touching just about every aspect of pharmacy from retail operations to long-term care and now, most recently, home infusion. This makes him an ideal person to chat with about this topic. And FYI, it was not easy to find someone to do so to clearly see the actions and reactions going on here because that's what this is all about: actions and reactions—how any self-respecting market distortion is going to cause a cascade of equal and opposite market distortions. So, let's cruise through the whole infused/injected specialty pharmacy historical play-by-play, shall we? It's like a "Who's on First?" routine—except very, very not funny. So, here we go. This is, of course, the semi-reductive abridged version; but let's do this thing. Once upon a time, the bagging story starts in ye olden days, meaning more than ten years ago, before specialty pharmacy drugs really became the massive profit centers for any party who can manage to get their fingers in the specialty pharmacy cookie jar. In these ancient and halcyon times, brown bagging was kind of a modus operandi. Don't forget, we're talking about infused or injectable drugs here, especially ones that need to be infused or injected in the provider's office. So, brown bagging means and meant when a specialty pharmacy drug is shipped directly to a patient, or a patient goes and picks up the specialty pharmacy drug at the pharmacy. Doc takes out prescription pad (this is in ye olden days, remember) and writes out the Rx. Patient picks up the drug from the pharmacy, which may be handed to them in a brown bag. Get it? But then they take that "brown bag," as it were, to their doctor's office. The doctor takes the drug out of the brown bag and infuses or injects it. I say doctor's office because many times, in the olden days, that's where this went down. And this brown bagging had some issues, for sure; but specialty pharmacy drugs really weren't all that big of a thing either dollar-wise or frequency-wise. At some point in our story here, pharma manufacturers start seeing just exactly how much money the market will bear for specialty pharmacy drugs, and the prices of these specialty drugs go through the roof. At the same time, for a bunch of reasons I actually discussed with Dr. Bruce Rector (EP300), a whole bunch of these specialty pharmacy drugs start hitting the market all at once. So, these drugs have skyrocketing prices—and there's lots of them. At that point, some (certainly not all, but enough) CFOs at provider organizations were like—wowza, epiphany, light bulb moment—there's a lot of money that can be made here because buy and bill. In buy and bill, which I talked about last week with Dr. Aaron Mitchell, provider organizations get reimbursed the cost of the drug plus some percentage when they administer it—meaning the more expensive the drug, the more money a provider can make because a percentage of a bigger number is, of course, a bigger number. Add to that a party-sized container of other provider shenanigans to maximize revenue on specialty pharmacy patients—and that revenue got bigger every single year. A recent report just came out that, on average, for oncology drugs, some providers are making six times the cost of the drug. Six times the cost of a drug that can cost lots of zeros! Just wow—6x! That's real money. This is winning the lottery every single time a patient needing a specialty drug shows up on your doorstep. Continuing the tale here, this buy and bill health system extreme greed hits employers in their pocketbooks. And, of course, plan sponsors start desperately seeking relief. Who rides up on a white horse? PBMs (pharmacy benefit managers), of course. PBMs say that they will negotiate with drug companies and buy the drugs on behalf of the plan sponsors for much cheaper. Then they will ship the drugs purchased to the provider organizations. Thus, the plan sponsor only needs to pay providers to administer the drug, not that and some crazy markup on the drug itself. Ladies and gentlemen, white bagging has entered the building. White bagging is when the drug is not shipped directly to the patient à la brown bagging. It is when the drug is shipped to the provider. But wait … there's more to the story than a grand PBM ges

After that recent episode with Scott Haas (EP365), where we talked about the real deal with PBM contracting, I kicked into high gear trying to untangle this whole apocalyptic honky-tonk we call benefits for prescription drugs. Notice I did not say prescription drug benefits because that would imply that pharmaceuticals are only charged for under the umbrella of pharmacy benefits. Ha ha, that would be just too easy. No, some pharma drugs are charged as part of patients' medical benefits. An amazing primer for what that looks like in the real world follows. Just pointing out that any self-respecting healthcare market distortion deserves another, and if anything qualifies as a market distortion, it's buy and bill—what I talk about with Dr. Mitchell in this healthcare podcast. In the following weeks, we'll chat about how the market has responded to this buy and bill market distortion that we talk about in this episode. So, next week, we're gonna get into all the different kinds of bagging: the so-called brown bagging, the white bagging, the clear bagging … and what is this newfangled gold bagging? Spoiler alert there. Tune in next week. And here's another spoiler alert: While in this show today we chat about how provider organizations tend to make somewhere between 4.5% and 20% additional over drug costs, there was a recent study claiming that 4.5% to 20% is chump change. Some provider organizations are, in fact, making four times to six times the cost of the drug—a very expensive drug, mind you (lots of zeros here)—in profit. In the show in two weeks, I'm speaking with April Yongchu and Erik Davis from USI about exactly and specifically how provider organizations can manage to perform this "let's make hundreds of thousands of dollars today" magic trick. So, with that, here's your encore. In the April [2020] issue of Value-Based Cancer Care (that's a journal), there's an article talking about a keynote presentation and a study highlighting a big problem for patients with cancer: toxicity. It's a fact that some chemo agents are pretty toxic, but in this healthcare podcast I am talking about financial toxicity. The financial burden of cancer care has a seriously negative influence on patients' quality of life. This keynote speaker quoted in the Value-Based Cancer Care article implored his fellow oncologists: "Think twice before ordering costly interventions that may have little impact on the clinical course," he said. This might be difficult for a number of reasons, and one of them is that oncology centers make money, a whole lot of money, sometimes the most money, from infusing cancer medications. It's this little payment paradigm called "buy and bill." The cancer center buys the meds and then gets paid an additional fee to infuse the drug. This fee is a percentage of the drug cost. You've probably heard a lot lately about the skyrocketing costs of some of these cancer agents. Realize that if you're an oncology center, the higher the drug costs, the higher your revenue. Now consider the patient suffering under the weight of increased cost sharing and employers and taxpayers who are funding this strange payment model. In this healthcare podcast, I dig into this so-called "buy and bill" payment model with Aaron Mitchell, MD, MPH. Dr. Mitchell is an oncologist and health services researcher over at Memorial Sloan Kettering. You can learn more at drugpricinglab.org. You can also connect with Dr. Mitchell on Twitter at @TheWonkologist. Aaron Mitchell, MD, MPH, is a practicing medical oncologist and health services researcher. He is an assistant attending at Memorial Sloan Kettering Cancer Center in the department of epidemiology and biostatistics. His research focuses on understanding how the financial incentives in the healthcare system affect physician practice patterns and care delivery to cancer patients. He cares for patients with prostate and bladder cancer. 04:34 Following the drug and following the dollar. 04:56 The "buy and bill" system. 05:43 The perverse and problematic incentives of the system. 08:38 "It creates the incentive for us to gravitate toward the more expensive drug." 08:42 The hesitancy to address the financial toxicity of drugs for patients. 09:53 Why the only person losing in this situation is the patient. 10:51 The financial impact from the patient perspective. 13:57 Are patients realizing this impact? 14:42 Solving the problem of oncology drug choice. 16:45 Reimbursement reform. 18:24 Capitated systems and incrementalist impacts to reimbursement reform, and what these look like. 23:30 Are we at a tipping point? 23:51 "The current system … works too well for too many people." 25:01 Who isn't well served by the current system. 25:32 Who has to lead the charge for change. 28:28 Large oncology providers vs small oncology providers in the buy and bill system. You can learn more at drugpricinglab.org. You can also connect with Dr. Mitchell on Twitter at @TheWonkologist. Check out our #healthcarep

In INBW32, I talked about telehealth. In this episode, I'm talking about collaboration between healthcare stakeholders or the lack thereof. My grandfather suffered from heart failure. This was many years ago now. But when I say suffered, I mean it. As many of you know, when heart failure is uncontrolled, it is painful to go through or even watch a loved one go through. There was that one time when I accompanied my grandfather (and my grandma was there, too) on a trip to the emergency room, you know, because he was drowning in his own lung fluid and could barely breathe. And when we arrived, they were going to wheel him into one of the exam rooms. But my grandmother put her foot down. She did not want to go into that one exam room because the TV was broken in there. Yes, the two of them had been in the ER so many times that they were familiar with the pros and cons of the various exam rooms. The end of my grandfather's life was almost unbearable, and I can't even begin to estimate the hundreds of thousands of dollars racked up in ER visits and inpatient stays. He was in the ER once a month at a minimum, and he would come home disoriented and confused. Now, as everybody listening to this show knows, this anecdote is also a data point that is, dare I say, all too common. But to that end, let me just talk about heart failure data for a second. Patients with heart failure generate a third of Medicare spending and 40% of Medicare fee-for-service deaths. They are also responsible for 55% of Medicare readmissions. You'd think that if there were any chronic condition that we'd be looking to improve outcomes on, it'd be this one. So, everybody's on it, right? Oh, wait … heart failure readmissions have actually gone up in recent years. I just want to point out that in between ER visits and inpatient stays, my grandfather received effectively no education, no PCP or cardiology follow-ups, no community support. He did not get a case manager. He got no coaching. He got 25 pages of tiny, printed instructions just before the door hit him in the butt on his way out to the parking lot. Obvious point here, but to do any of this in-between stuff would have required collaboration between the hospital and others. And it was conspicuous in its absence. Look, this is sad and I'm not telling the story because I think it's unique. If I asked who else has a story like this one where a family member or a loved one got lost in the gaps between their care, I am suspecting that everyone would raise their hands—even those of you who have medical degrees. No matter how much any of us know or care or try to help, stories like my grandfather's are painfully and unequivocally common in this country today. OK, so how to improve care, especially for chronic care patients. At its core, and I am not telling anyone listening something that you probably have not already thought about at great length, but there are two important contributors to patient outcomes. Not the only contributors for absolutely sure, but here are two important ones: Nonfragmented patient journeys that adhere to evidence-based best-practice care. My grandfather and anyone with a chronic condition requires a patient journey that isn't a game of whack-a-mole. Carly Eckert, MD, says this so well in EP361. Steering patients to the best care setting, which is required to get the highest-value best-practice care and also reduce financial toxicity. Short but important sidebar: We know that financial toxicity is clinical toxicity. There was just a study that came out that said in 2030, a leading cause of death will be noncompliance to treatment due to patients abandoning care because it costs too much. Wayne Jenkins, MD, from Centivo (EP358) talks about other implications of financial toxicity for a half-hour. Also, there's another paper that, again, is just more on this point. At this juncture, it is not arguable. Financial toxicity is clinical toxicity. So, we need to get patients, people, customers to the next place that is the highest value for them. Doing either or both of these things—nonfragmenting the patient journey and making sure patients get to the next care setting—it requires collaboration. Let me quote Dr. Steve Klasko, who, until recently, was president and CEO over at Jefferson Health in Philly. He said—and this is an adaptation of an old Steve Jobs mantra—but Steve Klasko said that for hospitals, our old math was inpatient revenue, outpatient revenue, and in-person tuition and funding. The new math is going to be strategic partnerships around this healthcare at any address model. Right? But good collaborations don't just improve patient outcomes. Here's another benefit: They also make happier clinicians or employees. If every outside interaction is a friction point, where employees, clinicians, doctors, nurses are rubbed raw because every interaction becomes a battle, if that's the ecosystem that any given party has created for themselves, patients aren't happy and

People are averse to change. It's a thing. It's a thing that affects even those of us who consider ourselves highly educated and/or very smart. Nobody likes disruption or, even worse, the prospect of disruption and the uncertainty that goes along with that. Nobody likes to feel like the rug just got pulled out from under them or that they've lost control of something, especially something important like their health benefits or how they care for patients. Changes to health insurance and healthcare, from any angle, are fraught with stress. A big reason for this is because health and healthcare are filled with so-called "one-way-door" types of decisions and decision points. If I cannot get the care I need today, or if the care I want to provide today to a patient does not go as desired, I feel like the door is one-way: Once I make a decision, I cannot go back. I can't click "undo" on that and go back through the door and arrive at yesterday. Health decisions, therefore, have a very "you got one shot at this" kind of feel. And it's that, right there, that just upped the ante considerably in the stress department for employees and then also for any clinician who is working with patients. It's life or death, and this is why making changes either to the insurance side or the care side of the equation feels like they will be so disruptive. It's a big reason why some self-insured employers or even fully insured employers won't mess with the status quo benefit designs or switch up their EBC (employee benefit consultant) or their ASO/TPA (Administrative Services Only/Third-Party Administrator), even if everybody in the entire company is currently complaining about the price and complexity of said status quo (it's kind of like the devil that you know) and even if it's possible to offer employees overall better-quality care at lower prices, meaning that everybody in the company could get a raise funded by the sometimes massive savings that could be had. I just heard a union leader the other day, and she said that every worker would have an extra $5000 in their pocket if their healthcare costs were what they should be. So, for many employers, the prospect of disruption is just too much. It's not in the CHRO's (chief human resources officer's) job description to open that Pandora's box. Nobody gets fired for doing what they did last year—I guess, until they do (one straw or another is gonna break the camel's back, after all). But in the meantime, we have this fear-induced festering inertia. Let me just point out one thing: Implicit in everything that I just said is the notion that one day everyone will have their familiar insurance card snugly tucked in their wallet, and then the next day, it will be ripped from their bloody fingers in a violent and unexpected fashion. Or, let's talk about provider organizations now. Say one's trying to move from the world of fee for service to the world of value-based payment structures with downstream risk, or direct contracts with employers. To do this well, let's chat about one aspect of this that health systems seem to struggle with that's been a topic of some conversation lately. There's an article cautioning that "practicing at the top of one's license" and its attendant need for team-based care is a giant fail and/or a money grab, or it could be. And it could be both of these things, don't get me wrong. Team-based care isn't a homogeneous construct. It would be like saying that all movies are bad because Super Baby Geniuses 2 was such a dog. I mean, team-based care—pretty much like team-based anything—if it's not implemented well, nobody on the team knows what they're supposed to be doing and nobody is accountable. There's no infrastructure supporting it. There was no testing or iteration or discussion about the intent. No one actually on the proposed teams was even consulted about the whole idea. And so, everyone starts to suspect, maybe rightfully or maybe not, that it's all financially driven and a cost-cutting exercise. On the show today, my guest, Ashleigh Gunter, warns about all of these exact things. You switch something up without going through the proper steps and stages, everybody gets very suspicious. And, nothing for nothing, their suspicion could be the least of the leader's problems. The initiative's ensuing failure maybe should be their biggest concern. Which is a shame if something was done in the spirit of better patient care, for example, because there's tons of research on the immense power of well-functioning teams as just continuing this one example. And there's just as much research and well-proven case studies showing that innovative benefit designs can be a 365-degree win when they cut out wasteful spending and navigate employees and plan members to high-value care. For all of these reasons and more, I wanted to get Ashleigh Gunter, who is an expert in change management, on the show to talk about how to succeed when you want to change something as touchy a

Lots of talk about direct contracting going on these days. Many of you will be familiar with the term, but in short, direct contracting means when a self-insured employer directly contracts with a provider organization with no payer in the middle of that arrangement. And when I say "employer," I mean the employer and all their peeps—their TPAs, repricers, other vendors, and consultants. Most of this talk, though, seems to come from the point of view of the employer. It's super easy to quantify what's in it for employers. US healthcare costs get blamed for all kinds of things: companies who have lost big global contracts because all of those fringe benefits cost way too much around here. If we're looking around for a why on that point, let me refer you to last week's episode (EP366) with Dr. Kevin Schulman entitled "An In-Depth Dissection of Our Dysfunctional Healthcare Benefits Market." Or the show with Dr. Wayne Jenkins (EP358) about how premium and deductible financial toxicity negatively impacts plan members. Never forget that financial toxicity is clinical toxicity. So, like a knight riding in on a white horse, direct contracting with a provider organization has some interesting potential. Most obviously, when an employer contracts directly with a provider organization, they cut out the middleman. They put the direct in direct contracting. Considering the multi-billions of dollars that some of these middle people are raking in every quarter in profits and/or "margins," cutting out the middle people could have a financial upside as big as those billions in profit. If those billions get passed on to patients in the form of lower co-pays/coinsurance or premiums, there could be some big benefits to direct contracting for pretty much all involved … except the middle people, of course. My guest in this healthcare podcast, Doug Hetherington, says that it's not uncommon to see on the low end a 10% reduction in costs to maybe up to 50% reduction in costs. It's amazing what can be accomplished when everybody starts working together for the good of the local community and patient and is held accountable for more than just revenue maximization. But there's also quality and patient outcomes upsides to these cost reductions. Here's a few we can speculate about: For example, if the middle people add layers of bureaucracy and administrative burden that make it really hard and/or upsettingly inefficient for anyone trying to serve their patients' needs to actually serve their patients' needs, then yeah, direct contracting can make getting the right care to patients faster and easier. That matters to burned-out clinicians. Also, here's another potential point to ponder: benefit designs. Listen to the show with Dr. Mark Fendrick (EP308) on this, but most benefit designs offered by middle people are really, as they call them, blunt instruments. High-value care costs as much (or more) as low-value care. Deductibles don't care if you need your diabetic foot ulcers checked urgently or you might get your foot amputated. It's a known fact that health outcomes plummet in January when, all of a sudden, cancer meds or whatever essential lifesaving medical innovation cost as much as a patient's deductible. So, patients abandon care—and outcomes go down. When an employer direct contracts with a provider, in its most sophisticated form—which my guest, Doug Hetherington, calls a "full-pay open contract"—the employer and the provider work together to construct a benefit design that helps patients get the best outcomes. Or here's another benefit, for the whole community, not just the employer: The whole community keeps the money local. Many of these middle people are big national companies. As Dave Chase and others have said often, when these Fortune whatever companies arrive on the scene, lots of money exits stage left out of the community. If local employers contract with local providers, the money stays local. So, all that I have said has been said before. What I wanted to dig into in this episode is the why and the how from the provider organization standpoint. I got curious about this after my conversation with Katy Talento (EP350). She talks about a major barrier for self-insured employers who want to work with local hospitals is that the local hospitals couldn't, frankly, get out of their own way. Maybe they couldn't see the benefit for themselves that made the juice worth the squeeze? That's what I talk about in this episode with Doug Hetherington: what's in it for providers and what a provider organization interested in direct contracting needs to actually pull it off. Doug Hetherington is CEO of Health2Business, and he has done and continues to do pioneering work with community hospitals in eastern Idaho and elsewhere. Health2Business helps facilitate direct contracting between hospitals and local employers. You can learn more at health2business.com and connect with Doug on LinkedIn. You can also learn how to engage in direct c

First of all, this is a 400-level discussion. If you think you already know all about our dysfunctional healthcare benefits market, then this show is for you. Before we begin, I just want to say something. I'm gonna refer back to David Muhlestein's episode (EP364), where he talks about the first step toward healthcare transformation. It is, let's just say, for incumbent health systems and payers, people who work there, to step back and in the harsh light of day really contemplate their business model—see it clearly. If you're listening to this show, then know that I love you; so this is not a condemnation of you or the great things that you are likely doing in your department. I see you as a changemaker. But contemplating your organization as a whole is like the first step of a 10-step program … to admit what friends and family were saying at the intervention. If you're not yet at the—what's it called?—contemplative stage in your journey toward transformation, you could skip ahead to the 23:00 mark approximately for some advice on what people who work at incumbent payers and/or providers can do right now. My one and only intent here is to see change happen. What I see currently are certainly efforts to improve quality at some level. But those responsible for finance, premiums, and the employer sales team are in a different part of the building. I mean, maybe a first step here is, Can you invite those guys and gals to your meetings? OK … so, there was a paper that came out in JAMA entitled "The Dysfunctional Health Benefits Market and Implications for US Employers and Employees." It was by David Scheinker, PhD; Arnold Milstein, MD; and Kevin Schulman, MD, who is my guest in this healthcare podcast. David Scheinker, by the way, was on the show earlier (EP363), so certainly go back and listen to that. This paper (the "Dysfunctional Health Benefits Market" paper) showed that commercial insurance costs have gone up 4x the rate of other benchmark goods or services in price. So, bottom line, "It is assumed that insurers compete intensely to improve the value received by employers and employees by negotiating to keep prices down and advocating for employers and employees." It turns out, though … not so much with that. My guest in this healthcare podcast, as mentioned, is Kevin Schulman, MD, an author on that paper. And he says this much more eloquently than I will, but the skinny is this: Because insurer profits are capped at 15%, that means that the more healthcare costs go up, the more possible profit in absolute terms that a health insurance carrier can make. After all, 15% of a bigger number is … a bigger number. If you look at how Wall Street responds to these bigger numbers all the way around—higher costs translating to higher profits, that whole thing—you will find that Wall Street likes this profit-generating formula … very much. Share prices go up when that 15% goes up. What does Wall Street like less? It likes less restructuring and pushing providers to deliver better care for less cost and then passing those savings on to employers and employees. Even if you increase quality and decrease costs really well and/or profitably as an insurer, share prices do not rise nearly as much as they rise if you phone it in with the "negotiations" with providers. Nonprofits, by the way, get no pass here either. Some of the most expensive hospitals in the country, which are nonprofit, are doing their thing in areas where nonprofit carriers are the big kahunas. Call it margins. Call it profits. Whatever … same thing. Listen to the show with David Muhlestein, PhD, JD (EP364) from two weeks ago. It's all about the business models. And that business model is revenue maximization. Period. End of the sentence. So, who loses in this equation? Oh, right … patients. And employers. Read anything by Dave Chase for more on how crushing this loss is that patients and employers suffer: middle-class wage stagnation, bankruptcies, financial toxicity that is actually clinical toxicity, skyrocketing premiums way over the cost of inflation, that healthcare costs borne by employers are a driver for offshoring because they make American labor so expensive. A study the other day said that nonadherence due to a patient's inability to pay for treatment will be a leading cause of death in 2030. That's what this all is adding up to. Because of business models, insurers have become the piggy banks for health systems, as my guest Dr. Kevin Schulman says. This piggy bank is funded with the pennies, nickels, and dimes from you and me, the insured lives, our employers, and taxpayers. So, unless you're a shareholder in one of these carriers and their vertically integrated PBMs, of course, then, I guess, good for you. Or getting political donations from them might also be a net plus for you personally. Where are the activist investors in all of this? Something that Dr. Schulman said in this episode I had never heard before, and—wow!—it explains so much.

One of my mentors often said price is irrelevant. He said he would sell anything for any price as long as he could define the terms of the deal. During this conversation today with Scott Haas about PBMs, that quote was playing in my head like an earworm. I'm henceforth gonna struggle with the term rebate to define dollars that the PBM gets back from Pharma, because, according to my guest in this healthcare podcast Scott Haas, it turns out "rebates" comprise only about 40% of those back-end dollars that some PBMs manage to score from pharma manufacturers. I don't have any insight really into this, but Scott Haas certainly does—and this is the average that he has seen in his work and that we're going to dig into today. But in sum … wow! Let me just repeat that a mere 40 cents on the dollar of the gross amount that PBMs take in "rebates" from Pharma these days winds up going back to plan sponsors, even plan sponsors who are getting "100% of the rebates." If you didn't understand what I just said, no worries. I'm gonna explain it right now. If you did and you know the why behind all of this also, you could probably skip ahead about five minutes. Here's the backstory on this whole rebate fandango. Let's start with part one of what is a two-part transaction. So, part one: the deal between pharma manufacturers and PBMs. In general, a pharma manufacturer signs a deal with a PBM to give back whatever percentage of their gross sales revenue to the PBM at the end of the year, say. It's along the same lines as a cash-back coupon for the PBM. Why would a pharma company be up for giving cash back like this? Well, to get on a PBM's formulary, giving cash back is like the price of admission. PBMs have a lot of leverage, after all—at least the big ones. They control access to millions and millions of patient lives. So, if Pharma wants their drug to be accessible to those millions and millions of lives, they have to play the cash-back game, otherwise known as the rebate game. They have to agree to give back to the PBM a certain amount of cash on the back end. So, PBM pays Pharma's list price up front—that's the gross amount paid, based on the list price of the drug—and then after all the cash back gets toted up at the end of the year, there'll be a net price. List price or gross price minus the cash back equals net price. It's this net price that's the true kind of final price which the pharma company gets paid per script by said PBM at the end of the day. These days, most everybody pretty much knows that PBMs are getting these so-called rebates—this cash back from pharma companies that I just explained. And it's pretty common knowledge the so-called gross-to-net bubble (the gross-to-net dollar amount) is pretty huge, meaning the rebate or cash-back amount is pretty huge. And many have also noticed that the gross-to-net dollar amounts seem to be growing bigger and bigger every year. I mean, for one insulin manufacturer, consider this: Their list price, their gross price, is $350 per script. And their net price after cash back/rebates was $52 this past year. Wait ... what? After all the cash back to the PBM, the insulin manufacturer got paid 86% less than their list price—$350 went down to $52 per prescription. The PBM vacuumed up 86% of the dough for every script written for this particular brand of insulin. OK … so, say Pharma gives $100 back to the PBM based on the terms of their deal. Call that part one of this example transaction. Here's part two: the deal between PBMs and health plans or self-insured employers. Health plans and self-insured employers are customers of the PBM. They hire PBMs to manage the pharmacy benefits for their members or employees. So, because everybody knows this whole rebate thing is going on, as part of the contracts that the PBMs put in place with their customers (meaning the health plans or employers), the PBMs tell their customers that they're going to give 100% of the rebates back to the plan/employer. So, you'd think that if the pharma manufacturer paid $100 to the PBM, that the customers of the PBM (the plan sponsors) would get the $100 back then, right? The PBM would pass on 100% of the savings, as it were, if they're saying that they're gonna give 100% of the rebates. I mean, if this is actually true, that $100 in and $100 out, then the PBM is potentially performing a useful service, right? They're lowering drug costs for their customer, the plan sponsors for their members and employees. Except … turns out, not so much. Because what is a rebate, really? A rebate can be anything the PBM defines as a rebate. And it turns out that, on average, as I said before, according to those in the know, something like $60 of that $100 is not a rebate. It's an administration fee. Or a data fee. Or an education fee. A clinical program fee. Some other name that is not rebate. As my guest Scott Haas says, the term rebate is meaningless because it can mean whatever the PBM wants it to mean. It's like incon

In this healthcare podcast, we're gonna zoom out and look at the entire healthcare industry. I am very confident that you know a lot about the healthcare industry and its basic stats. It's huge. The healthcare industry is approaching the $4 trillion mark, and it employs more people than any other industry in 47 states. Think about that momentarily. More people work in healthcare than in any other industry in every state except for Wisconsin, Indiana, and Nevada. We could get into (but we won't) how many of the gigantic, consolidated incumbents in the healthcare industry are either for-profits sporting very happy shareholders or investors. Then, of course, we have our "nonprofits"—especially mega-nonprofit health systems—who enjoy some pretty healthy margins while, at the same time, these health systems in general offer up some fairly embarrassing levels of charity care considering the amount of taxes they deprive their communities of. You also are probably eminently familiar with various ways that have been cited to transform the industry. So, the usual suspects here are, of course, changing incentives—offering true value-based care contracts, for example—and then the whole creative destruction angle, wherein upstarts come in with far superior products and services, à la the whole Kodak case study or what happened to Sears and Kmart. Maybe this will happen in healthcare. Other ideas to transform the healthcare industry include employers harnessing the latent power that they have in some markets and then, of course, getting rid of middle people, for sure. Or we could go single payer, of course. That's another suggestion/solution. Today's conversation is a rather holistic look at all of this. I dig into this with David Muhlestein, who is chief research and innovation officer at Health Management Association (HMA). And when I say dig in, I mean dig in. David made some very intriguing points that I had not heard before, actually—and I've heard a lot in my time, so that's saying something. I'm gonna tick off a couple of them, but I don't do them justice. So, you'll need to listen to David explain them and give context. First off, what's the problem with healthcare being a $4 trillion industry in this country—I mean, almost 20% of GDP—and employing more people than any other industry in 47 of our 50 states? There are other big sectors in our economy, after all, that get lots of love. Why is big healthcare "bad" and these other sectors "good" in economic terms when we talk about employment? That's one thing I wanted to know. And David made a point that may be self-evident for some but is worth reiterating in all cases. The government pays for roughly half of healthcare, and from a consumer or just American standpoint, it kind of sucks. I mean, I don't see many Insta selfies of someone rocking their brand-new insurance premium. Dollars going to healthcare or health insurance are not going to consumer goods. And that matters economically as well as retail therapy. For all you econ geeks out there, this industry offers no marginal utility. Here's a second interesting point: Just changing incentives might not be enough. Organizations downstream and upstream need to be on board with the spirit and objective of the incentive change. If they are not, then it's game on for every CFO and their revenue cycle managers to finagle how to find the loophole that enables revenue maximization. Revenue maximization. Period. Revenue. The end. Which brings me to another interesting point: Boards of directors, CEOs, people with fiduciary responsibility … they need to know thyself and consider their actual customer. Spoiler alert: 99% of the time, that actual customer is not patients, no matter what is printed in big letters on the front door. No change can really happen unless those who serve in the upper echelons of these businesses get really real about where their bread is buttered. Organizations are built to serve their customer, after all. So, if a patient isn't identified as a customer, the organization at its very core is gonna have a lot of difficulty serving the patient. So, now what? If I want my organization to move forward in a way that is more patient-centric and less financially toxic, say, what to do? Here's thoughts after chatting with David Muhlestein. Four main steps: As I just said, you gotta get your current state unemotionally understood. For reals, who is the organization built to serve? So, first step is being introspective in the harsh light of day. Consider the timeline of your existential demise. Ha ha, this show is so uplifting. But unless organizations really think out 5 years, 10 years, 25 years and really internalize the existential threat, it's going to be hard to motivate change. I see this all the time. So do you. Inertia is real. Nobody does anything until they absolutely have to. Sidebar: But if you need an eventual demise to bring up at your next strategy meeting, I just saw a paper come out saying

Administrative costs in the United States have a bad rap. You don't have to look too far to find an article about how there's now, like, 10 administrators for every 1 physician in this country. Or 3 to 4 billing people for every physician. Or find someone complaining about arduous prior auth processes and how long specialists sit on phones trying to get a prior auth approved while having a frustrating "peer consult" with a "peer" whose career has nothing to do with that specialty and, in fact, knows very little about it. Also consider the time that specialists' admin teams have to spend—or really any doctor's admin teams have to spend—when they are required to send documentation validating some prior auth request or appeal. They, in many cases, have to send this documentation via old-school, drop-it-in-a-mailbox mail … literally. This documentation can and often does amount to a sizable box full of paper patient records. They have to drag a box into their office and fill it up with paper to send to the insurance company to validate whatever appeal. Think about who prints out all that paper. Who does all this stuff? And who on the insurance side is unboxing it all and, I don't know, are they highlighting the good parts? Are they rekeying anything? What goes on there? Or here's another administrative cost: collecting and tabulating all the data needed to participate in some quality incentive program. Considering that each carrier has their own flavor of metrics … yeah again. Administrative burden, administrative costs. Or consider what Dan O'Neill was talking about in EP359 the other day. He was talking about IPAs (independent physician associations) and other managed care entities. These entities hold the contracts with payers on behalf of smaller provider organizations or solo practitioners. So, these smaller (usually) individual practices contract with the IPAs—you know, for leverage and all that. And then it's the IPA who then holds the contract with the payer. As Dan mentions, contracting with some of these IPAs is like an "I love 1990" flashback. The contracting process, again, transpires via mail. Not email, mind you. Mail. Like, stick-a-stamp-on-the-envelope mail. So, in sum, there's a lot of pretty well-founded complaining about administrative costs in this country. A lot of this administrative stuff is truly inefficient and a fantastical waste of time—valuable clinician time. So, here we are freaking out about staffing shortages, overlooking that doctors at the heights of their careers are spending some percentage of their time not counseling, treating, or diagnosing patients but twiddling their thumbs on hold with one insurance company or another slowly burning out by the inefficiency of it all. Or doing pajama time, and we all know that too much pajama time means also burnout on a silver platter. Now consider this: Reducing admin costs are frequently cited as a fine way to reduce overall healthcare spending in this country. So then, let's get granular here. If we're trying to quantify admin costs, how you'd do that is to quantify how much each transaction costs. How much does it cost to send a bill and get paid for it? How much does it cost to file an appeal and a denial of a prior auth? Add all those transactions together and you get the full cost of the administrative burden. In this healthcare podcast, we're digging into a paper about admin costs written by David Scheinker, PhD (my guest today); Barak Richman, JD, PhD; Arnold Milstein, MD, MPH; and Kevin Schulman, MD, MBA. I have the pleasure of speaking with David Scheinker, PhD (as I mentioned), who is the lead author on this paper. Dr. Scheinker is an associate professor of pediatrics and executive director of systems design and collaborative research at the Stanford Lucile Packard Children's Hospital. He is the founder and director of SURF Stanford Medicine at Stanford. David Scheinker's work centers around bringing together engineering PhD students and faculty with hospital administrators, leaders, doctors, nurses. The goal here is to design improvements to operations from an industrial engineering point of view. So, you can see how investigating administrative burden and costs and trying to reduce them fits in here. Before we begin, I just want to point out one thing: I alluded to this earlier when I mentioned staffing shortages. As reported by Gist a few weeks ago, health systems saw an 8% increase in labor costs per patient day; and many are budgeting for a negative operating margin. In the past, most administrative challenges were solved by throwing bodies at the problem. That is now untenable. This is one promise of technology. Tech can automate, replicate, and scale much of what has required human labor in the past. Tech is used to automate administrative functions in many other industries also, so there's a number of precedents for this. Now, just to underline a major takeaway from this conversation with Dr. David Scheinker, he reit

Let's talk about provider organizations and telehealth. It's just too common a refrain amongst provider organizations who say some combination of: Our patients and/or clinicians don't like telehealth. Telehealth is too expensive for us to do ... unless maybe we should charge facility fees for telehealth visits. Telehealth is risky to invest in because as soon as payers start paying less than 65% of in-person visits, we're gonna drop it anyway. These things are said despite the overwhelming popularity of telehealth in almost any large-scale survey that you'll find. It seems like largely the only entities reporting that patients and clinicians don't like telehealth are provider organizations who haven't adequately invested in telehealth at the systematic/strategic level. Therefore, the only thing their anecdotal evidence about telehealth really seems to show is the negative impact of phoning it in—which is no one wanting to phone in (pun unintentional but, you have to admit, kind of great). All of this is going on with an interesting backdrop, as reported by Chartis Group (and shared by Olivia Webb in her Substack the other day): Health systems see telehealth as a major competitor—82% of health systems surveyed reported that telehealth companies like Teladoc or Amwell are competitors. This is second only to the percentage of surveyed health systems that named other health systems as competitors. John Singer wrote on Twitter the other day, "Any leader who thinks their business is immune to the wild dynamism of our time is unlikely to last long." So apropos. Love it. I said this on a podcast last December (and you can go back and check the tape if you want to), and I'm even more convinced of it right now: Telehealth is inexorable, and it's already showing its disruptive potential. But let me point out something here. Who is leaning in hard to telehealth? I'm gonna make a broad-stroke statement here—so take it for what it's worth—but let me hypothesize that who is leaning in hard to telehealth and virtual healthcare are telehealth and virtual healthcare companies. Many of them are adding in-person care because billing codes, but their DNA is digital. So, most of the so-called "hybrid" companies out there are digital companies with in-person clinics that they've added—not ye old in-person clinic that added a digital service line. So, I say all this to say I wanted to talk to a traditional sort of provider organization. I wanted to talk to an in-person provider organization who is conceiving of telehealth not as a threat but as a new opportunity to provide ancillary services. One who is going "hybrid" but from the other direction—traditional in-person to digital instead of digital to in-person. Further, I wanted to talk to the CFO of one of these places. I thought the CFO would be the one to get the real scoop from because it's all about the business model, baby. Let me underline the business model point with a quote from a Substack entitled "I wasted $40k on a fantastic startup idea." And here's the quote: "It had been … a working assumption of mine ... that if you could improve the health of … patients then, you know, [someone] would pay for that." Yeah. No, they won't. Unless … business model. My guest in this healthcare podcast, Ali Ucar, is the CFO of Care Solutions Group. They provide mobile physician services to seniors. As they expanded their mobile physician service, they also looked at additional ancillary opportunities. Those ancillary opportunities all involve telehealth. Right now, Ali Ucar's company is running two telehealth programs. One of them is basically tele-urgent care. The second one is using telehealth for care transitions including some care coordination. They transition patients back to the home care setting as safely as possible. Let me say that again in business model speak: Discharged patients don't wind up in the ER and/or readmitted within 30 days. So, let's hear about telehealth from the vantage point of a CFO. How do organizations who realize that telehealth is essential for future viability, how do they make it financially viable today? Ali Ucar listed out a stepwise approach to creating a sustainable business model that takes advantage of telehealth. Here's the first thing: Figure out what you're trying to do on behalf of patients … please. For example, what opportunities are you trying to give your team or customers to improve patient care or equity in care? That's where it really should start. The next step, then, is figuring out how you're gonna get paid sustainably. There are two pieces to that. Maybe you can get paid directly, if at all possible. The most common way to do this, which is also the one I like the least because it echoes with the ghosts of paying for volume, is the whole "get yourself a code and bill FFS" for your activities. Maybe there's a value-based or risk-based contract that you can get where you're taking care of a patient population at a certain stage in

David Contorno the other day posted the life expectancy chart comparing the US to comparable countries. Spoiler alert: It's horrifying. You see Japan; you see Switzerland, Israel, Spain, Italy … basically everybody else in a cluster of pretty darn vertical lines: increasing life expectancies year over year without much cost increase at all. And then—wow!—off to the right, all by itself, you see the USA, costing nearly double the worst of the other countries with a life expectancy that is years lower. We pay a whole lot, and despite all of the advances in medicine and how much we pay, we don't seem to be getting the value for our dollar. We could dig into those poor outcomes that we pay for. If we were going to, I might mention our truly beyond-upsetting maternal mortality rates and also infant mortality rates, which are way above other comparable countries. We could talk about all of our issues with diabetes and obesity. But let's save all that for another day and just take one example that is really the quintessential example of what's going on. Let's chat about heart failure for just a sec. Here's some stats for you. They come from Dr. William Bestermann's Substack newsletter, and if you don't subscribe to it, you might want to. It's free. Dr. Bestermann wrote: "Twenty-two percent of heart failure patients who are admitted to the hospital are dead within a year. Patients with [heart failure] generate a third of Medicare spending and 40% of Medicare fee-for-service deaths. Overall, heart failure patients have a mortality of 22%, compared [to] 4% for Medicare patients without heart failure. They are responsible for 55% of Medicare readmissions." But here's some good news: In Denmark, investigators proved that using optimal medical therapy reduced heart failure admissions by 70% compared with usual care. Here's some more good news: There was a small, impoverished town near the coast of the Carolinas that had very few heart failure admissions. How did they accomplish that, you might wonder? Well, there was a nurse—one nurse—who was working under a grant. She was very dedicated. She had a list of all the heart failure patients in the area, and this was her job: making certain that every patient was on the best treatment for heart failure. She called the patients. She spent time with them. She had a trusting, caring, long-term relationship with them. That's it! That was the secret sauce. As Dr. Bestermann says, "Every poor community in our country could do that, but they don't." So, this leads us to care gaps—dare I say, this country's seeming care gap fetish dealing with care gaps retroactively. In this healthcare podcast, I'm speaking with Carly Eckert, MD. It's kinda funny, actually. I originally wanted to get Dr. Eckert on the show to talk about care gaps and how to close them, but this show did not wind up going how I thought it was going to go because Carly Eckert is a physician by training who got really interested in the upstream causes of what she was seeing in clinical practice. Despite my best efforts, she refused to be lured into my closing care gaps conversation. So, instead, this conversation is about the construct of care gaps and thinking about them in context. Closing care gaps is a model of care and maybe not a particularly great one, relatively speaking. In fact, here's another name for the model of care called closing care gaps: care gap whack-a-mole. Care gap pops up … we whack it. Care gap pops up … we try to close it. Another care gap pops up … we try to close it. Another care gap … you get the idea. Carly Eckert has worked in epidemiology and public health and also clinical informatics for health systems and payers. She is currently leading a team at Olive AI working on network data analytics and machine learning algorithms. I recorded this show with Dr. Eckert prior to EP359 with Dan O'Neill. In that interview, which you should go back and listen to when you have a sec, Dan O'Neill cleared up a couple of things that I struggled with during this interview. Here's the big one that I could not figure out: Why with the whack-a-mole? Why do we still insist as a nation on waiting for someone to show up in clinic to retroactively and reactively address a missed preventative care opportunity? Why don't so many more provider organizations create pop health programs that consider the whole person proactively? Why don't they take the time to operationalize whole-person care in a meaningful way? Why don't they do what that nurse was doing in the Carolinas? Ah, yes … to the surprise of exactly no one, it's all about the Benjamins. As Dan O'Neill put it, if all a provider organization is doing is slapping a sheet on a doc's desk every morning with a list of care gaps for all the patients that he/she will see that day, it's highly likely that incentives, or penalties to do anything else, are very weak. It's a sign that, from a paying for value perspective, we're not paying enough for value that it's w

Before I get into the show today, let me just remind everybody about our mailing list, which you can sign up for on our Web site, relentlesshealthvalue.com. You might follow Relentless Health Value on LinkedIn or Twitter, which is a great option, for sure; but I wanted to point out that what you see there is abridged at some level. Meanwhile, if you subscribe to our mailing list directly (again, by going to our Web site, relentlesshealthvalue.com—it's over on the right sidebar where you can sign up for the mailing list), if you subscribe that way, each week you'll get an email with a full transcription of the whole introduction of the show with timed show notes. Also, we don't send out literally anything else beyond what I just described on a weekly basis. Also, you can unsubscribe easily and anytime you want. You just hit the unsubscribe in the email. Also, we don't share our list with anybody. We barely have time to look at it ourselves, so if you have any concerns there in that regard, please don't. Last week's show (EP359) was with Dan O'Neill, and he talked about the four gradations of value-based payments, from paying purely for volume on one end of the continuum to paying purely for value on the other. When you have a moment (not now, but when you can), go back and listen to that show, as it adds some color to what we talk about in this healthcare podcast. But in the meantime, one of the points that Dan O'Neill makes is that patients in this country won't gain the benefits of value-based care unless commercial insurers pay for value, for reals. After all, value-based payments are payments that incentivize value-based care. Without value-based payments, how does anyone expect to get value-based care? To belabor this point momentarily, a provider is not gonna switch up their FFS business model when insurers, especially commercial insurers, pay whatever for whatever with no reward going to providers who spend time and effort to create value and/or better outcomes for patients. I'm being super cynical here, I will grant you. But in this day and age of private equity and record profits by a consolidated healthcare industry, if I'm in charge of a provider organization just realistically here, Pramod John, PhD, says this really well in EP352. He's talking about drug development in that episode, but same thing here is true for medical care. If you indiscriminately pay Ferrari prices for Hyundais, you're gonna get a Hyundai for the price of a Ferrari. To add insult to injury—and this is just one important reason why providers aren't really willing to invest in lifting outcomes—any value that they would manage to create is gonna be realized by the insurers. It's gonna go right back into insurers' pockets. Steve Schutzer, MD, talks about this in his episode (Encore! EP294) about the why and how to create a center of excellence. If, as a provider in a pure volume contract which is FFS, I work really hard to save downstream costs and complications for patients, some carrier is gonna bank the difference. It's go time, all you self-insured employers out there. Pay for high quality. Make the carrot an orange-colored stick, as they say. Patients will benefit. Probably doctors and other clinicians, too, honestly: less moral injury and crappy workflows. In this healthcare podcast, I am talking with Jeb Dunkelberger. Jeb Dunkelberger is the CEO of Sutter Health | Aetna, which is a payvider. Payviders, by Jeb's definition, take on full risk. They have a full-risk insurance product, meaning they must switch up their business model and how they deliver care so that it works in a total capitation payment situation. We go deep on payviders the last time Jeb was on the show (EP348). But in this relatively short conversation, I wanted to talk to Jeb about the operational imperatives of moving to value-based care, moving to a care model that is aligned with value-based payments—what needs to switch up in the day-to-day to ensure that patients don't have care gaps that cause expensive trouble downstream, or patients at rising risk get taken care of promptly before something avoidable and/or acute (ie, expensive) happens. There are three main things that Jeb talks about: Fixing up the clinical workflow Having care navigators Aligning physician comp to organizational goals Let me dig into each one of them briefly. 1. Fixing up the clinical workflow. There's basically five aspects to that: Ensuring that the right data is in the clinical workflow. Let's talk about this data for just one sec and we'll find actually one more reason that payers and purchasers need to get kinda engaged in this making sure members get care thing. Because data—data that payers have that is needed at the point of care. Like claims data. Please provide it to providers and actually insist that it gets used by clinicians making clinical decisions at the point of care. Ensuring that there are pick lists of drugs, with generic drugs first Making sure it's easy

Last week's show was with Wayne Jenkins, MD, from Centivo; and we talked about how insurance design, when not done well, can lead, in a nutshell, to mental and physical health problems for employees. This is a great lead-in to the conversation in this healthcare podcast with Dan O'Neill. And before I get into why it's a great lead-in, let me just start here—and don't roll your eyes. What is value-based care? Consider this delineation: There's value-based payments, and then there's the type of care that these payments incentivize. You would hope that a value-based payment would result in care that was of value (ie, great patient outcomes and patient satisfaction at a fair total cost of care). But those are two distinct things—the payment and the care. If we change the payment model but the provider behavior doesn't change in a way that actually improves patient outcomes and care, then what are we doing here? Or the converse: If we do not change the payment model, then how does anyone expect the care paid for is going to change? Employers or carriers who just meander along with the broad PPO network happily paying as much for low-value care as for high-value care and happily paying centers of excellence as much as non–centers of excellence … how is a provider who wants to spend time and money building out a practice to deliver better patient outcomes, how can they do that without overcoming some pretty fundamental business model challenges? This whole concept is one that my guest today, Dan O'Neill, has talked about and will talk about in this episode. Dan says the first step is for insurers, IPAs, managed care organizations to take an absolute chainsaw to their network management bureaucracy. There must be a clear door to a value-based payment model. It must be that if you're a provider or you're a physician practice (primary care practice, in particular), and you want to go down a value-based care path, there has to be a clear door and a pathway for you. I think I have a non-perfect litmus test for anybody with a value-based payment program who wants a heuristic to check if their value-based payment program is actually meaningfully impacting models of care in the marketplace: If most of the provider organizations who are part of that value-based program still incentivize and pay their doctors using FFS incentives like RVUs (relative value units), I'd step back and think about that for a piece. Contemplate that doctors, who are responsible for care decisions, still have every incentive to do everything that they would have done had the provider organization just been paid FFS. What's the point of value-based payments that extract exactly zero behavior change? And that is not a rhetorical question. So, back to the conversation from last week with Dr. Wayne Jenkins citing all of the things that can go horribly wrong when an employer's benefit designs are misaligned with the financial realities of their workforce. You get what you pay for, and I don't just mean that in terms of the dollars outlaid, since we all know in healthcare prices and quality have nothing to do with each other—I mean, in terms of what you choose to pay for and how you choose to pay for it. That's the macro of this whole thing, but indulge me as I get into the micro for just one sec. Let me just remind everybody about Goodhart's Law: "When a measure becomes a target, it ceases to be a good measure." More on the why of this in the interview with Rishi Wadhera, MD, MPP, on the hospital readmission reduction program (EP326) and also what happens when we don't adhere to Goodhart's Law as we evaluate PCPs, which Rebecca Etz, PhD, talks about in EP295. In this episode with Dan O'Neill, we go through where we're at on the continuum of value-based payments and how those payments are impacting the care, value-based or otherwise, that is incentivized by those payments. We tick through four gradations of value-based payments: A pure volume contract (otherwise known as FFS [fee for service]) A clinician bonus for achieving quality measures A piece of the savings (ie, MSSP [Medicare Shared Savings Program]) Global risk My guest, Dan O'Neill, is chief commercial officer over at Pine Park Health. Besides over a decade in healthcare tech and services, he was a policy fellow at the National Academy of Medicine and worked in the Senate on the Senate Health Committee. You can learn more at dponeill.com or connect with Dan on LinkedIn. Daniel O'Neill, MA, MS, currently serves as chief commercial officer for Pine Park Health, a value-based primary care group that delivers on-site care in senior living communities. Prior to that, Dan was a health policy fellow at the National Academy of Medicine, working primarily in the US Senate on legislation focused on surprise billing, anti-competitive contracting practices in the commercial market, and price transparency. Dan has also worked as a senior vice president with Change Healthcare and as an advisor to venture-st

First of all, anybody who thinks that your average citizen in the United States today is unaware of the financial double jeopardy of going to a doctor, going to an emergency room, getting a procedure is sorely mistaken. Americans today are well aware of the financial risk that they are taking by seeking healthcare in this country. To illustrate this point, let me read the first couple of sentences from a New York Times best-selling book review: "The illness narrative, ending in financial ruin and decreased quality of life, has become one of the classic 21st-century American stories. In her debut essay collection, Emily Maloney documents the … intersections of money, illness and medicine. For Maloney, the primary experience of receiving health care is not merely a bodily or spiritual event but always … a financial one. She understands … the relationship of money to being ill, … to managing an unfathomable amount of debt." This is a New York Times best-selling book in the beginning of 2022. Add to this something I saw Pete Scruggs write on LinkedIn a while back, which I found actionable. He said: "Patients selling personal items or taking on credit card debt after medical procedures is a failure of creativity in providing healthcare. It is possible to build creative health plans that reduce costs for patients with expensive procedures by giving wise guidance at the time patients need it the most. "It is not enough for insurance to provide access to a wide range of health providers but effectively leave the patient in debt … after the procedures are done. It is possible to buy healthcare so well in the local community that employers can reduce cost dramatically at the time most needed by those using health services." And lastly, let me quote from a recent article in JAMA by David Scheinker, PhD; Arnold Milstein, MD; and Kevin Schulman, MD, which says, "The financial consequences of an underperforming health insurance market (one that is not holding down … cost … ) diminishes the quality of life affordable to US employees and their families and the financial viability of employers not in the health care industry." So, in this healthcare podcast, I am speaking with Wayne Jenkins, MD, who is chief medical officer over at Centivo. Before his move into value-based healthcare about 10 years ago, Dr. Jenkins started his career as a radiation oncologist. He has also served as the chief clinician at a bunch of large health systems. I wanted to have Dr. Jenkins on the show to discuss a recent report which was published by Centivo that methodically dissects how financial toxicity is affecting patients. This includes how it affects choices that employees/patients/members are making both in terms of the care they decide they are willing to pay for or, more likely, the financial risks they're willing to take. In short, the three key findings of the report are as follows: Workers face mounting healthcare affordability issues, and health plan cost sharing features such as high deductibles are an underlying cause. Just a quick spoiler here: Do you know the percentage of employees who are forgoing buying groceries in order to afford medical expenses left on their shoulders by their high-deductible health plan or by their health plan with excessive premiums? Going hungry isn't just for minimum wage workers. Medical expenses are a significant cause of mental health and well-being issues for both individuals and also families. The conventional wisdom that health plan members will never "trade off" certain offerings for greater savings is simply false. The big takeaway here, though, is that the situation that we have in this country today is not a secret among your average regular American civilian. They do fully understand that by entering a healthcare setting, they are very well trading off, in their attempt to be healthy and going to the doctor in pursuit of that aim, they are trading off their financial well-being. And that financial toxicity actually has health implications. If you can't afford groceries, for example, or your mental health suffers, we get ourselves rather rapidly into a downward spiral, as you may be able to see. Other episodes dedicated to the impact of financial toxicity and possible solutions are in the show notes. I'm just gonna mention here quickly, we talked to Marty Makary, MD, about his book called The Price We Pay (EP242). There's an interview with Marshall Allen (EP328) and then also a very interesting conversation with Mark Fendrick, MD (EP308). You can learn more at centivo.com. Wayne Jenkins, MD, is the chief medical officer at Centivo. He is an accomplished physician and executive with a proven track record of patient-centered, revenue-driven results. Over the course of his career, he has consistently transformed large, complex healthcare systems into market leaders that deliver quality and value in a dynamically changing environment. Prior to Centivo, he was the chief clinical officer for popula

Here's the biggest problem with a lot of telehealth endeavors: Someone decides that they need to be doing telehealth, for whatever reason. Maybe there's a pandemic, for example. And the basic plan is this: Install some technology, give everyone a username and password and a link for patients, check that box, and move on to the next thing. My guest in this healthcare podcast, Liliana Petrova, has seen and talked about how, far too many times, the whole concept of telehealth is narrowed down to the exact moment where a patient and a doctor have a visit together. That's it … that transaction. There's little effort, if any effort, made to integrate telehealth into the existing clinical workflow, into the existing patient/customer experience, into the core business, into anything longitudinal. Telehealth becomes a weird island of a service only used by intrepid clinicians willing to put in the time and effort required to deal with its vagaries and inconveniences. Only used also by patients who manage to find the telehealth link buried on some Web site somewhere and then figure out how to schedule their telehealth appointments within a scheduling system mostly unable to accommodate virtual visits without a party-sized amount of technical expertise and, probably, chutzpah. There are consequences to this narrow and pretty slapdash thinking. One of them is that you have very few clinicians and patients willing to brave the organization's telehealth experience or lack thereof, so they don't use it. And then at some point the organization does a survey of how much telehealth is going on—and wow! Surprising news: Incredibly few are using telehealth. So, the conclusion is drawn that patients and/or clinicians don't want telehealth. What happens then? Further funding is withdrawn and/or the whole telehealth thing goes down on the chopping block. It reminds me of a cartoon I saw the other day. It was a picture of a bar chart showing some survey results. One of the bars in the bar chart was huge, and then the other one was, like, zero. It was a poll. There were two questions in the poll. Here are the two questions: Do you respond to polls, or don't you respond to polls? And as per the poll results in the bar chart in the cartoon, turns out, 100% of people respond to polls. Funny but, at the same time, true. Many organizations don't really think through the provenance of the "data" they're using to make really important decisions, and when it comes to telehealth, there's a lot of dirty data flying around. This dirty data, though, might be one explanation for the delta between the conclusions of all those studies showing that three out of four patients, always a comfortable majority of patients, intend to use telehealth versus the many health systems and/or provider organizations or even some doctors themselves sniffing and turning up their noses and saying that none of their patients are interested in using telehealth because no one is using telehealth in their office. Right. The only thing that's being anecdotally determined by these anecdotal conclusions is that patients don't like and/or even know about that office's telehealth solution. It says nothing of the larger trend. When organizations make decisions to not do telehealth well or at all because they didn't do it well and no one could figure out how to use it, then the value that telehealth could bring to both patients and clinicians is forfeit. Sad. Also, considering the X on the backs of some specialists and health systems in general these days, this could have longer-term consequences. Some good clinicians could find themselves way behind the curve after making what amounts to a very poor strategic decision. In this episode, I am speaking with Liliana Petrova, CEO of The Petrova Experience. Liliana is an expert on customer and patient experience. She hails originally from the aviation industry, where she was director of customer experience at JetBlue, where she built and maintained customer centricity across organizations. Today we're talking about telehealth. Last time Liliana was on the show (EP236), we talked about customer centricity—so go back and listen to that one if you're interested. In that show, we talked about, as one aspect, lobby design—the impact of having front desk people and clinicians literally barricaded behind cement and glass like they work in some bodega in a bad part of town that gets held up every other day. I never really thought about that and the message that it sends before. Liliana served this past year on the NODE patient committee and did a whole lot of work exploring telehealth and its potential and challenges. NODE stands for the Network of Digital Evidence. In this show, we go through the essentials to pull off a telehealth program that is actually going to deliver returns. In short, here's the ingredients: A telehealth "board" comprised of all the cross-disciplinary folks needed to pull this off: clinicians, IT, and also admini

So … let's start here. Mostly this whole episode is about the so-called "Big Three" PBMs that provide between the three of them pharmacy benefit services for 95% of insured Americans. PBM stands for pharmacy benefit manager, and the Big Three PBMs being ESI, otherwise known as Express Scripts; OptumRx, which is a part (a big profitable part) of United Health Group; and then also CVS. Yes, CVS is not just for your retail pharmacy needs; they are also a huge pharmacy benefit manager. Now, we get to the GoodRx part of our story. If you don't know how GoodRx works, I would strongly encourage you to go back and listen to "An Expert Explains" with Dr. Ge Bai from last year (AEE13). That said, here's the super short semi-reductive version to keep us all level set here. If you already know how GoodRx works, you can skip forward about four minutes. So, first of all, let's all understand that GoodRx's business model only exists because the pharmacy supply chain dominated by these three big PBMs that we just talked about is such a cluster. GoodRx profits from that dysfunction. So, as I said, here's the short version of how they do that. It all hinges on so-called spread pricing, and this is what I mean by that. Patient goes into pharmacy with a prescription for generic drug X. The patient has insurance—good news! Pharmacist checks the computer and sees that this patient should be charged, I don't know, $50 for drug X. The patient's insurance carrier picks up, say, $30 of the $50 cost; and the patient is left with, say, a co-pay of $20. Who did that little math there in the computer? The PBM (the pharmacy benefit manager) did that math. That's their thing, these PBMs. They adjudicate claims. That's what this math is called. Anybody who goes into a pharmacy with a prescription, it's the PBM on the back end who figures out how much the patient owes and how much their insurance will pay and what the patient responsibility is, etc. Goodness, you might say. How much are the PBMs being paid to perform this useful service? Turns out, it's free. That's right … the Big Three PBMs do all this adjudication for free. No charge to plan sponsors. Isn't that nice? Except it's actually not free if you dig into it. The PBM is certainly getting paid by means of arbitrage. They're taking a little something something out of the middle of every single transaction. Here's what that looks like in the example aforementioned. Recall the patient's insurance paid $30, and the patient themselves paid $20. The question is, how much did that drug cost the PBM? Remember, that's commerce: Buy low, sell high, and all that. You buy something, and then you sell it for more than you bought it for. OK, so we're talking about a generic drug here. They're cheap (usually). So, let's just say drug X costs, I don't know, $5. The PBM pays the pharmacy $5 for that generic script—and you can see how much money the PBM just made right there. The patient and their plan sponsor got charged $50, and the PBM's cost of goods was $5. Multiply that profit margin by the billions of generic prescriptions in this country that run through insurance, and you have a tidy little business model there. UHG, the parent company of OptumRx, made $24 billion in profit in 2021. Not all of that was from generic drug arbitrage (ie, taking advantage of spread pricing), but some of it was. And $24 billion is an awfully big amount when you consider whose paychecks all those pennies were lifted from. PBM services are anything but free. PBMs are collecting massive windfalls in the so-called spread between what the patient and the plan pay and what the PBM is actually buying those drugs for. Here's another wrinkle: When a PBM contracts with a pharmacy, part of their contractual terms is that the pharmacy's list price for drugs cannot be lower than a certain amount usually having something to do with the PBM's rates. So, pharmacy list prices become artificially high as a result, meaning that cash-pay patients who just wander into a pharmacy and try to pay cash pay an artificially high price. Into this mess swoops GoodRx with a killer idea. They see all that money on the table that PBMs are cleaning up in that spread. They want a piece of that action. And in the beginning, PBMs were fully on board with this. They were fully on board because the market GoodRx was going after was the uninsured market, meaning untapped turf for PBMs. And because PBMs make so much money off of each transaction, PBMs are always hungry for more transactions (the Big Three PBMs, anyway). They love more transactions. The more more more with the transactions, the more more more with the money. So, GoodRx goes to the PBMs and says, "Hey … if a cash-pay patient shows up in a pharmacy, what price would you charge them for you to adjudicate that claim? You know how much money you have to pay the pharmacy, so what can the patient price be? What spread are you willing to accept? GoodRx will take a little off the top, but you

My guest in this healthcare podcast is Nikhil Krishnan, who is the founder of the Out-Of-Pocket newsletter. I was talking with Nikhil, and we identified—or, more accurately, he identified—five business models of digital health. What makes each model distinct is a few factors. If you weren't in the healthcare industry, you'd probably expect that I'm going to say that the biggest factor a business model must hinge on must have something to do with patient outcomes or care or something that has something to do with the hopes and lives of patients. Except no. Mostly, our models do not define themselves by attributes of their patients, except on one dimension: who is paying their bills. Who is paying has enormous downstream consequences that I don't think people outside of healthcare, or even people inside of healthcare, sometimes really appreciate. It's because of all of the perverse incentives. It's a tangled web we weave. For example, let's just say you're a start-up founder trying to cook up your unique selling proposition. You can't just decide you're gonna lower costs and improve patient care as general constructs. Because let's just say you do that—that's your USP (lower costs and improve patient care)—and then you try to sell your thing to Medicare Advantage plans or large provider organizations. Oh, right … Medicare Advantage plans or even commercial ones—they don't care about the total cost of care. Neither do provider organizations unless they take on sufficient risk to care, and many do not. In fact, as came out in that JAMA article the other day, it could be construed that entities such as these carrier health plans have a perverse incentive to see total costs of care go up. So right, you naively (you're the start-up founder again in this case study, don't forget) trot into some administrator's office with a great something or other to reduce total costs of care—and you'll get cast out upon your petard on the quick. Every single day of the year in my world, I see people make this same mistake over and over again: not tailoring their product market fit to any particular market, with the recognition that some in this healthcare industry have a vested interest to see costs going up and some have a vested interest in costs going down. Either way, if we're talking about large organizations here and even some small ones, the money wins over patient care. So sad to have to say that, but listen to EP351 with Dr. Eric Bricker and you'll get all the context you need on that point. Here's the thing, though. I don't know about you, but I can't tell you how many digital health start-ups I run across where I look at their decks or have a conversation with a founder, and I ask who their customer is. Is it employers or health plans or … ? And they don't know. They're gonna figure this out later. I don't get how to successfully do that. I'm indubitably wrong here given all of the pivots I hear about that seem to go OK, but the prospect of completely redefining my operational goals and operations and market positioning at some point in the future seems like a daunting and avoidable prospect. I would be remiss not to mention, however, the number of really good mission-driven healthcare companies out there really trying hard to figure out how to create a sustainable business, a fair profit, while at the same time serving patients really well. There are companies adding value commensurate with the dollars that they come by, and I certainly applaud everything that they are doing. At the same time, given all this, here's a message for all of you VCs and private equity etc—people with money—out there. Let me quote Dr. Vivek Garg here (@vgargMD on Twitter): "If you're financing care delivery without board-level focus on clinical outcomes, you're part of the problem." So, let's talk about these five business models that health and healthcare start-ups eventually settle themselves into after they figure out who their customer is. Nikhil Krishnan, my guest today, and I discuss how they can be financially viable and if we think they'll actually be able to provide superior patient outcomes. [Trumpets play here] In no particular order, this is what we've got for our five business models: Completely avoiding incumbents, creating a cash-pay ecosystem Better middleware (being the pipes, as I've heard so many times these past couple of weeks) Companies serving incumbents either by being a virtual front door for them or disrupting the competitive landscape somehow Joint ventures Old-school digital health who are now incumbents in their own space My guest in this episode, Nikhil Krishnan, has a bunch of things going on. He might be best known for his newsletter, Out-Of-Pocket Health, which you should certainly subscribe to. He's also working on a healthcare 101 crash course to teach newcomers about the Wild West we call American healthcare. Besides all of this, Nikhil does some early-stage investing. You can learn more at outofpocket.h

In this healthcare podcast, we're gonna talk about the realities of setting up a clinically integrated network, otherwise known as a CIN. If only the whole process was unicorns and rainbows, but—as you likely suspected—it's not. Setting up a clinically integrated network is hard work, but the payoff for patients and clinicians alike can be worth fighting for. First of all, what is a clinically integrated network? It is a kind of ACO (accountable care organization). It is a legal entity that is a form of an ACO. So, every CIN is an ACO. But not all—in fact, most—ACOs are not CINs. CINs enable coordinated care. Everybody in the network gets together to figure out how to enable clinicians to (for reals) follow their patients through multiple care settings and plan for an entire care journey. It can really help the patients navigate our crazy healthcare industry by giving them a trusted team that plots out a proactive path toward better healthcare outcomes and then make sure the patient stays on that path. It can be a really beautiful thing. Listen to EP349 with Lisa Trumble for real-world examples of the patient outcomes and experience a CIN can generate. All this for the patient while, at the same time, the total cost of care for Medicare patients goes down, I've heard, about 10% on average; but it can be more, as Lisa Trumble also talks about in episode 349 as aforementioned. Alright … as we all know in healthcare, what's best for the patient doesn't, in so many cases, mean higher reimbursements. Sadly. So, what financial advantages does going through the time and trouble to create a CIN bring? There are basically four financial opportunities that can be realized with a CIN. I learned some of this from my guest today, Shawn Rhodes, who called strategically managing these four possible financial incentives "a delicate balance"; and as I get into some of them, you will see why. CIN Financial Opportunity #1: Similar to an ACO, if you're a CIN (because you are an ACO), you can participate in the Medicare Shared Savings Program, otherwise known as MSSP. The Medicare Shared Savings Program (MSSP) is the way that ACOs get paid a little something extra if they achieve savings goals for Medicare. The provider shares in the savings. Get it? And CINs are generally well equipped to realize these shared savings goals because to obtain the quality that you have to to pull off the shared savings, being clinically integrated really helps. CIN Financial Opportunity #2: Getting a gang of providers (doctors) together, you can do collective bargaining. So, back to basics with this one. You get a bunch of docs together in a region, then you all go to the big BUCAH plan—meaning the Blue Cross, the Cigna, the Aetna, Anthem, Humana—you go to them together and make your contracting demands, as opposed to each little doc practice going in all by yourself and trying to negotiate David and Goliath style. Now, what the payer might want from your collective crew there, the payer might insist on some kind of value-based agreement. Even if it's an FFS (fee-for-service) contract chassis, they'll attach some kind of quality or outcome component. So again, being organized in a CIN is a bonus either way. CIN Financial Opportunity #3: Your CIN can try to do direct contracting with local employers. Check out EP350 with Katy Talento for more on direct contracting. Actually, Lisa Trumble also mentions this in EP349. CIN Financial Opportunity #4: Lastly, you can work with local hospitals' quality and efficiency programs. From a hospital financial perspective, they might be interested in the care that happens after an inpatient stay. If the outpatient care at an integrated skilled nursing facility, for example, is good, then the hospital could, for example, reduce readmissions. Now, caveat: I asked (maybe grilled is a better word) our guest in this episode, Shawn Rhodes, about this whole "prevent a readmission" business. Because on one hand, oh wow, you get a couple points back from having lower readmissions—which you can game all day long, by the way. Listen to the show with Dr. Rishi Wadhera (EP326) for more on how to not get dinged for readmissions even if you effectively have readmissions. So, said another way, the crafty, albeit dubious, power move here if you're a hospital to maximize revenue is to let patients come back to the hospital after discharge but just don't call it a readmission. Call it, I don't know, observational. Then bill fee for service for the whole thing and get the reducing readmission financial incentives. At this point in the time-space continuum, everybody knows this stuff. This is not some kind of secret that I'm spilling here. Anyway, I bring this up because don't forget what I just said: The #4 CIN financial opportunity that Shawn Rhodes had mentioned is hooking up with a local hospital as part of their quality and efficiency program and the hospital looking to the CIN to reduce readmissions. Given the open secret on h

This episode is probably a 400-level class in specialty pharmacy rebating. If you want a 45-minute conversation on rebates in all their glory, go back and listen to the conversation with Chris Sloan (Encore! EP216). But if you're still with me, what's gonna follow is about an eight-minute overview of pharmaceutical rebating, just to make sure we're all on the same page before we get into the show itself. So, if you know all there is to know about pharmaceutical rebating, you can jump ahead about eight minutes and get to the part where I talk with Pramod John.

As a country, we spend approximately $500 billion on prescription drugs. Specialty drugs account for less than 2% of prescriptions but will cost us over $250 billion (that's in 2021)—so, 2% of prescriptions but half the spend. Specialty is the fastest-growing segment of healthcare spend and is a dominant issue that self-funded employers and other purchasers face. But let's dig into that $250 billion being spent on specialty drugs, shall we? I have to say, personally, that if we spent $250 billion but saved more than that in medical costs or if the patient quality of life went up measurably or if life expectancy or overall survival or whatever metric you used to assess quality … if that big spend produced even bigger returns/results, I for one would be like, "OK, trade-offs. Let's discuss." But the thing is, clinical trials and real-world evidence alike suggest that there's a lot of patients who don't really benefit from the expensive drugs that they are taking or were prescribed, and even those who benefit might not get the results that they're hoping for or even de minimis expecting. In this healthcare podcast, I am talking with Pramod John, CEO of VIVIO Health; and he makes a couple of great points about all of this that I'll repeat here and then he's gonna say them again later in this episode but in context—and probably better. There was some research done that showed for a really popular, really expensive drug, only 2% of patients who took it got the expected, maybe promised, benefits. But 100% of the patients who took that drug got bad, in some cases dangerously bad, diarrhea. This situation is really kind of typical. A drug will work great for some people, mediocre for other people/patients, and not at all for, say, the remaining what might be majority of patients. So, you'll have 2 patients where the results are out of the park, 23 patients where results are pretty darn good, 25 patients reporting meh results but something you can actually still point to, and then maybe 50 patients who see absolutely no improvement in anything. So, here's an important point: Maybe there's, let's just say, 3 drugs or 10 drugs in this therapeutic category, and that same patient distribution is true for all of them—except different drugs may work for different people. So, by enabling access to all the drugs, you can see that patients have a better chance of being in one of those first groups where they actually get results because there's more drugs that they can try and different drugs work differently in different people. But now, let's consider the way that we pay for specialty drugs: One or two of them get on formulary typically, and then all the others are excluded. That said, the purchaser, patient, and/or taxpayer is gonna pay a whole lot of money for those drugs regardless of how well they do or do not work. And with fewer drugs on formulary, there's less of a chance that results gold will be struck. But we're gonna pay a whole lot of money, also in terms of human life, to deal with the direct and cascading side effects of drugs whether they do or don't work. I have to admit, I kind of have a new appreciation for so-called me-too drugs after this conversation. Let me just add that here for the record. My guest today and next week is Pramod John, who is the founder and CEO over at VIVIO Health. VIVIO contracts with self-insured employers and helps their employees/members/patients (whatever you call them) get the right drug. They actually expand access, and the employer saves money. After what I just said, you might be cottoning on to why. The show this week concerns the reality of specialty drugs and what the terms efficacy and effectiveness really mean because they might not mean what you think they mean. As inconceivable as that might feel, I learned something. You might, too. And there are implications—big implications—for all of this for patients/members/employees. Or you and your family. In this episode, we also define and discuss the terms NNT (number needed to treat) and NNH (number needed to harm), which are really important and, in my humble opinion, do not get discussed enough—especially with patients who need to know these things to make informed choices. Next week's show is also with Pramod John, and we get into how what we talk about here intersects with rebates and formularies. Come back for that. It's probably a 400-level class in specialty pharmacy rebating, but some of you will appreciate it. You can learn more at viviohealth.com or by emailing Pramod at [email protected]. Pramod John, PhD, is the team leader of VIVIO, a public benefit corporation whose mission is to ensure that drugs work in the real world for the people on them and that their costs reflect the value provided. VIVIO's model has improved health outcomes and generated 35% to 40% savings on drug acquisition costs. It accomplishes this by answering three simple questions: (1) Is this the right drug? (2) Is it a fair price? and

In this healthcare podcast, I'm speaking with Eric Bricker, MD, about how so many entities in healthcare are getting up in other people's business and swimming in other people's traditional lanes. Consider last week's show with Katy Talento, for example. She mentions employers who are not only doing their own direct contracting (ie, cutting out the traditional carriers and negotiating directly with provider organizations) but also employee benefit consultants who are working on setting up their own hospital—an employer-owned hospital. That was episode 350, and while this hospital idea is a little future oriented, right now today, across the country, we have employers and also unions who are owning their own primary care clinics, which I discussed at some length with Mark Blum from America's Agenda (EP248). In this episode with Dr. Bricker, we start from the beginning. We kick off the conversation talking about the payer, PBM, and hospital system horizontal consolidation that has transpired over the past decades (that's plural). Horizontal consolidation is pretty much the easiest way to decimate all competition in your own swim lane so that you can charge more and not worry so much about patient/customer/member experience because the patients/customers/members have no better alternative. They effectively have nowhere, or few other places at best, to go if they leave you. So, what's the impact of horizontal consolidation? We get into this in the podcast, but subsequent to this recording, there was a study that came out in JAMA: "The Dysfunctional Health Benefits Market and Implications for US Employers and Employees." This was by David Scheinker, PhD; Arnold Milstein, MD; and Kevin Schulman, MD. This study showed that commercial insurance costs have gone up 4x the rate of other benchmark goods and services. Bottom line, "It is assumed that insurers compete intensely to improve the value received by employers and employees by negotiating to keep prices down and advocating for employers and employees." Ha ha … NOT. With peak horizontal consolidation, there is little meaningful competition—so ixnay on that premise. By the way, if anyone knows any of those authors that I just cited in that study, hit me up. I'd love to get one of them on the show. But let's spend a moment, shall we, on the human impact of all this extreme consolidation. The impact is your sister, your neighbor, your son, your friend. So many feel so much pressure financially in our country today because of healthcare costs. Even families earning significantly more than median household income are forgoing care because of costs. Again, this was in a recent paper. (The authors are Alyce S. Adams, Raymond Kluender, Neale Mahoney, Jinglin Wang, Francis Wong, and Wesley Yin.) But the direct observable financial toxicity resulting from high healthcare patient costs is really only the tip of the iceberg here. As Dave Chase from Health Rosetta has said a million times already, high healthcare costs have a multitude of effects on employers, big and small. One big one is, if healthcare costs more, then there's less money for salaries. Dave, citing lots of evidence, has long attributed wage stagnation in this country to accelerating healthcare costs, which became even more rampant during periods of industry consolidation. Dave Chase leads Health Rosetta, by the way. Here's another human toxicity: Listen to episode 337 with Oliva Webb on the impact on her life as a result of the undeniably and unquestionably common non-excellent treatment by the PBMs and SPPs that she has to deal with. Because, as Dr. Bricker also says, no competition means basically not a whole lot of concern about patient experience. Why should a for-profit business spend money to improve something when there's nothing really to be gained for them financially to do so? I mean, the best a patient can do most of the time is hop from the frying pan into the fire. That's what happens when there's no competition or no real competition. Also consider the burned-out clinicians who have to get stuck in the middle of this nobody-really-cares-at-the-monopoly customer service paperwork quagmire. By the way, here's a sidebar that might come as a surprise to some people, but please take this in the spirit with which it's intended. All of us innovators and lifelong learners, we want to update our beliefs when the facts show us an updated conclusion. So, I have learned that all of this consolidation was going on long before the ACA (Affordable Care Act). My point here is to please look into this well-documented trend line before reflexively tweeting that the ACA drove consolidation. Dr. Bricker and others like Dr. Mai Pham have told me that, in their opinion, low interest rates, cheap debt, and a desire to eliminate competition are wildly powerful drivers of consolidation. Anyway, about nine minutes into the interview with Dr. Bricker, if you're one of the ones who knows all you care to know about horizo

In this healthcare podcast, I'm talking about direct contracting IRL (in real life) with Katy Talento. This is a conversation that's more about the reality of direct contracting than the theory of direct contracting, and this was not an accident. So much of healthcare transformation is really easy to say and much harder to actually do. So … direct contracting. In the context we discuss in this episode, generally direct contracting means when an employer or their benefits consultant, more likely, hooks up with a provider organization, lots of times a hospital or a health system. Moving forward here, I'm just gonna say employer when I sort of really mean the employer and their TPA and their repricer, the constellation of consultants and other vendors that are working with the employer. So, just for simplicity, the employer says to the provider organization, "Hey, let's cut out the middleman here" (middleman likely being some insurance carrier). "I will just pay you directly, and it will be a win-win because no one is sucking out up to 15% to 20% right out of the middle, and also I'll steer my employees/patients/members your direction, which is great for us as a self-insured plan because money saved and also because I've done some quality analytics and I think you're relatively good at delivering care … so I'm happy to help my members find you." The employer will, in general broad strokes, pay the provider organization some percentage over the Medicare rate for procedures or codes or bundles. By the way, the dollar amount over Medicare for the bundles or procedures or codes can vary depending on factors like what service line it is because, unlike RBP (reference-based pricing), direct contracting is a negotiation. It's a two-way deal. RBP, a lot of times, is the payer/employer deciding what they're gonna pay and then paying it—without sitting around a table with the provider figuring all this out together. So, if only from this one dimension, direct contracting is something that you'd think that hospitals/health systems/providers would be kind of into and up for. One thing that I didn't really understand before this conversation is that, if we're talking about an employer direct contracting with, say, a hospital, the list of direct-contracted procedures or codes or bundles might include pretty much all of the services that the hospital can perform; but, in general, the employer is only going to steer members there or make it financially attractive to go to the hospital for, for example, emergency or unavoidable procedures. Why? Because no employer wants patients going to the hospital for things that they could get a whole lot cheaper in an outpatient setting with no less quality. So, unless a hospital is willing to compete on price with other care settings, then an employer is not going to steer their members there. If you're a hospital, you might take this as a con. But, on the other hand, consider that if there's a few hospitals in the area, the general direction will be to go to the one with the direct contract. Furthermore, if a plan is gonna steer members, they're gonna steer them whether they have a direct contract with you or not. Katy makes one point early and often throughout this conversation. From a hospital perspective, doing a direct contract is and should be pretty easy. From an employer perspective, too, there should not be a lot of disruption or friction for employees. There doesn't need to be. Done right, it should be a win-win for the employer, provider, and, most of all, the patient who doesn't get stuck with high bills, balance bills, and lower-quality care than might be available to them through their benefits. Katy goes through the steps to create a direct contract and the challenges she has faced along the way. We also get into the wonderful world of payviders, so you could consider this an extension to the episode with Jeb Dunkelberger (EP348) from last month. My guest today, Katy Talento, started out as an infectious disease epidemiologist (which I did not realize). She ended up doing public health policy. She's worked on Capitol Hill for various senators and, in the last administration, as health policy lead. Katy is the CEO of AllBetter Health and works with the Health Rosetta organization. She is a benefits advisor for employers who are looking to create better health plans that reduce costs dramatically while, at the same time, improving benefits. I mean, you can only do that in healthcare, right?—where there's basically no relationship between price and quality. You can learn more at allbetter.health or contact Katy directly at [email protected]. Katy Talento is an infectious disease epidemiologist, a veteran health policy advisor, and healthcare consultant. She is CEO of AllBetter Health, an insurgent benefits advisory firm building innovative health plans for employers that are free of misaligned financial incentives. Katy served as the health policy lead in the White House

As one of our guests, Dr. Tony DiGioia (EP332), has said, healthcare has been pushed to its limits this past year; but that doesn't mean that nothing good has come of it. Celebrating our bright spots and using our experiences to inform future innovations is really the key to more accessible, equitable, and higher quality of care. While the timing of the celebration could, in general, be better given the latest pandemic news, as they say, there's no time like the present. So, let's do this thing. Also, it's just definitely good from a mental health perspective to find bright spots and to be grateful for them. So, let me kick this off with all of the gratitude I can hold in my two hands for anybody listening who is on the so-called front line of healthcare. My appreciation cannot be expressed more fiercely. I wish, in fact, that there was more that I/we could do to address the systemic issues that plague our healthcare industry and really impact you directly. Speaking of doctors as one of these frontline healthcare groups, in the Doximity Physician Compensation Report that was released for this past year, here's four stats to know: Twenty-two percent of physicians are considering early retirement because of overwork. Sixteen percent of physicians are looking for another employer because of overwork. Twelve percent of physicians are looking for another career because of overwork. Twenty-seven percent of physicians said they're not overworked, so I guess there's that—that's a bright spot. So, all you docs, nurses, PAs, social workers, therapists of all kinds, any other healthcare workers: Thank you for all that you do even in the face of these adversities and a bunch of seemingly shortsighted policy and/or administrative decisions. Take care of yourself first and foremost. We need you; we appreciate you. Thank you. I'd also like to thank everybody who listened to Relentless Health Value this past year. Thank you for being part of an inspired and inspirational community of individuals who are trying hard to do the right thing and learn and connect with others on a similar journey—even in the face of all the perverse incentives and calcified status quo processes, the whole host of factors that add up to formidable barriers to positive change. All of us—and I'm thinking that includes you—we continue to press forward. This is important because the more of us there are, the more of us who link hands and do some combination of educate, cajole, scold, guilt into, demand, lead, vote, wear down … the more of us who consider ourselves part of the change, the more effective we can be. So, recruit your fellow thinkers and let's continue to make inroads. I want to give a special thank you to the many of you who have reached out to me over this past year. You have encouraged, coached, and debated with me. You have added details and case studies. You've provided context. You have offered up topics to explore and introduced me and our team over here to some great guests. You have changed my mind. You have made me realize that there's some maybe underlying reason for something that is, in fact, valid or a consequence that maybe hasn't been thought through well enough by me and/or others. I couldn't be more thankful or appreciative to every single one of you. For more information, go to aventriahealth.com. Each week on Relentless Health Value, Stacey uses her voice and thought leadership to provide insights for healthcare industry decision makers trying to do the right thing. Each show features expert guests who break down the twists and tricks in the medical field to help improve outcomes and lower costs across the care continuum. Relentless Health Value is a top 100 podcast on iTunes in the medicine category and reaches tens of thousands of engaged listeners across the healthcare industry. In addition to hosting Relentless Health Value, Stacey is co-president of QC-Health, a benefit corporation finding cost-effective ways to improve the health of Americans. She is also co-president of Aventria Health Group, a consultancy working with clients who endeavor to form collaborations with payers, providers, Pharma, employer organizations, or patient advocacy groups. 03:36 Thank you to our listeners and the feedback you've given the show over the years. 05:10 "Good and bad is a matter of extremes." 06:20 Thank you to Dr. Steve Schutzer, Dr. George Mathews, Dr. Ge Bai, Troy Larsgard, Dr. Hugh Sims, Vinay Eaton, Dr. Brian Decker, Jeff Hogan, Peter Hayes, Dr. Aaron Mitchell, Parker Edman, Andre Wenker, Doug Aldeen, Cristy Gupton, LynAnn Henderson, Chad Jackson, and Darrell Moon. 07:27 Thank you to our iTunes reviewers. 07:47 If you haven't given us a review yet, please do here. 08:01 Thank you to Malfoxley, Jopo1234, and Teresa O'Keefe for your 2021 reviews. 08:19 Thank you to Dr. Nadia Chaudhri, who sadly died this past year of ovarian cancer but who did so much to advance the awareness of ovarian cancer and pursue better outcomes and b

This episode is a little bit of a thought experiment, so hang with me as I bumble my way through it and then hit me up with your comments. The plan is to do another episode in the future where some of you with thoughts share your version of your own thought experiment. Here's the topic: The ultimate impact of telehealth—in 20 minutes or less. In my version of this thought experiment, I want to do something a little bit different (maybe) than everybody who seems to be putting up a poll on Twitter right now. I want to look at telehealth as a leading indicator, not as a trend. The goal here is not to inform you of things that you don't already know because I am entirely confident that much of what I'm gonna say right now the majority of you are already eminently familiar with—probably more familiar with than I am, frankly. So, the goal here is to put this information into a context that maybe is new—at least I hope it's new. The goal of that is to hopefully inspire some of you to take action, right now, with all haste. This whole telehealth thing started in the middle of one of the many conversations I've had lately about what will be the future of telehealth. You have probably had similar chats about the future of telehealth and know what I am going to say. They all seem to devolve into someone ticking off all of the states who have extended temporary telehealth measures and the 1000 telehealth bills pending in state legislatures that might mandate public and private payers cover it. Anyway, in the middle of one of these "let's all study this updated spreadsheet" exercises, I started to wonder if we were missing the bigger takeaway. So, let me tick through a few background points which are all pillars in my "what's the ultimate impact of telehealth" contemplation and the realization that telehealth in and of itself has no impact. What has impact is who is using it and whether their goals are reactionarily (if that's a word) short term and/or shortsighted, or if there's anything that approximates a strategic long game in that mix. For more information, go to aventriahealth.com. Each week on Relentless Health Value, Stacey uses her voice and thought leadership to provide insights for healthcare industry decision makers trying to do the right thing. Each show features expert guests who break down the twists and tricks in the medical field to help improve outcomes and lower costs across the care continuum. Relentless Health Value is a top 100 podcast on iTunes in the medicine category and reaches tens of thousands of engaged listeners across the healthcare industry. In addition to hosting Relentless Health Value, Stacey is co-president of QC-Health, a benefit corporation finding cost-effective ways to improve the health of Americans. She is also co-president of Aventria Health Group, a consultancy working with clients who endeavor to form collaborations with payers, providers, Pharma, employer organizations, or patient advocacy groups. 02:30 Should provider organizations be getting rid of telehealth? 02:40 EP330 with John Marchica. 04:36 EP349 with Lisa Trumble. 05:07 Should telehealth be viewed as a threat? 05:40 "Virtual is a 'head in the bed at the hospital' demand destroyer." 06:45 "'Virtual' is the scapegoat." 07:42 Patients/Consumers: Is in person really better? 10:42 EP338 with Nikki King; EP347 with Ian Tong, MD; EP320 with Christian Milaster; and EP302 with Blake McKinney, MD. 11:06 How one VP of finance justifies a facility fee for a telehealth visit. 11:54 Do patients actually act like consumers in the digital age? 12:12 Why are virtual-first entities steering patients to clinically integrated networks? 13:08 How is telehealth changing healthcare costs? 14:21 "It adds up to telehealth being inexorable. It's a done deal. It's not a trend." 15:17 "If telehealth is a leading indicator, anybody in the care delivery business who isn't … trying to figure out how to make telehealth work in their core business is gonna find themselves … in a very problematic position." 16:50 "When will tele-whatever become an existential problem for laggard traditional provider organizations?" For more information, go to aventriahealth.com. Our host, Stacey Richter, discusses the impact of #telehealth on our #healthcarepodcast. #healthcare #podcast #digitalhealth Should provider organizations be getting rid of telehealth? Our host, Stacey Richter, discusses the impact of #telehealth on our #healthcarepodcast. #healthcare #podcast #digitalhealth Should telehealth be viewed as a threat? Our host, Stacey Richter, discusses the impact of #telehealth on our #healthcarepodcast. #healthcare #podcast #digitalhealth "Virtual is a 'head in the bed at the hospital' demand destroyer." Our host, Stacey Richter, discusses the impact of #telehealth on our #healthcarepodcast. #healthcare #podcast #digitalhealth "'Virtual' is the scapegoat." Our host, Stacey Richter, discusses the impact of #telehealth on our #healthcarepodcast. #healthcare #p

Believe me, filling in for the uncontested master of podcasts, Stacey Richter, is just a tad unnerving! My name is Dr. Steve Schutzer. I'm an orthopedic surgeon specializing in joint replacement surgery, and I think it's fair to say that I'm more comfortable, in my own lane, doing complex surgery than doing this introduction to our encore podcast 294 entitled "Building a Center of Excellence: A Playbook for Physician Entrepreneurs," which aired originally in October 2020. But when Stacey graciously offered me the honor of doing so, I said to myself (sic: Steve, suck it up) what an opportunity to share with the devoted listeners of this show my humble perspectives on the prominent position COEs (also known as Centers of Excellence) are playing in this rapidly accelerating, evolving, and exciting healthcare landscape. So, there's an ancient Chinese proverb that goes like this: "When the wind of change blows, some build walls, and others build windmills"—or in this case, Centers of Excellence! And the winds of change in healthcare are blowing, maybe even reaching gale force. In the year since episode 294 aired, there's been unambiguous upsurge of activity, in part fueled by the pandemic, that has collectively and finally moved the healthcare value agenda across the chasm, over the inflection point—and there's no turning back. Unaccountable fee for service as the predominant payment model for healthcare services is, well, shall we say, on its last legs—being replaced by reimbursement models that are aligned with the clinical and financial outcome of the services actually delivered to our patients. For COEs, that's characteristically in the form of predictable bundled payments and fully warrantied episodes of care. Question: Where do COEs fit in this new landscape? Answer: COEs are the common pathway for all healthcare purchasers (whether they're self-funded employers, advanced primary care groups, Medicare Advantage—all of them) to steer agnostically to high-quality specialists focused on a defined set of healthcare services and who are willing to assume total cost of care for their product. And the favorable impact of COEs on the ROI for purchasers has now moved beyond the realm of theory to indisputable. Take, for example, the recent report by the RAND Corporation published earlier this year in Health Affairs: A study of over 2300 patients who had either total joint, spine, or bariatric surgery done under the Carrum Health program at one of their COEs. Carrum Health is a value-based national COE platform that connects self-insured employers with top providers under standardized bundled payment arrangements. And now in full disclosure, I serve as medical advisor for the company; and our program, the Connecticut Joint Replacement Institute in Hartford, Connecticut, is actually a Carrum COE. But in this independent RAND analysis of two years of medical claims data, the savings per procedure when the surgery was done at a Carrum COE was over $16,000 per procedure. Readmission rates were reduced 80% on average. Out-of-pocket cost to the patient? Zero. And an astonishing 30% of patients who were in the queue awaiting surgery ultimately were treated nonoperatively! Peter Hayes is president and CEO of the Healthcare Purchaser Alliance of Maine and a frequent guest on this podcast. His organization has been under contract with Carrum for approximately two years and recently reported an ROI of 58% and plan savings approaching $1 million. And these data also closely reflect that reported in the Harvard Business Review two years ago by Ruth Coleman and colleagues from their experience with Walmart COEs. Finally, you know, I heard Stacey say of COEs in one of her podcasts, "This is not something you can do on a Tuesday." Agree. Prescient advice. As you will hear once again in just a moment, this takes work. But physician leaders and entrepreneurs, take heed. Although you won't be able to stand this up on a Tuesday, there's no reason why you can't begin next Monday. You can contact Dr. Schutzer at [email protected] and learn more at the Novel Healthcare Solutions website. Steven F. Schutzer, MD, graduated with honors from Union College and the University of Virginia School of Medicine. Following a surgical internship at the University of Rochester, he served as lieutenant in the Medical Corps of the United States Navy. After his tour of duty, Dr. Schutzer did his general surgical training at the University of Rochester and then completed his orthopedic residency at the University of Connecticut. He was then a fellow in adult hip and reconstructive surgery at the Massachusetts General Hospital, after which he entered practice in Hartford, Connecticut. Dr. Schutzer is a founding member and medical director of the Connecticut Joint Replacement Institute (CJRI), a Center of Excellence at Saint Francis Hospital in Hartford, where he served as medical director between 2007 and 2021. He is currently the physician executive

This interview with Lisa Trumble is mostly about clinically integrated networks (CINs)—what they are, how they work, how data get shared. Furthermore, we talk about hybrid CINs, meaning, for example, a virtual front door that might lead to in-person care. After that, we talk about the potential impact of direct contracting, which Lisa says could significantly change the healthcare marketplace. The hybrid talk, by the way, is toward the middle of the show; and we talk about direct contracting—that's near the end if you're short on time and you want to skip around. But before we go there, let's just level set a little bit, shall we, on the topics of accountability and integration as general constructs. Specifically, what's the impact, or lack thereof at times, when the provider is not accountable for patient results? I'm talking here about fee for service, in general, where the provider is not accountable for patient results. Like, if we're talking about a fee-for-service world and what it incents, it goes like this: Transaction happens. Somebody sends a bill. The end. I mean, in a fee-for-service world, the patient encounter may be the highest- or the lowest-value patient-doctor transaction in the history of humankind; but either way, the payment is the same. So, the incentive is to figure out how to encounter lots of patients and/or upcode wildly, I guess. The incentive is not to coordinate care or teach a patient how to take advantage of a telehealth offering to mitigate some social determinant of health or spend 10 minutes doing some education or shared decision making or establishing rapport and being culturally sensitive. Any docs who are doing that stuff are doing it on their own time in an FFS world. Here's the good news and the bad news—and I don't often hear it spelled out this bluntly, so I'll do the honors: If anyone wants to get paid to create patient health, they have to be accountable for the outcomes created—upside and downside. Frankly, when an organization is super worried about the downside, that could be—not in all cases, but it certainly could be—a clue that maybe their approach is a little bit more transactional and/or inefficient than perhaps they would like to admit. There's been much talk over the years about the importance of giving patients so-called "skin in the game," but what might work out better is to mandate that providers have so-called skin in the game. Providers have to be accountable so good providers can reap rewards and bad ones don't. The episode with Sunita Desai (EP334) is all about how providers have proven to actually be better "consumers" than "consumers," so there could be a constellation of rationales here. Now, if you're accountable for care, you must actually create outcomes, as just discussed. And to actually create outcomes, there must be integration. Integration is necessary. Care coordination is necessary both with internal and external other providers and entities. There are very, very few cases where a chronic condition can be appreciably improved by a random assortment of 7- to 15-minute patient encounters. Managing chronic conditions requires a longitudinal journey that weaves together most often more than one doctor, also nurses and a PA and a speech pathologist and a nutritionist and a Certified Diabetes Educator and maybe a physical therapist or two. Considering that 85% of healthcare spend in this country has to do with chronic conditions also ... yeah, integration is really required. And, yeah, how many decades later, we're still talking about interoperability. Here's a tidbit I found kinda apropos: Female doctors make $2 million less, apparently, over a 40-year career than their male counterparts. That's per research in Health Affairs, recently reported in the New York Times. More men become surgeons, and women have been shown to spend more time with their patients, leading to fewer services that can be billed for. What's the actionable takeaway there, I wonder? In this healthcare podcast, I have the honor and pleasure of speaking with Lisa Trumble. Lisa is president and CEO of a CIN, a clinically integrated network, called the Southern New England Healthcare Organization, or SoNE. SoNE was formed in January 2020 to integrate three ACOs [accountable care organizations] in two states. The CIN manages a population of over 200,000 patients—about $1.5 billion in total costs of care. Previously, she worked at Cambridge Health Alliance building their pop health and value-based structure to the point where about 60% of their business was in some form of risk or alternative payment models. There is one disclaimer that I would just ask you to keep in mind when listening to any conversation about value-based care—and there are lots of them going on right now—but I just want to tuck this in here because I'd be remiss not to mention it at some point. Dr. Mai Pham (EP325) has put this better than I ever would. She said recently, "After a decade of value-based

The discussion to follow is probably a 400-level class in payviders. If I just said the word payvider and you're scratching your head wondering where you may have heard that term before, this show is probably not the best place for you to start. I'd go back and get some context by listening first to the episodes with Steve Blumberg from GuideWell (EP304) and/or the one with John Moore from Chilmark (EP172); and for a really retrospective lookback, check out the one episode with Dr. Kris Smith from Northwell (EP127) from back when they were still trying to become an insurance carrier. It's like a time capsule into their ambitions. OK, if you're still with me, in this episode I'm looking forward to digging into payviders with Jeb Dunkelberger, who is the CEO of Sutter Health | Aetna. Sutter Health | Aetna is the payvider joint venture between, you guessed it, Sutter Health and Aetna. Not only is Jeb one who would obviously know a whole lot about payviders and how they operate given his role, but he's also super articulate and thoughtful in terms of the potential impacts that this type of entity can have on patients and the surrounding healthcare ecosystem. I started to get really curious about payviders and what they're up to because the term keeps coming up in conversations, number one. And the more it came up, the more it started to become really obvious that payvider is one of those terms that everybody tosses around and may or may not define it the same way. Jeb refers to a payvider as an entity that delivers care but also writes insurance products and takes risk for them—not just taking capitated payments or doing direct contracting. While it's the employer who actually takes the risk, this is the definition of payvider that we explore in this healthcare podcast. Two kinds of interesting points that Jeb makes, which I'll just underscore here: One is "demand destruction." I like the idea of the term because it brings a really obvious point into stark focus. Bottom line, taking on risk or value-based programs is easier if you are a smaller percentage of the healthcare spend. The bigger a percentage of the healthcare spend that gets cha-chinged into your cash register, the more you destroy your own demand by creating value-based programs that minimize downstream costs. Those downstream costs are your revenue, after all. Value-based care is all about demand destruction at its core. In the last question of this interview (so, this is the second thing I'm underscoring here), I ask Jeb if he thinks payviders will ultimately lower healthcare costs; and he comes back with a reframe of my question. He says if we take costs out of the system, will hospitals close? And if the hospitals close, then people get laid off. Fair point, since in many places the health system is one of the biggest employers in town if not the biggest—and also a political tour de force. So, there's more nuances here; but you'll have to either get to or skip to almost the end of the episode to hear them. Jeb Dunkelberger began his career as a health economist and consultant. He became the CEO of Sutter Health | Aetna to focus on alternative reimbursement models and value-based care. Jeb also wrote a book called Rich & Dying. You can learn more at sutterhealthaetna.com. You can also connect with Jeb on LinkedIn and follow him on Twitter. Jeb Dunkelberger, MSc, MHCI, currently serves as CEO of Sutter Health | Aetna (SH|A), a commercial insurance plan serving Northern California. The health plan aims to combine the value of retail, provider, and payer via its partnerships with CVS, Sutter Health, and Aetna. Prior to SH|A, Jeb led growth for two bay-area healthcare start-ups: Cricket Health and Notable Health. Jeb has also held executive roles at Highmark, McKesson, and EY. Jeb holds healthcare-related degrees from Virginia Tech, The London School of Economics, Cornell University, and University of Pennsylvania. 03:58 What all does Sutter Health | Aetna entail? 04:31 What does it mean to be a "performance network"? 04:48 What does it mean to be a payvider? 06:35 How common are payviders? 07:31 "We are writing direct risk." 09:21 How does the fully insured product work? 12:30 "You want to hold their feet to the fire, from a value-based perspective." 12:42 What's the incentive for providers to partner with payers? 15:25 "It's just math. It's the amount of lives times the amount of utilization multiplied by your unit costs." 20:58 "You have to have a day of reckoning, and that only comes from financial incentives creating that gateway out." 24:55 How do we think about reform and taking money out of the healthcare system? 26:58 "We also have to talk about repurposing the workforce." 27:27 "We need to upskill our workforce." 30:14 "Can a health system survive as the largest employer, year over year, if they give unit cost concessions, year over year? … The answer is no." You can learn more at sutterhealthaetna.com. You can also connect with Jeb on Lin

I attended the STAT Summit last week and heard the heart-wrenching story told by Charles Johnson, who is the founder of 4Kira4Moms, which is a group dedicated to improving maternal health equity. Charles's family is African American. After a planned C-section, his otherwise-healthy wife died an avoidable death because 10 hours after the clinical team was alerted that she had internal bleeding—10 hours later—they got around to wheeling her into surgery. At that point, she had three liters of blood in her abdomen. She bled out and died, leaving her newborn infant motherless. This all went down at a large, incredibly well-respected integrated delivery network. One of the biggest issues in healthcare today … well, there are many issues, so maybe I should start again. One of the biggest issues in healthcare that is going to be discussed on this podcast today is how to engage those patients or members or employees or consumers who might need our healthcare industry to work better on their behalf. This is especially a problem (a well-known problem) when we consider those patients who our healthcare system in so many ways does not serve well: many minority patients, Black people, other people of color, the LGBTQ community, people who do not speak English as their first language. These patient cohorts emerge on the other side of our healthcare industry sporting patient outcomes that are even worse than our usual not-so-great average patient outcomes. In this healthcare podcast, we're gonna talk about a new coalition formed by Walmart and six other employers, plus Included Health, which is the combined entity of Grand Rounds and Doctor On Demand. (They merged recently.) So, there was a coalition that was formed. It's called the Black Community Innovation Coalition, and in short, it's a new virtual-care program aimed at combating health disparities among African American workers. I wanted to learn more about this coalition, so in this episode I'm speaking with Ian Tong, MD, about the aforementioned Black Community Innovation Coalition—the how and also the intent. Dr. Tong is the chief medical officer over at Included Health and also a clinical assistant professor and adjunct faculty in the medical school at Stanford. One reason I was so intrigued is that the Black Community Innovation Coalition leverages ERGs (employee resource groups) in a way I thought was different. If you're unfamiliar, ERGs or, as I said, employee resource groups, used to be called employee affinity groups. Many big companies have them. These ERGs bring together groups with shared identities, shared experiences, shared interests. What I thought was worth contemplating if you're interested in improving health equity, health outcomes … through these existing ERG organizations, it might be possible to pull the healthcare system and these patients closer together to create healthcare benefits and care delivery models that are designed with them in mind. So, what I think might be actionable to others relative to this coalition and its methodology is the best practice of building the engagement mechanism into the design of the initiative. So often it's an afterthought if you think about it. We build the thing, and then we wonder how to "market" it—like the "marketing" is this separate and sequential function. It's not. And marketing is also probably a limiting misnomer. This is especially true, though, when contemplating minority populations for a whole bunch of reasons that we get into in this conversation. So that's number one: Build the engagement mechanism into the program design. But here's number two: Consider the engagement mechanism relative to existing channels of engagement, re: ERGs or otherwise. Other links on the show include: Rebecca Etz, PhD (EP295) talking about some best ways to measure primary care quality. The Harvard Implicit Bias Test You can learn more by checking out the Implicit Bias Test, the CDC REACH site, and includedhealth.com. Ian Tong, MD, is chief medical officer at Included Health (formerly Doctor On Demand and Grand Rounds Health). In this role, Ian leads all clinical care delivery, including clinical products and service lines, clinical quality, and practice performance of the clinical staff. Prior to Doctor On Demand, Ian held leadership roles including chief resident of Stanford Internal Medicine and co-medical director of the Arbor Free Clinic. He also founded and was medical director of The Health Resource Initiative for Veterans Everywhere (THRIVE), honored with the Award for Outstanding Achievement in Service to Homeless Veterans in 2008 by the US Secretary of Veterans Affairs. A national collegiate champion in rugby at the University of California at Berkeley, Ian was named to the All-American Team in 1994. He graduated from Berkeley with a bachelor's degree in English, then earned his medical degree from The University of Chicago Pritzker School of Medicine. He completed residency and chief residency at Stanfo

Over the holiday season here, we're running some of our favorite episodes from years past. This one is with Mike Schneider, who actually has taken another role since this show was recorded. Other than that, the information that Mike shares during this episode from 2020 is all good. So, let's do this thing. Disclaimer before we get started here: This show is probably a 300-level class in pharmaceutical/PBM relations. If you are tuning in for the first time and you aren't pretty familiar with the role of PBMs, I would go back and listen to, say, episode 241 with Vinay Patel or episode 166 with Tim Thomas from Crystal Clear Rx. OK, now that that's out of the way, if you're still with me, this episode is like a ride on a roller coaster. I talk with Mike Schneider. And we get into, you know, kinda deeply, the what and the why behind the "Big Three" traditional PBMs deciding that now might be a fantastic time to set up GPOs. PBMs are pharmacy benefit managers—there's three huge ones. GPO stands for group purchasing organization. Traditionally, these GPOs have purchased drugs and supplies for hospitals and other providers at, according to their marketing materials, volume discounts. So, the unfolding story here, in a nutshell, is that ESI (Express Scripts) set up a GPO called Ascent in Switzerland. Optum has had an Ireland operation going in full swing for a while. And now we have CVS Caremark setting up a GPO called Zinc. These GPOs are not like normal GPOs working with hospitals, but instead, these GPOs are the entity which is now going to negotiate with pharma companies. In the past, it was the PBM that was negotiating with the pharma company to get rebates. Now it's this GPO entity. "But wait," you may say. "Wasn't there an executive order the other day requiring PBMs to, for example, pass through all of the rebates that they're collecting to patients?" Indeed, there was. And that rule doesn't say anything about GPOs having to do the same, especially GPOs in, let's just say, Switzerland. It's a tangled web we weave. You can learn more by connecting with Mike on LinkedIn. Mike Schneider is an experienced healthcare executive with over 20 years of experience in the pharmaceutical manufacturer, pharmacy benefit manager, and payer side of healthcare. He previously spent 9 years at CVS Caremark, where he was a director of industry relations with responsibility for trade strategy development, rebate negotiations, and contract execution for CVS Caremark's own Medicare Part D plans and that of its clients. He held a similar position at Universal American (UA) before it was acquired by CVS Health, where he also negotiated UA's commercial business. Mike has held various sales and market access roles with pharmaceutical manufacturers with increasing responsibility. Before entering healthcare, Mike began his career as a researcher at the Procter & Gamble Company in Cincinnati, where he worked on hair care product formulation development focusing on the key markets of China and Japan, and then moved on to work in drug development. Mike holds a BS degree from the University of Illinois and an MBA from the University of Akron. 02:48 What does a GPO add to a PBM? 05:23 Rebates vs driving more revenue. 10:39 PBMs vs safe harbors. 12:25 The net impact on the commercial side. 14:07 PBMs vs pharmaceutical manufacturers. 14:54 How the "Big Three" PBMs compete with each other, and how employers would choose between them. 15:56 What the net-net is here. 18:06 How PBMs are shifting their models. 20:42 How GPOs may be making things even less transparent. 21:31 "The PBM world as a whole is not very transparent." 25:00 "One of the biggest beneficiaries of this whole rebate [system] is the government." 25:46 "The question is, 'Who's paying those costs?'" 26:02 EP216 with Chris Sloan.27:00 A better way to move money from Pharma to employers and plan sponsors. 28:04 "Put your money where your mouth is." You can learn more by connecting with Mike on LinkedIn. Check out our newest #healthcarepodcast with Mike Schneider as he discusses #PBMs and #GPOs. #healthcare #podcast #digitalhealth #healthcarefinance #pharma What does a GPO add to a PBM? Mike Schneider discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma Rebates vs driving more revenue. Mike Schneider discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma PBMs vs safe harbors. Mike Schneider discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma What is the net impact on the commercial side? Mike Schneider discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma PBMs vs pharmaceutical manufacturers. Mike Schneider discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma How do the "Big Three" PBMs compete with each other? M

In this healthcare podcast, I speak with Peter Hayes, who is president and CEO at the Healthcare Purchaser Alliance of Maine and a national presence in healthcare strategy, innovation, and a frequent keynote speaker. One thing, among many, that Peter said during our conversation struck me. He said it will take a village to fix what ails the healthcare industry in this country. There are too many interdependencies. This point obviously resonates around these parts because it's the rationale for the Relentless Health Value podcast. We started this show on the recognition that if you want to achieve anything in healthcare, you cannot do it without collaboration/cooperation/grudging acquiescence of other stakeholders in the patient journey or the payment journey. And when I say, "You can't do anything," I mean you can't sell anything, you can't improve patient care, and, most relevant to this particular episode, you can't contain prices. If we're talking about health systems (for example, hospitals and the like), they are not going to curtail their price hikes or improve the value of care delivered or safety or infection control really unless patients and employers and CMS and others demand that they do—and unless employers and others do some of the five things that Peter Hayes mentions at the end of our conversation. Spoiler alert there. For context to this discussion, let's check in with some of the biggest, most powerful health systems in this country. If I limit this comment to the "nonprofit" ones—and I say "nonprofit" with air quotes because what does that mean exactly?—look, I know there are many health system execs that listen to this show, but there's some inalienable facts here. And let's talk about them with the intent of fixing them because nothing is going to get fixed that isn't talked about. It's not my nature to mince words, so I won't. Many hospitals are, by almost every account, pretty darn inefficient. And they don't do cost accounting, but then they'll scream and claim to be losing money when paid the exact same prices for certain services that other hospitals can get paid and make a fair profit. Crappy workflows cost money. Talk to anybody who has watched even the trailer to a Six Sigma course. Another thing that costs money is when all the burned-out doctors quit and you have to recruit new ones, but that's a topic for a different day. Listen the EP323 with Arshad Rahim, MD. But there's also inefficiencies in how many health systems purchase supplies. (Listen to EP281 with Rob Austin for more on that.) Further, paying the C-suite millions of dollars but maybe underpaying or understaffing nurses has consequences. There's complaints about Medicare payer mixes, but then somehow there's enough spare shekel to put a waterfall in the lobby. Nonprofit hospitals also don't pay any taxes, keep in mind, which is a huge financial windfall, especially when they provide vanishingly small amounts of charity care compared to revenue. See the top 10 health system hall of shame in this category here. Here's another point to ponder: Amongst the hundreds, thousands, of requests I get from PR firms pitching guests to come on this show, there are plenty from what appears to be a pretty large cottage industry that I had never heard of before. I'll call it the real estate for nonprofit hospitals cottage industry. From what I can gather by the promo copy, this involves buying up medical office buildings, not paying any real estate taxes, and then leasing out the space. I should have one of these guys come on the show just to shine some light on whatever this apparently pretty common shenanigan is. As Vikas Saini, MD, from the Lown Institute has said, "No margin, no mission" can become an excuse for all kinds of questionable behavior. So bottom line, we have employers, employees, taxpayers, cash-pay patients whose federal and/or state and/or local taxes are going to support these nonprofit hospitals—but then there's this double tax. Because they claim to be losing money on Medicare patients, they justify cost shifting some pretty big bucks onto the commercially insured patients, who are then paying, on average, some wildly inflated prices for healthcare services. This might be considered a double tax if you think about it: tax dollars going to the IRS directly and then after-tax dollars buying that knee replacement for $125,000 that should cost $25,000. Consider that a $100,000 double tax. But why should a hospital with a motive to maximize margins quit it with their questionable and secretive billing practices if employers just pay whatever the bill is no fuss no muss? Short answer: They won't. So, it's going to be up to someone else in the village to make it untenable to continue. It's going to be up to another party to slow that roll. In this conversation, Peter Hayes talks about the RAND Hospital Price Transparency Study. One last thing that may or may not be relevant here, but I can't resist a good sidebar. N

At the beginning of 2021, my guest in this healthcare podcast, Paul Simms, had come up with a set of predictions for 2021. Some came true; some didn't. But I was fascinated by a bunch of things, one of them being Paul's sort of implicit and explicit assessment of the context of these predictions. Right now, Pharma is in a weird moment: It's a confluence of technology, consumer expectations, changes in care delivery accelerated by the pandemic, policy at the state and federal level, and the financial realities of where we're at today. So, if you meet patients or providers or payers where they were last year or the year before that, you're gonna potentially be pretty far off the mark. There's also the financial realities which Pharma kind of exacerbated for themselves when some, many, spent the past however many years making their numbers by raising prices on existing drugs and developing drugs for mostly rare diseases but then, at the same time, not innovating antibiotics or for other diseases that impact so many lives. I mean, no comments on these strategies, but is it safe to then assume that an environment that allows for this sort of thing will continue indefinitely? Not only from an "Is this really the most patient-centric thing we can do?" standpoint, especially when you consider how many patients are being left behind as a result of both the narrow focus and also the price points—upwards of 40% of Americans have said they've abandoned meds due to cost, after all—but potentially also from a business continuity standpoint. Right now could be a decent time to start getting creative and experiment with new models and new ways to reach and engage. My guest in this episode, Paul Simms, is the former chairman of eyeforpharma, which ran the largest events in the pharmaceutical space for a number of years. His new company, Impatient Health, helps a very conservative industry find ways to deliver and provide patient value. During our conversation, Paul made a bunch of thought-provoking points; but one of them I keyed onto was a counterpoint to the ye old pharmaceutical conventional wisdom that high drug prices are needed for innovation. He said that actually all the money sloshing around could inhibit R&D innovation. Here's the thinking: If you can make a ton of money not being super innovative, then why be innovative? If you can make a ton of money not really improving OS (overall survival) in a meaningful way and not really helping a whole lot of patients, then why bother doing anything else, especially if the "anything else" might require risk or new business models that are going to take time and determination? During our chat, the work of Clay Christensen comes up more than once. Just to remind you, Clay Christensen is the one who coined the term disrupters. He wrote The Innovator's Dilemma back in the 1990s. Keep in mind that the main point of that whole book is that if you're a big incumbent, it's pretty easy to cruise along thinking everything is great until you get kneecapped by a competitor who takes advantage of a new business model or consumer preference or technology or law—all of which are coming out of the woodwork right now. Paul Simms has put it this way: When the habitat changes, evolution happens and entities that are able to adapt will thrive. I've also heard it put this way: It's not IQ or even EQ that matters most when change is afoot. It's AQ—the ability to adapt. You can learn more by connecting with Paul on LinkedIn. Paul Simms is known as the "pharma provocateur" for his efforts to realize the unfulfilled potential of the life sciences industry. His journey started in 2003 with eyeforpharma, an organization which he quickly grew into the pharmaceutical industry's most influential and largest event organizer, acquired by Reuters in 2019. He has since set up a think tank and consultancy called Impatient Health. Paul counts the industry's CEOs and innovators amongst his friends and is a regular speaker, host, author, and commentator. 05:04 "We're at that catalyst point where we could go one way or the other." 05:39 How can the analogy of Web 1.0 vs Web 2.0 be applied to the future of healthcare business models? 07:06 "People need to improve their awareness at the very least as to a new generation of companies coming forward." 08:31 "What now is the new business model that can exist in that world?" 09:07 Is there a stage pre-agility that will allow pharma companies to pivot to future markets? 12:08 What are the new ways to think about things in the future of healthcare business? 14:09 "The mind boggles at what is possible but is not yet being achieved." 16:11 Why could prices falling actually spark more innovation? 16:49 EP300 with Bruce Rector, MD.21:36 "It's these companies that have this data-driven consumer relationship that I think are very interesting." 25:16 "I just think that it's a mindset change first." 25:38 "I'm not here to be right or wrong. I'm just here to enable the convers

I was on LinkedIn, and someone was saying, "Oh, there's no real money in generic drugs. It's not a huge issue if patients are paying 10 bucks instead of 93 cents for something. It's not like anyone is getting rich off of that, and it's not like patient impact here is super meaningful." This is a pretty common refrain, actually; and from a conventional wisdom perspective, I get it, especially for those living comfortable middle- or upper-middle-class lives where an extra $9.07 for a prescription isn't a huge deal—except there are big-time issues with the generic supply chain that are worth billions and billions of dollars and that have a major impact on patient health. So, let's discuss. I started casting my eye over to what was going on on the generic drug front mainly because of the huge lawsuits in the news lately that were either filed and/or settled. Generic drug manufacturers are and have been the defendants in these lawsuits, accused of price collusion amongst other things. These lawsuits aren't fighting over chump change either, unless you consider hundreds and hundreds of millions of dollars as chump change, that is. The number of zeros on the table in these lawsuits may strike you, as they did me, as a factor of interest. I mean, we're talking about generic drugs here. The cost of goods on these drugs—there was a WHO study on this—and the cost of goods to manufacture a small molecule generic is, a lot of times, pennies. Further, there's no innovation undertaken by generic manufacturers in their manufacture of generic meds. Just so no one gets confused here, the rationale branded pharma manufacturers tout for high-cost branded (ie, new) drugs is that branded pharma manufacturers have to spot the R&D (research and development) dollars to come up with the new therapies and they take a lot of risk therein. Generic manufacturers, on the other hand, are getting a recipe that has been handed down to them. There is no R&D. There is no innovation. So, to restate the situation analysis, we have generic manufacturers spending no money on innovation and enjoying, many times, a low cost of goods. If the price were set using a cost plus methodology, you'd expect the prices paid by payers and patients to be correspondingly low—except they aren't. Depending on what study you look at, somewhere between 29% and 44% of patients who have been prescribed a med say they aren't taking it because it is unaffordable. Considering that 90% of the prescriptions written in this country are for generics, one could logically assume that there's some generics in that mix that are unaffordable due to their high prices. But there's a compounding factor here: The patient affordability problem has another aspect to it beyond just patients having to pay a portion, or all, of the price of generic meds that may be, let's just say, higher than one might expect them to be given the cost of goods. But here's this other factor: The share of patient out of pocket is weirdly high when it comes to generics. Consider that generics and branded generics account for 19% of invoice-level spending but represent 65% of patient out-of-pocket costs (IQVIA National Prescription Audit, 12/2020). So, that seems out of whack. But keep in mind, as I mentioned earlier, that 90% of prescriptions written in this country are for generics. That's five billion scripts a year. As my guest in this healthcare podcast, Steven Quimby, MD, says, generic medications touch many more lives than new branded drugs. Obviously, GoodRx comes up in the conversation in this episode. If you want to learn more about pharmacy list prices and how GoodRx makes money, listen to the conversation I had with Ge Bai (EP306 and AEE13). Several people actually mentioned on LinkedIn and Twitter that hers was one of the best explanations they had heard on these topics, so I recommend those shows. The show also with Vinay Patel dives pretty deeply into the "what's the what" between PBMs and pharmacies (EP241) if you're looking for more on that. Dr. Quimby also mentions how important it could be for providers to know at the point of prescribing what the cost of medications are for a patient and get this information right in their EHR system. Refer to the episode with Carm Huntress (EP284) for more info on that. My guest, as I said, Steven Quimby, MD, is an author and newly retired physician. His father was a pharmacist with a little drugstore that thrived in the late 1960s and early 1970s, so he literally grew up in the business. Dr. Quimby recently wrote a book called Billions in Your Generic Drugs. In sum, it's a supply chain where not only is nobody watching the henhouse, but everybody within that supply chain has a very, very vested interest to see prices go up. This is kind of a theme in healthcare, but nonetheless. Oh, and one last point to ponder before we get started here: Dr. Quimby mentions at one point that 86% of Americans believe that their health insurance plan always offers the l

Most people who have been in the healthcare industry for a while have heard by now the metaphor about the two canoes. Provider organizations or health systems with some of their payments coming from a fee-for-service (FFS) payment model and some of them coming from value-based arrangements have the challenge of one foot in the FFS canoe and one foot in the value-based canoe. They're probably going through a lot of metaphorical pants is the main takeaway that often comes to mind for me. But wardrobe malfunctions aside, this is a really difficult organizational challenge. That's what I'm talking about in this healthcare podcast with Dr. David Carmouche: how to deal with the operational challenges, the cultural challenges, maybe even (very arguably) the generational challenges here. Top line (very top line), to succeed in value-based care, you gotta have three things aligned: The payment model, the construct of the contract. No kidding, you have to have value-based contracts to succeed in value-based care. The big problem here—which is not to be underestimated—is that there are some areas of the country where it's really tough to find somebody, or enough somebodies, willing to offer a capitated, prospective value-based contract. That would be really frustrating to want to go forward (if you're a provider) in a value-based way but to not have a willing payer partner and/or employer partner to do so. So please step up, payers, policy makers, and employers in those areas of the country. But the construct of the value-based contracts can also not be overlooked. Toward the end of this interview, Dr. Carmouche gets into the different results that were achieved between two patient populations: one served by a Medicare Advantage (MA) plan and one in an MSSP (Medicare Shared Savings Program) model. So, the same provider network, the same environment, same geography, same number of lives, different payment model. Stick around for that part of the conversation. It's pretty eye-opening. The second of the three things to be aligned to be successful in value-based care are physician/administrative incentives and the employment models. Seriously, who is thinking that anyone's gonna succeed managing downstream risk when the physicians making the decisions about downstream services used are bonused by how much downstream costs they can drive and everyone is eating what they kill? If culture eats strategy for breakfast, incentives eat culture for lunch, as they say. Leadership skills. Leaders who are going to succeed in a world moving from FFS to VBC have to be mission driven toward that cause. They have to be strategic enough in their approach to take potential short-term revenue hits in pursuit of the longer-term goal—even the medium-term goal, honestly, if you think about the whole context of what's going on here. Leaders also need the skill and aptitude to pull off the change management and adjustments to the organizational culture that are needed. Staffs and teams really need systematic support. Value-based care is a team sport, and teams require leadership. Here's one example of where not having great leadership trickles down to bad results: If nurses or social workers or, in general, people of color or women in an organization feel demeaned or not valued by a critical mass of those in power—and maybe here I mean physicians or other physicians that they work with—then patient safety scores diminish and quality goes down. There's enough studies on the impact of having and not having psychological safety that it's getting harder to dispute what I just said. And if this environment becomes as toxic as the stories that you read about often enough, that's on the C-suite to fix. If the C-suite has value-based aspirations, that C-suite really might want to reprioritize their to-do lists. So, think about stuff like this because toxic environments make consistently delivering high-value care and satisfied patients difficult at best for many reasons. Here's a timely side note: I heard someone say the other day that in light of the pandemic and the FFS inpatient and outpatient volume fluctuations that plummeted and rose at various points during the pandemic, compounded with Medicare FFS rates that some institutions claim are not profitable or profitable enough … someone said that, given these factors, the best way to de-risk is to take on more risk. That's interesting to think about on a number of levels. In this healthcare podcast, as I mentioned, I'm talking about all this and more with Dr. David Carmouche. Dr. Carmouche was recently the executive vice president of value-based care and network operations at Ochsner, which is a very big integrated delivery network in Louisiana. You heard it here first, folks, but Dr. Carmouche will take on a new role in November 2021. He will oversee Walmart's expanding clinical care offerings and operations, including Walmart Health MeMD and its social determinants of health line of business. Here

This episode's conversation is about the new Consolidated Appropriations Act (CAA), the fee disclosure part of it, as well as ERISA and the fiduciary responsibility that self-insured employers are responsible to comply with under the law. Don't worry, the first thing my guest in this healthcare podcast, Christin Deacon, does is explain these terms, what they actually mean, and how they can be a tool actually in CEOs' or CFOs' toolboxes to get access to the employer's own claims data, which is a linchpin here that we'll talk about in a sec. But suffice to say here that the ERISA fiduciary responsibility has a few provisions and, in general, self-insured employer health plan administrators kind of tend to off-load worrying about these provisions to their brokers and consultants. The problem with this is that brokers and consultants do not bear the ERISA fiduciary responsibility. They do not bear the responsibility of complying with the CAA either. The employer does. You'd think that, given this, more self-insured employers would dig in hard to do their own due diligence to check whether or not their plan is compliant. But they don't. I asked Parker Edman from Leavitt Partners why, and he said he thought that it's likely a combination of the "old boy's network" and a fear of the massive lift that switching up plan designs or even looking at this might entail. But here's another facet: There's a contingent of plan advisors and carriers who have a very vested interest in self-insured employers not knowing what's going on with their spend. And they actually even have a magic trick that they have developed to beat back inquiries. In this magic trick, HIPAA is the abracadabra. Let me give you an example role-play. Self-insured employer: I need my claims data. Carrier: HIPAA. Self-insured employer: Nooo, not the HIPAA. I stand down. Forget I mentioned it. Here's a pro tip: Actually read HIPAA. Pull it up on your computer. It's easy to find. Spoiler alert: You know what you'll discover? Ninety percent of it is a love note to the carriers themselves that govern the data they must possess and the structure of that data. Ten percent of it is about the privacy of that data, and in that 10%, it specifies clearly that a self-insured employer is a covered entity and, therefore, falls under the umbrella of who can have access to claims data, especially if it is deidentified. Of course, said employer has obligations as to how to treat that data, but yeah, just don't be fooled by the HIPAA when it's wielded like sorcery. The only reason that word has any power is because so many C-suites let it have power. Also now, there's some provisions in the Consolidated Appropriations Act, the CAA (which was passed in 2020), which really ups the ante here. My guest, Christin Deacon, explains all of this and more, including what's up with the CAA, which is good because I could barely remember the name of it throughout the course of this interview. Christin Deacon is a healthcare leader and public-sector entrepreneur. She is a former deputy attorney general, a "recovering attorney" as she calls herself. Earlier this year, 2021, she left her role running the state health and school health benefits plan for about 800,000 New Jersey public employees. Now, she's just transitioned to the private sector where she serves as an executive VP at 4C Health Solutions. You can learn more by emailing Christin at [email protected]. You can also connect with her on LinkedIn. Christin Deacon is a healthcare thought leader who brings with her a wealth of experience in both public and private sector. Driven by her passion to change the healthcare system to truly benefit patients and payers, she focuses on bringing solutions and agency to self-funded and government-sponsored health plans. 04:10 What is ERISA, and what does it stand for? 05:40 What is a fiduciary obligation for an employer? 08:18 "We're now at a point of spending 17.7% of our GDP on healthcare costs." 09:39 "You absolutely have the keys to … controlling that spend." 13:35 "You have to own your data." 15:04 "If you don't have your claims data, how do you know you're paying reasonable fees?" 15:31 "If your carrier is telling you, 'Oh, HIPAA … you can't look at your data,' you need to pull out that red BS card." 16:25 How do employers navigate carriers refusing to share claims data? 21:36 "It has only as much teeth as the self-funded employer is … willing to learn about it and … willing to push back." 22:22 "This is not aspirational; this is an absolute floor." 24:11 "What does value mean?" 27:41 "Become familiar with HIPAA beyond just the privacy piece." 29:30 "At the end of the day, it's about people." 29:38 "If you're not paying reasonable fees, you're using plan assets to enrich others." 32:21 "The self-insured market … they hold the keys to unlocking value. And they're holding them; they just have to use them." 34:10 Marshall Allen's new book. You can learn more by emailing Chris

First, let's talk about reducing administrative waste in the US healthcare system. There was a pretty famous 2019 study by Shrank et al. that estimated about 25% of the $3.6 trillion the US spends on healthcare annually is potentially wasteful. This is each person spending $2500 unnecessarily. Robert Kocher wrote a really interesting article about getting rid of administrative waste and inefficiencies, and he said that it is the "safest form of health care cost savings; virtually no one argues that administrative costs should remain high. Reducing administrative waste should be the highest priority … [because] everyone, including patients and clinicians, would benefit from lower health care costs." In my mind, "everyone" means payers, policy makers, and also providers who are or want to take some accountability for the total cost of care here. To talk about the possibilities, I have the perfect guest: Gary Campbell, who is the CEO of Johnson Health Center, which is an FQHC, a Federally Qualified Health Center, in Lynchburg, Virginia. Why is the CEO of an FQHC a great person to talk about cutting out administrative waste with? Well, first of all, the patient population is what many would consider challenging at an FQHC. Second, they really have to cut out as much waste as possible because there is zero potential to cost shift. They do not have the option to charge their commercial lives 4x Medicare or whatever and effectively cost shift the impact of inefficiencies. There basically are no commercial lives. You either figure out how to be efficient, or the patient population does not get care. As Gary and I were talking, however, it became clear that when you cut out administrative waste, you wind up actually with the potential to become a great place to work. One reason for this just has to do with the process of cutting out waste, which requires culture and process. And a by-product of a great culture and a great process means a great place to work. You might be thinking, as I was thinking, that this show, which is supposed to be about cutting administrative waste, is going to be all about how to do lean and Six Sigma and pretty much go peak MBA. Spoiler alert: It's not. When I asked Gary how to be operationally efficient, it all ladders up to organizational leadership: leaders who commit to putting patients first, to have core values with the expectation to actually achieve them (for reals—not just in the marketing). Because without effective, accountable, committed leadership, patient first, lowering the cost of care, removing administrative waste … it ain't gonna happen. Leaders should be visible, have a vision, a strategic plan, project plans, and be inspirational. They also need to not be afraid to "move along," as they say, people who are pulling the team down and holding it back—maybe even if a short-term revenue hit will transpire. Before we get started here, let's talk about FQHCs for a sec just in case you're unfamiliar. Besides the acronym giving me fits of dyslexia—my brain always wants to invert the letters, so I have a Post-it Note here and I'm staring at it so, hopefully, I'll be able to keep this straight—FQHCs (Federally Qualified Health Centers) are usually nonprofits that are oriented to take care of the underserved. Today they serve upwards of 30 million people in the United States, and that's a growing number. There's something like 1500 of them across all 50 states. They're federally funded. They are a safety net really for individuals out there who may not be able to access care anywhere else. There's generally bipartisan support for FQHCs and often a real purpose and passion to really care for people regardless of their ability to pay. They also tend to offer a lot of resources under one roof (eg, medical care, dental care, other things, mental health care), which can add substantially to the operational complexity. Gary Campbell, my guest in this healthcare podcast as I said, is the CEO of an FQHC. Gary has a procurement and operations background, and this background informs how he approaches leadership and care delivery in ways that I find inspirational—and I hope that you do, too. Some of the conversation that we had in this episode reminded me of the interview with Tony DiGioia, MD, in EP332; so if you want to dig further into this topic, go back and listen to that episode. That interview is very specifically about how to create a patient-centric value system, which Dr. DiGioia says should be the new OS for healthcare delivery. During this show, I also mention my conversation with Jerry Durham (EP297), where we talk about streamlining the front desk. I didn't mention this in the show, but another episode that would be great to go back and listen to if this topic intrigues you is the one with Matt Anderson, MD, MBA, talking about how things get better when the scrubs and the suits collaborate (EP266). You can learn more at impact2lead.com. Gary Campbell is the founder and owner of

There's a next generation of digital front doors being created that open up to a patient/member experience that folds in payer, provider, and employer data—plus behavioral data the patient themselves generates when they browse through content in there. Because that's what it takes for a so-called personalized experience or patient journey to ensue. This is what I'm talking about in this healthcare podcast with Kristin Begley, PharmD. In an ideal world, you'd have, for example, a member/patient/customer who goes to their doctor and is handed a tablet to fill out an intake form. When they hit submit, they get access to a digital front door that leads to a vast Web portal inhabited by the doctor as well as the patient's payer and their employer. This personalized Web portal then knows this patient has asthma and is nonadherent to their maintenance medication and is using their rescue med a lot, because it's in the payer PBM (pharmacy benefit manager) data. The portal also knows the patient is searching a lot on content like what to do when you have a terrible asthma attack. Further, the portal knows that the patient's current doctor visit, the one where they're filling out the intake form, is about a respiratory chief complaint, because it's in the doctor data and also on that intake form, which, by the way, was immediately uploaded with structured insights available to all parties sharing the portal data. Now, everybody who needs to know knows this patient is at obvious rising risk. What can happen now? Lots of things. Because the portal knows what's included in the patient's benefit plan, there can be a proactive reach-out to get that patient into an available whole longitudinal program before they wind up in the ER. Maybe that's a point solution. Maybe that's a high-quality doctor offering a bundle. Which leads me to the whole value-based care part of this. Front doors are not only for patients to get steered to the best provider—maybe one with a value-based arrangement—but also, in a way, a front door for providers and payers to work together. A portal can be the "hub," if you will, the shared neutral interoperable space for all the parties who need to share space for their value-based arrangement to work out. In fact, some of these portals are taking on risk themselves. Like, you guys all use our portal for your value-based arrangements, and we'll guarantee this level of performance in those arrangements. Portals sharing risk and taking upside becomes even more relevant when the portal comes with its own network of existing provider users, for example—provider users who want to be paid for value and also with EHR (electronic health record) data and direct access and influence over patient care. It's the old network effect. But besides helping make sure the patient gets the right care at the right time, digital front doors also have the potential to ease patient administrative burden. While there's lots of well-placed attention on affordability, patient administrative burden means delayed or foregone care. That's as per a new study by Michael Anne Kyle, PhD, and Austin Frakt, PhD. Kristin Begley is chief commercial officer at Wildflower Health right now, but she started out as a pharmacist before she defected to the business world. She has spent time in the pharmacy space with big companies and small companies before transitioning into the value-based, risk-based world. She's now at Wildflower leading sales and account management, and she knows a whole lot about digital front doors. You can learn more at wildflowerhealth.com. Kristin Begley, PharmD, is a proven leader in the healthcare space with 20 years of experience in health information technology and the pharmaceutical supply chain, focusing on innovative solutions and software. She currently serves as the chief commercial officer of Wildflower Health, a modular digital-enablement care company that activates women and their families within the healthcare ecosystem. Wildflower's software, hardware, and humanware amplify and personalize available resources to women, breaking down silos of care between payers and clinicians while fueling the shift from fee-for-service to value-based care. Wildflower supports the whole person by helping clinicians address both clinical and social determinants of health needs and empowering women to confidently navigate and access care for the family. Kristin is a founding member of All Tru Health, a consulting organization dedicated to improving quality and lowering healthcare costs for Americans, with an emphasis on emerging technology and high-value clinical care. She also served as the chief commercial officer at EmpiRx Health, a pharmacy care manager with a model rooted in payer alignment through at-risk management and concierge service. Prior to that, Kristin was the chief pharmacy officer of Truveris, a healthcare technology company that sheds light on the inner workings of the pharmaceutical supply chain, serving a

Reference-based pricing, the way that most employee benefit consultants use the term anyway, refers to a methodology used by employers to pay providers for services. Usually we're talking within a fee-for-service (FFS) environment here. The way it typically works ... there are different flavors, but how it typically works is this: Reference-based pricing (RBP) means that an employer starts with some reference-based price. Many times, it's the Medicare rate. Medicare will pay X dollars for something. The employer—and when I say employer, I mean the vendor/company the employer is using to run this whole thing mainly—but the employer will decide that they're willing to pay some percent over the Medicare rate to providers who render that service to the employee. Maybe it's 10% over the Medicare rate or 20% to 50% as David Contorno talks about in this healthcare podcast. One of the biggest pushbacks against RBP schemes has been that it results in balance bills for employees, meaning that an employee goes to the hospital, the employer decides to pay some RBP amount for that service to the hospital, but the hospital hasn't necessarily agreed to accept that amount. There's no contract in place. So, the hospital decides to bill whatever their chargemaster rate is—which, as we all know, is redonkulous—and the employee gets a giant out-of-network balance bill. For the most part, this doesn't have to happen if you do it right; and David Contorno discusses all of this and more on this An Expert Explains. You can learn more at epoweredbenefits.com. You can also connect with David on LinkedIn. David Contorno is founder of E Powered Benefits. As a native of New York, David began his career in the insurance industry at the age of 14 and has since become a leading expert in the realm of employee benefits over the last 22 years. David was Benefits Selling magazine's 2015 Broker of the Year, and in March 2016, Forbes deemed him "one of America's most innovative benefits leaders." More recently, he received the 2017 Leadership Award at ASCEND, the annual conference of The Association for Insurance Leadership, which recognizes those whose leadership in support of improving the value and performance of employee benefits has significantly advanced the industry. David is a member of the board of directors for both the Charlotte Association of Health Underwriters and HealthReach Community Clinic. He served on the NC Insurance Commissioners Life and Health Agent Advisory Committee, as well as participated in the Technical Advisory Group that helped with the market reforms required under the Affordable Care Act in North Carolina. He is a longtime member of the Lake Norman and South Iredell Chambers of Commerce as well as the National, North Carolina, New York, and Long Island Associations of Health Underwriters. David contributes to numerous publications, including Forbes, Benefits Selling magazine, Business Leader magazine, and Insurance Thought Leadership. David is committed to giving back to his community and actively participates in the membership drive for the United Way, assisting the local chapter of Habitat for Humanity, and supporting The Dove House Child Advocacy Center. When he is not working, he enjoys boating and traveling. 01:37 What does good reference-based pricing look like? 01:57 What is the pricing methodology that 97% of healthcare is using? 04:25 How has E Powered Benefits minimized the noise around reference-based pricing? 04:55 "You're getting what we view as balance bills all the time." 06:47 "What very few people really recognize is that hospitals have multiple revenue streams." 07:36 "Which is the highest price? The answer is, commercial." You can learn more at epoweredbenefits.com. You can also connect with David on LinkedIn. @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast What does good reference-based pricing look like? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast What is the pricing methodology that 97% of healthcare is using? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast How has E Powered Benefits minimized the noise around reference-based pricing? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast "You're getting what we view as balance bills all the time." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast "What very few people really recognize is that hospitals have multiple revenue streams." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast "Which is the highest price? The answer is, commercial." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast Recent past interviews: Click a guest's name for their

Let's just start here: As a general construct, insurance carriers have every incentive for health insurance premiums to go up every year. If you're an employer, that is a material fact. Is it counterintuitive? Maybe. Except if you're an employer and your premiums are going up year after year, it begs the question why, every single year, the already-extravagant amount you pay continues to go up way more than the inflation rate. You'd think that if your broker and your plan administrator were so great at their fiduciary responsibility over your self-insured plan that this wouldn't be happening. Oh right, whosever PPO network you're using, they don't have any fiduciary responsibility over your self-insured plan. You do, all you CFOs and CEOs and benefit professionals out there. Wait, I misspoke. Plan administrators do have fiduciary responsibility—to their shareholders. The CEO of CVS/Aetna made $36 million in 2019. He's clearly very good at that job. The rest of them are, too. I'm not singling anyone out here. And also, this podcast is not investment advice. In short, as previously stated, most major insurance carriers and the brokers they pay commissions to have every incentive for your premiums to go up every single year. That's where we're at, folks. It's an open secret, yet so many are just getting so wildly taken advantage of by carriers and brokers whom they have really put their trust in. If you work for a self-insured employer, tell your CFO/CEO to listen to this show. Or if you are a CEO/CFO or a benefits professional in charge of healthcare benefits, welcome. I hope this information is helpful. My guest in this healthcare podcast, David Contorno, has been in the benefits industry longer than he hasn't been in the benefits industry. I think he started working in a benefits brokerage when he was 17 or something. Currently, he's the founder of E Powered Benefits. In this episode, we talk about the keys for self-insured employers that lead to better health for their employees at something like 20% or more lower costs. Here's some of the imperatives for employers that David digs into in this episode: Advanced primary care—really valuing primary care providers who do not work for hospital systems and, therefore, are not subjected to the ball and chain of perverse incentives that David talks about at some length. Getting cost and quality data so you can make prospective choices and not get hit in the back of the head with an after-the-fact "gotcha" in the form of an overpriced bill that you are now obligated to pay. Let me bring up all the articles lately in the New York Times and elsewhere … people paying hundreds of thousands of dollars for something that should cost a fraction of that. Most of them have "good" insurance (keep that in mind) from their employer. Also keep in mind that most of these stories that hit the news are the ones where some poor employee got stuck with a bill—not the metric ton of other examples where the self-insured employer was on the hook. If you're an employer, you can get ahead of these "gotcha" moments. It's textbook risk mitigation if nothing else. Create benefit designs to help employees find and incent them to use the highest-quality providers charging a fair price. Listen to EP334 with Sunita Desai for more on the topic of incenting consumerism. Know how your broker gets paid. If someone is paying your broker a commission and it isn't you, then your broker makes more money when your premiums and rates go up. They are a sales rep getting paid to make someone else money off of you. Get a handle on your pharmacy spend. David gets into some nuances here which are super interesting. You can learn more at epoweredbenefits.com. You can also connect with David on LinkedIn. David Contorno is founder of E Powered Benefits. As a native of New York, David began his career in the insurance industry at the age of 14 and has since become a leading expert in the realm of employee benefits over the last 22 years. David was Benefits Selling magazine's 2015 Broker of the Year, and in March 2016, Forbes deemed him "one of America's most innovative benefits leaders." More recently, he received the 2017 Leadership Award at ASCEND, the annual conference of The Association for Insurance Leadership, which recognizes those whose leadership in support of improving the value and performance of employee benefits has significantly advanced the industry. David is a member of the board of directors for both the Charlotte Association of Health Underwriters and HealthReach Community Clinic. He served on the NC Insurance Commissioners Life and Health Agent Advisory Committee, as well as participated in the Technical Advisory Group that helped with the market reforms required under the Affordable Care Act in North Carolina. He is a longtime member of the Lake Norman and South Iredell Chambers of Commerce as well as the National, North Carolina, New York, and Long Island Associations of Health Underwriters.

My overarching thought throughout a lot of this interview was that improving rural health will take everyone remembering to not let perfect be the enemy of the good. If I live in rural America, there's no subspecialists. Forget about even seeing a garden-variety kind of specialist. I might have to drive hours to even get to a PCP. There are NPs (nurse practitioners) in a lot of these remote communities, but everybody's fighting over whether to let them practice independently, even in places where there's zero PCPs for hundreds of miles, effectively leaving everyone in the vicinity with basically zero access to any care. Or here's another issue: Maternal mortality in this country is not only heartbreaking—a mother dying in what should be a precious moment—it's also embarrassing as an industrialized nation to be so far in last place. I don't know this for a fact, really, but women who have to drive literally hours to see a provider during their pregnancy or—God forbid!—they go into labor unexpectedly … is that a factor in our horrific maternal mortality rates? Consider that in Canada, which has, by the way, substantially better maternal mortality rates than the USA, PCPs and NPs deliver babies in low-risk pregnancies even in areas that have access to ob-gyns, unlike a lot of rural America. When do we start wondering if we're letting perfect be the enemy of the good? When do we start considering if no access to care is worse than some access, even if the "some" access is not with, perhaps, the ideal type of provider? These are not questions with easy answers, so we need data. We need to think in shades of gray—not in binary terms where good and bad have static definitions unaltered by wildly different circumstances. That said, one way to potentially make many parties happy might be to do something like the Nuka system has done for Native Americans in rural Alaska. Listen to EP312 for more info on that. It's pretty cool. But let's just back up a sec with a little situation analysis: The thing with rural hospitals closing—and they are surely running in the red and closing—is the very pernicious cycle that develops. A hospital closing is kind of a bellwether for a community caught in a downward spiral in ways I did not realize until my conversation with Nikki King in this healthcare podcast. The main industry shuts its doors—maybe coal, or I grew up in a steel town when they were "closing all the factories down." That was a Billy Joel quote there, and I spent a few years as a kid in the very same Allentown that song is about. Community trauma is no joke. Oh, and also, now there's no commercial lives. So, say the hospital in that town isn't prepared for this new payer mix reality and it closes. Then maybe a few hundred doctors and nurses move away, along with their spending habits, so other jobs go away. Then the more affluent senior citizens don't move back to their hometown to retire because who wants to live in a town with no hospital? Also, young families who have a choice might choose to go elsewhere. Former population centers start to disperse, and now there's not even a population big enough to support a hospital even if one would decide to go there. And when that hospital goes, so does its maternity department—and likely, even OB/GYN practices. Forget about a laborist. You then will have local PCPs leave town because, right, a PCP connected to a hospital can make twice as much as an indie. Reference the huge number of PCPs in this country who are employed by a health system. Most of these employed PCPs will not work in rural communities where their employer health system has no facilities to refer to. There's no jobs there for an employed physician. Obviously, no specialists can stay in business in this environment either. Things go from bad to worse: Child abuse rises, and multigenerational diseases of despair start to set in. And there's no healthcare to treat these diseases or prevent them. Things go from bad to worse to even more worse. In this healthcare podcast, I am honored and thrilled to talk with Nikki King, DHA, who offers up three community-centric ideas around solving the crisis of access that people in rural communities face. In short, these ideas include: Freestanding ERs (ERs that have the financial discipline to not take advantage of the communities they claim to serve, that is) Telehealth that recognizes broadband issues, which is possible Expanding nurse practitioner rights and maybe even the scope of PCP practices to, for example, include maternity care for low-risk pregnancies in areas that have zero or very minimal access to healthcare otherwise Here's the shorter-than-short version: Perfect can't be the enemy of the good when we're talking about some of these communities that have no healthcare options. Nikki King grew up in Kentucky in the coalfields of central Appalachia. She managed a behavioral health and addictions unit at a critical access hospital and also worked in biostatist