The urgency of change

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With patient demographics shifting nationwide and new technologies transforming how care is delivered, medical education has yet to receive the thorough review required to keep pace with the dramatic changes affecting our industry.

Physicians of the future need to embrace a more interdisciplinary approach to delivering care than the purely clinical focus our medical schools have cultivated for decades. Thanks to the new wave of medical schools that offer joint medical degrees and other changes in the way we train doctors, new physicians entering our hospitals and other facilities are much more diverse and well rounded than we’ve seen in the past.

Medical schools offering a mix of programs that include business, law, molecular medicine and other advanced degrees in conjunction with medical degrees will continue to become more appealing and diverse in the coming years, as physicians of the future seek more options for professional growth. Of course, diversity not only relates to a physician’s course of study but to the increasingly diverse patient populations served by providers.

It is difficult to deliver effective care if you are not attuned to patients’ cultural differences, and medical schools must teach physicians how different cultures approach care and perceive physicians. If they do not understand that their patients may react differently to care options as a result of cultural nuances, physicians struggle to form the genuine bond that is at the heart of every clinical interaction. It is imperative medical schools offer this kind of complementary education in conjunction with their clinical curriculum.

Perhaps the most dramatic mindset shift medical schools must embrace to adapt to a changing industry is to acknowledge that memorization is outmoded. It is unbelievable how much time medical students spend memorizing facts and figures, only to forget many of them when it comes time to learn new material for their next exam. Memorization does not imply understanding, and in an age when Dr. Google holds all the answers in a single click of the mouse, it is a waste of time.

When education focuses solely on the diagnostic or treatment aspects of medicine, physicians are ill-equipped to reconcile that medical care is only one component of health. There are many other factors that contribute to a patient’s overall health, including social determinants, geography, diet and a multitude of other lifestyle choices. To create a well-rounded care plan that keeps patients healthy and out of the hospital, it is imperative for physicians to truly understand how to engage patients and learn about all of the factors that impact the health and wellness of each individual. While technology continues to advance at a dramatic pace, it should never provide a substitute for human contact.

At Northwell, we partnered with Hempstead, N.Y.-based Hofstra University to form the Zucker School of Medicine, which welcomed its first class in 2011. In creating a pass-fail curriculum, we identified aspects of traditional medical education that we thought should be retained and modified it to create an entirely new experience for physicians in training.  It began with the concept that students don’t have to sit down in a classroom and be lectured at all day by professors. At our medical school, students meet in small groups and engage in facilitated discussions guided by faculty members. However, we did not simply update the way medical students engage with academic material, but changed the very academic structure of medical education.

Usually, medical students sit through two years of classroom instruction before they engage in clinical work. We found this model counterproductive to the ultimate goal of preparing physicians for the unpredictable and challenging job of delivering care. To give them more hands-on experience, students begin training as emergency medical technicians within the first nine weeks of school. They ride in ambulances and travel to patients’ homes, helping them to better understand that the patient’s personal circumstances have an undeniable effect on their health. Students then follow up with these patients along the entire continuum of care to help develop a holistic understanding of how people interact with our health care system.

Understanding that the majority of care in the future will take place outside the walls of the hospital, our students gain experience in many different care sites, including ambulatory practices and community health centers, giving them practical experience starting on day one of their education. Instead of multiple-choice exams, students utilize small-group assessments to present cases on an individual basis, then test their skills every 12 weeks at our simulation training center.

Though physicians are some of the most highly educated professionals in the world, even after medical school, residency and fellowship training, the most important lessons of their career come from day-to-day experience. Even if providers are not associated with a formal medical school, hospitals and health systems are in the business of education. Organizational leaders should be mindful of the educational nature of their work and provide opportunities for their clinical teams that foster a sense of continued learning throughout their careers.

Long-established medical schools, some of which have been in existence for more than 200 years, may be hesitant to adopt changes that shake their foundations. Some have become slaves to history and tradition within organizations that move at the lethargic pace of bureaucracy. However, during an era when consumerism is spreading into all areas of healthcare, traditional medical schools must be mindful of the outside players that are disrupting so many facets of healthcare. As we have seen with hospitals over the past 15-20 years, if they do not evolve and embrace change, they risk extinction.


Enabling Sustainable Investment in Social Interventions: A Review of Medicaid Managed Care Rate-Setting Tools


  • Issue: It is widely recognized that social factors, such as unstable housing and lack of healthy food, have a substantial impact on health outcomes and spending, particularly with respect to lower-income populations. For Medicaid, now dominated by managed care, this raises the question of how states can establish managed care rates to sustain investments in social supports.
  • Goal: To explore practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues.
  • Methods: Literature review, interviews with stakeholders, and analysis of federal regulations.
  • Findings and Conclusions: We identify the following options: 1) classify certain social services as covered benefits under the state’s Medicaid plan; 2) explore the additional flexibility afforded states through Section 1115 waivers; 3) use value-based payments to support provider investment in social interventions; 4) use incentives and withholds to encourage plan investment in social interventions; 5) integrate efforts to address social issues into quality improvement activities; and 6) reward plans through higher rates for effective investments in social interventions. More needs to be done, however, to assist interested states in using these options and identifying pathways to braid Medicaid dollars with other social services funding.


Exhibit 1

State Options and Considerations

1. Classify certain social services as covered benefits under the state’s Medicaid plan

2. Explore the additional flexibility afforded states through Section 1115 waivers

3. Use value-based payment to support investment in social interventions

4. Use incentives and withholds to encourage plan investment in social interventions

5. Integrate efforts to address social issues into quality improvement activities

6. Reward plans with effective investments in social interventions with higher rates

It is now widely recognized that social factors, such as unstable housing, lack of healthy food, unsafe neighborhoods, and unemployment, have a substantial impact on health care outcomes and spending, particularly with respect to lower-income populations.1 Moreover, there is an emerging body of research on which interventions are most likely to result in better outcomes and reductions in spending.2 As the nation’s largest payer for health care services for low-income populations, many of whom have substantial social service needs, Medicaid is front and center when it comes to these issues. State Medicaid agencies are increasingly focusing on how the program can cover and reimburse for nonclinical interventions, particularly in managed care, now the dominant service delivery model in Medicaid.

This report identifies practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues. Based on a literature review and on interviews with state officials, health plan leaders, actuarial experts, and other stakeholders, we identify options for states to consider if they are interested in incorporating the cost of social interventions into Medicaid managed care rates (Exhibit 1). While the strategies do not represent a comprehensive solution to the issue of Medicaid’s role in addressing social issues, they are an essential building block.


States face several questions about what role they want Medicaid to play in addressing social issues that directly affect the health of Medicaid beneficiaries and the cost of serving them. Do they want to move their Medicaid programs beyond paying for medical services to tackling affordable housing, economic insecurity, unsafe neighborhoods, and access to adequate and healthy food? In some states, the priority is finding more effective ways to deliver traditional medical care. Other states, particularly those that have implemented an expansion of coverage to low-income adults or are adopting a population health approach to their Medicaid programs, look to their managed care plans and providers to address such issues (Exhibit 2). In all cases, states must evaluate the extent to which federal Medicaid rules permit coverage and payment for discrete nonclinical services.

Exhibit 2

Medicaid Expansion: Implications for the Importance of Addressing Social Determinants of Health

In the states that expanded their Medicaid programs to all adults with incomes below 138 percent of the federal poverty level (31, plus the District of Columbia), newly eligible adults often have extensive social needs. According to research from the Medicaid and Children’s Health Insurance Program Payment and Access Commission, 70 percent are below the federal poverty level, but, even so, only about half receive benefits from the Supplemental Nutrition Assistance Program.a In our interviews with Medicaid directors in expansion states, they reported that gaining these new enrollees has reinforced the importance of Medicaid addressing social issues: first, because of the relatively high prevalence of mental illness and substance abuse among the population,b and second, because of Medicaid’s increasingly important role in the coverage and care of low-income families. Finally, interviewees noted that, as Medicaid coverage became more stable and states and managed care plans began to implement value-based payment policies, plans and providers were better positioned to address the social needs of their enrollees and patients.

Rate-Setting Tools in Context

A Medicaid managed care financing and payment strategy is an essential element, but far from the only required element, of any approach to use Medicaid as a vehicle for addressing social determinants of health. During our interviews, we consistently heard that while there is strong interest in innovative rate-setting options, states have many other challenges they need to tackle for Medicaid to play a role in addressing social issues. These other challenges include the need for more staff with different skills, such as social service experience or actuarial proficiency; a data infrastructure to identify and address social factors; and sufficient time and resources for plans and providers to prepare to address social issues (see Appendix D). While these are important issues, they are not the focus of this report, which addresses options available to states for creating a payment and managed care contracting strategy that supports investments in social interventions.

Medicaid Managed Care Rate-Setting: Rules, Policies, and Procedures

The question at the center of this analysis is how states can support plan investment in social services that improve health outcomes and are cost-effective. In states with Medicaid managed care, this translates into a question of how to set Medicaid managed care capitation rates in such a way that plans are incentivized or required — and, even more importantly, have the resources — to address social issues that directly affect the health outcomes of their members.

The starting point for answering this question is the federal Medicaid managed care rules that require states to ensure that capitation rates are actuarially sound. This means that rates must be sufficient to cover the costs that plans incur to provide covered benefits to their enrollees, as well as related administrative and operational expenses. Notably, capitation rates must be based only on services covered under the state plan and services necessary to achieve mental health parity requirements.3 In other words, states cannot directly build the cost of social support services not covered under the state plan into their capitation rates (Exhibit 3).4


The Medicaid Agency of the Future: What capabilities and leadership will it need?–what-capabilities-and-leadership-will-it-need?cid=other-eml-alt-mip-mck-oth-1802&hlkid=f3e96b6a484442438bbdc44b7744e1e9&hctky=9502524&hdpid=c2f3cd34-a3e9-46d4-bc69-f4a9cc3b0ac9

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Medicaid’s scale and complexity are unprecedented. State Medicaid leaders will need to innovate if they are to develop the capabilities that will enable them to steer their agencies into the future.

Since its inception in 1965, Medicaid has grown to have an expanded role in state governance—it is usually the first- or second-largest state program. Nationwide, Medicaid agencies manage about $574 billion in annual spending.1In an average-sized state, Medicaid directors are the single largest purchaser in the health sector, overseeing about $10 billion each year in payments to providers (roughly 17% of the state’s economy).2The agencies typically serve nearly one-quarter of their state’s population3and, in our experience, procure the largest IT infrastructure projects in state government.

Recently, demands on state Medicaid agencies have grown. Increasingly, Medicaid agencies are playing a multi-part role, fulfilling their traditional responsibilities (i.e., payer-purchaser, operator) and taking on new ones (i.e., market shaper and innovator). And while they are doing this, the agencies must address an array of competing priorities, as well as uncertainty about future funding levels. To perform well in these new roles, the agencies must develop new, next-generation capabilities so they can address the needs of their state’s citizens—even those not enrolled in Medicaid.

We believe the roles played by state Medicaid agencies will continue to evolve, but the agencies—in conjunction with the state government leaders they work with—can choose their strategic path forward (primarily, the extent to which they want to be market shapers). Those that pursue this path aggressively will be the first of their peers to evolve into a Medicaid Agency of the Future.

As we discuss below, all state Medicaid agencies will need to strengthen their capabilities if they are to meet the demands of the future—an issue that has important implications not only for the agencies themselves but also for state government leaders, managed care organizations (MCOs), local providers, and others. However, agencies focused on becoming market shapers will need to double down on capability building if they want to succeed on their chosen path.4

Trends shaping Medicaid

A number of trends are shaping what Medicaid agencies need to do to prioritize the direction of their efforts.

Spending growth is putting pressure on state budgets. Medicaid is putting continued cost pressure on state budgets. Program spending (including federal and state funding) increased from 20.5% of state budgets in 2008 to 29.0% in 2016.5The continued increase in Medicaid spending could have funding implications for other state programs, such as elementary and higher education, public assistance, and transportation. The cost pressures resulting from Medicaid spending are expected to continue regardless of what, if any, changes are made at the federal level.

Medicaid programs can lead to payment inno­vation. As program costs have risen, Medicaid directors have increasingly tried to slow the medical cost trend. One lever available to them is transitioning from fee-for-service reimbursement to payment innovations that include meaningful levels of provider risk-sharing. New payment models that reward providers for delivering high-quality care at lower cost have been shown to improve care quality and reduce costs by 5% to 10% when rolled out across the full spending base.6In several states, Medicaid programs have led multi-payer efforts to achieve payment inno­vation across the state.7

Medicaid plays an important role as both a payer and a convener. In the aggregate, Medicaid is the country’s largest payer in terms of covered lives and, in many states, is the largest purchaser of healthcare ser­vices.8Thus, Medicaid agencies are uniquely positioned to facilitate change. In addition, the agencies can often bring together multiple stakeholders to help align on improvements that would affect not only Medicaid but also the entire healthcare market.

Recognition of Medicaid members as consumers is increasing. Some Medicaid agencies are beginning to approach Medicaid members as consumers. For example, they are offering members technological tools, such as apps and patient portals, that empower greater decision making (e.g., about choice of provider, care setting, or treatment). If well utilized, these tools can improve member experience and encourage higher-value care.

Awareness of social determinants is rising. Increasingly, states are turning their attention to non-health factors, such as housing, education, and transportation, that influence Medicaid members’ ability to maintain their health and adhere to treatment. Some programs are beginning to address these determinants head on (e.g., by providing housing or transportation vouchers). Experimentation in special needs care is underway. Integrated models typically deliver better quality and cost outcomes. For example, integrated behavioral and physical healthcare approaches for high-needs patients have been shown to reduce emergency department and inpatient visit spending by 10% to 25%.9The successes to date are paving the way for further innovation in other special needs areas.

Analytics is playing an increasing role. Advanced analytics and big data can help Medicaid and other public health officials better understand state needs, design programs, and target interventions to maximize the impact of limited funds. The emergence of new national data-sets, such as the Transformed Medicaid Statistical Information System (T-MSIS, which includes states’ comprehensive claims and enrollment data) and CMS’ online database of state waivers and state plan amendments, may enable states to draw on experiences elsewhere when designing new programs.10

In short, state Medicaid agencies are facing an increasingly complex and difficult set of challenges at a time when the expectations of multiple stakeholders—members, families, and advocates; providers and MCOs; the federal government, state leaders, and other state agencies—are rising. If Medicaid agencies are to address these challenges successfully, the role they play must evolve.

Introducing the Medicaid Agency of the Future

In the future, some state Medicaid agencies may opt to follow the path set by previous state leaders. In other cases, they may want to respond to the trends just discussed by taking the lead in transforming healthcare delivery in their programs and their states. These Agencies of the Future will have to be able to chart a strong strategic direction and execute the activities that follow both efficiently and effectively. To accomplish those goals, they will need to use a data-driven approach to program management, build new capabilities, and improve their organizational health (Exhibit 1).

Agencies that opt to follow a more traditional path would also benefit from strengthening their operational performance and organi­zational health, but the level of improvement needed is lower for them than for the Agencies of the Future. Both sets of agencies, however, will want to prioritize their strategic investments once they have chosen their path forward.


Top 10 challenges for healthcare executives in 2018




12 takeaways from the 2018 JP Morgan Healthcare Conference

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The recent breathtaking flurry of mega-mergers coupled with increasingly challenging market forces and an ever shifting political landscape has cast a cloud of confusion regarding where the U.S. healthcare delivery system is heading.

So, where do you go to find the map?

Every year, the JP Morgan Healthcare Conference provides an incredibly efficient snapshot of the strategies for large healthcare delivery systems, the hub for healthcare in the U.S. Most of these organizations are also the largest employers in their respective states. The conference took place this week in San Francisco with over 20 healthcare systems presenting, including Advocate Health Care, Aurora Health Care, Baylor Scott & White Health, Catholic Health Initiatives, Cleveland Clinic, Geisinger Health System, Hospital for Special Surgery, Intermountain Healthcare, Mercy Health in Ohio, Northwell Health, Northwestern Medicine, Partners HealthCare System, WakeMed Health & Hospitals and many of the other big name brands in the market. Each provided their strategic roadmap in a series of 25-minute presentations from their “C” suite. If you’re looking for the GPS on strategy and a gauge on the health of healthcare, this is it.

How do their strategies differ? What direction are they heading in? There is a great line from Alice in Wonderland that goes, “If you don’t know where you’re going, any road will take you there.” You would think that line applies perfectly to the U.S healthcare system, but the good news is it actually doesn’t.

While the exact destination for everyone is TBD, the direction they are heading in is actually pretty clear and consistent. It turns out that they are all using a very similar compass, which is sending them down a similar path.

So, what are the roadside stops health systems consider absolutely necessary to be part of their journey to creating a more viable and sustainable value-based business model?

Based on the travel plans for over 20 of the largest and most prestigious healthcare delivery systems in the country, here’s your GPS and list of 12 things you “must do” on your journey.

1. You Must Scale

Clearly the headline at #JPM18 was the flurry of major announcements regarding major mergers. With that said, two of the mergers were front and center: teams were there to present from Downers Grove, Ill.-based Advocate and Milwaukee-based Aurora, which will be a $10 billion organization with 70,000 employees, as well as San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, which will be a $28 billion organization with 160,000 employees. The size and scale of these mergers is pretty stunning. While the announcement of these and the other recent mega-mergers has forced many into their board room to determine what the deals mean to them, the consensus at the conference was this: There are a number of different paths forward to achieve scale. Some, like Baylor Scott & White in Texas, have aggressive regional expansion plans. Others are betting on partnerships to provide the same or even more value. Taking a pulse of the room, two things were clear. The first is there is no definition of scale any more in this market. The second is that, despite this flurry of mergers, “getting really big” is not the only destination.

2. You Must Pursue “Smart Growth” and Find New Revenue Streams

Running counter to the merger narrative in the market, Salt Lake City-based Intermountain provided a good overview of the movement to what is called an “asset light” strategy of “smart growth.” This is a radically contrarian approach to the industry norm, which is the capital intensive bricks and mortar playbook of buying and building. As part of their strategy, Intermountain will open a “virtual hospital” delivering provider consultations and remote patient monitoring via telehealth. The system will also launch a number of healthcare companies every year, leveraging their considerable resources in a manner they believe will produce a higher yield. Other health systems outlined a similar stream of initiatives they have in motion to diversify their revenue streams and expand their business model into higher margin, higher growth businesses. One example is Cincinnati-based Mercy Health, which achieved strong growth and leverage via their investment in a revenue cycle management company. Advocate in Illinois formed a partnership with Walgreens. Together, they now operating 56 retail clinics and Advocate has made a significant impact on driving new patients and downstream revenue to their system. The bottom line is all now recognize that they must think and act differently to be able to continue to fund their clinical mission and serve their community.

3. You Must Measure and Manage Cost and Margins

While some are moving aggressively to get scale, everyone is looking to more effectively use the resources they have and get more operating leverage. Margin compression was a consistent theme, with many systems now moving into consistent, stable operating models around managing margins versus launching reactionary initiatives when they find a budget gap. What is emerging is a new discipline and continuous process around managing cost and margins that is starting to look similar to the level of sophistication we have seen in the past for revenue cycle management. To that end, there has been major movement in the market to implement advanced cost accounting systems, often referred to as financial decision support, which provide accurate and actionable information on cost and help organizations understand their true margins as they take on risk-based, capitated contracts. Some during the conference referred to it as the “killer app” for the financial side of driving value. Regardless of what you call it, all are moving aggressively to understand the denominator of their value equation.

4. You Must Become a Brand

Investing in and better leveraging their brand has become a strategic must for health systems. The level of sophistication is growing here as providers shift their mental model to viewing patients as “consumers.” Aurorain Wisconsin cited their dedicated Consumer Insights Group and outlined their “best people, best brand, best value” approach that has been incredibly effective both internally and externally. At the same time, the bigger investments for many health systems relative to brand are more on brand experience than brand image, with a focus on understanding and radically rethinking the consumer experience. As an example, at Danville, Pa.-based Geisinger, close to 50 percent of ambulatory appointments are scheduled and seen on the same day. And every health system is making meaningful investments in their “digital handshake” with consumer, creating and leveraging it via telehealth as well as mobile applications to enhance the customer experience.

5. You Must Operate as a System, Not Just Call Yourself One

One clear theme at #JPM18 is different organizations were at different points along the continuum of truly operating as a system vs. merely sharing a name and a logo. There are a number of reasons for this, but you are increasingly seeing tough decisions actually being made vs. just kicking the can down the road. There has been a great deal of acquisitions over the last few years coupled with a new wave of thinking relative to integration that is more aggressive and more forward-looking. This mental shift is actually a very big deal and perhaps the most important new trend. Many health systems are heavily investing in leadership development deep into their organization to drive changes much faster.

6. You Must Act Small

The word “agile” is quickly becoming part of everyone’s narrative with health systems looking to adopt the principles and processes leveraged in high tech. Chicago-based Northwestern Medicine is an example of an organization that has grown dramatically in the last five years, now approaching $5 billion in revenue. At the same time, they have still found a way to operate small, leveraging daily huddles across the organization to drive their results. The team at Raleigh, N.C.-based WakeMed has achieved a dramatic financial turnaround over the last few years, applying a similar level of rigor yielding major operational improvements in surgical, pharmacy and emergency services that have translated into better bottom line results.

7. You Must Engage Your Physicians

Employee engagement was a major theme in many of the presentations. With the level of change required both now and in the future, a true focus on culture is now clearly top of mind and a strategic must for high-performing health systems. That said, only a handful articulated a focus on monitoring and measuring physician engagement. This appears to be a major miss, given that physicians make roughly 80 percent of the decisions on care that take place and, therefore, control 80 percent of the spend. One data point that stood out was a 117 percent improvement in physician engagement at Northwestern. Major improvements will require clinical leadership and a true partnership with physicians.

8. You Must Leverage Analytics

Many have reached their initial destination of deploying a single clinical record, only to find that their journey isn’t over. While health systems have made major investments big data, machine learning and artificial intelligence, there was a consistent theme regarding the need to bring clinical and financial data together to truly understand value. Part of this path is the consolidation of systems that is now needed on the financial side of the house with a focus on deploying a single platform for financial planning, analytics and performance. The primary focus is to translate analytics not just into insights, but action.

9. You Must Protect Yourself

As organizations move deeper into data, there is increased recognition that cybersecurity is a major risk. Over 40 percent of all data breaches that occur happen in healthcare. During the keynote, JP Morgan Chase CEO Jamie Dimon shared that his organization will spend $700 million protecting itself and their customers this year. Investments in cybersecurity will continue to ramp up due to both the operational and reputational risk involved. Cybersecurity has become a board room issue and a top-of-mind initiative for executive teams at every health delivery system.

10. You Must Manage Social Determinants of Health in the Communities You Serve

Perhaps the most encouraging theme for healthcare provider organizations was the need to engage the community they serve and focus on social determinants of health. As Intermountain shared: “Zip code is more important than genetic code.” To that end, Geisinger refers to their focus on “ZNA.” They have deployed community health assistants, non-licensed workers who work on social determinants of health and have implemented a “Fresh Food Farmacy,” yielding a 20 percent decrease in hemoglobin A1c levels along with a 78 percent decrease in cost. Organizations like ProMedica Health System in Ohio have seen similar results with their focus on hunger in Toledo. WakeMed has an initiative focused on vulnerable populations in underserved communities that has resulted in a significant decrease in ER visits and admissions and over $6 million in savings.

11. You Must Help Solve the Opioid Epidemic

The opioid issue is one that healthcare professionals take very personally and feel responsible for solving. It came up in virtually in every presentation, and it’s an emotional issue for the leaders of each organization. This is good news, but the better news is that they are taking action. As an example, Geisinger invested in a CleanState Medicaid member pilot that resulted in a 23 percent decrease in ER visits and 35 percent decrease in medical spending, breaking even on their investment in less than 10 months. While many would rightly argue that the economic rationalization isn’t needed for something this important, the fact that it’s there should eliminate any excuse for anyone not taking action.

12. You Must Deliver Value

The Hospital for Special Surgery in New York is the largest orthopedics shop in the U.S. and a great example of how value-based care delivery is taking shape. Perhaps the most revealing stat they shared is that 36 percent of the time, patients receive a non-surgical recommendation when they are referred to one of their providers for a second opinion. This is exactly the type of value-based counseling and decision-making that will help flip the model of healthcare. Some systems are farther along than others. Northwestern currently has 25 percent of its patients in value-based agreements, but other systems have less. As the team from Intermountain re-stated to this audience this year, “You can’t time the market on value, you should always do the right thing, right now.” Well said.

It’s time to get started or get moving even faster.

As the saying goes, “It’s the journey, not the destination.”

Happy trails.

Humana CMO: “As we improve the quality of healthcare, costs decrease”

Dr. Roy Beveridge has served as CMO of Louisville, Kentucky-based Humana since 2013. Two years into his tenure, he opened the MedCity ENGAGE conference with a discussion calling for the democratization of healthcare.

In a recent phone interview, Beveridge discussed everything from value-based care to social determinants of health.

This exchange has been lightly edited.

What has been Humana’s biggest accomplishment in 2017?

From a physician and patient standpoint, we’re really moving quickly into value-based arrangements with MACRA and MIPS. There’s been a mind shift around physicians recognizing that in order to accomplish their goals of population health and value-based reimbursement, the whole discussion has changed around the need for analysis of data and a very different type of communication between the payer and the provider. Without that data, they can’t close gaps or improve the quality metrics that are becoming the norm.

A few years ago, I mistakenly thought value-based care was something that was going to be focused on the primary care physician and would not impact the specialist as much. But what you’re seeing is specialists recognize this value-based payment system is something they have to participate in.

From our standpoint, what that has resulted in is this continuous focus around community relationships. If payers like Humana are going to be successful, we need to be engaging our physicians’ patients. Services are needed for patients in the home. That’s the shift we have thought about and been successful at as we continue to recognize that an increasing amount of care will be in the home.

Why is it important to incorporate social determinants of health, and what work is Humana doing in this space?

When I was early in my practice and would see someone with diabetes, I remember having this belief that my role was to recognize what the patient’s diagnosis was and give a prescription for insulin. And then I thought I’d done a good job.

That was the mindset up until recently. Simply giving someone a prescription is the easy part. The more complicated part is explaining what their disease is and helping them take their medicine. We used to think that was a social worker’s problem. But if giving someone a prescription that they can’t fill doesn’t really help them.

As we look into the social determinants of health, transportation is big. Social isolation is a big one, and food insecurity goes hand in hand with diabetes and everything else.

I don’t think five years ago you’d be asking a question about social determinants of health. But at this point, the recognition of social determinant health issues is fundamentally linked to population health.

If you’re looking at a fee-for-service model, writing the prescription is all I need to do. If we shift the model to health outcomes, then you’re aligning everyone’s incentives to make sure people are thinking about these social determinants of health.

The other thing we have learned in the last year or two is that care really is local. We as a society have to recognize that what happens in South Florida is different than what happens in Texas or Minnesota or Massachusetts. There’s not one size that fits everything.

Humana recently released its inaugural value-based care report, which outlines numerous topics, including how Humana Medicare Advantage members affiliated with physicians in value-based models typically have healthier outcomes. Which finding from the report most surprised or shocked you?

I don’t think anything shocked me. There were parts of this that I think a couple years ago would have shocked people.

Five or 10 years ago, I would have said to you that in order to improve quality, you have to make an investment globally and that investment is going to cost the system more.

What’s pretty clear in the report is quality metrics do all the right things, yet at the same time, they lower the global cost of care. I don’t think that’s shocking, but it’s something that’s still hard for people to recognize and internalize. Fundamentally, as we improve the quality of healthcare, costs decrease.

News recently surfaced that Humana will acquire a 40 percent stake in Kindred Healthcare’s home care business for approximately $800 million. What does this mean for Humana?

We’ve only made the proposal. We haven’t gotten government approval for anything.

We’re thinking about, “How can we always get closer to the patient? How do we help improve someone’s health by being where someone is more of the time?” [Patients are] not in the hospital most of the time — they’re at home most of the time. We recognize we need to get closer to where people are if we’re going to help them in their destination of improving health.

What is your number one prediction for healthcare in 2018?

My number one prediction in healthcare is the pace of change within the system is going to continue to be fast.

CMS is pushing — and appropriately so — down a health orientation that moves from fee-for-service to quality-based outcomes.

My prediction for ’18 is that we’re going to hit an inflection point where the light bulb goes off because of the number of patients in the system who have moved from fee-for-service into this health outcomes model. Once it hits a certain amount of engagement within your hospital, then it becomes something everyone is aligned around.


Talk over Coffee into a Data Revolution for northern Nevada’s largest hospital system

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In May 2016, Tony Slonim, MD, DrPH, met fellow New Jersey native Joe Grzymski, PhD, at a Starbucks for coffee. Dr. Slonim, CEO of Reno, Nev.-based Renown Health, said he expected to trade stories about their home state, but they soon found their professional interests as compatible as their personal ones.

“Like all good things, it started at Starbucks over a coffee on a Saturday morning,” Dr. Slonim said, “As we let our minds expand and started thinking about complementary ways we could collaborate, this idea came up.”

This idea is a partnership between Renown and the Desert Research Institute, where Dr. Grzymski is senior director of applied research.

The duo began to think of ways they could combine the clinical data 946-bed Renown had on hand with the DRI’s environmental data to better understand the ways outside factors affect health outcomes in their community.

But the idea didn’t stop there. The pair also recognized that social determinants play an equally influential role in shaping a person’s health, so they made sure to include social data from the Governor’s Office of Economic Development in their new project, which did not yet have a name, but more importantly had a purpose.

“If we believe in population health, and the vision for population health, we’ve got to do a better job of understanding the health and the wellbeing of the people we’re serving,” said Dr. Slonim. “As an organization that’s got a large market share, it’s incumbent upon me as the CEO to think about how to use the most efficient resources for the most benefit for people that need it.”

At first, the collaboration was seen as a data-sharing project that would connect skilled researchers and analysts at the DRI with a wealth of combined information that had been inaccessible to a single provider in the past. However, it was only once Dr. Slonim and Dr. Grzymski took their idea to the 2016 BIO International Convention in San Francisco that they were able to find a third partner to provide them with yet another data set that would help them fully see the big picture of a person’s health.

Representatives from retail genetics firm 23andMe approached Dr. Grzymski following his talk at BIO. The company offered to provide genetic testing and sequencing for the project. Dr. Grzymski jumped at the opportunity, which would enrich the already robust data collection he and Dr. Slonim had begun to compile.

With genetic information as a fourth pillar of their potential data set, Renown and the DRI founded the Renown Institute for Health Innovation. The IHI’s most important initiative would go on to be named the Healthy Nevada Project.

At a September 2016 press conference, Dr. Slonim and other IHI leaders teamed up with Nevada Gov. Brian Sandoval to announce that the first 5,000 Reno residents who signed up to submit genetic samples would receive free access to the test results. Dr. Slonim believes offering this access to community members is what encouraged 5,000 people to sign up in only the first 24 hours of the enrollment period. With such an enthusiastic response, the leaders at the IHI decided to open up 5,000 more slots, which took one more day to fill. In only 48 hours, the Healthy Nevada Project had succeeded in enrolling 10,000 local residents to submit samples for genetic testing.

The project was off and running — quickly. And Dr. Slonim’s work was only just beginning.

Once 23andMe completed genetic sequencing of all 10,000 study participants in December, the Healthy Nevada Project still faced a looming question: What to do with all the data they’d collected?

“One-hundred more people per 100,000 die of cardiovascular disease in northern Nevada than national estimates. Our cancer rates are significantly higher and nobody knows why. So [we’re] trying to understand what the backdrop and the context is,” Dr, Slonim said. “Is it the mines that we have here? Is it the weather patterns that change because we’re in a valley? Our air pollution is higher, our particulate matter is higher — is that what causes lung cancer? We’re trying to figure this out, but you can’t do anything without data, so we started there.”

Dr. Slonim understands epidemiologists and analysts will have to spend many careful hours with the data to come to any concrete conclusions, but he believes the Healthy Nevada Project represents an essential first step for the future of the healthcare industry. If he and his colleagues could begin to harness the power of data in EHRs, then he sees a world of untapped potential that can help his community improve their health while also improving Renown’s organizational efficiency.

“This is the ultimate in strategic planning. If I figure out that our community is more at risk for cardiovascular disease 10 years from now, I can be thoughtful about how I go about recruiting cardiologists. If I know that the population is growing in pediatrics, I can start a program for pediatric residents at the medical school and grow my own pediatricians,” Dr. Slonim says. “The horizon for planning can be kept in view because we’re learning about our population’s health and disease. The second reason why I did this is because it’s the best way to engage consumers in their own healthcare to modify their behaviors.”

Dr. Slonim’s advice to hospital leaders looking to improve their capacity for innovative data concepts is simple: Take the first step. For the most part, the benefits of the Healthy Nevada project still lay ahead, as it has been only 15 months since that coffee meeting, but the game-changing potential cannot be understated. Dr. Slonim is confident that putting in the work to collect and analyze this comprehensive data will revolutionize the way Renown cares for its patients, and he believes other providers can follow suit.

“If you’re a large contributor to your market in healthcare with full range of integrated services across the continuum, get the environmental data. Get partnerships with the social data,” Dr. Slonim says. “Figure out how you can exercise your clinical EMRs and the great repository of data that are in there and put them in a big data warehouse and figure out how to analyze them. We’re not using predictive analytics in healthcare the way that other industries are, and we need to be better at that.”