June 3, 2022

The Weekly Gist: The Dr. Evil School of Management Edition

by Chas Roades and Lisa Bielamowicz MD

The weirdest, richest man on the planet was in the headlines again this week. In a sternly worded email sent from his secret volcano lair, Elon Musk ordered Tesla employees back to the office, placing a ban on working from home. “Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla,” wrote Musk, while stroking his exotic, long-haired white cat and feeding his laser-armed sharks. “If you don’t show up, we will assume you have resigned,” he added in a follow-up email, presumably copied from the world’s worst manager’s handbook. Two questions leap immediately to mind. First, does Musk live in an alternative universe where the labor market isn’t incredibly tight and talent isn’t scarce? (Maybe he’s already at the Mars colony?) And second, is he trying to further reduce the acquisition price of Twitter by getting Tesla workers off social media and back to the office? Maybe he’s a super genius, playing three-dimensional chess. Or maybe he’s just a jerk?

THIS WEEK IN HEALTHCARE

What happened in healthcare this week—and what we think about it.

  1. Former patient kills his surgeon and three others at a Tulsa On Wednesday afternoon, an aggrieved patient shot and killed four people, including his orthopedic surgeon and another doctor, at a Saint Francis Hospital outpatient clinic, before killing himself. The gunman, who blamed his surgeon for ongoing pain after a recent back surgery, reportedly purchased his AR-15-style rifle only hours before the mass shooting, which also injured 10 others. The same day as this horrific attack, an inmate receiving care at Miami Valley Hospital in Dayton, OH shot and killed a security guard, and then himself.

The Gist: On the heels of the horrendous mass shootings in Buffalo and Uvalde, we find ourselves grappling with yet more senseless gun violence. Last week, we called on health system leaders to play a greater role in calling for gun law reforms. This week’s events show they must also ensure that their providers, team members, and patients are safe. Of course, that’s a tall order, as hospital campuses are open for public access, and strive to be convenient and welcoming to patients. Most health systems already staff armed security guards or police officers, have a limited number of unlocked entrances, and provide active shooter training for staff. This week’s events remind us that our healthcare workers are not just on the front lines of dealing with the horrific outcomes of gun violence, but may find themselves in the crosshairs—adding to already rising levels of workplace violence sparked by the pandemic. Something must change.

  1. CVS Health to launch a virtual-first primary care platform. The digital platform is designed to provide consumers with a coordinated healthcare experience across care settings. It’s being sold to Aetna’s fully insured and self-insured plan sponsors, as well as CVS Caremark clients, and is due to go live next year. According to CVS Health, the new offering “enables consumers to choose care when and where they want,” whether that’s virtually, in a retail setting (including at a MinuteClinic or HealthHUB) or through at-home services. Patients will have access to primary care, on-demand care, medication management, chronic condition management, and mental health services, as well as help in identifying other in-network care providers.

The Gist: CVS Health has been working to integrate its retail clinics, care delivery assets, and health insurance business. This new virtual-first care platform is aimed at coordinating care and experience across the portfolio, and streamlining how individuals access the range of services available to them. CVS is not alone in focusing here: UnitedHealth Group, Cigna, and others have announced virtual-first health plans with a similar value proposition. Any payer or provider who aims to own the consumer relationship must field a similar digital care platform that streamlines and coordinates service offerings, lest they find themselves in a market where many patients turn first to CVS and other disruptors for their care needs.

  1. Steward Health Care sells its Medicare value-based care business to CareMax.The for-profit, 39-hospital Steward system manages 171K lives across the Medicare Advantage, Medicare shared savings, and Medicare direct contracting programs. This deal will allow Miami-based CareMax, a publicly-traded, value-based care company with 42 senior centers (mostly in Florida) and 34K lives under management, to expand across Steward’s footprint, which includes Texas and Arizona, states with rapidly growing Medicare populations.

The Gist: This deal is an example of the rise of venture-funded MSO (medical services organization) services that aim to subsume and scale value-based care functions from hospitals and medical groups. Steward wagers it can find greater success in managing risk in partnership with CareMax, moving a greater share of its Medicare population into risk, and outsourcing care management and patient engagement functions. Many health systems have spent substantial resources building out accountable care organizations and risk-based Medicare businesses over the last decade. While selling these assets to a company like CareMax may be one way to generate a return, particularly for those frustrated by lower-than-anticipated gains from moving to value-based care, it also requires relinquishing control of functions likely central to the future health system business model.

Pluswhat we’ve been reading.

  1. Surprise billing ban leads to cuts at PE-backed staffing firms. When Congress passed the “No Surprises Act” in 2021, credit rating agencies like Moody’s warned that the bill would hurt physician staffing firms, especially those that provide emergency department (ED) services, which result in a surprise bill in roughly one in five visits. A piece from investigative outlet The Lever highlights how one private equity-backed physician staffing firm, Nashville-based American Physician Partners, is responding to the resultant cash flow challenges by cutting ED physician pay, after already reducing staffing levels. As the article describes, this is possible in an otherwise tight labor market because, unlike many other specialties, there’s an oversupply of ED physicians, due to the rapid growth in emergency medicine residency programs over the last decade.

The Gist: With two-thirds of hospitals outsourcing at least some ED physician labor, the potential insolvency of large physician staffing firms could bring a crisis in access and coverage. In addition to revenue cuts tied to the surprise billing ban, rising interest rates also mean that PE firms may soon find it more difficult to fund their aggressive growth strategies. Health systems should proactively evaluate their partnerships with PE-backed physician staffing groups, with an eye toward anticipating potential staffing problems and service quality shortfalls.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

How other industry players are expanding their healthcare platforms  

Last week, we introduced our framework for value delivery as a “healthcare platform”, in which an organization’s proximity to both the consumer and to the premium dollar determines how it competes as a “care supplier,” a “care ecosystem,” a “premium owner,” or a “population manager.” Traditionally, different healthcare companies have operated primarily in one of these four domains. However, as shown in the graphic below, we’ve recently seen many shift their business into one or more additional quadrants, as they seek to expand their value propositions. UnitedHealth Group is an obvious example: it has moved well beyond the traditional insurance business, via numerous provider and care delivery acquisitions across the continuum. Other players have shifted from their own “pure play” positions toward more comprehensive “platform” strategies as well: One Medical adding Iora Health to enhance population health capabilities; Walmart moving beyond retail and pharmacy services, partnering with Oak Street Health to expand its ability to manage Medicare patients; Amazon getting into the employer health business. There’s a clear pattern emerging—value propositions are converging on a “strategic high ground” that encompasses all four dimensions of platform value, creating a comprehensive set of solutions to deliver accessible care, promote health, and grow consumer loyalty, with an aligned financial model centered on managing the total cost of care. Health systems looking to build platform strategies will find many of these competitors also vying for pride of place as the “platform of choice” for healthcare consumers and purchasers.


INTERMISSION

A recommendation from our weekly diet of music, movies, TV, and other good stuff.

George Carlin’s American Dream (HBO Max)—Whenever there’s a flashpoint issue in the news (abortion, gun violence, racism), you can bet a George Carlin clip will soon be making the social media rounds. See why in this excellent two-part documentary, a Judd Apatow-directed retrospective of the late comedy legend’s career and impact. The original “hot take” visionary, years ahead of his time.


THIS WEEK AT GIST—ON THE ROAD

What we learned this week from our work in the real world.

Eyeing a rebound in emergency department volumes

This week we heard from three healthcare executives that they’ve seen a recent uptick in emergency department (ED) volumes. As we’ve discussed before, ED visits plummeted at the beginning of the pandemic, and were the slowest class of care volume to rebound. Over the past year, many systems reported that ED volume had remained persistently stuck at 10 to 15 percent lower than pre-COVID levels, leading us to question whether there had been a secular shift in patient demand, with consumers choosing alternative options like telemedicine or urgent care as a first stop for minor acute care needs.

An uptick in ED volume would be welcome news to many hospital executives, as the emergency department is the source of half or more of inpatient admissions for many hospitals. But according to what we’re hearing, the recent rise in emergency department patient volume has not resulted in an expected bump in inpatient volume. “We’ve dug into it, and it seems like the jump in ED visits is a function of COVID,” one leader shared. “There’s just so much COVID out there now…even though the disease is milder, there are still a lot of patients coming to the ED. But unlike last year, most aren’t sick enough to be admitted.” And ED visits for other causes have not rebounded in the same way: “We’re hoping patients aren’t still staying away because they’re afraid of catching the virus.” We’ll be watching closely across the summer to see how volumes trend as the pandemic waxes and wanes across the country—we’d still bet that many consumers have changed their thinking on where and how they will seek care when the need arises.


THIS WEEK AT GIST—ON THE PODCAST

All the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.

Coming up on Tuesday’s episode, we’ll hear from Laura Kwako, PhD, a clinical psychologist at the National Institute on Alcohol Abuse and Alcoholism (NIAAA), and Katharine Bradley, MD, a senior investigator at the Kaiser Washington Health Research Institute. The NIAAA just released new resources to help providers screen and treat patients for alcohol use disorder, as addiction and alcohol-related deaths have spiked during the pandemic.

[Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.]


That’s all for this week! Thanks for taking the time to read the Weekly Gist. As always, we’re so grateful for your readership, and for your thoughtful comments and suggestions—keep ’em coming! And don’t forget to let your friends and colleagues know about us too—encourage them to subscribe, and to listen to our daily podcast.

Please do let us know if we can be of assistance in your work. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com