April 13, 2018

The Weekly Gist: The Better Way Edition

by Chas Roades and Lisa Bielamowicz MD

It’s Friday the 13th, so hockey masks are in season—a double-homage to Jason and the first round of the Stanley Cup playoffs. Our hometown Caps kicked off their pursuit of the Cup with an OT loss to Columbus, but not to worry. Alex Ovechkin will still be on the ice chasing his first championship long after his playoff beard turns more Tolstoy than Timberlake.

Meanwhile, a busy week for us at Gist Healthcare, keeping tabs on the latest twists and turns in the healthcare marketplace, and trying to explain to our kids why it’s not OK to talk like that at the table, but it’s fine if you’re talking to the national media. At least it had the benefit of being true.



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

Paul Ryan decides retirement would be a better way

Speaker of the House Paul Ryan announced this week that he plans to retire from Congress at the end of his current term, and will not seek re-election in the upcoming midterms. Ryan plans to return to his family in Wisconsin and has not announced future plans. He was first elected to the House in 1998, and quickly built a reputation as a “policy wonk,” deeply versed in the details of the Federal budget. During his tenure in Congress, and especially during his Speakership, to which he was elected in 2015, he was committed to two major policy objectives: overhauling the tax code and reforming the healthcare entitlement programs. After a frustrating 2017, which saw Ryan and his Republican colleagues fall short on “repeal and replace” of Obamacare (an effort that Ryan used to attempt a major restructuring of Medicaid), the Speaker was able to deliver major tax cut legislation for the President’s signature at the end of the year. Although he was not able to enact the two pillars of the “Better Way” healthcare reform he sought—“premium support” for Medicare and block grants for Medicaid—the long-term consequence of the tax cut Ryan brought to passage will almost certainly be major cuts to the entitlement programs by the next Congress, which his successor will be left to enact.

Moving toward Medicaid expansion in Virginia

Virginia’s Republican-controlled House and Senate reconvened in special session this week, called back to Richmond by Democratic Governor Ralph Northam. Lawmakers there appear to be close to a deal to expand Medicaid eligibility in the Commonwealth, a huge breakthrough in a state that has stubbornly resisted participation in the Obama-era health reforms. Two key Republican state senators signaled their support for expanding Medicaid, contingent on the inclusion of work requirements and other “fiscally responsible and conservative” measures. Virginia would join 32 other states and the District of Columbia in expanding Medicaid, which stands to benefit more than 400,000 Virginians who will become eligible. If expansion goes forward in Virginia, it could be the beginning of a new wave of states re-examining their opposition to Medicaid expansion in the post-Obama era, using conservative health policy principles promoted by the Trump administration to make the move more palatable to Republican legislators.

California debates price controls, but have they worked in Maryland?

California legislators introduced a bill to create an independent, nine-member commission that would set payment rates for doctors, hospitals and other healthcare services. Supporters of the “Health Care Price Relief Act,” including labor and consumer groups, hope the proposal will slow healthcare cost growth, which is consuming a growing portion of wages. Provider groups argue that rate setting could result in hospital closures and an exodus of doctors, noting the state’s above-average labor and facility costs. The bill comes as single-payer healthcare is being hotly debated in the state’s gubernatorial race.

The California bill is modeled on Maryland’s all-payer model, which has set uniform provider rates since 1977 with mixed success. Price growth has been constrained, but rising utilization and cost growth led to a revamping of the program, which implemented a global budget for inpatient and outpatient hospital spending. Policymakers had hoped this “hospital capitation” would encourage health systems to align with physicians to decrease utilization. Despite these efforts, two recent studies show no impact on hospital or primary care utilization.

While providers in Maryland are largely supportive of the current system, many feel that capping hospital spending doesn’t provide the incentives needed to encourage physicians and other providers to participate. California should learn from Maryland’s lengthy experience: price controls may provide temporary relief, but alignment around total-cost management provides the best mechanism for long-term cost control.


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

Central to the “population health” approach to reducing healthcare spending growth is the strategy of shifting risk onto providers. While risk can take many forms, the basic idea is to make hospitals and doctors accountable for controlling spending for some or all of an episode of healthcare delivery. One important learning from early efforts to shift risk to providers is that the mechanism of shift matters—a lot. In general, structuring payments around longer “horizons of accountability” enables providers to deploy care management strategies that might not be feasible in more minimal risk arrangements. For providers to get serious about moving care into lower-cost settings, and reduce unnecessary care utilization, payers will likely need to deploy capitation-like, time-based incentives (total cost risk), rather than just relying on event-based incentives (unit cost risk).


What we’ve been writing about this week on the Gist Blog.

What the New CMMI Director Should Do Next
As new leadership takes the reins at the Center for Medicare & Medicaid Innovation, we offered eight suggestions for the work of the center moving forward. Here’s what we said:

  1. Push providers more aggressively toward downside risk
  2. Use Medicare Advantage and managed Medicaid to make payment reform a multi-payer effort
  3. Reduce complexity and metric overload
  4. Ramp up evaluation of non-traditional approaches to care
  5. Catalyze and test efforts to reduce rising drug spending
  6. Deal the states back in
  7. Bring consumers into the effort
  8. Be a better business partner

There’s much more detail in the post—have a look and let us know what advice you’d give to the new head of the Innovation Center.


Give this a spin, you might like it.

Neither of us is a big fan of country music, to tell the truth. But the latest release by singer-songwriter Kasey Musgraves has us in a Texas state of mind. Moving beyond the down-home sound that marked her first two critically-acclaimed albums, Musgrave’s Golden Hour explores a whole new range of influences and subject matter—think of it as Nashville meets Los Angeles, with more than a little Stevie Nicks swirled into the Loretta Lynn sound. Well worth a listen, even if twang ain’t your thang.


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

Seeking the ideal “Chief Physician Executive”  

The purview of a health system’s “top doc” continues to expand, with many CEOs creating the role of Chief Physician Executive (CPE), a physician leader who spearheads the system’s efforts in physician alignment, clinical quality, and care transformation across the continuum. I spoke recently with a CEO who was vetting candidates for this role and was struck by how much the desired skill set has expanded beyond those of a traditional hospital-based CMO. Finding someone with deep experience across every aspect of the CPE role, from quality to medical group management to payment reform, seems like finding a unicorn. Better to bet on a physician leader with demonstrated success in working with doctors across a large organization to manage change and create consensus—and to support them with best-in-class “subject matter experts” to manage the diverse operations of the physician enterprise.

Helping family doctors understand and embrace change

This week I was invited to give a talk to the board of a state academy of family physicians about the future of healthcare. We discussed all of the myriad access options emerging in the marketplace today for primary care—retail clinics, concierge practices, urgent care centers, and so forth—and where traditional family practitioners find themselves in that busy and changing landscape. With even more disruption on the horizon (as CVS, Walmart and Amazon all inch closer toward the primary care business) these doctors are rightly asking how consumer expectations and new competitors will impact their practices. I was pleasantly surprised to find the group willing to rethink many of the legacy positions taken up by their “guild”: resistance to expanding scope of practice; opposition to telemedicine vendors; skepticism about the value of low-cost access alternatives. The doctors were clear—their foremost concern was that their patients (they’re not quite ready to call them “consumers” yet…) continue to be able to get affordable and appropriate care in the context of a trusting relationship with a caregiver.


Stuff we read this week that made us think.

Leaving black mothers and babies behind—the crisis behind America’s infant mortality

Since 1960 the US has fallen from 10th to 32nd of the 35 wealthiest countries in infant mortality. A compelling New York Times Magazine article describes the shocking data underneath this statistic: the disparity is largely driven by rising mortality of black infants. A black infant born today is more than twice as likely to die than a white baby, “a racial disparity that is actually wider than in 1850, 15 years before the end of slavery, when most black women were considered chattel.” Black women are also more than three times more likely to die from a pregnancy-related complication. These disparities exist across class and income.

The authors traced the limited research trying to identify a cause. Black mothers are more likely to have high blood pressure, pre-eclampsia, and deliver a low-weight baby. A seminal 2007 public health study dispels the idea that genetics are at play, and clearly pointed toward a public health cause. First-generation black immigrants have lower birth weight babies than their mothers, suggesting that “for black women, something about growing up in America seems to be bad for your baby’s birth weight.” Other research shows that feedback from pregnant black women is taken less seriously by providers, regardless of the patient’s class or background. This piece is a wake-up call for providers: listening to and supporting black mothers throughout their pregnancies may be the key to solving our high infant mortality. 

Where have all the good men gone? Not to OB-Gyn

Driving home this week, I heard a story on NPR reporting on just how quickly the specialty of obstetrics and gynecology is becoming a women’s-only domain. Women comprise 82 percent of residents matching into the specialty. Physicians in the field are conflicted as to whether there is a need for gender diversity, and whether more male students should be encouraged to apply. Some interested male medical students report becoming disenchanted when patients turn them away in favor of a female provider. Running women’s health is still a man’s world, with male physicians holding a majority of leadership positions, but this gap is likely to close within a decade. Health systems, medical groups and training programs will have to decide whether preserving gender diversity in a specialty treating only women is worthy of attention.

The future of artificial intelligence is now

Last week’s Economist magazine included a special report looking at the growing adoption of artificial intelligence beyond the technology industry. It’s a fascinating look at how the combination of AI, machine learning, and robotics is beginning to make a huge difference in many of the core functions of the business world—from supply chain to HR to customer service. There’s even a piece about the potential for AI to displace management consultants. (Whatever.) As healthcare begins to adopt more of these technologies, it’s a good reminder that the applications of AI will extend well beyond what we expect—and likely beyond what we’ll be comfortable with.


We said it, they quoted it.

“30,000 Strong and Counting, UnitedHealth Gathers a Doctor Army”
Bloomberg; April 9, 2018.

“UnitedHealth is betting that controlling many doctors can provide patients better care at a lower cost, and steer them away from expensive hospital stays. Bringing more doctors in-house provides a buffer against rivals and places an imposing moat in the path of upstarts.

‘This is obviously scaring the crap out of hospitals in many markets,’ said Chas Roades, chief executive officer of Gist Healthcare, a consulting firm.”

“CVS Hires Doctor from Health Startup in Sign of Medical Ambition”
Bloomberg; April 13, 2018.

“‘[Newly-hired Dr. Mark-David] Munk could be just the person to help CVS figure out how to upgrade their model to provide more comprehensive primary care for Medicare Advantage members,’ said Lisa Bielamowicz, president of the consulting firm Gist Healthcare. ‘There is a significant dividend to be found by better care and network management. While the concept is enticing, CVS has a long way to go.’”

And with that, let the weekend begin! Thanks for making it to the bottom of the Weekly Gist. If this is your first time reading, please subscribe, and share with your colleagues. And for more conversations on what’s happening in healthcare, check out the Gist Blog.

Most importantly, let us know how we can be of assistance. We love talking about healthcare, email us if you’d like to connect. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President