January 17, 2020

The Weekly Gist: The Everywhere a Sign Edition

by Chas Roades and Lisa Bielamowicz MD

Congratulations to the Doobie Brothers, Depeche Mode, Nine Inch Nails, and the late musicians Marc Bolan (T Rex), Whitney Houston, and Biggie Smalls (The Notorious B.I.G.) for their election to the Rock & Roll Hall of Fame this week. We’re trying to get our heads around Michael McDonald and Trent Reznor appearing together on any list, but such is the crazy world of rock and roll. Much as we love those bands, the unfolding scandal rocking baseball this week puts us in mind of a much more obscure musical act (a one-hit wonder, if you’ll pardon the pun): Five Man Electrical Band…best known for their 1971 hit single “Signs”. (“Do this, don’t do that/Can’t you read the sign?”)

THIS WEEK IN HEALTHCARE

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

CVS continues its aggressive expansion of HealthHUBs

In a televised interview with CNBC’s Jim Cramer this week, CVS Health CEO Larry Merlo provided an update on the progress the pharmacy chain is making in rolling out its new HealthHUB offering, the expanded care clinics it is positioning as the centerpiece of its patient engagement strategy. (We’ve written extensively about CVS’s strategy and the HealthHUB concept previously, including a first-hand report on what the clinics look like.) Merlo told Cramer that the company has now opened 50 HealthHUBs in four markets in Texas, Georgia, Florida and Pennsylvania, and has plans to open hundreds more by the end of 2020, opening new locations at a rate of about 12 per week across the year. New markets this year will include Boston and Dallas, as well as locations in North Carolina, Virginia, and Ohio. The company plans to have 600 locations by the end of this year, and 1,500 by the end of 2021. Speaking at the JP Morgan healthcare conference this week, Merlo confirmed that the HealthHUB rollout strategy is tightly linked to the concentration of Aetna enrollees in target markets, enabling the company to redesign benefits to offer Aetna members low-cost access to care at CVS locations. “We’re really excited about what we’re seeing from the consumers,” Merlo told Cramer. “We’re seeing increased traffic in the stores, we’re seeing higher front-store margins, and we are seeing terrific utilization of the health-related services.” We remain bullish on CVS’s strategy with the HealthHUB concept, which is has the potential to be the largest national-scale payer-provider integration, built around a new, access-forward care model. We also continue to believe CVS would be an interesting partner for incumbent health systems, who could build tight connections with CVS’s front-end offerings, thanks to the retailer’s use of Epic for its electronic medical record. Based on Merlo’s comments this week, it looks like we’ll be keeping the “CVS beat” busy in future editions of the Weekly Gist.

Oscar and Cigna partner to tackle the small business market

Oscar, the technology-driven, consumer-focused health insurance startup, and the traditional insurer Cigna announced this week they will be teaming up to offer health benefits to small businesses. While details on the exclusive partnership are sparse, the two companies plan to offer a co-branded product that unites Oscar’s tech-enabled services and features Cigna’s large healthcare networks beginning in a handful of yet-to-be-announced markets in 2020. New York City-based Oscar, founded in 2012, currently offers plans in 15 states and is mostly known for individual exchange plans, though it recently expanded into Medicare Advantage (MA) in New York City and Houston. Partnering with Cigna allows Oscar an opportunity to both penetrate the commercial market and expand its footprint nationally—a strategy to help meet the growth expectations of its investors at a pace it cannot achieve through organic growth alone. This is not the first time Oscar has partnered with a national payer in the small business space. In 2017, the company piloted a product with Humana in the Nashville, TN market, although that partnership is no longer active. It’s worth watching to see how successful Cigna and Oscar are in the small group market, which covers about 15M Americans, particularly given Oscar CEO Mario Schlosser’s prognostication this week at the JP Morgan healthcare conference that we will eventually see a “disappearance of the employer market”.

A quality problem with surgical gowns disrupts patient care

Cardinal Health, one of the nation’s largest medical supply distributors, this week initiated a widespread recall of surgical gowns used in many US hospitals. In coordination with the Food and Drug Administration (FDA), the supplier informed its customers that the Level 3 surgical gowns—commonly used by surgical personnel to prevent microorganism transmission and control infections—did not meet sterility standards due to conditions at a plant where the gowns are manufactured. Cardinal ceased distribution of the gowns last weekend, leaving many hospitals and surgery centers scrambling to secure alternative sources. In a statement, the FDA’s Dr. Jeffrey Shuren said the agency is working with Cardinal to investigate the causes of the quality problem and noted that “this issue may already be impacting patient care at healthcare facilities, such as the cancellation of non-elective surgeries.” We can confirm that’s true, having first heard of the problem from one of our member executives during a visit this week. Not only had the system been forced to reschedule surgeries, but they were coordinating with other local hospitals, including competitors, to share existing supplies of surgical gowns. The incident highlights just how tight the supply chain operations of many hospitals have become, with just a few day’s supply of many critical items on hand, and how heavily they rely on the three dominant supply distributors (Cardinal, AmerisourceBergen, and McKesson). A disruption in the supply of seemingly common items, such as gowns, can reverberate quickly through the nation’s health system and cause disruptions in patient care. It is reassuring to note, however, that in these situations it’s common for otherwise fiercely competitive healthcare provider organizations to work together to minimize the impact on delivery of care.


GRAPHIC OF THE WEEK

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

Toward a patient-centered definition of quality

Healthcare insiders know that clinical quality can be highly variable across providers. But the average patient assumes that the vast majority of providers deliver high-quality clinical care. The graphic below illustrates the distinction between consumer and physician definitions of “quality”. Patients’ definition of quality is often closer to what providers consider service quality: was the service available and convenient? Was my appointment on time and efficient? Was the staff courteous and helpful? As to clinical quality, few patients anticipate a bad outcome, or do extensive research on provider quality unless facing a grave illness. And for those who do, the metrics and methods available to assess quality are hard to interpret, much less to weigh against each other. For example, I know I don’t want a post-op infection, but how much extra am I willing to pay to minimize that risk? As consumers bear more responsibility for choice of provider—and have a greater range of options to choose from—providers must expand their quality goals beyond clinical quality to encompass service reliability, remembering that the ultimate measure of a good outcome for a patient is whether or not their problem was actually solved.


THIS WEEK AT GIST—ON THE ROAD

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

Who is responsible for surprise medical bills?

Lisa:
The chief medical officer (CMO) of a small regional health system called this week to seek advice on working with his doctors around the issue of surprise billing. Recently, a handful of patients at the system’s flagship hospital had received large “surprise bills”, or unexpected bills for out-of-network services provided at an in-network facility. One of these cases was picked up by local media: a lower-income patient underwent surgery at the hospital, and months later received a surprise bill for thousands of dollars from an out-of-network surgeon whom she had never met. While both the hospital and the patient’s primary surgeon were in her insurance network, the assisting surgeon was not. Not only had she never met this doctor, no one had told her a second surgeon had been part of her case, or to expect another bill. The hospital’s leadership was frustrated that the bulk of the scrutiny was directed at the in-network hospital, not the doctor. “We can’t make our independent doctors go in-network for every plan where we have a contract.

My reply: no, you can’t force them. But you must create processes that align your networks. Two percent of hospitals account for over half of surprise bills, largely due to exclusive contracts with large physician staffing firms, some of whom have an explicit strategy of profiting from surprise bills. Structure your contracts to minimize the impact on patients. Some health systems are taking this a step further and using the credentialing process to ensure physicians are in-network with major payers. While it’s incumbent on all providers to be transparent with patients, hospitals are responsible for the care delivered in their facilities, and should take the lead in creating seamless clinical and financial experiences across episodes of care. Working to create networks that minimize surprise billing is a litmus test for whether a system is truly on the side of their patients and consumers.

Considering options for “non-market” competition

Chas:
A discussion with a health system executive team this week reminded me yet again that the most useful class I took in business school all those decades ago wasn’t finance, or strategy, or accounting. It was a class called “Political and Non-Market Competition”. Essentially, the course covered the myriad ways businesses use “non-market” levers—lobbying, coalition building, networking and influence, legal machinations, and the like—to reinforce their competitive position. Useful insights included the fact that concentrated coalitions tend to dominate dispersed ones (which is why “consumer-focused” policies usually lose out to those that favor industry interests), the understanding that “regulatory capture” is endemic to government policy-making at all levels, and the ability to evaluate the legal tactics businesses use to keep potential competitors from jeopardizing profits (such as non-compete clauses). My recent conversation was about how to respond to an “unfair” advantage the health system’s main competitor enjoys in the market—lower prices, dominant share, control of referrals. Options on the table ranged from lobbying the state for regulatory changes, engaging in a press campaign to expose the competitor’s unfair advantage, and potentially even seeking recourse in the courts. Of course, the default option under discussion was to simply slug it out in the market—to compete hard on an uneven playing field. It strikes me that firms in heavily regulated industries like healthcare often look more frequently to “non-market” strategies than those in other parts of the economy, often to the detriment of consumers. My counsel to the system’s executives: pursue a balance of strategies, but focus first on simply being better in the market—that’s where enduring competitive advantage should come from.


THIS WEEK AT GIST—ON THE PODCAST

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

On our episodes last Monday and Tuesday, we featured a conversation with the outgoing CEO of St. Luke’s Health System, Dr. David Pate. He explained how making changes to incentive structures at the Boise, ID-based system was essential to ensuring a successful shift to value-based care. Pate also said that to truly reduce healthcare spending there needs to more focus on encouraging health, not just delivering healthcare services.

On next Monday’s episode we’ll hear from Dr. Connie Lehman, Chief of Breast Imaging at Massachusetts General Hospital and Professor of Radiology at Harvard Medical School. Lehman has developed and is using artificial intelligence (AI) models to read mammograms, and she’s working to share the technology with other countries that have limited access to clinical innovation. She believes AI will change the future role of radiologists and help drive further applications for imaging in medical treatment. Don’t miss it!

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


ON THE GIST TURNTABLE

Give this a spin, you might like it.

The benefit of releasing a new album at the very beginning of the year is that, for a while anyway, you have a shot at “album of the year” adulation. For this very young year, the best new music so far comes from 24-year-old Portland, OR native Alexandra Savior, whose sophomore record The Archer is just out. Working in a style she calls “desert rock”—haunting, dark, Western-tinged—Savior was mentored early in her career by Alex Turner of Arctic Monkeys, and you can hear echoes of his influence here, crossed with Savior’s Lana del Rey-like delivery. It’s a gorgeous, slow-moving (almost sludgy) breakup album, which finds Savior ruminating on the wreckage of past relationships (“You ate me right up/You spit me right out/You bit my head off with your tiny little mouth”) and reconciling with the reality of being on her own again (“My fate is at the hands of my mistakes/And that’s alright”). The production work, from Danger Mouse’s 30th Century Records, backgrounds Savior’s rich vocals with a lush, swirling atmosphere, creating an abandoned roadside bar vibe that fits her lyrics perfectly. It’s an album that promises great things to come from this young singer-songwriter and gets the new year off to an intriguing start. Best tracks: “Saving Grace”; “Howl”; “Bad Disease”.


WHAT WE’RE READING

Stuff we read this week that made us think.

Time to hang up the lead apron

Anyone who’s had an x-ray likely remembers the heavy lead apron placed across their abdomen to protect sensitive organs from radiation. While that lead blanket feels oddly comforting, a new position paper from the American Association of Physicists in Medicine says it provides no benefit in actually protecting patients. Not only is the amount of radiation exposure negligible, but the shield may also reduce the diagnostic quality of the image, obscuring adjacent body parts. The American Dental Association has come out with conflicting guidanceencouraging dentists—who perform over half of the nearly 600M x-rays done the US annually—to keep using the shields to protect the thyroid. Many imaging programs are worried about confusion between the two policies, making them reticent to change practice since patients have been sensitized to the harm of radiation, and have grown accustomed to use of the shield. The conflict highlights the need for both active patient education (see Chicago-based Lurie Children’s Hospital’s “Abandon the Shield” campaign to educate staff, caregivers and patients) as well as collaboration across medical and dental imaging to develop coherent and consistent policy in the best interest of patients.

Exposing the “information terrorism” in nutrition science

You may recall the fracas last fall surrounding conflicting guidance as to whether red meat consumption is harmful. A series of papers published in the October edition of Annals of Internal Medicine challenged longstanding guidance that red meat consumption increases the risk of heart disease and cancer, and asserted that any risk from eating unprocessed red meat is small. This week a JAMA perspectives piece showed the behind-the-scenes industry backlash that occurred, aiming to prevent publication of that research. Annals editor Dr. Christine Laine was the focus of a targeted campaign by the True Health Initiative (THI), a nonprofit nutrition and lifestyle advocacy organization, that flooded her inbox with thousands of bot-generated emails, and the organization’s physician leaders called on her to retract the research. Laine recalled, “The response of the NRA [to firearm prevention research] was less vitriolic than the response from True Health Initiative.” Coverage of the study indicated funding ties between researchers and the meat industry—while failing to call out extensive industry connections between THI and companies who stand to benefit from consumption of more plant-based foods. The new JAMA piece is worth reading not only for the soap opera-like rendition of “information terrorism”, but because it highlights the conflicts that arise when industry funds scientists who are trying to deliver sound nutrition guidance to the public. Nutrition science is notoriously fraught: randomized, controlled trials are expensive and logistically challenging, and observational studies rely on individual recall of diet over time, which is often inaccurate. The specter of industry influence, pervasive in the field, raises the issue of bias in nearly every guideline issued over the past decades. Absent oversight to prevent industry funding of research, what’s a consumer to do? Perhaps our best response is to heed the simplest advice: “Eat real food. Not too much. Mostly plants.”


That’s it for this week. Thank you so much for taking time to read the Weekly Gist! We’re so grateful for your thoughts, feedback and suggestions about what to write about, and we love hearing from you—so let us know what’s on your mind! And don’t forget to tell your friends and colleagues to subscribe, and to listen to our daily podcast.

Most importantly, let us know if there’s anything we can do to 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