December 14, 2018

The Weekly Gist: The Hall of Fame Edition

by Chas Roades and Lisa Bielamowicz MD

It’s the end of another week and we’re still trying to get our heads around the latest news from Cleveland, where somehow both Radiohead and the Cure have been voted into the Rock & Roll Hall of Fame. A richly deserved honor in both cases, of course, but we’re not quite ready for those bands to be museum pieces yet. It’s all part of getting older, we suppose, but if “Boys Don’t Cry” or “Karma Police” pop up on the oldies’ channel, we are pulling this car over.

On with the news of the week. (Friday, never hesitate…)


THIS WEEK IN HEALTHCARE

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

Obamacare enrollment is down, and (thankfully) boring 

For most Americans, tomorrow is the last day to get coverage for 2019 on the health insurance exchanges established by the Affordable Care Act (ACA). Open enrollment began on November 1st, and will end on Saturday, December 15th, except in the handful of states which have elected to keep their marketplaces open longer—New York, Rhode Island and DC (12/31), Colorado (1/12), Minnesota (1/13), California (1/15) and Massachusetts (1/23). Although final enrollment data won’t be available until next year, weekly updates from the Centers for Medicare & Medicaid Services (CMS) indicate that as of last week, signups were down by about 500,000 people compared to last year, with about 4.1M people buying coverage by last Saturday. Enrollment typically spikes during the last week of marketplace activity, but many analysts expect a lower total number of signups overall, pointing to several factors. 2019 will be the first year Americans will not be subject to a penalty for lacking coverage, thanks to the repeal of the individual mandate last year. Unemployment has continued to decline, meaning more Americans may be getting insurance through their employers. And in some states, slower signups may reflect an increase in Medicaid enrollment—as in Virginia, which expanded Medicaid this fall. Critics of the Trump administration also point to decreased funding for advertising and “navigators” to assist consumers with enrollment as possible explanations for the slowdown in ACA signups.

Whatever the explanation, and regardless of the final tally of Americans signing up for marketplace coverage, it’s clear that as each year passes the “Obamacare” exchanges have become less controversial, and more enmeshed in the fabric of American healthcare. Indeed, one reason for slower signups this year may be that there’s been much less media reporting on the topic than in years past, as the existence of the ACA exchanges is no longer in immediate jeopardy from “repeal and replace”. We’ve long talked about the healthcare “entitlement programs” as encompassing Medicare and Medicaid; to that, it’s probably now safe to add a third—Obamacare subsidies. Eight years on from passage of the ACA, and five years since the exchanges first opened, enrollment on the individual marketplaces now seems to have become a boring annual ritual, rather than a yearly political catfight. That stability is a good thing for all involved: consumers, insurers and providers. Look for the debate in future years to revolve more around fiscal issues (subsidy levels, marketplace funding) than political ones (mandates, eligibility). That is, unless the pending court case in Texas challenging the constitutionality of the ACA itself delivers yet another dose of uncertainty to the healthcare industry.

Dealing a big antitrust blow to Blues plans

A major antitrust case that’s been slowly moving through the courts for the past six years took another dramatic turn this week, as the United States Court of Appeals for the 11th Circuit rejected an appeal by Blue Cross and Blue Shield (BCBS) insurers to an earlier District Court ruling. The case combines two separate lawsuits on behalf of providers and small businesses that claim that BCBS plans unfairly restrict competition, resulting in lower prices being paid to providers and higher premiums being paid by customers. By agreeing amongst themselves to cover exclusive territories as part of their participation in the national BCBS Association, the insurers are engaging in a violation of the Sherman Antitrust Act, according to plaintiffs. In April, a US District Court judge in Alabama held that the exclusivity agreements among the 36 Blues plans constituted a per se violation” of the Sherman Act—meaning that the agreement itself violates antitrust law, whether or not it causes economic harm.

This week’s ruling rejected the BCBS plans’ appeal of that finding, making it much harder for the insurers to defend the practice. The Blues plans describe the arrangement as being simply a trademark licensing deal, not intended to create monopoly power. Notwithstanding that, several Blues plans (including BCBS of Alabama, where the suit originated) enjoy dominant market positions in their exclusive territories. The case is expected to drag on for some time, with an eventual trial to be held in Alabama. Meanwhile, individual Blues plans are continuing to find themselves in court accused of anti-competitive behavior, including in Florida, where insurance start-up Oscar Health recently sued Florida Blue for attempting to cut off its access to insurance brokers. We hear a lot about providers exercising market power to raise prices and limit competition, and rightly so—but there are plenty of questions to be asked of insurers as well. We’ve long thought that the state-level Blues plans, regardless of their nonprofit status, exert outsized power in the healthcare marketplace, limiting competition and retarding innovation. We’ll be tracking this case closely as it wends its way through the legal system.

Kroger launches a prescription discount membership

The Kroger Co., the nation’s largest dedicated grocery chain, announced this week that it is launching a prescription drug membership program aimed at reducing drug costs for customers. A one-year membership in the company’s Rx Savings Club will cost $36 for individuals, or $72 for a family of up to six members, and will lower the monthly price on over 1,000 common drugs to $6 or less. Over 100 common generic drugs will be free. While members will have the option to use their insurance and pay the designated copay, Kroger pharmacists, freed this fall from the gag clause that prevented them from notifying customers when paying the cash price would be cheaper than using their insurance, can alert customers to the lowest price. While Kroger estimates that the average family can save over $1,000 per year, patients who take high-cost, brand-name specialty drugs are unlikely to see their costs decrease significantly. The membership is a partnership with California-based start-up GoodRx, a company that tracks drug prices nationwide and makes them available through their app, helping consumers get coupons from pharmacies and pharmacy benefits managers (PBMs). GoodRx helped Kroger set prices and will be assisting with program administration.

Operating more than 2,000 pharmacies, Kroger follows Walmart, Costco, Walgreens and other pharmacy chains in offering discounted drug prices through memberships or direct discounts. Rx Savings Club and similar programs will likely benefit both commercial and Medicare patients; a recent study found that Walmart’s $4 generic drug discount program was significantly cheaper for common cardiovascular medications than many Medicare Part D plans. As consumerism takes hold, Kroger, which also operates in-store retail clinics through its The Little Clinic subsidiary, brings a different lens to consumer-focused healthcare. By combining consumer prescription and food purchase data with their grocery and pharmacy loyalty programs, the company could offer coupons and incentives to encourage healthy food purchases and medication adherence—creating a tighter connection to consumers than traditional providers have today.


GRAPHIC OF THE WEEK

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

Reducing costly acute care utilization for Medicare patients  

Earlier this month we began to share our framework for helping health systems rethink their approach to investment in delivery assets, built around a functional view of the enterprise. We’ve encouraged our clients to take a consumer-oriented approach to planning, starting by asking what consumers need and working backward to what services, programs and facilities are required to meet those needs. That led us to break the enterprise into component parts that perform different “jobs” for the people they serve. We think of each of those parts as a “business”, located at either the market, regional or national level depending on where the best returns to scale are found (and on the geographic scale of any particular system). Last week we began by describing our view of the “access business”, pushing systems to create a broad web of access points across their market, with the goal of building consumer loyalty over time. This week we’re sharing our perspective on an expanded view of the “postacute business”.

The postacute business—the places where patients receive care after discharge from the hospital—includes skilled nursing facilities (SNFs), rehabilitation hospitals, long-term acute care hospitals (LTACs), hospice, and home health. These serve a range of patients and care needs of varying acuity. Value-based payment, and readmissions penalties in particular, sparked health system interest in building a network of high-quality postacute providers who could partner to manage an episode of care. Bundled payments and accountable care organizations (ACOs) created incentives to have that postacute network not only improve quality and reduce readmissions but also reduce cost of care across time. Efforts to create high-performing postacute networks have been successful, supported by technology and data integration, common care processes, and ongoing performance management. In fact, a number of ACOs have told us their largest identifiable source of savings has been from minimizing postacute utilization and directing patients to closely-aligned, high-quality postacute providers.

Building from this foundation, we encourage systems to take a broader view of the postacute business beyond discharge from the hospital into what we call the “senior care business”. Over the coming decades, aging Baby Boomers will fill hospital beds, largely for exacerbations of chronic diseases like congestive heart failure and diabetes. Key to managing costs for these patients will be finding a way to deal with these flare-ups in a lower-cost setting. What we think of as postacute services today should handle much of this demand. In our vision of the senior care business, each postacute asset takes a broader role in managing aging patients. Patients with a mild chronic disease exacerbation could be admitted directly to a SNF for nursing care and medication management at a lower cost than in an ED or hospital admission. Home health services, augmented by telehealth and remote monitoring, could take an expanded role in ongoing management, preventing acute episodes, and providing more intensive care within the home, in line with the “hospital at home” programs pioneered by Johns Hopkins, Presbyterian Health System, and others. Some experts believe as many as half of hospital admissions for chronic disease could be managed in one of these lower-cost senior care settings. As systems look to expand their postacute networks, finding partners who share this vision for the future of the business should be a priority.

We’re looking to bring together a group of systems looking to expand their senior care and hospital-at-home businesses—let us know if you would like to be part of that effort. Next week, we’ll take a look at the “specialty care business”.


THIS WEEK AT GIST—ON THE ROAD

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

Looking for three “tipping points”, not one

Lisa:
One of the questions we’re asked frequently came up again at a board and executive team meeting I attended last week: “We’ve got some value-based contracts today, but how much more of our business needs to move to risk for us to have passed the ‘tipping point’ for value?” Health systems and physician groups are seeking a “magic number”, a threshold or a goal line to cross, on the other side of which their business model and operations will have shifted away from volume-based, fee-for-service payment and behavior to align around reducing the total cost of care. Our work with health systems who have been able to move a large portion of their business to risk has taught us that the idea of a single tipping point is a fallacy. 

We have identified three distinct tipping points where key behaviors and operations change as a system moves to value. When a system has around a third of their business in risk-based contracts, they reach what we call the “clinical tipping point”, where physicians and other providers begin to apply value-based clinical care pathways across their full practice. From a doctor’s perspective, they now see multiple patients every day who are part of ACOs and other value-based care contracts. Rather than operating two different clinical care models based on how the system is paid, which is both operationally challenging and ethically questionable, they begin to deliver care as if the system were at risk for their full panel of patients. When a system has roughly half of their business at risk, they reach a “cultural tipping point”, where the system self-identifies as operating in a value or risk-based environment. At this point many systems begin to make strategic investments and capital allocation decisions for a value-based care environment.  A true shift in business model, or the “financial tipping point”, isn’t reached until a large majority, upwards of 70 percent, of a system’s business is as risk and the economic model of the system is based on managing the total cost of care. One system CFO felt their financial tipping point may even be further away: “Our last few fee-for-service contracts are our most lucrative commercial contracts. The profit we get from these allows us to afford investments in population health and care management. It’s essentially another cross-subsidy.”

The difference in timing between the clinical and financial tipping points creates an inherent conflict for health systems: doctors will change care long before the health system business model supports a full transition to value, and unrewarded demand destruction undermines health system economics. To mitigate this challenge, systems must pursue two strategies. First, they should minimize the amount of time they spend between tipping points. After reaching the clinical tipping point, it’s in the system’s best interest to move as much business into risk as quickly as possible. Second, systems must reduce their reliance on cross-subsidies and make their risk contracts, particularly for public payers, profitable on their own. This will require not only tight network management and efficient care management but also creating much lower-cost labor and clinical care models.

A “fast follower” is still a follower

Chas:
This week I did again what I’ve had the privilege of doing dozens of times across the course of this year: delivered a “future of healthcare” talk to the board of one of our health system clients. I’ve been doing this kind of work for two decades now, and have grown accustomed to the rhythm of these meetings—first I provide a perspective on market and policy trends and their impact on health systems, then someone (occasionally me) delivers a “local” talk with more detail on competitive dynamics in the system’s own geography, then the CEO or another executive gives a “state of the enterprise” talk that describes how they’re positioned to address the trends the audience has just heard about. My assignment at the outset, then, is to provide context, answering the question, “What will the future look like and what will that mean for us?”

Over time, I’ve pushed the organizations I work with to think about that question—and the future—differently. This week was another instance of that effort. Rather than starting with a perspective on the future state and then discussing what’s to be done about it, I made the case to the CEO that the right question is, “What do we want the future to look like and how can we shape it?” I worry a lot that healthcare delivery organizations—hospitals, systems, physician groups, and others—tend toward a reactive posture to the industry and the forces driving it. A classic example of this is the “transition to risk” or population health. Most delivery system leaders have settled on a default position of wait-and-see, arguing that “we’ll be ready to move when the market is”, and “we don’t want to be on the leading edge.” I think that’s a recipe for failure, particularly because (as we’ve seen) commercial insurers have been very reluctant to shift meaningful risk to providers. Or take the topic of “consumerism”. Again, many leaders fall back on the argument that “we’re not really seeing it yet in our market, but we want to be ready when it hits,” as though one day they expect to open up the newspaper and see a headline that says, “Local Market Hit By Consumerism”. Nonsense! The longer providers wait for the market to tell them to innovate, the further behind they fall, and the more likely it is that the market will simply innovate around them, leaving them disrupted by new competitors who had the courage to lead the change. To their credit, the organization I was with this week was in full agreement—willing to take risks on innovations that put them in a leadership position, rather than seeking to be followers (no matter how “fast”).


ON THE GIST TURNTABLE

Give this a spin, you might like it.

Such a monumental time was 1968, that 50th anniversaries have been coming fast and furious all through this year. In music, some of the greatest albums ever made hit the half-century mark in 2018: the White AlbumBeggars BanquetMusic from Big PinkWhite Light/White Heat. This week, we’ve been listening to another of those golden anniversary landmarks: Van Morrison’s Astral Weeks. You don’t have to be a Van the Man superfan to recognize the album as one of the greatest releases of all time—it’s earned its spot at the top of the “Best Of” lists covering the past half-century and more. If you’re in need of a good retrospective on Astral Weeks, there was a great piece in The Atlantic earlier this year that’s worth a read. But what had us cueing it up this week was the release of Van Morrison’s 40th (yes…fortieth!) studio album, The Prophet Speaks. Now 73 years old, Morrison still maintains a Herculean work ethic: this is his second new album of 2018, and his 13th of the new century. And boy, does he still have the chops. This latest is the second of two this year produced alongside Hammond B3 legend Joey DeFrancesco, and finds him lending his full-throated Celtic blues vocals to a handful of covers (Sam Cooke, John Lee Hooker) as well as a few originals. It’s the new material that really shines here, from the down and dirty “Ain’t Gonna Moan No More” to the lushly laid-back “Got to Go Where the Love Is”. How Sir Van’s voice sounds as good at 73 as it did at 23, back when he “ventured in the slipstream, between the viaducts of your dream” is a mystery. Definitely worth a listen, and while you’re at it, dip back into Morrison’s extensive back catalog—a great time to catch up with an old friend who’s still at it, 50 years later.


WHAT WE’RE READING

Stuff we read this week that made us think.

All the lonely people

There’s a growing consensus among healthcare providers and policy makers that we are on the brink of a national epidemic—of loneliness. In an excellent new installment of their ongoing series “Unprepared”, which covers the coming retirement crisis, the Wall Street Journal featured a piece this week on the growing problem of loneliness and its impact on the health of the nation. Health professionals and sociologists have long recognized the relationship between “social connectedness” and positive life outcomes, including health status. And it’s been well documented that connectedness is on the decline in the US—just read Robert Putnam’s classic study from 2000, Bowling Alone. As Baby Boomers—who had fewer children, got divorced at a higher rate, and are more likely to prefer aging independently—enter the Medicare program, the cost of their above-average loneliness is beginning to take a toll on public finances. Boomers report “often” feeling lonely at a higher rate than any other generation, and about one in six lives alone. That social isolation adds, it is estimated, $134 per person to Medicare spending, or $6.7B per year—and growing. Common health problems, from hearing loss to hypertension, become much more complex when suffered in isolation: self-care is often forgotten, there are fewer social safeguards protecting against an adverse event, and depression becomes a significant additional challenge. And our social services infrastructure was built for an era when people simply lived much shorter lives; many Boomers will live into their 90s grappling with loneliness.

As much as we tout the potential for technology—telemedicine, remote monitoring, and so forth—to lower the cost of care for an aging population, it’s worth remembering that we also need health services that create and bolster social ties. We’re huge fans of the visionary leadership of Dr. Sachin Jain at CareMore Health on this score; he’s been a vocal proponent of addressing the loneliness epidemic head on, and CareMore has invested in a significant initiative called the “Togetherness Program” targeted at intervening to counter loneliness among its enrollees. As payers, providers and policy makers work together on solutions aimed at increasing healthcare value and reducing cost, it’ll be critical to include a heavy focus on loneliness in those efforts.

Some hospital-acquired infections are declining 

Any doctor will tell you that hospitals are dangerous places, and a patient’s risks are minimized by being discharged as quickly as is safely possible. A recent NEJM study shows that hospitals have made strides against one of the greatest risks to patients: hospital-acquired infections, with rates declining 16 percent between 2011 and 2015. Drawing on data from nearly 200 hospitals, researchers found the decline in overall rates of hospital-acquired conditions was largely driven by reductions in surgical site and urinary tract infections. However, rates of pneumonia and C. difficile infections were unchanged.

The specific clinical areas where progress was made demonstrate that hospitals’ efforts toward care standardization and infection reduction protocols are working. Surgical care and catheter management (the source of most hospital-acquired urinary tract infections) are among the most easily “protocolized” areas of hospital medicine—and represent the low-hanging fruit of nosocomial infections. Reducing pneumonia, C. difficile and other hospital-acquired infections will require standardizing more complex processes like ventilator and antibiotic management. While any reduction in infection rates is great news for patients, we are still in the early days of care standardization and capturing the resulting benefits of improved outcomes and lower costs.

Looking to telemedicine to support campus mental health

College can be a difficult time, even for the most resilient, well-adjusted students. The transition to independence, pressures around performance, and experimentation with identities and lifestyles can be overwhelming for a young person. Add to that the economic stresses many people face in college, and there’s little surprise that behavioral health issues arise with some frequency among students. Yet, as we were reminded by an article in the Boston Globe this weekcolleges and universities often lack the resources needed to keep pace with the mental health needs of the students they serve. As the article points out, this is an area in which telehealth might prove to be a major part of the solution. The current cohort of college students, who are the leading edge of so-called “Generation Z”, have grown up with digital technologies woven tightly into their daily lives. Their comfort with online interactions, coupled with a preference for anonymity, creates the ideal user of “telepsych” services. That’s a good thing, since there’s an overwhelming prevalence of behavioral health needs amongst college students today. According to a recent study published in the Journal of Abnormal Psychology, roughly a third of students surveyed across 19 colleges in 8 countries screened positive for at least one common DSM-IV anxiety, mood, or substance abuse disorder. As the study’s authors suggest, “one practical response would be to offer internet-based interventions in addition to the services already offered by student mental health and counseling centers. A number of internet-based interventions exist for a broad range of psychiatric disorders (e.g., depression, anxiety, eating disorders) and associated problems (e.g., sleep, stress) and have been shown to be effective for both prevention and treatment of these conditions.”

That’s just the type of intervention being offered by a number of telemedicine startups, looking to bolster the behavioral health infrastructure on college campuses. Take, for example, Christie Campus Health, a behavioral health company whose “CONNECT@College” platform—launched this month—includes online education, self-care tools, and an on-call support line to link students to mental health resources. Or “YOU at College”, a platform from online provider Grit Digital Health which provides web-based assessment tools and mental health management support to students on more than twenty college campuses nationwide. The telemedicine company MDLive also provides a dedicated behavioral health service, which is now available as part of the Walgreens app, priced at $99 without insurance—exactly the kind of service a parent might be willing to pay for to get quick help for a student away from home who can’t see a college health provider without a long wait. These services are best used in coordination with, not as substitutes for, campus mental health services. As pointed out by researchers in the multi-country study, such services “could be especially useful if they are used in campus mental health counseling centers to triage care, with students experiencing less severe symptoms receiving these interventions.” As with telemedicine generally, we’re in full agreement: virtual care will be a critical tool in expanding access to needed care, but it must be tightly integrated with locally-provided care. It’ll be worth watching the campus mental health space to track the most promising applications of telepsych services.


Thanks for taking the time to read the Weekly Gist this week. “Fast away the old year passes”—just a couple more editions to go for 2018, including our end-of-year look at the highlights from the past 12 months and a look ahead at what we’re watching for 2019. In the meantime, we appreciate your readership, your feedback and your support, and we’re especially grateful for you sharing this with a friend or colleague, and encouraging them to subscribe.

If there’s anything we can do to be of assistance in your work, we hope you’ll let us know. 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