March 12, 2021

The Weekly Gist: The Infographic Auction Block Edition

by Chas Roades and Lisa Bielamowicz MD

We were today years old when we finally figured out what NFTs are. Don’t worry if you don’t know, the world is just catching up to this latest sign of the apocalypse. (The New York TimesWashington Post, and even WIRED—yes, the magazine of the digerati—all ran headlines this week, asking “So what are NFTs?”) We’re talking about “non-fungible tokens”: basically, digital files that are registered as unique assets on the blockchain. Image files, mostly, that can be bought and sold as collectibles, sort of like hifalutin’ Pokémon cards. Except instead of fidgety fifth graders, it’s moneyed investors who are sinking record sums into these digital doodads. This week, a JPEG file created by the digital artist Beeple sold at auction for a record $69M, putting it among the top five most expensive art works ever sold, right up there with Jeff Koons’ Balloon Dogs. Insanity!

On a related note, if you’re interested in purchasing the digital original of our latest Graphic of the Week, please contact our auction agent at Sotheby’s. Bidding starts at $5M. Serious inquiries only, please.


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

Observing an unhappy anniversary, with better days ahead

This week marked the one-year anniversary of the COVID pandemic, at least as measured from the World Health Organization’s official declaration on March 11, 2020. Over the past year, the virus has infected more than 119M people worldwide, killing more than 2.6M; the US represents nearly 25 percent of those cases, and 20 percent of the deaths. With 10 percent of the US population now fully vaccinated against the virus, and a quarter of Americans having received at least one vaccine dose, the light at the end of the tunnel is growing increasingly bright. This week, in a primetime address to the nation, President Biden directed states to make every adult American eligible for vaccination by May 1st, and set a goal of “independence from this virus” by July 4th. The Centers for Disease Control and Prevention released new guidelines for what vaccinated people can safely do, greenlighting small indoor gatherings with other vaccinated people without masking, as well as visits with low-risk, unvaccinated people. While scientists still warn that the more contagious variants of the virus could cause a dangerous “fourth wave” of COVID cases, early evidence from Florida, where the B.1.1.7, or British variant, is now predominant, shows no sign of a new spike in the disease. With more than 100M Americans at least partially vaccinated against the virus, and millions more likely carrying some immunity from previous illness, there is simply a diminishing number of targets for the disease to infect. Summer is looking more and more promising—we can almost taste those 4th of July hot dogs and hamburgers now. Just a little longer.

The ARP comes to the rescue of the ACA, for now

On Thursday, President Biden signed the American Rescue Plan (ARP) Act of 2021 into law, committing nearly $1.9T of federal spending to boost the nation’s recovery from the coronavirus pandemic. In addition to direct payments to American families, extension of unemployment benefits, several anti-poverty measures, and aid to state and local governments, the plan also contains several key healthcare measures. Approved by Congress on a near party-line vote using the budget reconciliation process, the law includes the broadest expansion of the 2010 Affordable Care Act (ACA) to date. It extends subsidies for upper-middle income individuals to purchase coverage on the Obamacare exchanges, caps premiums for those higher earners at a substantially lower level, and boosts subsidies for those at the lower end of the income scale. The Congressional Budget Office (CBO) estimates that expanded ACA subsidies in the ARP will result in 2.5M more Americans gaining coverage in the next two years. Fully subsidized COBRA coverage for workers who lost their jobs due to COVID is also extended through the end of September, which the CBO estimates will benefit an additional 2M unemployed Americans. The ARP also puts in place new support for Medicaid, enhancing coverage for home-based care, maternity services, and COVID testing and vaccination, and providing new incentives for the 12 states which haven’t yet expanded Medicaid eligibility under the ACA to do so. In addition to the ACA’s 90 percent match for those states’ Medicaid expansion populations, the lucky dozen will also receive a 5 percent bump to federal matching for the rest of their Medicaid populations should they choose to expand.

Three policy changes of keen interest to providers were left out of the final version of the bill. First, while a special relief fund of $8.5B was created for rural providers, there was no additional allocation of relief funds for hospitals and other providers, similar to the $178B allocated by the CARES Act, despite initial proposals of up to $35B in additional funding. (Around $25B of the initial round of provider relief is still unspent.) Second, the ARP did not extend or alter the repayment schedule for advance payments to providers made last year, in spite of industry pressure to implement more favorable repayment conditions. Finally, the new law does not extend last year’s pause on sequester-related cuts to Medicare reimbursement, although the House is expected to consider a separate measure to address that issue next week. Notably, the coverage-related provisions of the ARP are only temporary, lasting through September of next year. That sets up the 2022 midterm elections as yet another campaign cycle dominated by promises to uphold and protect the Affordable Care Act—by then a 12-year-old law bolstered by this week’s COVID recovery legislation.


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

A year later, consumer confidence is returning

After a rollercoaster year of living with COVID-19, consumer confidence has returned—and remained largely stable during the winter surge of the pandemic, according to the latest data from a Healthgrades’ consumer attitudes and behavior survey. The graphic below depicts Healthgrades’ “Consumer Comfort Index”, a measure based on survey questions that assess comfort in specific healthcare settings (e.g., visiting your primary care doctor) and “everyday activities” (e.g., going grocery shopping or dining inside a restaurant). The index reveals that consumers continue to feel more comfortable with in-person medical-related activities than most everyday activities, with 65 percent now feeling comfortable in healthcare settings—up from 40 percent last April. There are, however, some obvious “everyday” outliers: for example, people still feel more comfortable going to the grocery store than getting an in-office medical procedure. A second survey, by Jarrard Phillips Cate & Hancock and Public Opinion Strategies, finds consumers are much more willing to seek in-person medical care in the next six months as compared to last summer. Health systems and physicians should leverage this return of consumer confidence to reach out to patients who have delayed or missed screenings and other important care across the past year.


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

The false metric of “lives under management”

“We’ve fully embraced value-based care,” we often hear from health system executives. “We don’t just measure inpatient admissions anymore—now we focus on ‘lives touched’.” Indeed, the proliferation of shared savings schemes, quality-based bonus payments, and the like has refocused traditional hospital leaders on a broader set of performance metrics. But there’s some fuzzy math going on here. When we hear an executive boast that their system has “more than half our payments at risk”, our first question is, what kind of risk? A hypothetical, but very common, example, illustrates the point: if $100 of reimbursement has a $1 quality bonus attached to it, that’s often counted as $101 of “revenue at risk”. Nonsense!

As the lines blur between insurance companies and providers, and health systems aspire to move up the value chain, embracing risk for the health of the patients they serve, the real question shouldn’t be how many lives are under management, but rather how much management those lives are under. Taking on greater responsibility for managing not just the total cost of care, but the total health of each individual patient, should be the strategic goal of systems looking to become fully “integrated”—depth matters more than breadth when it comes to managing care. That’s where the incentives really change, and decisions about what care should be delivered when, to whom, and how, become powerful drivers of a system’s economics. We’d encourage health systems to fully embrace accountability for the health of their patients, and not to be satisfied with merely earning performance-based bonus payments.

Back to “a deal for every doc”?

Many physician practices weathered 2020 better than they would have predicted last spring. We had anticipated many doctors would look to health systems or payers for support, but the Paycheck Protection Program (PPP) loans kept practices going until patient volume returned. But as they now see an end to the pandemic, many doctors are experiencing a new round of uncertainty about the future. Post-pandemic fatigue, coupled with a long-anticipated wave of retiring Baby Boomer partners, is leading many more independent practices to consider their options. And layered on top of this, private equity investors are injecting a ton of money into the physician market, extending offers that leave some doctors feeling, according to one doctor we spoke with, that “you’d have to be an idiot to say no to a deal this good”.

2021 is already shaping up to be a record year for physician practice deals. But some of our recent conversations made us wonder if we had time-traveled back to the early 2000s, when hospital-physician partnerships were dominated by bespoke financial arrangements aimed at securing call coverage and referrals. Some health system leaders are flustered by specialist practices wanting a quick response to an investor proposal. Hospitals worry the joint ventures or co-management agreements that seemed to work well for years may not be enough, and wonder if they should begin recruiting new doctors or courting competitors, “just in case” current partners might jump ship for a better deal. In contrast to other areas of strategy, where a ten-year vision can guide today’s decisions, it has always been hard for health systems to take the long view with physician partnerships. When most “strategies” are really just responses to the fires of the day, health systems run the risk of relationships devolving to mere economic terms. Health systems may find themselves once again with a messy patchwork of doctors aligned by contractual relationships, rather than a tight network of physician partners who can work together to move care forward.


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

On last Monday’s episode we learned how patient navigation platform Upfront Healthcare is helping medical groups and health systems like Newport News, VA-based Riverside Health System use COVID-19 vaccine outreach to build consumer loyalty and drive patients back for missed care.

Coming up on Monday’s episode, we’ll dig into the unique collaboration between a rural hospital and community health center in North Dakota—and explore whether this solution can be replicated in other underserved markets.

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Give this a spin—you might like it.

The past several weeks have yielded a bounty of excellent releases from female singer-songwriters working in the indie-folk space. Garnering most critical attention is the third album (Little Oblivions) from veteran Julien Baker, her best, most orchestrated record to date, featuring a fuller, richer sound than her more spare earlier work. (Best track: “Faith Healer”.) Texan Katy Kirby debuts with a compact, surprisingly powerful collection (Cool Dry Place), showcasing her lyrical chops and combining a playful, pop-sweetened sarcasm with her innocent vocal style. (Best track: “Traffic!”). Americana musician Lydia Luce is out with her second LP (Dark River), a warm, Laurel Canyon-tinged set of tracks full of lush string arrangements and her characteristic, k.d. lang-esque singing style. (Best track: “Maybe in Time”). But the best of the recent crop is the new album from New York folk artist Cassandra Jenkins (An Overview on Phenomenal Nature), who was about to go on tour in 2019 as a guitarist with David Berman’s Purple Mountains when he tragically took his own life. Jenkins regrouped and went into the studio with producer and songwriter Josh Kaufman, emerging with a psych-folk album that vaults her into the top tier of the indie world. It’s a wide-ranging, gorgeously crafted set of observational tracks about love, loss, and living through difficult times, and Jenkins’ lyrical prowess is as good as anything you’ll hear this year. (How’s this for a 2021 breakup line: “You’re the virus/And you come back at the first sign of weakness/Treatable, not curable/And I’m building a resistance.”) Jenkins’ latest, along with the rest of these recent releases, is not to be missed. (Best tracks: “Ambiguous Norway”; “New Bikini”; “Hard Drive”.)


We said it, they quoted it.

UnitedHealth Chases 10,000 More Doctors for Biggest U.S. Network
Bloomberg; March 5, 2021

“More practices may be on the market amid the pandemic. ‘It definitely has stressed even the largest physician groups,’ said Lisa Bielamowicz, co-founder of consultancy Gist Healthcare. The fallout will bring more opportunities ‘for health plans, health systems and others to continue to aggregate physicians,’ she said.

At the same time, fewer groups the size of Atrius remain for Optum to add hundreds of physicians in a single deal. ‘There is a shrinking list of these megapractices,’ Bielamowicz said.”


Stuff we read this week that made us think.

Consolidation as a force for good—at least during COVID

When Jeff Goldsmith and Ian Morrison talk, people listen (apologies to E.F. Hutton…Goldsmith and Morrison are old enough to get that reference, anyway). These two lions of health policy and strategy came together recently to pen an editorial in Health Affairs examining the impact of large integrated health systems on the nation’s response to COVID-19. Morrison and Goldsmith admit to often finding themselves on opposite sides of consolidation issue, but looking back over the past year, both agree the scale systems have built over decades has been foundational to their effective and rapid response to the pandemic, which they rate as “better than just about any other element of our society”. Larger health systems were able to mobilize the resources to secure protective gear as supplies dwindled. They responded at a speed many would have thought impossible, doubling ICU capacity in a matter of days, and shifting care to telemedicine, implementing their five-year digital strategies during the last two weeks of March. This kind of innovation would have been impossible without the investments in IT and electronic records enabled by scale—but systems also exhibited an impressive degree of “systemness”, making important decisions quickly, and mobilizing across regional footprints. Given the financial stresses experienced by smaller providers, consolidation is sure to increase. And the Biden healthcare team will likely bring more scrutiny to health system mergers. Morrison and Goldsmith urge regulators to reconsider the role of health systems. The government should continue to pursue truly anticompetitive behavior that raises employer and consumer prices. But lawmakers should focus less on the sheer size of health systems and rather on their behavior, considering the potential societal impact a combined system might deliver—and creating policy that takes into account the role health systems have played in bolstering our public health infrastructure.

That’s it for another week. Before we sign off, a quick announcement: we’re hiring! As our firm grows, we’re on the hunt for inquisitive, analytical candidates with a passion for improving healthcare to join our small, motivated team. Interested? Learn more here.

Meanwhile, thanks for taking the time to read this week’s edition! Please don’t forget to share it with a friend or colleague, and encourage them to subscribe, and to listen to our daily podcast.

And if there’s anything we can do to be of assistance in your work, please let us know. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President