November 15, 2019

The Weekly Gist: The Open to the Public Edition

by Chas Roades and Lisa Bielamowicz MD

We’re back! After a crazy travel schedule last week that kept us from our writing duties, we’ve returned to Washington just in time for the biggest media circus in recent memory, with public impeachment hearings playing on every television and computer screen. In case you were wondering what Watergate would have been like in the age of Twitter and the 24-hour news cycle, here we are. The real question is, who will be our Robert Redford and Dustin Hoffman when this is all over and the movie version makes it to Netflix? (Just kidding. It will never be over. And it’ll probably be on Hulu.)

THIS WEEK IN HEALTHCARE

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

Forcing hospitals to reveal their secretly negotiated prices

Today the Centers for Medicare and Medicaid Services (CMS) released a final rule requiring hospitals to publicly reveal the negotiated prices they charge insurers for their services, along with the discounts they’re willing to give uninsured patients. First proposed this summer as part of an executive order on healthcare transparency, the rule requires hospitals to publish, in machine-readable format, their “standard charges” for all services, including gross charges, payer-specific negotiated rates, and discounted cash prices starting in 2021. Hospitals must also publish consumer-friendly information on their websites about charges for 300 “shoppable” services, including a standard set of 70 inpatient and outpatient services. At the same time, CMS announced a new proposed rule to require group health insurance plans and health insurers to reveal the rates they negotiate, along with information on consumer cost-sharing, in the form of real-time, personalized online tools.

Secretary of Health and Human Services (HHS) Alex Azar said in a press release that “Today’s transparency announcement may be a more significant change to American healthcare markets than any other single thing we’ve done.” Industry lobbyists have already floated plans to challenge CMS’s authority to make such changes through regulation, hoping to find a sympathetic ear in the courts, which already struck down an earlier Trump administration attempt to force drug manufacturers to publicly reveal their prices. While we understand all the arguments against more transparency—patients won’t be informed shoppers, hospitals might collude to raise prices rather than lower them, there’s no true “market” in healthcare—we continue to think that pushing back against transparency and defending secret pricing is a bad look for hospitals and insurers, particularly for those who tout a nonprofit, mission-focused orientation. Transparency need not result in a race to the bottom on price, as long as hospitals are able to justify their pricing based on the benefits they deliver to consumers—quality care, superior access and service, and (most importantly) great outcomes. If “value” is defined as benefits divided by price, perhaps greater visibility of the denominator will encourage greater attention to the numerator—a welcome result for patients.

Uncovering a major new healthcare data partnership

Search engine giant Google and St. Louis, MO-based health system Ascension found themselves in the public spotlight this week, after the Wall Street Journal reported that the two are working together on a joint effort to consolidate and analyze the personal health information of more than 50M patients across 21 states. Dubbed “Project Nightingale”, the collaboration is purportedly an attempt to allow doctors and other clinicians at Ascension, the nation’s second largest hospital system, to exchange data about their patients across care settings using Google’s suite of productivity tools. It is also intended to apply Google’s artificial intelligence and machine learning technologies to Ascension’s clinical data, theoretically allowing real-time adjustments to care plans and treatment approaches. After the WSJ report, which was based on a tip from an anonymous whistleblower, both Google and Ascension rushed to reveal additional information about the project on their websites, even as regulators and lawmakers moved to launch investigations into the details of the partnership, and whether it violates Federal healthcare privacy laws. Both organizations claimed to be in compliance with those standards, and legal and privacy experts seemed to agree that the arrangement is permissible under the Health Insurance Portability and Accountability Act (HIPAA), which governs the sharing of sensitive health data.

Coming amidst larger concerns about the ethical behavior of large technology firms and increasing scrutiny of how sensitive personal data is shared and monetized, the report could be a major setback to attempts to analyze vast storehouses of clinical data to improve how care is delivered. The story raises several important questions: why did Ascension not de-identify the data before sharing it with Google? Why were patients not informed of how their personal information was being shared? And what measures are being taken to ensure that individuals’ health information doesn’t fall into unwelcome hands (such as employers or advertisers)? On one level, it’s good news that this kind of project is happening—if we want technology to improve care, then data is the fuel that makes that engine run. It’s also an indictment of the legacy electronic health record systems that they don’t enable the kind of workflow support, analytics, or data sharing that Google is now trying to layer on top of the “walled data gardens” that pervade healthcare. But we’re long overdue for a very public discussion of how technology and healthcare intersect, and what we as patients are willing to share with whom, when, and for what purposes. Here’s hoping we hear some of the healthcare luminaries Google has recently hired commenting on these important questions—soon.

Facing an earnings slump, Walgreens looks to go private

On Monday Bloomberg reported that private equity firm KKR & Co. is in the process of preparing a bid to take Walgreens Boots Alliance Inc. private. Walgreens has reportedly been exploring a leveraged buyout for several months, holding discussions with a number of large private equity firms. However, analysts have been highly skeptical of KKR’s ability to take Walgreens private on its own, given the company’s sheer size and large amount of debt, and speculate any feasible bid would require multiple sources of financing. Walgreens has recently seen its profits drop, and announced last month that it would close nearly half its in-store clinics as part of cost cutting efforts. In addition to facing new competition from disruptors like Amazon looking to enter the prescription business, the pharmacy chain has been losing ground to rival CVS Health. Just a few years ago, Walgreens seemed the more forward-looking of the two competitors, partnering with provider organizations to launch accountable care organizations (ACOs), announcing co-branding deals with leading health systems, and unveiling plans to get into the care management business. But its more recent strategy of leveraging partnerships to acquire capabilities, rather than growing by acquisition, has been slow to deliver returns. Going private would remove the pressure to maximize quarterly earnings and allow the company to focus on building in-store health services—and reposition the company to better compete with the growing number of vertically-integrated competitors looking to profit from combining care delivery, pharmacy and insurance to lower the total cost of care.


GRAPHIC OF THE WEEK

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

Recognizing how doctors think—and how to help them manage change 

Anyone who works with physicians knows that doctors share common personality characteristics reinforced over many years of training. Physicians are trained to operate autonomously. They’re straight-A students by nature and have been rewarded (often handsomely) for individual performance their entire lives. It’s probably an exaggeration to say they’re opposed to change—but they want to see evidence before they make a move. And most of all, they dislike being told what to do. Doctors will be happier if they make the tough decisions on how care processes should be designed to improve outcomes and reduce waste, rather than having it decided by government regulation and payer policies—and their patients will be better off as well. This week’s graphic unpacks this common mindset—and how understanding it can be helpful in motivating practice change.


THIS WEEK AT GIST—ON THE ROAD

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

A new vision for clinically integrated networks

Lisa:
Earlier this month, a health system chief clinical officer called me with this question: “We’re having trouble getting new contracts and I’m worried we might start losing doctors. How can we ‘jump-start’ our clinically integrated (CI) network?” We’ve heard concerns from both member doctors and the leaders of these networks, created to align employed and independent physicians around the goal of jointly delivering value-based, integrated care, that their CI networks are losing momentum and physician interest is waning. Most CI networks were built with two purposes: to provide a vehicle to align independent doctors more closely with the health system, and to resource them with electronic health record systems, care management support and other resources outside of direct employment.

But the great promise of CI networks is their use as a platform for accountable care and other value-based contracts—which hopefully earn participating doctors a meaningful bonus from shared savings. For many, however, bonuses have been lackluster, as commercial ACO contracts have been hard to come by. In addition to thinking through ways to increase the pace of value-based contracting, we’ve encouraged physician leaders to consider orienting their networks around consumer value: can the CI network provide a platform to organize independent doctors for better access, more consistent service, and improved loyalty? But in order to succeed, doctors must standardize elements of scheduling, operations and service to create a unified consumer experience—a challenge to independent practice much larger than the changes required to be part of an ACO. We’ve found a few networks who are making this work and will share lessons learned as they continue to evolve.

Keep your friends close and your “frenemies” closer

Chas:
Healthcare is full of buzzwords: “value”; “population health”; “social determinants”; “consumerism” among many, many others. But recently I’ve been hearing another word again and again from executives at healthcare organizations: “frenemies”. That portmanteau captures perfectly the love/hate relationships in which many now find themselves: hospitals and doctors; health systems and insurers; incumbents and disruptors. In particular, the term has been coming up a lot lately in the context of Optum, CVS, and other gargantuan organizations looking to elbow their way into new segments of healthcare. They’re too significant to ignore, too well-funded to hold at bay, and bring too many capabilities (broad access, digital tools, consumer connections) that are difficult for incumbents to replicate. Thus, they’re picking frenemies—choosing to pursue partnerships around defined projects or parts of the business, all the while “sleeping with one eye open”, cognizant that the long-term aims of those disruptors are probably not fully aligned with those of health systems or physician groups. The frenemy strategy is unavoidable for most incumbent providers, and it can be a smart way to get up the learning curve more quickly on care innovations that would otherwise be too expensive and time-consuming. My counsel in these situations: be aggressive about the benefits of partnership—learn as much as you can, as quickly as you can, and not just in the form of “pilots”—and be clear-eyed about the risks. Pay close attention to the second half of the word “frenemy”, while using the first half to maximum advantage.


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 this past Monday’s episode, host Alex Olgin spoke with Fountain Valley, CA-based health system MemorialCare’s Chief Transformation Officer Helen Macfie and Chief Medical Officer Dr. James Leo about their recent project on behalf of the Institute for Healthcare Improvement (IHI) to identify close to $1T in healthcare waste. Macfie and Leo detailed how MemorialCare has been taking steps to reduce waste, which has already yielded sizable savings.

Coming up next week on Gist Healthcare Daily, a special series on the changing dynamics of healthcare in North Carolina. That state is in the midst of shifting to Medicaid managed care, providers are moving quickly to value-based care and there’s a renewed focus on social determinants of health. Each episode next week will feature an interview with a different player in the state’s healthcare transformation. We’ll hear from the state health director, the largest insurer in the state, a health system CEO, an independent primary care doctor and the state treasurer. Tune in next week!

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


ON THE GIST TURNTABLE

Give this a spin—you might like it.

The otherworldly English electronica artist FKA twigs is back this month with her second full-length album, Magdalene, which comes a full five years after she first landed her alien craft on the surface of planet R&B and began to transmit cosmic sounds to human ears. Also known by her Earth name, Tahliah Barnett, FKA twigs began her career as a backup dancer on the London electronic scene at age 17, but quickly established herself as a multimedia, avant-garde musical act, a kind of Afrofuturist Kate Bush with a diamond-edge soprano voice and a flair for the theatrical and bizarre. Her new release is a break-up album that only FKA twigs could produce, a weird collection that blends sounds ranging from medieval chants to Skrillex club beats to samples from dirty south rapper Future. There’s no summarizing her work—you have to hear it (and see it) for yourself. “Didn’t I do it for you?” she asks on the album’s first single. “Why don’t I do it for you?” Oh, she does. Best tracks: “cellophane”; “holy terrain”; “home with you”.


WHAT WE’RE READING

Stuff we read this week that made us think.

Millennials are set to be the unhealthiest generation

As proud Gen-Xers, we joke that we’re members of the “despair and dismay” generation, with our trademark grunge music, black turtlenecks, and Winona Ryder. But a new study from Blue Cross Blue Shield and risk management company Moody’s Analytics reveals that Millennials are in even more dire straits, seeing their health decline faster than the generation before them—and without intervention, likely to have a 40 percent higher risk of mortality than Gen-Xers at the same age. Rising rates of physical and mental illness lie behind these risks. Millennials are experiencing faster rates of increase in chronic disease, including high cholesterol and hypertension, as well as behavioral health conditions, particularly depression and hyperactivity. Millennials are also the first generation to know only high-deductible insurance, and their health risks are compounded by greater financial exposure to the cost of care and resulting reluctance to seek treatment. All in, their health costs could reduce the average Millennial’s annual real income by $4,500 and even dampen the productivity of the country’s labor force. The poor health status of Millennials sets up a prevention mandate for the healthcare system. While the near-term financial stability of the healthcare system requires lower-cost management of aging Baby Boomers already afflicted with chronic disease, the long-term sustainability of healthcare could depend on slowing rates of illness in Millennials as they age into their prime healthcare utilization years. And despite the generation’s predilection for wellness apps and fitness tracking, staving off this health crisis will likely require more intensive solutions directly connected to healthcare delivery.

Unpacking rising rates of hospital admissions

An article this week reported that all major for-profit hospital chains showed rising rates of admissions in their most recent quarterly earnings reports. Admissions were up an average of 4 percent for the third quarter, with analysts debating whether this is a one-time spike or indicative of a longer-term trend. Continued historically-low unemployment has increased the numbers of patients with insurance seeking care. But more commercially insured plans come with high deductibles, leading to greater numbers of patients accessing care in the second half of the year as they “max out” their deductible. (Several hospitals have told us that they’re nearly fully booked for elective surgeries through the end of the year, even after adding weekend slots and other capacity.) It’s likely that this annual spike will continue, with high deductibles skewing wait times for elective surgeries and other admissions. And over time this autumn “capacity crunch” will only be intensified as Baby Boomers age, and more hospital beds are filled with medical admissions for chronic disease exacerbations. One possible, but unlikely, factor that could smooth capacity needs: Medicare for All (M4A) proposals that eliminate patient cost-sharing would nix the incentives to wait until late in the year to schedule. Or, as critics contend, M4A could create year-round queuing for specialty care of the kind we’re now seeing in the second half of the year.


Thanks for joining us for this week’s edition. We’re glad to be back—the flood of events feels overwhelming if we don’t force ourselves to sit down every Friday and make sense of it all. Hope you find that useful as well. Don’t forget to share the Weekly Gist with a friend or colleague and encourage them to subscribe. And remember to check out our daily podcast to stay up to date on all the latest in healthcare business and policy news!

Most especially, please 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