April 30, 2021

The Weekly Gist: The Rosebud or Marmalade Edition

by Chas Roades and Lisa Bielamowicz MD

Having dabbled in movie, TV, and music reviews for a while now, we recognize that critical judgement is subjective. One person’s trash is another person’s treasure, and all that. But when it comes to the Best Movies of All Time, we’re pretty sure that Citizen Kane is right up there. Not so much, according to the review site Rotten Tomatoes, which this week updated its score for the 1941 Orson Welles classic to 99 percent, down from a perfect 100, thanks to the addition of a long-forgotten review from a Chicago Tribune critic. (She thought the movie was too “shadowy and spooky”. Fair enough.) But the downgrade means that, at least according to Rotten Tomatoes, Citizen Kane is now ranked below the first two Toy Story movies…and below that cinematic masterpiece, Paddington 2. Having not seen the 2017 live-action movie about the marmalade-guzzling bear, we can’t say for sure. But let’s just say we have newfound sympathy for hospitals and doctors who complain about public ranking schemes because “the data just aren’t right.”

THIS WEEK IN HEALTHCARE

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

President Biden lays out his sweeping legislative agenda

In his first address to a joint session of Congress, delivered on the eve of his 100th day in office, President Biden laid out his vision for two major legislative proposals to follow the $1.9T stimulus package he signed into law last month. The first, described as an “infrastructure” bill, focuses largely on investing in transportation-related improvements, building projects, and “green” upgrades to the nation’s energy grid, along with a $400B investment in home-based care for the elderly and people with disabilities—which amounts to over 17 percent of the package’s $2.3T price tag. The second, which he unveiled in Wednesday’s speech, is a $1.8T “families” bill, is largely aimed at expanding childcare subsidies, early childhood education, paid family and medical leave, and educational investments. Included in that package is $200B to extend the temporary subsidies—approved as part of last month’s stimulus law—for those seeking health insurance coverage on the individual marketplaces created by the Affordable Care Act (ACA). Notably absent from either proposal were two categories of healthcare reform that received much focus and airtime during last year’s election campaign: reducing the cost of prescription drugs and lowering the eligibility age for Medicare to 60 or below. Given the closely divided makeup of the new Congress, and the relatively moderate position staked out by the Biden administration on healthcare issues (with a bias toward bolstering the ACA rather than pursuing sweeping changes), we’re not surprised to see the Medicare expansion go unmentioned. But the bipartisan popularity of lowering prescription drug costs seems like a missed opportunity for Biden, who encouraged the Congress to return to it separately, later in the year. We’ll see. For now, with even some Democrats expressing concern about the $4.1T price tag of Biden’s proposals, we would be surprised if all $600B of the healthcare-related spending makes it to the final legislation. In particular, our guess is that some portion of the home-care spending will get traded away in favor of other components of the package. Expect negotiations to be intense.

Medicare’s proposed payment rule benefits hospitals

The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent, resulting in a $2.5B payment boost to the industry. In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now. Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs. It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s priorities; it’s possible CMS may just be slowing down the effort in the wake of the pandemic. Other highlights of the proposed rule include funding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures. Comments on the proposed rule are due by June 28th.

Physician enablement company Privia Health goes public

Arlington, VA-based Privia Health, a company supporting physician practice operations and transformation, launched its initial public offering yesterday. Founded in 2007, Privia has a network of over 2,700 providers across six states. The company offers a scalable technology and care management platform to support the formation of physician-led value-based care networks, and has also helped its practices pivot to add telemedicine services during the pandemic. While its practices have largely been successful in value-based programs, like Medicare’s Shared Savings Program (achieving $57M in savings last year), more than 85 percent of Privia’s 2020 revenues came from fee-for-service claims, according to its S-1 filing. The company has also begun to partner with health systems, striking its first deal with Florida-based Health First in 2019, although it remains to be seen how much of its future growth it will derive from health systems looking to “outsource” the management of their physician networks, rather than from aggregating more independent physicians, which has been its niche thus far. Privia’s successful IPO is another indication that the physician practice space is a hot target for investors as the COVID pandemic subsides. Whether the long-term prospects for owning and running doctor practices are as rosy remains to be seen, but in the short-term, the opportunity to aggregate and roll up physicians clearly has investors interested.


GRAPHIC OF THE WEEK

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

Taking a deeper look at vaccine hesitancy

The American public’s attitude toward COVID-19 vaccination has evolved rapidly since the end of last year. The share of adults who report they have either already been vaccinated or intend to get the vaccine as soon as possible continues to rise (currently about 62 percent), while the share who say they will “wait and see” continues to shrink (now 17 percent). Importantly, however, the share who say they will either “definitely not” get vaccinated or only do so “if required” (currently 20 percent) has remained stubbornly consistent since December. As the US reaches a vaccine tipping point, with more COVID vaccines available than people willing to be vaccinated, it will be important to understand this vaccine-hesitant population more clearly. A recent consumer segmentation analysis found that this group falls into four major behavioral profiles, shown on the right side of the graphic below. The next phase of vaccine rollout must specifically address the key concerns of individuals in each of these different segments. For example, the “watchful” group, the easiest to persuade, will likely respond to a more transparent vaccination process and the amplification of positive vaccination testimonials. On the other hand, “system distrusters,” generally comprised of younger, lower-income minorities, would benefit most from hearing community leaders discuss vaccine safety. Unfortunately, the largest segment of vaccine-hesitant Americans, the “misinformation believers”, will also be the most difficult to turn. These individuals are more likely to hold rigid, politically driven beliefs. While countering misinformation by leveraging trusted influencers may help convince some, this group may be the hardest to persuade—although their participation will be crucial to hitting any goal of “herd immunity” by this fall.


THIS WEEK AT GIST—ON THE ROAD

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

A mounting wave of post-COVID CEO retirements

A recently retired health system CEO pointed us to a working paper from the National Bureau of Economic Research, which indicates that leading an organization through an industry downturn takes a year and a half off a CEO’s lifespan. It’s not surprising, he said, that given the stress of the past year, we will face a big wave of retirements of tenured health system CEOs as their organizations exit the COVID crisis. Part of the turnover is generational, with many Baby Boomers nearing retirement age, and some having delayed their exits to mitigate disruption during the pandemic. As they look toward the next few years and decide when to exit, many are also contemplating their legacies. One shared, “COVID was enormously challenging, but we are coming out of it with great pride, and a sense of accomplishment that we did things we never thought possible. Do I want to leave on that note, or after three more years of cost cutting?” All agreed that a different skill set will be required for the next generation of leaders. The next-generation CEOs must build diverse teams capable of succeeding in a disruptive marketplace, and think differently about the role of the health system. “I’m glad I’m retiring soon,” one executive noted. “I’m not sure I have the experience to face what’s coming. You won’t succeed by just being better at running the old playbook.” Compelling candidates exist in many systems, and assessing who performed best under the “stress test” of COVID should prove a helpful way to identify them.

Five guiding principles for digital health strategy

We’ve had numerous conversations with health system executives over the past several months about digital strategy. The rapid ramp-up, and then regression, of virtual services during the pandemic convinced many leaders of the urgency of developing a more robust, sustainable approach to incorporating telemedicine and virtual care into their delivery models. With literally hundreds of potential technology solutions and partnerships to evaluate, and sizeable resource investments on the table, we’ve been urging executives to take a step back and consider their guiding principles for setting a digital strategy. At least five overarching principles make sense to us. First, and most obviously, any investment the system makes should improve health, advancing the “Triple Aim” either by addressing acute disease (better care), helping maintain good health (better health), or better matching disease state and care intensity (more appropriate care). Second, any investment should aim to reduce complexity of care, either for consumers or caregivers (or preferably, both). Third, the best investments are those that help reduce total cost of care, either clinical or operational—even though in some cases they may actually increase unit cost of care. Fourth, and critically, any digital strategy should be viewed through an equity lens, and should aim to reduce health inequalities, or at least not increase them. And finally, systems should look for digital solutions that help support sustainability and growth, either by enabling scale advantages, increasing their ability to acquire and serve more patients, or reinforce their ability to deliver on their brand promise. Surely there are other criteria that make sense—we’d be curious to hear how you’re thinking about the hallmarks of a good digital strategy. It’s a rapidly evolving field; today’s best answers might fall short tomorrow, but having a handful of “must-hit” standards will surely be helpful.


THIS WEEK AT GIST—ON THE PODCAST

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

Last Monday, we shared our conversation with Sean Lane, CEO of healthcare artificial intelligence company Olive AI. The Columbus, OH-based company, which helps automate repetitive tasks, is expanding. In recent months, Olive has acquired AI-powered clinical analytics and prior authorization companies.

This coming Monday, we’ll hear from Shawn Morris, CEO of Virginia-based Privia Health, which, as discussed above, held its initial public offering this week. The company is one of a growing number of high-profile “physician enablement” firms, helping practices improve operations and transition to value-based care delivery. Make sure to tune in!

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


BINGE WATCH ALERT

We would’ve worked harder, but we watched this instead.

Amid the reality shows, crime dramas, and superhero spinoffs that crowd the streaming platforms these days, you might find yourself longing for a little comfort viewing—something that fills the space that, in another television era, was occupied by shows like The Waltons and Little House on the Prairie. Enter what is surely the unlikeliest Netflix success ever: Shtisel, an Israeli program from eight years ago that unexpectedly found enough of an American audience to be picked up for a new season, just out on the streaming service. It’s a family drama centered on the everyday joys and sorrows of an ultra-Orthodox Haredi family living in Jerusalem. The aging patriarch, Shulem Shtisel, is a widowed rabbi and principal of a local school, engaged in a constant struggle to defend his family’s traditions in a changing world. His bachelor son Akiva wants to be a painter rather than a teacher; his daughter Giti is married to a schemer who’s constantly up to no good; his grandson Yosa’le wants to marry outside the strict boundaries of the faith. There’s nothing racy or titillating here—you may have to adjust your palate to savor the, well, wholesomeness of the show. But it’s worth the adjustment. Far from being treacly, Shtisel is a nuanced, moving portrait of a family and community navigating the business of sustaining their way of life. The writing is terrific, and the performances by the cast of veteran Israeli actors (including Shira Haas, who will be familiar from her lead role in the recent miniseries Unorthodox) are incredibly powerful. Take a break from the blaring cacophony of today’s televised fare and enjoy a quiet moment with this delightful show.


WHAT WE’RE READING

Stuff we read this week that made us think.

Colorado’s “public option” primed to move forward

We’ve closely tracked Colorado’s pursuit of its own public option insurance plan, which seems now to have reached a compromise that will allow a bill to move forward, according to reporting from Colorado Public Radio. The saga began two years ago when state legislators passed a law requiring Democratic Governor Jared Polis’ administration to develop a public option proposal. Amid the pandemic and broad industry opposition, progress stalled last year on the proposal. Lawmakers picked up the proposal this session, and have made progress on a compromise bill now poised to pass the state’s Democratic legislature. Unlike the earlier version, the new legislation would not lay the groundwork for a government-run insurance option, but rather would force insurers to offer a plan in which the benefits and premiums are defined and regulated by the state. The bill would also allow the state to regulate how much hospitals and doctors are paid. In the current version, hospital reimbursement is set at a minimum of 155 percent of Medicare rates, and premiums are expected to be 18 percent lower than the current average.

While state Republicans and some progressive Democrats are still opposed, the Colorado Hospital Association and State Association of Health Plans are neutral on the bill, largely eliminating industry opposition. The role hospitals played in fighting the pandemic surely paved the way toward the compromise bill, which is viewed as much more friendly to providers than the previous proposal. With the Biden administration unlikely to pursue Medicare expansion or a national public option, we expect more Democratic-run states to pursue these sorts of state-level efforts to expand coverage. In the wake of the pandemic, providers are well-positioned to negotiate—and should use the goodwill they’ve generated to explore more favorable terms, rather than resorting to their usual knee-jerk opposition to these kinds of proposals.

An old drug shows new promise for surgery without a scar

A 20-year-old medication used to treat glaucoma nearly completely eliminated scarring from surgery in mice when injected into the wound site, according to research published last week in Science. The drug, verteporfin, inhibited the response of fibroblast cells—leading to skin healing through regeneration rather than scarring. The resulting new skin that was formed looked normal, and had hair cells, oil glands and the mechanical strength usually absent in scar tissue. Stanford researchers who led the study hope to gain approval to begin testing the drug in babies with cleft lips and palates within the year. Researchers in wound healing not associated with the study describe the results as “a major leap”, and truly groundbreaking in the field. Clinical trials must still confirm safety and outcomes in humans, but hopes are high for a “medical miracle” with the potential to deliver life-changing outcomes for patients who experience disfiguring scarring after surgery.


That’s all for now! Thanks for taking the time to read the Weekly Gist. We’re so fortunate to have so many engaged readers (and listeners) each week—keep the emails and messages coming…we love hearing your feedback and suggestions. If you can, please forward this to a friend or colleague and encourage them to subscribe, and to listen to our daily podcast. The more the merrier!

Most of all, please let us know if there’s anything we can do to assist with 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