August 3, 2018

The Weekly Gist: The Signs of the Apocalypse Edition

by Chas Roades and Lisa Bielamowicz MD

Perhaps at some point during these long, lazy days of summer you’ve run out of “fun activities” for the kids to do, thrown up your hands, and acceded to their demands to mindlessly play video games. (Or maybe, you find yourself with a PlayStation controller in your own hands.) No shame in it. Unless you lose.

Here’s this week’s sign of the impending apocalypse: the Wall Street Journal is out with a feature on parents who are hiring tutors to teach their precious little ones how to win at the popular online game “Fortnite”. And you thought the travel soccer trainer was extravagant. Sheesh.

On to less dispiriting news…


THIS WEEK IN HEALTHCARE

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

Walgreens launches a new digital care marketplace

This week, Walgreens launched a new digital marketplace of care providers called Find Care Now, available online and through its popular mobile app. The marketplace provides a way for Walgreens customers to find low-cost, convenient alternatives to traditional physician and hospital visits, including a number of telemedicine options, and provides easy-to-understand information on pricing and availability of those services, customized to each user’s local geography.

At launch, 17 care partners were participating in the Walgreens marketplace, including MDLive (telemedicine), Heal.com (on-demand home visits), UnitedHealth Group’s MedExpress (urgent care), and New York-Presbyterian Hospital’s Second Opinion service. Also included, depending on location, are clinics from a range of traditional providers who have partnered with Walgreens, including Advocate Aurora Health (Chicago), SSM Health (St. Louis), Baptist Health (Jacksonville), and Piedmont Healthcare (Atlanta). The marketplace is a significant addition to Walgreens’s mobile app, which already provides the ability to refill prescriptions, print photos, and receive shopping discounts, and is one of the most popular retail apps in the US, with over 50M downloads and 5M active monthly users.

Walgreens is facing a fierce competitive landscape, with its closest rival CVS Health pursuing a merger with insurer Aetna, intended to build on its popular Minute Clinics to create a fully-integrated care platform for consumers. Further pressure is coming from the online retailer Amazon, which is moving closer to the pharmacy space with its recent acquisition of online pharmacy provider PillPack. Several years ago, Walgreens was viewed as the leader among retail chains in moving toward a new vision of healthcare delivery, launching several accountable care pilots with partner organizations. But following the chain’s merger in late 2014 with Alliance Boots, Walgreens pulled back from that strategy, and has since been viewed as lagging rival CVS in the drive to innovate retail pharmacy’s role in the new landscape.

As consumerism continues to take hold in healthcare, however, Walgreens’s new play toward digital health and transparent pricing is a compelling alternative in an increasingly crowded convenient-care space. Particularly interesting is the “non-insurance” pricing offered by its marketplace partners: $99 for a doctor house call; $59 for a telemedicine visit or dermatology consult; $99 for an online therapist visit, and so forth. This “marketplace” strategy echoes Amazon’s approach to curating a range of vendor options for consumers, mediated through its own online platform—an alternative to “owning it all” that may prove successful for Walgreens as it tries to keep pace with its aggressive competitors.

Centene and Ascension announce a new Medicare partnership

This week St. Louis, MO-based Ascension, a Catholic health system which operates more than 150 hospitals across 17 states, announced plans to form a joint venture with Centene Corp., a Clayton, MO-based insurer that operates health plans largely targeted at low-income enrollees in 20 states. The new venture will offer Medicare Advantage plans in the two companies’ overlapping markets (of which there are 13—including NY, TX, IL, and FL) starting in 2020. Centene derives most of its revenue from its Medicaid plans, but has previously stated an intention to grow its Medicare book of business from a current 9 percent of revenue to 20 percent in coming years. The venture plans to target lower-income seniors, leveraging Ascension’s provider platform to manage care for those enrollees, whose care needs are generally more complex and costly.

With Centene looking to grow its presence in the burgeoning Medicare Advantage marketplace, which is forecasted to grow from 35 to 50 percent of all Medicare enrollees over the next five years, the deal with Ascension signals a willingness to partner with, rather than compete directly against, established providers in markets it targets for expansion. While UnitedHealth Group and Humana have both pursued aggressive employment and direct contracting strategies to tie up physicians and other delivery assets, Centene has declared that it intends to pursue a different approach. Although it recently acquired a physician group in Miami-Dade County, FL, that is not Centene’s preferred strategy, according to CEO Michael Nierdorff. “We’re not out there buying all the practices we can and the clinics that we can,” he stated on recent investor call. As provider organizations look for strategies to improve the economics of care for low-income patients, particularly in the Medicare and Medicaid populations, the Centene-Ascension venture could provide an alternative vision for how insurers and hospitals can work together to tackle that challenge.

A secret White House debate on the future of Obamacare

The New York Times reported this week that a debate has been going on between senior Trump administration healthcare officials and the White House over the possibility of allowing states to partially expand Medicaid coverage, but that the idea was rejected—at least until after the upcoming midterm elections—by the President himself. The proposal, supported by Secretary of Health and Human Services (HHS) Alex Azar and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma, would have allowed so-called “non-expansion” states to opt for partial expansion for adults earning up to 100 percent of the federal poverty level, rather than the 138 percent envisioned by the Affordable Care Act (ACA).

Azar and Verma’s argument: with several “red states” (including Maine, Idaho, Utah and Nebraska) already moving toward full expansion via referendum, and Virginia’s legislature having approved full expansion, opening the door to partial expansion under a block-grant style Medicaid waiver could forestall additional state attempts to fully expand the program. Inside the White House, the proposal was opposed by budget director Mick Mulvaney, Treasury Secretary Steven Mnuchin, and others. According to internal memos obtained by the New York Times, the debate was halted last week by President Trump, who had been urged by Congressional conservatives to avoid taking any action on it until after the midterm elections for fear of being seen to compromise on Obamacare expansion.

The internal debate highlights the shifting politics surrounding Obamacare, and particularly Medicaid expansion. Having failed to fully “repeal and replace” the ACA via legislative action, the Trump administration has turned to regulatory approaches to modifying the law (such as this week’s new regulations governing short-term health plans), which has put HHS and CMS leaders in the position of “managing” the ACA, rather than simply opposing it. Meanwhile, as anti-Obamacare rhetoric begins to lose its potency as an electoral tool, state-level budgetary considerations have begun to drive the politics of Medicaid expansion. Outside of a few holdout states, we’d expect several other “red states” to explore options for expanding Medicaid, enabling them to take the relatively favorable terms offered by the ACA in order to reduce the numbers of uninsured residents, and the burden the uninsured place on states’ economies. While some Congressional Republicans may try to leverage Obamacare angst one more time at the ballot box this fall, the politics of healthcare are beginning to shift unfavorably for them, as voters increasingly look for positive solutions and not just oppositionist promises from candidates.

A Blues plan leader puts a stake in the ground on shared risk 

Many health systems actively working to shift their commercial contracts toward value-based risk are often stymied by what we call the “Blue Wall”: market-dominant state Blue Cross Blue Shield (BCBS) plans who have little motivation to partner with providers and fear disrupting their highly profitable large and small-group businesses. We’ve seen little innovation from most BCBS plans, who seem content to ride out the current model as long as they can. One notable exception to watch: Dr. Patrick Conway, CEO of Blue Cross Blue Shield of North Carolina (BCBS-NC), has signaled that he intends to apply learning from his previous role as Director for the Center for Medicare & Medicaid Innovation (CMMI) to control costs in the commercial market. Speaking this week at the American Board of Internal Medicine Forum, Dr. Conway sent North Carolina health systems a strong message that he expects them to partner in this effort: “I will never give you a fee-for-service rate increase if you don’t go on the value-based healthcare journey with us.”

Conway has stated that in order to continue to receive annual rate increases, North Carolina health systems will need to enter shared-savings risk arrangements. While the specifics of the program have not been announced, it’s likely to be modeled on aspects of the Medicare accountable care organization (ACO) programs that were developed and implemented under Conway’s leadership at CMMI. He has also recruited other members of his former team to drive the effort, including former CMMI Deputy Director Dr. Rahul Rajkumar, hired last fall as Chief Medical Officer of BCBS-NC.

While we applaud Conway’s efforts to move the commercial insurance model toward value, it is far from a slam-dunk in delivering lower costs. As we’ve discussed in the blog, Medicare’s ACO program has yet to generate significant cost savings. Applying the Medicare model to the commercial population brings added complexities. Just a few to consider: are savings easily achievable in a heathier population where high-cost events drive much of the spending? How will the plan attribute commercial patients, who are less likely to regularly see a primary care provider? Conway’s ultimatum of “partner or else” will bring health systems to the table, but will it engender the collaboration and co-creation needed to develop a successful and sustainable model?

BCBS-NC is clearly serious about controlling rate increases: the plan also announced this week that they will lower rates for plans on the North Carolina exchange in 2019 by an average of 4.1 percent. To do so, they appear to be turning to traditional tactics of narrowing networks to exclude high-cost providers (in this case, Duke University Health System and WakeMed Health & Hospitals). The same market forces affecting provider profitability also threaten to disrupt the Blues’ perch atop the commercial market. Innovation is not an easy option for dominant Blues plans, as nearly all stand to lose market share as the commercial population ages into Medicare, and employer health benefits move toward defined contribution. Providers across the country should keep a close eye on the work of Dr. Conway and BCBS-NC—their success or failure could set path for other Blues plans as they evaluate provider partnerships.  


GRAPHIC OF THE WEEK

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

Asking the simple questions about transformation

In our work with health system clients, we emphasize the importance of breaking down complex problems to their simplest components—to understand the “gist”. At the heart of the tangle of issues hospitals and physicians face in trying to transform care, and move from an antiquated model of delivery based on maximizing revenue based on volume to driving success based on value delivered to patients are three simple questions:

  • Who will deliver care in the future?
  • How will care be delivered?
  • Where will care be delivered?

Each of the three questions uncovers a range of strategies that the health system will need to deploy in order to deliver value to consumers. The “who” is really about labor model—can we use labor substitution (think, nurses instead of doctors) and technology substitution (think, virtual instead of physical) strategies to reduce the cost of clinical labor? The “how” is about what kind of care we deliver—can we standardize, move to lower-intensity settings, and pursue evidence-based care approaches? And the “where” is about assets—can we shift to an asset-light configuration that cares for patients in other settings (especially in the home) that are more appropriate and affordable? Surely these aren’t the only questions we’ll need to answer as we pursue care transformation but starting with the simple categories of who/how/where has proven a helpful way of organizing the effort.


THIS WEEK AT GIST—ON THE ROAD

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

Clinical leaders experiencing cognitive dissonance

Lisa:
I spent a morning at a retreat for the leaders of the clinically-integrated networks of a super-regional health system. Although they hailed from disparate markets in several states, this group of physicians and administrators was united in their ambition not only to generate returns under risk contracts but to truly improve care and access for their patients. It was one of the most enthusiastic groups I’ve been with this year, and I was truly inspired by the stories they shared of improving care coordination, process redesign and patient engagement. Despite their success, one physician expressed a sense of fatigue in constantly having to fight an uphill battle to force change in the system. He said, “our leaders tell us our work is the foundation for the system’s future success—but everything else they do and where they spend their dollars, says they’re not serious”.

Others joined in sharing their own struggles with conflicting incentives, referral mandates, and allocation of funds toward hospital over outpatient investments. The discussion revealed a growing frustration we hear from a number of clinical and population health leaders: how long can a promise of “the future world of value-based care” sustain momentum in care transformation when the business model still remains firmly rooted in fee-for-service? Many systems have now spent years in population health “pilot mode”. Not only does the capital plan not match the rhetoric at many systems, but we run the real risk of alienating our doctors and other caregivers by paying lip service to the importance of “transformation” while, in reality, continuing to treat innovation as an interesting side-show to the main event of volume growthIt’s time to move beyond pilots and begin to walk the walk of true delivery system transformation.

A chance to reflect on the future of healthcare

Chas:
This week I had the opportunity to attend the Leavitt Partners Annual Strategy Conference, a terrific two-day gathering hosted in Chicago by Governor Mike Leavitt and his team. A rarity for me, I was there as an attendee not a speaker, so I got the chance to sit back and absorb all of the great presentations and panels without worrying about getting through my own slides. The Leavitt team ran through their survey research on where the healthcare marketplace is going, and the always-engaging futurist Ian Morrison shared his scenario-planning work on the future of health reform efforts in Washington. Several key takeaways for me from the event:

  • Consumer dissatisfaction with high deductibles, cost sharing, and network restrictions is rising fast;
  • Political polarization may reduce the likelihood that we end up with otherwise broadly-bipartisan solutions;
  • Private market innovations offer a number of interesting approaches to address rising costs, but most run the risk of further fragmentation and segmentation of the healthcare marketplace;
  • The inertia of traditional industry economics still exercises a strong influence, holding up our ability to break silos and work collaboratively, and;
  • I have a renewed appreciation for conference-goers. All keynote speakers should be forced to sit still for industry conferences once in a while. This one was excellent, but the conference’s subtitle (“Beyond Powerpoint”) was a tantalizing promise that went unfulfilled. As a decades-long Powerpoint addict, I promise I’ll keep trying to dial it back!

BINGE WATCH ALERT

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

In case you missed its initial run on PBS last fall, the epic 10-part, 17-hour documentary The Vietnam War showed up in its entirety on Netflix recently, and you absolutely must watch it. Using the same narrated structure familiar from his other documentary series, director Ken Burns and his partner Lynn Novick deliver an exhaustive—and exhausting—history of the conflict from its Truman-era origins to its lasting legacy on our nation. Driven by hours of interviews with combatants and other participants from all three sides of the conflict (US, South Vietnam and North Vietnam), along with extensive news footage (as Vietnam was the first war where media coverage was completely uncensored) and a classic rock soundtrack that includes nearly every song under the sun, the series takes a thoroughly unbiased look at one of the most contentious periods of American history.

As we know now, despite how heavily documented the Vietnam conflict was, there was so much the American public was never told about the costliest war in our history—including the central fact that we were never going to win. It’s fascinating to hear the war described from the point of view of the men and women on the ground; as with his other series, Burns finds one or two previously unknown voices who completely capture the narrative. There’s so much here that fills out the story of the war with the perspective of distance and time, and so many useful connections to what we’re living through today—this is a vital piece of art and history that should be mandatory viewing for every American.


WHAT WE’RE READING

Stuff we read this week that made us think.

“Medicare for All” gets a price tag, and Bernie Sanders likes it

fascinating new analysis of the leading “Medicare for All” proposal was released this by the right-leaning Mercatus Center at George Mason University in Fairfax, VA. The study put a 10-year, $32.6T price tag on legislation proposed by Sen. Bernie Sanders (D-VT) to expand Medicare to a universal coverage program. Press accounts of the report quickly focused on the top line number, which represents a sizeable increase in the Federal government’s share of national health spending, growing by between 10-12 percent of total GDP. Yet the report is being touted by Sanders and other Democratic supporters of Medicare for All (M4A), because it also projects that the M4A plan would reduce overall national health expenditures by $2.1T and would reduce personal health spending by $482B over a ten-year timeframe. That reduction largely comes from a cut in Medicare payments to providers of $5.3T, and large reductions in drug costs and administrative savings. Those savings are offset by a projected increase in utilization, driven by Sanders’s proposal to completely eliminate deductibles, coinsurance, and copays.

The Mercatus study comes as the politics of healthcare coverage loom ever larger in both the upcoming midterm elections and the 2020 Presidential election. While it’s overwhelmingly unlikely that Sanders’s M4A proposal, or anything close to it, could be enacted in the near term by an evenly-divided Congress, the study usefully frames the national debate that’s emerging on healthcare—are we willing to trade off a much larger role for government in funding healthcare for universal coverage and lower out-of-pocket spending burden for individuals? Taxes would have to go up to pay for the M4A scheme, to be sure—but are we willing to trade a higher tax burden for eliminating the burden healthcare spending places on individuals, businesses and states? Or, as conservatives urge, would we be better off to lean more heavily on private market forces to bring the cost of care down, rather than relying on an increased role for government? One thing is certain—the existing system won’t go down without a fight: insurers, providers, pharmaceutical companies, and device manufacturers all stand to see their profits diminished dramatically under the M4A proposal, and many would not survive the shift. Expect the debate on “Medicare for All” to continue to heat up over the coming months, fueled by massive lobbyist spending on all sides.

Sprained ankle? Here’s an opioid.

Five years ago, I turned my ankle stepping off a curb after a meeting in California. The next morning it had swelled to double its size, and I couldn’t bear weight. Far from home, I went to the closest hospital ED to make sure it wasn’t broken. Luckily it was just a sprain—which was why I was surprised when the ED physician handed me a prescription for Oxycodone. Seems excessive, I told him. “Take it just in case,” the doctor said, “you’re flying tomorrow, and you might need it”. A new study in the Annals of Emergency Medicine shows I wasn’t alone: a full quarter of patients treated in the emergency department for an ankle sprain left with a prescription for opioid painkillers.

Researchers analyzed four years of commercial claims data to determine opioid dosing and prescription patterns. The study showed wide geographic variability, with 40 percent of patients in Arkansas leaving with an opioid prescription, compared to just 2.8 percent in North Dakota. While dosing also varied, most concerning was a clear connection between higher doses and longer-term abuse: 4.9 percent of patients who received more than 30 tablets showed prolonged use, compared to just 1 percent of patients receiving a lower dose.

It’s becoming increasingly clear that not only do opioid prescriptions for minor ailments place patients at risk for addiction, but less-addictive medications like ibuprofen may be just as effective in relieving pain. Researchers analyzed data from 2011 to 2014, and since then many hospitals have implemented policies to limit opioid prescribing for minor conditions. Studies like this also highlight a larger cultural question about the goals of pain management. We were reminded of an opinion piece earlier this year in the New York Times, in which an American expat describes her experiences after hysterectomy in Germany. After surgery she was dismayed to be offered herbal tea and ibuprofen in lieu of stronger medications. Her doctor’s reply: “Pain is a part of life. We cannot eliminate it, nor do we want to. The pain will guide you. You will know when to rest more; you will know when you are healing. If I give you Vicodin, you will no longer feel the pain, yes, but you will no longer know what your body is telling you.” Providers need to reframe the goal of successful pain management, away from the complete elimination of pain toward supporting patients in managing and responding to pain.

Do hospital mergers create safety risks for patients? 

Last year, 115 hospital mergers were announced, and as we’ve written we expect the pace of consolidation to increase. Leaders behind nearly every health system merger promise the community that consolidation will not only lower costs but also bring better patient care. A new analysis in JAMA indicates that, at least in the short term, the opposite may be the case, suggesting that changes in policies, procedures and logistics after a merger may increase the rate of adverse outcomes. A partnership between a medical liability insurer and health systems researchers from Ariadne Labs surveyed physicians involved in mergers and analyzed clinical practices, flagging three areas of potential risk to clinical care in the immediate aftermath of a merger: changes in the patient population; unfamiliar infrastructure and policies; and shifts in site of practice.

The analysis in the article is admittedly limited in scope (focused mostly on practitioners in the Harvard system) and methods (based on surveys and anecdotal reports), but it highlights a critical need in planning for the disruption to clinical practice and operations brought by a merger. Most health system mergers have been criticized for the limited value they have historically delivered. As a new wave of mergers aims for a higher level of clinical and operational integration in order to generate value from scale, understanding the risks as operating processes change, and planning for additional support and staffing in the immediate wake of a merger is critical for patient safety.


A WORD OF APPRECIATION

Look for the helpers.

There is a horrific wildfire burning in California right now, the Carr Fire near Redding in the northern part of the state, which has been raging for two weeks and has killed six people, consumed more than 120K acres and destroyed over 1,000 homes. It’s already the seventh-most destructive fire in California history.

Seventy of those destroyed homes belong to people who work at Mercy Medical Center, and thirty more belong to hospital workers at Shasta Regional Medical Center, both in the affected area. As the local news there has reported this week, those people came to work anyway, to help others—to do their jobs.

Those people, who put the care of others ahead of themselves, are the reason we’re so passionate about working in service to healthcare. We should all be proud of their sacrifice, and the work that they do. Might we ask you to consider ways to reach out and provide your support?

Mercy Foundation—Carr Fire Relief

Shasta RMC Foundation—Help Carr Fire Healthcare Workers


That concludes another episode of the Weekly Gist! Thanks so much for reading, and for sharing with friends and colleagues. Every week brings new subscribers, and we’re so grateful for your time and attention! It’s truly a pleasure to put this together each week, and to hear from so many of you with your thoughts and comments.

Please remember: if there’s anything we can do to be helpful in your work, 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