May 18, 2018

The Weekly Gist: The Telling It Like It Is Edition

by Chas Roades and Lisa Bielamowicz MD

Every day in America on average, 46 children and teenagers are shot in murders, assaults, suicides, suicide attempts, unintentional shootings, and police interventions. Seven children and teens die every day on average from gun violence in the US.

More than 214,000 students have experienced gun violence at school since the Columbine shooting in 1999. This year more children have been killed at school than soldiers in the military.

Today at least ten people were killed, and at least ten were injured, in a shooting at Santa Fe High School near Houston.

This is madness. And it is the most important health crisis facing our nation. Please visit the Coalition to Stop Gun Violence to learn how to take action.


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

A week of tough talk on drug prices

Following up on last Friday’s Rose Garden unveiling of the Trump administration’s strategy to combat the rising cost of prescription drugs, Health and Human Services (HHS) Secretary Alex Azar hit the road this week, with a series of speeches and media appearances intended to put more meat on the bones of the new blueprint. Speaking at an appearance on Monday, Azar outlined four key components of the new strategy: (1) expanding Medicare’s ability to negotiate the price of drugs by moving select drugs from Part B to Part D payment; (2) encouraging competition by cracking down on the ability of big drug companies to block the introduction of generic substitutes; (3) reducing out-of-pocket costs by increasing price transparency; and (4) working to reduce list prices of drugs by giving Medicare access to the same rebates common in commercial purchasing.

The tone of Azar’s remarks was notably tougher than before, likely in reaction to the tepid reaction among industry observers after last week’s announcement. Running straight at criticism of himself as a pharma insider, Azar said, “I’ve been a drug company executive—I know the tired talking points: the idea that if one penny disappears from pharma profit margins, American innovation will grind to a halt.” Yet Azar continued to dismiss more aggressive measures such as allowing Medicare to negotiate the price of drugs (as President Trump had previously proposed), or reimporting drugs at a lower cost from Canada (which Azar called a “lovely neighbor…but a small one”). Although some experts were optimistic about the potential for the small-ball reforms proposed by Azar, the best indicators of the new strategy’s likely impact were the prices of major pharma and biotech stocks—which were mostly up after the week of tough talk from Washington. 

Pressing forward with Cerner, despite early concerns

The Veterans’ Administration (VA) announced this week that it had finally signed a $10B contract with Cerner to implement its electronic health record (EHR) across the VA system. The contract, which stretches across ten years, was first agreed to last year, and will kick off immediately with $782M in federal spending this year. Cerner won the contract through a no-bid process, because it was part of the team that was successful in a larger 2015 procurement process that included the implementation of EHRs across the Department of Defense’s (DoD) military medicine facilities as well. Enabling interoperability across the DoD and VA health systems has been a major objective for both the Obama and Trump administrations.

Cerner has faced challenges in the first phase of implementation of its technology at DoD facilities, however. Late last week, Politico revealed the results of a recent internal Pentagon report on progress made at four pilot sites at Naval Station Bremerton in Washington State. Citing more than 150 “critical” or “severe” shortcomings in the rollout of the Cerner platform at those sites, the report characterized the results of the pilot implementations as “devastating”. That report—which was first published in late April—came after one of President Trump’s close private sector allies, Isaac Perlmutter, had been involved in a behind-the-scenes campaign to derail the Cerner VA contract. Perlmutter’s involvement was prompted by input from a physician who was unhappy with his experience with the Cerner platform in private Florida hospitals. While Cerner appears to have weathered the back-channel effort—pinning the blame on implementation partner Leidos Health—the tempest reflects the tortuous and difficult journey many health providers have experienced over the past several years in implementing electronic health records. One hopes that, coming late to the process of EHR conversion, the VA and DoD will be able to avoid many of the pitfalls experienced by private-sector providers. Early indications are not reassuring.

Something’s rotten in the state of rural healthcare

CBS News reported this week on the troubling findings of an investigation by a Missouri state auditor into the finances and billing practices of several rural hospitals in the state. The auditor discovered that national lab testing companies had been using the rural hospitals as “shell companies”, charging for their toxicology tests—often performed outside the state—at the hospitals’ favorable billing rates. One 15-bed hospital went from $7.5M in revenue one year to nearly $100M the next, as part of a deal with a management company to funnel lab billings through the facility. The management company now faces a $60M lawsuit filed by Blue Cross Blue Shield for fraudulent billing. CBS News reported on similar practices earlier this year, including the acquisition of a 49-bed hospital in rural Georgia by a Florida-based lab company, which then used the facility to dramatically increase charges for toxicology tests.

The practice of using rural hospital billing as a means to boost lab testing revenues is evidently commonplace, according to an article last week from Modern Healthcare. As rural facilities struggle with low volumes and financial difficulties, lab testing companies have begun to view their favorable reimbursement rates as a lucrative opportunity. Rennova Health, a Florida-based lab company that has faced its own financial difficulties, struck a deal last week to purchase Tennova Healthcare-Jamestown, an 85-bed rural facility in Tennessee, from Community Health Systems. While Rennova’s stated intention is to turn around the struggling hospital, the acquisition fits the larger pattern that’s emerging across rural healthcare. We’re facing a crisis in rural healthcare in the US, and the exploitation of rural hospitals to boost profits for unrelated companies (whatever the legality) is yet another red flag signaling the need to find a solution for this critical but troubled segment of the healthcare safety net.


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 a few common personality characteristics which are reinforced over many years of training. We are trained to operate autonomously. We’re straight-A students by nature and have been rewarded (often handsomely) for individual performance our entire lives. It’s probably an understatement to say we’re not particularly inclined to change—and we want to see evidence before we make a move. This week’s graphic unpacks these common behaviors and mindset—and how understanding them can be helpful in motivating change in practice.


What we’ve been writing about this week on the Gist Blog.

Physician Burnout: It’s Nothing Personal
Until recently, burnout has been viewed as a work-life balance issue. Although there’s growing recognition that physician workflow is more to blame for rising levels of burnout, Lisa points out that there are larger changes afoot in the practice of medicine, requiring doctors to get comfortable with a “new normal”.


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

Discussions on the destiny of independent medical groups  

This week I met with the leaders of a large independent medical group that has been successful by nearly every measure: growing in their market, generating returns under shared savings and Medicare Advantage risk, and delivering top-decile quality and patient satisfaction. Their success has not gone unnoticed, and the group finds themselves with several (unsolicited) offers to be acquired by payers, health systems and venture-backed physician aggregators. A few years ago, they would have said there was no future that didn’t include remaining independent, but with several large IT and capital investments looming, the board launched a process to evaluate an acquisition. Discussions have pitted two constituencies in the group against each other. On one side are physicians nearing retirement, most of them partners eyeing a very attractive offer from a large payer.  A second group of younger doctors prefers a partnership that offers more control but a lower payout. Regardless of their ultimate direction, this debate highlights a key challenge for large medical groups. In an era when physician practices are fetching top dollar, which path allows for the retirement and exit of older physician partners while maintaining a stable practice environment and viable mission for younger physicians who’ll be practicing for years to come?

Framing the vendor-provider dialogue around value

In preparation for an upcoming panel discussion with the CEO of a large academic system and the CEO of a major device manufacturer, I spent some time this week researching the changing relationship between hospitals and their vendors. Given the rise of value-based purchasing and the larger pressures hospitals now face to deliver more reliable, lower-cost care, many medical technology companies are now attempting to shift their emphasis toward providing “value solutions” as opposed to just devices. Implant and device companies are broadening their sales pitch to include data on infection rates, readmissions, and longer-term outcomes. It’s a recognition that, while surgeons will always have the final say in what medical technologies they use, the larger realities of the provider business are changing the way those decisions are made. While Medicare’s mandatory bundled payment programs for orthopedic and cardiac procedures have been dialed back, those two service lines are still “hot spots” for expensive devices—and smart vendors are taking steps now to make sure that they’re on the right side of the value equation.


Recommending a well-thumbed classic from the past.

This week we lost Tom Wolfe, one of the greatest American writers of the 20th century, and the father of New Journalism. The man himself was larger than life, throwing himself (sometimes literally) into his reporting, and cutting a distinctive figure in his trademark white three-piece suits. Wolfe didn’t write his first novel until he was 50, spending better part of his career producing deeply-reported and beautifully-crafted “creative nonfiction”. If you’ve never had a chance to read Wolfe, take our advice and put his 1979 masterpiece The Right Stuff on your bedside table. The book tells the story of the Mercury Seven astronauts and the early days of the space program, weaving in tales from the postwar test pilot Chuck Yeager, who served as an advisor to Wolfe’s work. The 1983 film adaptation is worth watching as well, but Wolfe himself felt it strayed too far from the book, losing something of the gritty realism and space race drama of the original. It’s a book that we both feel personally connected to, having grown up in a NASA town and an Air Force family, and we’re both huge fans. Give it a read!


We said it, they quoted it.

“A Bid to Save $300 Million at HCR ManorCare, and Disrupt U.S. Healthcare”
Reuters; May 15, 2018.

“Medicare already covers certain home health services and has a pilot program that allows patients to receive care directly at a skilled nursing facility without prior hospitalization, as is the case currently.

‘Medicare is testing this out and this is where people think healthcare is ultimately going and they want to be skating in that direction,’ said Chas Roades, head of Washington D.C.-based consultancy Gist Healthcare.

Roades said the [ProMedica] deal with ManorCare, expected to close in the third quarter, is the first bet by a major health system on the post-acute space.”


Stuff we read this week that made us think.

Casting a misguided eye back to the “good old days”

Ask anyone under the age of 50 the name of their personal physician, and the most likely response is “I don’t have one.” A thought-provoking article in this week’s New York Times Magazine traces the evolution of what it means to be a doctor, and for a patient to have a doctor. Patients at the University of Chicago’s Comprehensive Care Program might feel like they’ve stepped back in time to visit their grandfather’s doctor. There, doctors own the complete delivery of care for a group of very complex patients, managing them both in and out of the hospital. The patient stories are profound, and these doctors are generating impressive outcomes by collaboratively addressing both clinical and social needs.

The tradeoff: the clinic’s five doctors each has a panel of just 200 patients. The article stops short of addressing the challenge of scaling a care model primarily dependent on high-cost physician labor. Even if this clinic can show a return, our healthcare system just does not have enough dollars—or doctors—to scale this model across the millions of patients who could benefit.  Organizations like Iora Health have shown similar outcomes with much lower labor costs, instead deploying a health coach as the ongoing “connection” between patients and a robust, physician-led care team. There’s no doubt that many patients would benefit from a deeper patient-provider relationship and due attention to social needs, but we can’t afford that kind of model at scale if it’s delivered by doctors alone. Managing the care of 80M aging Baby Boomers will require creating a new care model dependent on team and technology, not on a mythical Marcus Welby-style doctor.

The decline of a cardiac dynasty 

For over half a century, many physicians would have said “Houston” when asked for the best place in America to receive advanced cardiac care. Driven by the brilliance and personal rivalry of two pioneers of cardiac surgery, Drs. Michael DeBakey and Denton Cooley, the Texas Medical Center grew two world-renowned heart surgery and transplant programs within walking distance of each other. A shocking piece of investigative journalism by the Houston Chronicle and ProPublica shows just how far one of these stars, the Texas Heart Institute (THI) at St. Luke’s Hospital, has fallen.

The article paints a picture that would make any patient pause before seeking care. In just a few years outcomes dropped to the lowest of Houston’s three transplant programs, with length of stay 50 percent longer than the national average and quality ranking near the bottom nationally. A young transplant surgeon was recruited to run the program (a “bold move” according to a member of the selection committee); his leadership and individual clinical performance is now under scrutiny. Turnover of several key surgeons and staff led to a drop-off in volume. Open questions remain about whether cost-cutting led to staff shortages, and whether patients were given misleading information.

The whiplash of multiple system leadership changes likely also affected THI’s operations and performance. St. Luke’s-THI became affiliated with Baylor College of Medicine after the latter split from Houston Methodist in 2004, and subsequently it was acquired by Catholic Health Initiatives in 2013. The decline of this giant of cardiac care serves as an important lesson for health system leaders: consolidation can have real consequences for patients if it leads to instability in leadership, physician relationships, and operations.

Coming soon to a sidewalk near you?

We first noticed them the last time we were in San Francisco. And then again in Los Angeles. And now they’re here, in our nation’s capital. We’re talking, of course, about electric scooters, and the wonderful people who ride them. Reporting on the seemingly-overnight invasion of scooter-rental companies in major metropolitan areas across the US, this week’s Washington Post piece captures perfectly the mixture of envy and annoyance that the scooters are causing. Like Uber and Lyft before them, a handful of new companies have stealthily entered a number of markets in the past few months, encouraging riders to pick up a scooter, ride it like a preteen boy, and then leave it lying in the middle of the sidewalk for someone to trip over. OK, that’s not quite the business model, but it’s close. If this new trend hasn’t made it to your neck of the woods yet, then thank your lucky stars, and enjoy the article. The money quote: “I’m a middle-aged man on a scooter!”

Thanks for taking time to read the Weekly Gist. It’s always a pleasure to hear from you, so don’t hesitate to reach out with your thoughts and suggestions—we love feedback! Please feel free to forward this to a friend or colleague…and subscribe if someone has shared it with you.

And most importantly, 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

Lisa Bielamowicz, MD
Co-Founder and President