The Weekly Gist: The Winter is Coming Edition

We’re glad the tournament is over, though, because now our Sunday evenings are free for what really matters…dragons. It might not be news to those in the Midwest who suffered through an early Spring storm this week, but in case you hadn’t heard: Winter is Coming. Not sure if you’ve filled out your Iron Throne bracket, but we have a certain King in the North going all the way.

NOTE TO READERS: The Weekly Gist will not be published next Friday. We will return after the holiday break, with a new edition on Friday, April 26th.

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

A new academic mega-deal in the Carolinas

This week Charlotte, NC-based Atrium Health, a 42-hospital system with operations across the Carolinas and Georgia, and Winston-Salem, NC-based Wake Forest Baptist Health, a 7-hospital academic system that includes the Wake Forest School of Medicine, announced that they are in talks to combine the two organizations in an arrangement that would bring a new medical school campus to Charlotte, one of the largest cities in the country without its own medical school. Merger talks are planned to conclude at the end of this year, with the new campus to open in Charlotte in 2021 or 2022. The announcement comes a year after Atrium’s failed attempt to merge with Chapel Hill, NC-based UNC Health Care, and would fulfill a decades-long goal among Charlotte business and community leaders to bring a four-year medical school to the Queen City. Despite the enthusiasm expressed by civic leaders, the deal is certain to raise consolidation concerns among payers, especially Blue Cross Blue Shield of North Carolina, whose CEO Patrick Conway (formerly an Obama administration official) has been engaged in a vocal public campaign to rein in rising healthcare prices in the state. Civic pride and executive hubris notwithstanding, we continue to be surprised by health systems’ interest in adding medical schools to their portfolios—a trend that has surfaced in several states. The investment in clinical research capabilities and a pipeline of next-generation physicians is understandably appealing. But given the high operating costs and challenging economics of academic research and teaching, we worry that already-costly health systems run the risk of exacerbating an already-mounting price problem, making care even more expensive in the pursuit of academic prestige.

Florida man convicted of largest Medicare fraud in history

Late last week in Miami, a jury convicted skilled nursing and assisted living facility owner Philip Esformes of money laundering, bribery, obstruction of justice, and paying illegal kickbacks related to a $1.3B Medicare fraud scheme, the largest of its kind in the program’s history. Over an 18-year period, Esformes was found to have engaged in paying off regulators and funneling money to doctors for referring patients unnecessarily to his facilities. Esformes has been in jail since 2016 and is now awaiting sentencing in the case, facing up to 250 years in prison. (In a related case, although one not associated with the current college bribery scandal, a University of Pennsylvania basketball coach last year pled guilty to money laundering after taking a $74,000 bribe to help Esformes’s son gain admission to the school.) Separately this week, a Florida man and 23 others were charged in a $1.2B Medicare fraud case, after authorities broke up a multinational telemedicine scheme that paid kickbacks and bribes to doctors to prescribe unnecessary orthopedic braces to seniors. In addition to the CEO of two Florida telemedicine companies, medical equipment vendors, telemedicine operators, and clinicians were charged in California, New Jersey, Pennsylvania, South Carolina and Texas. The two schemes highlight the susceptibility of unwary seniors to fraudulent medical services and underscore the need for continued vigilance by Federal investigators in battling Medicare and Medicaid fraud. While “reducing fraud and abuse” can sometimes seem like a fig-leaf slogan used by politicians to substitute for real proposals to control healthcare spending, these recent cases demonstrate that substantial dollars are at stake, along with risks to patients’ health.

Disrupting primary care in the Lone Star State

A large payer and a national retailer announced separately this week that they are launching new primary care offerings in the state of Texas. On Tuesday, Health Care Service Corporation, the parent company of Blue Cross Blue Shield of Texas (BCBS-TX), announced a partnership with global healthcare firm Sanitas to launch ten primary care clinics in Houston and Dallas next year. The clinics will provide health and wellness services in addition to primary care, imaging and lab services. The following day, Walgreens announced a partnership with Chicago-based primary care provider VillageMD to place primary care physician offices inside select Walgreens pharmacies in Houston by the end of the year. The offices, to be called “Village Medical at Walgreens”, will each include six to eight exam rooms and offer a full range of primary care services. Both companies describe these strategies as central to their efforts to lower costs and shift toward value-based care. Texas is also the test market for CVS-Aetna’s HealthHUB pilot stores, which opened in Houston in February, and was the first site for Walmart’s in-store comprehensive primary care clinics in 2014.

BCBS-TX appears to be building its new clinics from scratch, and the BCBS-Sanitas clinics are likely to directly employ their doctors, raising concerns that they will compete with local physicians, many of whom also participate in BCBS-TX’s value-based payment and care management programs. “It’s disappointing that BCBS didn’t look to work with us after a decade of performance-based partnership, or explore partnerships with other local physician groups,” said Dr. Christopher Crow, CEO of North Texas-based Catalyst Health Network, in an interview with the Weekly Gist. “We’re also concerned about the potential impact on continuity of care for patients who are forced to switch carriers away from BCBS.” (Catalyst is the largest independent clinically-integrated network in the US, serving over 450,000 attributed lives.) Texas has become a testing ground for disruptors looking to refine their consumer-focused care offerings. Coupled with the highest number of urgent care and freestanding EDs in the US, the state is now the epicenter for new access and care services. Healthcare leaders nationwide should closely monitor the Lone Star State to see how these experiments evolve, and how they impact traditional providers.

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

Toward a patient-centered definition of quality 

Healthcare insiders know that clinical quality can be highly variable across providers. But the average patient assumes that the vast majority of providers deliver high-quality clinical care. The graphic below illustrates the distinction between consumer and physician definitions of “quality”. Patients’ definition of quality is often closer to what providers consider service quality: was the service available and convenient? Was my appointment on time and efficient? Was the staff courteous and helpful? As to clinical quality, few patients anticipate a bad outcome, or do extensive research on provider quality unless facing a grave illness. And for those who do, the metrics and methods available to assess quality are hard to interpret, much less to weigh against each other. For example, I know I don’t want a post-op infection, but how much extra am I willing to pay to minimize that risk? As consumers bear more responsibility for choice of provider—and have a greater range of options to choose from—providers must expand their quality goals beyond clinical quality to encompass service reliability, remembering that the ultimate measure of a good outcome for a patient is whether or not their problem was actually solved.

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

Weighing stakeholders versus start-ups to address social needs 

Lisa:
This week I was in New York to present at a session for investors hosted by Citi, focused on payor-provider dynamics. The investment community and the provider audiences we regularly engage with often want to discuss the same issues, but investors bring a very different lens to the conversation, more transactional and focused on near-term impact. Amid discussions of the payer, pharma and provider sectors, I was struck by the level of interest in a session titled “Finding the Value in the Social Determinants of Health”. Given that social risk factors will account for as much as 40 percent of future increases in health spending, it’s not surprising that a flurry of start-ups have emerged in the space. Their areas of focus run the gamut from the predictable (many are focused on analytics to identify patients at risk) to oddballs like Papa, a company that helps lonely seniors “rent” a grandkid on demand to help out with daily tasks. Listening in, I was skeptical. Would the payoff from social needs solutions come quickly enough to satisfy investors? Is a point solution targeted toward one social need viable? Further, the primary purchaser for these solutions isn’t fully clear. Payers, providers and consumers could all benefit—so who should pay?

We’re intrigued by a different, less investor-driven approach to the issue. George Mason University health economist Len Nichols has built an alternative economic model that recognizes the benefit of addressing social determinants as a public good, that can be priced and supported by investments from a range of stakeholders proportional to the benefits each will receive. Dr. Nichols is piloting this effort in a handful of markets across the country, assembling groups of stakeholders around a “trusted broker” model of mediation. Given the degree of need for solutions to address social determinants of health, there’s room for many approaches. But we’d bet on stakeholder-driven initiatives over the investor-driven start-up environment to build solutions that sustainably improve long-term outcomes.

Reminded of the power of storytelling

Chas:
We had the opportunity this week to participate in a training program for healthcare journalists that’s jointly run by NPR and Kaiser Health News. The multi-day session brought together local reporters from different NPR markets, and exposed them to industry experts and thought leaders on a range of healthcare topics. The goal was to give the journalists a chance to understand the industry at a more detailed level to inform their future reporting. It’s a terrific program, and one that I’ve been involved with for years. As always, I came away truly impressed by the group—sharp, engaged and thoughtful reporters who asked (no surprise) tough and relevant questions. We shared our broader take on what’s going in healthcare these days, citing facts and figures and spending a fair amount of time trying to give the group a sense of how the industry actually works—who gets paid, how, for doing what, to whom. Our Byzantine, acronym-laden corner of the economy isn’t always easy for outside observers—even sophisticated journalists—to understand. What the group was most eager to hear, as it turned out, were story ideas: how can we illustrate these market forces and trends with stories that listeners will find engaging? It was a good reminder that it’s not enough to simply share data and analysis; people need stories to help them understand the world and make sense of complexity and change. That’s an ethic we’re working hard to weave into our work at Gist Healthcare, particularly as we build out new service offerings. As we grow our team and our work with members, we’re paying a lot of attention to storytelling as a key part of our toolkit. And we’re inspired by—and indebted to—the dogged work of journalists and others who are out there beating the bushes for stories every day.

Give this a spin, you might like it.

When the going gets weird, the weird turn…to sociology? That’s the idea behind the sophomore release from DC-based DIY post-punkers Priests, who’s new album The Seduction of Kansas pays not-so-subtle homage to Thomas Frank’s 2004 landmark of political sociology, What’s the Matter with Kansas? How Conservatives Won the Heart of America. The band have slimmed down and unclenched their fists after the fury of their post-election 2017 debut Nothing Feels Natural, and their spiky punk vibe has given way to a more polished and restrained sound, less Savages than St. Vincent (whose producer they borrowed for this release). Frontwoman Katie Greer and her bandmates are out to understand America circa 2019, examining all the jagged edges and worn spaces of a country they call, in the album’s title track, “a drawn out, charismatic parody of what a country thought it used to be.” Name-checked along the way: Dollar Tree; Applebee’s; the Koch brothers; Dorothy from the Wizard of Oz (twice); YouTube; Afghanistan; Grace Kelly; and White Castle, among a host of other cultural references. While holding true to their underground roots, Priests have pulled up here for a longer view, staking a claim as intellectuals of the post-punk scene. Best tracks: Jesus’ Son; The Seduction of Kansas; Carol.

Stuff we read this week that made us think.

A digital front door that no one’s walking through

Here’s this week’s good news in health IT: over 90 percent of hospitals now provide portals or similar platforms allowing patients to electronically access their medical records, according to a new report from the Office of the National Coordinator for Health IT (ONC). The bad news, however, is that few patients actually use them. Fewer than eight percent of hospitals report that half or more of their patients have activated their patient portal, and nearly 40 percent reported that less than ten percent of patients have logged on. This is in spite of data in the report showing that two-thirds of hospitals offer services like secure messaging, electronic bill pay, and online scheduling that are highly valued by consumers. The root cause lies in simplicity and connectivity. Each hospital or independent physician practice has its own portal, forcing the patient to manage multiple logins and navigate myriad systems, each of which only displays a slice of their medical records. Rarely can the systems communicate with each other to allow providers access to the patient’s complete record. Asking patients to navigate multiple portals from different healthcare providers is like asking them to use different web browsers for each site they visit—it’s cumbersome and nonsensical, the hallmark of a design driven by regulatory requirement rather than consumer value. What’s needed is one, unified consumer portal for healthcare, which integrates all the different providers’ information feeds. For that, we’d need a truly consumer-centric healthcare system, built around and controlled by the individual. Maybe one day.

There’s a fungus among us!

Unless you’re an infectious disease specialist, it’s likely you hadn’t heard of Candida auris before the New York Times piece this week describing the emergence of the superbug infecting hospitals around the world. When the first human infection of C. auris was documented in Japan in 2009, scientists dismissed it as a nuisance infection similar to those caused by other fungal and yeast species. But in the past five years the number of infections has grown rapidly in dozens of countries around the world, with 587 cases documented in the US since 2013. C. auris is often resistant to common antifungal drugs and carries a high mortality rate, with one study documenting that over 40 percent of infected patients died within 30 days. But its tenacity may be most concerning. C. auris is nearly impossible to remove from rooms and equipment used to treat infected patients, with some hospitals resorting to ripping out walls and floors of patient rooms to eradicate the bug. Scientists aren’t sure how C. auris has risen so quickly—multiple strains have emerged in different parts of the world almost simultaneously—but they blame resistance caused by the rampant use of fungal pesticides on crops worldwide. So with hundreds of cases, many fatal, why hadn’t we heard of this until now? According to the Times, hospitals in the US and Europe have been slow to report C. auris infections, much less widely alert the public, fearing loss of volume if worried patients were to seek care elsewhere. Fortunately, healthy patients are unlikely to suffer infection; those with compromised immune systems can only minimize their risk by avoiding hospitals, nursing homes and other institutional care settings. And providers must put patient safety and transparency before business concerns, educating the public about risks and providing patients complete information to make an informed choice of provider in the face of this new threat.

Keeping a (too) close watch on female employees’ health

A fascinating investigative article in the Washington Post this week calls attention to a growing privacy concern that stems from the mountain of sensitive data employers now have access to, thanks to the proliferation of digital “wellness” tools in recent years. The piece centers on the fertility and pregnancy app Ovia, which women can use to track menstruation, enter detailed data about their pregnancies, and even record details about childbirth. Originally a consumer-focused app supported by advertising revenue, Ovia has pivoted to serve the lucrative employer market, where benefits managers are eager to understand and manage employee health costs—including those related to pregnancy and childbirth. Although the information Ovia shares with employers is “de-identified” and “aggregated”, privacy experts have expressed deep concern that such information could fall into the wrong hands or be put to nefarious uses, including by employers themselves.

Activision Blizzard, a video game company that pays its female workers to use the Ovia app, is profiled in the article as a hotbed of digital wellness tools that it deploys to track workers’ sleep, diet, exercise and other habits—including the sexual habits of Ovia users, who can use the app to identify the optimal time to get pregnant. (Activision already knows how often its core customers are having sex: never.) “I want [female employees] to have a healthy baby because it’s great for our business experience,” the company’s benefits manager tells the Post. We’re profoundly skeptical of these sorts of employer “wellness” strategies, which implicitly treat individuals as bad actors whose behavior drives healthcare costs up, rather than working upstream to address the true causes of high-cost care. We want women to have healthy babies because we like women and we like babies, and we’d prefer that the marketing genius and data-mining acumen of tech companies and their funders be directed at solutions to the real problems plaguing our healthcare system, rather than helping employers and insurers squeeze a few more dollars from already overburdened healthcare consumers.

We’ll be back in two weeks with another edition. In the meantime, if there’s anything we can do to be of assistance in your work, please don’t hesitate to 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