June 7, 2019

The Weekly Gist: The Women’s World Cup Edition

by Chas Roades and Lisa Bielamowicz MD

We’ve been eagerly awaiting the kickoff of the 2019 FIFA Women’s World Cup, which started today in Paris with a match between France and South Korea. Competing in what’s expected to be the most competitive World Cup in history, the US women are looking to defend their title against a field of 23 other teams including very strong squads from Germany, England and France. It looks to be a great few weeks of soccer, but we were dismayed to see that FIFA, for all its rhetoric about trying to create more equity between the men’s and women’s games, has managed to schedule two other major Cup finals on July 7th, the same day as the Women’s World Cup final. Infuriating!

The best revenge? Tune in to the women’s games and cheer on your favorite team! The US women launch their campaign on Tuesday afternoon, with a match against Thailand.


THIS WEEK IN HEALTHCARE

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

CVS announces aggressive expansion plans

In a presentation to investors this week, retail pharmacy giant CVS Health announced plans to expand its “HealthHUB” store concept, first launched at three store locations in Houston, to 1,500 stores in the next three years. The new store concept, built to take advantage of CVS’s 2018 acquisition of health insurer Aetna, is centered around providing more extensive care management and wellness services than traditionally available at the chain’s Minute Clinics. In addition to Houston, the company is targeting Atlanta, Philadelphia, and Tampa, all in states where Aetna’s existing insurance footprint and the new care offerings can be combined to create new benefit designs and consumer engagement approaches. In a wide-ranging discussion of the company’s future strategies, CVS executives also outlined plans for delivering home-based dialysis, expanded in-store primary care services, and further expansion of virtual care. In sum, CVS is banking on its ability to lower care costs for health plan enrollees and increase use of its clinic services to grow incremental revenue by $850M in the next three years, and $2.5B longer term. We continue to view CVS as an entirely new kind of healthcare delivery company, bringing together convenient, lower-acuity care services and a risk model that will allow it to prosper by reducing the cost of care and building consumer loyalty. The speed of CVS’s rollout of this new value proposition should be a wake-up call to traditional healthcare providers everywhere.

A familiar disruptor is spooking hospital execs

Meanwhile, according to Business Insider, insurance giant UnitedHealth Group has its own aggressive plans for expanding lower-acuity care delivery as part of its OptumCare division. Senior executives from the company reportedly told a gathering of investors that they expect to grow revenue from delivering care from $16B today to $100B by 2028.  The OptumCare target is part of a broader UnitedHealth Group strategy to capture and manage Medicare Advantage “lives”, using referral management and care coordination approaches to reduce utilization of costly hospital and specialist services. $100B seems like an aggressive goal; by comparison, hospital company HCA Healthcare’s 2018 revenue was only $46.7B. To hit a target of $100B, OptumCare would need to expand its care delivery portfolio, now centered in primary care, urgent care and ambulatory surgery, to include other services. Executives rejected the notion that the Optum would ever directly own hospitals, however, instead describing their strategy as selectively partnering with health systems in markets where it lacks a critical mass of non-hospital assets. That’s little comfort to hospital leaders, who have grown increasingly concerned about the insurer’s encroachment on traditional provider territory. In a recent survey conducted by consulting firm Kaufman Hall, two-thirds of health system executives cited UnitedHealth Group/Optum as a “strong” or “extreme” threat, ahead of other potential disruptors including CVS, Amazon, Google and Apple. We believe incumbent provider organizations increasingly find themselves encircled by these new-style competitors, and must seize the initiative by developing new, more consumer-friendly approaches to care delivery that can ensure their relevance in a much more demanding and diverse healthcare marketplace.

Anthem acquires the nation’s largest behavioral health company

Anthem, Inc., the nation’s largest Blues plan with enrollees in 27 states, announced this week that they plan to acquire Beacon Health Options, the country’s largest behavioral health organization, which serves 36M patients across all 50 states. On the surface, this move appears to be in line with the provider acquisition strategies of other large national health insurers like UnitedHealth Group and Humana. While Beacon brings a broad array of behavioral health services, much of their portfolio is weighted toward intensive management of addiction and serious mental health conditions, and access for vulnerable populations. Combined with Anthem’s acquisition of CareMore Health, this move indicates that the insurer may be focused on building a care network to manage complex patients in its growing Medicare Advantage (MA) and Medicaid businesses, over solutions positioned for younger, healthier enrollees. (Government business accounts for nearly two-thirds of Anthem’s revenue.) CareMore has flourished under Anthem, in part by maintaining a degree of strategic and operational independence. It will be worth watching how tightly Anthem tries to integrate Beacon into its existing operations, and how Beacon’s client base, which includes 180 employers and 65 health plans, responds.


GRAPHIC OF THE WEEK

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

A look at the changing ROI of employing doctors

recent report from Merritt Hawkins provided an opportunity for us to test out a new, interactive tool for data visualization this week. The recruiter surveyed hospital Chief Financial Officers about the “return on investment” (ROI) they expect from employing physicians. The report compared average salaries paid to key specialties with the anticipated “downstream” revenue each physician is expected to produce for the hospital or health system. To explore the data, click on the graphic below—you’ll be able to see where each specialty ranked, and (by clicking between tabs), see how the expected ROI has changed since the last time the survey was conducted in 2016. We’ve grouped the doctors into three categories: primary care; medical specialists; and proceduralists. A few interesting highlights from exploring the data: employed physician salaries rose for every single specialty across the past three years. While specialists may bring in more revenue per doctor, primary care physicians continue to have the highest return on investment of physician salary dollars. But take a look at the change in size of the bubbles, representing ROI, between 2016 and 2019. ROI remained pretty stable for both adult primary care and the specialists who support high-margin services like orthopedics, neurosurgery and obstetrics. In contrast, the highest ROI growth is seen in pediatrics and psychiatry—suggesting systems are finding new ways to link these specialties to downstream services. Let us know what you think of this interactive tool, and what other kinds of analysis you think might be interesting using it. (We think it’s pretty nifty.)

 


THIS WEEK AT GIST—ON THE ROAD

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

Tapping into the broker perspective 

Lisa:
Last week I spent a day with the leaders of a regional health plan engaging with one of their most important constituencies, the broker community. It was a diverse group, ranging from independent brokers who run their own shops to regional leaders of large national firms. Given that their businesses hinge on relationship building, it’s no surprise that the brokers in attendance were not shy and asked tough questions—easily one of the most spirited and insightful discussions I’ve led. They quickly applied my observations about market forces to how their roles, and the products they sell, need to evolve. There was no argument with the notion that healthcare benefits are moving from a business-to-business (B2C) to a business-to-consumer (B2C) sale, and brokers expect to spend more of their time working directly with individual customers, in both the commercial market and in Medicare Advantage. They confirmed that employers are reaching the limits of cost-shifting and high deductibles and are looking for alternative network and plan designs, including narrow and tiered networks—but that the products in the market today fall shortNarrow networks need to have a greater cost differential compared to PPO plans, they argued, in line with the 10-15 percent reduction seen with the first wave of high deductibles. And that cost difference needs to reach employees: if the employer pays 75 percent of premium, even these meaningful total cost reductions only impact the employee’s spend by a few percent—making the choice of the PPO a no-brainer. Moreover, the group was adamant that these products need to be differentiated by something other than cost, and they connected that observation to our notion of “Member Health”. “Give me the experience differentiator, the simplicity, the real connection to providers, something that is truly unique in combination with a tiered network,” said one broker. “That, I could sell.” Brokers occupy a classic middleman position between payers, providers and employers—and they recognize they must deliver value or run the risk of disintermediation. Providers and payers would be wise to tap into their perspectives as they develop new products for the commercial market.

Getting doctors “addicted to data” for improvement

Chas:
I had a fascinating conversation this week with the Chief Medical Officer (CMO) of a regional health system, on the topic of using data to improve clinical performance. Having witnessed the mixed performance of off-the-shelf data “tools” that purport to reduce unwanted variability in clinical practice but really just serve to frustrate and antagonize physicians, I’ve come to believe that it’s clinical change management, not just greater visibility into performance metrics, that really moves the needle on clinical improvement. The experience of this system largely confirmed that belief, though I was struck by the CMO’s perspective that his personal efforts to champion greater performance transparency and tracking of key clinical metrics made a big difference in the system’s impressive results in elevating physician performance. While he shared my view that cultural and behavioral change are really the key ingredients in performance improvement, he emphasized that “getting the doctors addicted to data” was a critical element of his system’s success. Producing timely, consistent, and credible reports on key focus areas—implementing antibiotic protocols, reducing time to treatment for sepsis, eliminating low-value diagnostic testing—and creating scalable processes around addressing those issues, are at the heart of their approach. He knew his system was succeeding when doctors “were rushing to open our weekly emails with their performance data”. Great data is essential, but insufficient, to performance management; clinical leaders must build process and culture around harnessing that data for improvement.


ON THE GIST TURNTABLE

Give this a spin, you might like it.

Dreamy new music this week from a fresh face on the R&B scene. Raveena Aurora, a 25-year-old singer with roots in the Indian-American communities of New York and Connecticut, just released her debut album Lucid. Her music mixes Quiet Storm-influenced soft R&B with North Indian musical traditions, creating a lush, atmospheric sound that’s equal parts Anita Baker, Blood Orange, and Bollywood. Carrying a self-love message informed by her own recovery from personal trauma and an affirming fusion of South Asian and queer-positive cultures, Raveena has created a concept album for a new generation of R&B listeners. Her impressionistic, elemental songs look both forward and back, calling on the wisdom of generations of immigrant women who preceded her while delivering a new take on what it means to be a strong, independent woman. And her vocals are utterly gorgeous—hushed, languorous lyrics threaded through richly-produced synths and percussion. She’s a welcome addition to the vibrant, globalizing R&B scene, a star on the rise. Best tracks: MamaStrongerSalt Water.


WHAT WE’RE READING

Stuff we read this week that made us think 

Denmark gets an Epic export—physician burnout

This week’s must-read piece comes from Politico, detailing the chaos that ensued when Denmark installed Epic’s electronic health record (EHR) for a portion of the country’s national health system. The problems began with imperfect translation of medical language (“The Danish system for a short time offered surgeons the choice of amputating the left leg or the ‘correct’ leg”) but greater havoc was wreaked by applying a records system fundamentally designed for medical billing to clinical workflow in a country with no US-style health insurance and no medical bills. Danish IT buyers were wooed by the Epic mythos: “The fabulous Epic Systems campus in Wisconsin, with its tree houses, Montessori-style conference rooms and whimsical, Tolkienesque buildings, was seductive to Nordic techies weaned on Hans Christian Andersen…‘They went to Epic and fell in love.’” But Epic’s approach—particularly its strategy of rapid, full deployment and fixing problems later—disrupted clinical operations, slashed productivity, increased wait times, and broke clinician morale(“Many who were there are still traumatized by having seen battle-hardened doctors and nurses weeping openly for days”). In the words of one Danish surgeon, “You have exported burnout”. The country’s experience of applying US medical record technology in a socialized health system provides a test case that confirms the flaws in our EHR systems and their negative impact on productivity, operations and physician satisfaction. Trust us, it’s worth the read.

Eldercare increasingly relies on an immigrant workforce 

Much has been written about the impact of more restrictive immigration policies on physician supply, particularly in rural and underserved communities. A new article in Health Affairs shows that impact may be even greater in other parts of healthcare that depend on immigrants for lower-skilled caregiving roles. Researchers found that 18.2 percent of all US healthcare workers are immigrants, in line with the overall 18.5 percent of American residents who foreign-born. But immigrants account for nearly a quarter of all labor in nursing homes and other long-term care settings, and over 30 percent of all home health workers. Immigrants also fill nearly a third of non-caregiving positions, like housekeeping and maintenance, in these settings. With the elderly population set to double by 2050, further immigration restrictions will surely exacerbate a predicted shortage in lower-skilled healthcare workers—positions that are largely viewed as unattractive to younger, American-born workers. Immigrants also bring a higher education and skill level to these roles, given the difficulty of attaining licenses for foreign-trained professionals. These issues aren’t unique to the US; leaders in Britain’s National Health System (NHS) fear tighter immigration under Brexit will create similar, severe labor shortages. Restrictive immigration policies could have a deep effect on health systems that manage a large and diverse provider workforce, highlighting the need for policies that preserve access to a broad supply of labor.

Memberships in everything, air-ambulance edition

fascinating article in the Wall Street Journal this week tipped us off to a service we had no idea existed—air-ambulance membership programs. The piece shares stories from patients living in remote areas— islands, rural areas, and so forth—who were rescued and evacuated to distant medical centers by helicopter and fixed-wing aircraft, thanks to their annual memberships in emergency air-transport companies. Evidently, a number of medevac companies now offer subscription-based access to their services, which otherwise can cost tens of thousands of dollars if a patient’s insurance doesn’t cover air rescue. It’s an ingenious idea, and one that will surely gain traction in rural settings, where hospital closures have steadily eliminated nearby emergency care options. According to industry data cited in the article, 85M Americans live more than an hour away from the nearest Level I or Level II trauma center. Available memberships can range from $85 to $395 per year for a household, according to the article, while the median price of air transport charged by air-ambulance companies is more than $35,000. Short-term air-evac insurance is nothing new, but the translation of that model to a membership-based service for those in remote areas is an interesting innovation.


That’s it for this week! Thanks again for reading the Weekly Gist—it’s great to be able to engage with so many of you, and to hear your thoughts, feedback and guidance. Keep it coming! And please remember to share this with a friend or colleague, and encourage them to subscribe too!

Don’t forget: if there’s anything we can do to be of assistance, 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