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Category: The Business of Health Care

Money and Values: For Healthcare Workers, It’s Time They Align

By WYNNE ARMAND and CHRISTIAN MEWALDT

It shouldn’t be controversial to say that promoting the well-being of patients and our community should be at the core of our decisions in health care — even when competing factors exist. Yet we have grown increasingly uncomfortable to realize that we’ve been investing in companies whose products — including fossil fuels — are at the crux of diseases we treat.

In 2018 alone, fossil fuel combustion-produced particulate matter was responsible for an estimated 9 million deaths worldwide, according to a recent publication by researchers from Harvard University and the Universities of Birmingham and Leicester in the United Kingdom. Other health effects are extensive, including increased cardiovascular disease and respiratory illnesses, especially in small children. Fossil fuels are also widely considered a primary driver of climate change, and their combustion contributes to the increased numbers of record heat waves and heat-related deaths, as many US communities are facing this summer.

Our hospitals, as tax-exempt nonprofits, provide us retirement plans in the form of 403(b)s, financial accounts similar to 401(k)s that are offered by for-profit companies. As employees who are eligible for benefits, we are typically automatically enrolled in the retirement savings plan, with contribution limits determined by the Internal Revenue Service (IRS). Recently, we learned that by the end of 2020, of the $35 trillion in US retirement assets, $1.2 trillion were invested in these 403(b) plans, according to Investment Company Institute, the trade association for investment companies.

With healthcare representing the largest sector of employers in the US, with nearly 7 million employees at hospitals alone, our employers should provide us with options for retirement funds that do not contain fossil fuel investments that ultimately undermine our duty to patients.  While retirement finances aren’t our focus during our workdays, the effects of our collective $1.2 trillion investment do appear in clinical settings.

The default choice at our institution, like many, is a target-date fund composed of “passive investments”, i.e. indexed stocks and bonds that rebalance as the employee’s retirement date nears. Most also offer pre-screened mutual funds chosen by the employer’s investment committee, or allow participants to transition retirement funds into a brokerage account to self-manage investments. To choose an alternative investment strategy requires financial know-how and effort, so, unsurprisingly, most of us invest in the default. The largest, most-used are the Vanguard Target Retirement Index Funds, which have an estimated $292 billion invested in fossil fuel companies.

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Value-based care – no progress since 1997?

By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

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Why the Centene and WellCare Merger is the Biggest Deal in 2020

By ANDY MYCHKOVSKY

I feel like the healthcare world just skipped over the $17.3 billion mega-merger between Centene and Wellcare, which just received final regulatory approval last Wednesday. With their powers combined, this new company will create the Thanos of government-focused health plans, hopefully without any of the deranged plans to take over the world. I do get it, 181 million lives are covered by employer-sponsored insurance, between full-risk and self-insured plans. These employer populations have the most disposable income and their HR departments are willing to provide supplemental benefits. However, in my opinion, the future growth of health insurance will be governmental programs like Medicare Advantage (MA), Medicaid managed care, and ACA exchanges. But instead of me telling you this, here is exactly what Centene and WellCare said in a press release to defend the merger:

“The combined company would be the leader in government-sponsored healthcare with increased scale and diversification both geographically and in its managed care service offerings, and enhance access to high-quality services for members. It will offer affordable and high-quality products to its more than 12 million Medicaid and approximately 5 million Medicare members (including Medicare Prescription Drug Plan), as well as individuals served in the Health Insurance Marketplace and the TRICARE program. The combined company will operate 31 NCQA accredited health plans across the country and will have increased exposure to government-sponsored healthcare solutions through WellCare’s Medicare Advantage and Medicare Prescription Drug Plans. It will also benefit from leveraging Centene’s growing position in the Health Insurance Marketplace to new markets. The transaction creates a company with the size and scale to better serve members through enhanced healthcare programs, expanded capabilities and increased investment in technology.”

Simply put, here’s some of quick stats provided at the JP Morgan Healthcare Conference presentation on January 13, 2020:

  • National footprint now serving 1 in 15 Americans
  • Clear market leader in Medicaid managed care and ACA exchange marketplace
  • Dominance serving most complex populations, #1 leader in LTSS and #2 in dual eligible
  • Competitiveness in the Medicare Advantage (MA) enrollment wars
  • $500 million in proposed savings due to annual cost synergies
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9 Things Every Healthcare Startup Should Know About Business Development

By ANDY MYCHKOVSKY

In this post, I write down all my strategy and business development knowledge in healthcare and organize it into the top 9 commandments for selling as a healthcare startup. I think everyone from the founder to the most junior person on the team should know these pillars because all startups must grow. I should also note these tenets are most applicable for selling into large enterprise healthcare incumbents (e.g., payers, providers, medical device, drug companies). Although I appreciate the direct-to-consumer game, these slices are less applicable for that domain. If your startup needs help developing or implementing your business development strategy, shoot me an email and we can discuss a potential partnership. Enjoy!

1. Understand Everything About the Product and Market

You must also understand the competitive landscape, who else is in the marketplace and how they appear differentiated? What has been their preferred go-to-market approach and is your startup capable of replicating a similar strategy with your current team members? Also, do you understand the federal and state policy that most affects your vertical, whether that be pharmaceutical or medical device (e.g., FDA), health plans (e.g., state insurance commissioners), or providers (e.g., CMS)? For example, if your company is focused on “value-based care” and shifting payment structures of physicians to downside risk, do you intimately understand The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the requisite CMS Demonstration Models from the Innovation Center (e.g., MSSP, BPCI-A, etc.)? Make sure you do or at least hire someone to explain what is important now and in the future.

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The Lynne Chou O’Keefe Fallacy

By MATTHEW HOLT

Rob Coppedge and Bryony Winn wrote an interesting article in Xconomy yesterday. I told Rob (& the world) on Twitter yesterday that it was good but wrong. Why was it wrong? Well it encompasses something I’m going to call the Lynne Chou O’Keefe Fallacy. And yes, I’ll get to that in a minute. But first. What did Rob and Bryony say?

Having walked the halls and corridors and been deafened by the DJs at HLTH, Rob & Bryony determined why many digital health companies have failed (or will fail) and a few have succeeded. They’ve dubbed the winners “Digital Health Survivors.” And they go on to say that many of the failures have been backed by VCs who don’t know health care while the companies they’ve invested in have “product-market fit problems, sales traction hiccups, or lack of credible proof points.”

What did the ” Survivors” do? They have:  

“hired health care experts, partnered effectively, and have even co-developed their models alongside legacy players. Many raised venture capital from strategic corporate investors who have helped them refine their product, accelerate channel access, and get past the risk of “death by pilot.”

Now it won’t totally shock you to discover that Rob heads Echo Health Ventures, the joint VC fund from Cambia Heath Solutions (Blues of Oregon) & BCBS of N. Carolina, and Bryony runs innovation at BCBS of N. Carolina. So they may be a tad biased towards the strategic venture = success model. But they do have a point. Many but not all of their portfolio are selling tools and services to the incumbents in health care, which mostly includes health plans, hospitals and pharma.

And now we get to the Lynne Chou O’Keefe fallacy. (You might argue that fallacy is the wrong term, but bear with me).

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What a Sock Business Can Teach Health Care Companies

By KOUSIK KRISHNAN, MD

As recent events in northeastern Syria make clear, the number of displaced people in the world is rising — as are their health needs. 

In 2018 I went with a team of other doctors to a Syrian refugee camp in Lebanon. At one stop, a woman offered us homemade bread as we examined her husband, although the couple had very little money and not enough food for themselves. As we ate the bread, she asked if we could leave them extra medications since they didn’t know when the next humanitarian mission would come through their camp.

Her request was reasonable in the situation – indeed, many other refugee families we treated asked us the same thing. Their host countries’ healthcare systems are simply not equipped to handle their needs. Lebanon alone has almost 1.5 million refugees, an increase of 1/4 of their population.  

But expecting vulnerable and displaced people to hoard needed medicine is neither sustainable nor humane. Instead, we must make it part of the social contract for healthcare corporations to use some of their massive wealth to help reduce disparities in global access to healthcare. Pharmaceutical companies and the retail industry have already created efficient models healthcare corporations could follow. 

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Consumerism, washing machines, big data & health care

“all your stuff works together” Really!

By MATTHEW HOLT

Those of you who remember my BestBuy washer & dryer installation saga from a couple of weeks back may want to gird your loins. Because the saga continues. And it has even more relevance for consumerism in health care. So catch up on the prequel and come back.

When you left the story your hero had just arranged for Best Buy to attempt delivery on Tuesday afternoon last week. I was in SF for the “can’t miss” Rock Health Summit. I was waiting at the apartment when I got about 4 calls from the same random number in 3 minutes but when I answered no one was there. I called back, no answer. Then I got a voicemail saying the delivery team was outside. I ran outside! No they weren’t! At that point I gave up and had lunch. But then for now the 5th time I called Best Buy and lined up a new delivery. I stressed about 10 times that the delivery team could NOT leave next time without seeing me. There may have been some shouting…..

Monday was the next available day for delivery and it was day that Best Buy was going to finally get it right. I got an email saying they’d be there at 1.30pm

I was across town in a meeting at 12.30 and noticed 4 missed calls from the same number. Being of a very suspicious nature, I called the number, and yes it’s the delivery team. They were outside the apartment, and they were 60 mins early!  Thankfully the delivery crew agreed to wait, and I went over to meet them. So at 6th time of asking, the crew was there, the equipment was there, I was there, and we all went into the apartment.

What could possibly go wrong!?

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The Opportunity in Disruption, Part 3: The Shape of Things to Come

By JOE FLOWER

Picture, if you will, a healthcare sector that costs less, whose share of the national economy is more like it is in other advanced economies—let’s imagine 9% or 10% rather than 18% or 19%.

A big part of this drop is a vast reduction in overtreatment because non-fee-for-service payment systems are far less likely to pay for things that don’t help the patient. Another part of this drop is the greater efficiency of every procedure and process as providers get better at knowing their true costs and cutting out waste. The third major factor is that new payment systems and business models actually drive toward true value for the buyers and healthcare consumers. This includes giving a return on the investment for prevention, population health management, and building healthier communities. This incentive would reduce the large percentage of healthcare costs due to preventable and manageable diseases, trauma, and addictions.

Picture, if you will, a healthcare sector in which prices are real, known, and reliable. Price outliers that today may be two, three, five times the industry median have rapidly disappeared. Prices for comparable procedures have normalized in a narrower range well below today’s median prices. Most prices are bundled, a single price for an entire procedure or process, in ways that can be compared across the entire industry. Prices are guaranteed. There are no circumstances under which a healthcare provider can decide after the fact how much to charge, or a health insurer can decide after the fact that the procedure was not covered, or that the unconscious heart attack victim should have been taken to a different emergency department farther away.

Picture a well-informed, savvy healthcare consumer, with active support and incentives from their employers and payors, who is far more willing and eager to find out what their choices are and exercise that choice. They want the same level of service, quality, and financial choices they get from almost every other industry. And as their financial burden increases, so do their demands.

Picture a reversing of consolidation, ending a providers’ ability to demand full-network contracting with opaque price agreements—and encouraging new market entrants capable of facilitating a yeasty market for competition. Picture growing disintermediation and decentralization of healthcare, with buyers increasingly able to act like real customers, picking and choosing particular services based on price and quality.

Picture an industry whose processes are as revolutionized by new technologies as the news industry has been, or gaming, or energy. Picture a healthcare industry in which you simply cannot compete using yesterday’s technologies—not just clinical technologies but data, communications, and transaction technologies.

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Consumerism is the answer to health care? Maybe not

By MATTHEW HOLT

After 3 days at the Health 2.0 conference, everyone is agreed with Jane Sarasohn-Kahn that more consumer choice and better transparency and an “Amazon like shopping experience” would improve health care. In fact in her wonderful book, HealthConsuming, Jane talks a lot about the dark side of putting this much pressure on consumers, but I just had an experience that revealed what might go wrong. Bear with me, this does get back to health care…

The short answer is that BestBuy‘s home appliance service delivery and fulfillment seriously sucks. It has gone off the rails in a massively bad way. You’d think they’d have a multi-platform CRM that worked but it’s a disaster

The story. The washer in an apartment I used to live in but now rent out broke after 9 years–fair enough. And I spent a long time on a customer IM chat with Best Buy figuring out if there was an available washer that would stack under the still working dryer (which was stacked on top of it). But the answer was no.

So in the same IM chat the Best Buy agent suggests a replacement washer and dryer, and all the stuff required to put it in, and added installation and delivery. And he gets me a page where I can fill in my details, credit card and buy it all, then return to the chat to set a delivery date. Pretty snazzy BUT apparently the agent forgot to add removing the old ones to the order (even though most of the conversation was about the old ones!) Remember that for later…

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The Business Case for Social Determinants of Health

By JESSICA DaMASSA, WTF HEALTH

How can understanding the underlying social risks impacting patient populations improve health outcomes AND save health plans some serious per-member-per-month costs? You’re probably familiar with the concept of ‘Social Determinants of Health’ (SDOH) but Dr. Trenor Williams and his team at health startup Socially Determined are building a business around it.

By looking at data around what Trenor calls ‘the Significant 7’ social determinants (social isolation, food insecurity, housing, transportation, health literacy, and crime & violence) he and his team are working to help health plans intervene with their most vulnerable populations and bring down costs.

What kind of data is Socially Determined looking at? Everything from publicly available data on housing prices and air quality, to commercial datasets on buying preferences and more. Plus, with help from their health plan partners, they’re using clinical and claims data to create a complete picture of health care spend, utilization, and outcomes.

Trenor walks through some very specific examples in this interview to help illustrate his point. In one, Socially Determined was able to identify how Medicaid could better help asthmatics manage their asthma AND save a thousand dollars per affected member each month. Another project in Ohio identified that a mother with a history of housing eviction was 40% more likely to give birth to a baby requiring NICU care – opening up myriad opportunities for early intervention and the potential to positively impact the lifetime health of both mother and child.

As healthcare continues to realize its ‘data play’ – and look beyond the typical data sets available to healthcare companies – the opportunities for real and meaningful impact are tremendous. Listen in to hear more about what Trenor sees as the new opportunity for Social Determinants of Health.

Filmed at AHIP’s Consumer Experience & Digital Health Forum in December 2018.

Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health