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Embracing Risk: Will it Bring Value to Healthcare?

September 30, 2013
by John DeGaspari
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Information technology will play a central role, according to panel

How will the public and private sectors work together as the U.S. healthcare system adapts to changes that are intended to make it more responsive to patients and improve patient outcomes? On September 17, a panel of five providers, entrepreneurs and public officials gathered at the offices of New York-based ZocDoc, an online medical care scheduling service that was founded in 2007, to discuss this issue.

The panelists were former U.S. senators Thomas A. Daschle and William H. Frist, M.D.; Amanda Parsons, M.D. deputy commissioner of healthcare access and improvement at the New York City Department of Health & Mental Hygiene; Richard Fernandez, senior vice president and chief operating officer for Steward Medical Group, part of Steward Health Care System in Boston; and Brad Weinberg, M.D., a founding partner of Blueprint Health, New York, a network of healthcare entrepreneurs and venture capitalists. The panel was moderated by Oliver Kharraz, M.D., chief operating officer and founder of ZocDoc.

A Time of 'Turbulence and Transformation'

Daschle said that the three and a half years since the Accountable Care Act (ACA) has been signed into law have been as turbulent and as transformational a time in healthcare as any time in the nation’s history. He added that there is a recognition that building a higher performance, higher value healthcare sector is possible, and healthcare IT is going to be a big part of that effort. Nonetheless, he said the healthcare sector still has a long way to go, particularly with bringing about ways to ensure shared savings and share risk; team-based approaches to health; and transparency.

Much of the panel discussion focused on risk around the changes taking place in healthcare today, both in making technology investments and in value-based payment models. Daschle said that people are generally willing to take on risk, “But we do have to come up with mechanisms that share the risk and share the savings, and try to do things in a way that accommodates this new environment.”

Fernandez commented on changes that have taken place in the Boston area around Pioneer accountable care organizations (ACOs), those ACOs participating in the Pioneer program within the Medicare Shared Savings Program for accountable care. “It is a daunting challenge, particularly for providers that are focused on what we try to focus on, which is value,” he said. As healthcare moves from a fee-for-service model to a value-based model, the challenge will be “having the opportunity for people to say, value is really about quality, and the right care, at the right place and at the right time,” he added.

Fernandez said Steward Medical Group has had success in getting patients and employers, particularly small businesses, engaged with the issue of value. In Massachusetts, small business premiums were going up in the double digits for large businesses and small businesses, he said. Steward has partnered with health plans to provide 20 to 40 percent lower premiums to small businesses, in exchange for using more a more integrated delivery system. “The pick-up has been phenomenal,” he said. “We did it with our employees about four years ago, and 85 percent of the Steward employees use our internal network for healthcare.” He thinks premium reductions will drive consumers, small businesses, and accountable care organizations together tighter in the future.

Parsons commented that the fee-for-service payment model is still significant in the New York market, particularly in the small practice setting, “where they are not getting together and forming accountable care organizations.” She noted that Pioneer ACOs are forming in New York, but added it’s “very complicated for hospitals to take on risk, because you have risk about the patient in the office and also what happens outside the office.” She said there haven’t been the underpinnings of health IT to give the ability to control that, but transparency and IT will help organizations be more comfortable with managing risk.

What About Technology Investment?

Both Frist and Weinberg emphasized the ability of the private sector to help drive change. Legislatively, “the train tracks have been set” by the government, Frist said, adding that the healthcare sector will be in a “chaotic zone” for the next three to five years, as it transitions from fee-for-service to value-based models of payment. Speaking from his perspective as a heart transplant surgeon, he said, “You are given money for a whole team, instead of fee-for-service, where everybody gets paid for episodes of illness. That’s the area that for me is the most exciting, and where the private sector is going to provide the answers.”  Weinberg observed that changes in how hospitals and providers get payment have resulted in significant business opportunities for entrepreneurs.

Speaking from the medical group perspective, Fernandez said that Steward has invested heavily in technology, although he added that as an industry, healthcare is risk averse. In his view, current legacy systems can’t develop at the pace it needs to go, and he sees a need for plug-ins and inexpensive technology that is patient-centric, and improves quality and access.

Parsons, who has consulted on electronic medical records for small practices, said the tolerance of risk adversity is inversely proportional to the switching costs. “For doctors to go in and take a very small, nascent company that might not have itself completely figured out in the market, and to take six months of time to input all of their data, only to find that that there is a better product out there, that lack of risk adversity comes at a huge switching cost,” she said. That’s why doctors are “wondering what I am really getting into, what does this whole thing really mean and how easy will it be for me to extract and reverse the decision,” she said.

A Focus on Primary Care

IT is driving healthcare to be a more consumer-directed and knowledge-based system, according to Frist. He noted that a shortage of primary care physicians over the next five years will result in a much more team-based approach to healthcare, particularly with regard to outcomes measures. Noting that behavior drives a large part of healthcare, he said a key part of healthcare in the future will rely on integration, which will be driven by consumers.

According to Parsons, physicians have historically been an incredibly powerful influence in patient care, but over time, the balance of knowledge has shifted, as patients have gained access to the Internet. “When you sift through what we are asking patients to do, we are asking patients to access to their records, to be able to engage with the practice, to be able to request appoints and request prescriptions and ask questions of their data. Does that ultimately lead to better outcomes?” she asked.  “It can’t hurt,” she said. “Maybe it will be for some sub-population it will, and like in all medicine, sometimes it works and sometimes it doesn’t and it’s our job to figure out why.”

Parsons also said providers need to be cognizant of the fact that healthcare takes up only a small slice of a patient’s life, and technology innovations like patient portals are one way to extend the visit. “We are going to learn about what does this do for patients, in terms of better outcomes, and we have to study this,” she said. “Patient behaviors are changing so much faster than provider delivery networks are, and this is going to be a way for us to learn how to extend the reach of the healthcare system information in the patient’s home.” She also noted that the word prevention is going to be an important piece for everybody, and is something providers need to emphasize. “There are evidence-based interventions that work,” she said.

Although Parsons expects to see a shortage of primary care providers, she said that will even out over time. She predicted that providers will go back to pursue primary care, and said that primary care is shifting from “one-doctor shingles, to multi-specialty groups, where people will have colleagues, be part of the bigger networks, and salaried, making the job more appealing.”


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