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Andy Slavitt, Health System Leaders Take Action to Advance Medicaid Transformation

August 29, 2018
by Heather Landi, Associate Editor
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Seventeen health systems in 21 states, comprising 280 hospitals, and a number of other healthcare industry stakeholders, are collaborating on an ambitious, long-term project to identify, develop, and scale financially sustainable digital solutions that improve the health of underserved individuals and families in their communities.

With five leading health systems anchoring the work, among them San Francisco-based Dignity Health and Danville, Pa.-based Geisinger Health System, the Medicaid Transformation Project, which was announced August 28, will focus on pinpointing, developing and scaling digital solutions to assist Medicaid patients.

The 17 heath systems involved in this project currently serve 43 million Medicaid enrollees, or 58 percent of the 75 million total Medicaid enrollees across the U.S. The project is being co-led by Chicago-based AVIA, which leads a network of health systems focused on digital innovation and transformation, and former CMS Acting Administrator Andy Slavitt, who also founded Town Hall Ventures, a venture capital firm devoted to investing in and supporting entrepreneurs who are improving the health of underserved populations.

“The current healthcare system fails the people who need it most,” Slavitt said in a press release announcing the project’s launch. “The Medicaid Transformation Project will be part of a decade-long journey leading some of the best health systems in the country. Our work will be to deepen and refine the best innovations and then implement them at an accelerated pace at providers across the country.”

Andy Slavitt

According to project leaders, in the next two years, participating health systems will begin implementing innovative solutions aimed at addressing several critical challenges facing vulnerable populations across the country—behavioral health, women and infant care, substance use disorder, and avoidable emergency department visits. The overarching work of the project will span 10 years, Slavitt says. “It’s going to take a decade to have the kind of impact to transform care delivery the way we want to,” he says.

Linda Finkel, president of AVIA, says project leaders have bold, ambitious goals for the initiative. “We have great aspirations. We’re looking for nothing short of actually moving the needle on the health and healthcare of the 75 million Medicaid beneficiaries in the country today,” she says. “While we’re focused on health system-led innovation, we won’t be satisfied unless we find that we have both moved the needle on the financial sustainability of meeting the health and healthcare needs of these populations and have actually improved their health.”

The five health systems anchoring the work are Advocate Aurora Health in Chicago and Wisconsin; Baylor Scott & White Health in Dallas; Dignity Health in San Francisco; Geisinger in Danville, Pa.; and Providence St. Joseph Health in Renton, Wash. In addition to those five health systems, the other 12 health systems involved in the Medicaid Transformation Project are Allina Health (Minneapolis, Minn.); Ballad Health (Johnson City, Tenn.); Christiana Care Health System (Wilmington, Del.); Froedtert & the Medical College of Wisconsin (Milwaukee); Henry Ford Health System (Detroit); Memorial Hermann Health System (Houston); Navicent Health (Macon, Ga.); OSF HealthCare (Peoria, Ill.); Presbyterian Healthcare Services (Albuquerque, N.M.); Rush University Medical Center (Chicago); Spectrum Health (Grand Rapids, Mich.); and UVA Health System (Charlottesville, Va.).

Currently, one in five Americans is covered by Medicaid and 50 percent of U.S. births are financed by Medicaid. Medicaid is the country’s No. 1 payer for behavioral health services, and 33 cents of every dollar for a physician’s services are paid by Medicare/Medicaid, according to project leaders. In a statement about the scope of the Medicaid Transformation Project’s work, Geisinger CEO and President David Feinberg said, “The gap between the needs of vulnerable populations and the healthcare they receive is too great. We are no longer interested in discussing the problems our patients are facing or just piloting solutions – we’re interested in solving them as quickly as possible.”

Slavitt, who served as acting administrator for CMS under the Obama Administration, says improving healthcare for underserved populations will take a collaborative, collective approach. “This is a challenge that is best not approached individually hospital by hospital with everyone doing just their own best work. We have a national challenge in that we have very significant health inequities in this country, based upon people’s zip code, their income level, their race, ethnicity, gender and language and socioeconomic status; these are challenges that we should all be investing in as a country.” And, he adds, “It’s also a call for innovators, for digital companies, for tech companies, for venture capitalists and private equity companies, to say, if we create real solutions, we now know there are at least 17 major health systems that are very interested in evaluating them and rolling them out.”

Finkel notes that many of the health systems involved in the Medicaid Transformation Project also are members of the AVIA Innovator Network and have had a “running start” on tackling these complex challenges. “We have been working with our health systems for a number of years to help them leverage digital to meet the needs of vulnerable populations. It became evident to us that there was an opportunity that was fairly unprecedented to take the systems in our network, who are committed to meeting the needs of these populations but need to do it in a financially sustainable way, and leverage the work we do and power that up, via digital.”

Linda Finkel

Froedtert Health has been a member of the AVIA Innovator Network for three years, with a focus on adopting technology solutions to address areas such as post-acute care and behavioral health. Michael Anderes, chief innovation and digital officer at Froedtert Health, says this new collaboration among 17 health systems has the potential to better address the needs of vulnerable communities through the proliferation and adoption of shared digital solutions and innovative care models.

“If we tackle some of these things together, we can obviously learn from each other but also accelerate some of the work, because we are not all individually trying to assess these various models and different technologies,” he says. By working together, health systems can identify and implement solutions offered by early-stage technology companies and startups at a faster pace with lower risk, he notes.

Michael Anderes

However, technology solutions alone are not a silver bullet to solve complex problems with care delivery to vulnerable populations. “With this particular work, there is going to be a heavy dose of care model redesign, which is something that we really want to share best practices across this network because none of us have solved this,” Anderes says.

From Collaboration to Action

As part of the initital work on this initiative, the Medicaid Transformation Project will assemble a core team at each health system to implement solutions. Health system leaders will share best practices across the network, creating a roadmap for partner organizations to act quickly to create change, the project leaders say. The work will feature a leadership council, chaired by Slavitt and composed of health system CEOs.

According to Slavitt, health system leadership will meet quarterly to collectively discuss the challenges and share best practices. “This is what AVIA does quite well, they will help get all the ingredients necessary for innovation to be successful and to take off. That includes doing an assessment of what health systems are doing well, what the gaps are, what the business case is for filling those gaps and a scan of what the best technology and innovation companies are doing to fill those gaps,” he says, adding, “AVIA’s role is to help to get those things disseminated and adopted, as well as things that aren’t best practices yet but outside-in solutions.”

The collaboration and sharing of best practices among the health systems could entail technology adoption or process changes, or both, Anderes says. “Our experience to date has been no matter what technology we’ve worked with and whatever problem we’re trying to solve, it’s always tied back to a relatively significant operational change. In this case, it will be hard to know whether the technology will drive the operational change, or the operational change will enable the technology, but I can’t envision any of this work being just a technology in isolation,” he says.

Finkel also notes that the scope of this work is broader than just the Medicaid population.  “There is a recognition that [Medicaid] is a wildly underserved segment of the marketplace. There has been a disproportionate investment in meeting the needs of commercial and Medicare patients and very little directed at Medicaid,” she says. “That said, we do believe, while Medicaid is the rallying cry for this work, we know that the solutions and care models that systems will roll out will impact more than just Medicaid patients. There will be considerable spillover across other patient populations, including commercial and Medicare. But for us, the Medicaid-first approach that we see solution companies taking into the marketplace, that gives us a roster of capabilities to pull from that just never existed.”

The announcement of the Medicaid Transformation Project comes at a time when senior healthcare officials in the Trump Administration are working to reshape Medicaid. Back in January, the Centers for Medicare & Medicaid Services (CMS) issued a memo confirming that it will accept state Medicaid waivers that include work requirements as a condition for eligibility. Opponents say these policies would take coverage away from those who need it most. The Trump administration has already approved work requirements on certain Medicaid populations in Indiana, Arkansas, Kentucky and New Hampshire. Slavitt has been an outspoken critic of the Trump Administration’s approach to reforming Medicare and Medicaid.

Back in June, House Republicans also released a proposal that would balance the budget in nine years, and the proposal includes $1.5 trillion in cuts to Medicare and Medicaid.

David Smith, formerly of Leavitt Partners, will guide the Medicaid Transformation Project and has partnered with a number of leading Medicaid experts as active participants in the work. “There is an incredible confluence of market and policy activity creating the right conditions to drive profound change for the least fortunate among us. Our health system partners believe that this moment is unique and their leadership can have a seminal impact in catalyzing nationwide energy and focus on the challenges facing our communities,” he said in a statement.

Finkel contends that transforming healthcare delivery to vulnerable populations is a “bipartisan problem” that requires “bipartisan solutions.” “Our systems have really concluded that they can’t wait around for Washington anymore, it doesn’t matter who is in office. They understand that this is work that needs to happen now,” she says.

Many industry stakeholders, including Slavitt, whose Town Hall Ventures focuses on care for the underserved, seem bullish on the idea of the private sector disrupting Medicaid and transforming health care for the underserved. In fact, digital health startups are increasingly focused on building digital tools and services specifically to help vulnerable populations. "I personally think that the most exciting place in healthcare, by far, is going to be these kinds of things, caring for vulnerable populations," Slavitt says.

Finkel contends that digital technology innovation is the key to transforming U.S. healthcare. “The simple fact of the matter is that [digital] is the last remaining lever to do that. The systems in our network have squeezed every ounce of juice out of process improvement and capital expansion, and you can only conclude that digital remains the critical opportunity to take these pockets of success and actually scale them in replicable ways,” she says.

Healthcare is the last remaining industry not to see the full benefits of technology, Finkel contends. “Health systems are notoriously risk-adverse and rightfully so, they treat patients. Our aspiration is to take the risk out of acting, on behalf of really moving the needle in our communities and in the health systems with who we work," she says.


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Take the Lead to Deploy Emerging Technologies for Improved Outcomes

December 14, 2018
by Brad Wilson, Industry Voice, former CEO of Blue Cross and Blue Shield of North Carolina
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It is a thrilling time to work in healthcare. As the former CEO of Blue Cross and Blue Shield of North Carolina (Blue Cross N.C.), I have had the opportunity to be at the forefront of using new technologies to improve outcomes for our members. Now as a member of the CitiusTech advisory board, I continue that focus on emerging technologies, such as artificial intelligence (AI), and the potential to accelerate the shift to value-based care and improve the healthcare system in material ways.

AI is starting to make a distinct impact in helping providers deliver more effective care, lower costs and create a more consumer-friendly healthcare system. Blue Cross NC recently piloted the use machine learning, a type of AI, to identify spikes in prescriptions for a costly medication. The company reached out to doctors who had been prescribing the medicine in significant numbers. Alerting just one particular physician practice to a generic equivalent brought estimated annual savings of $750,000 for Blue Cross NC customers. The potential of AI is not measured only in dollars, but cost savings are an important consideration.

Machine learning works by applying sophisticated algorithms to rich datasets from electronic medical records (EMRs), patient-reported data, claims and a host of other sources. To be successful, this requires both access to data and significant investment to support the depth and breadth of data analytics capacity and capability.

Yet, historically, one of the biggest barriers to value-based models has been providers’ and payers’ possessiveness of their own data. There is a good business reason for that possessiveness: competitive advantage. The different parts of the healthcare system do not want competitors to use shared data to steal business. But the guarding of data drives healthcare costs higher and, more importantly, makes delivering better, more personalized healthcare more difficult. In the past, power came from hoarding information; today, there is power in serving as an information hub.  Healthcare providers and payers are starting to understand this and there is more willingness to work together in sharing what has traditionally been closely held information.

As consumers’ voices gain in numbers and decibels, it’s clear that analytics technologies that can lead to better care at lower cost are desperately needed, particularly for payers. But the entire healthcare industry needs to move more rapidly. Health plans need to enrich, deepen and widen their analytics capabilities as quickly as possible. If they don’t, we will continue to see disruptors like Google, Apple, and Amazon enter the healthcare market—companies that have a demonstrated ability to be nimble and maximize the impact of their data.

For both providers and payers, forward-thinking organizations recognize that building their own data analytics solutions is not always the answer. Often there is not enough time, resources or enough of the right talent to deliver the capacity and capability required. Fortunately, robust turnkey solutions coupled with deployment expertise are available to efficiently and cost-effectively integrate data and analytics within an organization’s clinical, financial and administrative processes.

As health plan executives map out their strategic plans, look to these emerging technologies as accelerators for leveraging data to manage risk, optimize performance, engage consumers, enhance population care, and improve clinical outcomes to reduce readmissions and further drive evidence-based medicine. The opportunity is here to transform healthcare delivery in significant ways. Success will go to those organizations that understand the potential of these new technologies and take the lead to deploy them effectively—today. 

Brad Wilson is former CEO at Blue Cross and Blue Shield of North Carolina and is a member of the new CitiusTech Advisory Board. Mr. Wilson joined Blue Cross NC in 1995 as General Counsel and held a variety of senior-level positions before being named CEO in 2010. Under his leadership, Blue Cross NC grew to a $9 billion company serving over 3.8 million customers. Mr. Wilson has also served as Director of the BCBS Association, AHIP and numerous other national and state healthcare organizations.

 


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Investors Have Strong Interest in HIT Sector, Despite Valuation Concerns

December 13, 2018
by Heather Landi, Associate Editor
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Healthcare IT remains a hot investment sector despite concerns about these companies being overvalued, according to KPMG-Leavitt Partners 2019 Investment Outlook, a survey of health care investment professionals.

Looking ahead to 2019, more than a third of respondents (34 percent) said they were most interested in investing in health care IT, followed by care management (31 percent), home health (23 percent), retail-centric medical groups (22 percent) and primary care practices (21 percent).

New York City-based KPMG and Leavitt Partners, based in Salt Lake City, surveyed 175 respondents online from corporations, health systems, investment banks, venture capital and private equity firms between September 17, 2018 and October 21, 2018. Of those surveyed 32 percent were C-suite executives; 29 percent were principal, partner or managing director; 32 percent were vice president or director; 6 percent were analysts/associates and 2 percent held other titles.

“We are not surprised by the great deal of interest in health care IT and care delivery outside the hospital,” Governor Mike Leavitt, founder of Salt Lake City-based Leavitt Partners and former Utah Governor and U.S. Health & Human Services Secretary said in a statement. “As health care continues to march toward value, the emphasis on moving care to lower cost sites and enhanced coordination will continue, and those who can increase quality and lower cost will win.”

According to an October report from Rock Health, 2018 is already the most-funded year ever for digital health startups. Digital health funding in this past third quarter soared to $3.3 billion across 93 deals, pushing 2018 funding to $6.8 billion, already exceeding last year’s annual funding total, which was $5.7 billion, by more than a billion dollars.

Drilling down into respondents’ predictions for investment activity in 2019, in the health care and life sciences market, 96 percent of respondents see either a lot or a moderate amount of investment in health IT and data next year, while a similar percentage (90 percent) see significant or moderate investment in outpatient services. Forty-four percent forecast a lot of investment in post-acute care services, 39 percent predict significant investment in provider services and about a quarter of respondents believe there will be a lot of investment in managed public programs, payer service providers and pharmaceutical and biotech manufacturers. Eighteen percent believe there will be significant investment in medical device and diagnostics and medical equipment.

The survey results indicate there is concern that health IT is overvalued, yet investors believe there is some room to climb.

The majority of investment professionals see health care IT investments as an overvalued sector (64 percent), yet 40 percent expect the valuations to increase in 2019 while 51 percent see them staying the same. About two-thirds of respondents (62 percent) think the health IT sector will grow faster than the market in 2019, and three quarters of investment professionals see increasing competition in the health IT market. Investors also estimate that the average purchase price multiple, in terms of EBITDA, will be 12.5 for the health IT sector in 2019. Survey respondents expect ongoing demand for tools to help with consumerism will impact investment and deal making in the sector, according to the survey.

About four in ten respondents believe the healthcare market is experiencing a “moderate bubble,” while 9 percent believe the bubble will likely burst.

Care management solutions for risk-bearing providers, a highly competitive sector which helps coordinate care of the chronically ill or seriously injured, are expected to be the second highest sector for investment behind health care IT, similarly driven by trends of consumerism and increased focus on early care interventions.

Looking at potential drivers of M&A activity in the health care and life sciences sector in the coming year, 64 percent of respondents cited cost consolidation and economies of scale, while 45 percent cited accretive acquisition strategies. Forty percent of respondents see changing payment models as a driver of M&A activity, and 38 percent cited pressure from competition. Other drivers cited by respondents include expansion/divestiture of service areas (25 percent), geographic expansion/contraction (24 percent), revenue synergies (22 percent), need to deploy cash on balance sheet (17 percent), and regulations and legislation (13 percent).

“Deals are largely being driven by the need for savings, economies of scale, and improving cash flow or accretive earnings per share,” Carole Streicher, Deal Advisory leader for healthcare & life sciences at New York City-based KPMG, said in a statement. “Secondarily, there is a bit of a defensive posture motivating investments as health care organizations contend with competition and reimbursement models connected to quality and efficiency, as well as the entrance of tech firms investing in the sector.”

 

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Report: Massachusetts General Hospital Targeting Various Blockchain Use Cases

December 7, 2018
by Rajiv Leventhal, Managing Editor
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Massachusetts General Hospital (MGH) researchers are partnering with MediBloc, a Korean healthcare blockchain company, with the aim to improve patient data sharing and storing, according to an article in CoinDesk.

Per the article, the Laboratory of Medical Imaging and Computation by MGH and Harvard Medical School will be escalating research in a variety of broad areas “from medical image analysis to health information exchange by leveraging our cutting-edge technologies such as blockchain, artificial intelligence and machine learning,” according to Synho Do who is the laboratory’s director.

Do specifically told CoinDesk, “In collaboration with MediBloc, we aim to explore potentials of blockchain technology to provide secure solutions for health information exchange, integrate healthcare AI applications into the day-to-day clinical workflow, and support [a] data sharing and labeling platform for machine learning model development.”

Interestingly, MGH won’t be using any real patient data for its research, but rather simulated data, according to officials, since the various institutions that have the real patient data keep it in a way “that can’t be shared securely and often is in various incompatible formats.”

MediBloc’s CEO noted that the company is not only developing a distributed ledger for storing and sharing medical data, but also working on a tool that would convert data now held by hospitals from existing formats to a universal one, per the article.

For this initiative, MediBloc has already gotten partners across Asia, including eight healthcare organizations and 14 technology companies, officials said.

Earlier this year, a testing environment version of the blockchain was launched, and the network is expected to go live before the end of the year before becoming fully functional in the second quarter of 2019. Furthermore, there are also apps in the works that are planning to go live next year, with one of them, currently in a beta testing phase, “designed for patients to sell the information about their symptoms and the prescriptions they get to MediBloc. After that MediBloc will analyze that data and sell the analysis to pharmaceutical and insurance companies,” according to the story.

In the end, the main goal of the blockchain project will be to let patients independently decide what to do with their information.

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