EP330: What Is Going On Over at Health Systems? With John Marchica, CEO at Darwin Research Group

In this health care podcast, I’m interviewing John Marchica, who is the CEO at Darwin Research Group.

Starting last year in the middle of the worst of the COVID pandemic, Darwin Research Group conducted a study about what was going on at health systems or integrated delivery networks (IDNs), and they’ve updated it every quarter since then. The goal was to try to stay on top of the effects of COVID-19 on care management and the business of care delivery.

I loved having this opportunity to quiz John about what health systems are saying about how they are doing and what they are doing, both strategically and reactively, coming out of the pandemic and in response to the pandemic.

Now this is a half-hour conversation about an extensive research report, so we’re kind of aggregating all of the health systems in one big bucket. Said another way, we’re obviously not going to play the deep cuts here. No worries—the insights that John lays out are fascinating and give an insider’s look into what’s going on at these really powerful institutions.

By the way, when I say powerful institutions, I just was looking at some stats the other day. Something like 50% of all prescriptions these days run through IDNs (that was in 2020). And also in 2020, aggregate IDN market size was $1 trillion. And by 2027, their anticipated combined revenues may exceed $2 trillion. That’s double. (I know, that was some quick math by me. You’re welcome.)

We’ll see, though, what the recent Executive Order yields—the one to look into the market power that some of these consolidated IDNs wield. Regardless of who you are, it is tough to deny the mountain of evidence showing that IDN health system consolidation considerably jacks up prices that patients, employers, and taxpayers pay in any geography where consolidated IDNs, otherwise known as monopolies, have destroyed all competition.

Probably the most striking takeaway I had from this conversation was how much there is to read between the lines. At the end of the day, IDNs are, and are run, like businesses; and regardless of whether they have a nonprofit on the door or not, that is still true.

Before I get into this, let me just clearly say that my heart goes out to the frontline workers—doctors, nurses, everybody else—and all they have done and continue to do for us, and I mean that with three underlines. While I really admire and support some of the rural and urban truly safety net hospitals who are trying to cobble together positive net revenue against all odds, I am far less sympathetic to some of the huge institutions who will engineer an “it’s good for patients, honestly” cover story for any and all endeavors which all seem to have one thing in common: their profitability. Like, nobody mentioned 340B revenue opportunities or how much money there is in specialty pharmacy when explaining the rationale for standing up specialty pharmacies within some health systems’ walls. Maybe it goes without saying.

Here’s my conversation with John Marchica, CEO of Darwin Research Group and host of the Health Care Rounds podcast, by the way. You should check that out.

You can learn more at darwinresearch.com or by emailing John at jm@darwinresearch.com. You can also listen to the podcast Health Care Rounds wherever you listen to podcasts.

John Marchica is a veteran health care strategist and CEO of Darwin Research Group, a health care market intelligence firm specializing in health care delivery systems. He’s a two-time health care entrepreneur, and his first company, FaxWatch, was listed twice on the Inc. 500 list of fastest-growing American companies. John is the author of The Accountable Organization and has advised senior management on strategy and organizational change for more than a decade.

John did his undergraduate work in economics at Knox College, has an MBA and MA in public policy from the University of Chicago, and completed his PhD coursework at The Dartmouth Institute. He is a faculty associate in the WP Carey School of Business and the College of Health Solutions at Arizona State University and is an active member of the American College of Healthcare Executives.

03:50 What were John’s top three health system findings during COVID?
05:24 What is priority for integrated delivery network health systems right now?
08:57 Why do health systems have a renewed focus in primary care?
10:07 How did infusion centers manage throughout the pandemic?
13:58 “It’s not just in cancer, people not getting screened and being diagnosed; it’s in other areas as well.”
14:17 Which of these telemedicine changes are permanent?
19:39 “A visit is a visit … so why would you reimburse at a lower rate?”
19:57 “Telemedicine … is, by its nature, more efficient … and they should be able to figure out how to make money.”
27:17 What are health system plans that own their specialty pharmacy groups doing right now?
29:57 What does Darwin Research Group focus on?

You can learn more at darwinresearch.com or by emailing John at jm@darwinresearch.com. You can also listen to the podcast Health Care Rounds wherever you listen to podcasts.