Introduction
[00:00:00] Stacey Richter: Encore episode, "A Case Study for Anyone Trying to Level Up Primary Care That I'm Gonna Call “How Margin Shoves Mission Off the Bus". Today, I speak with Dr. Scott Conard.
American Healthcare Entrepreneurs and Executives You Want To Know Talking. Relentlessly Seeking Value.
The Mission vs Margin Dilemma in Primary Care
[00:00:29] Stacey Richter: Here's a great musing that I read on LinkedIn. “How will alternative primary care models fare when growth mode gets balanced with profitability and VC supported burn rate is transformed to big retail bottom line expectations? Mission versus margin.”
I'm going to add to this. How will alternative primary care models, or even just doing good primary care, fare when it encounters the current system rife with perverse incentives of all kinds, including, yeah, for sure, big retail bottom line expectations, but also big health system and big payer bottom line expectations and current business models?
This show from last year was wildly popular, maybe one of our most popular shows, and re listen to it in the current context of what's going on right now in the primary care and MSO, managed services only, space. Coming up, I'm going to probably do a whole show on this if I can get my act together, but this encore is really relevant right now.
One piece of podcast business before we get into the episode, please sign up for our weekly email if you haven't already, especially if you consider yourself part of the Relentless Health Tribe. I am mentioning this not only because it's a great way to keep track of our shows, because you can do an email search to remember where you heard something, since a good deal of the show intros are in the emails, but also, there's a plan afoot to hold some Zoom meetings to talk about different topics, etc, and you won't be notified of such goings on unless you're subscribed. You can unsubscribe whenever you want, by the way, and I am way too busy to send more than one email a week, or spam, if that was a concern. My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.
Dr. Scott Conard's Journey: From Personal Story to Healthcare Transformation
[00:02:23] Stacey Richter: On Relentless Health Value, I don't often get into our guests personal histories.
There are a bunch of reasons for this, which if you buy me beer, we can talk podcast philosophy, and I will tell you all about my personal, very arguable opinion here.
Nevertheless, today we are going rogue, and I am talking with Scott Conard, MD, who shares his personal story. You may ask why I decided to go this route for this particular episode, and I will tell you point blank that Dr. Conard's experience, his narrative, is like the perfect analog. Is analog the right word? Allegory? Composite example? His story just sums up, in a nutshell, what happens when a PCP does the right thing, manages to improve patient care for real, and then at some point gets sucked into the intrigue and gambits and maneuvering that is, sadly, the business of healthcare in the United States today.
Before we kick in, I just want to highlight a statement that Scott Conard makes towards the end of this show. He says, “so this isn't about punishing or blaming aspects of care that are being over rewarded today. It's really about what's the path forward for corporations, for middle class Americans, and for primary care doctors who don't choose to be part of a big system.
We have to figure out how to solve this problem. I hope people don't hear this and think that there are horrible people at some not for profit hospital systems, for example. There are some great people at not for profit health systems, but they have some really screwed up incentives.”
A few notable notes from Dr. Scott Conard's journey and words of wisdom that I will just highlight up front here. He says that as a PCP, you actually can produce high value care in a fee for service model if you think differently and you change practice patterns. I have heard this from others as well, including most recently David Muhlestein. Who says this in an episode, as Dr. Scott Conard says later in this episode, healthcare organizations must embrace the art of medical leadership. So I guess that's a spoiler alert there.
Another point that Dr. Conard makes very crisply towards the end of the show is that doctors can kind of get pushed and pulled around in this mix. You have docs just trying to provide good care and they work for one entity that gets bought and now it's some other entity and what's happening upstairs and the price is being charged or somebody somewhere deciding not to make prices transparent or deciding to sue low income patients for unpaid medical bills or what charity care to offer or not to offer. These are not doctors and clinics making these calls. And we need to be careful here not to homogenize what some of these health systems are choosing to do like some kind of democratic vote was taken by everybody who works there. Health systems, hospitals are many celled complex entities.
And a third takeaway. There are a bunch of takeaways in this show, but a third one I'll highlight here. From Dr. Conard's story is the old fiduciary responsibility codeword being used by health system administrators as a euphemism for strategies that might need a euphemistic codeword because the strategy has questionable community benefits.
In the case study that we talk about today, the local health system managed to raise healthcare spend in North Texas by $100 million dollars year over year. Employers and employees in North Texas communities wound up paying $100 million dollars more year over year in healthcare one particular year. This was prices going up.
It also was removing a big systemic initiative to keep heads out of hospital beds. Reiterating here, we are not talking about doctors here particularly because, of course, the vast majority of doctors are trying to prevent avoidable hospitalizations. But suddenly, in North Texas, physicians did not have the population health efforts and the team really standing behind them helping to prevent avoidable hospitalizations.
That sucks for everybody trying to do the right thing and, as has been said, burnout is moral injury in a cheap Halloween costume. Moral injury happens when you have good people, clinicians, doctors, and others who realize that what is going on, at best, is not helping the patient.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.
Scott Conard, MD, welcome to Relentless Health Value.
[00:06:47] Scott Conard: I'm so excited to be here. Relentless Health Value is my favorite podcast. So to be honored is a real honor.
[00:06:52] Stacey Richter: That is such a generous statement. And I've been very much looking forward to having you on the podcast.
The Evolution of Primary Care: A New Model Emerges
[00:06:57] Stacey Richter: I want to start out, your career arc is kind of a perfect incarnation of what is possible to achieve for patients, but also what is possible in terms of a profit driven industry managing to crush the whole endeavor. You had a moment, I would say, in your career earlier on, do you want to just talk about what happened that kind of triggered maybe the journey that you wound up going on?
[00:07:23] Scott Conard: So when I went into practice, I was top of my class in med school, top of my residency program, chief resident, and then I went in thinking I was all that in a bag of chips. By God, I was going to be Arcus Willoughby incarnate. And then in 1996, I had three patients, all in their 40s. I loved taking care of them, and they all had come to see me within 90 days, and they all died.
One of those, oh my gosh, what just happened moments that completely reframed my mindset around what is excellent primary care and how advanced primary care needs to work.
[00:07:55] Stacey Richter: I can certainly see how that would give anyone pause. You had three individuals, all in their 40s. They came to your practice within 90 days of their ultimate deaths.
They said, I feel fine, doc?
[00:08:10] Scott Conard: Yep, exactly. I feel fine. And then they didn't feel fine.
[00:08:14] Stacey Richter: So from there, you must have sat back in your chair and said, wait, how did I miss something that obviously was going on? Right?
[00:08:24] Scott Conard: Yeah. I probably would say I didn't sit back in my chair. I went and laid in my bed. Thank God I'm married to a strong woman because at the time, my conclusion was, I'm a fraud. Like, I thought that I was like, Joe Family Doctor, doing everything right, and people had died on my watch. I literally had trouble going to work every day, because I was afraid, at that point, that I was going to harm somebody, or not do the right thing. But, in going back and looking at their charts, here's what I found.
All of them had risk. If you look at their key numbers, the numbers showed risk. Their cholesterol was a little bit out. One of them smoked cigarettes. One was a person with diabetes who their hemoglobin A1C or their 90 day average was a little bit high. One of them has what we call metabolic syndrome today.
So the risk was there. And then when I looked at my note, I literally had said increased risk of having a heart attack, stroke, and problems. And I said to the person, I need you to take an additional medicine. I need you to change your lifestyle. I need you to really address this problem. And they all looked at me and said, but Scott, “I feel fine.”
And then they died. So that's where I got really clear. I thought that I was treating symptoms. I was actually a risk management expert. And so when you think about what we do in advanced primary care, which is the topic that you've done such a great job exploring with Brian Klepper and others. We take people who do not have symptoms who at increased risk and we help them change the way they live their life, which is a very different exercise than helping somebody feel better.
[00:09:48] Stacey Richter: Looking at data and triangulating what somebody's risk might be, like whether they're high risk, medium risk, rising risk. Do you want to talk about maybe how your practice changed and what you started doing?
[00:09:59] Scott Conard: It completely transformed because now I was taking asymptomatic people and monitoring, managing, and helping their risk.
And it led me to develop the analytics I've got to work on today, which really looks at three things. Number one is what's the absolute risk of a person? And we call this the whole person risk score, by the way. So what's the absolute risk of a human being? And that looks at the disease conditions, how many they have, how many doctors they're seeing, what their social determinants are and saying, this is the challenge that we're up against.
And then the second part is looking at cancer screening rates, immunization rates, all the things that we call gaps in care. and what we call pathways in care around migraines and low back pain and AFib, coronary arteries, all those things and asking how well is the system taking care of the person but equally important is the third aspect and that is how well is the person engaging with the system.
My career, what happened at that moment was that I started to practice medicine a different way. You can't practice preventive proactive medicine in seven minutes. So I'd go in a room and I'd say, okay, thanks for coming in for your physical. I'd do the whole thing. We'd get their blood work. And then they'd give them a copy of my book and I'd say, okay, now let's read chapter whatever two and five.
So you understand what's going on inside your body.
[00:11:10] Stacey Richter: Just interjecting here. You wrote a book called "The Seven Numbers That Will Change Your Life", that is written for patients to understand, as you said, what is going on in their bodies.
[00:11:19] Scott Conard: So, and then they come back in. I could have a conversation where they had an understanding, I had an understanding we could be much more efficient.
Health literacy, you talked to Al Lewis recently. Health literacy, which is what he's built his career around is so important, really working on the health literacy of the individual.
[00:11:35] Stacey Richter: Your learnings evolved, it's almost like a practice model, or it is a practice model, really. That the first thing is assessing what their absolute risk is vis-a-vis those seven numbers.
The second one is for you to look at those seven numbers and really contemplate, are they on the right pathway? Is this individual in a best..., there's obviously practice guidelines and best practice care, right? Is this person on a patient journey, which is optimal for them, which is something that obviously I've ranted about any number of times, so I'm not going to repeat it here.
But if that doesn't happen, this is when you get just one care gap after another, right? And it's at that juncture, it's mopping up the floor while the faucet's still running. So, the point of the second step here, I'm almost going to call it, is to ensure that the patient is within, you know, their hypertension is actually controlled, that there's a plan to do that.
Somebody figured out exactly how their hypertension is going to become under control. So they do not have a hypertension care gap, for example. And then the third thing is to move from an allopathic model, didactic kind of model to one where, which is much more co-change, which understands that the people are in a clinic.
A very small period of time compared to the amount of time that they're outside of the clinic. And as has been said, any number of times, 80 percent of some of these outcomes are not determined by what happens in the clinic. So it's almost like a three step engagement model.
[00:13:07] Scott Conard: Yeah, it really is. You start to move from a transactional model to a relationship model, from a model where you are telling someone what to do to engaging them in their own health.
My mission statement at the time became adding years to your life, in life to your years, by empowering you to take control of your health. Because the truth is that health is with you. And that's why it's a social model. It goes from a medical model to a social model. From health and illness to a well being model.
[00:13:35] Stacey Richter: So a wellbeing model adds years to your life and life to your years. I love that.
[00:13:40] Scott Conard: Well, by empowering you to take control of your health.
[00:13:44] Stacey Richter: What year was this?
[00:13:45] Scott Conard: Oh, so this is 1996 to 2006.
[00:13:48] Stacey Richter: So this is going great. You are seeing...
[00:13:51] Scott Conard: We are adding a new doctor every nine months. We went from me and a couple of nurse practitioners to 13 healthcare providers and we totally changed this.
[00:13:59] Stacey Richter: You enshrined a whole new relationship based primary care practice model using the three risk factor engagement points that we just talked about.
[00:14:08] Scott Conard: So when someone walks in the door, they're handed their personal health summary, which is the system you talk about, right? The nurse assistants had been trained to review that with the patients.
They were given delegated authority to actually put the orders in the system. So when I walked in, I said, hey, I see you're here for your sinuses today. They'd say yes. And by the way, your nurse went over with me. I need a mammogram. I need this. I need that very efficiently. She'd already entered all or he had already entered the orders in the system.
I treated the sinus infection, I ordered the tests. And so what actually happened was two things. One is that in a family doctor's office, things get slow in the summer and early, late spring, summer, and fall. But now because we were training people and we were increasing their health literacy, I was able to right size the cash flow, as stupid as that sounds, but it was great.
And then we hooked it up as part of creating a company called Phytel, which actually would do automated telephone calls into my patients. And so I automated a lot of the work around this and patients loved it. They really were, they appreciate being treated like a thinking adult instead of being told what to do in seven minutes.
And so it was very successful.
[00:15:14] Stacey Richter: All of this is going on. You obviously have taken the local market by storm. And I know we've had any number of people on the show talking about consumerism and how it has certainly its limitations. But relative to selecting a primary care doctor and who someone chooses to go to, it sounds like you definitely were a provider of choice, given how fast the practice grew.
Navigating the Complexities of Healthcare Business
[00:15:34] Stacey Richter: Did you have any risk based contracts?
[00:15:37] Scott Conard: There were some primary care risks, is what I'd call it, but it was so funny because I'll never forget I went into the Dallas Fort Worth Business Group on Health, had this big thing where they had Cigna, Aetna, Blue Cross Blue Shield, and UnitedHealthcare's leaders talking.
And within the month beforehand, I had gotten a letter from Blue Cross Blue Shield that said, you're one of the best doctors we have. I'd gotten told by one of the other companies, we're going to cut you out of the, out of our system because you're too expensive. And the, one of them said, we don't judge primary care doctors.
They didn't do anything. And the fourth one came in and said, we're going to, we want to renegotiate your rates down 10%. And when I looked at the data, what had happened was Blue Cross Blue Shield was looking at the total cost of care, and I was 17 percent less expensive, but my personal, like in primary care, was more expensive.
So they were like, wow, you save a 70 percent on the top, but you're 2 percent more expensive. That's a great deal. We just made 15%. Whereas the second company was just looking at primary care expense, and they were going to cut me out of the network. And, Aetna at the time, they said, uh, Well, you're not a big enough group for us to negotiate a high rate.
And I said, then you want me to join somebody else and get in a bigger group? It was a very confusing time to try to practice advanced primary care.
[00:16:45] Stacey Richter: To a certain degree, those same conversations are still happening. As sad as that is to say. And I think what BCBS realized is the same thing that's been proven endlessly on a global scale that if you spend a little bit more in primary care, then the total cost of care can be significantly reduced.
That is just It is inarguable at this moment.
[00:17:10] Scott Conard: That's why we have to talk about total cost of care. You can't just look at primary care costs.
[00:17:14] Stacey Richter: Absolutely. So at that moment in time, I understand you got a visit from a larger local practice, which might have been appealing just given what that one health plan had told you about needing to be bigger so they could negotiate a higher rate with you, for example.
[00:17:31] Scott Conard: First of all, let me just say, it wasn't just me, right? It's a whole team. So I don't want this to come off like a glory wrap, like Scott's something special. I'm not. I just love being with people who care about the health of other people. And so as a team, what happened was that the care we were taking for, of our patients got noticed.
A person walked in and he said, we have 182 clinics, 343 doctors, and we want you to reproduce what you've done here in all of our clinics. And so I joined this, they bought everything I had, which is exciting. And then I became the chief medical and strategy officer for this group, and we took the same systems that I just talked about, and we introduced it into this group of 343 doctors, so we grew in the next four and a half years to 510 doctors, and we had a basically an office within five minutes of every place in North Texas, and it was so much fun, because all these systems I was putting in place, we were 70 percent primary care, 30 percent specialists. And one day, Eduardo Sanchez, who is the chief medical officer for Blue Cross Blue Shield, called me up and said, Scott, what are you doing?
What are you guys doing over there? Because you're again, you're saving 16, between 16 and 17 per member per month than other primary care doctors. And with people with diabetes, you're $100 less expensive every month. We just did this big, data analytics on all the primary care providers in North Texas.
And so I told him about all our systems, blah, blah, blah, blah, blah. And he said, we have 400,000 patients coming to your offices. You're saving us around $5 million a month. And so we want to work with you more. And so we started to do some risk based contracting at that point to answer your earlier question.
And by the way, I just have to put a cherry on top of this section of my life anyways, these years where we built this practice. The other thing that happens is our revenue in primary care went up significantly, like 25 to 30 percent because we were doing all these preventive services, all the immunizations, we were getting people in regularly, we increased our revenue during the summer months, all the things I talked about work for the big group.
So in fee for service, practicing high value healthcare, works. And I believe that we should be in a prepaid advanced primary care model. So don't hear me like I don't think that's the right way to go. But all the people who argue that you can't practice high value medicine in a fee for service system just have never really thought about it.
Because when you think about it, you actually do get paid more for that. So enough of that. But I just wanted to make that point is you can practice high value in a hybrid model where you're stuck doing fee for service and doing advanced prepaid care as you make that transformation over to hopefully 100 percent prepaid model.
[00:20:04] Stacey Richter: Which is really an interesting point and it underlines the fact that medical schools don't teach leadership classes and Dr. Robert Pearl has said this, you have said this before, this has been echoed any number of times so I don't think I'm speaking out of school here when I say. What you are saying relative to having a hybrid model and fee for service is possible if the organization itself is really thought through and systems and technology and processes are put in place such that an immense burden doesn't wind up on the backs of the PCP physicians themselves.
You can do this.
[00:20:39] Scott Conard: Yes, you are exactly correct. It can be done. It takes a different leadership style, which, by the way, during this time. We found that we had a 70 percent turnover rate in our medical assistants and a, and about a, oh gosh, about 15 to 17 percent turnover in our physicians as we were growing this group.
And we realized it's because we hadn't prepared them for change and a great leadership as we transform the healthcare system means you've got to teach people how to change effectively. So we actually wrote a book called the art of medical leadership and the woman that I wrote the book with, or she is fantastic.
She actually, Suzan Oran, she actually would teach our clinics and our physicians how to shift their mindset into a more open minded position stance. And we saw our turnover rates go down to under 30%, which I know that's still too high, but it was much better than 70 with DMAs. And then with the doctors, we got it down to less than 5%, and I should say clinicians because we had nurse practitioner PAs s in there also. And so one of the things for private equity is they think about transforming healthcare is you've got to embrace the art of medical leadership and change mindsets. If you don't, then you're pushing a rock uphill and you're just going to get run over.
[00:21:57] Stacey Richter: Yeah, it's funny how often medicine as an industry considers we all consider ourselves somehow, I don't know, exempt from things that everybody else takes as just completely sancrosanct and true, like change management. It's a thing.
[00:22:16] Scott Conard: You did a podcast recently with the woman who was working with BI. And she was in charge of transformation and change management, and she made a bunch of great points. So I would encourage everybody to go listen.
[00:22:26] Stacey Richter: Yes. And that was Karen Root. And even if what is going to be happening on the other side is so much better, there is definitely this messy middle, which needs to be considered. What Karen says very succinctly is that there certainly has to be a vision and a goal that everybody is aware of that they're striving to achieve.
[00:22:46] Scott Conard: Yes, it's a vision, mission, and purposes, but the other thing you've got to have is a shared lexicon, and you've got to have shared methods to get there, and that's what was also missing. So that's where we think that people are going to walk in off the street, all thinking that, oh, we're going to solve this problem this way, and get along, and everybody's got their own version of that, so just saying to everybody, okay, this is how we're going to think of things, this is the lexicon we're going to use, and this is where we're trying to go. It is amazing how much better the quality of life is for your employees just by taking a month of an hour a week to get that aligned.
[00:23:23] Stacey Richter: The good news is that instead of having to figure that out by trial and error, you ourselves, anyone that's listening, we can learn from your experience there and ensure that before we embark on this process. We have a vision, a mission, a shared lexicon, and a methodology that everybody agrees in order to move from where we currently are, which sort of isn't great, to a much better place.
And we're doing that in alignment. All right. So this is going really well. You've figured out, you've obviously learned a lot of lessons. You have happy doctors, you have happy clinicians that are working in the practice. You have patients who obviously are, the practice is growing, so, word of mouth.
Patient satisfaction is clearly high. Payers are happy because total cost of care of the ones that are smart enough to realize this is diminishing. Then what happens?
A Shocking Revelation: The Business of Healthcare vs Patient Care
[00:24:11] Scott Conard: I thought I was doing the happy dance, as you point out, and was so excited with what was going on. And so I actually now we're 2010 and Obama ACA.
And I'm thinking, okay, our time has finally come. We're going to form ACOs. We're going to take risk and this is going to be great. So I went to the largest healthcare system in North Texas and said, you've got 17 hospitals and really no significant physician group, we've got 510 clinicians and no hospitals, let's form an ACO.
And they're like, great idea. So we got together and during the third meeting, they said, you know what, it'd be smarter if we were one tax ID number. We'd like to buy your group. And I go, crap. Okay. I don't want that, but that's okay. It's not my choice because I'm the chief medical strategy officer. So I pulled the CEO and the president in and to make a long story short, the next January, they purchased our group.
And you know, the whole premise was I was going to get to do the ACO with them. And we were going to have a first mover advantage to be able to start to do this high value care in North Texas. We do a lot of work corporations, it'd be great, but in one of the most stunning things that's ever happened in my life, 90 days into it, my staff of 36 people had been reassigned to hospitals or HR or IT, and I was sitting in an office looking at the windows and there was nobody in my group.
And I went to the chief strategy officer who had become a good friend of mine cause he was very valued minded and said, what the heck just happened? This guy was at the hospital. He was the chief strategy officer of the entire hospital. And then I said, you know, what happened? And he said, when we got your list of doctors and we went and we looked at the revenue that they were generating for our health system, it had gone down $20 million the year before, a hundred million last year, and it was exhilarating.
And we actually believe that if we hadn't stopped you and stopped what you were doing, we would eventually have had to close a hospital down because you had such a huge presence in North Texas, you were dangerous and we needed to stop.
[00:26:13] Stacey Richter: Wow. Okay. So let me just jump in here. So the chief strategy officer at the hospital looks you in the eye and says, your patients were not our heads in beds.
You were keeping patients out of the hospital. Your preventative methods were actually working. You were actually lowering risk such that your patients were not having the acute events And that's how we make money and therefore we needed to buy you to shut you down so that our hospital could be full again and we have enough sick people in our community to keep a hospital open.
[00:26:48] Scott Conard: In all fairness to him, the fiduciary responsibility conversation came up. And he said, Scott, do you understand how much these communities that we're in depend on the revenue they get from our system? And I'm like, well, you don't pay taxes because you're not-for-profit. So no, I really don't get that. Oh, think of all the nurses and doctors that live in the communities and how much money they spend.
Okay. And he said, it's our fiduciary responsibility to protect the well being of our non-for-profit hospital system, and you were undermining that, so it was fiduciarily our responsibility to shut you down, and that was a lightning bolt in the back of the head to me, because I always thought the fiduciary responsibility of healthcare providers was to help add years to the life and life to the years of people.
And what he introduced at that moment to me was, no, no, no, we're a big business and our responsibility is to make money for our shareholders, but we don't have any shareholders. So we're going to make a surplus, which we put into higher salaries and doubling, tripling, quadrupling the number of mid level managers we have in our hospital system and paying ourselves salaries of three, four, $5 million a year to administer, and honor our fiduciary responsibility.
So first point I'd make was he was basically at that moment, spewing to me what he had been told. Now, philosophically, he did not agree with that, by the way, he was gone within two years. He left, he would got out of the healthcare system business and has led some great endeavors in value based stuff and done some really important things in his life.
But that was what the rationale was. And I think that a lot of corporate leaders, a lot of CEOs and presidents of corporations don't understand that. And they think that the hospital systems are working for the help of their employees, not realizing they're actually protecting their bottom line. And that's one of the naive moments that became I was no longer naive that moment in my life when he said that to me.
[00:28:41] Stacey Richter: I can imagine how your heart just dropped through the floor at that exact moment in time.
[00:28:48] Scott Conard: But the thing I say is for the people in private equity that want to that are invested in transformation, I support you and I want you to do well. You've got to realize that the mindset of whether it's insurance companies, PBMs or big groups like this, they're over barrel because they feel like if they honor their fiduciary responsibility, it's going to actually harm them.
[00:29:10] Stacey Richter: There's a big difference between doing a legit cost benefit analysis and deciding that it is a patient imperative to keep a hospital open and determining the right way to do that vis a vis fair prices for appropriate care. There's a big difference between that and trying to maximize revenue in ways that everybody has to realize at an intellectual and visceral level harms the patients, which seems even the tax exempt are not immune to this. It seems like it's almost a default position wherein revenue maximization, as I said, becomes the main goal and patients become a way to achieve that goal. And you can always tell when that turnstile goes through because you start seeing all the things that you're just saying.
You see, CEOs who are making more money than some Fortune 500 companies. You see just immense amounts of this admin layer, embarrassing levels of charity care, financial aid not being offered. You basically see buildings, you see the hospital going on building sprees, that, do they actually improve care? Question mark. Like you see all these things start to happen. PR department who can manage to spin that in all kinds of varied ways. Which sound great on paper, but at the end of the day, it's all about the revenue maximization. Like you don't have to peel the onion back very far to figure that out, which is exactly what your experience bore out.
Like that is a very crystallized moment in time that makes that very clear.
[00:30:42] Scott Conard: Yeah, it was a traumatic. It was like a Pelican Brief moment for me. And the other thing that Stacey is so amazing to me is the doctors, many of whom still are in that system are wonderful, caring human beings who view their fiduciary responsibility as caring for the patient and they just come to work every day.
They do a great job. They go home. One of the weird things that happened is because the contracts that insurance companies give to these big health systems are so much better. The companies in North Texas paid $100 million more than the next 12 months for the same services that they had gotten the 12 months before at a significant discount, just because about 400 of the 510 doctors moved over to a 30 percent higher rate of compensation.
And so the doctors are like, wow, I just got a raise for doing the same work. That's a great deal. And unless you step back and view it from this macro level, you and I are looking at it and asking the question, gosh, they made a surplus of $250 million last year. What if that actually had gone into parks and gone into solving food deserts and safety deserts and healthcare deserts, and actually working into the mental health and the community, what would happen if part of that $250 million a year, maybe only a hundred million of it went into that.
And if they actually had adding years to life and life to the years by empowering people as a part of their mission statement, so I resigned. And then I decided at that moment to go work corporations, to go help corporations see what was really happening. And to do that, you use the data to transform.
And that's what the next chapter of my life has become.
[00:32:22] Stacey Richter: Yeah. So just to summarize that first chapter, just looking at this at the macro level, there was a gigantic wealth transfer from the employees from the community of North Texas into the healthcare system. And you definitely can see that because we have an additional hundred million dollars spent paying for 30 percent more expensive FFS, fee for service rates and facilities fees because hospital systems can get higher rates than independence most of the time. I'm sure there were also more acute events requiring hospitalization, probably more ER visits, etc, that went up after the moment in time where the practice was bought. Obviously we have this situation where the intent and the goals of the local health system are in direct conflict with what I'm going to say most would consider the good of the community.
Granted, we do have one complication there because oftentimes health systems, as David Muhlestein said on the podcast, 48 of the 50 United States employ more people in the healthcare industry than in any other industry, right now, considering that 50 percent of the income of most people employed in the healthcare industry is paid for by the federal government, that is a bit of a different spin but none the less there is certainly people's livelihoods that play a complicating factor here.
Reflecting on the System and Looking Forward
[00:33:43] Scott Conard: Can I just make one comment to your comment, and that is, so at that time, I wanted to blame somebody. I wanted there to be a bad guy that I could blame for the whole thing. But in a very odd way, everybody thought they were honoring their fiduciary responsibility. And the incentives are completely misaligned.
So I don't want people to hear this and think, oh, those terrible health systems are several insurance companies or those terrible PBMs or blah, blah, blah, blah. They're not, they're good people. They're really honorable people. The doctors within these groups are fantastic people and they proved they could practice really high value care or they could have practice really expensive fee for service. They just are trying to take care of patients. So at that moment, I wanted to blame somebody, but what I got really clear about is we have unconscious capitalism. We have crony capitalism with a bunch of people going to Washington and preventing transparency.
You've got to have free enterprise. And I think that Wendell Potter did a great job with this.
[00:34:37] Stacey Richter: Episode 384 with Wendell Potter.
[00:34:39] Scott Conard: You got to have transparency to have free enterprise and if we expect enterprise to work in healthcare, we've got to go fix that problem. So I realized it's a system that's broken. It's not bad people. And the other thing with conscious healthcare is every stakeholder has to have a way forward. So this isn't about punishing or blaming aspects that are being over rewarded today.
It's really about what's the path forward for corporations for the middle class American, as you pointed out, is getting killed and to primary care doctors that don't choose to be a part of a big system. And so we have to figure out how to solve the problem. It's not about, I hope people don't hear this and say, oh, you know what a horrible group of people at this not for profit hospital system.
They're really a bunch of great people with really screwed up incentives.
[00:35:21] Stacey Richter: Yeah, it definitely sounds like everyone needs to take a step back and reorient toward what you said at the very beginning of this conversation. What's our vision? What's our mission? What's our shared lexicon? What's our methodology?
It sounds like the whole industry needs to take a step back and think through those things.
[00:35:40] Scott Conard: That's the opportunity for private enterprise, right? That's why they're paying $55,000 per life is we can harness the power of the private enterprise to actually help make this transformation, or if private enterprise chooses to make the wrong investments that can really slow the process down.
So that's where I hope everybody listens to Relentless Health Value.
[00:35:58] Stacey Richter: I appreciate that. And I hope so too. Dr. Scott Conard, if someone is interested in learning more about converging health, where would you direct them?
[00:36:07] Scott Conard: Oh, I probably just had an email me at scott@scottconard.com. I would just ask them to reach out to me directly.
[00:36:12] Stacey Richter: Dr. Scott Conard, thank you so much for being on Relentless Health Value today.
[00:36:16] Scott Conard: I'm a raving fan, Stacey. Anytime I can help, please let me know.
[00:36:19] Stacey Richter: Appreciate it. Thank you.
Closing Thoughts and Invitation for Further Engagement
[00:36:20] Stacey Richter: So let's talk about going over to our website and typing your email address in the box to get the weekly email about the show that has come out.
Sometimes people don't do that because they have subscribed on iTunes or Spotify and or we're friends on LinkedIn. What you get in that email is a full and unredacted, unedited version of the whole introduction of the show transcribed. There's also show notes with timestamps, so you get everything that you need to decide if you want to listen or not.
Just apprising you of the options that are available. Thanks so much for listening.