Collaboration Breakthrough
[00:00:00] Stacey Richter: Episode 503. "Let's Go from Lazy PPO Networks to Smart Collaboration With Direct to Employer Specialty Care". Today I am speaking with Ryan Wells, Dr. Leo Spector, and Adam Stavisky.
[00:00:32] Stacey Richter: Today we are digging into something I've said probably way too often. Collaboration is the next breakthrough innovation, and I'm doubling down on this because in the current healthcare landscape, two parties that actually should be talking, like burning up the phone wires talking, are sitting on opposite ends of a very long, very crowded roadway.
On one end of the road, you have self-insured employers, the ultimate purchasers plan sponsors. On the other end of the road, the specialists who actually provide the care. Status quo in the middle. We got a whole lot of traffic. Let's not forget, we're talking carriers. We got ASOs, TPAs. We got large, consolidated health system organizations, also in the middle there, often with their own interests.
It is no wonder, one of my guests today, Dr. Leo Spector, he says these two groups, the plan sponsors and the specialists are often like two ships passing in the night.
So today we are talking about bridging that gap, bringing the two ends of the road together, putting a gang plank, betwixt the ships. We have lots of metaphors.
And to have this conversation about bridging this gap I have with me today Adam Stavisky, who has managed benefits for Walmart among other massive member populations, and he now consults with innovative purchasers.
We have Dr. Leo Spector, a surgeon, and CEO of OrthoCarolina.
And we also have Ryan Wells, who is the founder and CEO of Health Here, which is an organization that provides the digital bridge, to make sure that any direct connections don't result in an inadvertent additional pile of manual paperwork and administrative waste. Because the current rails of healthcare don't really support direct contracting so well.
Three Pitfalls Ahead
[00:02:24] Stacey Richter: Okay, so this is how this conversation that follows is gonna go down. First we dig into the complications, let's call them, when the two ends of the road start to talk to each other, right? We should be educating ourselves in the topics that we know for a fact are gonna come up that we do not want to turn into a dustup.
So let's prep for these in advance. Here are the things that we know are going to rear up whenever you get specialists and plan sponsors in a room.
Quality And Appropriateness
[00:02:54] Stacey Richter: Here's the first one. What is quality? Who delivers quality? What is appropriate care? What is care that is of value? Right? So we spend some time on this one because we've all been there.
As we were talking about this one though, I wanna point out Adam Stavisky, he made a beautiful point when we were level setting, what is the opportunity here really as far as quality and appropriateness is concerned? In other words, what is the why to even try to figure this out.
This is what he said. He said, Traditional carrier networks have a tough time in any really informed quality conversation. Because they're often trapped by, “disruption analyses”.
If you have any given plan sponsor who insists that every single doctor remains in network to avoid the dreaded D word, disruption, then that plan sponsor is defacto prioritizing no disruption over patient quality and even patient safety. Because you wind up with clinicians who are practicing medicine standards of deviation differently from the best practice, and they wind up in everybody's network.
But look, that challenge is actually the opportunity because when you get the ultimate purchasers and those delivering the actual care, sitting around a table together, this is why collaboration is the breakthrough innovation because you can put your heads together and work it out.
I mean, progress might be iterative, but if you don't try, then you'll be left with the status quo. These lazy networks where quality and price in the same network is highly variable. And I'll leave it at that.
Next area of contention that always comes up is how does one scale this. Most plan sponsor teams actually have a day job and that day job is not doing a national road trip negotiating direct contracts in every geography. So we talk about this at some length and buckle up, Ryan Wells has some insights.
And then our last complication that we talk about today that will for sure arise during any attempt to tesseract the beginning and the end of the road together is, any smart specialist thinking about spending time and money to rejigger their practice and their data and their contracts will immediately ask, how are you plan sponsor incentivizing members to come to my practice. Because I'm not gonna do all this and then get crickets, which is something.
Links in the show notes that Dr. John Rodis [Episode 286], Dr. Steve Schutzer [Episode 294] and others have talked about happening. You level up quality and safety and no one cares.
When I interviewed Dr. Mark Fendrick [EP308], he called benefit design and payment design, peanut butter and jelly. You gotta have both for this to work well. So we talk about that for a bit.
Okay? So after we explore each of these three complications, we then talk about what's the roadmap here? Where are we and what does the future look like? And in sum, you could put this whole thing under the banner of, what do our Center of Excellence models look like?
If you think about, and I hadn't, so this was a revelation for me, but if you think about what does direct contracting look like at scale, this is where you're gonna wind up in some kind of Center of Excellence model.
We now have options that include what Ryan Wells calls Center of Excellence 1.0, which is pretty much the fly to a brand name hospital model, mostly. And look, just to quantify the why here, even for this 1.0 version, I literally, moments ago just saw a post from Jonathan Baran talking about sending one of their plan members to Baltimore from Wisconsin for heart surgery.
He wrote, "One Madison hospital charges $219,000 for a surgery that Johns Hopkins, one of the best cardiac programs on earth, does for 80k door to door.”
Also in the market at this time, we have Center of Excellence Model 2.0, which by my accounting is a more scaled availability in local markets. But the thing is, even 2.0 uses a lot of the status quo rails that were designed for fee-for-service and requires a lot of manual labor on the side. Because half the stuff that you're trying to track when you're doing direct contracting, the existing rails don't support it. You're gonna have to have a whole side hustle, separate operation going on to just like adjudicate or reconcile most of the risk-based anything.
So yeah, we finish up this conversation getting both sides of our road here talking about Center of Excellence 3.0 where the rails are different. Maybe we compress the road actually, and these metaphors completely fall apart, which would be kind of great actually.
And in this 3.0 complication, Ryan Wells has definite thoughts because his company Health Here works with clinical organizations across the country to stand up these payment and communication pathways. But bottom line, it is time to stop with a game of telephone and really start talking directly.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group, and today we did have an assist. I need to thank Health Here who donated some financial support to defray the costs of this episode today.
So thank you so much to Health Here for your generosity.
Introducing Our Guests
[00:08:12] Stacey Richter: Adam Stavisky, welcome to Relentless Health Value.
[00:08:15] Adam Stavisky: Pleasure to be here. Thank you for having me.
[00:08:17] Stacey Richter: We have Dr. Leo Spector.
[00:08:19] Adam Stavisky: Thank you. Appreciate you having me.
[00:08:20] Stacey Richter: And Ryan Wells, thank you so much for coming on Relentless Health Value today.
[00:08:24] Ryan Wells: Excited to be here. Thanks.
Ships Passing Night
[00:08:25] Stacey Richter: So let's just start at the very beginning here. If we're just talking about the why and the where for, and the collaborating between ultimate purchasers and specialists, Dr. Leo Spector, do you wanna discuss this idea from the standpoint of the specialists? You have said sometimes you feel like two ships passing in the night with self-insured employers.
What do you mean by that?
[00:08:47] Dr. Leo Spector: I think it's no secret that healthcare costs are high, they're getting higher, and they're unsustainable. And we know that ultimately, privately insured companies bear the brunt of that. And I think it puts corporate America at a disadvantage compared to the rest of the world where they have, you know, socialized healthcare. They don't have to worry about paying for that, but US corporations do. And so those purchasers of care wanna see the cost go down.
And then you have folks like ourselves, specialists, who are fervently committed to delivering a high value product to the consumer. And you can define the consumer as the patient, the folks that are consuming that care.
But you can also define it as the payer, the people that are paying for that care, and obviously the patient pays for part of it too. And so we're committed as practitioners to trying to lower that cost and improve that quality.
What I mean by that is that you've got folks like us out there that are putting together value-based programs, And you've got purchasers who want it, but we're not connected.
And so, you know, the supply and demand, normal business economics that you would are not happening because the supplier, us and the purchaser are not able to connect in a way that allows that to occur.
[00:09:58] Stacey Richter: What do you have to say about that, Adam?
[00:09:59] Adam Stavisky: I think that philosophically and strategically we're aligned with what Leo is saying very much so. It's just, and it's more than a small, just operationally. It's near impossible for a large multisite employer to arrange these contracts market by market, specialty by specialty. That's what the health plans have historically done for purchasers.
We could talk about how well or not they do that, but that's one of the key values that they bring to the table.
[[00:10:35] Stacey Richter: Okay, Adam mentions scale and how a self-insured employer HR team with a day job can't be negotiating direct contracts in every geography across the country, like off the side of their desk.
Although I lay low here for a few minutes. I did actually hear him when he said that. So stay tuned. We talk about this, how to attain scale as our second pitfall that's gonna come up here.]]
What do you have to say, Ryan?
[00:11:02] Ryan Wells: Yeah, I mean, I think they've really hit on the crux of it, that their alignment exists between sort of a supply and demand side, however you wanna frame that.
But the truth of the matter is that the infrastructure wasn't built to manage any model beyond a traditional fee for service revenue cycle. And so with that, to do something that's does create this alignment is really requires you to jump off the rails, if you will.
[00:11:26] Stacey Richter: And the point that you're making is where there's a will, there's a way, but that way isn't on status quo rails, which just were not designed to facilitate bidirectional transparent communication between the beginning and the end of the road.
[00:11:41] Ryan Wells: Yeah, exactly. And I would go a step further and say, if you really look at where the costs continue to escalate faster than even on the service delivery, that 30% waste number that we hear save often, so much of that is in the administrative layer.
And in that administrative layer we have all the prior authorization, claim denial rework, all these layers there that can be actually disintermediated with these types of models. So it was effectively just creating a direct line.
[00:12:10] Stacey Richter: Well, that was a very apropos statement since we've just done about four shows in a series entitled “The Inches Are All Around Us”, where we're just digging into those kinds of things that are just friction.
All right, when you actually decide that collaboration is the way to go because it's the next breakthrough innovation, let's talk about how you can't use the existing rails. So this metaphor is very apropos how things might go off the rails, right? As you think about setting up that next set of rails, what happens that may be a pitfall, is maybe how I'm gonna frame it.
Measuring Quality With Data
[00:12:46] Stacey Richter: The first one I'm gonna tee up here for discussion, comes up all the time, which is data accuracy and defining what quality means. You mentioned Dr. Spector, value. Well, value is very dependent on an assessment of quality. So let's switch this up. Adam, talk about this from the perspective of the self-insured employer.
[00:13:06] Adam Stavisky: Yeah. This is an emerging space, well, it's been emerging probably for more than five or six years. So, there's a number of players doing this, and now there is a number of companies have, not employers, but companies that employers can hire, have access to, you know, databases with hundreds of millions of patients over multiple years.
And you start to have statistically credible information on physicians, and you can look at both the appropriateness of their care. How are, what is the care plan that they're recommending based on the way someone presents, and then the clinical effectiveness of that care, how well they, they executed on that plan.
I believe that that is the most important aspect for buyers to consider. You want the highest quality care you can get your covered population to have. And that can also mean, you wanna avoid the very worst, the bottom of the quality decile, if you will, of care that's out there. And that is not something you can get from the traditional players.
And so you've got to go, and we can talk about it if you want different ways, but that's how I think quality's critical. Both that appropriateness and the clinical effectiveness of that care and making sure you have enough data so that you are assessing physicians on an apples to apples basis. Because everybody thinks they have the sickest patient load and that they should be treated differently.
[00:14:25] Stacey Richter: So just kind of restating what you're, what you're saying. And then I'm very interested in getting Dr. Spector and Ryan's overlay here. What I'm understanding there's vendors out there who have trillions, probably lines of data, and therefore are able to assess quality and appropriateness, which you're putting together.
So I'm hearing here, you can't assess quality unless you're also simultaneously assessing appropriateness. And then the other kind of point that I think that you made, you're looking at maybe not splitting hairs, just like who are the 80% that are doing a fine job and then like, let's get rid of the ones who are just by any measure, like this is not a gray area, this is just, it's pretty black and white at that point who are just not quality, who are not doing appropriate things. Is that correct?
[00:15:08] Adam Stavisky: That is absolutely correct. And we looked at data back in my old job and physician type by physician type, market by market. And we weren't that interested in parsing the docs between the 67th and the 73rd percentile. But holy cow, the docs at the bottom 15%, they were just practicing medicine standards of deviation differently than the median in that market, let alone the best practice.
[00:15:32] Stacey Richter: Dr. Leo Spector, hearing that, how do you react as a clinician?
[00:15:36] Dr. Leo Spector: Yeah. I mean as a clinician, I, again, at a high level, I don't disagree with Adam. I think we all wanna see that bottom 10 or 20% not involved in that kind of care. Adam's right. You need to have data to look at because every physician's gonna tell you why their practice is unique, why their patient's head is more challenging.
PROMs And Outcome Gaps
[00:15:54] Dr. Leo Spector: So, again, agree conceptually. I think the challenge becomes how do you really measure outcomes? Because most of these folks that Adam, I think is talking about, they have lots of claims data and different data, but they don't have true patient report outcome data. Because even in the best research studies, typically you're only collecting that on 30% of patients. Right?
And so to really be able to measure outcomes, you need that full understanding of how the patient's doing. And we don't have that data. As a proxy, sometimes, like Adam referred to, you start looking at outliers with regards to utilization as opposed to a purposeness of care.
The example that I love to give is having met with one of these companies when they were starting out, they gave an example. They, they were showing us our data and they said: “You know, look at this practitioner of yours, this person, you know, only operates on 10% of the patients that have been sent for total joints. They are a low utilizer, therefore, must be very appropriate.”
And they said, “now look at this other gentleman. He's an outlier. He's operating on 90% of the patients that comes, he is over utilizing. It must be inappropriate.”
And obviously I know these two physicians, one is a highly experienced, you know, 20, 30 years in a practice. Total joint surgeon. The only patients that he ever sees are patients that have been fully worked up. And are ready to move forward with surgery. And he does hundreds of joints a year. That's exactly who I want replacing my knee. So as a result, he's gonna really high.
The other gentleman was semi-retired, did only a couple of joints a year, and was winding down his practice. That's not who I'd want replacing my joint at that period of time.
The problem is with the data, is it really giving you the right indicator? And like Adam's saying, he's not looking to differentiate between the 60th and the 70th. So I get that and I agree with them. We want to focus on getting that bottom quartile out. And they use more metrics than just that one, right? So it's not a single metric they grade folks on, and that's really key.
But I just think the important thing is we've gotta make sure that the information, the data that we're using to grade people is appropriate, and it really is helping us differentiate that bottom quartile. Because in this case, who they were saying was a bottom quartile was actually the top quartile and and vice versa.
[00:18:03] Adam Stavisky: And if I could pick up on one quick thing on that, so we both actually agree, right, that there is a difference in the physicians you might want taking care of patients. And so the question is, how can we have that understanding become ubiquitous across the country so that the patients understand that there's a difference.
And then we give them digestible means of parsing through sorting through the physicians and give the physicians the same data because I think there's a percentage of physicians who will change the way they practice medicine if they were seeing this data.
[00:18:36] Stacey Richter: And if I'm just kind of summing up what the two of you are saying before I ask Ryan how he's gonna fix all this.
The things that I'm hearing are PROMS, patient reported outcome measures or patient reported outcomes, are missing in action a lot of times. And it's very difficult to assess if you're doing a total joint replacement, then how the patient's doing later, how the patient feels, or the quality of life or the amount of activities they resumed, like that's the whole point.
So in the absence of that, it's very difficult to assess quality or even appropriateness. And you gave a great example Dr. Spector of someone who all he does is operates on people who have already been worked up and are deemed appropriate for surgery. So knowing that really matters and not everybody who only operates on a slim percentage of patients is again, the best surgeon.
And then lastly, I think, Adam, you made a really important point that if what we're looking to do is raise the quality of care, we have to have standards. Ryan, what do you think here?
[00:19:36] Ryan Wells: Oh, it's, I think we could have a whole episode on just the quality theme. I think that is truly a in the trenches battle to operationalize a model that really effectively measures outcomes.
So patient reported outcomes specifically, which I have lived in that world for over a decade and, and I'm very passionate about it. But to scale those, and Leo mentioned that there are, there's a lot of activity in that space, specifically in orthopedics, traditionally around research.
But to really quantify what good looks like and to show the success of a specific procedure, you need a baseline of a patient's functional lifestyle and with their abilities. And then a six month, or six weeks, six months, one year score to kind of really tell that story. And then you need to know what that patient looks like. So comorbidities and, you know, depression levels.
So it gets, like, you see, you just get a lot of layers there. And so at current state, there aren't a lot of payment models that have rewarded the effort to capture that level of data. And I can tell you, no matter the sophistication level of any specialist group, and with good technology, there's still a meaningful effort there.
But if we really want to get there and we want the value equation to play out with outcomes over cost, I think that is a truth that can't be denied, that that needs to be part of it or some, some proxy for that.
Otherwise, we get sort of in that cherry picking versus lemon dropping scenario. We don't want surgeons only creating a panel of incoming patients that are just right. So they always have the scorecard. We gotta serve the population.
So we gotta know what the palpation looks like and what happens when we treat them.
[00:21:16] Stacey Richter: And I think what Ryan is alluding to there is that if I do a total knee replacement on someone who didn't really need a total knee replacement, then their outcomes are generally speaking gonna be quite good.
What I'm taking away here is that there's still a lot of devils in details that require people actually sitting around the table and trying things and figuring out and weighing in on what's working and what's not working. Because the beginning and the end of the road have been separated for so long, it's really important.
We did a show with Dr. Steve Schutzer actually a couple of years ago. He had a Center of Excellence in Connecticut. He talked about how he collected PROMS and just how difficult it was to get paid.
Which by the way, is foreshadowing for the conversation that is going to come up. The alignment between benefit design and payment.
Scaling Direct Contracts
[00:22:05] Stacey Richter: Not right now though, because there's one thing I wanna talk about before, which is scale and operationalizing this whole thing. Because even when there is alignment, going back to what Adam was talking about at the top of this conversation, just the sheer complexity of executing direct contracts and thinking through what quality is, what value is across the different geographies. How do we start thinking about operationalizing this?
And again, I'm gonna go to you, Adam, since you were the one to tee this up.
[00:22:34] Adam Stavisky: You know, one thing I wanna not lose sight of the fact is we can always make the measures better, and I hope we always will. But I believe they're good enough now to make meaningful progress. And if we wait to have this universal consensus on what the measures are, we'll never get going.
And I think Americans will suffer because of that. And so, you know, I believe that the measures are there. I mean, we did these studies that showed, if you look at healthy pregnancies, there were doctors who were doing C-sections half the time. Half the time versus 10%, 5% for the best.
And you know, you don't want those physicians touching our population. I could, on and on about the studies we showed about people who got back surgeries at the right place. They're back at work faster than those who didn't. There's meaningful measures out there to look at success.
Network Pressure Reality
[00:23:19] Adam Stavisky: But it's hard, right? Because the traditional health plans aren't doing this. They're trapped candidly because a lot of employers still look at something called disruption analysis back when I was a consultant. And if they're going to switch from one big health plan to another, they wanna make sure all the docs that our people saw in the prior carrier covered by all the docs.
So the health plans are under pressure to have everybody in the network.
Direct Contracting Limits
[00:23:42] Adam Stavisky: And so, you know, at Walmart we took a bold move by saying we were gonna intentionally disrupt patient physician relationships that we thought were putting our patients at risk. But we had to do that on our own way, which, is different than we couldn't find Leo.
We would've loved to have found Leo in Charlotte, but then we'd have to find Leo in Topeka, Leo in Detroit, Leo.… And then that's, then we have to do that for obstetrics and so it's exceedingly difficult to direct contract in that way. You can do it for transplants heart, you know, the big, big events. And we did that And we had direct contracts with those organizations And we, we saw good results there.
But in the everyday care in the local communities, if Ryan and others, there's a lot of players out there that are emerging with direct contracting coming up. I think there we're gonna see more opportunities come to light in the next couple years. I'll be curious to see how far it scales in terms of geographic breadth.
[00:24:37] Stacey Richter: So what I'm hearing you say, and then I'm gonna ask Dr. Spector for his response. This is kind of reiterating what you said at the top of the show. Here we are talking with Dr. Leo Spector, who's one individual. It's kind of hard, you know, there was that movie Multiplicity that didn't go well. So that's not something I'm necessarily gonna recommend, even if we are looking for more Dr. Leo Spector across the country.
Good Enough To Start
[00:24:57] Stacey Richter: But we've got this idea of good enough that if we all understand what the goal is, and we get to a point where it's good enough, then there's no reason not to try it. Understanding as long as we've got an okay, if we spot something that is not working, that we all agree, we're gonna get back around the table and fix it pretty quick.
If you, you have two functioning teams who are willing to work together, good enough can become pretty good relatively quickly despite all this complexity and variables and things that you could never foresee anyway. So it's one of those situations where you maybe just gotta try it because there's no way to predict what's gonna, you know, “go wrong”.
Dr. Leo Spector, what do you think?
[00:25:36] Dr. Leo Spector: Yeah, so I think, you know, first off, I agree with Adam's comment. There's an old axiom in surgery that the enemy of good is better. Meaning that if we wait for it to be perfect, we're never gonna do it, or we're never gonna stop the surgery and say everything went well.
And so I agree with Adam. You know, we've got good data, we've got good ideas on how to improve things. If we wait for it to be perfect, we're never gonna move forward. And it's at the expense of both the health of the patient, first and foremost, and the, and expense of the economy, the health of the economy.
So, totally agree. I think the key is to be working together, the payers, the purchasers, the suppliers of care to make sure that we are continuously improving the data that we're using so that we are getting the patients to the right practitioners at the right time.
That really gets to the scale issue that you've touched upon. And it's a big issue. You're right. My wife definitely does not want you to make more of me, that's for sure.
Scaling Quality Networks
[00:26:26] Dr. Leo Spector: But the question is, how do you get a network of independent practitioners, right? It's not like Walmart or Adam worked, like I feel confident that if I walk into any Walmart in this country, there's gonna be uniformity of service and product.
But you're not gonna get that with surgeons, practitioners, but you can start to get uniformity around indications for surgery and expected outcomes. And so I think it really relies on creating networks and there's different ways to do it. You know, Adam and Walmart did their Centers of Excellence. I think with direct to employers, now you're seeing folks come in and try to create networks.
As a large, independent orthopedic practice, we participate with something called the OrthoForum, which is about, you know, a hundred large groups throughout the country. And we've put together something called the OrthoForum Value Network, trying to lean into that network so that if Adam wanted to contract, he could come to one place and have large independent groups throughout the country that are willing to adhere to, you know, the protocols, the outcome expectations and contracting.
[[00:27:25] Stacey Richter: Hey, shout out to OrthoForum and President Karen Simonton, who has been a long time champion of this podcast. So I did just wanna take this opportunity for the shout out.]]
[00:27:35] Dr. Leo Spector: But that's where folks, you know, like Ryan step in to help make all that happen. But sure, it's really, it's hard to scale it. I was listening to another interesting podcast that was talking about, I'm gonna mispronounce it, Hermès, you know, and how they basically have these bags where you have individual craftsmen making a bag.
It's not made on a factory line, and how they're able to scale that, that's a hard thing to do. They've managed to pull it off. But that's a niche if you think of surgeons or doctors as craftsmen, right? How do you bring uniformity so you can scale that and create a network that Adam can feel comfortable making sure that his teammates are getting care there?
That's, it's not an easy thing.
[00:28:11] Adam Stavisky: In the end of the day, how is it better? If Ryan or someone can do this, because we did it, say we do the OrthoForum, and we get everybody for ortho, and that's great. And then there's a cancer one. And we gotta do the cancer one. And then we got obstetrics. And then holy cow, I've got to have, as a planned sponsor, 15 of these specialty networks that I carved out.
And then how is it coordinated? And it starts to be, and maybe Ryan and the Ryans of the world can create that. Well, now they look like, is it like a health plan or is there some, like, did my cost go down if I did all this? Like what? What made it better for the purchasers to deliver for their populations?
Lazy Networks Problem
[00:28:52] Stacey Richter: I had interviewed Ivana Krajcinovic and she talks about lazy networks. And just this idea that like for example, if you look at like California just as a baseline, but it's pretty true across the country and you look at how carriers are competing. First of all, you figure out real quick they're not competing. If you look at just like market share and how the market share changes, it does not, it's the same.
You go back however far you wanna go back and the biggest plans are still the biggest plans. They have exactly like you said, exactly the same clinicians. Exactly the same doctors are in network across all of the plans.
So you have these networks with the same exact provider networks, lazy networks, if you will. And then you figure out that the only way that they're competing is based on discounts. Not on quality at all, because they all have the same clinicians in their network. So then you start thinking about, Oh, how do you get the biggest discounts you come in with volume. You have the most members.
Okay, well now you understand why the biggest plans are always gonna be the biggest plans. It has nothing to do with quality outcomes.
Anything that we're talking about here.
[[As discussed in the Take Two with Dr. Jacob Asher a couple of weeks ago. Do go back and listen to that show if you wanna hear about commercial carrier market stagnation and the resulting “lazy networks”.
And then listen to the show with Ivana Krajcinovic on how lazy networks cost millions because high prices can prevail and docs doing C-sections, 50 to 90% of the time on healthy patients remain in the network.]]
Stacey Richter: I could kind of see if the paradigm were different and the network wasn't lazy, that if this last mile could get figured out with any kind of eye on quality, things would potentially be better. Ryan, weigh in here, straighten us out.
[00:30:44] Ryan Wells: Good. Yeah, I'll take that.
Centers Of Excellence Evolution
[00:30:45] Ryan Wells: I've been working on these themes since I think effectively 2012 and when Health Here made the build out, we've got a lot of specialist groups on the platform. That was the really, to me, I felt like we could, we could control for and enable the provider side piece of that equation, right?
Now, the employer slash carrier or ASO or however we wanna frame it from the payer side, and I'm just trying to address like how do we get the scale Center of Excellence 1.0 set the precedent and that's well over a decade old now, right? That was maybe more of a major health system centered approach.
Now I think we're at the Center of Excellence 2.0 version, where these aggregators that have gotten critical mass of self-funded employer lives and they are curating specialist networks have evolved. And I think it's creating an opportunity to kind of redefine what a modern health plan looks like. You know, essentially their carve outs. But I think there's, this is just the natural evolution.
And so what we're seeing in these markets where a critical amount of lives are captured. It is changing referral pattern and it is enabling these models at a faster rate that's really has been the barrier that I've seen in the past five years that yes, you could stand this all up and then it's crickets, you know, where's, how do we get something running through these value-based pipes?
We're seeing that change now, I think is a major opportunity. Now how do we do that efficiently and how do we do that to where it's really just not on dollars? And I think that's where we start talking about the Center of Excellence 3.0. Where the quality and outcomes really factor into the design and the curation of the network.
And that has to be evolutionary because we're talking about $350 billion of spend and OrthoCarolina sees 500,000 encounters a year. That's not a light lift to create a model that streamlines this.
Because quite frankly, and this is our mission, I don't wanna add another layer, cost to the system. And so we have to work really lean and ensure that the dollars get attributed to the right parties and net savings is actually achieved.
That's not easy, and I don't expect that to be, you know, an overnight transition. But I will say in the past 24 to 36 months, we've seen meaningful pickup in that, and I'm really bullish in the next couple years.
[00:33:02] Stacey Richter: I am looking forward to talking about Centers of Excellence 3.0 in the middle of this $350 billion in orthopedic spend that you're talking about here. And how this can be done so that we're not adding another meta player that may just be adding a layer in the middle. That doesn't necessarily help.
Again, bring the two ends of the road together, right? Like they may actually be further disintermediating it just like somebody else in the middle there.
Benefit Design Or Crickets
[00:33:33] Stacey Richter: But before we get there, I do just wanna bring up one last kind of like complication maybe thing to think through because you teed this up, Ryan, when you just said what you don't wanna do is stand this whole thing up and then have crickets, like no one's actually using that.
There has to be a bit of benefit design here. As everybody knows that benefit design and what the employer's doing to steer tier, whatever that looks like really starts to matter. Otherwise you can build it and they may not come.
Adam or Dr. Spector, who wants to go first?
[00:33:56] Dr. Leo Spector: I can give you my perspective on it.
Incentives And Deductibles
[00:33:57] Dr. Leo Spector: I think at the end of the day, this does all come down to aligned incentives. It gets down to reward the behavior that you wanna see. And to what you talked about earlier with having that third-party intermediary, you don't wanna add another layer, but we probably wanna disrupt the current layer and put a layer in that actually is aligned with improving outcomes and lowering costs.
And you're absolutely right. Going back to the beginning of the show with the two ships, passing the night. We stood up a program to deliver bundled joints because that was the main thing we saw the market would need. And it was crickets because the market wasn't out there for it. Right. So how do you go ahead and create the benefit design?
Even today, now we have and are working with direct employers. We're working with traditional payers, but still benefit designs are not awarding our patients to take advantage of these bundles that will improve their outcome, ultimately lower the total cost to their employer, and hopefully lower the cost to them.
We have issues where patients have to pay their full deductible upfront, despite the fact that they're gonna save a lot of money for the plan and for the employer.
And so we're going back to the payers and saying, waive the deductible and let them participate. They're gonna save money here, so then the out-of-pocket, because it's a lot for surgery, becomes a barrier and they don't get it.
So there's lots of things around benefit design, which Adam can speak far better to than I can, but we are not incentivizing the patients, the employees, the teammates, to take advantage of the programs that are now existing that folks like Adam have designed for companies.
And so that's a big part of it too. So again, to me it's just aligning that reward and incentive system.
[00:35:33] Stacey Richter: What does an anticricket program look like?
[00:35:36] Adam Stavisky: Leo, I agree with him. So when we did centers of Excellent 1.0. It was required. And you know, we, the reason we got comfortable at it is like we are indexing on patient safety. And as an organization we said that's what we're gonna prioritize. And this was like, you know, you had to fly to different places.
But again, we were indexing on patient safety. And so we felt comfortable, we felt good about doing that.
And then when we got to 2.0, which was we curated our own networks, carving out the bottom with 10, 15% of certain specialists. That was also the same concept, was the priority that we're gonna weather if there's pushback on access, because we're gonna stand for patient safety.
But design is critical, right? And as you think about 3.0, and there's a bunch of companies, I'm not talking about employers like Walmart, but companies that are selling to them, they're, you know, insured and self-funded versions of these coming forward. And they do have the design is critical. You're right, because if I'm gonna blow through my deductible, I don't care.
And even if I do care, I don't as a patient know how to determine if Dr. Smith or Dr. Jones is better. And what does better even mean? It's really, really hard.
So not only are they financially agnostic, they don't even have the means by which to do this. So we need a combination of design and that employers would be well-served to have these designs that steer patients to certain people.
And then you've gotta pair that with regular kitchen English terms so that people not just understand it. Actually feel good and understand why you're helping now.
Peanut Butter And Jelly
[00:37:13] Stacey Richter: Benefit design and value-based care are like peanut butter and jelly. It's really hard to have one without the other because you wind up with crickets a lot of times, or you wind up with a benefit design and no place to go.
[[This quote is by Dr. Mark Fendrick, who said this in episode 308. Link in the show notes.]]
Stacey Richter: So you sort of have to have both. Ryan, as we think about this from an operational standpoint, to facilitate the peanut butter and jelly, how do you think about this?
Operationalizing The Last Mile
[00:37:51] Ryan Wells: Well, this is what we're living in real time right now, where we're seeing these Center of Excellence 2.0 members being navigated from the aggregator models. That's working.
Why are they working? 75% of them, if not better, have some form of waived cost share for the member. They are localized. They are not travel models per se. Quite frankly, we now have material amount of data that shows that members are traveling 60, 80 miles for this model. So that's probably a bigger radius than normal. We don't, it's early. I don't wanna make a claim yet.
But you know, the lede here is that in these models, that cost ceiling has been fixed through a mechanism, some form of bundle payment, whether it be surgical, and I think more and more evolving conservative care models.
So I say that in that these are working and now both sides are starting to figure out how to go from a drip to a flow.
I think we have enough lives, let's say 50 million covered lives in the some form of these models for musculoskeletal care. I don't know if that's a great number or not, but it's pretty close.
And so in a given market where we see, let's say 30,000 covered lives, our client being the specialist group is seeing a material amount of plans under these new models.
So that's what I'm framing as the modern health plan now has taken form and now how do we get it to scale? And it requires all these pieces. Now how do we do it in a really cost effective manner? But I think that's exciting.
[00:39:13] Stacey Richter: So what you're saying there is that in certain pockets in the country it's like that there's a quote like the future is here, it's just unevenly distributed.
What I'm hearing you say is in certain unevenly distributed areas, there is actually peanut butter and jelly. You've got employers who have benefit designs that align with sending potentially patients who need surgery to value-based places like that is afoot.
[00:39:39] Ryan Wells: I think what we're seeing today and what in, let's call it Center of Excellence 2.0, the foundation set, and now there'll be others, but us as a company are embedding the technology that's integrated on the specialist side and the respective participating providers involved.
So you gotta appreciate that there's a network, a virtual digital network that's being built, and we're the digital bridge for that, right? So you've got specialists, you got the surgery centers, you got anesthesiology, you got physical therapy. There's all these components to create a virtualized and elegant payment model there. That foundation is now set.
The health plan design and the themes around that design seem to be set in that it looks quite obvious that a member that has a carrot model where, you know, coinsurance and deductible models are waived to any degree that they can be, does provide incentive to look at a more narrow, high value specialist network. I think that's established.
Center of Excellence 3.0 Outcomes Focus
[00:40:37] Ryan Wells: What's next in talking about a Center of Excellence 3.0 would mean that we're taking in more global perspective on the outcome related to each episode of care and/or looking at a very longitudinal model from the first visit in conservative care and how that member's, that clinical pathway is attributed to and how's surgery, that clinical pathway around surgery defined and, and how are those linked?
In other words, going beyond a date of service bundle and or even a 90 day bundle, I think there is an opportunity to go longitudinal and have outcomes play a bigger role in that. That requires the infrastructure to mature, the health plan design mature, so there is a crawl, walk, run process that's happening.
And we've got so much room to grow just in 2.0. I'm not really concerned about 3.0. I think it's exciting, but I don't think we need much more aspiration. We need more execution. And so I'm busy just making sure the pipes flow and groups like OrthoCarolina are having a frictionless experience with this and getting out, you know, and growing these models as they are today.
That's kind of where I see it.
[00:41:47] Stacey Richter: So what I'm understanding you saying, Health Here is working to operationalize that last mile to make it such that if there's a practice like Dr. Leo Spector's who wants to work with a client of Adam Stavisky, that there are the rails that are available. There is the ability to operationalize that last mile.
Adam, how do you react to all this? What do you wanna either underline or just make real clear?
Encouraged But Execute
[00:42:13] Adam Stavisky: I'm encouraged. I'm really encouraged and to date this emerging practice of curating, triaging, creating incentives and plan designs that are based on physician quality, if you will.
There's a lot of different models, a lot of different companies that are putting these in place, but most of them are still riding the BUCA rails, right? If I'm a, whatever it is, they're still riding those rails and it's an overlay. So it's a 2.0 version.
But if the Health Here's of the world are gonna create a way for these new players to contract more directly with the Leos of the world in a way that will deliver value back to the plan sponsors financially while improving the health of their participants, that could be the next one.
And Ryan may be busy enough in the current 2.0. But the, as these other plans become, dare I say, ubiquitous, I may be a little further off, but certainly not uncommon, I think there's gonna be opportunity here to bring those two streams of emerging practices together.
[00:43:23] Dr. Leo Spector: I'd echo Adam's enthusiasm, excitement, I'm encouraged. I mean, all of us on this call have been engaged in “value-based care” for, you know, well over a decade and it's exciting to see that we're finally really starting to put some of the pieces together.
And I agree with Ryan's statement, I think we've worked out what Center of Excellence 2.0 can look like and now it's really incumbent upon us to execute on it.
At the same time, we do need to continue to be aspirational so that we do get better, right? We don't let the enemy of good be better, we're gonna do good.
So we're gonna do Center of Excellence 2.0. We're gonna execute on it. And that's what, you know we're doing with Ryan and others. But let's also look to the future on what is better and moving like Ryan touched upon beyond procedure-based bundles into condition-based bundles into that longer continuum of care.
At the end of the day, as we continue to align incentives and reward the behavior that we wanna see from the practitioners, payers, patients and bring that all together, we're gonna continue to move in that direction.
Listen, if this was easy, it would've been solved long ago by others. Far more intelligent than I. It's not, but I'm just encouraged to see that we're continuing to plug away and that we are making progress slowly but surely.
Wrap Up And Contacts
[00:44:29] Stacey Richter: It's really interesting when you start thinking about that this is a 350 billion dollar conversation that we're having right now with upwards of 30% of that being waste. So there's certainly a reason to get individuals sitting around a table trying to figure out how to collaborate, trying to figure out how to work together, especially when there's aligned incentives, which they're generally speaking are between the beginning and the end of the road between those two ships that frequently pass in the night.
And the magic that can happen when you put smart people around a table with a common and aligned goal is pretty fascinating, especially if you've got a Ryan Wells from Health Here who may be able to figure out how to operationalize that.
Which, you know, again, devil's in the details. This is not easy stuff when you're talking about healthcare to figure out how to operationalize.
Ryan Wells, if someone is interested in learning more about Health Here, where will you direct them? And I will also just tell everyone listening, as usual, all links will be in the show notes. So if you're interested in learning more about what Dr. Leo Spector or Adam Stavisky is doing then certainly we will have those links available.
But Ryan, where can people find more about Health Here?
[00:45:38] Ryan Wells: You could find us at healthhere.com and navigate to the contact page and submit your information and our team will be happy to reach out.
Adam Stavisky, Dr. Leo Spector, Ryan Wells, thank you so much for being on Relentless Health Value today.
[00:45:54] Dr. Leo Spector: Thank you. Enjoyed it Stacey.
[00:45:55] Ryan Wells: Thanks.
[00:45:56] Adam Stavisky: Thank you.