Value Guessing Ends
[00:00:00] Stacey Richter: Episode 505: The Death of the "What Is Value” Guessing Game. This one's for all you clinical and plan decision-makers out there who are ready to move on. Today, I am speaking with Dr. Ahilan Sivaganesan—otherwise known as Dr. Siva.
[00:00:35] Stacey Richter: Hello, Relentless Tribe. Thank you so much for showing up today. All right.
OVI Explained
[00:00:38] Stacey Richter: To start, let me lay out the goal of the episode today. This episode is for you if you are a self-funded employer, looking to ensure your members are steered and tiered to real high value care and or if you are a clinical leader looking to show up in the real high value care tier and or deliver at the highest possible value to the community. Yeah, if you fit any of those descriptions, please stay tuned.
I, for one, left this conversation pretty darn, I don't know, hopeful is maybe the right word. My guest today is Dr. Ahilan Sivaganesan, otherwise known as Dr. Siva. And we are discussing, I'm gonna call it the death of the what is value guessing game.
Because today we're digging into what Dr. Siva calls the Operative Value Index, the OVI. The OVI is a common mathematical language that allows purchasers to finally have the math to move away from some very lazy status quo provider networks where value, cost, and quality is highly variable across network providers. Let's just leave it at that.
The OVI reminded me of an article that Dana Prommel Strauss had written about and quoted some weeks ago where she talked about what is the health dividend that results from delivered care link in the show notes. So these ideas, it sounds like, are ideas whose time has come.
Okay, so on the pod today, Dr. Siva shows how to identify using the OVI, the rockstar surgeons and or other clinicians who deliver care that is the highest value for their patients. He uses these bubble charts that you can check out. We'll put the link in the show notes if you are interested. Just go back later on and check 'em out.
And this whole endeavor, let's just not lose track of this, has obvious implications for provider organizations, but for anyone who is paying for care and has an actual aligned incentive to ensure that the care is high value.
This OVI operative value index and its common math, also allows us to pay in a way that just saying the quiet part out loud, we can pay in a way that isn't one big old outta the gate perverse incentive.
Which you know, we can say a lot about a lot, but if we're talking FFS (fee-for-service), or even most bundled payments at their just basic, fundamental level, the only way the surgeon gets paid is to do the surgery as just one example.
If you're looking to align everyone around the common goal to have the best outcomes for the patient, that doesn't cut it. Weird pun not intended at all, but yeah.
Dr. Siva says, coming up here, he says, you don't have to just do the math, the bubble charts at the procedural level. You can do them at the diagnosis level, which I think is even more interesting to a self-funded employer or a payer. Because if I'm a surgeon that is appropriately conservative, I don't just cut on everyone. I'll send that patient to PT if I really think that's the highest value, next step.
And let's say my patients do really well with that conservative approach, I'm gonna look like a rockstar on these bubble charts because I'm going to be getting great patient reported outcomes and my spend is gonna be a lot less 'cause I'm not doing surgery on everybody.
And so finally, there's a way for me to be rewarded in a way that the metrics are designed compared to someone who's just doing surgery on everyone. We haven't had the language or the framework to be able to actually compare surgeons or practices on value that incorporates appropriateness or conservatism in the right way.
I found that really interesting and it also reminded me actually of the episode, episode 434 with Dr. Ben Schwartz about five surprises with bundled payments because Dr. Schwartz also talks about the idea of diagnosis level bundles.
Why Costs and Outcomes Fail
[00:04:44] Stacey Richter: Okay, so let me take a dip back now from whence this episode came. It's genesis, if you will.
This whole thing started out for me at least with the revelation of an episode with Dr. Mick Connors, where I first cottoned on to this idea that our typical value definitions are based on a mix and match on awry. I mean, we all say value equals outcomes divided by cost, And we say this very confidently.
But let's get real. Across most of this $5.6 trillion sector, both of those numbers, outcomes, and cost are total question marks. It's weird though. It's a weird thing because we tend to roll up costs. Roll 'em up in a vaguely cryptic and inarguably, triangulated way, and then we break down outcomes to the level of like a blood test.
We should flip that, get those costs defined as close as we can to the unit. Or to the unit and roll up the outcomes to Whole Person Care. Definitely go back and listen to the episode with Dr. Mick Connors. There's also an episode on Whole Person Health with Dr. Scott Conard which could be a nice round out here.
Dr. Alex Sommers wrote some posts on or about this recently. I will link to them in the show notes.
And this is the point Dr. Siva made in the quote I read earlier, and you will hear this again in the episode that follows, you can't figure out who or where the high value care actually is unless you figure out the actual value.
And to figure out the actual value, you need to figure out the quantified outcomes And the unit level costs. Mark Cuban wrote on LinkedIn on this topic with over 900 comments. So hitting a chord here.
Today as aforementioned, my guest is Dr. Ahilan Sivaganesan, Dr. Siva. He is a practicing neurosurgeon and also a national leader in value-based care.
His research focuses on the costs and outcomes of spine surgery. He also writes and speaks about redesigning care models, mapping patient journeys, and eliminating waste in healthcare.
By the way, at the very end of this conversation, we get to the why. As in why it is becoming increasingly an imperative for clinical organizations to figure out how to get past the inarguable complexities, and it is difficult, no one's arguing with that, get past all of that. Also get past the weird little stack of perverse incentives to not accurately calculate costs and outcomes really get to actually doing it.
As Dr. Siva says, and he wrote a whole article about this. We'll link to it in the show notes, but he says near the end of this conversation how Yahoo laughed at the little upstart Google for not understanding that the business model here was keeping eyes on a homepage and putting ads on the homepage. Yahoo laughed and disparaged. Until they didn't.
Dr. Siva talks about how we're coming up on a similar kind of Google moment. It's just maximizing fee-for-service is Yahoo and being able to actually deliver quantitatively high value is Google.
My name is Stacey Richter. This episode is sponsored by Aventria Health Group.
And we had an assist from Payerset. Payerset has price transparency data in a very elegant interface. You can use it to turn negotiations into partnerships. Certainly check them out. And I thank Payerset so much for offering financial support to keep this podcast on the air. Thank you very much, Payerset.
Dr Siva Origin Story
[00:08:12] Stacey Richter: Okay, so let's get to my conversation with Dr. Ahilan Sivaganesan.
Dr. Siva, otherwise known as Dr. Ahilan Sivaganesan, welcome to Relentless Health Value.
[00:08:23] Dr. Ahilan Sivaganesan: Thank you for having me, Stacey.
[00:08:24] Stacey Richter: I am so looking forward to having a conversation with you that sort of started teed up with Dr. Mick Connors when I had this crazy revelation, and I've been on this ever since. This revelation that in healthcare, people want whole person health and yet we're talking about these quality measures to the nth degree that divide humans up into all these little pieces.
And then on the flip side, when we're doing accounting, when we should actually, because every other industry on the planet does unit cost accounting, we roll everything up to the highest level we can possibly manage. It's kinda like flip that.
I'm just recounting my trajectory how we got here. You actually have dealt into this and as a neurosurgeon I found this absolutely fascinating. How did you get here?
[00:09:14] Dr. Ahilan Sivaganesan: That's right. Yeah. So first of all, thank you very much for having me. I'm a huge fan of the podcast. I listen every week, so it's a real honor to be talking with you today.
But yeah, so. You know, I've been involved in research around outcomes and costs of surgical care for many years now, but I will tell you that it was a shocking and very unsettling moment when I realized that most of the time hospitals, surgeons, doctors don't have the first clue about the true internal costs of executing a given care episode.
So if I do a spinal fusion on a patient tomorrow, in OR10 at the hospital that I work at, and I want to know the true cost to the practice for the hospital of delivering that episode of care, it's a complete guessing game. You know, you might be able to get a report that shows what the medical device costs were, or you might be able to get some information on reimbursement after a while or charges or sort of budget allocations.
But really, when it gets down to brass tacks, what was the real cost of executing that care episode down to the personnel, consumables, supplies, indirect utility costs, we don't really have a clue. And that is extremely concerning because in any other industry outside of healthcare, when you're running a business, how do you stay savvy, stay solvent without knowing your own costs?
Especially when we're all complaining on the doctor side about declining reimbursements. Costs are going up. We all need to contain costs. We all hear this, and yet we aren't able to really dig down into the true cost. I mean, so that was an alarming realization.
[00:10:59] Stacey Richter: So that's absolutely fascinating. And spoiler alert, in a couple of seconds I'm gonna ask you why you care. So that's upcoming.
Measuring Real Quality
[00:11:09] Stacey Richter: But there's also that flip side, which is the outcomes side of the house. What does that even look like? You know, we talk about quality measures. We throw this outcomes word around. Now we're all talking about appropriateness, which is something that's a big deal in your line of work.
And again, it seems like it's like the opposite issue, right? We've got everything rolled down to like, what is someone's A1C, not how are they doing? What's their quality of life? How are they feeling as an individual, which sounds, even saying it, and it sounds soft and squishy, whereas you know, A1C is 7.0.
It just feels a lot more quantitative and measurable in some way. But does that mean we're measuring in a way, the wrong things?
[00:11:50] Dr. Ahilan Sivaganesan: Thanks for bringing that up, because we talk about the value equation all day long. No value-based care presentation is complete without the value equals outcomes divided by cost equation. Right?
And yet to your point, we are getting down into the weeds sometimes to the level of like handwashing rates or readmission rates or ER visit rates and calling that quality. But in my view, we have completely missed the boat on what quality really means and how to measure it. And I'll give you an example.
If my aunt. Who say lives in Chicago. We think she might need a hip replacement. She's got hip pain and we're trying to figure out what to do, where to go, where to start. It's not enough to know that, say Northwestern has a surgical site infection rate of X. Or they have a readmission rate of Y. I mean, that's the kind of quality metrics that we all sort of hear about.
What do I really wanna know? First of all, I want to know that if she gets a hip replacement by a given surgeon at a given hospital, what is the probability that a year later she is mobile walking, pain-free, and satisfied with her outcome. That's like what this was really about.
We don't really measure that at scale and make it visible to patients or payers. There's no consumer reports for specialty care where I can go in and say, all right, what matters to my aunt specifically. She cares about not being in the hospital too long. She cares about being able to walk a hundred yards. What she really cares about is not having to have a second operation, even if it means something more involved upfront.
I should be able to dial those things in and then be able to compare hospitals practices and surgeons in a given region on the specific patient report outcomes that matter to her. That's real quality. And I'll go one step further, which is that it's not just about how good you are at doing surgery.
Because to your point about appropriateness, if she has hip pain, maybe the right pathway for her is to start with PT, then try some injections, then try some yoga. And if none of those things work, then go for surgery.
If she goes to a practice or institution where they're a little too aggressive, for example, in offering surgery. It doesn't really matter to me whether the surgical outcomes are great if she was never supposed to get surgery at that juncture in the first place.
And so what that brings up is this idea that you have to measure quality across the entire care journey. And that means evaluating whether or not a patient is getting the right treatment at the right time by the right person, which is a very upstream concept to how good you are at delivering that surgical episode of care.
[00:14:30] Stacey Richter: Yeah. I think you're bringing up some really interesting concepts here that if what we're trying to measure, like what are we even doing here. At the end of the day, if everyone's got a great A1C or quality measure scores, but yet the community is dying around the hospital, which by the way is a thing, right?
You've got a hospital in the middle of a community that is by any objective, reasonable measure, not doing well. And the hospital is killing it on their quality scores. And one of the things, And we did a show with Dr. Rishi Wadhera on this a while back, just how easy it is if you have enough money to game these metrics, these biometric metrics.
We did a show with Rebecca Etz from the Larry Green Center, just on how biometric measures actually don't do a great job predicting how well a population is doing. But they're easy go-tos, right?
So it's easy, especially in this kind of quant world we live in, for us to sort of default to these go-tos in a way when at the end of the day they may not be the best measures. Furthermore, if we're just talking about surgery, the best way to get a great outcome, frankly, is to operate on a person that might not really need the surgery. There was that huge study of the, if it was knee surgery or something like that, where they, where they didn't actually do the operation.
[00:15:48] Dr. Ahilan Sivaganesan: Right.
[00:15:49] Stacey Richter: And the patients had, it was like a placebo effect, right? So we can start to see that on the outcome side of the house, considering what the whole patient wants and needs and what their baseline is. Definitely has some room for improvement. Let's just put it that way.
[00:16:05] Dr. Ahilan Sivaganesan: I couldn't agree more. I mean, it's like appropriateness is the foundation of quality.
You cannot have a meaningful conversation about the quality of a given intervention or surgery or whatnot without first answering the question of whether it is the right thing to do at that right time by the right person. And so I don't have a lot of appetite for conversations around downstream metrics if we're not talking about appropriateness.
Especially when we know that there is a lot of overkill over utilization happening, and that's why the idea of mapping the entire patient journey and coming up with quality measures across that entire time horizon is important.
If I'm a self-funded employer and I know that I have a cohort of employees with serious hip pain or spine pain or what have you, I wanna partner with a practice where I have reason to believe that they are stewarding those employees to the highest value outcome across the entire patient journey. And if they need an expensive intervention or or a surgery, that yes, they will deliver a good result in a cost effective way, but only when it's absolutely appropriate and necessary.
And if we don't have the ability to visualize and compare appropriateness in these high dollar interventions in a a meaningful quantitative way, we're never gonna crack the nut.
[00:17:26] Stacey Richter: So just kind of level setting where we are in this conversation because we've come a long way in a relatively short period of time.
We started out talking about cost accounting, question mark.
[00:17:36] Dr. Ahilan Sivaganesan: Yes.
[00:17:36] Stacey Richter: One of the things that just teed off this whole exercise around the cost accounting, just kind of starting at the beginning and then we'll move forward here. Is I said something about how any other business, if, if they went on Shark Tank and was just like, I have no idea how much my product costs. Like, they wouldn't even make it past the screener.
And yet somehow we've got a $5.6 trillion sector in this country where everyone's okay and comes up with, let me tell you, you walk into a room and you start talking about cost accounting with any number of hospital executives, you will for the next three hours, hear all of the reasons why they cannot do it.
And the point that I wanna make is, but can you not not do it right? Like at this juncture, there's a great quote from a CFO who, who's just like, everybody else is doing it right? And their businesses are just as complicated. I mean, there's this human element, but just like enough with excuses. When it starts to cost this much.
Okay. So then on the quality side or the outcome side or the, what are the results of what we're doing or how are we keeping our community healthy side? We take the exact opposite approach, which is just crazy if you start thinking about it. We drill it down to like those microscopic levels we can possibly get and hope nobody rolls it up in a way.
Why Surgeons Must Cost
[00:18:51] Stacey Richter: So here's my question for you. And you sort of alluded to this earlier, but maybe you can just kind of gimme a, a statement here. As a practicing neurosurgeon, if you're thinking about this from the clinician side of the house, or dare I say, in the hospital side of the house.
[00:19:07] Stacey Richter: Why are you waiting in this fray?
[00:19:08] Dr. Ahilan Sivaganesan: When it comes to surgeons, here's why I think time driven activity based costing is existential and like absolutely necessary in the coming years. We know that procedural bundles are coming, whether it's Medicare And the latest CMS program or the commercial payers following suit. The payer is gonna come and say, all right, you want to do this elective spinal fusion? Here's the much money you get and it's, this needs to cover your 90 day global, or whatever that may be.
If I don't understand the true cost of delivering care for my practice or hospital within that time horizon, i'm gonna get screwed. But you know, when I present this kind of information, this data infrastructure that allows you to do prospective, time driven activity based costing, when I present it to other surgeons and when I present comparisons: Hey, surgeon X is 30% cheaper than surgeon Y, you can predict what the next comment is, right?
Well, that's not really a fair comparison. My patients are different than his patients. What that comes down to is that there are certain confounders. That we know it's very procedure specific, specialty specific that I know as a spine surgeon, what are the key patient specific and surgery specific variables that account for these dramatic differences in cost.
And so you have to incorporate those confounders into the analysis so that when you do a ranking, or a comparison from one practice to the next, or one surgeon to the next, you are accounting for all those potential variables that could be at play. And that's what an employer would also want, right?
If they, if they wanna make an intelligent decision, we want to go at risk for spine care or trying to choose between these two, “high value” practices that are ready to play ball with us. And we wanna understand in a very quantified way, what the costs are, what the payments are gonna be, and what the outcomes are. You have to have access to those confounders and be able to adjust for them.
So this is a critical foundational requirement for any type of value-based marketplace. And so I think it serves multiple purposes.
[00:21:10] Stacey Richter: We've covered a lot of ground very efficiently here. And I just wanna sum up, you just are checking off check boxes, right? So like relative to cost accounting and there is a methodology called TDABC or time-driven activity-based costing. Again, TDABC. There's a lot of literature as well as evidence that this is a great way to understand actually what true costs are.
But what we talked about here is just A, the fact that this doesn't exist, and then B, there's two ways it could go if it does exist.
One is that you could use it for games, right? Like you could use it, which by the way is one of the main reasons not to bring up a sore subject, why it became illegal for doctors to own hospitals. Because doctors were getting real, real good at cherry picking and lemon dropping, and then got kicked outta the C-suite.
On the other hand, though, not knowing this information. Recognizing that you're losing money in ways that you don't have to be right, like you do not have the action-based insights to actually take action if you don't have these kinds of things. So this is bigger than surgical outcomes, but certainly entwined.
And then the other one is just the surgical confounders, right? Like you've got doctors who, right, who wants to get measured, especially if you don't do well, you're gonna come up with excuses.
So it's just like a lot of human nature that's folded in here as well. And I think the point that you're making is other industries have done this, it's complicated. Sure. But others have done this. We can too. Ignorance is not bliss at this juncture. Like we've seen the downsides of not knowing the information we need to figure out how to move forward in the spirit of the endeavor.
[00:22:57] Dr. Ahilan Sivaganesan: I totally agree, and that brings up to your second point, which is that you can never expect a physician to go at risk in any way if they don't understand their own costs.
This is a prerequisite, And so if you, if any, anyone who believes either in the short term or the long term, that physicians going at risk for outcomes and costs is necessary for true movement towards value-based care, must understand that physicians have to know their own costs. How else can you go at risk? Otherwise you're jumping blind into an abyss.
And so that's the way I think about it, is that knowing your own costs in a prospective scalable condition, specific way is an absolute minimum requirement for physicians to go at risk and, move us towards a value-based marketplace.
[00:23:42] Stacey Richter: I'm gonna underline that. That's the why here. Like we talk all day long about value-based care or whatever, but at the end of the day, that is going to fail unless two things are known.
One of them is the cost, the other one is what are the, I don't even know what to call it, outcomes, results. What is the quality of life that patients attain on the other side of that care? What is the health dividend?
[00:24:10] Stacey Richter: Actually, Dana Prommel Strauss quoted an article recently where she's just like, there's a lot of care and there's no increase in health dividends, so like, what is the health dividend on the other side?
Operative Value Index
[00:24:18] Dr. Ahilan Sivaganesan: This is why with my research team, I introduced this concept of the operative value index. Now, admittedly, right now it's only within the domain of surgery.
But the whole idea was that, you know, we say value equals outcomes over costs, but why is it that we can't visualize and quantify the actual value at a given patient level for a given surgery?
Like if, if I do a surgery tomorrow on a patient, six months later, if I ask the question, can someone give me a number or a metric for what value I delivered for that patient? That hasn't existed.
So what we did is we said, okay, what's the patient reported outcome that matters most for this surgery and what was the true cost of delivering that care through TDABC? And you do the, you do the quotient, it's simple math, and you'll get an answer, which is that, you know what, you delivered 40 points of disability improvement for that patient per their own reporting, and the surgery costs this much.
So you can get an actual quotient, an actual metric, which says, you know what? When Dr. Siva does this surgery, on average, he delivers 40 points of improvement in disability for every $10,000 spent in the operating room. Oh, that's interesting. Now we can compare that to other surgeons, or we can compare one practice to another, and a self-funded employer can say, oh, this is something I can actually sink my teeth into.
We're actually creating a common mathematical language. To compare the value delivery for a given condition for a given procedure, and so you can actually make intelligent decisions. And it's crazy to me that this type of common metric doesn't exist.
And there's no reason it has to stay within surgery. You can expand that to the entire journey of a patient from PT to injections to surgery over say a one year or two year time span and say, what were the improvements in patient reported outcomes in a condition specific way divided by the total spend by the employer now instead of the true internal costs to the doctor. And you can get a value index across time for a given condition.
And then you can compare MGH to Stanford to Hopkins and say, Hey. What's the value index over a two year time period for diabetes? At these different institutions, risk adjust for the confounders we talked about earlier, of course.
And say, wow, you know what? It's like an average of 4.7 for a two year diabetes value index for Hopkins. It's only a 2.3 for MGH. We're trying to figure out who our Center of Excellence for at risk diabetes care is gonna be. Maybe we should go with institution X instead of institution Y. That's the kind of world I think we need to move towards.
[00:26:52] Stacey Richter: Which definitely changes the calculus because right now you have hospital executives, some of them so inclined sitting in conference rooms trying to figure out who the profitable health failure readmissions are. Right. So like …
[00:27:04] Dr. Ahilan Sivaganesan: That's right.
[00:27:05] Stacey Richter: The bar is not high.
[00:27:07] Dr. Ahilan Sivaganesan: Right.
[00:27:07] Stacey Richter: It is kind of, okay, so let's just level set. What we did is we first started talking about the absence of time-based cost accounting in general at hospitals in mostly.
Then we moved into also outcomes, results, quality of life, also not super quantified. And the problem for their many problems, one of them is certainly it's hard for an employer to purchase. Because what are you even buying? It's, it's hard to figure out what you're purchasing.
But then the other bit of it is, it's really hard then on the supply side, you've got supply and demand, right? So it's hard for the demand curve to purchase with any sort of integrity almost. But then it's also hard for the supply side to take a contract, right?
Like the whole endeavor is handicapped without these two being quantified. If I'm putting together a sort of a roadmap here, Step 1 here is definitely wrap our arms around time driven, activity based costing this TDABC like, figure out how you're gonna do that, and there is a lot of literature actually on this.
Then Step 2 is defining what meaningful patient outcomes actually look like. And then you sum this up, you're like, okay, if you have those two things, then it becomes possible to create the operative value index, and it's that value index that can be used to actually form this fundamental infrastructure that is necessary for really any type of payment structure that isn't fee-for-service.
[00:28:40] Dr. Ahilan Sivaganesan: That's a great summary.
It's that the providers need to have a true understanding of their own costs. Both the providers and the payers need to have an understanding of true condition specific quantified outcomes. You combine the outcomes and the cost together into a value index.
And the beauty of this framework, to your point, is that you can rinse and repeat this for any given condition. It doesn't have to be specific to surgery. You can decide that your outcome is A1C control over a six month period, or you can decide that it's, you know, a certain disability score for hip osteoarthritis or return to work, for example.
And you can use these value indices with the risk adjustment to rank practices, doctors, and health systems and decide who you want to entrust with certain direct contracts, so that you're actually making an intelligent decision.
And it may be that, you know what? For diabetes care, you want to go with this really nimble, agile, forward looking nephrology practice or endocrinology practice in a given, in a given area.
But for musculoskeletal, you really need to go with this, other group. And yes, that creates some fragmentation. And now you've got multiple different players in the mix. But that type of thoughtful decision making is what, like what we all deserve And we just need a common quantitative framework for it.
And these are the sort of key ingredients? I think.
Bubble Charts In Action
[00:30:03] Stacey Richter: So let's talk about a use case here. And you have your famous bubble charts, which which you posted on LinkedIn the other day and got something like 90 plus comments or something like this. So obviously this struck a chord. And the bubble chart, what we were actually doing is trying to create the OVI for surgeons, for individual surgeons.
Do you wanna talk about, what you learned coming out of that exercise, which ultimately is gonna wind up improving value, improving patient care, accomplishing the good thing. Let's start there.
[00:30:41] Dr. Ahilan Sivaganesan: Yeah, no, thanks for bringing that up. Probably the first lesson from this exercise of creating these value visualizations and these bubble plots is the power of transparency.
So when I show these visuals to the surgeons whose data is going into the actual plots, like surgeons are addicted to this. They wanna know which bubble they are, and they want, they're fascinated. Like, wait a minute, like am I a quote unquote high value surgeon according to the assumptions behind this figure.
And to be honest with you, surgeons aren't really used to asking that question and understanding where they stack up relative to their peers for a given type of surgery or a given type of condition. So just the, visibility of that where you can, it's the first time you can see value, that you can see the value you are bringing for a given type of surgery or a given type of condition compared to your peers.
And just that alone, like surgeons and doctors in particular, surgeons, definitely very competitive. You just gotta get 'em to compete on the right thing, right? And right now we've just been competing on volume, but now you provide this kind of information and everyone starts asking. Well, okay, if I did my surgery this way instead of that way my outcomes are gonna be the same, but I'm gonna cut my costs down 20%. Those gears start turning.
We didn't have to make any sort of official payment incentive. We didn't have to do anything with respect to you're gonna get a bonus if your bubble on the plot is off to the upper left quadrant. It was just the power of transparency.
So that was the, that was probably the first lesson. The second lesson is if instead of those individual bubbles representing surgeons, they represented practices or health systems, this is exactly the kind of dashboard that I think any self-funded employer would want to be able to decide who they want to pick as their clinical partner for a given condition that they know they're getting crushed by.
And so I think those are the first two thoughts that came up from, from the exercise.
[00:32:39] Stacey Richter: We had Dr. Marty Makary on, it's probably more than five years ago. And the whole show doctors, how they compare with their peers and performance will improve. That outliers will creep closer to the middle.
And that could work for just exactly the reasons that you're saying. I mean, the study that Dr. Makary did was with dermatologists who were just raking in dollars on Mohs surgery doing kind of untoward things, frankly. And when, once it was pointed out like, look, hey, we see you. We see what you're doing there. The doctor started to, let's just say diminish that, that typeof behavior.
So this is a very well proven that, you know, transparency helps improvement. You see how you're doing. And I also could just see as a doctor, like you're used to doing something a certain way. There's a lot of fear, like, I'm gonna switch this up. I may hurt my patients.
So to know that you could just skip that step and it doesn't actually have any diminishing results, I could see that this could benefit surgeons. It certainly benefits patients and then also those that are paying the bill as well.
[00:33:45] Dr. Ahilan Sivaganesan: I totally agree. I mean, this is, now we're finally talking about, the so-called learning healthcare system, right?
Where you have information available to be able to have a feedback loop and iterate and disseminate best practices, but you gotta have the numbers and the visuals to be able to know what your baseline is. And then to see that you're improving with respect to value over time.
And what I think is also neat about these bubble plots, you don't have to just do it at the procedural level. You can make these kind of visuals at the diagnosis level as well, which I think is even more interesting to a self-funded employer, a payer.
Because if I'm a surgeon that is appropriately conservative, I don't just cut on everyone. I'll send that patient to PT, if I really think that's the highest value, next step, I won't just decide to jump into a big surgery.
And let's say my patients do really well with that conservative approach. I'm gonna look like a rockstar on these bubble charts because I'm gonna be getting great patient report outcomes, but my spend is gonna be a lot less because I'm not doing surgery on everyone.
And so finally, there's a way for me to be rewarded in the way that the metrics are designed compared to someone who is just doing surgery on everyone. And getting great collections and looking like the best things in sliced bread.
We haven't had the language or the framework to be able to actually compare surgeons or practices on value that incorporates appropriateness or conservatism in the right way.
That's what I think any any payer would wanna know is like, all right, it's nice to know that surgeon X is a higher value when it comes to this given surgery, but what I really wanna know is, are they higher value when it comes to managing the whole condition?
And this kind of visualization can help you see that.
Steering Beyond Lazy Networks
[00:35:30] Stacey Richter: We have done three shows recently. If you haven't listened to those shows, you should go back and listen because they're definitely a tee up to this one. Just this idea that if everybody's in network, you can't control for quality, you can't actually control for cost.
You've got the obstetrician who's literally 95% of healthy births are C-sections.
[[By the way, the target average for C-section rates for healthy births is 23.6%.
And these three earlier shows that dip into direct contracting and the wild cost and really sometimes patient safety issues created by “lazy networks” and why the networks are lazy are, episode 503 with Dr. Leo Spector, Adam Stavisky, and Ryan Wells about collaborating for smart contracting.
Episode 501 with Ivana Krajcinovic on how to not spend an extra million dollars for an infusion.
And the Take Two of episode 398 with Dr. Jacob Asher on why the carrier markets never seem to change, thereby creating these lazy networks to begin with.]]
And that's an actual example. The obstetrician whose literally 95% of healthy births are C-sections. That guy is in network.
What is starting to evolve to is not lazy networks. And I'm saying all this to say, in the world where entities are steering and tiering, this creates a demands curve that requires the supply curve to start doing some of the stuff that you're talking about here necessarily.
I'm kind of getting the vibe that provider organizations, clinical organizations, the ones that are ahead here, have a value prop that could be very differentiated to be offering employers who are so inclined, or consultants who are so inclined, or like anyone who's just like, I just can't with these networks anymore.
[00:37:26] Dr. Ahilan Sivaganesan: I think that is such an interesting point. I mean. This is the big blue ocean opportunity for forward looking providers. right?
You gotta have the actual numbers. And this mathematical framework to be able to say, you know what? We quantified the value for this OB practice versus the other one. They're doing way too many C-sections. And you know how we know because the value index looks horrible because there's way too much expensive surgery happening and they don't have the outcomes to show for it. Or you can replace that with any type of specialty care.
So this value index concept can unearth the good actors and the bad actors, positive, negative deviance, and allow self-funded employers to be able to tier and steer appropriately. And to your point, the practices and the providers and the health systems that do first mover advantage here and start to develop these scores and reporting and provide them to the self-funded employers are gonna be gems. And then everyone else is gonna have to follow suit.
But instead, everyone's competing on the provider side. Everyone's competing in this red ocean of how can I maximize my revenue and how can I get better rates and all that and compete within this existing pie.
The practices that, that strike out of that trap and do this sort of work are going to be, you know, godsends for these self-funded employers that are looking for something to make these decisions based off of.
Infrastructure And Google Moment
[00:38:51] Stacey Richter: And with that in mind, I did just read an interesting Substack post by Dr. John Lee the other day about how infrastructure, especially at larger institutions, has to change in order to enable, he was talking about AI to function properly, but also to probably do some of the computations that you're talking about and that is not something you can just like dedicate Tuesday to, right.
Like the, these are some fundamental, both cultural, I would say, but also just infrastructure, data gathering. There's a lot of implications here that if we see that this is the way forward, be it this year, even five years from now, the right time to have started. What's that? It's something about a tree, but I'm gonna use it in this case.
The right time to have started was five years ago, but the second best is right now. If this is the way that we see the winds blowing.
[00:39:44] Dr. Ahilan Sivaganesan: I totally agree. I think the infrastructure comment is so spot on, because you're right, this requires some serious ingredients. You need combined clinical and claims and financial data sources that are merged together so that you can actually follow these patients across their care journey, be able to understand the patient reported outcomes. Be able to understand the total longitudinal spend and be able to adjust for the kind of factors that we talked about earlier, that requires a real unique combining of data sets and a analytics capability built on top of that.
And you know, it's funny, like I, the TPAs are a classic example of an entity that technically has all the touch points. And they have the ingredients to do a lot of this, but in my estimation, they haven't really had the incentive or the mission to do that, right? Because their game is different. So there's an incredible opportunity for entities and groups that can actually help provide this kind of infrastructure as a software, as a service, so that every hospital doesn't have to build it from scratch. Because you know that this is gonna be a huge demand within the next couple of years.
And if you can make it an easy button and walk a hospital's, you know, down the path towards having this analytics capability, infrastructure to be able to send this information out to the self-funded employers and make your case, then you're gonna have access to huge swaths of patients. That you never had access to before 'cause you earned it.
[00:41:13] Stacey Richter: It's gonna be interesting to see who has war gamed that scenario is likely and start working to that end. And or who doubles down on, there's no way we can possibly do that. Look at us. It's not a requirement to have fiscal discipline, which, you know, obviously they're not saying that out loud, but, but any hospital that is fighting so hard against doing cost accounting, and every time you bring up a reason why they come up with 10 more problems.
[00:41:41] Dr. Ahilan Sivaganesan: I think it's so true. I wrote an essay a few months ago, which I, which was called, "If Health Systems are Yahoo, Then Who is Google?" And the whole idea was that Yahoo was like the darling of the internet economy years ago. And Google was this small upstart where you could get what you wanted really fast.
You could kind of like a value-based practice. You could get the outcomes you wanted. Very quickly and very efficiently, but Yahoo was laughing at Google and saying, these, these fool don't understand the business model. The whole idea is to keep the customer on the homepage so you can click the banner ads and keep making money. Sounds like fee-for-service, right?
They didn't understand how you could make money in a different model where you're just gonna get the customer to the destination most efficiently.
Well fast forward a few years and Google came up with Ad Words and Ad Sense, and they figured out a new way to monetize effectively getting the customer to the answer to the destination.
That's what I think is a reasonable analogy for this, which is that current health systems are like Yahoo. They're just trying to maximize billable events. Maximize fee-for-service, just like keeping the eyeballs on the homepage on Yahoo, Yahoo Mail, Yahoo Sports, Yahoo Finance, just so that you can click those banner ads and eke out as much revenue as possible.
But there is a Google moment happening right now, and it's just a matter of whether practice sees that opportunity, develops the infrastructure either on their own or using another entity and can actually get out ahead of this.
[00:43:08] Stacey Richter: And that's probably a great place to wrap this up.
Final Takeaways
[00:43:10] Stacey Richter: Dr. Ahilan Sivaganesan, is there anything I neglected to ask you that you want to talk about today or clarify?
[00:43:18] Dr. Ahilan Sivaganesan: Well, thanks for asking. I think maybe just the, point to clarify is that time-driven activity-based costing is totally doable by practices and health systems. We've published a lot of work, which gives you a roadmap for that.
And secondly, that quantifying value through things like an operative value index or an episodic value index is a totally practical thing once you've built the initial layer of time driven activity based costing.
And the practice that take this stuff seriously and are able to do this sort of work, are going to be light years ahead of the competition and you're gonna win in this future marketplace where we actually move towards competition around value.
[00:43:57] Stacey Richter: Dr. Siva otherwise known as Dr. Ahilan Sivaganesan, who I would highly recommend following on LinkedIn and everything that Dr. Siva just said we will certainly put in the show notes as usual. But thank you so much for being on Relentless Health Value today.
[00:44:14] Dr. Ahilan Sivaganesan: Thank you so much, Stacey.