Introduction
[00:00:00] Stacey Richter: Summer Short. Another case study for anyone trying to level up primary care that I am going to call, "How Margin Shoves Mission Off of the Bus". Today I am speaking with Stan Schwartz, MD.
To listen to this episode or read the show notes with mentioned links, visit the episode page.
Starting off here with a heads up. Hey, heads up. A bunch of you in the tribe who I find inspiring as all get out, and just the good kind of people who, yeah, you would be the type who would want something like this.
But in the newsletter that Relentless Health Value sends out on a weekly basis, the weekly email that you can for free subscribe to if you go to the website and click on the box that will pop up sooner or later, I am going to link to the so-called Guiding Principles Policy that Doug Geinzer and Amy Mecham from High Performance Providers put together.
I had referenced said policy in the show with Dr. Ben Schwartz about mission and margin. In that show, I called this document the more professional version of a no A-Holes policy. But anyway, I said it's something that Doug, Amy, and team ask anyone they have to do with to sign like literally sign. So yeah.
If you would like to get a copy of this personal integrity and “are you in healthcare for the right reasons” policy, please either check your inbox for the newsletter this week that you just got when this show went live. And find the link to download or sign up for the newsletter and I will include it again next week on Thursday.
After that, I am not gonna post this on the website or anything, so yeah, call it a limited time offer.
Emergency Room Spending Insights
[00:02:19] Stacey Richter: Let's do this summer short. Did you listen to the show with Al Lewis about ER, emergency room spending, being now around 6% of many plan sponsors total plan costs. If not, it's episode 464. Go back and take a listen when you have a moment.
So 6% of total plan sponsor costs can go to the ER these days, which is insane, mind you. But it got this breathtakingly high, one reason at least, because so many patients/members are getting what amounts to the most expensive primary care money can buy in the emergency department.
That right there was the big takeaway from the primary care/ER follow the dollar show I did this past spring, which is episode 467. Look at me, saving you time. You wait long enough and you'll get a one sentence summary of every single Relentless Health Value episode. So let me continue.
Advanced Primary Care Benefits
[00:03:14] Stacey Richter: Turns out advanced primary care, comprehensive primary care. Can and often will reduce emergency room admissions. Advanced primary care will also therefore reduce resulting hospital admissions since as many as a third of hospital admissions come through the emergency room. And this matters considering that around 50% of a lot of plan sponsors total costs go to health systems, 50%. Yeah right, one half.
At this point every time I hear a plan sponsor talking about health system spend, it's right around 50%.
[00:03:54] Stacey Richter: So, let's just say 50% of plan sponsored dollars are going to health systems and 6% go to ERs as just like the top of the funnel in a lot of cases. Let's put all these pieces together now, shall we? Let's just say we've established that advanced primary care saves lives, saves money, makes clinicians happier. Which is also true.
Listen to the Summer Short called "What Happens When Someone Tries to Un-transform an Advanced PCP Practice?” Let's just say from a quadruple aim perspective, advanced primary care makes all the sense in the world.
Now I mean advanced primary care, we are not talking about transactional primary care. I'm talking good, comprehensive, longitudinal data-driven team-based with behavioral health and navigation. We’re managing health, not just symptoms. We’ve just established it's good for patients, it's good for members, affordability, just all the things, clinicians.
So you’d think that everyone in the healthcare industry, the medical industrial complex, if I wanna be snarky, should really have, if they're interested in the quadruple aim, they should really have a vested interest in promoting good advanced primary care.
Challenges in Healthcare Systems
[00:05:01] Stacey Richter: Well, let's open the door and invite the real world in, shall we?
I want to mention episode 391. This is the episode where Dr. Scott Conard for the first time ever talked about his, he calls it his Pelican Brief moment when the local health system bought his advanced primary care practice. It is a really compelling show. It is a tale of how healthcare in this country actually works.
And let me tell you, I have people with very big jobs who have come up to me. They've sent me emails, they've come up to me at conferences, they pull me aside and they say that this show, the one with Dr. Scott Conard, it really got to them. It really affected them and how they think, link in the show notes to all of the shows, etc, that I am mentioning.
So right this Summer Short today is another such tale of perverse incentives and health system administrators doing stuff that is clearly endorsed and encouraged by their boards and leadership, but smells very, very bad when it hits the open air I would say. I mean, I think anyway, but you know, nihilism is just not my brand.
Dr. Stan Schwartz's Journey
[00:06:09] Stacey Richter: So let me introduce you to a real OG in the healthcare industry, Dr. Stan Schwartz. I know you are used to spoilers in these introductions, but I'm gonna throw you for a loop today. No spoilers for you, except to say that this story isn't rainbows and unicorns, but you probably guessed that already.
It's another example of, and now, okay, fine. I'll give you one little, I'll call it a trailer, and I'm quoting Dr. Schwartz here. But he says his experience was an example of a major variation on fee for service that occurred within a fee for service universe. And the problem was one leg was going one direction and the body wants it to go another direction. And Dr. Schwartz said, That is not a sustainable endeavor.
Yep. Not the first time that we have heard this. These days, Dr. Stan Schwartz is a co-founder over at ZERO.Health. ZERO gets members access to high quality providers for $0 out of pocket, leveraging bundled payments and direct contracting.
Apropos nothing except I was intrigued and just thought of something that Dr. Schwartz told me. He says, “Members rarely have an incentive to opt out of surgery. Because surgery is so often cheaper than conservative care.” That struck me. So yeah, points of ponder. ZERO, by the way, generously offered financial support to Relentless Health Value. And for that, I and the entire team over here is extremely grateful.
It was such an honor to have Dr. Schwartz on the show, and especially talking about an experience that is so instructive, I think, for everybody listening from plan sponsors to hospital executives, to clinicians. Just everybody. This is another case study with a lot of learnings.
This Summer Short, as I just said, is sponsored by ZERO.Health with a small assist from Aventria Health Group.
My name is Stacey Richter.
Dr. Stan Schwartz, welcome to Relentless Health Value.
[00:07:55] Dr. Stan Schwartz: Great to be here.
[00:07:56] Stacey Richter: I wanna ask you to tell me a little bit about yourself Dr. Schwartz. And I do actually have some motivation a scheme here because I was talking to Dr. Scott Conard, who many may remember was on the podcast a couple of times.
But Dr. Conard was telling me that you actually have a similar story to his, the one he related that he calls his, “Pelican Brief moment”. What happened there?
Comprehensive Primary Care Initiative
[00:08:23] Dr. Stan Schwartz: Let me give you a real quick background just to understand how we got to that point. Wound up coming to Oklahoma to practice because it was a wonderful opportunity with very, very few doctors. There was only one doctor within a 100 mile radius that was in the same specialty I was.
Fast forward to the year 2004, I was asked by one of the largest health systems in Oklahoma to become medical director for their multispecialty clinic, which was about 300 or so providers at that time. We were also in the process in the late aughts at about 2009 in the city of Tulsa, setting up a health information exchange, which was really a landmark technology that was, I think, far advanced from what any other states had.
Medicare came along with their centers for Medicare, Medicaid Innovation. And they had proposed a project called the Comprehensive Primary Care Initiative, and this was a landmark project to really help Medicare demonstrate that if you did something, you could get something back. Pay a little more here. Save a little more there.
The project gave physicians, primary care physicians, additional resources, mainly in the, in terms of money, but some also knowledge resources to make advanced primary care. Primary care where you had care guidance nurses, you had risk stratification of your patients. All the things you know that Scott knows very well and has talked about.
So our little area in northeast Oklahoma applied and we were competing against states. We were one of only two of the organizations that applied that weren't complete states, and we were competing against Colorado, Oregon, New York, you know, big tickets, just a little us.
But we won because we had a health information exchange and we had brought together a consortium of hospitals and doctors who are like-minded and tied them together with the health information exchange and brought, I think, was it well more organized structure to it that really promised them success.
[00:10:30] Stacey Richter: Let me just give kind of a recap of what I'm understanding the situation was thus far.
So this is, as you said, this is in the early aughts. You were a medical director in Oklahoma. 300 docs. You were thinking to yourself, maybe we should do advanced primary care. This would be amazing to do because as has been said, we just have done a through line show on how if you do primary care, well you can reduce ER visits or at at a minimum, there's a correlation between good primary care and reduced ER visits.
So not news. Apparently 25 years ago people had that same thought. So CMMI throws out an opportunity where if you can do advanced primary care, they gave the potential to be able to demonstrate that there are in fact downstream savings.
There was a big competition and because your little nook of northeastern Oklahoma had an HIE and had maybe some synergies and some practices going on there that were for the time potentially advanced, you actually beat big states. So that's where we're at in this story. Okay. So you get the CMMI award, then what?
Program Success and Challenges
[00:11:46] Dr. Stan Schwartz: Well, we put it into place and over the course of the program, it actually worked. I mean, the primary care docs loved it.
They would have a registered nurse in the office to work with patients, teach patients afterwards. Call people up. You know, if somebody left the hospital, they were immediately contacted. Follow up was all arranged. There was never that dead zone between when they left the hospital and what they got to see their doctor.
Everything was facilitated. We had behavioral health in the offices, which is really important for primary care because so many problems are either based on behavioral health issues, depression, anxiety, or chronic diseases that are aggravated by depression, for example. And this project tooted along, the patients loved it. The doctors loved it because all of a sudden they had things they didn't have before.
[00:12:34] Stacey Richter: It sounds like clinicians were very happy. They're like, whoa, this feels like why I went to medical school or nursing school.
Like I am fulfilling my purpose here. This feels very good. I can see patients responding to the structure of what we are doing here were patient outcomes, Dr. Conard said sometimes it takes a while up to two years actually for there to be financial rewards and health improvement awards. But at that time were you also seeing whatever they were measuring?
Like what? What did good look like?
[00:13:07] Dr. Stan Schwartz: We saved money. We reduced emergency room visits and hospitalizations to a certain degree. But overall the program was successful as a beginning demonstration program and some of the doctors got really nice rewards, you know, tens of thousands of dollars based on the quality of the service they provided.
So the program was successful and then it was reborn in a second version of it, we wound up, Oklahoma really was at the head of the class when the program ended.
The program wasn't continued in the health system. And the one thing I remember, and I think that's what Scott was alluding to when he spoke to you is I was at a meeting, an executive meeting at the hospital and we presented what the program was all about and how we were going to reduce visits to the emergency room, keep people out of the hospital.
And as I was sitting down, there was a conversation behind me between the health system, CEO, and his consultant who was his consigliere and his consigliere whispered in his ear, why would we want to keep people out of the emergency room? Because that's where people got to the hospital. Third of the hospital admissions came through the emergency room.
It was a money maker for the hospital. So just from a financially competitive standpoint, it didn't make very much sense for the health system to continue the program. I'm not demonizing the health system for this. You know, it's a very competitive market here in Tulsa and keeping people in the hospital, being sure the people that the clinic doctors were taking care of wound up in our hospital was very important to the bottom line.
But it was an example of the conflict, the tension between things that save money and things that generate money in the health system economy.
[00:14:52] Stacey Richter: Just to underline a couple of points that you made there, which I think is just a stunning, just another example of something that we've heard repeatedly on this show and if anyone is fascinated by the story that Dr. Schwartz just related, definitely do go back and listen to the episode with Dr. Scott Conard. It's episode 391. We'll link to it in the show notes as usual.
But in that earlier show, Dr. Scott Conard tells a similar story. The hospital administrator said of the advanced primary care, he said to Dr. Conard, “Look, we looked at the numbers and we realized just how many hospital admissions your group prevented. We gotta fill up the beds in our hospital. So we had to shut you down so that our beds in our hospital could be filled.”
We also had Dr. John Lee on, if I'm just thinking about this. The story that Dr. Lee told was of a hospital that chose to shut down a very successful program that prevented heart failure patients from getting readmitted. And you know, again, the story was some of these heart failure readmissions are actually very profitable. And so, you know, we want the readmission.
There's just so many examples here.
[00:16:07] Dr. Stan Schwartz: Like I said, I don't demonize any health system for doing what they need to do to survive. It's the way our system is put together. It doesn't take a genius to look at a system like that and realize that isn't gonna work.
It's a fox and henhouse problem.
[00:16:22] Stacey Richter: It is very, very important, I think, to break things down to the fundamental levels that we're talking about right here, and not get confused by marketing.
[00:16:31] Dr. Stan Schwartz: And just going back to the comprehensive primary care initiative, it was a great program, but it was a major variation on fee for service that occurred within a fee for service universe.
And the problem was it wound up being a situation where one leg was going in one direction and the body wanted to go in another direction, and that's not a sustainable endeavor.
[00:16:52] Stacey Richter: I love how you put that. And the body's a lot heavier than legs, I'm guessing.
Dr. Stan Schwartz, is there anything that you want to sum up with or mention in the context of that experience.
Employer-Sponsored Healthcare
[00:17:06] Dr. Stan Schwartz: In the context of that experience, what I'd learned is that you've got to make changes in how healthcare is financed and you've got to make the change agent people who pay for things, not for people who receive payment.
That's why after I supposedly retired, I got really interested in employer sponsored healthcare because although employer sponsored healthcare doesn't spend the most amount of money in the United States, employers cover the most number of people in the United States.
And if there's one place, change can happen and it can happen quickly. It's in employer sponsored health plans. They are nimble. They cover people who are not necessarily vulnerable people. They cover commercially insured patients are generally the most “desirable patients” because the payment is the greatest.
So they're very attractive to providers. And providers really wanna follow commercially insured populations. So we realized that here's the place you can really make a difference.
And don't look at Blue Cross. Don't look at United. Don't look at health plans. Don't look at health systems. Look at employer sponsored plans because if you get enough employers together, they really make a difference. Health systems, hospitals have to have commercial populations.
[00:18:23] Stacey Richter: So recapping what you just said there, and I don't think any plan sponsor listening should forget this, that the profitable readmissions are the commercial patients.
And if you think back to what I was just talking about, about how, why do we wanna eliminate the profitable heart failure readmissions, like that's who we're talking about right now, your members.
It's a buyer beware scenario, and as we've had Andreas Mang talk about as we've had Claire Brockbank, Cora Opsahl, there's been any number of guests on the podcast who have also echoed exactly what you just said, collective action. 60% I think, of Americans are commercially insured. These are the attractive, these are the desirable patients, just from a financial standpoint, for better, for worse.
So there is power there if anyone chooses to embrace it.
Conclusion and Contact Information
[00:19:10] Stacey Richter: Dr. Stan Schwartz if someone is interested in learning more about ZERO, where would you direct them?
[00:19:15] Dr. Stan Schwartz: I'm on LinkedIn, Stanley Schwartz, MD. My co-founder Jim Millaway is on LinkedIn, James G. Millway. Or you can go to our website, ZERO.Health, or you can send us an email at info@zero.health and I assure you a real human will answer your questions.
[00:19:33] Stacey Richter: Dr. Stan Schwartz, thank you so much for being on Relentless Health Value today.
[00:19:38] Dr. Stan Schwartz: Thank you Stacey.
[00:19:40] Dr. Scott Conard: Hi, this is Scott Conard. One of the highlights of my week is when Relentless Health Value comes out. I love to listen and then to think, who can I send this to, that it would bless them and tremendously help them think through and solve a problem they're dealing with.
It's, again, one of the highlights of my week, and I hope that you'll join me in appreciating and sharing Relentless Health Value.