EP460: Rushika Fernandopulle, MD’s Theory of Change Starts With Status Quo Healthcare

[00:00:00] Episode 460, Rushika Fernandopulle, MDs Theory of Change Starts With Status Quo Healthcare. Today I speak with Dr. Rushika Fernandopulle.

[00:00:18] American healthcare entrepreneurs and executives you want to know talking relentlessly seeking value.

[00:00:27] This is one of those episodes where we consider top line strategic imperatives and key drivers. I thought there was no better person to do this with than Dr. Rushika Fernandopulle.

[00:00:39] who, in case you are unaware, was the founder of Iora Health, an advanced primary care group that was sold to One Medical and then to Amazon.

[00:00:47] Listen to the show with Brian Klepper entitled, Why is private equity willing to pay $55,000 per patient? For more on that dynamic, it is not what we talk about today.

[00:00:57] In fact, we talk about almost the opposite of this $55,000 per patient today.

[00:01:02] This is a conversation about actually getting patients great care, great health, great experiences at an affordable price.

[00:01:10] We talk about how to actually get Americans care that keeps them healthy.

[00:01:14] And the reason I set my sights on getting Dr. Fernandopulle on the pod to talk about this is something I heard Dr. Kenny Cole, who I interviewed in episode 431,

[00:01:24] but something that Dr. Kenny Cole told me that Dr. Fernandopulle said during a conversation that the two of them had, the gist of it is this.

[00:01:32] There's a lot of innovative stuff that's going on at this point kind of around the edges.

[00:01:37] But if we want to impact the care of 99 percent of Americans, we have to impact those in the mix who are caring or paying for the care that 99 percent of Americans are currently getting.

[00:01:45] And that is the status quo cohort of hospitals and carriers.

[00:01:50] This is exactly also why I'm a huge cheerleader of anybody who works at a big jumbo anybody who chooses to recognize the downstream impact of their company and of their own work and tries to tweak said impact.

[00:02:02] Because as I said in that personal charter show at the end of 2024, when there's millions and millions of patients or members on the spreadsheet, switching up any given vector, what, 0.05 percent will have a macro impact.

[00:02:16] Dr. Ruchika Fernandopulle says if you're going to change anything, you've got to have a theory of change.

[00:02:23] He has a four prong theory that I'm going to run through right now.

[00:02:27] And because I can't leave well enough alone, I plucked one more prong from our conversation and stuck it on the end.

[00:02:32] So this show covers a five prong theory of change.

[00:02:36] Here's the sum up of these five prongs.

[00:02:38] Prong one, new payment models.

[00:02:40] We have to have payment redesign if we want actual real change to happen, such as getting advanced primary care for all Americans.

[00:02:48] Small detail of note to actually get real payment design.

[00:02:51] My eyebrows went up when I heard Dr. Fernandopulle say the same thing I had just heard Lisa Weatherby from Trinsic say at a recent Think conference.

[00:03:00] And it's also the same thing that Cora Opsell and Claire Brockbank from 32BJ said.

[00:03:06] And when I say they all said this, I mean, they all said this in a formidable way.

[00:03:11] They said you walk into the door of the carrier, whether you're a plan sponsor or you are a clinical organization,

[00:03:17] you walk into the door of the carrier with your own paper, you bring your own contract and you start from your own contract.

[00:03:24] Do not take theirs and try to hack away at it.

[00:03:26] This will not result in changing the payment model.

[00:03:28] And unless the payment model is changed, it's really hard.

[00:03:31] It makes it much more difficult to do the rest.

[00:03:34] Prong two, change the process and innovate a new clinical model.

[00:03:38] It's all about teams, real teams, navigators, behavioral health, social work on that team, physical therapists, nutrition, population health inside of the practice and all that data.

[00:03:49] It definitely takes a village.

[00:03:50] Care has to be proactive, not reactive.

[00:03:53] Can't wait for somebody to show up when they are already in an acute situation because then we cannot prevent the acute situation.

[00:04:00] Of course, all of this is easier said than done.

[00:04:02] But thinking hard about all of this is the second prong in Dr. Fernandopulle's theory of change.

[00:04:07] Here's prong three, a different set of technology tools that are relational, not transactional.

[00:04:14] Dr. Scott Kennard is going to talk about this also in an upcoming show.

[00:04:17] The whole imperative to be relational and aligning infrastructure and tech and how data is used around that relationship.

[00:04:25] Dr. Tom Lee talked about that also in a recent show.

[00:04:28] All of these links are in the show notes, by the way.

[00:04:30] Prong four, change the culture.

[00:04:33] Doctors have to be on board and want to work on a team.

[00:04:37] And then that team has to be competent and take ownership and accountability.

[00:04:41] There's so much cynicism and rightfully so where doctors have been told, you know, go ahead and leave your shift.

[00:04:46] There's a team that's going to help out and keep patients in good shape.

[00:04:49] And so often that has turned out to be a false promise.

[00:04:52] And so team-based care and working at the top of your license basically became synonyms for cutting costs to maximize profits.

[00:04:59] So, yeah, we have to reset on that in such a way that doctors really want to be part of the change.

[00:05:05] Prong five.

[00:05:06] Again, I'm adding this one to the end.

[00:05:08] This prong five gets discussed, but it kind of came out organically.

[00:05:12] It wasn't part of Rashika's original list.

[00:05:15] Make collective action, collaboration happen.

[00:05:18] That's prong five.

[00:05:19] Think about creating long-term partnerships.

[00:05:21] If there's a giant beast of a market power in any given market, ganging up together is a strategy with a lot of historical success to combat that giant beast of a market power.

[00:05:32] To this end, and I've said this several times in several recent podcasts, including the Thanksgiving show, but in that Trilliant report and also in a recent advisory board podcast, as well as a bunch of other articles I've read, I keep hearing over and over and over again that organizations who are good at forming payer-provider partnerships and or plan sponsor provider partnerships and or plan sponsors ganging up together and or other types of partnerships have a very big competitive advantage.

[00:06:02] Over those who are fighting tooth and nail with each other or trying to do stuff all by their lonesome.

[00:06:08] So that's prong five.

[00:06:09] And with that, here's the conversation with Dr. Rashika Fernandrupal.

[00:06:12] My name is Stacey Richter, and this podcast is sponsored by Aventria Health Group.

[00:06:17] Dr. Rashika Fernandrupal, welcome to Relentless Health Value.

[00:06:20] Thank you.

[00:06:21] It's so great to be here.

[00:06:21] It is such a pleasure and an honor to have you here today.

[00:06:25] So before we kick into our conversation, which I'm super looking forward to having with you, do you want to just give the briefest of backgrounds?

[00:06:31] I'm sure a lot of our listeners are incredibly familiar with your work, but do you want to just give a little bit of background on how you came to be where you are today?

[00:06:39] Sure.

[00:06:39] So I'm a primary care doctor.

[00:06:41] And about 20 years ago, I realized that the model we have to deliver care is not just a little bad, but it's awful.

[00:06:49] That's not a secret, by the way.

[00:06:50] It's an awful experience for the patient.

[00:06:52] It's an awful experience for the doctor.

[00:06:54] Our outcomes are embarrassing.

[00:06:55] The costs are too high, etc.

[00:06:57] My sort of crazy insight was maybe it's rotten to the core and we have to start over.

[00:07:01] So again, 20 years ago, set out on this journey.

[00:07:04] So what if we started over, rebuild healthcare from the bottom up and the right place to start with primary care?

[00:07:09] And what if you had a different payment model and a different process and use different technology and build a different culture?

[00:07:15] So that set out on a 20-year journey, started with a little primary care practice in Arlington, Massachusetts.

[00:07:22] Eventually started working with some employers, got some publicity, were able to raise some venture capital money.

[00:07:27] Starting in 2011, built a company called Iora Health.

[00:07:31] We ended up selling to One Medical and then we sold the combined company to Amazon.

[00:07:35] And I decided at the end of that, I didn't really want to work for Amazon.

[00:07:38] And so I left and I've been taking a little time off since then.

[00:07:42] So speaking of the background and experience that you have building a company like Iora, advanced primary care, helping patients in a very deep way.

[00:07:55] I understand, a little bird told me, that you were having a conversation with Dr. Kenny Cole from Ochsner.

[00:08:02] Do you want to recap what happened in that conversation with Dr. Kenny Cole?

[00:08:06] Yeah, so Kenny's a good friend. We've known each other for many, many years.

[00:08:09] And there's always been a tension, I think, between what I call the disruptors and the existing healthcare system.

[00:08:16] And the conversation was, you know, people like us at Iora, and I would add other folks,

[00:08:21] Oak Street and GenMed and One Medical, who are disruptors.

[00:08:24] They decided outside of the healthcare system, exactly the healthcare system,

[00:08:28] let's actually build new models and break what people think are the rules.

[00:08:31] And we've been able to show much better outcomes and lower costs.

[00:08:34] But the problem is that you add up the number of people that we all serve,

[00:08:38] you're lucky to get a single, a very low single-digit percentage of the U.S. population.

[00:08:44] And the conversation with Kearney is, this was almost certainly the right first step to show that it can be done.

[00:08:52] But if we really want to change healthcare in this country,

[00:08:55] we have to figure out a way for the big guys,

[00:08:58] the health systems who have the 99% of the patients to be able to, you know, do what we did, learn from us and actually do it.

[00:09:06] And I think that's the next challenge for the industry is how do we go from this small number of disruptors

[00:09:11] to sort of really taking this to scale?

[00:09:15] And I think that route has to go through the existing delivery model.

[00:09:18] You have a bunch of disruptors.

[00:09:20] If you add up the total impact, I mean, not on a per patient basis,

[00:09:25] because you may have had and probably did have a lot of impact on individual lives there.

[00:09:30] But if you're thinking about this relative to the entire United States of America,

[00:09:35] the number of patients impacted is low single digits, as you said.

[00:09:38] So the point that you're making is, okay,

[00:09:41] consider the disruptors maybe a bit of a skunkworks, if you will,

[00:09:44] or a bit of a proof of concept.

[00:09:46] If we want to legitimately, for real, in the biggest possible way,

[00:09:54] have the biggest possible impact, somehow or another,

[00:09:56] we need to figure out how to gain adoption on a much larger scale

[00:10:02] of some of the ideas that have been operationalized and proven to actually make a difference.

[00:10:10] Like the rest of the industry has to pick up what we're putting down here.

[00:10:14] Did I get that right?

[00:10:16] Okay. So easy enough.

[00:10:21] We chuckle.

[00:10:22] But what do you think the key challenges are there in?

[00:10:28] Right? Like if you just had, and I can think of like 90 off the top of my head.

[00:10:31] So I guess I'm asking you to prioritize.

[00:10:33] A bunch of things.

[00:10:34] So the point one is, we need to have new payment models.

[00:10:38] So I think one of the lessons we've learned is that trying to innovate the care model

[00:10:42] in the absence of payment redesign is a waste of time.

[00:10:46] There was this whole effort called Medical Homes that happened 10-ish years ago,

[00:10:50] where they sort of had these new models and gave people grants,

[00:10:55] but they didn't change the fundamental payment model.

[00:10:57] And people were still paid to keep people sick, to be quite honest.

[00:11:00] So if you don't change that, the second the grant runs out, the champion leaves,

[00:11:04] people stop paying attention.

[00:11:05] It goes back to the way it was.

[00:11:06] So point one is you have to have different payment models.

[00:11:09] What's interesting is we decided that that was an active state, but not a passive state.

[00:11:14] So in every other industry in the world, I think,

[00:11:17] the people who deliver the good or service decide how they want to get paid.

[00:11:21] And they tell the buyers, do you want to buy it this way?

[00:11:23] You know, if I open a restaurant, I say, I'm selling a solid card.

[00:11:27] You're like, no, I want all you can eat.

[00:11:28] You're like, that's not what we do.

[00:11:29] Go somewhere else if you want a buffet.

[00:11:31] But in healthcare, the payers sort of say, this is how we're going to pay you.

[00:11:34] And we say, thank you, sir.

[00:11:35] May I have another, right?

[00:11:36] But if a little guy like us could go to payers and say, look,

[00:11:40] I don't want to get paid fee for service because it won't let me do the job that I took an oath to do.

[00:11:45] So I'm not going to take it.

[00:11:47] This is how we need to get paid.

[00:11:48] When and if you're ready to pay us this way, we're happy to work with you.

[00:11:51] If we could do this, imagine if a big health system had the guts or the courage to do that.

[00:11:55] Again, I think they don't.

[00:11:56] The point one is you have to change the payment model.

[00:11:59] So let me just interrupt right there.

[00:12:01] And then we'll move on to number two.

[00:12:02] It's really interesting what you're saying.

[00:12:04] And I'm reminded, I was at a conference myself the other day, Think360.

[00:12:11] And I'm reminded of this because I was listening to Lisa Weatherby from,

[00:12:17] she's the CEO over at Trinsic, which is an ACO,

[00:12:22] similarly to the show with Claire Brockbanks, where 32BJ is like, look, have your own paper.

[00:12:28] You walk in the door to a carrier and you get them to sign your contract.

[00:12:33] You don't take theirs and then try to edit it.

[00:12:35] Lisa Weatherby, she was actually saying the same thing from the standpoint of an ACO.

[00:12:39] She's like, I walk in the door with my own contract.

[00:12:42] And I tell them if they want to work with me, they sign my contract, as opposed to,

[00:12:46] again, the other way around, which I think is exactly what you're saying and kind of floored

[00:12:50] me a little bit, I have to say.

[00:12:53] And like I said, it's how virtually every other business in the world works.

[00:12:56] I don't know why we've gotten this place in healthcare where

[00:12:58] we as the people who actually deliver the service, that providers, you know,

[00:13:03] just take whatever we're given.

[00:13:05] Yeah, because I could see absolutely how exactly the same rules apply as the employers,

[00:13:12] you know, the plan sponsors are saying, which is you take somebody else's contract.

[00:13:17] Now, all of a sudden, you are playing by somebody else's rules that may actually not be good

[00:13:23] for either party because they don't understand your business.

[00:13:26] But this is really important.

[00:13:28] If you don't get the payment, you will not be able to do any of the rest of it.

[00:13:31] Point two is you have to change the process that what we and other people who are disruptors learned

[00:13:38] is that if your goal is not, remember, the goal of the current fee-for-service system

[00:13:42] is do more stuff to people.

[00:13:44] And in some ways, you perversely don't want to make them better because you get paid less.

[00:13:48] And there are all sorts of examples of people who create these great programs to keep people

[00:13:52] out of the hospital in the ER and they get fired because they lose revenue and income.

[00:13:56] But if you still all of a sudden say, no, our job is to actually improve people's health

[00:13:59] and keep them out of trouble, you end up designing and implementing a very different model.

[00:14:04] So the biggest fool's errand that a lot of these health systems do is they think that

[00:14:09] they need to implement both models from the same place at the same time.

[00:14:13] So the same poor doctor has to say, well, for these patients over here, I'm going to operate

[00:14:18] under my fee-for-service mindset and churn this stuff.

[00:14:21] And for these people, I've got some new payment and I want to do it differently.

[00:14:26] And somehow I'm going to color code the charts or put a flag on the Epic or something.

[00:14:30] And it's an unholy mess, unholy mess.

[00:14:32] I think one of the conclusions we and other people came to is if you want to do growth,

[00:14:36] it's okay to do both things at the same time.

[00:14:39] The reality is the world is going to be a hybrid for a while, but don't do it in the same place.

[00:14:43] Create two different business lines, create two different processes, get different people

[00:14:47] doing it.

[00:14:48] And I think that's really important.

[00:14:49] So let me react to that.

[00:14:51] I had Dr. Bo Raymond, also interestingly from Oshner, works with Dr. Kenny Cole on the podcast

[00:14:57] several months ago now.

[00:15:00] And one of the things that he said is, first of all, he's like, I'm done with the two canoes

[00:15:04] metaphor.

[00:15:05] Nope.

[00:15:05] Because like, this is, as you just said, it's not like we're going to have one payment model

[00:15:11] anytime soon.

[00:15:12] He's like, I liken it to a catamaran and you have to figure out how to drive your catamaran

[00:15:16] where you've got fee-for-service as one of the skids or whatever you call them and then

[00:15:20] value-based as the other.

[00:15:21] Now, what Bo Raymond said was you actually probably can put everybody in the same setting

[00:15:27] of care because if you operationalize it right, giving good care also can be well reimbursed

[00:15:34] in a fee-for-service way.

[00:15:36] It's just you get reimbursed for doing the good things and following up in meaningful ways

[00:15:40] as opposed to letting the same heart failure patient get readmitted to the ER once a month,

[00:15:45] which is, yeah.

[00:15:46] Yeah.

[00:15:46] So one of the interesting things, there's actually data on this about you don't need to have all

[00:15:50] of your patients in value-based things.

[00:15:52] So how do you get sort of system-wide transformation?

[00:15:55] And there's a threshold that, you know, everything I've read is at about 60%, not 100, not 90,

[00:16:01] not even 80, but around 60%.

[00:16:03] So when 60-ish percent of your people are in this sort of value-based payment,

[00:16:07] then Otto Bennett makes sense to be able to treat everyone that way.

[00:16:10] So by the way, this is the correlation.

[00:16:12] What everyone else is doing is that the mantra is we should slowly move our way from this old

[00:16:17] world to the new world.

[00:16:18] And maybe that's exactly wrong.

[00:16:21] Maybe the right thing is you've got to move as fast as you can to cross that threshold.

[00:16:26] So you want to maybe accelerate through this transition and say, we're going to get there.

[00:16:31] And I think of very few sort of progressive systems that the inner mountains of the world,

[00:16:35] the oceans of the world seem to believe that.

[00:16:38] So basically, as fast as you can get to 60% because then the math works out from a financial

[00:16:42] perspective.

[00:16:42] Then the math starts working out.

[00:16:43] Yes.

[00:16:44] What's your advice for how to do that?

[00:16:47] And then I'm going to go back to maybe some of the operational stuff that you were talking

[00:16:50] about there about changing the process.

[00:16:52] But just to continue on this thread for a sec, I could see how if you are necessary for

[00:16:58] network adequacy or you had a big enough brand that you had to be a network, right?

[00:17:04] Now you got some power relative to negotiating.

[00:17:07] But I hear over and over again from smaller entities who are trying to do the right thing

[00:17:13] where it's almost like the carriers have a scorecard and they see who's actually providing

[00:17:19] good enough care that start ratings are met and cost of care is low.

[00:17:24] They see who's doing that.

[00:17:25] When those entities go into the carrier and say, all right, pay me value-based.

[00:17:31] They're like, oh, no, no, no, nothing available.

[00:17:33] Or they say, well, send a self-addressed stamped envelope to some PO box because that's how

[00:17:39] our process works.

[00:17:40] Meanwhile, the physician organizations who are doing a terrible job, somehow or another,

[00:17:45] they get value-based opportunities because it's seen as a way to kind of get them to

[00:17:49] level up their care.

[00:17:50] So it's like the carriers have this kind of thing going on where they're using value-based

[00:17:54] care incentives to ensure that they get their star ratings met.

[00:17:57] You know, I think that the secret ingredient to all of this that people don't pay enough

[00:18:02] attention to is the consumer.

[00:18:04] And I think if I were one of these folks, I would be, you know, the general secret about

[00:18:09] health plans is no one cares what the name is on the card sitting in your wallet.

[00:18:15] And people care a ton about who their doctor is and where they're getting care because they've

[00:18:20] met you and then you've saved their life.

[00:18:22] Again, no one gives a wit about who their health plan is.

[00:18:25] And the key is to leverage that if I were a provider group.

[00:18:29] And there are two ways to do that.

[00:18:30] So on the commercial side, it's going upstream to the employers.

[00:18:34] The health plans on the employer side are by and large working with self-insured employers

[00:18:39] for a variety of reasons.

[00:18:40] And they don't care about lowering health care costs because they get a percentage off the

[00:18:45] top.

[00:18:46] And a percentage of a bigger number is a bigger number.

[00:18:48] So despite the rhetoric, they don't care.

[00:18:50] So talking to the health plan about lowering health care costs is a waste of your time.

[00:18:53] So we would go straight around and around them, go straight to the employer, Boeing Company,

[00:18:58] Dartmouth College Employees, the Union Trust.

[00:19:00] You mentioned 32BJA and say like, look, they work for you, not the other way around.

[00:19:05] Let's do this together.

[00:19:06] And by the way, we had a thing where at Dartmouth, where their carrier was, we don't like working

[00:19:11] with these people because it's disruptive.

[00:19:12] And they were like, wait a second.

[00:19:14] We didn't ask what you thought.

[00:19:15] If you don't like it, we'll find someone else to handle our account.

[00:19:19] You know, and you work for us, not the other way around.

[00:19:22] Too many employers, by the way, don't understand that, but they work for you that's spending

[00:19:25] your money.

[00:19:27] So for one, it's on the employers that go around.

[00:19:29] On the Medicare side, you know, you can go direct to the consumer.

[00:19:33] So find some plans who are willing to give you risk and willing to do this.

[00:19:38] And then tell your patients switch.

[00:19:41] You know, you can vote with your fee.

[00:19:43] This is who we work with.

[00:19:44] If you want to stay with us, you work with these plans because they're willing to pay us

[00:19:47] the right way so we can give them the right sort of care with you.

[00:19:49] So it really is about the go upstream of people who are not with the program.

[00:19:55] Which is kind of reinforcing, actually, the point that you made at the top of this conversation

[00:19:59] about be proactive.

[00:20:00] Don't be reactive.

[00:20:02] Succeeding here will require thinking in a different way, probably.

[00:20:07] Not to say it's easy at all, because there's some very creative people who have not been

[00:20:11] successful trying to figure out how to do this depending on the area of the country and

[00:20:15] kind of the power dynamics there.

[00:20:17] The only thing I know for sure, Stacey, is that if we keep doing what we're doing, we're

[00:20:20] going to hit the iceberg.

[00:20:21] We're in the Titanic hitting for the iceberg.

[00:20:23] So being afraid to turn left or right is almost irrelevant.

[00:20:26] Lisa got my hands on the whistle.

[00:20:27] Albert Einstein, the short sign of insanity, is doing the same thing over and over again,

[00:20:31] expecting different results.

[00:20:33] This current model doesn't work for people.

[00:20:35] Doesn't work for patients.

[00:20:36] Doesn't work for doctors.

[00:20:37] Doesn't work for the health system.

[00:20:39] Doesn't work for the finances.

[00:20:40] So we need to be doing different things.

[00:20:43] And if one of these many middlemen that we have in healthcare don't like it, you know,

[00:20:48] such is life.

[00:20:49] So you said your second thing was change the process.

[00:20:53] Obviously, a lot of this is intertwined with how are we getting paid and for what?

[00:20:59] But what can you dig into the change the process a little bit more?

[00:21:03] You said two care settings is probably optimal.

[00:21:05] But what do you mean?

[00:21:06] Yeah.

[00:21:06] So again, a few lessons that all of us have done this, you know, and trying to optimize

[00:21:11] on this sort of action taking care population.

[00:21:14] For one is team-based care.

[00:21:17] So this model of either the doctor and the doctor tells you what to do.

[00:21:21] I often joke in my practice before I or applications would come to me, I'd have seven

[00:21:25] minutes.

[00:21:26] I said, you, Stacey, should eat less, exercise more, take your medicines.

[00:21:29] Good luck.

[00:21:30] I'll see you in three months.

[00:21:31] And by the way, I get paid for telling you what to do.

[00:21:33] I don't actually give a whip about whether you do it or not.

[00:21:36] Actually, I sort of hope you don't do it so you'll come back and pay me again.

[00:21:40] You have to be as cynical as, yeah.

[00:21:41] In the IR model, I get paid for telling you what to do.

[00:21:44] I get paid for you doing it.

[00:21:45] But you're actually taking your antihypertensive, not getting a stroke, not getting down for

[00:21:48] the hospital.

[00:21:49] And so that's why you realize you need these other human beings.

[00:21:52] We call them health coaches.

[00:21:53] People call them care navigators or a whole lot of names work.

[00:21:57] But almost everyone who does this seriously realizes you need human beings who are not

[00:22:00] the doctor or picked for empathy, whose job it is to partner with the patient to make sure

[00:22:04] they can execute on the plan.

[00:22:06] And then you end up needing integrated behavioral health because that's a barrier.

[00:22:09] You need social work if people are low income.

[00:22:11] You need physical therapists to teach people how to move.

[00:22:14] You need nutrition people.

[00:22:15] The whole, it takes a village.

[00:22:17] And so you need team-based care.

[00:22:18] Your number two is you need to be proactive and not just reactive.

[00:22:21] Think about in typical fee-for-service practice, you sit in your office, you wait for people

[00:22:25] to come in.

[00:22:26] If you are on the hook for a population, that's the stupidest thing to do.

[00:22:28] The person who is getting into trouble isn't the guy coming in today.

[00:22:31] It's a person sitting on his couch eating Doritos, not taking his meds.

[00:22:34] So you need to know who they are.

[00:22:35] You need to reach out to them.

[00:22:36] You need to do that.

[00:22:37] You need to really just think very differently about sort of helping people navigate to the

[00:22:41] right set of specialists and co-manage them in the hospital.

[00:22:45] Again, it's not a little different.

[00:22:46] It's completely different.

[00:22:47] You need to embed the population management within the practice, not some other person sitting

[00:22:51] in Idaho during the disease and case management.

[00:22:54] It's your job.

[00:22:55] You know the patient.

[00:22:55] If it's not your job to manage the diabetes, what are you doing?

[00:22:59] This is why you have to end up evolving a very different clinical model.

[00:23:04] So you said team-based care with integrated behavioral health, social work, etc.

[00:23:10] Nutritionists.

[00:23:10] You said definitely got to be proactive, not reactive.

[00:23:13] Because obviously, if we're talking about engagement, the only people showing up are engaged

[00:23:17] patients.

[00:23:18] You talked about navigating to specialists, especially if you're on the hook for downstream costs.

[00:23:22] Like you absolutely have to know the specialists that are producing the outcomes that you're

[00:23:27] looking to create.

[00:23:28] And then embed POP Health, because obviously finding the patients at risk is a data exercise

[00:23:36] here.

[00:23:37] It's data and it's gratification and all of that.

[00:23:40] So by the way, my number three, if one was the payment, two was the process.

[00:23:43] Number three, you need a different set of technology tools.

[00:23:46] So unfortunately, the technology that most healthcare people use are to help them document code and

[00:23:52] build higher and not do any of the things I just mentioned.

[00:23:54] So really, we and almost everyone else who did this seriously, again, Coke, Chen, One Medical,

[00:24:00] two minds, all made the same decision independently, that we needed different technology tools in

[00:24:05] order to manage this.

[00:24:06] And by the way, the epics and centers and outskirts of the world, you know, weren't good

[00:24:11] enough.

[00:24:12] Now they're getting better slowly.

[00:24:13] They're typically built on the wrong platform, though.

[00:24:16] They're very transactional and not relational.

[00:24:18] But in general, one needs to rethink the technology platform.

[00:24:21] If I am thinking about this first from a physician standpoint, so and we have had a number of people

[00:24:29] on this podcast talking about similar themes to the things that you just mentioned about

[00:24:33] team-based care and being proactive and reactive and using data and analytics.

[00:24:38] I'll put a list in the show notes if somebody really wants to dig in.

[00:24:41] But, you know, I actually had Dr. Tani Cole on the pod who echoed very, very similar themes.

[00:24:45] As I just mentioned, Dr. Bo Raymond, we had Dr. Scott Kennard saying similar things.

[00:24:50] So like there's broad agreement.

[00:24:52] I am going to ask you about physicians, though, because there are doctors who are going to

[00:24:58] here's going to be some typical pushback.

[00:24:59] First of all, the my patients are well-managed pushback.

[00:25:04] The second one is I am accountable for my patients.

[00:25:08] So I kind of don't trust anybody else to do it.

[00:25:12] I would almost think that a success factor also is going to be having a culture.

[00:25:18] Physicians are obviously essential for this, but this is not how medical schools, you know,

[00:25:23] bring people up.

[00:25:24] You hit by number four, which is changing the culture.

[00:25:27] So if one is payment, two is process, third is get the right IP platform, and the fourth

[00:25:32] is culture or people, if you want to be cute and name it four Ps.

[00:25:36] And you are absolutely right.

[00:25:37] So we would do this.

[00:25:38] At one point, we tried to, we worked with Virginia Mason, a really great health system.

[00:25:42] We would go, we did a pilot with the Boeing company and went to one of his Virginia Mason's

[00:25:46] practices in Itaqua, outside of Seattle, and grouped 10 doctors and talk about this model.

[00:25:51] And, you know, look, you're going to get an extra payment, and you've got a health

[00:25:53] coach, and you've got population management tool.

[00:25:55] It turns out that one or two doctors love it.

[00:25:59] They're like, where have you been all my life?

[00:26:00] I've been waiting to practice this way.

[00:26:02] Three or four are like, oh, this sounds vaguely interesting, but I'm skeptical.

[00:26:05] I want to see what happens.

[00:26:07] And then one or two are like, I don't like data.

[00:26:09] I don't like nurses.

[00:26:11] What's wrong with what I'm practicing now?

[00:26:12] I practice well.

[00:26:13] You know, all the things you said.

[00:26:15] And the problem with most medical groups is they work largely by consensus than one or

[00:26:19] two of these people.

[00:26:21] It gets put the kai bash.

[00:26:22] So what we did, and we said, great, we're going to create a thing over here.

[00:26:25] And those two people are giving me the hugs in the hallway.

[00:26:27] You're going to come over here and practice.

[00:26:29] And the rest of you keep doing what you're doing.

[00:26:31] So you build the culture with the people who want to be there.

[00:26:34] But what happens, by the way, if six months later, that third guy who was a little skeptical

[00:26:39] said, yeah, can I come visit the practice?

[00:26:41] He comes over and he said, wow, not only is this not scary, this is better than what I

[00:26:45] have.

[00:26:45] Can I come over?

[00:26:46] Great.

[00:26:46] Then six months later, the fourth one comes over.

[00:26:48] By the way, seven, eight, nine, ten will never come.

[00:26:51] And by the way, we're going to be living in this catamaran world, to put it your way.

[00:26:55] You know, we're going to need people doing the fee for service.

[00:26:57] So let them do it.

[00:26:58] But the fool's there and he's trying to make them do something differently.

[00:27:01] Getting doctors to do things they don't like is a waste of time.

[00:27:04] So find the people who want to do this.

[00:27:06] It's partly training, but it's partly just getting the people who attach and building

[00:27:11] the right.

[00:27:11] So again, what we did is we did not try to convert existing practices.

[00:27:15] We built new ones and created the culture.

[00:27:18] And we had all sorts of little markers to make sure people were the right fit.

[00:27:22] So for instance, we didn't give doctors private offices.

[00:27:25] The doctor wants a private office so he can put a little diplomas up and said, we're like,

[00:27:29] great, wrong place for you.

[00:27:30] Keep doing what you're doing.

[00:27:31] You like it here and want to be with the team and sit together with the team so we can

[00:27:34] communicate well, this is the right place for you.

[00:27:36] So it is about changing culture.

[00:27:38] And I could also see that if I'm a patient in this mix, there's obviously a right door to

[00:27:43] be going through here.

[00:27:44] Because like any time you get patients who are in the kind of care models where somebody

[00:27:50] is helping them and navigating them and they actually feel taken care of and they feel like

[00:27:55] there's relationships, those patients are like, to use your term, where have you been

[00:28:00] all my life?

[00:28:01] Whereas on the other side of the hallway, you go see the doctor, they say, go do these

[00:28:05] things.

[00:28:06] They have no idea where to start.

[00:28:07] Some specialist is not available.

[00:28:09] People are trying to figure out how to use Yelp or like it's kind of a mess.

[00:28:14] And even I'm not even talking about patients of Medicare age, like it's a mess for everybody

[00:28:19] trying to figure this out.

[00:28:20] So I also could see that there is a consumer preference that is at play here.

[00:28:26] And sooner or later, you're going to have people on the one side of the hall talking to

[00:28:30] their buddy on the other side of the hall and trying to figure out how to get over there.

[00:28:34] Yeah.

[00:28:35] So our theory of change, when one tried to change the world, one needs to have a theory

[00:28:40] of change.

[00:28:40] So my theory of change was what I call the Southwest Airlines theory of change.

[00:28:45] So US Airlines circa 1980, high fares, crappy service.

[00:28:49] You know, what changed?

[00:28:50] It wasn't the government.

[00:28:51] It wasn't consultants.

[00:28:53] It wasn't American and Delta waking up and deciding to be better.

[00:28:56] It was a new entrance showing up.

[00:28:57] Southwest getting patient customers to vote with their feed.

[00:29:01] That not only got those customers lower fares and better service, but it kept Delta and

[00:29:05] America in the behind and said, we better change or someone's going to come and clean

[00:29:10] our clock.

[00:29:10] So I'd like to think that part of the reason why Kenny Cole is able to sort of get his

[00:29:16] folks at Oshner to actually do something is a bit of a chair.

[00:29:19] Mark Harrison back in the day when he was, I think, at Cleveland Clinic, actually said in

[00:29:24] a speech to modern healthcare that we are petrified that someday I or our health will

[00:29:28] come to my market and start taking our patients away.

[00:29:31] We better disrupt ourselves before they do.

[00:29:34] So when those doctors, you know, I told you the two will come over here and the other eight,

[00:29:38] I tell them, keep doing what you're doing.

[00:29:40] And then I mumble under my breath.

[00:29:42] Someday we'll take your patients away.

[00:29:45] That's how we will change healthcare.

[00:29:46] All right.

[00:29:47] So I know that there is probably, I'm going to say 68% of our listening audience here who

[00:29:55] are thinking to themselves, yes, but how consolidated health systems make the vast majority of the

[00:30:03] money that they make.

[00:30:04] Primary care is basically a feeder to the specialists.

[00:30:08] I'm just talking economics here.

[00:30:10] One of the reasons why primary care at some of these big entities is so chronically underfunded

[00:30:17] is because there is absolutely no incentive.

[00:30:20] How much money to recoup the margin that would be appropriated from seven commercial heart

[00:30:30] failure patients getting readmitted?

[00:30:32] You know?

[00:30:33] The real honest answer is, I think, to our health system.

[00:30:37] And so this is the right economic, makes the right economic sense.

[00:30:41] So by the way, I think hospitals are really dangerous places, by the way.

[00:30:46] You get COVID, you get some strange, you know, MRSA infection, you fall and you sundown,

[00:30:52] you get the wrong drug.

[00:30:54] Just putting it from a human point of view, if you need to be in a hospital, by all means,

[00:30:57] you need to be in a hospital.

[00:30:58] If you don't need to be in a hospital, you should stay as far away as you can.

[00:31:01] And that's true for myself, it's true for my mom, it's true for my wife.

[00:31:04] And so people like us have shown that we can reduce hospitalizations by 40%, 4-0.

[00:31:10] So by the way, if that's the right answer, it's better for the patient and it's better

[00:31:14] for the payer, it's going to happen.

[00:31:16] So if you are a health system, you have two and only two choices.

[00:31:20] You can either do this yourself and get in some version of a risk contract where you can

[00:31:24] benefit from the falling cost, or you could watch someone else do it and just take these

[00:31:29] people away from you.

[00:31:30] And you are left with a shrinking and shrinking pie with someone else taking all the surplus.

[00:31:36] Those are the two and only two options.

[00:31:37] I think, you know, there was a big drumbeat when it was thought the retailers would do this.

[00:31:43] It turns out by the way that bet was wrong, that these retailers seem not to know how to

[00:31:46] do healthcare and don't have the patient's court.

[00:31:48] So they're all fleeing.

[00:31:49] But guess who isn't doing this?

[00:31:51] It's Optum, right?

[00:31:52] Optum is the number one employer and physician.

[00:31:54] They are coming to your market and they're buying the physician groups up.

[00:31:58] It's not Optum, it's the PE firms, right?

[00:32:00] It's Welsh Carson and CBNR, often now paired with Elevance or Dumana or Deerfield and with

[00:32:09] your eyes in Blue Cross.

[00:32:11] And, you know, and so if this is the right answer, someone else will do it.

[00:32:15] And you can either watch them do it or you could think about doing it yourself.

[00:32:19] And by the way, they're your patients in this general system.

[00:32:22] You've been taking care of them for hundreds of years.

[00:32:24] By the way, last I checked, this is what your mission statement says we should be doing.

[00:32:27] So it is very clear despite now, and I'm not, and no one should lump all hospitals in the

[00:32:33] same bucket, obviously.

[00:32:34] So let me just start out with that caveat.

[00:32:36] So you're saying that there's actually enough money there that you have private equity and

[00:32:42] Optum.

[00:32:43] By the way, they're not doing this because they want to help save healthcare.

[00:32:45] Yeah, obviously.

[00:32:47] Again, in fact, they are doing this where they think they can make money off of it.

[00:32:50] If we want to find somebody with for profit in all caps, like I think you hit the nail

[00:32:55] on the head.

[00:32:56] And to a certain extent, I'm like, it's like watching succession.

[00:32:59] There's absolutely no character, which is likable in any way.

[00:33:04] But you're basically saying even despite the fact that we've got a little bit of a succession

[00:33:09] scenario on our hands and money is certainly on everybody's minds.

[00:33:13] Just the fact that you have other entities that are popping up here, the competition just

[00:33:18] in and of itself is going to enable forward change.

[00:33:22] So the one thing that's really clear in healthcare is healthcare is local.

[00:33:26] So I think this will play out differently in different markets.

[00:33:29] And what's interesting is, you know, so we did a project years ago with the Casino Workers

[00:33:35] Union in Atlantic City.

[00:33:36] And it was in partnership with a health system called Atlanticare, which was essentially the

[00:33:42] only health system in town.

[00:33:43] They were by far the dominant player.

[00:33:45] And Jim Nolan, the CFO of Atlanticare, said two things that were very profound.

[00:33:49] He said, and we built these practices not just for the workers in the union, but also for

[00:33:54] Atlanticare employees.

[00:33:55] So number one is the biggest employer in most markets happens to be in the health system.

[00:34:00] So you are paying for your own care, right?

[00:34:03] So number one.

[00:34:03] Number two is, he said, I don't really want to be in a business where my interests and

[00:34:08] those of my customers are opposed to each other.

[00:34:11] That's just a crappy thing to do.

[00:34:12] And number three is, if I keep raising prices and sort of over utilizing, et cetera, what's

[00:34:19] going to happen is the employers have already run out of room.

[00:34:22] Their first response had been to create higher and higher deductible plans and pass it on to

[00:34:26] the consumer.

[00:34:27] We've reached the end of that.

[00:34:28] We can't squeeze more blood from the stone.

[00:34:31] We can't go any higher on these deductibles.

[00:34:33] So now what they're going to have to do is just start cutting benefits.

[00:34:36] So people are cutting benefits.

[00:34:38] Now all of a sudden, the economy starts hanging because of me, the health system.

[00:34:42] I'm going to be left with all these uninsured people who now I need to take care of and

[00:34:45] for free because they're still going to come to me.

[00:34:47] I'm not going anywhere.

[00:34:48] So this idea that we need to come up with a sustainable thing between us and the employers

[00:34:53] in town.

[00:34:54] And by the way, I can make the same American was instead of federal government and Medicare,

[00:34:57] that if this becomes an unstable thing, people are just going to be uninsured and people

[00:35:00] uninsured or they're going to cut the prices, right?

[00:35:03] Government has one lever that the commercial people don't is they can just change the fee

[00:35:07] schedule.

[00:35:07] I mean, we saw the physician fee schedule just got dropped.

[00:35:09] So they're just going to drop the fee schedule.

[00:35:11] So then what the health systems do is they try and pass it on to the employers.

[00:35:15] But remember, no more blood from the stone.

[00:35:17] We're hitting the end of all of those things.

[00:35:19] So again, I think this will play out differently in different local markets.

[00:35:21] But like we have to think about this in a sustainable way.

[00:35:25] And I think we're starting to reach the end of the unsustainable sort of ratchets that we're

[00:35:30] having.

[00:35:31] David Mielstein was on the pod a while ago that said the biggest sector employer in 48

[00:35:37] states is health care.

[00:35:38] Like health care employs more people in 48 states than any other industry.

[00:35:43] But then also Zach Cooper just released a study where for every, I think it was percentage

[00:35:48] point of hospital price increase, employment in non-health care businesses goes down 0.3%.

[00:35:56] I love that study.

[00:35:57] I think it's true.

[00:35:58] The vast majority of these health systems are theoretically not-for-profit.

[00:36:01] And by the way, anyone who thinks that we got a lot of flag for being a for-profit company,

[00:36:04] like if you say non-profits and for-profits act any different, you're being naive.

[00:36:08] You know, it doesn't matter.

[00:36:10] I've sat in a non-profit board meeting, the for-profit board meeting.

[00:36:13] You can't tell the difference.

[00:36:14] No margin, no mission, et cetera, right?

[00:36:16] But A, they are non-profits.

[00:36:17] In theory, they are serving the community.

[00:36:19] I think the people who fall asleep at the switch are the boards of these health systems.

[00:36:23] And they're not holding these folks accountable for the mission of what the hospital should

[00:36:27] be doing and the health of the community, which is what their mission statement say.

[00:36:30] So again, I would put out a plea for boards of health systems.

[00:36:34] But I think you've got to think long term.

[00:36:36] If I'm a health system, we've been here for 100 years.

[00:36:38] We're not going anywhere.

[00:36:40] These people are not going anywhere.

[00:36:41] Hopefully the jobs aren't going anywhere.

[00:36:42] So we have to come up with sustainable long term models.

[00:36:46] This is not like Amazon who could get customers from other places.

[00:36:51] It's a fixed thing and it's a long term game.

[00:36:53] Yeah.

[00:36:53] So we had Suhas Gandhi on the podcast, Dr. Suhas Gandhi, who did a study about hospital

[00:36:58] boards.

[00:36:59] Spoiler alert.

[00:37:00] It's really hard to figure out.

[00:37:01] You had said hold people accountable.

[00:37:04] It's actually very difficult to figure out who is even on a hospital board.

[00:37:08] Well, these boards have like 50 people on it.

[00:37:10] Some of them do.

[00:37:12] They have 11 to 50.

[00:37:13] I think like it's actually a really interesting thing, just understanding like how do these hospital

[00:37:17] boards function?

[00:37:18] So first of all, you have to be a researcher sometimes to figure out who's on the board.

[00:37:22] But also, do you know the biggest occupation or former occupation of most board members?

[00:37:30] What sector are they in?

[00:37:31] Banker?

[00:37:32] Yes.

[00:37:33] Yes.

[00:37:35] Yeah, yeah.

[00:37:35] Generally speaking, there's like point and now I'm making stuff up at something along

[00:37:39] these lines.

[00:37:39] There's like one physician and like 0.02 nurses.

[00:37:42] You know what I mean?

[00:37:43] Like the vast minority of people on these boards have had anything to do with healthcare in

[00:37:50] their career.

[00:37:50] So you throw a majority finance professionals in a room and tell them to manage a hospital.

[00:37:56] And I don't want to underestimate, like obviously things have to be sustainable.

[00:37:59] Like you have to figure out how to do things.

[00:38:01] Yeah, absolutely.

[00:38:02] But at the same time, if all you're trying to do is maximize the short term, which a

[00:38:06] lot of finance people like that was their job, just like figure out how to make as much

[00:38:09] money as fast as possible.

[00:38:11] That's what they'll do.

[00:38:11] Yeah, then that's what they're going to do.

[00:38:13] So who is shocked, I guess?

[00:38:15] It does take courageousness, I guess, on the part of individuals and then also creativity

[00:38:20] and the willingness and the understanding of how to collaborate.

[00:38:24] Like I often talk about more and more lately, collaborative EQ or collaborative IQ.

[00:38:29] So it's one lesson we learned about how to do a collective action.

[00:38:33] Well, you know, when we went into the Medicare space, we formed a partnership with Humana,

[00:38:37] who at the time was sort of one of the most progressive and, you know, far thinking.

[00:38:41] We signed a 10-year contract with Humana, 10 years.

[00:38:44] The problem with doing all of this stuff is it takes a while.

[00:38:48] It takes a while to figure out how this works.

[00:38:50] It takes, you know, and by all the things, it's the same way when people get married,

[00:38:53] right?

[00:38:54] The second foods go badly if someone pulls the plug, like you're never going to go anywhere.

[00:38:58] Right?

[00:38:59] So it's a 10-year relationship.

[00:39:00] We're in this together.

[00:39:01] We're not going to put it up to rebid every year.

[00:39:04] And so that's the way you solve problems.

[00:39:06] To me, that's the only way we're going to make progress is form long-term partnerships

[00:39:11] and solve this together and not be like, I'm going to find some lower bid next year

[00:39:15] and just jenny some year or get someone else.

[00:39:17] Yeah, which becomes a race to the bottom at a certain point.

[00:39:20] Absolutely.

[00:39:20] Which a lot of this happens.

[00:39:22] So I could talk to you for quite some time,

[00:39:24] but I do feel us coming up to the end of our time together.

[00:39:27] Is there anything that I neglected to ask you that you kind of want to sum up here?

[00:39:30] Dr. Rashika Fernandropoul.

[00:39:31] You know, there's lots of activity going on in the space.

[00:39:35] The job of healthcare is to make people healthy.

[00:39:38] It seems like an obvious statement.

[00:39:40] And I think we need to start realigning our systems.

[00:39:43] And by the way, our system is not doing that.

[00:39:45] Look at, you know, our life expectancy in the U.S.

[00:39:47] I'm returning more time to despite spending close to $5 trillion a year,

[00:39:52] we're getting crappy outcomes from it.

[00:39:54] And I think, A, as consumers, we need to start holding the system more accountable.

[00:39:57] But B, as people in the system, whether it's running a health system or health plan,

[00:40:01] we need to start taking our mission statements seriously

[00:40:04] and start thinking about how do we sort of change what we do in order to do this.

[00:40:08] Because like I said, the contact we're on is unsustainable.

[00:40:12] And bad things might happen.

[00:40:13] So it's up to us.

[00:40:14] We can either design this well and do it in our control,

[00:40:17] or we can wait for things to collapse and then bad things might happen.

[00:40:20] Dr. Rashika Fernandropoul, thank you so much for being on Relentless Health Value today.

[00:40:23] You're very welcome.

[00:40:24] Thank you for having me.

[00:40:25] Hi, my name is Chris Skizak.

[00:40:27] I am the executive director of the Houston Business Coalition on Health,

[00:40:32] as well as Texas Employers for Affordable Health Care.

[00:40:35] I've been a longtime listener and have had the privilege of getting to know and work with Stacey Richter.

[00:40:42] There is no doubt in my mind that Relentless Health Value is the best podcast out there

[00:40:48] that addresses the financial challenges and opportunities in health care delivery.

[00:40:53] I think it gives hope and encouragement to what can be accomplished through collective perseverance and resolve.

[00:41:01] Thank you very much.