Thoughts

Innovative Communications for CMS Innovation Funds

Tuesday, February 7th, 2012

Kriste Goad
Senior Vice President, Revive

With the pressures on pricing, reimbursement, volume, and politics weighing heavy on health care provider segments this year, at least two Wall Street analysts say their firms are keeping a close watch on what happens with companies vying for and receiving grants from the CMS Innovation Center.

Both Darren Lehrich (Deutsche Bank Securities) and Adam Feinstein (Barclays Capital) cited the Innovation Center funds during their recent appearance at the Nashville Health Care Council (NHCC)’s annual Wall Street event featuring predictions for Nashville’s publicly traded health care players in the hospital, health plan, post-acute care, home health, senior living, pharmacy, and medical device sectors.

“Most interesting to us,” said fellow NHCC panelist Whit Mayo, senior research analyst with Robert W. Baird & Company, “will be watching many key providers move closer towards their vision of what is an integrated care model. We think large, well-established systems that are the must-have in payer networks sit in an advantageous situation with regards to this developing ecosystem.”

Playing an especially interesting role in the developing ecosystem will be the 32 ACO Pioneers named by the Innovation Center last December. We’ll be keeping a close eye on how they are positioning themselves, and their brands, in the wake of their new designations. Maximizing brand preference will be absolutely key in the future.

As you know, patients do not enroll in an ACO – it is a product of their provider use. Employers and their employees who are using health care services will continue to select their private health plans. These people with private coverage will, in turn, continue to select their providers. This means creating strong consumer and employer preference and brand loyalty for a specific ACO’s hospital and physician groups is key to ACO profitability and success.

Even though the Innovation Center’s Pioneer ACO Model is designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings, how these organizations communicate what’s happening will play a critical role in their success going forward.

It will be important, for example, to understand how being an ACO Pioneer affects overall organizational branding and marketing, if at all. From a public relations standpoint, the ACO Pioneers will likely lead the way for others, good or bad, when it comes to explaining:

– How the Pioneer ACO will work and what benefits will be created near-term and long-term; and
– What happens next, especially in the context of population health plans.

Time and again, organizations that communicate their vision and help their constituencies clearly understand what they’re doing – and why – tend to fare best and create the most value. Let’s hope the next generation of health care ideas being funded by the Innovation Center includes some innovative communications as well.

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Government Health Care Takeover Outside of the ACA

Tuesday, January 10th, 2012

Matthew Bassett
Senior Vice President, Revive

Even outside of the pivotal Supreme Court hearing on the health care overhaul this Spring, state governments are intervening in areas many health care executives had not anticipated. Rather than an organization’s board, senior management, or shareholders making the decisions, government forces are increasingly weighing in and often making decisions that have major operational consequences. For two cases-in-point, consider Kentucky and Pennsylvania.

In Kentucky, Gov. Steve Beshear just rejected a proposed merger involving three major hospitals. The merger would have created the largest hospital system in the state, as University of Louisville Hospital would have joined Jewish Hospital & St. Mary’s HealthCare and St. Joseph Health System. Governor Beshear noted that the transaction was “not in the best interest” of Kentucky, and “the risks to the public outweigh the potential benefits.” Kentucky’s attorney general stated the merger would bring about ”a material change in the level of service at the historically public” University Hospital, and raise questions surrounding the “excessive entanglement between state and religion.”

The result for now is that the two systems will merge sans University Hospital. University was left out in the cold with no access to the sorely needed funding the new entity would give it access to, raising questions about the hospital’s future.

With the extensive due diligence involved in this type of merger, one has to wonder how hospitals failed to add the Governor and Attorney General of the Commonwealth to their list of key external stakeholders. In this case, government intervention prevented market forces from moving forward as planned.

Likewise, in Pennsylvania, a contracting dispute between the University of Pittsburgh Medical Center and Highmark, the Blue Cross Blue Shield affiliate in western Pennsylvania, has garnered national attention and produced a bevy of legislative proposals designed to bring an end to the stand off. Proposed legislative measures ranged from binding arbitration to an unprecedented expansion of powers that would give the state’s Insurance Commissioner significant authority over private-sector contracting disputes. Among other things, one measure would grant the Commissioner the authority to require private parties to stay in a contract (for years), if it was deemed to be in the consumers’ best interests. As the public and political din escalated, Gov. Tom Corbett, a Republican, announced that he was “deeply” concerned and became involved.

Republicans control both the House and Senate in Pennsylvania, but if any of these measures becomes law, they would affect far more than just the parties involved. This type of aggressive legislative intervention would have a profound effect on all of Pennsylvania’s health care contract negotiations.

You can debate the wisdom of government intervention on an ideological basis, but you can’t deny that increasing regulatory and government actions can profoundly affect your organization’s best-laid strategic plans. If government communications are not part of your strategic plan, or fully integrated with your senior management team, now is the time. It could be the only thing that separates the winners from the losers.

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Failure of Super Committee Leads to Possibility or Peril for Providers: Better Know Your Three P’s

Monday, November 28th, 2011

Matthew Bassett
Senior Vice President, Revive

The not-so Super Committee pretty much lived up to expectations (zero progress), and conventional wisdom says the provider community really dodged a bullet…for now.  It’s true that a 2% Medicare cut in 2013 (and beyond) could significantly erode operating margins, but providers need to understand that this was only the starting point for the committee.  The committee, with Republican and Democrat member buy-in, was then going to go industry-by-industry to find the real savings that would begin to approach this summer’s “grand bargain” territory that was rumored to be in the ballpark of $4 trillion over 10 years.  That’s quite a leap from just 2% a year.

2012 is expected to be a year of gridlock, with both parties putting forth competing campaign themes leading up to the November election.  Save a robust economic recovery, which virtually no one is forecasting, many providers will enjoy a good year with decent margins that will then be used as the justification for even larger proposed cuts in 2013.  No long-term sustainability plan will leave funding for Medicare or Medicaid unaddressed.  And on the state side, there is no more help coming in 2012 from the federal government, and state lawmakers of all stripes know this to be the case.

In this environment it will be imperative for providers to know and practice the three P’s when attempting to influence government – policy, positioning, and pursuit.  Never has this been more true than in the current health care environment.  To develop the thought further, the 3 P’s all lead to one overarching goal: differentiation.

If your health care organization has not fully developed or is not currently implementing your 3 P’s, think of the committee failure as a gift, the gift of time. In many ways, 2012 will be the year of waiting.  Waiting for budget and tax certainty.  Waiting for the Supreme Court to rule on the health reform overhaul.  Waiting for debate followed by the rejection of competing proposals for the $1.2 trillion in cuts set to begin in 2012.  Waiting for order to emerge from the confusion and uncertainty.

With the failure of the Super Committee, the likelihood of any significant agreement next year given the backdrop of a Presidential election is essentially nonexistent.  So, now is a good time to evaluate where you are today and to plan how your organization will differentiate itself from the other competing budget interests going forward.

Not sure exactly where you stand on your organization’s or industry’s three P’s?  Might further guidance and advice be warranted?  Stay tuned.

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Is Massachusetts leading the way again? Is that a good thing?

Thursday, November 3rd, 2011

Brandon Edwards
Founder and President, Revive

Everyone says payment change is coming, but how soon and what will it look like?  Is the death of the fee-for-service system really upon us?

Most experts agree the FFS system has some life in its old bones yet.  Whether FFS will completely disappear or just shrink as a percentage of the health care system payment methodology is something only time will reveal.  The next three to five years will bring many payment changes, and certain solutions may get better traction than others, either nationally or even different solutions in different markets.  Until there is a clear national timeline and clarity for a total FFS replacement, we will all watch the horizon for the coming changes.

Of course, Massachusetts is one place to watch.  Ever since the state’s health reform effort was implemented to increase coverage and access, people have been watching to see what solutions would be implemented to address rising costs.  The New York Times reported on October 17, 2011 that a “solution” may be close at hand.

“After three years of study, the state’s legislative leaders appear close to producing bills that would make Massachusetts the first state — again — to radically revamp the way doctors, hospitals and other health providers are paid.

Although important details remain to be negotiated, the legislative leaders and Gov. Deval Patrick, all Democrats, are working toward a plan that would encourage flat “global payments” to networks of providers for keeping patients well, replacing the fee-for-service system that creates incentives for excessive care by paying for each visit and procedure.”

Imposing a global payment system, first on state employees and those covered by Medicaid and state subsidized coverage, will create predictability in costs for the state.  If applied to those with private insurance later, it will give private employers and individual policyholders greater predictability as well.  The real question is, what will be done to reduce the actual costs of care in the system itself?  Will this really be good for the system?

A sick population still needs care, and sometimes a great deal of care for serious illnesses or injuries.  Consumers who eat poorly, smoke, drink too much, fail to exercise, and consistently march down the road to poor health will continue to tax the system and drive up the total health care costs that burden the entire system.  What will be done to affect those issues?

Paying less is always a solution that government and payors default to when they want to lower “health care costs.”  But in our health care system, total cost is driven by price, utilization, and population size.  As the population of sick and unhealthy people grows, the utilization goes up.  As the utilization rises, so do the costs of providing that care.  Pieces can be compressed, controlled, limited, or dictated by the state – but over time that’s just going to cause serious financial distress for hospitals and physicians.

The ultimate solution must address the health and wellness of the population.  Increasing access will always increase costs, and global payments will only serve to create financial pressure on providers.  The real solution is going to be tougher to create than that.

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How Do We Flip the Switch One Day if We Don’t Build It Now? (Insights from Revive’s Health Care Leaders Summit)

Tuesday, November 1st, 2011

Brandon Edwards
Founder and President, Revive

The 2011 Revive Health Care Leaders Summit brought about an amazingly rich discussion on the future of the health care system and the hospital’s role in the future. There were a number of common themes, and a great deal of discussion about the pathway to the future. The event featured speakers who are senior executive leaders from top, respected organizations – HCA, Norton Healthcare, Piedmont Healthcare, FTI Healthcare, Healthways, and others. There were also special appearances by HealthSpring, United, and Humana in a payor-only section of the agenda.

One trend was clear from the discussions: The health care system of the future must shift from “sick care” to “well care,” no matter what we call it. Population health management seems to be the most common term, although I respectfully submit that’s not the right term if we want people to embrace the idea. One key question is, who will lead the effort to design and implement population health management solutions? The role of the hospital is obvious, but whether it will be the leadership role or not remains to be seen.

Everyone involved in the Summit agreed that population health and “well care” will be an increasingly important part of any health care provider organization’s success. Whether it’s building these capabilities to enable more risk-based contracting, or constructing ACOs and other care-delivery models, or launching a wellness and disease management program to connect with self-insured employers, hospitals know they need this capability in the future. When they will need it, how they will use it, and how it supports the business model of the future remain critical issues to address.

Smart, forward-looking health systems see these decisions as a series of switches – first you have to build them, then you have to determine the best time to flip those switches to maximize the value of the opportunity.

Flip the switch too soon, and your hospital leaves profitable FFS revenue on the table. Flip the switch too late, and you risk losing market share to other providers or losing money on risk-based contracts. It’s a complex equation and contingency planning process you must consider to be successful.

The other population health issue that caused substantial discussion was the availability of proven strategies, solutions, tools, technology, and talent. The consensus is 1) the problem is coming into focus, 2) available solutions and tools have shown anecdotal success, and 3) most solutions and tools seem to be payor- and employer-centric, rather than attacking the issues from a provider perspective.

Even the payor speakers acknowledged that Kaiser and Geisinger were the two parties who can demonstrate the most mature capabilities in this area, yet the combination of assets these organizations offer would be very difficult to duplicate. In fact, payors say they have no interest in owning hospitals, and hospital executives say they have no interest in owning a health plan. There will be partnerships, JVs, and many other arrangements made to accomplish these goals, but it will require new and unproven approaches.

This is a fast moving environment everyone is navigating. A system in flux will create winners and losers, and it’s clear that the losers won’t just do one or two things right. The winners will build the right switches, flip them at the right time, and build a sustainable competitive advantage in their communities. The winners will keep making money from treating and healing the sick, while also making money from keeping people well.

What else did we learn at the Summit? Stay tuned.

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