Farzad Mostashari MD Unbundles the ‘Healthcare Borg’ at Engage

By Gregg A. Masters, MPH

I have been following the career of Dr. Mostshari since his tenure at ONC as Director of the Office of the National Coordinator for Health Information Technology.

Upon learning of his launch of the startup ACO management company Aledade, we posted some thoughts here and here.

Yesterday at MedCity Media’s ‘ENGAGE’ conference in Bethesda, Maryland he literally tutored the in-person audience as well as many others following the feed via Google Hangouts, or the twitter stream tagged #mcENGAGE. Mostashari illuminated both the burning platform nature of the ‘business as usual’ through a prism of ‘good for doc’, ‘good for patient’, ‘good for society’, as well as probable indicia of the likely solutions. This is a masterful performance by a physician executive turned entrepreneur worthy of widespread distribution. Apparently there’s quite a bit more to Mostshari than EHR adoption and the national e-connectivity backbone.


ACO Onramp: Reading the Pioneer [Exit] Tea Leaves

By Gregg A. Masters, MPH

Whenever someone buys a stock for the most part they make a decision that weighs available public (and sometimes ‘non public’) information and concludes that the company’s value exceeds (currently or shortly will) that which is expressed in the bid/offer price points the day the purchase is executed. Yet, there is always a seller who may more often than not hold the opposite opinion. After all why is he/she selling if the stock price undervalues the company’s enterprise fundamentals?buy sell

Absent the expressed manipulation of a third party intermediary (broker dealer, hedge fund, etc.) this buy vs. sell ‘call’ can reasonably and accurately reflect the aggregate market based ‘tug of war’ between the public perception and actual fundamentals of a company – at least as reflected in it’s stock price or ‘market cap’.

This same tug of war might equally apply to the battle for the ACO narrative at least as it relates to interpreting the reported ‘signals’ of movement inside the accountable care space.  However, instead of stock prices we’re looking at certain metrics including the number of players entering or conversely exiting the accountable care theatre as a proxy for the underlying health or efficacy of the Affordable Care Act – or at least that piece allocated to the provision in the Act specific to ‘accountable care’.ACO growth medicare vs non medicare

Of late the headlines have predictably served up a mixture of news for public consumption and therefore fodder for the talking heads to spin in the media and the ‘credible’ blogosphere writ large to explain to their audience.

If only healthcare where as simple as buy/sell equity transactions on public exchanges (lets not get into ‘dark pools’) mostly immune from ideological spin as to the broader significance of a move up or down in standing, valuation or growth vs. contraction. Unfortunately the health reform space is littered with agenda driven spin to drive an ideological outcome in one way or the other. And we know who the usual suspects are…

Meanwhile, several headline examples meriting interpretation including original source links are posted below. Further, since the launch of Aledade and several other entrepreneurial players (Privia Health) to bolster the vision, leadership, capacity and management infrastructure including the healthIT spine that supports independent physician led participation in the ACO initiatives, we include a recent Commonwealth Fund deep dive titled Profile: Rio Grande Valley ACO Health Providers’ exploring a physician led ACO effort in the Rio Grande Valley of Texas.

Context for the ACO pulse check narrative is perhaps best framed via a JAMA piece titled: The Pioneer Accountable Care Organization Model Improving Quality and Lowering Costs which is instructive on the significance of select Pioneer exits, while a deeper dive into the weeds of ‘Shared Savings in Accountable Care Organizations: How to Determine Fair Distributions (abstract only) addresses a problem most ACOs would aspire to have, i.e., a formula to distribute actual savings generated. 

The later abstract notes:

Accountable care organizations (ACOs) are playing a major role in health care reform. In the last 2 years alone, Medicare ACOs have proliferated to cover more than 5 million Medicare beneficiaries in more than 360 organizations nationwide.1 In ACOs, individual clinicians (including physicians, physician assistants, and nurse practitioners, among others), group practices, and, in some cases, hospitals contract with payers to be jointly accountable for the health outcomes and expenditures of a defined patient population. By meeting specified quality measures while keeping expenditures below defined benchmarks, ACOs share in the monetary savings generated.

Over at Modern Healthcare, Melanie Evans notes in ‘Medicare’s Pioneer program down to 19 ACOs after three more exit‘: 

Franciscan Alliance in Indianapolis, Genesys PHO in Flint, Mich., and Renaissance Health Network in Wayne, Pa., have exited the program, which is now in its third year.

For further discussion into quality performance measurements checkout ‘Medicare gives first glimpse of ACO quality performance’.

Perhaps the biggest piece of news was wrapped into the announcement of the launch of Vivity Health, see: ‘Reform Update: Will Anthem’s Vivity gain traction among large employers?‘.

This ambitious announcement by Wellpoint spawned the following two tweets today:

.’s ambitious ‘Vivity’ alliance [a response to ] will make merger look like a walk in the park!

Although saw light when it green-lighted as chassis to build out/express MA care delivery innovation.

Finally until job descriptions change reflecting better deployment of professionals working at the ‘top of their license’, as well as non clinical or administrative staff support re-engineered workflows, we’re probably not witnessing the movement of the needle towards the triple aim. In ‘ACOs, other delivery reforms shift job roles at hospitals’ we learn a little more about this continued labor pool tweaking.

IPA 2.0 the Preferred ACO Chassis?

By Gregg A. Masters, MPH

Earlier his morning I received an email from a colleague watching the ACO space for one of his clients. He wanted to draw my attention to an announcement by a Northern Virginia based company that supports physicians in independent practice. He also offered his client as commentator on the significance of this announcement for the emerging accountable care industry.

I promptly read and followed the hyperlink tree for backstory on the announcement and am now called to author this blog post.

Here is the seemingly superficially benign headline with considerably deeper dive significance grabbing the moment:

Arlington's Privia Health lands $400M to begin national expansion


Thus far the ACA rollout in general with all its misdirected and misinformed ideological representations in the media and ‘monkey courts’ in the Congress, and the ACO uptake chatter in particular has centered on major moves by nameplate operators in the space (hospitals, health systems and health insurers re-imaging their business models), with a smattering of regional or niche market players with interesting designs or claims on a novel path that might work.

Lost perhaps in the conversational exchange moving the health reform football forward is the net contribution to be realized via seasoned and risk savvy players who have demonstrated the value equation via their delivery systems albeit in the more familiar and perhaps safer turf of ‘Medicare Advantage’ and have chosen to sit on the sidelines or enter and exit the Pioneer program.

Simmering in the sea of competitive repositioning however in somewhat ‘semi-obscurity’ (perhaps stealth mode) are players who are emerging from the physician led, or preserving the independent practice of medicine model. Of late we’ve learned of the launch of Aledade, here and here, and today we witness the rather prominent bolstering via significant capital investment in Privia Health who’s ‘about’ content notes:

Privia builds and enables high-performance physician groups and clinically integrated provider networks – using technology, team-based care, and unique wellness programs to help leading doctors better manage the health of their populations.

So here we revisit the fundamentals of physician integration which is mission critical and the ultimate driver if the ACA is to work as envisioned. Physicians – traditionally averse to top down leadership especially when originated by health system or hospital executives – must aggregate into cohesive, seamless, coordinated nodes of care delivery to prudently purchase, deliver and thus restrain the ‘rapacious appetite’ of an institutionally driven healthcare [perhaps more aptly characterized as sick-care] industry drunk on a fee-for-volume paradigm.

When IPAs (independent practice associations) where first envisioned in the mid 70s and later amped up in the mid 80s to penetrate so-called mainstream medicine, the value prop was always to ‘preserve independent medicine’ while enabling participation in and thus positioning a ‘dog in the hunt’ for a market segment eagerly pursued by ‘bricks and sticks’ medical groups (primarily multi-specialty) who’s professional management correctly saw as a growing piece of the commercially insured (and later Medicare) pie.

The announcement by Privia Health today of a $400 million investment by ‘An investor group led by an affiliate of Goldman Sachs & Co.’ is in the words of an informed colleague aka @VinceKuraitis ‘could be a very BFD’.

As noted in the article above, Privia:

‘..markets itself as a platform for physicians to stay in private practice while becoming part of a larger network…’

Get to know these guys ASAP. We’ll be extending an invitation to their leadership to come tell the Privia Health story on ‘This Week in Accountable Care‘, and the details will be posted here upon confirmation.




Changing the Mythology of Hospital Led Value Based Purchasing

By William De Marco

William J. DeMarco | Pendulum HealthHospitals whose only product is acute care will have a difficult time managing in the post reform environment. Many hospitals have ventured into outpatient services competing with physicians. This has proven to be a mistake long term when seeking collaboration with physicians. Many hospitals do not understand how ACOs actually make money and have been so confused about managed care controlling their utilization and revenue that they believe this is the same strategy, yet it is not.

There are successful collaborations between hospitals and physicians such as Geisinger, Baylor (now Baylor Scott and White Heath) and Intermountain. There are also several new PHOs emerging as underlying structures to contract with the ACO. However, there are still traditional scenarios where the hospital runs it all and then the PHO becomes the HPO.

When starting an ACO there needs to be a separate corporation with physicians as major leaders, yet often times the hospital foots the bill for the startup and ends up feeling it is a disadvantaged partner because it is going to have its length of stay and admissions restricted. When the hospital pays for all the startup cost there is an expectation that these costs will be recovered when savings are created. This expectation can wipe out any bonus monies and if there is no bonus money earned the hospital is carrying this debt forward.

Both overspending a bonus or not earning a bonus will create major long lasting conflict for both parties and the finger pointing may last for years. This finger pointing is not just between the hospital and the physicians but sometimes between the physicians themselves, primary versus specialty, older doctor versus younger doctor, etc. If the hospital does not head this off immediately, the collaboration will be in trouble. Suddenly it is all about the bonus, but not really; it’s about how the physician feels he/she has been treated by the hospital. A fire begins burning that may never be quenched. Sometimes new managers being brought to hospitals report that the doctors do not trust them even though they never did anything to them.

The essential point being missed here is that when no one is held accountable, everyone can blame each other without consequence.

Using the joint venture organizational structure and a strategy that fits the marketplace there is a better chance to build a foundation for open cooperation and accountability and this does several things.

  1. Structure provides limits in terms of what powers or authority hospitals have over physicians in the relationship. This is reflected in the participation agreements and the board make up. There is an understanding that the hospitals will have the “physicians enforce physicians” rule and the hospital will run its own departments in accordance with the clinical guidelines that formulate part of the essential strategy to manage results that earn savings against the benchmark.
  2. Committees (several) hold the organization accountable for clinical guideline creation and enforcement. Non-compliant physicians may still practice at the hospital but they do not share the bonus unless they successfully correct their utilization issues. Several committees are required but we would add management, technology assessment, finance, and reimbursement committees to support the organization.
  3. While this list of committees can go on, I am constantly amazed when asking ACO executives what kind of bonus they are expecting under optimal conditions and I get a blank look.
  4. If no feasibility study has been done, two things will fall apart – the vision is tarnished because no one can articulate why they are doing this and the reimbursement sharing (if any) is left out until there is money on the table. And then the fight begins. Like a big family when a relative with money dies, it can be nasty. Those who put more money into the early investment (the hospital) want their cut.

If part of ownership by the physician included some money up front, with the hospital matching this amount with the understanding more dollars will come that, after expenses, can be divided in accordance with a schedule, this may be a start to fixing this problem. But nothing is simple here. It will get the physician’s attention to come to meetings if he/she want a return on investment and hospitals will reduce their risk by having to match what’s put up instead of putting all the money up. Perhaps a commercial loan for any additional money could be used to share the risk further. This may sound simple, but to not discuss the ins and outs of capital before getting started often leaves one partner holding the bag if the ACO should fail to produce savings.

Unifying the structure at the top and pushing down the accountability throughout the organization with delegated committee responsibilities and then supporting this with a capital plan to launch and divide rewards as earned avoids the PHO from becoming a HPO and unifies the medical and hospital staff around a common set of goals and vision that will likely lead to other joint ventures. Hospitals can form successful ACOs but must find that simple but effective way to form a true collaboration.

William DeMarco is President and CEO of DeMarco & Associates, Inc.  Mr. DeMarco created the firm based upon 20 years experience in health plan development and management, earning his credentials working with several community based health plans in the competitive St. Paul /Minneapolis marketplace. For more information see Pendulum Healthcare and follow on Twitter via @WJDeMarco

Tom Scully Tutorial & Diagnosis of Medicare Program

By Gregg A. Masters, MPH

washington journal scully on medicareAn excellent ‘tutorial’ of sorts on the Medicare program is provided by Tom Scully, former Bush era (2001-2004) administrator of the Centers for Medicare and Medicaid Services, who opines on the Medicare and Medicaid Acts of 1965.

He discusses President Lyndon Bain Johnson’s vision of the bill and looks at the present state of the program including his preference for ‘means testing’, the role of Medicare Advantage and issues associated with the expansion of Medicaid via the Affordable Care Act.

Scully also fires a shot over the bow of the The National Committee to Preserve Social Security and Medicare claim via ‘Top 10 Reasons Americans Love Medicare‘ questioning the relative ‘efficiency’ of the program compared to it’s commercial equivalents or fee-for-service (‘traditional’) Medicare.

7.  Medicare is efficient. Only 1% of traditional Medicare’s spending is overhead compared to 9% for private insurance and 6% for privatized Medicare (aka Medicare Advantage plans).

Scully notes:

Yeah, I think that’s completely and totally wrong… I’m trying not to be partisan and be objective on this. But look  Medicare is a wonderful program. It’s incredibly efficient….but basically what Medicare is it’s a single payer system where the Government pays every doctor in Toledo and every hospital the same thing. So the problem is as you have in any system – in the history of any economy in the world – when you fix prices, is volume…. so what you get is competition over volume….which is what they are incentivized to do…  

Regarding CMS, on the ‘efficiency’ claim Scully notes, perhaps in a moment of hyperbole:

I love CMS. The employees are great. They have no clue what’s going on in the healthcare system…it’s just by design that they don’t.

The video segment is courtesy of Washington Journal with original source link here. For a chronology of Medicare see: ‘Medicare Turns 48‘ courtesy of AARP.

For additional Scully insights see: ‘Care Innovation Summit: A Very Sober Assessment!

NOTE: If only Scully type rationality were native to the ‘don’t confuse me with facts’ oppositional Republican mindset of some these days, we’d be more about fixing problems than blame – just saying.

Key Steps to Successfully Implement Bundled Payment

By Gregg A. Masters, MPH

Are you tasked with ‘accountable care’ strategy, clinical integration or even business model innovation at your hospital, health system, medical group, practice or healthcare network?

Then you will be interested in this timely session on Bundled Payment.

Just consider the history (and on again off again promise) of bundling payment for healthcare services – which has a long one indeed. Recently and fueled by the passage of the Affordable Care Act (ACA) it’s value proposition and integration upside, bundled payment has been ‘re-discovered’.Richard Gilfillan MD

When you reflect on this discontinuous ‘timeline of consideration’ (from HCFA circa 1991 to CMS in 2011) of the role of bundled payment as viable health policy reform (regardless of political ideology), I can not escape connecting the dots between strategy and people. Here and perhaps not coincidentally linked is the Center for Medicare and Medicaid Innovation’s (CMMI) first director’s tenure and bundled payment DNA, i.e., Rick Gilfillan, MD who was/is intimately familiar with Geisinger’s ‘ProvenCare’ program – innovation in bundled payment and performance guarantees.

During an interview (see keynote here) I asked Dr. Gilfillan why so few have adopted the ProvenCare model to which he replied with some ‘angst’ –  I have no earthly clue (paraphrased).

In ‘Key Steps to Successfully Implement Bundled Payment’ courtesy of the Health Care Incentives Improvement Institute (HCI3) we are treated to a well detailed history, update and future promise of the renewed emphasis on bundling not just payment but also the underlying culture of collaboration the formula will require.

This program was recorded June 24th 2014 with Bailit Health Purchasing’s Michael Bailit and Marge Houy serving as principal faculty.



‘Eating Glass?': A DaVita Healthcare Partners Hiccup or Impending Physician Integration Implosion?

By Gregg A. Masters, MPH


When Modern Healthcare somewhat ‘matter of factually’ and rather tersely reported the sudden [unexpected?] change in C-suite leadership at the DaVita acquired foray into physician global medical risk management (i.e., Healthcare Partners) of Craig Samitt, MD, I wondered what back-story this announcement might portend? samitt to leave healthcare partners

DaVita the market leader in End Stage Renal Disease (ESRD) care and its articulate CEO Kent Thiry has been publically outspoken about having ‘overpaid’ for Healthcare Partners and rather aggressively warranting analysts on conference calls of no more hiccups in execution, i.e., those that were responsible are no longer with us (paraphrased).

This article appeared on July 18th, 2014. Twelve days later Modern Healthcare then reported ‘DaVita again lowers earnings projections for HealthCare Partners despite Q2 improvement‘, listen here.

Samitt has been a long term and visible player in risk savvy medical group culture as a thought leader and modeller of best practices at The Dean Clinic, see:How Dean Clinic Redesigned Primary Care‘, with previous stints at Fallon Clinic,  Harvard Pilgrim Healthcare and (Atrius Health founding member) Harvard Vanguard Medical Associates. In other words his ‘street cred’ in the integrated delivery system space was/is – well – impeccable.ACO Summit

I last saw Samitt at the ACO Summit in DC 2013 where he gave an excellent presentation on how Dean was bridging that elusive volume-to-value divide via incremental though progressive blended shifts in physician compensation from production to outcomes based incentives – including the underlying though mission critical enabling cultural shifts. Brilliant I thought! Just the ticket many will need to vision and implement the broad tenets of the Affordable Care Act, especially the likes of DaVita a best in Craig Samitt ACO Summit 2013class though single specialty services provider.

So when this abrupt and (short lived tenure) departure was announced, I found myself wondering what could possibly be wrong with this marriage? It just fits too well….

We shall see as more is revealed over time. I invite any of you with inside information to share what you know. Better yet, Craig can you willingly provide any perspective here?