Accountable Care, Affordable Care Act, health innovation challenges, public health

‘Non-Profit IDNs’: Where’s Da Beef?

By Gregg A. Masters, MPH

I have followed this narrative for quite some time albeit inside the industry contained debate of whether so-called ‘non-profit’ [501(c)3] hospitals or their parent systems (really more aptly characterized as “tax exempt”) actually earn this financial advantage via material ‘returns’ to the communities they serve.

NASI_Goldsmith studyAs can be expected you have the party line of the American Hospital Association (AHA) a trade group of predominantly non-profit members vs. that of it’s for-profit brethren The Federation of American Hospitals (FAH). You can guess which side of the argument each of them favor.

Now thanks to a recently published landmark study ‘Integrated Delivery Networks: In Search of Benefits and Market Effects’ by Healthcare Futurist Jeff Goldsmith, PhD et al, of the 501(c)3 cast of characters in the related but more often than not distinctly different ‘IDN culture’ we extend that line of inquiry into what has been a somewhat conversational ‘safe harbor of sorts’ – not any longer?

The Executive Summary notes both the rationale and basis to study the market ‘incident to’ a more focused pricing (via asset concentrations) power line of inquiry:

In January 2014, the National Academy of Social Insurance commissioned a study of the performance of Integrated Delivery Networks (IDNs), incident to its Study Panel on Pricing Power in Health Care Markets. The premise of this analysis was that any examination of the role that hospitals play in health care cost growth is complicated by the fact that in most large markets, the significant hospitals are part of larger, multi-divisional health enterprises. In these markets, hospitals may be part of horizontally integrated hospital systems operating multiple hospitals; vertically integrated health services networks that include physicians, post-acute services and/or health plans; or fully integrated provider systems inside a health plan (e.g. with no other source of income than premiums) like Kaiser Permanente. The latter two models are collectively labeled IDNs.

IDNs have very different stated purposes than mere collections of hospitals: to coordinate care across the continuum of health services and to manage population health. IDN advocates claim that these complex enterprises yield both societal benefits and performance advantages over less integrated competitors. The purpose of this analysis is to evaluate the evidence to support these claims.

And now for the less than surprising but wholly unacceptable answer albeit modestly caveatted by the limits of publically available information:

Despite more than 30 years of public policy advocacy on behalf of IDN formation, there is scant evidence in the literature either of measurable societal benefits from IDNs or of any comparative advantage accruing to providers themselves from forming IDNs. We have similarly found no such evidence in our analysis of 15 IDNs. Serious data limitations hamper anyone attempting to evaluate IDN performance based on publicly disclosed information. IDN financial disclosures obscure the operating performance of their hospitals and physician groups.

There does not appear to be a relationship between hospital market concentration and IDN operating profit [emphasis mine]. However, if the performance of the IDN’s flagship hospital is any indicator of overall systemic efficiency, the IDNs’ flagship hospital services appear to be more expensive, both on a cost-per-case and on a total-cost-of-care basis, than the services of its most significant in-market competitor.

This runs counter to the theoretical claim of IDN operating efficiency. Further, the flagship facilities of IDNs operating health plans or having significant capitated revenues are more expensive per case (Medicare case-mix adjusted) than their in-market competitors.

The authors would have greater confidence in these findings if they covered not only multiple years of information but also multiple institutions in the IDN portfolio (e.g. its suburban or rural hospitals, etc.). Further, the central question of whether IDNs have abused their market power in metropolitan markets can only be answered by examining actual service-specific payments to their hospitals by local health plans and by determining the profits generated by their hospital portfolio.

NASI_Goldsmith study_cohortI am struck by the reaction or better yet absence of a reaction in public discourse let alone in health wonk or big data evangelists circles particularly at time when there’s been so much mis-direction and battle fatigue surrounding the endless debate/efforts at repeal of the Affordable Care Act.

Such a profound observation and ‘counter intuitive’ result (i.e., ‘hey, there may not be a there, there insight’) based on frequent accolades and ‘innovation’ recognition extended to such trophy name plates as Kaiser Permanente, Geisinger Health, InterMountain Health and so little public debate (see complete list) causes me to question whether we’re paying attention to what matters?

How can we intelligently debate, discern and buildout the qualities and characteristics of financing and delivery system platform efficacy and business model innovation that delivers on the triple aim and lays a solid foundation for a sustainable healthcare economy if we do not understand their root DNA and the results (“community benefit”) they ostensibly generate?


Accountable Care, population health, public health

Ebola: What’s Accountable Care Got To Do With It?

by Gregg A. Masters, MPH

I proudly display the ‘MPH” (master of public health) tag awarded by the School of Public Health from UCLA (a long time ago) and have both tweeted and blogged about the ‘we need more MPH’s and less MBA’s’ to solve America’s pressing healthcare challenges (access, affordability and quality imperative or ‘triple aim’) to which we now need to apparently add more robust ‘communicable disease control’ to the ‘value prop’ calculus.

Earlier today I tweeted:

Rick Santelli et al

I meant it…. minimally it’s about your lens, but more importantly ‘values’ in this scramble for purposeful behavior.

It use to be career minded and service oriented professionals where drawn into clinical medicine, the allied health professions (collectively ‘the helping professions’) and healthcare administrative services (their enablers) out of a sense of mission and giving back. So when I enrolled at UCLA in the School of Public Health the ‘route’ into hospital or health services administration was principally via the ‘MHA’ (Master of Health Administration), the ‘MPH’ (Master of Public Health) or even ‘MPA’ (Master of Public Administration) graduate degree programs.

The ‘MBA psychology’ had yet to infect the career progression glidepath, albeit that fire was in part stoked by the emergence of the proprietary hospital management industry (where I spent a fair amount of my time) intent on driving both revenue and share gains, but principally by deploying ‘secret sauce’ (superior management chops) operating efficiencies in exchange for quarterly earnings growth. Yet, since those early days the MBA strain seems to have dominated the current cultural pool of professionals entering the ‘admin’ or professional manager theater. Unfortunately, and while I generalize, most MBA students/graduates are really good at the profitability thing (sometimes squeezing out the last bit of profit from failing business models or burning platforms) and usually from an investor exit frame of reference. Rarely do we see a ‘community benefit’ or ‘sustainability of the healthcare delivery ecosystem’ sit on top of the MBA cultural indoctrination.

So as we watch the systemic exposure of the operational and worse yet horrific cultural gaps on display between the acute care health system and the ‘clean up crew’ as represented by ‘public health types’ i.e., both state departments of health or public health and their federal overlords at CDC, one must wonder about the viability of these apparently ‘parallel worlds’ with different incentives, values and cheerleaders.

Perhaps via this historically rationalized ‘financial class’ disconnect we’ve reached a teachable moment? Might we actually think about how public health and acute care medicine can work together for the greater good?

I think so! Will you join me?

Originally posted at PublicHealthHQ