Cre­at­ing feeder net­works is ‘cut­ting off your nose to spite your face’

Modern Healthcare - - Q & A -

Dr. Gary Got­tlieb, pres­i­dent and CEO of Part­ners Health­Care since 2010, will be step­ping down from his post in July to lead Part­ners in Health, a Bos­ton-based non-gov­ern­ment or­ga­ni­za­tion that cre­ates in­no­va­tive health­care de­liv­ery mod­els in poor coun­tries such as Haiti.

Got­tlieb re­cently spoke with ed­i­tor Mer­rill Goozner about his push to bring Part­ners’ 10 hos­pi­tals, which in­clude the pres­ti­gious Brigham and Women’s and Mas­sachusetts Gen­eral, and its 6,000 physi­cians into the ac­count­able-care era, its agree­ment to limit price in­creases and why he wants to move into global health. The fol­low­ing is an edited tran­script.

Mod­ern Health­care: How do you re­spond to crit­ics who say you’ve pushed too hard to move Part­ners to­ward a pop­u­la­tion-health man­age­ment model?

Got­tlieb: There’s a shared vi­sion to fig­ure out a path­way to pro­tect and nur­ture our mis­sion, which is to bring the best and the bright­est peo­ple to care for the sick­est and need­i­est pop­u­la­tions and to in­form that care with sci­ence and invest in train­ing. Col­lec­tively, there’s been a spirit of re­design­ing the front end of care, serv­ing pa­tients in med­i­cal homes with care man­agers, al­low­ing us to re­duce to­tal med­i­cal ex­penses. Do I think that we’ve pushed too hard around that? Frankly, we’ve done it in a grad­ual way. We’ve taken about $300 mil­lion worth of costs out just in the first cou­ple years that I was here. We’ve fo­cused on ef­fi­cien­cies within the in­sti­tu­tions.

MH: What per­cent­age of Part­ners’ rev­enue now comes from risk con­tracts?

Got­tlieb: About 30% of our business is in risk con­tracts. We made a decision that if we’re go­ing to move to pop­u­la­tion-health man­age­ment, we need pay­ment mech­a­nisms that work for that. If you are be­ing paid fee-for-ser­vice, you can’t pay for care man­agers. You don’t get any re­ward for in­creased in­vest­ment in psy­chi­atric ser­vices. The sav­ings has to be in some way shar­ing sav­ings with the in­surer. So we re­opened our payer con­tracts and moved in that di­rec­tion. We be­came a Medi­care Pi­o­neer ACO. We wanted to have sim­i­lar pay­ment paradigms for all our payer classes so that our prac­tices were blind to whether peo­ple were be­ing paid fee-for-ser­vice or val­ue­based pay­ments. Now the chal­lenge is we’ve got our feet in both camps and that cre­ates ten­sion.

MH: Is that trans­lat­ing to pres­sure on mar­gins?

Got­tlieb: The over­all ob­jec­tive of the Mas­sachusetts reg­u­la­tory en­vi­ron­ment is to cre­ate growth tar­gets—it’s set right now at 3.6%—and that cre­ates a down­ward pres­sure on price over­all. Our so­ci­ety has a de­sire to fig­ure out how to make health­care bet­ter and at the same time less ex­pen­sive. So, yes, that puts down­ward pres­sure on mar­gins.

MH: Was it a good decision for Part­ners to ac­quire an in­surer, Neigh­bor­hood Health Plan, a cou­ple of years ago?

Got­tlieb: I think that was the right strat­egy. The real in­ter­est was that Neigh­bor­hood Health Plan is a Med­i­caid man­aged-care plan. It’s deeply part of our mis­sion to take care of all pa­tients. We’ve been able to learn from the in­surance side how one re­designs ser­vices to man­age the care of high-risk pa­tients. We’re us­ing com­mu­nity health cen­ters to help keep peo­ple out of the emer­gency depart­ment. The plan did very well on the orig­i­nal Mas­sachusetts Con­nec­tor ex­change. But after the ACA took ef­fect Jan. 1, and the state changed the Con­nec­tor to meet fed­eral cri­te­ria, it didn’t func­tion well. That caused losses for all of the state’s Med­i­caid plans. I’m hope­ful that the Con­nec­tor will work bet­ter this time and we can at­ten­u­ate the plan’s losses.

MH: Why has Part­ners had a growth strat­egy of ac­quir­ing sub­ur­ban hos­pi­tals?

Got­tlieb: It’s not growth that’s es­sen­tial to our strat­egy. It’s try­ing to fig­ure out the right net­work for do­ing pop­u­la­tion-health man­age­ment. In Mas­sachusetts, a lot of care his­tor­i­cally has been de­liv­ered in the aca­demic med­i­cal cen­ters. The most ef­fi­cient use of their re­sources is to pro­vide ter­tiary and highly spe­cial­ized ser­vices. Our vi­sion is to cre­ate med­i­cal vil­lages where pri­mary-care doc­tors and pa­tients in med­i­cal homes are clus­tered around easy-toac­cess ser­vices. We want to have a com­mu­nity hos­pi­tal avail­able to th­ese pa­tients closer to their homes, of­fer­ing su­perb ser­vice at lower ex­pense. So pa­tients can see their own won­der­ful physi­cian nearby, get care at a spec­tac­u­lar com­mu­nity hos­pi­tal, and

“It’s not growth that’s es­sen­tial to our strat­egy. It’s try­ing to fig­ure out the right net­work for do­ing pop­u­la­tion-health man­age­ment.”

have their spe­cial needs ad­dressed by the spe­cialty re­sources of Part­ners. And if some­one needs a higher level of care, there’s in­stan­ta­neous ac­ces­si­bil­ity to the most mag­nif­i­cent spe­cial­ists and aca­demic med­i­cal cen­ters on the face of the earth.

MH: How do you re­spond to crit­ics who say Part­ners is sim­ply try­ing to build a feeder net­work?

Got­tlieb: In a pop­u­la­tion health-man­aged en­vi­ron­ment, if you cre­ate a feeder net­work, you cut off your nose to spite your face be­cause you end up overuti­liz­ing ex­pen­sive re­sources.

MH: Why did Part­ners ne­go­ti­ate an agree­ment with Mas­sachusetts At­tor­ney Gen­eral Martha Coak­ley to ac­cept a hard cap on cost growth in ex­change for ac­quir­ing two hos­pi­tals?

Got­tlieb: We agreed to it be­cause we embrace the vi­sion of pop­u­la­tion-health man­age­ment and of bend­ing the cost curve. We’re say­ing here’s a way to hold us ac­count­able for mov­ing in this di­rec­tion. It’s a painful way. It’s a way in which we may not suc­ceed. It’s a way which may cost us a sub­stan­tial amount of funds. But we get that this is what we need to prove to so­ci­ety in terms of ac­count­abil­ity. We’re aware that our prices are higher in many cat­e­gories. We need to deal with our unit costs and be ac­count­able. While the deal with the at­tor­ney gen­eral im­poses a painful re­stric­tion, one that comes with fi­nan­cial risks, we will do the nec­es­sary work to sus­tain those smaller in­creases over six and a half years.

MH: If the Mas­sachusetts judge rules against the agree­ment, could those two deals be un­wound? How would that af­fect Part­ners’ strat­egy?

Got­tlieb: We’d have to fig­ure out what el­e­ments of the strat­egy will be harder to im­ple­ment and what levers we need to pull to move those pieces for­ward. Th­ese are im­por­tant hos­pi­tals. We have very strong and close re­la­tion­ships. They worry about be­ing alone in this mar­ket­place. So we have those re­la­tion­ships to take care of, and at the same time, we have to fig­ure out how we move for­ward with the strat­egy.

MH: Part­ners re­cently an­nounced you’re step­ping down next July and go­ing to Part­ners in Health. Why?

Got­tlieb:

I’ve been here for 16 years and I’ve loved it. When Ophe­lia Dahl an­nounced that she was step­ping down as the CEO of Part­ners in Health, some board mem­bers asked me to con­sider be­com­ing CEO to help their or­ga­ni­za­tion have a broader and more sus­tain­able im­pact. My wife, who’s the head of pub­lic and com­mu­nity psy­chi­a­try at Mas­sachusetts Gen­eral, said, “You gotta do this. This is why we be­came doc­tors. This is what you are so pas­sion­ate about.” In July, I went back to Haiti, and I thought this is what I would love to do in the last phase of my ca­reer. I’ll miss this. But I just couldn’t let it go. It felt like the op­por­tu­nity of a lifetime.

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