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

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.