Pay­ing for value: Vi­sions for the fu­ture

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The in­te­grated de­liv­ery sys­tem that com­bines payer and provider un­der one um­brella or­ga­ni­za­tion is of­ten held up as the best model for mov­ing health­care de­liv­ery from fee-for-ser­vice medicine to value-based care. But there are other ap­proaches. The Lead­er­ship Sym­po­sium brought to­gether the CEOs of two of the na­tion’s lead­ing health­care or­ga­ni­za­tions to dis­cuss their dif­fer­ent ap­proaches. The fol­low­ing is an edited tran­script of the dis­cus­sion be­tween Bernard Tyson, CEO of Kaiser Per­ma­nente, the na­tion’s largest in­te­grated de­liv­ery net­work head­quar­tered in Oakland, Calif., and Dr. John Nose­wor­thy, CEO of the Mayo Clinic, head­quar­tered in Rochester, Minn. The ses­sion was mod­er­ated by Howard Kern, CEO of Sen­tara Health­care, an in­te­grated de­liv­ery sys­tem based in Nor­folk, Va.

Howard Kern: Like many things in health­care, we look at value-based health­care as a magic bul­let. Many of us know there’s no one sil­ver bul­let that’s go­ing to solve all the health­care chal­lenges. Bernard, how is pay for value looked at in your or­ga­ni­za­tion?

Bernard Tyson: We’ve al­ways been some­what dif­fer­ent be­cause we are a pre-pay­ment sys­tem and it’s a cap­i­tated sys­tem. In the 21st cen­tury, a fee-for-ser­vice sys­tem is just not the right chas­sis. We must fig­ure out how to align in­cen­tives in very dif­fer­ent ways.

One of the most pow­er­ful tools we have at Kaiser Per­ma­nente is the abil­ity to in­vest in qual­ity. We give the re­sources re­quired to our physi­cians so they have the in­cen­tives to make the right de­ci­sions for their pa­tients. It’s not an eco­nom­i­cally driven sys­tem.

The sec­ond thing is that we own the whole dol­lar and we’re re­spon­si­ble for all the risk. If you are work­ing in­side of a sys­tem like mine, my physi­cian part­ners know when we en­gage in dis­cus­sions about the eco­nom­ics, it’s about what we need to pro­vide the high­est qual­ity care pos­si­ble that is af­ford­able and ac­ces­si­ble.

For ex­am­ple, no physi­cian is in­cented to ad­mit a pa­tient into the hos­pi­tal be­cause the rev­enue doesn’t flow like that in our sys­tem. And so a physi­cian has a choice: Do I pro­vide ur­gent care or do I pro­vide hos­pi­tal care? That’s cre­ated by aligned in­cen­tives with our physi­cians.

We’re shift­ing now to be­gin to ask more ques­tions about the out­comes of care. We are very much fo­cused on evolv­ing our health sys­tem to re­ally look at the so­cial de­ter­mi­nants of health. How do I move up­stream and deal with the be­hav­ior as­pects of 11 mil­lion mem­bers. We work with our mem­bers to re­think things like how you’re eat­ing, how you ex­er­cise, and how you deal with stress man­age­ment. That’s where I think we have real op­por­tu­ni­ties. Call it value-based or what­ever you want, but we want to take a holis­tic view of a per­son’s life as op­posed to only think­ing about it in the con­text of health­care.

Dr. John Nose­wor­thy: We’re go­ing to be look­ing at how we evolve value-based pay­ment go­ing for­ward. It raises this po­lit­i­cal is­sue of what will hap­pen to the Medi­care

and Med­i­caid in­no­va­tion group. Speak­ing as a physi­cian and as a sci­en­tist, you have to test in­no­va­tion to see if it works. My hope is that some form of that will sur­vive.

Bernard and I over­see very dif­fer­ent or­ga­ni­za­tions. As much as pos­si­ble, we would like to ad­vise pa­tients how to pre­dict and pre­vent health­care is­sues, and we do that as much as we can. But Mayo Clinic is es­sen­tially a des­ti­na­tion med­i­cal cen­ter where pa­tients who have se­ri­ous and com­plex ill­nesses come when they can’t get an an­swer some­where else. It’s a not-for-profit, salary-based sys­tem. The in­cen­tives have been muted sub­stan­tially, but the fo­cus on the pa­tient has never changed.

So we’ve been strong pro­po­nents of chang­ing from fee-for-ser­vice to some sort of value-based ap­proach for a long time. The prob­lem is many politi­cians and much of the pub­lic has health­care re­form fa­tigue and as­sumes we’re done. Yet the science of mea­sur­ing qual­ity is re­ally just be­gin­ning. It’s frus­trat­ing to all of us—whether you’re pri­mar­ily pop­u­la­tion health, pre­ven­tive, com­mu­nity prac­tice-based or the ex­act op­po­site like us, which sees the sick­est of the sick with mul­ti­ple co­mor­bidi­ties.

There’s noth­ing in the sys­tem to at­tribute those pa­tients ap­pro­pri­ately or to risk-ad­just them. As we ap­proach the next phase, we urge that we pause for a minute, not stop. Just like any­one do­ing an ex­per­i­ment, let’s just slow down a bit and see if we can get the fun­da­men­tals right. What is the value for our sys­tem, whether it’s your sys­tem or our sys­tem, and what do our pa­tients need? If you don’t get those fun­da­men­tals right, you’re not go­ing to get there.

Kern: How as an in­dus­try could we do a bet­ter job of build­ing that long-term re­la­tion­ship with the pa­tient?

Tyson: One of the as­sets we have is that our mem­bers stay with us for a long time, on aver­age 12 to 15 years. We are heavy on pre­ven­tion, early de­tec­tion and early treat­ment. We try to max­i­mize the healthy life.

We work hard on ag­ing and func­tion­al­ity in ag­ing. And end-of-life care. But prob­a­bly most im­por­tant is the trust our mem­bers have to­ward our physi­cians. Those re­la­tion­ships are very en­dur­ing. So our mem­bers tend to have a sense of own­er­ship. I can’t think of an ini­tia­tive that we will start that we wouldn’t have a pa­tient in­volved in that ini­tia­tive.

When we de­cided to take on the ini­tia­tive of safe hos­pi­tals and build­ing the safest hos­pi­tals in the coun­try, we had a fam­ily mem­ber come and talk to us di­rectly about the ex­pe­ri­ence of their child dy­ing in a hos­pi­tal when he should not have died. That moves it from be­ing a statis­tic. The pa­tient ex­pe­ri­ence out­come is crit­i­cally im­por­tant.

Kern: As we’ve gone through this tran­si­tion from fee-for-ser­vice to pay-for-value, we’ve seen a par­al­lel track of merg­ers with high-value or­ga­ni­za­tions. Mayo has re­sisted that. Why?

Nose­wor­thy: We took a dif­fer­ent path on this for whole host of rea­sons. We looked at what we could do to ad­vance the pa­tient-care in­ter­face the best. We de­cided the best way to im­prove pa­tient care was to share what we know with other providers so they could ap­ply Mayo’s ap­proach in ev­ery­day prac­tice.

We have dig­i­tized what Mayo does in thou­sands of sit­u­a­tions and cre­ated tools for physi­cians in ru­ral Amer­ica and small ci­ties and small aca­demic med­i­cal cen­ters and in­ter­na­tion­ally. They may say, “I’ve tried this. I’m stuck with this sit­u­a­tion. What would Mayo do with their in­te­grated prac­tice?” So a neu­rol­o­gist can talk to our neu­ro­sur­geon and an in­ternist about the case.

We’ve used that to knit to­gether a net­work of like­minded or­ga­ni­za­tions that were driven to im­prove qual­ity and re­duce the cost of care. We don’t own any of these 45 cen­ters—40 of them are in the U.S. Those groups pay a sub­scrip­tion fee de­pend­ing on their size and the ex­pected use of the Mayo tools.

Kern: Is there a tele­health or a tech­nol­ogy con­nec­tion?

Nose­wor­thy: It’s im­por­tant, but isn’t nearly as im­por­tant as the trust that Bernard talked about. In health­care, it al­ways comes down to that trust. We all get hung up on the tech­nol­ogy. If there’s no trust be­tween the nurses or the physi­cians, it doesn’t work.

Kern: How im­por­tant is the is­sue of be­hav­ioral and men­tal health to mov­ing to­ward value-based care?

Tyson: This is one of our ma­jor fo­cus ar­eas. I call it reat­tach­ing the head to the body. We’re ex­per­i­ment­ing with in­te­grat­ing be­hav­ioral health ser­vices with pri­mary care. We are run­ning cam­paigns to deal with the stigma of men­tal health in our so­ci­ety.

We have done stud­ies in­side Kaiser in Colorado where about 30% of pre­sent­ing cases for back pain or suf­fer­ing the snif­fles that won’t go away in­clude an un­der­ly­ing is­sue that we have to ad­dress. We did this ex­per­i­ment of re­fer­ring them right there to men­tal health ser­vices.

And it is work­ing. It takes out the stigma. The mem­bers feel very com­fort­able do­ing it. It’s a crit­i­cally im­por­tant and un­der­ap­pre­ci­ated area of the med­i­cal care sys­tem. And it has a tremen­dous im­pact on the value of care.

Kern: How does re­search at Mayo get ap­plied from a value per­spec­tive, and how do you see that im­pact­ing the over­all value of care?

Nose­wor­thy: The key at Mayo is to trans­late re­search quickly into pa­tient care. We sup­port can­cer care re­search, of course, and are fo­cused on in­di­vid­u­al­ized medicine and re­gen­er­a­tive medicine. But we also have a cen­ter for the science of health­care de­liv­ery.

How do you drive ways to im­prove out­comes? This re­search is ba­si­cally about trans­form­ing the prac­tice. We take three to five of the best ideas each year that come from the bench or from clin­i­cal tri­als, that are just about ready to change how we man­age care with a lit­tle bit of a nudge. We try to get them into prac­tice as quickly as pos­si­ble so pa­tients get cut­ting-edge care.

Dr. John Nose­wor­thy CEO of the Mayo Clinic

Howard Kern CEO of Sen­tara

Bernard Tyson CEO of Kaiser Per­ma­nente

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