Activating Healthcare as a Community Asset

David Zuckerman is president and founder of Healthcare Anchor Network (HAN), launched in 2017 as a national thought leader on the role of health systems as anchor institutions in building community wealth and inclusive economic development. He sat down for a conversation with Modern Healthcare Custom Media about how supplier diversification is integral to health systems’ mission of improving health and lives.

What lessons have been learned from lack of supplier/ vendor diversification in healthcare?

We’ve learned there needs to be a level of intentionality by health systems if we’re going to increase spend with diverse suppliers, meaning they cross the continuum of the different certifications that exist. Organizations that have made the commitment in terms of staff resources and embedding within organizational priorities have been able to move the needle more quickly on seeing their spend with those businesses increase.

What is the advantage of prioritizing increased spend with diverse suppliers?

In addition to being one way healthcare can create economic opportunity for communities that have been historically either disinvested in, discriminated against or otherwise left out of the process, it expands the aperture of businesses that can meet healthcare institutions’ needs. A business that is also diverse-owned or [mindful of] its footprint might be better at meeting their needs over the long term. In terms of personal connection and relationship, they might be more responsive than a larger vendor that just sees [the healthcare partner] as another account. So, I think [we can] look beyond just this being the right thing to do, but also think about how working with a wider set of vendors can be a win-win for resiliency of the supply chain and in creating better quality and cost for an institution.

Where should health systems begin with efforts to improve supplier diversification?

[First is tracking current spend with diverse businesses] and second is coming up with an intentional strategy around who you’ll partner with to increase your spend. That could be resourcing an FTE to identify existing diverse-owned businesses, building relationships and identifying what categories of spend you want to make sure that these businesses are effectively competing for over time. But it might also be expanding your own universe of who those businesses are—working with chambers of commerce or within entities like GPOs to encourage them to set up or strengthen supplier diversity councils and their own outreach to diverse vendors. A healthcare system also needs to be creative in terms of ensuring that their own payment terms aren’t prohibitive for small and diverse businesses. Think creatively about how we can help those businesses access capital or certain requirements we insist vendors have to do business with us, and help break down those barriers.

As health systems work to build up diverse pipelines, how can they exert influence within their existing partnerships to ensure accountability and transparency regarding impact?

HAN created the Impact Purchasing Commitment, a framework for how a health system can lean in to the many ESG areas. The first commitment requires that vendors submit to them their own supplier diversity spend, so we can track not just what the health system is doing directly, but how its largest vendors are spending with diverse businesses. If this request is coming from more and more health systems to the same vendors, it continues to illustrate it’s a priority for healthcare. Another component of the commitment was that healthcare should work with some of its large, tier one vendors to create hiring pipelines into specific communities of need that health systems serve—and to ensure that they were quality jobs. One example was Intermountain’s work with Becton Dickinson to create a new program in Salt Lake City for providing a living wage, retirement options and comprehensive health benefits to these targeted hires. This is a way systems can work collaboratively with their largest vendors to say, ‘This is a priority for us. We want you to have this shared priority, and it’s something we’re going to take into consideration when we make decisions.’

What are strategies for gaining internal alignment on supply chain diversification?

An organization needs to have an accountable executive for this priority, as well as a program manager who is part of implementing the day-to-day work and execution. Over time, it’s key to ensure it doesn’t live with a single point person within the organization but is distributed among the supply chain team. Organizations at the forefront of this have it built into KPIs, bonuses and compensation.

Several systems have this reported out on some frequency to their board of directors and set it as an organizational priority at that level, which helps to provide the insurance that this is a priority and everyday resources should be put toward it. There should be internal policy built into purchasing evaluation criteria and contracts, and supplier diversity requirements and goals in performance reviews. All these strategies work toward ensuring that the organization is aligned and [accountable].

How do you predict regulations will influence the need to build diverse supply chains?

I think we’re most likely to see regulation or guidance specific to supplier diversity and economic opportunity strategies at the state level. In California last year, requirements were passed that healthcare systems over a certain size had to track and report their supplier diversity spend. We’re seeing some legislation like that moving in other states as well. It’s an opportunity for health systems to be proactively thinking through how they would approach leveraging the resources to support more robust supplier diversity strategies.

Can you share some strong, real-world examples of collaboration between providers and suppliers/ vendors that can serve as

models for health systems looking to take similar action?

A really interesting one is the Children’s Hospital of Philadelphia’s community asthma prevention program, which was focused on eliminating sources of asthma triggers in homes with patients suffering from childhood asthma. Embedded within that effort was an intentional strategy to help local diverse contractors and businesses get certified, as well as complete the activities that that effort was trying to address.

They did recently reach their milestone of repairing 100 homes, making them free of asthma triggers and using diverse vendors to make that happen.

One other example is Kaiser Permanente, which has done a lot of work in this space. They’ve worked with ICCC about building capacity for diverse vendors— many of which are not going to work directly with Kaiser. They’ve taken this very broad perspective of building capacity for minorityowned businesses that go beyond their own supply chain, which is very, I think, thoughtful and something that we should encourage: ensuring that there’s a clear business win here for your organization, but also that we are strengthening the ecosystem that these businesses are situated.

Increasing economic opportunity broadly is going to really ensure that we’re addressing existing disparities over time.

What can healthcare organizations do today to prepare for transformation of the supply chain?

Take a holistic approach. What we’ve found with our Anchor Mission approach is that power comes from connecting dots between many different parts of the organization that had been working on initiatives in their own silos and not always threading together the benefits they could have realized together, as part of a holistic strategy to improve community health.

Think about this as activating healthcare as a community asset—bringing the ESG frame into healthcare’s work around being a more intentional anchor institution and addressing the community conditions that create poor health in the first place. That is where we get to the next level of impact and make it sustainable over the long term.

payer tactics will lead to inadequate networks or access issues,” Resneck wrote. “The AMA is monitoring this situation and will work relentlessly to beat back these cynical ploys.”

Insurers argue they are working to lower costs for patients, particularly among private equity-owned specialty providers that charge exorbitant rates.

In February, CVS Health’s Aetna refused to pay more than the rate outlined in the No Surprises Act for services the air ambulance company Global Medical Response provides its members, according to a bill the Greenwood Village, Colorado-based firm submitted to regulators. Aetna didn’t respond to interview requests.

Blue Cross and Blue Shield North Carolina, which declined to comment, referenced the No Surprises Act in letters sent to providers in March and November 2021, writing that it would end contracts with anesthesiologists, radiologists, emergency physicians and others unless they agreed to payment reductions of up to 30%.

UnitedHealth Group subsidiary UnitedHealthcare likewise requested a 40% decrease, according to a letter the American College of Emergency Physicians sent to the North Carolina congressional delegation in March.

North Carolina physicians charge some of the highest rates nationwide, with some out-of-network doctors billing at more than 1,000% of Medicare rates, a UnitedHealthcare spokesperson wrote in an email. “The No Surprises Act is bringing greater price transparency to the healthcare system and finally putting an end to the financially crippling surprise bills that consumers have struggled with for years,” the spokesperson wrote.

Doctors who accept these reimbursement cuts would struggle to keep their practices open and those who reject them would only be available out-of-network, said Ed Gaines, vice president of regulatory affairs and industry liaisons at revenue cycle management firm Tech Partners. Both outcomes threaten patient access, he said. Health systems are already struggling with rising costs due to inflation, labor shortages and looming Medicare pay cuts, said Gaines, who sits on the American College of Emergency Physicians’ reimbursement committee.

“This is a reimbursement perfect storm like I have never seen in my 30 years,” Gaines said. At least three of his company’s emergency and anesthesiology clients have received similar notices from Cigna, he said.

Cigna and other insurance companies are focused on terminating contracts to reduce the median innetwork rates they pay physicians, said Amanda Hayes-Kibreab, a partner in King & Spalding’s healthcare and life sciences group who represents providers in payment disputes. This rate is known as the qualifying payment amount under the No Surprises Act and represents a critical data point to determine what providers ultimately get paid.

The new law requires parties that cannot come to agreements to enter a mediation process rolled out before final guidance was issued on how arbiters should resolve payment disputes. The Centers for Medicare and Medicaid Services directed arbiters to base payment decisions, in part, on the qualifying payment amount that insurers set. Health insurance companies are cutting ties with costly providers as a way to lower this rate and take advantage of the arbitration system, Hayes-Kibreab said.

“As they pick off their higher-rate contracts, their [qualifying payment amount] is going to go down. It creates a race to the bottom,” she said. “I don’t think that’s necessarily what Congress or CMS intended when the No Surprises Act was passed, and it’s not a positive development for managed care.”

CMS plans to issue a final rule this summer that establishes the factors arbiters must consider when ruling on payment disputes and spells out how much weight arbiters should give to the qualifying payment amount, said Jack Hoadley, a health policy professor emeritus at Georgetown University’s McCourt School of Public Policy.

“People weren’t writing the law for the purpose of changing the way network contracts were negotiated, but I think it was certainly anticipated that it would have an effect on negotiations,” Hoadley said.

The Congressional Budget Office estimated in 2019 that the No Surprises Act would reduce health insurance premiums by up to 1%. More than 80% of these savings would come from renegotiated in-network contracts because the vast majority of patient care is delivered in-network, according to the CBO. The law could increase provider pay, too. Paired with new regulations that require insurers and providers to disclose negotiated rates, providers could leverage that information to demand higher reimbursements, said Loren Adler, associate director of the University of Southern California-Brookings Schaeffer Initiative for Health Policy.

“The thing people always leave out is that the median is higher than what half of doctors get paid,” Adler said.

The No Surprises Act aims to discourage private equity-owned specialty physician practices from avoiding insurance networks to generate revenue by balance-billing patients. Insurers citing the law to set lower rates are furthering that goal, Adler said. “This is a positive sign that the law is working as intended and may end up reducing premiums,” he said. “The market dynamics appear to have shifted slightly so that the playing

n field is a little bit more level now.”

“This is a reimbursement perfect storm like I have never seen in my 30 years.”

Ed Gaines, vice president of regulatory affairs and industry liaisons at revenue cycle management firm Tech Partners