Christopher Kerns: From Advisory Board, we're bringing you a Radio Advisory. My name is Christopher Kerns. You can call me Christopher. I am once again filling in for Rae Woods, who's currently on trial for war crimes at the International Criminal Court in The Hague. Christopher Kerns: For part one of our discussion, we talked a lot about the current State of the Union in healthcare. We looked at what are the forces and trends and challenges that are facing different parts of the industry, and we really focused a lot of our attention looking at what are the big macro trends that are facing everyone in healthcare. To help me with that discussion, I invited my longtime colleague, Yulan Egan, to join me, and she has decided to join me once again for part two of today's discussion. Yulan, thank you for joining once again. Yulan Egan: Thanks for having me back. Christopher Kerns: In part one we spent a lot of time talking about how the pandemic has impacted the financial fortunes of different parts of the industry, but today I want to talk a little bit about the future. We really want to see around those corners, we want to see a little bit farther down the pike than other parts of the industry might be able to see. And typically we do that in the form of making predictions about the future, but in leading this research for our State of the Union, you took a very different approach this time. Why don't you tell us a little bit about that and why this year's State of the Union and our look into the future is a little bit different from years past? Yulan Egan: As we got deeper into the research for this year, I think what we ended up feeling was that the industry to a certain extent, it really is in a true state of flux. The pandemic has upended a lot of our longstanding assumptions about how the industry can and should operate. It's upended the regulatory landscape. And so there are a lot of open questions, or as we've tended to call them sort of point of inflection that we're approaching right now, big structural elements of the industry that really feel like they could play out in a number of different ways. And so rather than making a single prediction about what's going to happen, what we've tried to do is paint a picture of some different realities and some different futures that we could see the industry going toward. Christopher Kerns: So not to get too hyperbolic here, but I do want to bring up an analogy that came up at the very beginning of this research process. It came up over and over again. It was this idea that the pandemic has been the single biggest disruptor to global civilization since the Second World War. Nothing in the past 75 years, not decolonization, not the fall of the Berlin Wall, not even 9/11 has so altered the nature of daily life on a global basis all at once more than this pandemic has. In our conversations during the beginning of the State of the Union research process, we kept thinking of those images of Roosevelt, Churchill, and Stalin at Yalta and Potsdam. That's when you said you wanted to banish two phrases from common parlance that we are hearing a lot these days in the press. You want to share what they were? Yulan Egan: Yeah, the first one, I think I'm probably not alone in, and that's the "new normal". I think this is the term that we all used all the time in the early days of the pandemic, and we very quickly started to get sick of that language. I don't like that language because it suggests that the future is set, and that there aren't these open questions, that we know what the new reality is going to look like, and I just don't think that that's true. So I've been trying very, very hard to move away from that terminology and that language across the past couple of months. Christopher Kerns: This really gets back at that image of Churchill, Stalin and Roosevelt at Yalta, which is we didn't really know what world they were building at the time. And the healthcare industry is finding itself in a similar position. It doesn't know what the world is going to look like, but the people at the table are the ones shaping what that future is going to be, whether they like it or not. Yulan Egan: That's the same reason that I'm going to name the second phrase that I want to banish, which is this concept of the recovery period because similarly, I think that suggests that we know what the future should look like. It should look like the pre-pandemic reality and that the phase of time that we're in right now is all about kind of getting back to that pre-pandemic status quo. I think that that's also untrue. I don't think that's an accurate depiction of where we are as an industry right now. Christopher Kerns: But it's also not true that this recalibration phase is going to last indefinitely. This isn't something that's going to last for the next five to 10 years. Those decisions that need to be made, they're being made right now, and that amount of time that we've got is relatively short. Would you agree with that? Yulan Egan: That's true. I think the future is absolutely being written now, but it's also being written very, very quickly. So there's this short window of opportunity that we have to influence what the future is going to look like, which is exciting I think to a certain extent. There's a real opportunity for today's healthcare leaders to shape what the future is going to look like for years to come. Christopher Kerns: Let's talk a little bit about those various branching futures and the decision points that we are at right now as an industry. Let's start with one that I know is very near and dear to the heart of our host Rae Woods, and that is the new spotlight on health equity. Christopher Kerns: Now Yulan, you know me. You've known me a long time. I have a cold, dead heart. I am a cynical, cynical human being. It's part of my job as a researcher. It's easy for me to dismiss the new focus on health equity as a trend. Now, when I say easy to dismiss, it's not because I want to; it's just because sometimes there are a lot of things in the industry that can sound like a trend or a talking point, a box to check until we move on to the next thing. I really, really hope that's not true this time. So the question I have for you first is what will it take to make health equity part of the new reality and not just a passing series of buzzwords? Yulan Egan: Maybe I'm more of an optimist than you- Christopher Kerns: Let's hope so. Yulan Egan: ... but I actually think that we're going to see progress on this front, no matter what. Obviously this is not a new issue that has been brought to bear by the pandemic, but the pandemic has shown a spotlight in a way that really makes it impossible to ignore. And so what we're seeing is that pretty much every single healthcare organization out there is making a commitment to move the dial on health equity. Yulan Egan: I think the fork in the road that we're approaching here though, is does this continue to be something that is solely a mission imperative, which is no bad thing. I think it's a good thing that this is becoming core to the mission of every organization across the industry. But I think what makes even more progress as an industry, if we can actually solidify health equity as a business imperative. So if we can make it something that has true financial incentives that are tied to it so that the financial success of an organization, its leaders and its employees really hinges on its commitment to health equity. Christopher Kerns: I think this is something that is going to have to be embedded in health policy as well. We're starting to see some of that right now with the desire from CMS to collect more and more data around this. And that will force frankly, a lot of providers and health plans to collect a lot more data on this. But without that data, it's really hard to see a lot of progress being made without a lot more daylight being put on it. Yulan Egan: It's hard without the data and it's hard without actual financial incentives. I think it's still early days from a health policy perspective, but this administration has been pretty clear that they want to explore different ways to tie progress to health equity to reimbursement. There's a lot of talk for example about how to do that within the Centers for Medicare and Medicaid Innovation through the various value-based programs that they promote and roll out. Christopher Kerns: For longtime listeners of this podcast, they'll know that Rae Woods has spent a lot of time focusing on what are the ways in which different leaders within the industry can influence what those metrics need to look like so they can actually be part of the conversation around what are the business imperatives that are tied to this. So listen to some of our other podcasts on that if you want to learn more. Christopher Kerns: Now, I will admit that for all of my skepticism, cynicism, I am actually fairly bullish on the prospects for health equity becoming a part of the business incentives for our industry. I really am. But you also know from me, Yulan, that I'm a lot less so on one other aspect of health policy, which is price transparency. And I don't think I'm alone there. There's a lot of effort right now to mandate a lot more transparency from payers and providers, but I have a number of different suspicions that it may not necessarily amount to very much. Let's talk a little bit about that. Christopher Kerns: When we think about the price transparency incentives that are out there, what are the things that give you the most amount of pause? I'll share some of my own ideas here in a second. Yulan Egan: Yeah, and I probably share your skepticism on this one. Again, I think this is still an open question. This is still an area where the future is unwritten, so to speak. I think the big questions center around the enforcement of some of the new mandates that we're seeing out there. So lots of new mandates coming down for both payers and providers, but so far the financial penalties for non-compliance have been relatively small. And then beyond the question of compliance, there's the question of is the data even good? Is the data even usable and something that we can sift through in a meaningful way? Christopher Kerns: The good news on that front is that the penalties are increasing. So non-compliance is no longer going to be that much of an issue in that providers, health plans, payers of all kinds are going to have to comply with this. The real question is will the data be usable. But even if the data is usable and there is a lot of transparency, will that actually have the intended effect? I think it can for services that are commoditized, but I actually fear that more transparency for high cost services does not fundamentally change the negotiating postures between payers and providers, and if anything, it could lead in certain markets to increases in costs as the lower cost organizations simply raise their prices to what they view as the market average. Christopher Kerns: So a lot of things that we need to still know about there, but let's just put it this way, I will feel better about it if I start to see some real effects here that start to push prices down in a meaningful way. Yulan Egan: Yeah, I think it really comes down to who uses the data at the end of the day. I think our gut instinct, when we hear about transparency is to assume that it's going to be consumers. So patients in this case, who are actually using the data to shop around. I think you bring up a good point that providers and plans themselves are also potential users of this data. And to the extent that they're the main users, they may be trying to use the data in other ways, not necessarily to decrease prices or compete on basis of price, but to increase prices in certain instances. Christopher Kerns: All right, let's shift our attention though, to the part of the industry that you and I have talked about many times as the big game changer for healthcare, which is who will engage the physicians. We both said before that we think the future of healthcare belongs to whomever can engage the physicians. And they've got a lot more options than ever. We've got tons of people right now that are vying for physician loyalty. You've got the health systems who've been employing them for years. You've got private equity looking to aggregate specialists. You've got the nontraditional disruptors that are focusing on primary care for specific segments. And of course, you've got the health plans looking to migrate a lot of doctors to value-based payments, such as Medicare Advantage. So the big question for you, Yulan, who's going to win this battle royale? Yulan Egan: I think it's still anyone's game at this point, but I do think that we're approaching the point where whoever wins this battle is going to win it because they're able to look beyond the binary choice of independence versus employment. Because when we talk to especially the most sophisticated physician groups out there right now, they're not necessarily looking to sell. This comes back to the conversation we had in part one of this podcast. Physician practices are actually seeing relatively stable finances right now, especially those that are more sophisticated and more attractive to potential buyers. So we're hearing lots and lots of talk about partnership as an alternative to employment. So I think that finding ways to partner with physicians in new and interesting ways is really going to be the differentiator from a competitive perspective. Christopher Kerns: It really is an irony for the ages that over a period of time in which physicians have never been so battered and bruised and beset, they also find themselves with more power and influence than ever. Never have physician practices been more valuable than they are today and never have the options available to them been more capacious than they ever have been. I think the experience over the past two years has really changed a lot of the decision criteria for a lot of physicians. They want not just more partnership, they want things that are going to enable them to improve their lives, not just their livelihood. And I think that is a lesson that too many organizations fail to appreciate. Yulan Egan: I think more and more physician practices are also recognizing the value of value-based reimbursement. The pandemic really has shown a spotlight on the downside of traditional fee-for-service reimbursement structures because when your volumes disappear, so does your revenue. So I think the interest that we're seeing among physicians and value-based care models and value-based payment models is really at an all time high, and they're looking specifically for partners that can help them transition to those types of models. Christopher Kerns: This gets at something that you have been talking about for the last couple of years now, Yulan, which is that there is a convergence in the public sector and the private sector that giving risk to the physicians is the key to being able to control costs, whether we're talking about the public payers that are trying to control utilization or the private payers that are trying to control for price by steering patients toward lower cost sites of care. So I think that the pandemic has just given a giant shot in the arm to a lot of those efforts. Yulan Egan: Absolutely agree. I think employers are an important part of that dynamic as well. We hear a lot of interest among employers in creating what they call value-based primary care networks. So specifically finding ways to steer their employees toward primary care physicians that aren't necessarily affiliated with a large hospital or health system. Christopher Kerns: When we're talking about steerage, it's a great segue to talk about digital health as well, because digital health of course has been the biggest game changer in engaging patients and frankly physicians as well. Over the past two years, digital health has made giant leaps forward. Everyone expects that digital health is here to stay, especially for behavioral health, but you've said to me before, Yulan, that the question isn't if digital is here to stay; it's where it will live. Yulan Egan: Yeah, for me this is one of the most I think surprising effects of the pandemic, because if you had asked me three years ago, who would be in the lead once telehealth finally had its moment in the sun, I would not have thought that it would be local providers. I would've assumed that it would be standalone technology vendors, maybe some of the big tech companies. But what we saw across the past two years is that local providers really took the lead. They delivered the majority of the virtual care that has been delivered across the course of the past two years. And so I think the big question now is can local providers maintain that lead or do we start to see some of the technology companies chip away at it? Christopher Kerns: Well, what are the ways in which some of those big tech companies can do so, when we think about what are the benefits that the local providers had that the national telehealth providers don't have and how are they looking to close those gaps? Yulan Egan: I think a lot of it comes down to expanding the scope of services that they offer. It needs to be about much more than just one-off urgent care visits. And we are seeing that; telehealth companies that are really investing in chronic disease management and expanding into full-blown primary care. So I think that's one aspect is just the scope of services that they offer virtually. Yulan Egan: The other big advantage that the local providers have though, is the ability to really coordinate the follow up care. So you're not just providing care in the moment; you're also providing referrals to specialists, referrals to downstream care. So that's the other piece that the technology companies and the vendors are going to have to solve for as well. They seem to be heading in that direction. We've seen them actually acquiring third-party navigation services so they can really start to fill in some of those gaps. Christopher Kerns: So I think it's fair to say then that while digital health is here to stay, the performance bar is raising pretty rapidly across the entire industry, and whether you're local or whether you are a national tech company, you're going to have to be able to meet that bar if you want to compete going forward? Yulan Egan: Absolutely. I think for their part, local providers are going to need to invest more heavily in things like the technology platform and the customer experience if they want to continue to compete with those third-party vendors. Christopher Kerns: This is part of a long running debate across the entire industry and not just in digital health, around the value of integration versus fragmentation. I think this debate is nowhere more salient than in home-based care, which also got a giant leap forward in 2020 and 2021. When we think about the future of home-based care, Yulan, what are some of the things that are most important for you? As we start to look at the future, what are the things that you are most excited about and most worried about? Yulan Egan: I think there's been a lot of conversation about home-based care's potential. A lot of excitement about its potential to improve the patient experience, maybe to improve quality, and potentially to serve as a lower cost alternative to traditional facility-based care settings. I worry a lot about the potential downsides, which I don't think get quite as much attention. So you brought up this tension between fragmentation or integration. The healthcare industry is not historically known as being particularly good at integrating care. And so I worry a lot about what happens in a world where we add millions and millions of patients' homes to the mix. That raises a whole new coordination challenge for an industry that hasn't historically excelled at that. Christopher Kerns: It's also raising the question of resourcing, because we are in a massive labor crunch right now across the entire industry for traditional sites of care, or even frankly, emerging sites of care. Whether you are a hospital, whether you are an ambulatory site of care, whether you are a physician office, you are probably struggling to retain talent right now, and adding a whole new set of care sites with millions and millions of patients' homes can only make those stresses that much more difficult. Yulan Egan: We're already starting to hear of a lot of organizations who are bumping up against that reality. Whether it's a health system or a health plan that might be trying to launch a new home-based care program, we're hearing that they're running into a lot of issues with hiring and that's really limiting their potential to take on new patients. Christopher Kerns: That's why I think that digital health and home-based care have to work simultaneously because we have to find ways to improve the scale and the reach of the resources we have, and it's hard to imagine that without deploying technology far more aggressively than we currently have. Yulan Egan: Absolutely. I think if home-based care is going to become a cornerstone of this industry moving forward, it needs to evolve beyond home-based care as we have known it in the past. So it needs to look a lot different from say the traditional home health programs that we might be used to. Christopher Kerns: Yulan, I want to thank you again for joining us here today. There's so much to talk about in every one of these topics, but one thing I want to end on is this notion that in a lot of the conversations that I've had with leaders across the healthcare industry, there is often, and I have to say, unfortunately, the sense of fatalism. It's not really pessimism per se, but it's this notion that whatever future takes shape, it's going to be done to someone; the government, the health plans, the health systems, big pharma, there's always some big, powerful entity who will end up calling all the shots and the rest of the world is just going to have to fall in line. But really to my mind, that form of thinking I think is exactly wrong. And if it were correct, predicting the future would be a whole lot easier and you wouldn't need people like Yulan and me. Healthcare really is shaped by the daily decisions of millions of people, and a lot of what we're trying to share with you all is to help make those decisions a little bit easier. Yulan Egan: Yeah, I've led our State of the Industry research for the better part of five or six years at this point, and I have to say that I think this year's research was my very favorite for the reasons that you're describing. I think the decisions that healthcare leaders are making today carry a very different weight than they have in recent years, because they're helping not just to set the strategy for the next year, but really for the next generation of healthcare leaders and the next iteration of what this industry is going to look like. So it's an exciting time, obviously born out of a very unfortunate reality, but I will be keeping a close eye on how all of these questions pan out, and I'm excited to see where things go from here. Christopher Kerns: Well Yulan, you and I have worked together for a very long time, and I'm looking forward to working with you in 2022. Thank you for joining us yet again on both the podcast and on Stay Up to Date and for many, many of the pieces of research that have come out of this. Yulan Egan: Thank you for having me, and I'm looking forward to another year of great research ahead. Christopher Kerns: I just want to impress on you one last thing, which is, this is your Yalta moment. If you are listening to this, you are one of the people who can shape the future of healthcare. And the big decisions that need to be made are in fact, being made right now, and you are one of the people who is making them. That might be intimidating. It also might be thrilling and exhilarating. I hope it's the latter. As we move into 2022, know that we will be there every step of the way, helping with new ideas and new strategies for both adapting to and coping with the various challenges that lie ahead, and we look forward to serving you much more in the coming year.