Rae Woods: From Advisory Board, we're bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. This time last year, there were a lot of predictions being made about how the pandemic would revolutionize the healthcare landscape. And as we've talked about before, many of those predictions centered on the physician landscape. So today, I want to check in on those predictions and talk about what's changed and what hasn't. To do that, I've brought two physician experts, Sarah Hostetter and Daniel Kuzmanovich. Hey Sarah. Hey Daniel. Welcome back. Sarah Hostetter: Hi Rae. Daniel Kuzmanovich: Good morning. Rae Woods: It's been a while since we've had both of you on the podcast. Sarah Hostetter: Yeah, I was trying to think this morning about how long it's been. Been within the last year, right? Because aren't we coming up on Radio Advisory's one year anniversary? Rae Woods: It just happened actually. I think we've decided that our birthday/ anniversary date is April 10th. That was the day our first official episode went live, but the team and I, we all had to debate about what should be the official day. Sarah Hostetter: Well, happy podiversary. Rae Woods: Thank you. Sarah, I actually want to start with you by revisiting some of the questions that you and I talked about in the early stages of the pandemic. Back then, right about a year ago, there was a lot of conversation about... Big predictions being made about physician groups. What were some of those big predictions? Sarah Hostetter: Yeah, the talk was really around consolidation and how much consolidation we were going to see coming out of the pandemic. A lot of people were saying that there was going to be this buying spree for physician practices. We were going to see independent groups going out of business, kind of being bought up left and right, that we potentially could see this extinction of independent practice. And we never said that, but there was a lot of media coverage to that effect. And you and I spent a long time on that podcast talking about what we did and didn't think was true about all of that coverage. Rae Woods: Yeah. In fact, I remember you actually saying that the physician landscape, in particular those not owned by hospitals was actually strong. Not just that they weren't going to go extinct, but that they were in a place of strength. But even back then, right, we kind of contrasted that with the fact that there were still questions about physicians' ability to weather the storm across the worst months of the pandemic. Now that we are, I'm going to knock on wood as I say this, through that, tell us what actually happened. Sarah Hostetter: So we saw a little bit of what we predicted, which was some acceleration of pre COVID trends or some kind of consistency with pre COVID trends. So we saw continued consolidation in the specialties, which we were watching pre pandemic. We did see some acquisition, especially of small practices, primary care, paeds being two of the big areas where we saw acquisition of smaller practices. So we're talking, the five to 10 doc practices that health systems really need to be feeders into their kind of broader system, we did see that. But a lot of the independent groups, especially those mid to large groups that I work with have been able to, again, knock on wood, but weather the storm so far. They have been able to shore up their resources and work with their physicians to kind of keep the ship afloat for the last year. Rae Woods: Of the groups that have survived, are they likely to remain sort of fiercely independent physician groups? Sarah Hostetter: Yeah. They want to, and I think that a lot of them will. There is a trend that we're watching, which is different from acquisition, and that's partnership. So we are seeing more and more independent groups, hospitals, those who partner with independent groups coming to us and asking how we keep independent groups kind of alive and how we make sure that the future of independence is bright. And independent groups are looking for new ways to partner that isn't all out sale or acquisition. I think what's really interesting is there's now more folks who are willing to go into those types of partnerships with independent groups. So the entire market is kind of rethinking from acquisition to partnership, to enablement, to keeping and preserving independence. Rae Woods: Okay. So let's leave acquisition aside and talk more about partnership. Daniel, I want to come to you next. What kinds of partners are actually out there for physician groups, or maybe what kinds of things are practices prioritizing when they're thinking about potential partners? Daniel Kuzmanovich: The good news, I suppose is that there are a lot of options. Physicians from a partnership perspective have a ton of different options and they kind of have a span of, "Hey, I can enter and just do a small arrangement too. I can go into a really robust partnership." I would say that some of the entities that we're keeping track of are groups like private equity, who are working with a lot of independent physician groups to provide capital and resources in exchange for a stake of ownership. We're seeing health plans both acquiring physicians, as well as partnering with physicians. You've also got some National Medical Group franchises and enablement partners that are helping physicians practice a certain way, either employed or in an affiliated manner. Rae Woods: Let's pause on that for a second, because the three of us use the term enablement partner, but I'm not sure that other folks really know intuitively what that means. What do we mean when we say enablement partner? Daniel Kuzmanovich: The way I think about an enablement partner is, ironically enough not to use the definition of a word within it, is it is I'm going to enable you to do something. And so it is a, I am going to help you practice a certain way by either outsourcing a function or taking something back office or giving you a kind of business model and the tools to succeed in that business model, but really letting you, the physician retain your practice environment and the way you do that work. We're vendor neutral, but I think a big example here is Aledade, which is very popular in California and North Carolina, where they are working to help independent physicians succeed in value-based contracts and primary care. Sarah Hostetter: And you hit on one of the themes, Daniel that we're seeing in enablement partners, which is around value based care, right? So that's a big place that if you're a small group, it can require a lot of capital, a lot of investment, a lot of data, a lot of tech to do value-based care successfully. So that's a place that we've really seen all of these partners, enablement partners, but also kind of PE health plan et cetera lean in over the last year is how do we help you with those investments so that you can be successful undervalue? Rae Woods: And I think we're talking about, I'm going to use the word popular, the more popular types of partners that are out there for independent groups. Why do these kinds of entities rise to the top of the partnership list? Daniel Kuzmanovich: One of the things that I think is notable is, prior to the start of the pandemic, right, if you had [inaudible 00:07:29] 2020, if you were an independent physician, it was because you either wanted to be, or because the health systems around you were not looking to employ you at that particular time. We had seen this massive wave of consolidation. That sense of fierce independence that Sarah has already pointed out, that didn't go away just because of the pandemic. The groups that still want to be independent at the start of the pandemic still want to be independent now. And so the people that are going to let them have independence and control are really higher on the partnership, higher on the dance card, if you will, than those who are going to make them more of an employee. Sarah Hostetter: I think what's really interesting about what Daniel was saying was that pre pandemic, we had these same dynamics or the same kind of juxtaposition between autonomy and security, right? So there's this long narrative that employment equals security, that if we can be employed by a hospital, if we can be employed by one of these nationwide groups that that's going to give us the security that we want. And I think I've mentioned this on one of the other podcasts, but COVID threw a wrench into all of that. The groups that were "secure" don't look quite as secure as they did. The foundations of security across the market, across healthcare have been undermined, whether we're talking about compensation, whether we're talking about time off, whether we're talking about PPE and how much access to that you have. Security looks a lot different in a pandemic and coming out of a pandemic. So this kind of go independent route for autonomy versus get employed for security isn't quite as black and white as it was a year ago. Rae Woods: And I find it pretty interesting that it took us till this moment to bring up hospitals and health systems. And we said in the last conversation that perhaps they were more towards the bottom of the wishlist for independent groups. Is that still true today? Daniel Kuzmanovich: Yes, very much so. Sarah Hostetter: I think what's interesting though, Rae to this theme of partnerships, some hospitals are getting smart to this and coming to us and saying, "How do we work with our independent groups better? So the independent groups in our market don't want to be employed by us, don't want to be employed by anyone, what can we be doing to work more closely with independent groups? We had this collaboration during COVID. We all came together to fight COVID. How can we keep that up in a way that's productive for both sides of the kind of coin here, as opposed to all out employment?" Daniel Kuzmanovich: Before the pandemic, we were seeing some challenges to the concept of the employed physician model. And one of the things that's really been reinforced is, for hospitals and health systems, "Hey, I can still work with physicians without necessarily employing them." [inaudible 00:10:24] Sarah's point. That's what we saw throughout the pandemic. And that's where the smart organizations are saying, "Hey, maybe I don't need to fall back to my default strategy of employment. What's the best way to partner, not to employ and control?" Rae Woods: Yeah, exactly. And we started off this conversation by kind of talking about what others in the media got wrong about the physician landscape. And even though the conversation has shifted away from acquisition, I'm still hearing far too many focus on the partners themselves. What are the health plans, the PE firms, et cetera doing? But what the two of you are pointing out to me is that beyond just the partner, the model becomes very important. Sarah, you talked about this a little bit when it came to value-based care. I wonder if you can give me an example of how the same types of partners might be offering different models to physician groups. Sarah Hostetter: I think health plans are a great example here of how a similar type of partner can offer a range of models. Within single health plans, we have health plans who are taking the route of Optum Care, taking the route of a National Medical Group. And at the same time, within the same plan, offering enablement partnerships, offering almost what the blues offer through some of their partnerships, right? So we have within the broader landscape of health plans, a huge range of models. But then even within a given health plan, we're seeing some evolution and some changes based on kind of market dynamics in terms of what health plans are offering physician groups in the area. Rae Woods: And I think finding the right business model is important, but the practice model I think is important as well, and maybe something that's become even more important over the last 12 months. If I reflect on some of the early predictions made about the physician landscape at the start of the pandemic, I saw so many headlines saying, "We are just going to totally start from scratch on the way that we pay doctors, because the classic way isn't working." Daniel, where are those conversations one year later? Daniel Kuzmanovich: Still happening and starting to see some of that change. At the start of the pandemic, if you were a physician, you were paid mostly on some definition of production, whether that was the work relative value unit, whether that was dollars that you were paid on some definition of production. When the shutdown that COVID inspired happened, you weren't really producing and physicians saw a significant drop in their income. What that resulted in is a lot of physicians saying, "Hey, there's probably a better way. There's probably a better definition of what I produce besides just dollars or wRVUs, how do I work in a practice model that rewards me for that thing rather than the WRVU?" And we are starting to see groups coming up with, not just starting, but continuing to move down the pathway towards what we'll call a value based payment, where physicians are being paid based on the quality of what they produce, not just the wRVUs ... Sarah Hostetter: And that's happening in both kind of employed and shareholder independent settings. I think it's really interesting. If you put kind of comp on a spectrum, hospital employee groups were further in that direction pre pandemic, but we're seeing that uptick in interest in non productivity basics and incentives across the board with physician comp. Rae Woods: Given everything we've been talking about, would you say that the power dynamics have shifted in the physician market one year into the pandemic? Daniel Kuzmanovich: I would. I think physicians have both more options and beyond just the options, they have more agency. They get to be selective because of those options. And the things that they are looking for are more what I'll call physician and physician group centric than historically health system and hospital centric. Sarah Hostetter: Yeah. I agree. I think it's really about, how do we work together and how do we find synergies in what you're offering and what I need, whether I am an individual physician or whether I'm a physician group. I thought that was a really important one Daniel just brought up is, Rae, you and I talked a year ago about how we thought there'd be movement of individual physicians, but not a huge net movement of groups, right? And I still think that is true. We still need physicians. We need physicians in all of these settings. And so, there's almost two levels of this where we're seeing a balance in power between both the groups. And then also physicians are getting a little bit more power as they think about where they're going to work. Rae Woods: And what model they're going to pick. Sarah Hostetter: Yes. Daniel Kuzmanovich: Exactly. There are physicians who are leaving the very "secure" model of employment to go work at independent physician practices because they've done the math and they said, "Hey, the security I thought I had, wasn't worth it." And that's what my learning from the pandemic was. And that's a real change. Rae Woods: We're reflecting on the things that have changed in the physician landscape, right, one year into the pandemic. And one of the biggest changes that I've sort of felt, is just in the way that we talk about doctors, right? This time last year, we were celebrating healthcare heroes, right? We were out on our front porches banging pots and pans, trying to empower the clinicians on the front line. Maybe I'm the only one who feels this way, but I kind of think that there's been this shift in just how we talk about doctors. Have you felt that? Daniel Kuzmanovich: I sure have. I feel like at the start of the pandemic we were all lined up around the metaphorical ship as it went off to fight the battle with the doctors and nurses on board, and a year into this, we're now doing our day to day. This has felt a little more normalized to us and physicians have fallen a little bit out of the national conscience, but they are still, not to invoke the word metaphor too deeply, but they are still fighting the good fight against the pandemic. Rae Woods: No, I actually think the word metaphor is completely accurate here. I appreciate it. And I think that is why the conversation today isn't so much dominated by consolidation or compensation. It is all about burnout. But the three of us have been talking about burnout for a long time. This isn't necessarily a new challenge for the workforce, but perhaps it's that the root causes of burnout and the way leaders address it, those certainly have changed. Daniel Kuzmanovich: Absolutely. The causes of burnout that we've been paying attention to when the three of us have done this research have been largely about the administrative burden of medicine, which is very significant. And about feeling like a cog in the wheel, kind of in this context of security versus control, and feeling like I have a voice or a say in the organization and what it's doing. And also a sense of isolation. All of that has still been going on, but that sense of isolation is not just isolation from my colleagues, but isolation from my patients, isolation from my families. The challenges and the... I'll even go out and say trauma, physicians are often well conditioned to say, "I am not traumatized by this event," but that can even result in a blind spot when it comes to what they've experienced. Physicians have been through a time, whether it's the professional burnout piece or the personal anxiety, trauma, distress, fear that they have experienced. Rae Woods: And we're going to go deeper on how to address trauma in a further episode, because I want to make sure we give that challenge the time and space to really go deep on it. But I do want to give each of you an opportunity to talk about how leaders should address the specific challenge of today and the specific challenge of trauma that is different from what we've said about burnout in the past. Daniel Kuzmanovich: I'm going to do a twofer here. So the first one, when we talk to physician leaders, the word that they almost consistently use to describe their physicians is exhausted. And going after the administrative burden of medicine, maintaining whatever gains have happened over the last year where leaders look at the work being done and saying, "Hey, this doesn't need to be done," or, "Hey, this is not the right time to launch this big strategic initiative." Addition by subtraction, adding to physicians' lives by taking away, that's one of the things that leaders must do to focus on the- Rae Woods: Wait, hold on. Adding to physicians' lives by taking something off their plate. Daniel Kuzmanovich: Yeah. Rae Woods: That is really important, especially in a moment where... [Inaudible 00:20:03] talked about this last week, where she admitted that her biggest concern in recovery is that we're not prepared to deal with burnout when we still have to keep adjusting our strategic plan and investing in telehealth and doing all of this other stuff. And you're actually saying, in order to move forward, you might have to take something off the clinician's plate. Daniel Kuzmanovich: 100%. Right now, the bill comes due is a real concern that our physician leaders have around the nation, that the challenges of burnout prior to the pandemic and then what physicians have been through, not just as professionals, but fundamentally as human beings over the last year, now is not the time to go launch every major strategic initiative to bring the organization back. It's actually going to take some time to bring the workforce back, to recover, to heal both from where we were and from what we've been through. Sarah Hostetter: I think it's really easy to kind of think about this as a front line physician problem, right? As the physicians who were actively in the hospitals fighting COVID problem. But one of the things that Daniel said that resonates with me every time I think about burnout is, humans are traumatized after the last year. So that applies to all of your clinicians, all of your staff, it applies whether you have clinicians on the front lines or who were sidelined, right? That was a big theme we talked about a year ago, is this division in the workforce. And I think this advice that Daniel's giving, it's really important to reflect on that across the entirety of the healthcare landscape and across every practice setting. Rae Woods: Yeah. And we got into this a little bit in the episode we did on resiliency. And I want to circle two of the words that Daniel said which is, "If we need the workforce to heal, then we need to allow the workforce to recover." And that is a real challenge that is going to affect not just the physician workforce, but it's going to affect how people think about their strategic plan, how they're doing capital planning, right? This is going to have its fingers in the way that we do everything in healthcare, because everything we do in health care comes through our clinicians, and comes through our physician workforce. Rae Woods: Well, Sarah, Daniel, I cannot thank you enough for coming back on Radio Advisory. I can confidently say that you will be back on because like I said, we want to make sure we're devoting real time and space to talking about how to give clinicians real time and space to heal and recover. You two know what's coming, and that's my final question. When it comes to the state of the physician workforce today, what is the one thing you want our listeners to take away or act on? Daniel, let's start with you. Daniel Kuzmanovich: The burnout trauma piece is the one thing I want our listeners to take away and act on. In particular, I think that with everything that they have been through both as professionals and people, leaders have already been making a ton of progress. One of the things that a lot of leaders have done is really build up their connection and collaboration within their physician enterprise to help them address the shared experiences, the global experiences that they've been going through for the last year and beyond. And that's something where we cannot take our foot off the gas pedal, we should be increasing and sustaining those efforts, and that would be my advice to leaders. Rae Woods: Sarah, what about you? Sarah Hostetter: So I have a different message for health systems and independent groups. If you don't mind, I'll give both. Rae Woods: You both, always cheat. Go for it. Sarah Hostetter: I know. It's important. We're talking about partnerships. You need a different perspective. So with health system leaders, the message that I've been giving when we've had these conversations is, build real relationships with the independent physicians in your market that aren't just about driving referrals. So many times when we talk about alignment and partnership, it's referrals. And I would encourage health systems to think about how you develop relationships and partnerships. Value-based care is a great place to start there. But my message has kind of been that work... Things are shifting in the outpatient. We talked about the change in power dynamics. Your independent groups in your market can go from frenemy to competitor really quickly, so it's time to rein that in. And for independent groups, it's a different story. Sarah Hostetter: My story for independent groups is now that we're coming, hopefully towards the end of this crisis, how are you going to remain competitive? And how are you going to grow? That may be through partnership and may be through doing it on your own, but the one thing that COVID has shown us across the industry is that it's no longer enough to stay the same, that we have to embrace change and be willing to adapt to this market so that the next crisis won't hit us in quite the same way. Rae Woods: Thank you, Sarah. Thanks Daniel. Daniel Kuzmanovich: Thanks Rae. Sarah Hostetter: Thanks for having us. Rae Woods: We'll be right back with what our research team is watching this week. Rae Woods: The latest federal exchange data shows that more than 500,000 people have signed up for coverage on the federal exchanges. They did this during the special enrollment period between mid February and at the end of March, which means they signed up before the American rescue plan reduced premiums for most exchange customers. That will ultimately drive additional sign-ups this year. With 15 million uninsured Americans now eligible for some sort of subsidy on the exchanges and several states considering Medicaid expansion, it's possible we could see real movement on the uninsured rate in the coming years. Rae Woods: While some providers float the idea of mandating vaccinations for staff, the concept of a vaccine passport is becoming more and more contentious. Over a dozen states are limiting or banning vaccine passport requirements for entities receiving government aid. And the White House has ruled out the possibility of a federal passport system. But some are arguing for a shift in language, looking for COVID-19 health screens more broadly that would allow people to gather in ways that are largely free from pandemic restrictions. Rae Woods: President Biden is pushing for 400 billion of additional funding to expand and strengthen home and community-based care for Medicaid beneficiaries. The plan includes a pay raise for home health workers and more money for a Medicaid model that incentivizes moving patients from nursing homes and into home care settings. As we've talked about before, the pandemic has accelerated the shift to home-based care, particularly for seniors. So we'll be watching to see if the Biden administration has regulatory changes in store to support that shift. And if that happens, remember we're here to help.