Rae Woods:
From Advisory Board, we are bringing you a radio advisory. My name is Rachel Woods. You can call me Rae.

Rae Woods:
Value-based care and risk-based payment is on everyone's mind. In some ways, it feels like interest and value-based care is at an all-time high, but here's the thing. It's not new. The headlines I read about value-based care today are eerily similar to the big statements the industry said 10, 20, even 30 years ago, so, today, I want to talk about what it would take for the industry to move head first into risk-based payment and why, this time, the industry may actually be poised to take a big leap. To do that, I brought experts Daniel Kuzmanovich and Clare Wirth.

Rae Woods:
Welcome back to Radio Advisory, Clare and Daniel. How are both of you doing today?

Clare Wirth:
I'm doing great. Thanks for having me back.

Daniel Kuzmanovich:
Springtime in Northern Virginia.

Rae Woods:
I'm excited to have you both back on the podcast because our audience is going to learn that you two have a pretty wide range of expertise.

Rae Woods:
Clare, you've been on here before to talk about behavioral health. Daniel has been on here many times to talk about physicians, but you two are actually our resident value-based care experts, which is what we're here to talk about today.

Clare Wirth:
Yeah. I'm excited to talk about some of my bread and butter value-based care research.

Daniel Kuzmanovich:
We all need to know about value-based care.

Rae Woods:
At the beginning of the pandemic, we all know that volumes tanked and, at the time, we heard this chorus of rallying cry saying, "We want predictable payments. We want capitation." I will say though that, for as many cries for more value-based payment, we also heard some naysayers maybe not so keen on changing up their payment models in the middle of a crisis like COVID-19. What are the two of you hearing from the market today?

Clare Wirth:
I would say the last couple of years has been a microcosm of value-based care as we know it over the last 10 years. What I mean by that is we had an initial rallying cry, like you said, around switching to value because, all of a sudden, fee-for-service looked a lot more challenging because we had way less demand than we've ever had, and so there was this rush or urgency to shift to risk, and then, over the last couple of years, as with your conversation with CMMI Director Liz Fowler indicated, that inevitability, that urgency has diminished especially as we've had first, second, third, fourth, however many waves of COVID you want to count.

Daniel Kuzmanovich:
It's a lot of interest still, but there's not actual momentum, if that makes any sense. People are very interested in it as a topic, but the actual transformation is maybe not happening as fast.

Rae Woods:
You've hit exactly on my frustration. The three of us have watched for years as the overwhelming majority of organizations maybe talked about moving towards value-based payment, but, really, we only saw pockets of meaningful action. You've clearly had those same conversations. My question is do we actually have the numbers to back up what we're hearing in the market?

Daniel Kuzmanovich:
We do. Some of the data out there suggest that only about 40% of the dollars in healthcare are directly tied to fee-for-service anymore, but the actual meaningfulness of the dollars that are tied to value is very small. Only about six, 7% of the dollars in healthcare are actually tied to what a lot of people think as the classic value-based payment, capitation or population based payments. Only 40% are fee-for-service, but there's only $7 if you only spent a hundred dollars in American healthcare that are actually really meaningfully delegated risk to a provider organization.

Rae Woods:
Daniel, what do you mean by meaningful risk?

Daniel Kuzmanovich:
Where it makes total sense to switch from this fee-for-service paradigm to a demand destruction value-based payment model paradigm.

Clare Wirth:
Yeah, there's actually a study that comes from that. Daniel has, I think, mentioned the 2016 Harvard Business Review article that looked at what the exact tipping point would in fact be. They used an integrated delivery system, and I know that's not everyone listening, but it's a helpful proxy. What they found was, if 23 to 29% of a group's payment came from that population-based payment, so capitated payments made directly to the provider, that is when they had a true business incentive to eliminate waste, cost, avoidable utilization because, in that range, that's when they had not just the strategic imperative, but the financial one.

Rae Woods:
Wait a minute. Wait a minute. So organizations have adopted meaningful risk when 23 to 29%. I'm just going to say 30% because that's easier when 30% of their payments are tied to risk. Daniel, you said that, today, we're at seven.

Daniel Kuzmanovich:
Yep.

Rae Woods:
That's not exactly inspiring...

Daniel Kuzmanovich:
We agree.

Rae Woods:
... especially when you think about the fact that the industry's been moving to risk for decades, I mean 10, 20, 30 years, depending on how you want to measure it. This has been a long time coming, and we're still very far away from getting to meaningful risk.

Clare Wirth:
Yeah, and that's what we've been struggling with. I mean, the last seven to eight years, someone argued we're just glad there's some water in the glass. There. That's some progress that we've been making. Organizations that have moved into risk are moving further into risk. That's the good news of it, but, yes, we're still 23 percentage points away from the actual tipping point.

Daniel Kuzmanovich:
This is actually something that Clare and I are working on a lot right now. We recently brought a collective of executives from across the industry and asked them, hey, what's it actually going to take to get to meaningful risk? What would it actually entail if we did that? We had them work out, all right, if not just 30%, but truly like 70%, if the majority of dollars in healthcare was actually tied to value, to meaningful risk, what would it take to get to that point in time?

Rae Woods:
You brought these folks together because, as Clare said, we have been trying to push the market towards risk for a while. That has been Advisory Board's perspective, and we're certainly not the only one in the industry, and so you decided, hey, let's actually get these people who are maybe pointing fingers at each other, blaming each other, in a room to design what would it take to actually get there. Who were actually the people that came together for this event?

Daniel Kuzmanovich:
We brought executives, so think about the CXOs, VPs from about 120 different organizations. We've done this kind of conversation a couple of times now. We had health systems in the room. We had hospital leadership. We had CEOs. We had physician groups. We had health plan.

Clare Wirth:
Post-acute care.

Daniel Kuzmanovich:
EMR companies.

Clare Wirth:
Mm-hmm (affirmative). Yep, digital technology firms all across the board.

Rae Woods:
Wow, and you talked to more than 120 executives. What are the biggest things that you learned, I guess, from them about what it would take to actually get to meaningful risk?

Clare Wirth:
We have had a great conversation around what would need to happen to move us forward into risk and also a productively skeptical conversation about what would hold us back, and there were three main themes that came across. The first was the way that we talk about risk matters. Secondly, partnership is more important than growth in value-based care, and third was that the fundamental piece that had to come out of that meeting was action.

Rae Woods:
All right. Well, let's talk about each of these starting with the way we talk about risk matters. I'm assuming that this is where you're going to get into language.

Daniel Kuzmanovich:
The power of language is pretty important. For example, why would someone want to do something that is inherently risky?

Rae Woods:
That's right.

Clare Wirth:
Or capitation. It doesn't sound all that appealing.

Daniel Kuzmanovich:
Decapitate.

Rae Woods:
Decapitate.

Daniel Kuzmanovich:
The language here really matters, and sometimes the way we talk about the concept of risk actually disengages people. Put that together with the sense that this is not actually inevitable that some places have found in recent years and, suddenly, the language actually is an impediment to making progress on this industry objective.

Rae Woods:
You talked about the word risk, which definitely is a trigger word especially when I'm having conversations with folks, but I will tell you I have grown to hate the word value. I recently told somebody that, instead of having a swear jar, we should make a value jar because it's become... I mean, could... It's become meaningless, right?

Rae Woods:
Daniel, you described... Daniel and Clare, you both described a very, very specific definition of meaningful risk, and that is what we mean when we talk about pushing the industry towards value, not this generically happy idea that we are providing the best care for people and saving money in the process, that we're actually getting to 23 to 29% of our payments in global or capitated payments.

Clare Wirth:
Yeah, and that's why this meeting was such a mental exercise for folks. We had to put them in a future state where we had value with teeth, real value that they had to put the dollars where they were putting their implementation, and so, that was true, this was a mental exercise. I would assume folks who attended it were tired afterward.

Rae Woods:
That mental exercise is even harder when you are forced to have this conversation not just with your competitors, but for people that have different incentives than you do or have different definitions of these things as you do, which brings me to your second takeaway, which is all about partnership. Why is that so important here?

Daniel Kuzmanovich:
Because you can't grow in value-based care without partnership. I actually think one attendee said it really well. You actually need to have a partnership strategy that enables growth, not a growth strategy in a world that is very value-based care focused and meaningful risk-based focused. It's the partnership that allows you to grow, not growth for your own ambitions.

Clare Wirth:
Everyone assumes that the only way to make progress in value-based care is by making it across industry effort, and I think that's a good assumption, but we really wanted to test it in action.

Rae Woods:
How did you test it with this group?

Clare Wirth:
Well, I think it really was affirmed in the commitments the folks wanted to make on the latter half of the conversation. We talked about how this needed to inspire action, and one of the big pieces of that was people saying, "I need to be a better partner to my health plan, to the community health center down the road." People put it on themselves as their actionable piece they were going to take out of this.

Rae Woods:
This is honestly something that we do fairly often in Advisory Board events. We try to push the audience to think through what is going to be different as a result of this conversation, what is going to be different as a result of coming together, but what I like about what the two of you did is you actually forced people to write it down. What kinds of action items did you hear from your attendees?

Clare Wirth:
My favorite takeaways were the people who wanted to face their fears. In value-based care, there's a fear of loss, there's a fear of change, there's a fear of giving up your secret sauce because your success is dependent on the partners you're working with in this new world.

Rae Woods:
The loss can mean actual financial loss here. Let's not forget that.

Clare Wirth:
Mm-hmm (affirmative). Mm-hmm (affirmative).

Daniel Kuzmanovich:
You can do so well in value-based care, but, if you miss time to market, you can put yourself out of business.

Rae Woods:
That's right. That's exactly right. I applaud the two of you for running at that fear.

Rae Woods:
I don't want to be the pessimist in the room, but you've done these sessions four or five times now. At the end of your time together with these executives, do they actually believe that we can get to meaningful risk as an industry?

Daniel Kuzmanovich:
As someone who is naturally pessimistic, I was expecting that many of them would, but, surprisingly, they very much proved me wrong. A lot of folks said, "Yeah, we can do this." There was an overwhelming sense of actual optimism about the ability to push our industry into this new direction.

Rae Woods:
As always, I have one last question for you. When it comes to moving the market towards meaningful risk, what is the one thing that you want our listeners to focus on?

Clare Wirth:
For me, it's get started. This is a long journey ahead. It is treacherous. As we've discussed, the folks who lived that future state marinated it and said that it was worthwhile the smaller pieces you have to take along the road, but you have to start from somewhere, and that's what we had folks in our session do.

Daniel Kuzmanovich:
Similarly, my big word for folks is agency. Healthcare has a cost problem. We don't talk about controlling healthcare costs anymore. We talk about controlling cost growth. Value-based payment models succeeding in value-based care is one of the ways we cannot just solve this costly equation, but also improve the quality of care that we deliver to patients.

Daniel Kuzmanovich:
The interesting thing that I think every person in that conversation that we facilitated took out was they actually had the agency to start making change on value-based care themselves rather than waiting for some other actor or stakeholder to be the cause of change. They could do it themselves.

Rae Woods:
Name your fear.

Clare Wirth:
When it comes to value-based care, I don't think it's value-based care people are afraid of. I think it's the fear of change. It's the fear of changing their role in the industry. It's having to lean on partners and the risk that comes along with that. I think it is to name your fear like any good therapist would tell you and take steps from there.

Rae Woods:
Spoken like the behavioral health expert. Well, Clare, Daniel, I'm going to cheat and ask you one more question. A lot of what you're talking about is taking action, just get started, name your fear, own your agency. Do you have an example of an organization that's doing that maybe that came from these events?

Daniel Kuzmanovich:
We do. Summit, which is a physician organization in Tennessee, is one that's already gotten started on their action, and maybe we should ask them what they're up to.

Rae Woods:
Yeah, let's do it.

Wendy Ferrell-Smith:
My name is Wendy Ferrell-Smith. I am the vice president of value-based care at Summit Healthcare in Knoxville, Tennessee.

Rae Woods:
Wendy, I know that you at attended Advisory Board's event on the future of value-based care, and we forced you to put pen to paper and say, "What is the action item that you're going to take back to Summit?" and you actually came up with a pretty interesting idea and put it into practice. Tell me about the commitment that you made.

Wendy Ferrell-Smith:
Honestly, at the time that I had attended the summit, I had only been with our organization for a short time, still learning the ropes, trying to figure out what we can and cannot do, and this was something that I had done at another employer, and I thought, after the summit, it was like, "You know what? We should do that again here," so I went to our CEO and asked for a commitment, and he said, "You know what? It's just a no-brainer. Let's do it."

Rae Woods:
What was that project that you got the spark to say, hey, let's actually go put this into practice?

Wendy Ferrell-Smith:
We've dubbed it the Friendly Practice Challenge. We have internal dashboards in our EMR system that let us monitor our successes, our opportunities around different quality metrics and getting folks in for annual wellness visits and things like that, and so we picked some areas that we have some opportunities for improvement. We picked four. What we've decided to do is we want to acknowledge that getting and taking care of a patient, it takes a village. We all say that. It's kind of a cliche, but it's so true. This is a way for us to acknowledge team-based care, that how every person, from the person who is doing outreach, the scheduler, she's not just the scheduler, she's an integral part of the healthcare team because, if she doesn't help get that patient in, then we can't trust the processes that we have internally to help set that patient up for success all year long.

Rae Woods:
That's one of the things I found so interesting about this Friendly Practice Challenge is you're looking at these gaps that you know that you need to close in order to meet your value-based care goals, but you specifically chose not to actually lean on the docs. You chose to look at everyone else in the practice that, to your point, plays a role in these gap closures for patient care. Tell me why you chose to focus on those people, the village, so to speak.

Wendy Ferrell-Smith:
Yeah. Well, physicians understand, most folks in healthcare understand the value of getting patients in and getting those preventative screenings and all of those kinds of things. I think most of us understand that. What I don't know is that if everyone really understands their piece of the pie and why it's so important. Again, to refer back to that scheduler, they may not realize that, when we call to get folks in, it's not a revenue driver just because we need to see another person. It really is to help set that person up for success because so many studies have shown that, folks coming in for that annual wellness exam, they have lower total cost of care. They have fewer ERs. They have fewer admissions, so, really, it's a win-win all the way around.

Rae Woods:
Yeah, you're absolutely right. We depend on these frontline folks, whether it's staff, whether it's the person that's rooming the patient, to get a lot of information about that patient care and, to your point, actually close some of these gaps. You said you identified four opportunities for gap closure. You mentioned annual wellness visit is one. What are the other areas of opportunity?

Wendy Ferrell-Smith:
Yeah, so we looked at some of the things where we may not always do or perform that activity in house, and so, breast cancer, colorectal screening and diabetic eye exam, there's opportunities for us to close. We actually do have an imaging center, but we recognize that patients have choice, too, and they may want to go other places. We have retinal view scans in our clinic so we can do some of those eye exams, but, again, patients, those diabetic patients, may have a relationship with a provider, and we're not trying to replace that at all. We're just trying to sure that, if they don't, that we're helping close it.

Wendy Ferrell-Smith:
I say that to say that we know that sometimes patients are up to date on their care, and it's just important for us to get that information back into the system. When you're rooming a patient or when you're seeing them, sometimes I think that when we just get into our day to day, we don't always recognize why it's so important that we get that information back into our chart or why it's so important to make sure that the patient really is up to date on their screenings, because I know for myself personally, even though I have lived in this space for so long, sometimes I think, "Oh, yeah, I've had my mammogram. Oh, gosh, I guess that was three years ago." It's really important. Even though if you asked me while you're rooming me, I might say, yes, I'm up to date though maybe I'm really not.

Rae Woods:
Getting that extra level of detail to then follow up and say, hey, it actually has been three years.

Wendy Ferrell-Smith:
Correct.

Rae Woods:
Let me get you scheduled and make it as simple of a process for the patient as possible. Again, these are things that we shouldn't necessarily expect the physician to be doing, but we can expect someone else in the practice to be doing. Now, you've described this as a challenge, and challenges mean there is a goal. You've got these four areas of opportunity, annual wellness visit, colorectal screen, breast cancer screening, and diabetic eye. What does it mean if the staff is hitting their target in these areas?

Wendy Ferrell-Smith:
Yeah, so we decided to go with the four-star rating. Again, part of that reason is is we're using our internal data to measure success. We can get information from various payers, but we look to try to treat all of our patients exactly the same, so we like to use our internal dashboards for our performance levels, and so, knowing that sometimes it's hard to get those documents in from others, that's why we chose a four-star.

Wendy Ferrell-Smith:
Honestly, even though we started it this year, we tried to promote it a little last year because these are multi-year measures, so we're saying close it now and it will be successful for a couple of years. We went with the four-star level because we wanted to make something that was attainable for everyone and not too much of a stretched goal that, folks, they may be discouraged and not be as interested.

Rae Woods:
Challenges have goals, but challenges also have rewards. What are you offering to the practices in your Friendly Practice Challenge?

Wendy Ferrell-Smith:
Well, obviously, bragging rights, that is one and, honestly, that's one of the things that we're doing. We are sharing the information every month to say here's where you are in your individual practice. We're pretty transparent across the organization as where folks are in their journey into doing this, but then we do have... Like I said, I have commitment from our CEO at the end of the performance year to provide a recognition prize, if you will, which is still to be determined, but I will say I really feel like folks will be pleased with this. It's not going to be just like a gym bag or a pizza party or something like that. It's definitely meant to be more than that.

Rae Woods:
Yeah, something that's substantive, something that is actually a reward for getting all of these people together to do, let's say, some of the manual labor that is required to close these gaps that help the group actually achieve its goals.

Wendy Ferrell-Smith:
The other thing that we're doing is, every month, we're also providing what we're calling a tip because, again, when you're doing this job day in and day out and if the patient says, "Yeah, I'm good to go," even though we don't have their information in our chart, we may or may not spend that extra time that it takes to verify because we've got that next patient to room or that next patient to teach about their inhalers or their next patient to talk about all these other things. Again, it does take everyone working together and understanding the why, and so that's one of the things that we're providing each month. It's more of a reminder to the staff of the why we're doing what we're doing.

Rae Woods:
That's important because you're not setting up this goal and saying, "Good luck. We'll see you at the end of the year. Somebody's going to be getting a prize, but it's up to you to figure it out." You're saying, "We're going to remind you along the way. We're going to make sure that we're grounding this in the why so that there's a reason beyond the prize to get folks focused day in and day out on doing these gap closures."

Rae Woods:
Now, one of the things I really like at about this story is that you took an idea and you put it into practice, and you put it into practice fairly quickly. I know you said you had some experience with this in your previous organization, but I want to say you got this together in a couple of months, maybe even a couple of weeks.

Wendy Ferrell-Smith:
Yeah.

Rae Woods:
What did it take and who needed to be involved in making this happen so quickly?

Wendy Ferrell-Smith:
That's true. I took the idea back to our CEO and just shared with him why I felt like it was important to do this because we didn't have a reward structure, if you will, that's already in place, and he said, "Gosh, it just makes sense because it's a win-win for everyone." It's a win if we are verifying that our patients are really getting better care, if they're getting all of their screenings, if they're coming in so that we can see them, to set them up for success, whether they have chronic conditions or they do not. It's a win for the organization financially when we perform better on our value-based arrangements, and it's a win, too, for our associates just to remind them that, each and every person, you don't have to be a clinical person to be taking care of patients.

Rae Woods:
That's right.

Wendy Ferrell-Smith:
Your role in the healthcare can be at any level, and, so to me, it was really that when, when, when to make it happen. Like I said, our CEO agreed and was gracious enough to set aside the amount that I had requested for this prize, if you will. That's why I think folks will be pleased once they... we get to that end and we see who was able to reach that.

Rae Woods:
I don't want folks listening to this podcast to think, gosh, this sounds like something that's really small because I do think that this is important in the long-term path towards moving towards meaningful risk. Why is the Friendly Practice Challenge important in Summit Medical Group's path to getting to meaningful risk?

Wendy Ferrell-Smith:
Yeah. It gives us an opportunity to intentionally educate. We're sending out those tips every month about something different as to our why, why we're doing what we're doing, and we're trying to use as much of our internal data as we can. I mean, we all hear cancer statistic rates. Depending upon which website you look at, you can get something different, but it's probably a lot more impactful if I'm able to share with our group to say, hey, in our own imaging centers, one out of every 158 women that we screen, we're finding a cancer, we're detecting a cancer, and you're potentially not only changing the life of that patient, but their entire family. We're not just healthcare providers. We're community partners. We're taking care of our community, and so that's another reason why this is important. It just gives us a special opportunity to be able to remind folks the why we're doing what we're doing.

Rae Woods:
Well, Wendy, before we close out our time together, I actually want to ask you about more than just Summit Medical Group in Tennessee. I want to ask you about the market as a whole when it comes to moving the healthcare industry towards meaningful risk. Do you have a piece of advice or an action item to the listeners to this podcast?

Wendy Ferrell-Smith:
I probably have a couple little pieces of advice. One is you should have to have commitment all throughout the organization. That's why including everyone, making sure everybody understands what your goals are is really important, because I think you have to have that. Second, I would encourage folks, too, if you're really going to be in value-based care to take on some risk because, if you don't have a piece of ownership...

Rae Woods:
That's right.

Wendy Ferrell-Smith:
... then it's hard to make change. I think you have to have a piece of the pie, like I said, some ownership in there, to really show commitment, to really show change. I think that Summit has done a wonderful job in doing that.

Rae Woods:
Well, Wendy, I want to thank you for coming on Radio Advisory. I know that our listeners are inspired by some of the things that you're doing and are going to say, hey, that idea that I have in the back of my head, let me actually go to my CEO and make it happen.

Wendy Ferrell-Smith:
Yeah. Thanks for letting me be part of this.

Rae Woods:
Yeah, we'll talk soon.

Rae Woods:
What I hope you take from this episode is something that you've heard again and again from Clare, from Daniel, from Wendy, and that's that action matters here. We have spent far too long dreaming of an industry that actually transforms its payment model. It's time to actually do it, and, remember, as always, we're here to help.