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February 1, 2016

Worse Than I Thought

I am a huge fan of ‘walking around stats.’ I spew them all the time, not just here.

Drop some big, attention grabbing stat watch people marvel at the brilliance. Besides that, they are also valuable in helping crystallize things in people’s mind. Too many numbers become a fog; a good ‘walking around’ number sticks.

These stats are not too technical and not too complicated. You can convey them in three seconds or less and they deliver a big punch. Detailed accuracy is not the point (Hey, if you only wasted three seconds of someone’s life, they’ll forgive you’re off a smidge), just be directionally correct.

One of my favorite of these walking around numbers was that the government, through Medicare, Medicaid, CHIP and Tricare, pays about half of our $3 trillion healthcare bill.

It was perfect. 50% is a nice round number. $3 trillion is incomprehensibly large. Half of that prompts the desired ‘Holy cow’ response.

Well, it turns out that my simple, symmetrical 50% number is wrong.

It is worse than I thought.

A recent study found that when all forms of government spending at all levels (federal, state and local) are factored in and we also consider things like healthcare coverage for government employees, the actual number is 64%. Yep, taxpayers fund almost two-thirds of our entire healthcare bill.

Is it any wonder why our ‘market’ doesn’t behave like a ‘market?’

Bernie, it turns out we’re much closer to your vision than we’d like to admit.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 29, 2016


Quick question: When you get your hair cut, are you a customer or a client?

Personally, this is a hypothetical question since, on this subject, I am a self-serve guy wielding my handy buzz-cut clippers.

But for the folically-gifted, a haircut is not a haircut. Your point of view impacts the experience.

Customers buy whatever the joint is selling. They expect a good cut, nice service, and a fair price. The hair place (as I don’t frequent them anymore, I am not sure what we are calling them now days, but it might not be the ‘barber shop’) offers what it offers. It might be cheap or expensive, frills or no-frills, but their offer is their offer. They decide what they are going to make before they even know who the customer might be. The customer then chooses, or doesn’t. It is all a pretty straightforward transaction.

By contrast, those who view themselves as a client approach a haircut totally different.  They don’t look at the offers and decide, rather they pick a stylist and then specify what they want. The stylist has an opinion about what is best and there is some give and take.

Customer and client are related ideas, but they are not synonyms. Neither is more elevated than the other; they are just different.

Why does this matter?

As healthcare moves faster and further toward a consumer-oriented industry, your practice has a decision. Will you serve customers or clients?

Some of you abhor this entire dialogue. You think this whole ‘consumer, customer, client’ rubbish devalues the high esteem of the doctor-patient relationship. Oh, stop it. I am not comparing your work to selling used cars, but it is changing and your patients are now consumers.

A second instinctive reaction is to presume the answer to the question must be ‘client’ instead of ‘customer’ because client seems far more impressive. Wealth managers have clients and McDonalds has customers. Surely our answer must be ‘clients.’

Maybe, but maybe not. A lot of healthcare providers are building great businesses serving customers. They have a great offer and they deliver it well. And their customers are happy and loyal.

So, no, ‘client’ is not the default answer. But you have to have a conversation and decide which it is for your practice. How you approach your patient/consumer will be very different based on your answer. Don’t get caught with a little customer stuff here and a little client stuff there. That is a recipe for doing neither well.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 27, 2016

Give Heed

hark-en (v): give heed to, pay attention to.

Recently, UnitedHealth’s CEO Stephen Hemsley announced the company expected to lose $700 million on exchange products in 2015 and 2016.  Then on last week’s investor call, CFO Dan Schumacher said they now expect those losses will approach $1 billion. Hemsley has hinted, suggested, even signaled that United just might exit the public exchanges altogether next year. 

That all seems like big news, something to which we should give heed. Biggest payer bails on the centerpiece of the ACA. Pay attention.

Yes, but it is also something of a head fake, a magician’s misdirection. Look over here.

But over there is this new company that you may not have heard of yet. Harken Healthcare.

Harken is marketing a new kind of plan being sold on the exchanges in Chicago and Atlanta. Here is the concept:

With the Harken plans, you get free and unlimited primary care visits at Harken Health Centers, which are staffed by salaried physicians. Patients can access their care team 24×7 via phone, email, text or video chat. The full menu of wellness stuff is also included for free. Beyond primary care, there is only a deductible and no co-insurance. When you need to go to a specialist, there is a network of 850,000 physicians available.

850,000 is our first clue about Harken…a network of 850,000 physicians? Isn’t that about 100% of all physicians in the country? Who would have a network that includes almost every physician in the US? That would have to be a big payer, right? Only one or two or three possibilities, right?

Though you can’t find any mention of this on their website, Harken is a wholly-owned (that is, the whole enchilada) subsidiary of, you guessed it, UnitedHealthcare.

Harken, give heed, pay attention.

So, what might we learn in giving heed?

United is confessing that they can’t make money on the exchange using a conventional insurance model. People are too sick. If they can’t, others likely can’t either. We know co-ops can’t. Not a good long-term outlook.

But they are not bailing entirely. They are coming back in with the Harken model. This is a significant innovation at the intersection of care delivery and paying for care.

And yes, this is one more move of United deeper into care delivery.

Give heed.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 25, 2016

Acronyms Gone Wild

We are cycling back here to something that came out right before Thanksgiving, but it got lost in the holiday shuffle. Or maybe we skipped over it two months ago because the press release read like a bad Scrabble draw:


CMS, the Medicare and Medicaid people, released their final rules for the Comprehensive Care for Joint Replacement (CJR) model, which is a mandatory bundled payment plan for lower extremity joint replacements (LEJR) for hospitals in certain markets (MSAs) that are currently paid under typical Inpatient Prospective Payment System (IPPS), that is, unless said hospital is participating in a Model 1, 2 or 4 Bundled Payments for Care Improvement (BPCI) program.

We don’t need to encrypt our national security secrets…we can just let the CMS press release folks turn them into acronyms and just put them up on any old website. The Russians will have no clue what we are doing.

Let’s decode, shall we?

It turns out that not enough hospitals signed up for voluntary bundled payments for total knees and total hips, so CMS is dictating this for a whole bunch of places.

One obvious take from this program is that CMS is really serious about moving from fee-for-service to value-based payments. They’ve set aggressive, public goals and now they are using their big hammer to get things moving. Joint replacements are first only because they are viewed as most easy to define. That and that fact that CMS spent about $7 billion on these two surgeries last year. This will expand to other treatments quickly, I promise.

But of more interest to me was this one little sentence in the press release announcing the final rule:

‘By holding hospitals accountable for episode spending and quality associated with services included in CJR episodes, the CJR model will encourage hospitals to consider carefully the needs of each individual patient.’

This is so telling about the inherent facility-centric bias in the current thinking of the people who think about (and pay for) these things.

Does the hospital matter when it comes to the cost of a joint replacement surgery and all that follows over the next 90 days? You betcha. They are the biggest single cost item and things that happen in the hospital have a lot to do with all that happens later.

But I have one question: Where’s the surgeon?

Who, exactly, is best suited ‘to consider carefully the needs of each individual patient?’ The factory with all of the gear and hardware, or the person who sat in the room with the patient and decided on surgery, and then put their hands inside the patient’s body to do the work?

And since this is really about cost reduction, which we totally support by the way, who is more likely to think creatively about how to reduce unnecessary costs across the entire 90 day period – the one with big fixed costs that need to stay full or the person who is going to manage the patient all the way through to the end?

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 22, 2016

More Slavitt

Having the steady demand to write, three times a week, something that you might find remotely interesting keeps me on the prowl for healthcare news. When I can find something that feeds more than one post, I’ll milk that puppy for all its worth. You know, you have suffered through such excessive milking.

But the comments of Andy Slavitt, head of CMS, at the J.P. Morgan Healthcare Conference, have a lot of good material. If you want, you can skip today’s post and go read his speech  yourself. I won’t be offended that you ditch me for someone of his stature. But if you only have another 90 seconds, I’ll give you another tidbit.

Slavitt observes that CMS operates on three levels – first, as a policy maker and regulator, and then second, as an operator, the health plan for almost half of all Americans. It is the third level that is interesting. Given its bulk and fiat power to simply declare things as they are to be, CMS is ‘a market signaler, acting as a catalyst to bring together the disparate pieces of the health care to make improvement more rapidly and more efficiently such as how we pay for care.

We explored one such signal about the future in Monday’s post about the coming replacement for Meaningful Use. With that, CMS is sending a strong, strong signal about its commitment to value-based payment instead of the current fee-for-service model. There were more signals to that end. Don’t miss them.

First, CMS has launched its next generation of ACOs. This model is not going away, what with there now being 475 Medicare ACOs that cover 20% of all Medicare beneficiaries. More interesting, however, is that 64 ACOs, up from 19 last year, are in the full-risk model (code word – capitation). That is still a small slice of the total, but wanna bet where this is moving?

Another signal about the future of our payment system came in his comments about Medicaid. Over the past two years, 13.5 million people have been added to the Medicaid rolls. That is over 4% of the entire population in just two years. Guess what phrase was all over this section of his talk? ‘Managed Medicaid.’ Again, code word for…correct, capitation.

Like it or not, Slavitt is right about CMS’ ability to signal and move the market. If you miss this bright flashing light, you have no one to blame.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 20, 2016

The King is Dead, Long Live the King

Royals seem to believe that it is really important for the folks to know the monarchy continues without a break in the succession. They couldn’t announce that one king had died without simultaneously proclaiming someone new was on the throne.

‘The king is dead, long live the king.’

This phrase was probably used the first time in the 1400s in France when young Chucky #7 took over from his recently deceased papa, Charles VI. All could rest easy. Though he was a whole lot like the old dead guy, someone new was now in charge.

In related news, at the big J.P. Morgan Healthcare Conference last week, Andy Slavitt, the head of CMS, recently announced, ‘The Meaningful Use program as it has existed, will now be effectively over and replaced with something better.’

The king is dead, long live the king.

MU will be succeeded by a new MACRA-driven measurement and reward/punishment system. Remember, MACRA is the value-based payment model that came along with the permanent SGR fix. These things are all connected and MACRA will start impacting your Medicare and Medicaid payments in 2018.

Slavitt promised details about the new regime would be forthcoming soon, but shared four principles that drove the creation of the son of MU.

First, it will reward patient outcomes, not the use of technology. Of course, but that proves tricky, doesn’t it?

Second, it will allow far more customization by physicians to match their specialty. No more ‘one size fits all’ measures.

Third, and this is a little technical, it will require open APIs, which means that the software that has all of the data (think EMR) has to open its doors and let other applications get access to that data. The aim is to stimulate innovation that solves specific problems without providers having to go through the brain damage of completely changing their EMR.

And finally, Slavitt said, ‘we are deadly serious about interoperability.’ Data blocking won’t be tolerated. Here’s guessing he had a familiar culprit or two in mind with this fourth point. You got a lot of federal money to help digitize healthcare, not establish and defend your monopoly.

Yesterday, CMS posted a column that provides some more detail around the ideas outlined in the J.P. Morgan speech.

As always, the devil is in the details, but keep in mind that Slavitt was a private market guy who knows a thing or two about technology. He used to run this little company called Optum.

Here is one thing to know about the coming new king of mandated measures. MU might have been his father, but value-based payment was his mother.

The king is dead, long live the queen.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.