Finance and Business Strategy

Annual Conference Day 2: Culture of healthcare slows needed change, says keynoter Robert Pearl, MD

November 10, 2021 4:38 am
  • The healthcare field is going to have to adapt to change more quickly or live with the changes that outsiders implement, according to a keynote session Tuesday at HFMA’s Annual Conference.
  • Building community partnerships is a place to start when seeking to become a more diverse and equitable hospital or health system, according to a breakout session.
  • Among many other noteworthy sessions Tuesday were presentations on succeeding in risk-based contracting and establishing a succession-planning strategy.

Recognizing the strengths and weaknesses of healthcare’s culture is key to implementing needed industry changes, according to Robert Pearl, MD, former CEO of Permanente Medical Group and a best-selling author, in a Nov. 9 keynote at HFMA’s 2021 Annual Conference in Minneapolis.

The long-entrenched system and culture of healthcare, while keeping providers focused on treating patients the best they can, also is slow to accept change without a clear incentive to do so. As a result, quality of and access to care have suffered in the United States.

“The system of medicine is broken,” Pearl said. “It is a broken 19th century cottage industry.”

As a jarring example, Pearl pointed to the lack of a universal electronic health record for physicians. That is in contrast to the still much-used fax machine, which has roots dating to the 1800s and shows few signs of being phased out despite a slew of electronic alternatives.

Pearl also cited Commonwealth Fund statistics that demonstrate quality of care lags behind other high-income countries despite greater costs in the U.S. “We spend a lot of money and what do we get? Poor outcomes,” he said.

In rankings of the 11 most industrialized nations, the healthcare research organization showed the U.S. placing:

Pearl said research shows healthcare costs are expected to rise $2.5 trillion a year on average through the end of the decade. “Is there not a better way we could spend $2.5 trillion?” Moreover, “30% of what doctors do, the Mayo Clinic has shown, adds no value.”

Unlike in other industries, technology has not reduced costs. An example of how healthcare resists change in this way can be found in telemedicine, a means of boosting efficiency. After skyrocketing to as much as 60% of care as a result of the COVID-19 pandemic, usage of telemedicine is waning, falling to 11% of visits.

“Why are physicians not embracing it?” he said. “The answer is the culture of medicine. Physicians love the office,” Pearl said. The culture of medicine puts the physician at the center, he said, even though it makes more sense medically for the patient to be at the center.

“Telemedicine will be a powerful tool used by someone. Whether it’s us in healthcare or people outside,  we’ll have to see,” he said.

Community partnerships are key to building health equity at Northwell

In a breakout session on health equity, Northwell Health CFO Michele Cusack said the system’s approach to increasing equity is heavily based on building community engagement and requires a full commitment to the principles behind the effort, not just the expected payoff.

“We need to go upstream and not wait for the financial benefits,” Cusack said.

Cusack outlined immediate action items CFOs should take now:

  • Look inward at your own finance staff and hiring practices.
  • Work with your local community to define collaborations and partners, and invest in social components of health equity.
  • In a risk-based payment model, activate the social drivers of health.
  • Engage with the board of directors and coordinate with state and local regulators.
  • Recognize you may not be able to do it all.

Northwell has had a formal health equity effort for more than 11 years, has more than 15 such initiatives in the community currently and has tackled more than 60 initiatives since 2018.

It takes “hard work, boots on the ground and constant conversation,” Cusack said.

3 approaches to attribution in risk-based contracting

Krista Hoglund, interim CEO of Security Health Plan, part of the Marshfield Clinic Health System, discussed attribution methodologies that set the stage for success in risk-based contracts. The insights were part of a presentation by Hoglund and Gordon Edwards, CFO of Marshfield Clinic Health System, as part of the Cost Effectiveness of Health track.

Hoglund described three general approaches.

Anchor and sweep. In this approach, no new members are added under the contract after the “anchor” date, which typically is set relatively early in the year — say, March 31.

In addition, if members receive a certain percentage of services from another provider, they’re “swept off” the contract at the end of the year. “That’s a look back to say, ‘I know you told me you’re attributed to my system, but your care tells me you’re actually going to another system. So I’m not really managing your care,’” Hoglund said.

This strategy is worthwhile for providers that have limited experience in risk-based contracting because it makes impacting the care of the attributed population easier. “If you have a lower risk tolerance, this is a good place for you to start,” Hoglund said.

Sweep only. Under this methodology, members can be added to the contract all year long but still can be swept off at the end of the year if they’ve gotten a high percentage of services from another provider.

“If you get comfortable with ‘anchor and sweep,’ you might say, ‘OK, I’m a little more willing to take some additional risk. Now I can have members come on July 1 [or] Sept. 1, and still be part of that value-based contract.’

“It does limit your PCPs’ ability to manage care, so that’s where the additional risk comes in.”

Take all comers. Members can be added all year and don’t drop out of the contract unless they change their primary care physician. One consequence is the potential for shorter and more limited interaction between provider and member.

“You’re going to get the most members, but you’re going to get the highest risk,” Hoglund said. “You’re saying, ‘You can come on [to the contract] anytime during the year. And if there’s a difference between [who] you tell me is your PCP and what your claims tell me, it doesn’t matter. You’re still included.’ This does present a lot of potential additional risk to the provider system that you probably want to think really carefully about.”

— Nick Hut, HFMA senior editor

Why succession planning should be based on potential, not performance

At a time of turmoil for the healthcare workforce, succession planning becomes even more vital. Jana Danielson, vice president of revenue cycle with Nebraska Medicine, described what leaders should know to ensure their organizations stay viable.

In her breakout session, Danielson noted that many ongoing factors make succession management crucial. Among the issues:

  • Retirements: Many organizations are experiencing the effects of the aging workforce.
  • Mitigating risk: Hiring senior leaders from the outside is difficult.
  • Fewer opportunities: Years of downsizing and other cost-cutting measures have reduced the internal bench strength.
  • Fiduciary responsibility: Boards are playing a more active role in succession management processes.

Danielson said Nebraska Medicine makes a point of distinguishing between:

  • Performance, which is backward-looking, represents one moment in time, is based on outcomes needed for the employee’s current role and is a “notoriously biased measure.”
  • Potential, which is future-focused, based on experience and observation over the years, considers the needs of the next role and has less measurement bias.

In addition, performance is gauged via a formal appraisal process, while potential is more holistic and can be assessed outside that process.

Danielson noted the difference was seen in a 2005 survey by the Corporate Leadership Council, which found that only 29% of high-performers would be considered to have high potential for a leadership position. Meanwhile, 93% of those with high potential would also be deemed high-performers.

— Nick Hut, HFMA senior editor

Looking ahead

While HFMA’s 2021 Annual Conference still has one full day to go, the 2022 conference in Denver is less than eight months away. Mark your calendars


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