Gregg Masters  00:06  And you’re listening to PopHealth Week on HealthCareNOW Radio. I’m Gregg Masters, the Managing Director at Health Innovation Media, the Executive Producer, Co-founder and Co-host of PopHealth Week. I’m joined today by my partner, co founder and lead co host Fred Goldstein, who’s president of Accountable Health LLC, a Jacksonville, Florida based consulting firm. And Fred and I are thrilled today we get to chat with an amazing woman that we met at the Jefferson College of population health 19th population health colloquium in Philadelphia in this past March. Rita is a seasoned player, key thought leader and respected author in the healthcare transformational space. read his most recent book co authored with Michael Abrams, MA is Bringing Value to Healthcare Practical Steps for Getting to a Market Based Model. Rita Numeroff, PhD is the president and co founder at Numeroff Associates, a firm with a 25 plus year track record of rigorous structured innovation that has solved complex strategic and operational problems for clients in industries in transition, which certainly characterizes what we’re looking at in healthcare. And more about Rita, her dedication, leadership and passion, have guided Numeroff and Associates into its third decade of continuous growth and success. From the firm’s inception, Rita has focused on developing new business models for companies and industries undergoing major market changes. Her work has spanned industries that are critical to global economic growth, financial services, healthcare, delivery, pharmaceuticals, medical devices, telecom and major industrial manufacturing, bringing experience style and boundless energy, Rita has applied her expertise to help organizations create and execute successful new strategies in the face of fundamental market shifts. Rita has a deep understanding of the challenges executives face in sustaining growth and profitability in increasingly fluid markets. As a result, she’s become a trusted advisor to senior management teams, across a wide range of leading companies or cross industry perspective, combined with her expertise in executing strategy and optimizing corporate performance are the basis for objective counsel that leading executives rely on. So Fred with that impressive, abbreviated introduction over to you help us get to know this dynamic human being.

Fred Goldstein  03:00  Thank you so much, Gregg. And Rita, it’s a pleasure to have you on PopHealth Week.

Rita Numeroff  03:04  Fred and Gregg, it’s a pleasure to be with you both.

Fred Goldstein  03:06  Yeah, thank you so much. And it really was great to see you at the Colloquium again and catch up some, and that I was very excited, obviously, as we talked about, about the most recent report you did, which was the State of Population Health Fourth Annual Numeroff Survey. And this is the fourth year you did it at the colloquium. What was the origin of this report? How did this all start?

Rita Numeroff  03:27  Great question. And I think it ties in to the very gracious comments that Greg started this off in terms of positioning what we’re doing the backdrop of our work. The roots of the survey really are tied to our strategy consulting process the last 30 years. As Gregg mentioned, we have focused on industries in transition across multiple sectors. And industries go through this transition when they are either facing changes in the regulatory environment, or shifts in technology or the competitive set, or even a shift in market expectations. And when you have one of those changes, that in turn causes even leading companies to challenge assumptions about their business models, how they go to market, the nature of their products and services, the competencies that are required for them to succeed. It is wrenching change. And not surprisingly, most organizations, especially those that have been leaders in their industry segments tend to make changes at the margins. And they avoid making the needed investments that will allow them to succeed as the business model shifts. After all, they’ve been making money in the current model and nobody has ever gotten points for driving a business into a ditch. In health care, you have all four of these dynamics happening simultaneously. If we look at population health and the need to improve health, health outcomes, At lower total cost of care, through the lens of a fundamental business model change, then you begin to understand some of the sources of resistance. So it’s it’s really based in the work that our consulting firm has done. The other stream is then in the mid 1980s, I’m really dating myself here, I had just finished my PhD, and I had predicted that DRGs would lead us down a path of poor coordination, greater cost and poor quality, the exact opposite of what CMS that was really focused on bending the cost curve back then, was trying to do. And the prediction was based on the fact that there was no connection between payment and outcomes. nor was there any accountability for care across the continuum. And my contention has been for at least that long, then till we get to accountability for care across the continuum, we’re not going to get to better health care, better outcomes, lower total value, we’re not going to be able to get to population health. And so as we were working with healthcare delivery organizations to help them understand the opportunities, as well as the challenges in moving to a new business model, we were aware of very many different definitions of population health. And sometimes they were even different in the same organization. And organizations were in very different places in their ability to master what we thought was going to be needed. And so at that point, we thought that having a comprehensive database, look at how the industry was progressing over time would be really important. And that was when I reached out to David Nash, and told him what we were planning, and asked if he wanted to be part of the process. And his answer was Affirmative. And that was when we launched the first survey, which we started about five years ago in terms of putting the instrument together, getting initial buying and validation, so forth for it. And as you mentioned, before we launched the results of the fourth annual survey in March of this year.

Fred Goldstein  07:12  Fantastic. So what are some of the key findings that our audience might find useful?

Rita Numeroff  07:18  Well, I think the first finding is that most people think that population health is critically or very important to their future success. Actually, about 82% of the people that responded, and we had more than 500 executives from across the healthcare industry, that represent AMCs, large community organizations, large physician practices, and really reflect the geographic makeup of this country, and also reflect rural, suburban as well as urban institutions. When we started four years ago, people were very optimistic about being prepared to take on risk. And over the last several administrations, they have continued to moderate their expectations downward. Let me give you an example of that. One of the questions that we asked is how ready they think their organization will be in two years to be able to take on risk. In 2016 61% of respondents said they’d be very or completely prepared. And in 2018, only 25% reported that they had achieved that goal. And when we asked them to forecast where they think they’re going to be two years from now, in terms of how ready do they’re going to be around 20% predict that they’re going to be prepared?

Fred Goldstein  08:51  So given all the discussion about we’re moving to value based care, this thing’s coming we’re going with population health. What do you think has changed? What are the reasons that that you’ve seen such a substantial drop in their, in where they’re at compared to where they thought they were going to be?

Rita Numeroff  09:10  I think the biggest reason, Fred is that they’re beginning to come to terms with the fact that this really represents a fundamental business model change. It isn’t about tweaking the current model, and playing around at the edges with regard to changes that have to be made. What’s really striking to me in this year’s results, is that the second barrier that they identified is internal changes to the culture. And I think again, at this represents they’re recognizing that the changes represent a very different way of doing business, and that they need to reinvent themselves. And the good news is they’re recognizing that they’re not prepared when you Get to be more concrete about what does this really look like. And it’s not something out in the clouds. And something you report to the board, we have meetings in place and some concepts that we’re playing around with. And you begin recognizing that this is about connecting your clinical and your financial performance to outcomes that matter. And you’ve got to be competitively differentiated, that reflects very different work, the first barrier that they identified as a reason for not wanting to move faster, is really understandable. It’s the fear of financial loss. And this has been a top barrier that they identified over the four administrations of the survey. One of the things that I think is really interesting about it, is that initially, there was a tendency to blame payers for not moving ahead, essentially framing it out as we’re ready. And we’d like to move to total cost of care, but the payers aren’t ready. And in fact, in our work with payers, they would tell us that they don’t think that the providers are really ready. And on a carve out basis didn’t trust that providers wouldn’t raise prices in some other areas. So that was part of the reason, and there are others. But that was part of the reason that the payers were reluctant to move in this direction. But I think there’s an increasing recognition of what it’s going to take to get to a different model.

Fred Goldstein  11:32  Is it you know, is it read a recognition of what it’s going to take or recognition of what it’s going to do to the organization, I noted in your report, and you in particular had this quote by by one of the facilities that said, you know, value based models are still an ethereal concept for hospitals, and that CFOs still think in terms of heads and beds and fee for service. So if the CFOs are still living in that model, but we fundamentally understand that, to get the savings, we’ve got to pull people out of that high cost facility and use other services and etc. Is that just a sense now that maybe it’s an intransigence versus a Hey, this is difficult to do?

Rita Numeroff  12:13  Well, there’s no doubt that there is a level of intransigence, if you’ve been successful. In a current model, you’ve got 30 plus years of doing well, your systems have been optimized for that particular model. Human Nature says, why change if we don’t have to, and to the extent we can put the brakes on to doing something different, let’s continue to do that. And continue to to count the cash with with heads in beds. So part of it is, when the numbers are good, there’s resistance to doing it, there’s also the resistance, because it’s how we’ve optimized our current infrastructure. I think that there’s increasing awareness on the part of some organizations. And I think the future shift to population health is really going to be market by market and not just one country wide, or even statewide swarm toward that way, there is a path forward. But it’s not doing more of the same or thinking that if you just get big enough, the clout, you might exercise and contract negotiations, will somehow save the day. In fact, massive consolidation, Fred, might increase vulnerability, as you’re now internally focused, trying to figure out how we’re going to do things, and you’ve got more challenges in integrating disparate cultures. And so I think the key across the board is recognizing that you need a different model, and that you also need to reinvent yourselves, but you can’t do it too fast, or you are going to jeopardize the current model. And so I think that

Fred Goldstein  13:57  well keep going, nope

Rita Numeroff  13:59  I think, you know, using a framework that allows organizations to, to make the transition and ensure profitability at the same time is what’s what’s needed. It’s not either or, and it is different, it’s not about throwing more money into IT. Most healthcare delivery organizations have more data than they really know what to do with. So again, it requires conceptualizing a different model, a lot of CFOs have not been oriented or trained to be able to do that. It often means understanding what you’re really good at, and ensuring the disciplines are there to deliver in a consistent, predictable way.

Fred Goldstein  14:44  And you do work. It’s interesting because you do work across across these industries, etc. And there are other, you know, industries in this country that are innovating at an incredible pace and changing you know, really rapidly is, is there’s something within health care that is fundamentally different that keeps us from doing that, or things we could take from the other industries that would help us, as you say, don’t want to get way out in front of this. But it seems like we just seem to be getting further behind.

Rita Numeroff  15:12  And I think it’s a really interesting observation, Fred. There are lessons in other industries. And you can’t just take somebody else’s experience and some other industries experience and adopt it wholesale into a different one. In the same way that you can just take something that’s worked in a healthcare delivery market, in one part of the country and adopt it wholesale, and so it’s going to work in your market. That said, one of the differences between healthcare delivery and some of the other industries where we work is that when regulatory shifts were identified, say even in the banking world, these organizations knew that there were financial opportunities, and they needed to think about different ways of reinventing themselves. And while healthcare delivery has responded to regulatory restrictions and new regs that they have to put in place to make sure that they don’t violate Starke regulation, or they make sure they do what they need to to get paid. They haven’t had the same orientation to business, and competition and strategic marketing. That has been true in the for profit world. And so they haven’t built the disciplines again, because they didn’t need to, for thinking about such things as service lines across the continuum, and understand what it means to build a product and a product portfolio. And so it’s some of that thinking that hasn’t been part of the education of some healthcare administrators. And it certainly hasn’t been the part of clinical training of physicians, nurses, pharmacists, and other parts of the critical health care delivery team.

Fred Goldstein  17:12  Given that training issue, whether it’s a healthcare administrator training, as you talked about with the physicians, obviously not getting that I know, David has really been pushing for getting population health out into the medical school curriculum, and beginning of that training, are we going to have to wait for the next generation? Or can this is there enough here that we can begin to move this forward and have some meaningful impact on a broader scale than we currently see?

Rita Numeroff  17:39  I don’t think that anyone should expect we have to wait for the next generation. I think that that would be really not a good basis for building curriculum. I think that schools need to help their students understand both a fee for service model and and what they’re walking into in most organizations today. And at the same time, what is required to make the shift because we are in transition on steroids. And if the educational institution isn’t able to arm students to lead in a world that’s emerging, to anticipate where we’ll be, and translate that into concrete operational realities, I think they’re doing their students a real disservice. One of the tasks of an educational program is to help students learn how to plan for how to anticipate and plan for the future. And to make that transition. If we’re talking about teaching coders, for example, to do what’s required to do, that’s one thing, but that’s very different from what we need to teach future healthcare executives and future clinicians. And so again, I think that these students are not being served appropriately, if their institutions fail to deliver on that promise.

Fred Goldstein  19:15  What’s your sense of we’re seeing some, you know, fundamental things around the edge these globally capitated Primary Care networks of physicians that we’ve covered on this show. And obviously, you’ve got the ACOs out there and these independent practice groups and other models. Are there any you think that are more likely to help push this along or more likely to produce results based on what you’ve seen?

Rita Numeroff  19:39  That’s a great question. And I, I will say that, looking at the the ACOs and experience ratios, as a way forward, I think is going to be problematic. I’m going to use analogy. You don’t learn how to swim by dipping your toe in the water. And one of the concerns that I’ve had about ACOs and some of the bitsey pilots that have come from the federal government as a way to have training wheels, if you will, and get organization stored in this is that it’s really not scalable. And it’s done oftentimes, aside from the main part of the organization as a whole. So you don’t build in the disciplines that you need. And the irony is, if you build the disciplines today that you’re going to need for tomorrow, you wind up finding significant dollars that are being left on the table, even in a fee for service, Medicare DRG, they so there are things that they’re going to reap rewards for financially immediately, by taking this particular path. The other thing is that, ironically, we had a very heavy percentage relative to the number of ACO organizations in the country, we had a huge percentage relative to what they represent. Reflecting organization as a whole, we had about 65% of our respondents participating in either an ACO or some kind of at risk bundled payment, versus what I think the national representation is at about 20%. So even for those organizations that have had more exposure to some of these pilots, and have done in some cases very well, they’re also reporting that they’re not nearly as prepared as they need to be.

Fred Goldstein  21:49  So you talked about dipping your toe in the water? Should they just dive in? Or is it real, as you said, they’re not, don’t feel there is prepared and are pulling back? I know what the recent ACO moved to two sided risk, a whole group of them said, Hey, we don’t want to do that, please pull that back? Is it is, is it time to maybe shift it further, as CMS is doing and just say, we’re moving this way? But why don’t you look even beyond this two sided risk and start going to global or, or, or more of a model like that and just figure it out?

Rita Numeroff  22:25  Well, I think that gold global cap is where we need to be. And if the industry doesn’t do it, it will be done to them in ways that they’re not going to like, and I’m very concerned about that. But the issue of just diving in, if you don’t know how to swim, that’s probably not a good idea. But having a construct, being able to conceptualize what a different model would look like. And making sure that you have the pieces in place to be successful. Is is very important. I’ll share an example. We were doing some work with a health care system in the south. And our focus was to do an assessment initially of how prepared they were to be able to move risk. And our contact was the board chair, the organization who was pretty well known MD, and we had an educational session after we’d finished the assessment. And the board work was open to executives from the healthcare system. And the deal was they had a sit along the side of the board table, if you will, and everybody needs to raise your hand if they wanted to get called on. So it was it was pretty controlled. Robert’s Rules, rules the day, if you will. And I was walking through this framework that described very specifically how you’d find the services, the kind of financial modeling that needs to be in place that kind of guarantees, how you get there, how you need to align providers and other partners across the continuum, and then ultimately be able to go to market with an Economic and Clinical value either for a service line, or for an entire book of business. And I was in the middle of summarizing that where the CFO jumped out of his chair, didn’t bother raising his hand, he jumped out of his chair and he said, Oh my gosh, I get it. I can do this. And I think I think it points to the the need not just to dive in and hope that somebody will throw you a life preserver. But to understand first and foremost conceptualize What does it mean? What are the different pieces? How do they fit together? What do I have in place today? What do I not have in place today? And how are we specifically going to take that journey to get there.

Fred Goldstein  24:55  So as you look to the future years for this survey, What do you expect might change over the next one to four years?

Rita Numeroff  25:07  I think that there will continue to be slow movement, Fred. And it will be market by market. And as more innovative organizations start to break out, movement will pick up speed, I think disruptors will force change. And those organizations that hold on to the status quo, are going to find it harder and harder to be relevant. As the model shifts, I don’t think that size is protective. As the administration continues to push risk, which I think they will do that will amplify the need to move in a new direction. I think that Jeff Bezos and other non traditional players who see opportunity in the discontinuity ease and the inefficiencies in healthcare delivery, are also going to put pressure and they’re going to offer an alternative. And I think that people are going to choose transparency, they’re going to choose access, and they’re going to choose better outcomes at lower cost. These are not new problems, I don’t think that anyone would agree we can afford the status quo, because we’re not getting value really that’s commensurate with $1 that we spend. And so as these disruptors continue to move forward, I think there will be more and more of a sense that it’s possible, and that if we don’t move in this direction, that we will be left behind. And so I’m I’m very optimistic, I don’t think it’s going to happen all once, I think, again, will be market by market. And it means that alternative models and the fortitude, to re envision how and what we’re delivering is going to enable organizations to be successful in their markets.

Fred Goldstein  26:59  Where are you seeing some of these innovations? Are there specific places you might call out for people to take a look at? And we’re about a minute out?

Rita Numeroff  27:08  Sure. I think that there are organizations that are prominent, and they’re not perfect, Geisinger. Most listeners would, would know about already, they’ve been in this space for a long time. And they have interesting lessons, both culturally as well as in their market, and they’re in a unique market. So what’s worked for them isn’t necessarily going to work for others. There are private practice groups, primary care driven groups that have done some really creative things. And if anyone wants specific examples relative to just specific markets, I’d be glad to share that. I think organizations are doing this in unique ways. Some of them are further ahead than others. And there will be different models that will work one size does not fit all.

Fred Goldstein  28:07  That’s fantastic. We’ll read it. There’s a whole bunch more we could go through with you on this show. And I’d certainly like to get you back on and thank you so much for joining us this week on PopHealth Week.

Rita Numeroff  28:18  It was a pleasure to be with you.

Gregg Masters  28:21  And there you have it. That’ll be the last word for today’s broadcast. I want to thank our special guests. Rita Numeroff, PhD, the President and co founder of Numeroff and Associates for her time, passion and dedication to the transformational imperative our industry no doubt faces. Do check out her work on the web, but www.nai-consulting.com and be sure to follow her on Twitter by @RitaNumeroff and the firm by @NAIconsulting for PopHealth Week. HealthcareNOW Radio, Fred Goldstein Rita Numeroff, this is Gregg Masters saying Bye now