Dueling Data Games: Demographics vs. Provider Patterns?

---John Campo, Vice President, Business Development, Valiant Health  (see also http://www.valianthealth.com/blog/dueling-data-games-demographics-vs-provider-patterns1/)

Various forums like Health IT, academia, and the health care bloggers are abuzz with a fascinating, but controversial study released on May 28, 2013 that addresses the long held belief that some regions have wasteful medical practice patterns. The new paper concludes that individuals’ health differences around the country explain between 75 percent and 85 percent of the cost variations.  When the primary author, Dr. Patrick Romano, noted that “People really are sicker in some parts of the country,” he set in motion a debate with the conventional wisdom against the work of the Dartmouth Institute for Health Policy & Clinical Practice.  Dartmouth’s three decades of research has propagated a theory that regional differences in Medicare spending is mostly due to the aggressiveness of the medical community (and attributing it mostly to individual profit incentives).

The answer to this question is critical because it is driving CMS strategies to reduce Medicare spending.  The Institute of Medicine, at the request of Congress, is continuing to investigate the question.  

Regardless of whether the new study turns out to be correct or if the IOM substantiates the findings of the Dartmouth group, it makes for an interesting debate with high stakes in terms of CMS payment strategies.  Plans, ACOs, and all types of providers will be involved in looking at data in various ways like local/provider specific analyses to regional/national benchmarks.  Providers should expect to conduct patient and population level analyses and measure results, comparing them to expected norms and explaining the variances.

 This will be particularly important as providers and plans engage in any kind of pay-for-performance or risk sharing arrangements, such as those expected under Accountable Care Organizations.  They must have systems in place to offer point-counter-point perspectives that establish quality results and justify the occasional outlier.  Link for different perspectives:   

• http://www.healthcareitnews.com/news/pop-health-explains-medicare-disparities?topic=04,28,19
• http://www.kaiserhealthnews.org/Stories/2013/May/28/medicare-state-geographic-variation-costs.aspx

John Campo is responsible for Valiant Health’s growth, including client engagement and satisfaction. He brings over 15 years of diversified healthcare experience to Valiant Health. Prior to joining our leadership team, John founded and owned the CAMPO Group: Strategic Managed Care Consultants where he engaged leading pharmaceutical, biotechnology, specialty pharmacy, and health insurance clients. John’s background includes healthcare contracting, trade relations, reimbursement, specialty pharmacy distribution, quality improvement and Medicare. His leadership background includes working for a Fortune 500 PBM, HMO, and Specialty Pharmacy organization in leadership roles as well as being responsible for Managed Markets National Account Management for a large ethical US Pharmaceutical firm. He holds a BS in Business from Brescia University. 

Managing External Vendors in the New Health Care Industry: Maximize Visibility, Accountability, and Governance

---Terri Bernacchi, PharmD, MBA,  Cambria Health Advisory Professionals and Managing Partner at Quo Magis Partners 

Whether one considers the provider (hospital/medical), pharmaceutical or device industry, or the health plan perspective, today’s health care executive must be more be nimble than ever before in managing strained budgets and people resources, overcoming ever-greater challenges.  As the realities of Health Care Reform (HCR) unwind upon these organizations, managers must deal with new legal requirements and penalties that are still only partially defined.  Health care has always been a bit different from other business sectors because the customer consuming the good or service must rely on others to 1) select the product (e.g., the physician) and 2) still others to assure payment (e.g., insurance companies or administrators).  At the end of the day, however, regardless of what a health related company offers, it is ultimately the consumer who is to be satisfied. 

More than ever before, as costs shift back to the member through higher out-of-pocket cost-sharing or restricted choices, and as coverage rules are tightened in order to squeeze more out of every dollar, health care industry players must focus on how to attract and retain the individual.  A company’s resources will be focused more intensively on how to get to the patient or to smaller local units like the Accountable Care Organization (ACO) or local exchanges as traditional health plan and support vendors (like Pharmacy Benefit Managers and TPAs) consolidate and refuse to cover anything but the minimums. 

Today, getting to market successfully means that some key projects are managed internally, while others must be executed through a variety of vendors that promise lower costs and expedited results.   Managing your own company’s resource is one thing; staying on top of an outside vendor is quite another.    When engaging with any vendor--- after the contract has gone through procurement and the signatures have been applied to the deal---implementation and ongoing execution is the hard part.  Both sides name the business sponsors and managers for the relationship.   Over time, however, the designees are likely to shift and the Governance Plan may be neglected.  Senior executives may be late to realize that something has run amuck where promised results have not materialized or unanticipated snags have cropped up, costing precious resources or results.   

Certainly, if it hopes to be successful in the marketplace, a vendor will do its best to meet promises made to you.  Whether the deal involves a key project requiring executive oversight for an IT outsourcing deal, a business process service need, or (more commonly these days) is focused on a Copay Discount program which is a component of the launch of your product in the US market, the recipe for success is the same.    A few of these are spelled out below: 

1.       Emphasize the expectation for ongoing governance and accountability early in the vendor negotiation process.    This includes spelling out the key performance metrics and the frequency of reporting.

2.       Offer those in your company responsible for the ongoing management the program, assurances that executives are monitoring results, with results reported directly to your Board or senior management team.  Under larger vendor agreements, this designated manager may be responsible for a function that would have previously represented hundreds of employees; executive oversight should be reflective of that degree of resource allocation.

3.       Intervene early if something is going awry (delays, cost-overruns, or poor quality) by tracking key metrics on a routine basis. 

Additional insights for the reader may be gained from the linked research article, Critical Aspects of Governance in Outsourcing: Insights from Industry, by Markus Biehl, et al.  http://www.meritoutsourcing.com/images/Outsourcing_research_paper.pdf

The authors noted the high degree of (>75%) dissatisfaction of the buyer with outsourcing vendor deals; they also cited a strong correlation between governance and oversight capabilities and buyer satisfaction.  Obviously, players in the US health care industry will continue to use of external vendors to manage critical programs or projects because it is efficient.  These deals should be accompanied by a strong, accountable process for executives to measure results and intervene early.

Terri is the founder of Cambria Health Advisory Professionals and a Managing Partner at Quo Magis Partners. Among her current clients: a large health sciences firm serving payers, pharmaceutical and device manufacturers and other stakeholders. a small special needs health plan as a 5 Star Consultant, and several other health related clients. The thoughts put forth on these postings are not necessarily reflective of the views of her employers or clients nor other Health Advisory Professional colleagues. Terri has had a varied career in health related settings including: 9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years experience as founder and primary servant of a health technology company which was sold to her current employer three years ago. She has both a BS and a PharmD in Pharmacy and an MBA.  *see: www.quomagis.com