We're moving on to our next talk, and the speaker really needs no introduction to this audience, and the talk is on evolving reimbursement and the GI. It's Jim Levitt, who everyone has been referring to in the last few talks, is the president of GastroHealth, and I'm sure he'll have a point or two to make in follow-up to Scott and Praveen's talk, has been in private practice, but prior to that was also in academics, and he's still an assistant clinical professor of GI and continues to be involved in all of these different activities, and looking forward to his talk on evolving reimbursement and the GI. Jim? So, I was asked to speak about evolving reimbursements and the GI practice. If any of you heard me talk before, I love to change the title, and the reason I'm going to change the title here is because it's not reimbursements that are evolving. Reimbursements are not evolving. What's evolving and what you've heard throughout the day is marketplace, and so I think we have to understand, and you've heard so much about the marketplace, and it's the marketplace that's evolving, and so we have to understand that if we want to get to the reimbursement side. All right, so the key concept here is evolving means changing, and that's the key area here. So why are we changing? Of course, we'll start with all the depressing slides showing rising costs, poor quality, et cetera, et cetera. We know all that, but it's not just the cost side that's a problem. If you look at the process measures, this is an older study in measures in IBD, proportion not following guidelines, and two years ago, Corey Siegel came out with a similar study, some study, and it looked about the same. So we don't even follow the measures that give us best practice, and you can see that our cost per capita is twice anyone else's, and our cost as a percentage of GDP is way higher than any other country. And so what are the correctable causes? Well, care fragmentation, lack of coordination, typical role of physicians or cowboys. I refer you to Atul Gawande's article in the New Yorker Cowboys versus Pit Crews, and we need to be able to change from cowboys to pit crews. As you've seen, inconsistent applications of best practices, overutilization, so providers incentivize on volume, not value of care. I think this is a little overstated, to be honest with you. If you looked at Uwe Reinhart's last book, Priced Out, what his point is that, in fact, our intensity of services is not that much different than the other countries. It's the cost of those services. So in those other countries, maybe a CT scan costs a few hundred dollars, and in our country, it costs thousands of dollars. And then we're incentivized to produce and use expensive technology. So if one hospital puts in a proton beam, every hospital has to put in a proton beam, and that's just, it's crazy. It drives up costs. And insurance and access issues, and of course, we have some of this. I say you're suffering from an arrow through your head, but just to play it safe, I'm going to order a bunch of tests. So that's driving up the costs. So this creates a dawn of a new era. This is not sustainable, and it's making all of us very nervous, right? And so before we go off the deep end here, though, let's think a little bit about historical perspective. 1933, the U.S. was in the midst of a severe economic downturn that was going to be the Great Depression. 1929 showed that U.S. health care expenditures was 4% of GDP, some that was believed to threaten the country's financial recovery, and the Committee of Costs on Medical Care said medical service should be more largely furnished by groups of physicians and related practitioners so organized as to maintain high standards of care and to retain personal relationships. We're saying the same thing. In 1947, an article, The Problem of Medical Economics and the Method of Distributing Medical Care is without a doubt the most important problem facing the medical profession. And then finally, more recently, of course, was a presidential address to Congress where it was stated that health care reform is necessary. We're facing rapidly escalating health costs in Medicare and Medicaid. We need to act now to assure all Americans financial access to high-quality medical care and comprehensive health insurance is an idea whose time has come in America. We all know who this was, of course. This is our radical left-wing socialist president, Richard Nixon, in 1974. Just to put everything in perspective. All right. So health care reform represents a transformational change. There's going to be winners and losers. There's not going to be a lot of status quo. And Ray Nordis said, in times of great change, you can fight it and die, accept it and live, or lead it and prosper. And I think we're all here because we'd like to be part of that last group. But Charles Darwin said, it's not the strongest that survive. It's not the most intelligent that survive. It's the most responsive to change. Deming reminds us, however, that it's not necessary to change. You want to know why? Because survival is not mandatory. I say it is for physicians. The future has to belong to the doctors. It's critical. We're the best advocates for patients. It's our responsibility to survive. And if we don't, we're all in trouble. The health care systems, future gastroenterologists, future physicians in general, but our society. If we don't lead health care reform, that's our duty. So how will it affect our future? Well, I can't say who really knows for sure. John Allen wrote a fantastic article back in 2012 in clinical gastroenterology and hepatology and used the acronym of the Affordable Care Act. And it was all about performance measurement, population management, aggregation, cost, and accountability. Sort of the AAA in population health experience of care and per capita cost. And the next five years, I've been saying this for the last five years, the next five years, like Klaus said, it's the same. You're going to see cross reduction will be a dominant force. You're going to continue to see massive consolidation in payers and health systems and weird consolidations like Aetna and CVS. Practices that demonstrate value will win. A GI will be billed or buy or rent. And we're going to shift from volume to value. And that's what we're hearing. There's a lot of pressure on us as physicians to control costs, increase services and functionality. We have to answer to a lot of different clientele subject to a lot of stringent regulations and oversight and downward pressure of reimbursement. So what do we do? What's our challenge? How are we going to improve customer service, streamline business and clinical processes, and improve patient outcomes if we're going to lead healthcare? That's our obligation. Remember that. And we have to control costs. So what are our choices? We can cut costs in ration care. That's not going to happen in the United States. Or we can start looking at new designs. And that's what this is all about. And we have to be disruptively innovative. Praveen used that word, innovation, innovation, innovation. The reason those companies were on the downside of that curve is they lost track of the innovation and the disruptive innovation. So I refer you to that book by Clayton Christensen. So these trends in healthcare are accelerating. Some healthcare organizations have been moving away from traditional department structures and focusing more on clinical service lines. Health organizations are focusing less on revenue generated through service delivery and responding to these market forces that emphasize accountability for patient care and pay us based on that. Scenario for healthcare destruction, according to Christensen, is the locus of care moves away from tertiary hospitals and general hospitals toward outpatient clinics, physician's offices, and the community even, in patients' homes. That's where we have our advantage. We don't have to build expensive bricks and mortar. Creating new organizations, healthcare industry today is trying to preserve outmoded institutions. You see the hospitals just creating more and more bricks and mortar. Is that where we need to go in the future? The history of disruptive innovation tells us that those institutions will be replaced by new institutions whose business models are appropriate to the new technologies and the new markets. So we have to understand the markets and the technology. So how will it affect our future? More coordinated approach and a whole bunch of different ways for reimbursement in the future. But we have to be ready to take those forms of reimbursement. We have to be prepared. It's building that infrastructure that will allow us. And it's likely that the care of disorders that primarily involve one system in the body, like GI, will migrate to focused institutions whose scope enables them to provide better care with less complexity-driven overhead. And if history is a guide, the health system that can be transformed only by creating these new institutions rather than attempting a torturous transformation of existing institutions. I don't think hospitals are where it's going to be. Hospitals as drivers? Let's look at that. Stanford and UCSF, 25 miles apart, about five years ago, they both built new pediatric hospitals or wings. There was no demand for that. But they spent millions of dollars. You went 50 miles from San Francisco to San Jose, 10 hospitals doing cardiovascular surgery. Three of them did less than one case a year. You can't be cost-effective if you do that. And with raised quality and lower cost, no hospital CEO is going to close their cardiovascular service to lower the cost trajectory. And in fact, these hospitals are planned for increased volume, increased revenue, increased profit margin. What's the hospital motivation to employ physicians? Well, they say ACOs and clinically integrated networks. Employed physicians are subject to pressures to act in compliance with the goals of their employer. I know primary care physicians who were bought by the hospital, and instead of sending their imaging to low-cost, high-quality centers, they sent them to the hospital. Their costs went from $300 to $3,000. Physician autonomy and leverage, if you have less of it, leads to reduced competition from effective physician groups, and less competition converts to higher prices. And you can see, where is the hospital going? Inpatient volumes are going down. Inpatient volumes are going up. So that's where they want to capture the physicians, to capture that outpatient. Employment of physicians and acquisition of physician practices, along with hospital purchasing of ASCs and other community-based facilities, are resulting in more and more services being paid at this higher hospital rate. And the payment differentials likely have accelerated the trend of hospital acquisition. But we've heard that those differences may end. And when they do, I strongly believe that the cardiologists, et cetera, who will be dumped by the hospitals. And increased spending on HOPD services playing a major role in overall spending. And if you look, screening colonoscopy between community and HOPD, if you look at labs or even physical therapy, the price differentials are dramatic. MedPAC has questioned whether these sites' service differentials are warranted, and it's been recommended that Medicare pay for routine physician visits in hospital outpatient departments at the same rate as non-hospitals. So implication for purchasers, large price differentials between HOPD and community settings offer an opportunity for purchase to reduce spending by steering patients away. And based on a sample of services, substantial savings could be achieved if they did this. So there are going to be different health benefits, narrow networks that will exclude high-priced people, tiered networks that will be more out-of-pocket for patients, and even reference pricing where they say, here's $1,800 to get a colonoscopy, go find somebody. So what are our options as physicians? And Praveen said, there's a lot of options that you have. Just go gently into the night. Reduce your expenses. Hold on. You're going to retire in five years. Hold on. Don't go gently into the night. Don't do Medicare. Don't do Medicaid. Don't do anything. Just become concierge. Not many of us can do that. Join a health system. I think that's a dead end. In the long run, we'll talk more about that. Or create a large enough practice to become the preferred practice. So how will it affect our future? We talked about this, all these payments. We need to become ACOs. What kind of ACOs? Not ACOs as a destination. Not as a noun. Not as an organization. But we need to become ACOs, things that interpret it as an adjective. We need to be able to provide accountable care. That's what this is about. So how do we do that? We have to change our conversations from employment, independence, autonomy, control, power. We have to stop being cowboys. We have to be pit crews. Clinical integration, standardization, reliability, consistency, shared leadership. And that's where we need to talk about. So how do we become the group of choice without losing our shirt? Well, the first thing I have to tell you, if you want to become the group of choice, you have to take your shirt off. And you hope your practice doesn't look like this. Because this is not going to win. Your practice has got to look like this. With hard work and discipline, physician's group can become lean, muscular, and competitive. And so there's certain competencies that we're all going to need. Ability to design and organize and manage an efficient system. Ability to integrate across time, settings, providers, and geography. Need a big geography if we're going to go to these payers. Ability to innovatively price and cost account and understand your costs. Ability to how we're going to distribute the dollars to the physicians. And we're going to have to live in these two worlds, these fee for service and the outcomes type of payment for a long time. And that's going to be contradictory. So but we're going to need to be independent. I hear so much about private equity. We consider ourselves an independent practice. Needs to remain independent, tightly integrated practice governance, EMR with regional and national connectivity. Quality measures, financial and production metrics, higher tier pay recognition, strong physician leadership. I couldn't agree more with Praveen. This is critical, whatever we do. And a turnkey solution for whoever is controlling payment of the patients. And for us, our thought is getting bigger is going to be very important. To do all these things, it's a cost. You can spread that cost, amortize that cost over more doctors and it becomes doable. Bigger is better. This is a variation on a picture that Klaus showed. Smaller practices, I think, are going to struggle. Reducing reimbursements, increasing reporting burdens, increasing expenses, crushing regulatory requirements, provide a burnout. I think in smaller communities, if you live in Durango, Colorado, I don't know if anyone out there is from Durango, there's five docs, no one else around them within 75 or 100 miles, you're going to be fine. But in suburban and urban areas, they're going to be some struggle since payers tend to favor larger practices. Large horizontally integrated practices are must-have positions. They're going to be able to afford, build, and build remote patient engagement and monitoring, teleconsulting, analytics, capabilities around value demonstration will be strategically advantageous. But you're going to have to demonstrate it. You just can't say you're better. So we need to consolidate. But we keep talking about consolidation meaning size. That's not what consolidation is about. Consolidation is not how big you are, just how big you are. It's the action or process of combining a number of things into a single, more effective coherent whole. That's the critical part here. So you shouldn't be interested in how big is your group, how great is your group? What are you doing? We have to build this practice infrastructure, and it's not inexpensive. Clear mission, clear vision. What is your mission? Stick to your mission. Gastrohealth, it's to provide outstanding medical care and exceptional health care experience. It's our mission before, during, and after all our private equity deals. We need strong governance, physician and administrative leadership, fair, understanding trends, hold the partners accountable. We have peer review with divine consequences. And there's gives and gets that we all have to understand as we do these deals. Like Praveen said, it's not good or bad, it's gives and gets. We're going to have production and quality measures, compensation system eventually that promotes the correct behavior. And we're going to have to have robust analytics and BI platform, and that's going to require practice management, quality and production reports, efficient scheduling, and unlocking our EMRs. And regional and system integration, and we have to think of ourselves not just as consultants, but manager of all digestive health. How are we going to, if we build this platform, how are we going to leverage it? You've heard talks on this. We have to create our digital front door. That's how people find us. If you don't, someone else is going to be. We have to drive affordability and reduce costs, or we're just going to be the problem. Hospitals are not going to be able to do this. They raise the cost. Tackle social determinants of health. No one talks about this, but this is a giant driver and a lecture or two all by itself. We have to create partnerships. You've heard that from Klaus and many others. Industry, other people, there's so many advantages as you get larger to create wonderful healthcare innovative relationships. And that's, we're going to have to look for, and we have to become the hub of targeted services and chronic conditions, or they're going to go elsewhere. And we have to leverage applied analytics, or we're going to lose our way. We can't be just a provider of healthcare. We have to create a platform for GI health and healthcare in our community, region, state, and nationally. And what are the principles? Goal is quality, not cost. Deming said, if you concentrate on quality, cost goes down. If you concentrate on cost, quality goes down. And we have to compete on value. And what is value? Quality over cost. So it's not so bad. We can understand the cost part, but defining quality, oftentimes in the eye of the beholder, this is MIPS, right? Government says, check this list. Government says this, and we'll give you a little money, maybe, or we won't take away money. If you're a colon, if you're, you know, if you're a gastroenterologist taking care of an IBD patient on a biologic, and you scope them, and this is quality. If you're a patient, this is quality. So quality is in the eye of the beholder. And I'm sorry to everybody. I show this picture every time only because I love to look at it. It's the first day, it's the, after the first run of a beautiful bluebird day, Glacier National Park in the background, a foot and a half of new snow. Even though this is all about quality, can you tell me who the best, the best skier is? No. This, the guy on the left is the best technical skier. One in from the right is not quite as good technically, but it's stronger, more fit. So in different cases, different, he may be the better skier. So it's not clear. And patients don't perceive the quality of the care any more than you can perceive the quality of the skier here. But just like you can understand the quality of that experience, patients understand the quality of the experience. And as we move forward, we have to understand that. So we want to compete on value. We have to reorganize the way we deliver care. Volume and scale and experience will matter. We have to measure outcomes. We have to pay in a way that reinforces value, and we have to develop information platforms. We can't just become a commodity. We can't just compete. If you're a commodity, you're just competing on price. And technology is going to lead us to service excellence and metrics. So the solution is going to be state-of-the-art technology, using data warehouse and analytics, combining many different sources of data so that we can start to get advanced processes into the future with advanced data mining, et cetera, and build these data lakes or data warehouses. Big data, where it's at, simply capturing core data or quality reporting is not enough. We have to go way beyond that. We have to be able to conduct data mining and reporting to pay for performance. It goes back to the triple aim. How do you understand patient experience? Of course, you can do press gaining, but you have to build a practice intelligence infrastructure to improve clinical and business platforms. So you can do clinical case management, patient coordination, deliver quick KPIs on the practice level performance indicators, clinical and business goals, and actionable practice analytics. Not just on the business side, but on the clinical side. We have to control our clinical service lines. So for colon cancer, here's our physician clinical scorecard, withdrawal time, sequel intubation rates, quality of prep, adenoma detection rates. But we also do this on the business side. How many procedures are you doing? Where are you doing them? Are you doing it at the low cost area? How often are you late? That's a suck on profitability. What percentage of your total block time are you using? You're not using enough? We're going to redistribute it. Why are we getting cancellations? And what are the reasons and how can we correct that? So these are all important. It goes back to the triple aim. What about population health? Same with colon cancer. How many people know this? You do recalls. What percentage of these people do you actually get in scope? That's population control and population health, and it's also a good business plan. How about IBD? Triple aim? How about cost? We can start to look at some of the data elements as we unlock them and put them in our data warehouse that will be predictive of outcomes and be able to stratify risk patients so that we can understand who is the most severely at risk and be able to apply more resources to them and bring down costs. This is make-believe data, but one day we'll get there where we'll be able to go to the payer and say a four-year savings of $42 million we want to share in this and eventually get good enough to take risk. We've done multiple alternate payment examples. We did it six or seven years ago. Blue Cross came to us and said, we want to cut you by 20%. You're making more than anybody else for your fees. We had a lot of data, and we showed them that if they cut us, we would leave, and for the same population of patients, it would cost them $5 million more to take care of the patients. We told them, we spent a lot of money to build this infrastructure for right now. You have to decide whether we're worth it. They did decide we were worth it. They didn't cut us 20%. They gave us a 5% bump, and two years later, we were the only group in Florida that got another bump. You can do value-based purchasing, even a fee-for-service world. We're now doing episodes of care around shared savings, around episodes of care, not bundles, but episodes of care around colonoscopy and EGD, where 85% of the cost of the average gastroenterologist in Florida for colonoscopy and about 75% for EGD. That's not because our professional fees are lower, they're higher. It's because of what we do and the data that we can create. We share that savings, and we're now talking to payers about clinical service lines directly in shared savings. We grew. We went from, in 2006 to 2015, 27 to 47 doctors. We thought that wasn't enough. It wasn't a big enough spend to attract payers for these types of contracts. We didn't cover enough geography. It was very labor-intensive. Groups are big, but they weren't capitalized. To build this infrastructure, you need to be capitalized. The best way to predict the future is to create it. Why don't we create it? Because sometimes we're confronted with insurmountable opportunities. Thomas Edison said, vision without execution is just hallucination. We don't want to hallucinate. Enter private equity. You've heard about it. They've been following the consolidation trend for years, recognizing an opportunity to affect consolidation and build many of the benefits of scale in independent physician markets. The provider sector is attracted to private equity because it's one of the most fragmented markets. When private equity is looking to deploy this capital, they're looking for opportunities, not just based on value, but are one of the drivers of value. How can they bring their sophistication into solving our problems? How do we do consolidation in the true sense of the word? How do we build a great company? There are some private equity firms, and Pravin sort of hinted at it, they'd want to buy the house, paint it up, and flip it. Some, though, have the reputation of building great companies. Those are the people you want to be partners with. We did partner in 2016. We went from 47 to now more than 300 in soon to be seven states. That's rapid growth, but we have consolidation and capabilities there. I don't have time to go over that, but we're a platform company. We do a lot of stuff, and we're not just gastroenterologists. We provide all-in-one platform, colorectal surgeons, general surgeons, pathologists, everything together, all-in-one platform, coordinated care. We have sophisticated recruitment teams, special project, PI teams, analytic teams, M&A teams, contracting teams, one consolidated IT platform and a robust business intelligence platform developing the gastrohealth way. If you can't measure it, you can't manage it, but the sky's not falling. You don't have to do this. There are presently and will continue to be very successful independent practices out there in the market who don't have to partner with PE. That's not what we're saying. What you need to do is how will you strategically get these capabilities, but you have to understand hospitals as well as large insurance companies are taking more control over the referral patterns of patients through the creation of these networks. It's important that practices that we lead the way and have necessary resources and capital to make the investments in order to be able to provide the value while being included in these partnerships or we're going to be marginalized. PE partnerships are one way to do it, but it's not the only way. Healthcare predictions. I believe that physicians will continue to consolidate. Everybody else is. We have to. I believe healthcare prediction number two, there's going to be huge stress on healthcare systems. When that price differential goes away, they're going to dump doctors. Their bricks and mortar will be, they're not being innovative. They're on that downward trend that Praveen showed you on that cycle. Prediction number three, physician dominance is restored. I believe it. What can stop us? Ourselves. We have met the enemy and he is us. We are our own worst enemy. We all recognize that. So determinants of success, vision, leadership. We had so much talk about leadership. Why is it important? Because leaders lead. How do we get this done? The people around us, the people we can partner with, the processes and the partnership develops will drive us to where we need to be. So is this the end? I don't know. I think it's just the beginning. Just the beginning. Thank you.

reimbursement

changing marketplace

rising costs

healthcare reform

physicians

technology