Gregg Masters 00:06 This is PopHealth Week on HealthcareNOW Radio. Today’s episode is sponsored by Health Innovation Media. We bring your brand messaging alive on the ground and now in the virtual space for major trade show conference innovation summits and webinars via our signature pop up studio connect with us at www.popupstudio.productions. I’m Gregg Masters Managing Director of Health Innovation Media, publisher of ACOwatch.com and your PopHealth Week co-host with my partner co-founder Fred Goldstein, President of Accountable Health LLC, a Jacksonville, Florida based consulting firm. Our guest on today’s show is Cliff Frank, president of Healthcare Management Solutions, Inc. a managed care consulting firm located in Dunedin, Florida Cliff is making an encore appearance on PopHealth Week and will share insights from a series of recent virtual Confabs focused on reopening our health system post-COVID-19, including hospitals and physicians as they reengage with traditional operations with a special emphasis on primary care. Cliff has more than 30 years of healthcare experience working with payers, hospitals, IPAs, PHO’s and clinically integrated networks with demonstrated abilities in managed care contracting, payer-provider relationships, bundled payment design capitation program design and management, Accountable Care design and operations and evaluation of managed care models and structures. Throughout his career Cliff’s focus has been on reducing waste and enhancing quality for the benefit of patient care. Creating clinical and financial alignment among providers and payers has been a central theme to his professional work across a variety of settings and organizations. Cliff provides leadership to clinically integrated networks operating shared savings relationships with payers and Medicare and routinely consults to organizations on their managed care contracts, strategy preparation for provider risk transfer and innovative payer provider partnerships. So Fred, over to you help us get to know what is on Cliffs radar these days and what he’s learned from those virtual Confabs.
Fred Goldstein 02:24 Thank you so much, Gregg, and Cliff, welcome to PopHealth Week.
Cliff Frank 02:26 Thanks, Fred.
Fred Goldstein 02:27 Yeah, it’s great to have you on, we always have a fascinating discussion with you. And I know this last time, excuse me with that little jet flying over right now. The Navy is doing some practicing. But I know that you just had an incredible Confab. I was involved with that. And so why don’t you talk a little bit about your Confab and what they are and what you did this time, then we can get into some deeper discussions on the results.
Cliff Frank 02:49 So I’ve been doing these Confabs off and on for, I don’t know, 10 to 12 years. And what I like to do is about once a year get buck smart people in a room that I’ve known for many years, and we just kind of beat up a topic or two for the better part of a day, because of the travel restrictions and other kinds of limitations. Instead, this time I did three phone calls with about eight to 10 people each. It was really a lot of fun. Because we were we were talking about kind of what comes next after the virus stuff settles down. People from insurance people from providers, people from consulting firms, and other kind of managed care near do wells like me. And we all had somewhat similar ideas. But we all had different ideas, too. So it was it was a very good idea exchange. And we kind of ended up in some fairly common places among each other, not necessarily in agreement with kind of what’s out there in the world. But definitely, we went through kind of who wins, who loses and what does winning look like for some entities, we think it’s going to be pretty tough. And for some others, it could be could be interesting. And we all said well, we better buy United stock.
Fred Goldstein 04:07 Yeah, absolutely. Let’s, let’s sort of talk about where they’re at now. And I think, you know, it’s kind of fascinating. We’ve had everybody, you know, under the shutdowns and some hospitals that are different than others. And I know you’re involved running some ACOs. So what did you hear? And what did you actually see in some of the places you’re involved with in terms of what’s going on in the facilities now in terms of utilization, etc.
Cliff Frank 04:28 So utilization is down generally by half or more. And, of course, it’s all the profitable utilization that is down from a net revenue and or net profitability standpoint. It’s really ugly for hospital. What’s kind of a separator is how those hospitals have have dealt with it. Some hospitals have just laid off, everybody laid off a bunch of people, fired doctors, cut pay on clinical staff, fired a bunch of non clinical staff and are just kind of trying to hunker down and muddle through. Others have been a little bit more more strategic, we heard about one health system that was holding their primary care Doc’s harmless in the in the reduction because they didn’t want to kind of squander that asset. Others have gone the other way and just said, Hey, you know, who’s ever high paying is, you know, high paid is going to get get the biggest whack. So it’s been, nobody has gotten away with kind of not having a hit, everybody’s got a hit, but people are very hospital are looking at how to approach that problem very differently. There was some consensus that the strong could get stronger, and the week may die, institutions, that people and that that, but there was kind of a counter-trend that also said, Well, you know, some some health systems may really kind of have overplayed their hand in this in this role. And there are some new strategic vulnerabilities that they need to be thinking about, particularly relative to their employees, medical staff.
Fred Goldstein 06:01 And I think, you know, this focus on primary care and how some places really took a hit to them and others took care of them is sort of a feature set that a bunch of people talk about in coming out of this thing. What happens with primary care, and what was the sense of the group with primary care and their relationship with hospitals.
Cliff Frank 06:19 very somber, telehealth is a game-changer for several reasons. First of all, you know, we hadn’t really adopted it very well. And we were, there was kind of this circular argument while the patients won’t like it. So I don’t like it. And suddenly, you know, people find out when they don’t have any other alternative telehealth, I guess, will work and the technology works. And it isn’t that hard to put in. And my God, the patients love it. They absolutely love it, even even the elder, they can kind of do this. And the doctors as a result like it a lot. Well, all of that has some big implications down the road. Because of this. Physicians, particularly those that went through salary cuts, or watch their brethren get terminated, have been through a culture shock, because the reason they sold their practice or went to work for a big institution was shelter from the storm, guess what the storm is actually inside the building, and there is no shelter. So there are a lot of disillusioned primary care physicians that work in large systems that, you know, may not be that different from what was before because there were lots of reasons for doctors to be grumpy. The difference is now with telehealth, they have these doctors have an option they can go right to their basement contract with American Well and a couple of other telehealth companies at 35 bucks a visit three and a half to four visits an hour. And they can make $250,000 a year without breaking their no-compete agreement with the hospital. So hospitals have thought they have their primary care staff captive, suddenly may find many of them going rogue
Fred Goldstein 08:07 fascinating. And I understand that you set up a telehealth system pretty quickly for your ACO or something like that. Is that true?
Cliff Frank 08:14 We did for our for Shore Medical Centers employed Medical Group, we’ve been looking at it for like 18 months. And finally, you know, we had to do something. So we couldn’t kind of dodge the decision. So in the space of 36 hours, we went from zero to 90 miles an hour without really much of a hiccup just hooked up the Zoom that has security and encryption. And then away we went, and it’s working great.
Fred Goldstein 08:43 So literally, the physicians were able to pick up the technology and just run with it. Not a whole lot of intervention training or anything.
Cliff Frank 08:49 Yeah, half an hour worth of training apiece. That was it. That’s fantastic.
Fred Goldstein 08:54 And they like it.
Cliff Frank 08:55 Yeah, yeah. fact, one doctor was telling me, he had the patient when a patient who was kind of complaining of shortness of breath, he said, Okay, go walk up the stairs in your house, and come and come back. And so the patient did right there on the spot. And, you know, they had a further clinical dialogue. That was not something you could do in an office. It was amazing.
Fred Goldstein 09:18 And and the good news, I guess is he came back. And the other good news is if he hadn’t you were on the phone, and you could go get something done. Right
Cliff Frank 09:24 That’s That’s right. That’s right.
Fred Goldstein 09:26 Yeah, ultimate assessment right there. That’s fantastic. So you know, what, what about the thinking in terms of the big players in that space? You know, the American Wells Teladoc’s those others that have big businesses versus you that just went out and did it? You know, with Zoom etc. Do you see any advantage to one or the other or is it going to affect anything over the longer refers to what types of systems are set up or are ultimately taken take over?
Cliff Frank 09:54 There may be some shakeout in the telehealth space. I think right now. There’s kind of a plenty of plenty of food on the table for everybody. But what is important is really the link to my earlier comment. And that is, if each health system has their own telehealth that they could essentially lock out a defector, as long as there’s an American Well, and a bunch of others there, there’s plenty of work for primary care Doc’s who want to migrate to some other employee or independent status, kind of like, you know, you can drive for Uber, you can drive for Lyft, you could drive for grubhub, you know, there’s plenty, there’s plenty of business. And it doesn’t mean you got to work to the taxi company.
Fred Goldstein 10:39 Right? And over the longer term, do you think that those payment models because obviously, they said, Hey, we’re gonna pay for this stuff at this rate? Do you think they leave that and that continues on? Or do we actually create a system that’s more efficient and lower those payments for tele-visits or stuff like that, because you may not have the big office space and the exam rooms and those kinds of things? Do we get there,
Cliff Frank 11:01 the margin inside primary care offices may actually go up for just that reason, they can shrink, and they can actually manage more patients, particularly if they were capitated. But even in the fee for service world, I don’t think Medicare is going to be able to retreat very much from parity. They may they may end the plans may move to discount the voice only tele-visit and say, Well, okay, that’s that’s not the same as a visual telehealth visit. So we’re going to we’re going to kind of create some separation and payment there. The other place I’ve heard some grumblings about is that there are certain kinds of visits that really are not great for telehealth like physical therapy that needs to really be a visual in person laying on hands visit, so they may stop paying for, you know, those kinds of visits. But in the mainstream in terms of primary care, and maybe a lot of the internal medicine subspecialties, I think telehealth is here to stay. And I think if somebody tries to mess with it there, there will be a consumer backlash.
Fred Goldstein 12:15 Well, yeah, that’s a fascinating insight about physical therapy because right now one of the hottest so-called areas musculoskeletal care is moving into virtual
Cliff Frank 12:24 Well, what I’m what I’m hearing from the plans is they don’t understand that value,
Fred Goldstein 12:29 not possibly the best thing.
Gregg Masters 12:31 And if you’re just tuning in, you’re listening to PopHealth Week on HealthcareNOW Radio, our guest is Cliff Frank, president of Healthcare Management Solutions, a managed care consulting firm located in Dunedin, Florida.
Cliff Frank 12:43 So there is probably some education which needs to be done of the plans to make sure that it that that telehealth sticks in those areas where the plans are skeptical.
Fred Goldstein 12:57 You also mentioned capitation. And it seems to me an obvious deal that those who were in these prepaid models or risk-based models were probably better off than fee for service model. One is that the case and two does that quick in the movement to those types of payment models.
Cliff Frank 13:15 Well, one thing that helps in a crisis is cash. And these capitated physicians who are have a big chunk of patients have cash to work with those that kind of either dabble in it or don’t have it at all, are really kind of strung out on the fee for service nickel that is getting scarce in today’s world. The thing about a capitated model is that it’s not a revenue play at that point, except for how many patients can you really handle, it’s really more of a cost management plan, both costs, downstream cost management, and cost of managing your own patients. And to the extent that patients don’t need to come into the office, but they can be managed with telehealth that lowers a physician’s cost of doing business and enhances quality because they can make that outreach more often without it without generating a lot of costs or a lot of friction from the member. So everybody seems to be pretty happy with the telehealth component of this, particularly, as it relates to lowering costs. And being kind of the next substitute for the in-person office visit, the more efficient, it’s more you know, a working person has a better better access because they don’t have to take off work or pick up the kid at school or anything else. And particularly if things can be done in the off-hours, it really makes for a better quality of clinical experience.
Fred Goldstein 14:48 And speaking of this issue of global cap and for those primary care physicians or other groups that might be in a global cap environment, what’s going to be the thinking because we know that you shut off all these so called elective or types of procedures. So clearly if you’re globally capitated and that’s part of your bundle in that cap, you don’t have those expenses. Is there going to be any discussions? You think among the health plans and providers that wait a second, you actually had a windfall because people just didn’t go in for surgery?
Cliff Frank 15:19 I don’t think so. But I think the contract renewal negotiations could get a little bit a little bit tougher. However, that being said, Remember, there are these medical loss ratio requirements. So where if the medical spending on medical services falls below 80% of total premium, the plans have to give back money? Well, when the provider is not capitated, but it’s all fee for service, the plans and there’s this dip the plan, they’re gonna have to get back a bunch of money. So
Fred Goldstein 15:55 right
Cliff Frank 15:55 either way, the plans weren’t going to be able to keep this all this money that they were that they’re not spending, it’s going to go back in either better benefits, or it’s going to go to to providers as earned income. All that’s just fine. I think it’s reasonable.
Fred Goldstein 16:11 So what what does it look like? What is the group thinks it looks like coming out of this is there a bunch of pent up demand, are the ER or the Or’s is gonna be flooded? Are people afraid to come up with a sense?
Cliff Frank 16:23 So there is a huge disconnect between those in the in the medical side or provider side. And everybody, the providers are well aware of hundreds of patients who who need to come in who said they’re coming in. And you know, we can’t wait, we’ll run 24 hours 24 seven, to meet those meet that to backlog. There are a lot of us who are kind of keen observers who don’t think that’s going to happen, there will be a little a backlog. But there are lots of reasons why people aren’t coming back at the rate that that hospitals are are expecting or hoping a lot of people don’t have jobs, so they don’t have money, or insurance. A lot of even those that do don’t don’t want to take time off. A lot of the reasons why the surgery may have been necessary, may have self resolved, or the patient got sick or dies. So they’re no longer candidates for surgery. And the last thing is who the hell wants to go to a hospital that was full of virus last month, and may or may not be all that clean? Lots of reasons why the rebound or snap back may kind of be a build back rather than a snap back. If that’s the case, providers, both medical have a not both physician and hospitals are going to see a lot more financial pain.
Fred Goldstein 17:48 Do you think this will lead to some changes in terms of you mentioned some of the really big systems maybe having a bit of a struggle, because that does it lead to some change in in how the hospitals think going forward, or do they just continue on and try to crank some volume.
Cliff Frank 18:04 I think those that are kind of volume plays, and leverage plays with the market will try that again, I don’t know that it’s going to work as well as it has in the past, for the simple reason that employers now are going to be desperate to save money, because a lot of them are just as close to going out of business, I think we’re going to see a lot more development and implementation of narrow networks. And, you know, narrow networks can be built around one system, they can be built around best of breed in a particular market. But however it’s done, there’s going to be a whole lot of systems or a whole lot of providers that get cut out of these new deals. And when that happens, that build back that snapback, even if it’s a slow rise of activity may not happen and the leverage that that large plan large health systems thought they had in the market may turn out to be more imagined than real.
Fred Goldstein 19:04 In terms of those narrow networks. What happens to those centers of excellence models like Walmart was using,
Cliff Frank 19:10 I think the model could be kind of replicated on a local basis, where where like Cleveland Clinic could actually kind of and they’ve done this they franchise their designation and their model so they could actually publish their criteria and coach up a system that could then go back to Walmart and say, okay, we’ve now got these 18 different systems that are that are Cleveland Clinic branded. And you can get the same kind of conservative analysis and good clinical approach in those places as well as our so you don’t have to travel so much.
Fred Goldstein 19:50 How does the public come out of this thing or what or where do they fit in this post? COVID
Cliff Frank 19:57 I think that’s a little bit unclear. With telehealth, clearly the patient’s win. I mean, it’s it’s so much more convenient. The cost is, you know, fairly, fairly well managed. So I think telehealth is a big, big win for some of these other things, you know, as the hospitals get trouble get in trouble, access may become more of an issue, pricing may get get really goofy because a lot of hospitals may come back and, and demand more money from plans rather than less to make themselves, you know, to cover their hole in their bucket in their income statement. But plans are not necessarily in a mood to kind of say, well, yeah, we’ll be your bailout. So I think in rural health, there’s a crisis of access coming in urban markets, it may not be that bad, but it’s going to be different, because a lot of the things that hospitals weren’t doing to compete; now, you know, they may actually have to collaborate, to do things systemically across the city, and eliminate duplication and other kinds of added costs without adding value.
Fred Goldstein 21:15 Are there any specialties over the next, you know, post this that will be harder hit, or that the group felt might struggle more than others?
Cliff Frank 21:24 Anesthesia is not going to be a good place. Because as surgery comes down, they get, they’re the first ones that that feel it. Interestingly, ER, is way down, it’s like down by half on strokes and heart attacks and other things that you would expect would still come. So where all that’s going is not clear, but they are ER, specialty is struggling mightily at this point. And anything that kind of is hospital dependent, is is likely to have a problem. If they’ve got other lower-cost alternatives, like let’s say orthopedic surgery, or radiology or something like that, you know, they they can move to those lower-cost settings, I think, Hmm, I think hospitals are going to have a lot of pressure, like on the site of service issues and and and other things where, where the hospitals make a good nickel, every place, they’re making money, they’re getting hammered. There is no shelter anymore.
Fred Goldstein 22:23 What about the issue of VC with the doctor, ER groups and others? Is that Is this going to put a nail into that business?
Cliff Frank 22:33 I would say it depends. And it kind of depends on the philosophy, the orientations, these single-specialty roll ups like to roll up GI doctor orthopedics or, or OB-Gyn , that were all predicated on, essentially building volume, building market leverage, and getting better better rates from from the market. I think those plays are dead, private equity-backed organizations are, as our seminar group reported, are shaking in their boots, because they can’t figure out how they’re going to get to next Tuesday, with the with the plate with everything locked down. And then when it comes back, it’s not going to come back that strong. And if it does come back there, there are a lot of costs that have to be covered. On the other hand, those venture-backed or private equity-backed organizations that are trying to manage Medicare risk through really effective primary care, and other support supportive either technologies or clinical delivery systems could find themselves in a very good position, because there’ll be lots of doctors spinning out of hospitals that want someplace to land. And that’s kind of oriented toward the future, not the past.
Fred Goldstein 23:49 Fantastic. Well, Cliff, it’s really been great having you on again, today. And I hope you continue to stay safe, we really should get you back on because there’s a whole lot more we could get into. We didn’t touch anything about you know, the insurance folks or the people losing insurance and how that impacts it; but clearly, it’s going to be an interesting time as we come out of this. So thanks again for joining us. It’s been a pleasure.
Cliff Frank 24:12 Oh, it’s always mine. I’ll do anything for an audience.
Fred Goldstein 24:17 Thank you so much Cliff. and back over to you Gregg
Gregg Masters 24:21 And thank you, Fred. That is the last word on today’s broadcast. I want to thank Cliff Frank, president of Healthcare Management Solutions, Inc, a managed care consulting firm located in Dunedin, Florida for sharing his time and insights today for more information or to follow Cliff’s work, go to www.CliffFrank.com for PopHealth Week, my colleague Fred Goldstein and HealthcareNOW Radio This is Gregg Masters saying, stay safe y’all. We get better together even if virtually