The CMO of a Pioneering Southern California Physician Organization Looks at Risks and Rewards in the New Healthcare System
The MemorialCare Medical Foundation, a physician organization in Southern California with more than 2,000 physicians and mid-level practitioners, is a core element in the four-hospital MemorialCare Health System, headquartered in Fountain Valley (and whose hospitals are Long Beach Medical Center, Miller Women’s and Children’s Hospital, Orange Coast Medical Center, and Saddleback Medical Center). The integrated health system encompasses more than 200 sites of care and more than 14,000 employees and contractors, and, according to its 2018 annual report, the system encompasses 1,353 licensed beds, 267,000 patients in value-based health plans, 570,000 medical group visits, and 246,000 emergency department visits. The report notes that “MemorialCare offers more value-based products than any other health system in Southern California. Our Accountable Organizations (ACOs),” the report notes, “include a customized, direct contract between MemorialCare and Boeing called the MemorialCare Health Alliance, as well as innovative plans like Aetna Whole Health, and Vivity offered by Anthem Blue Cross. And it notes that, between 2017 and 2018, the MemorialCare Health Alliance “grew enrollment by 28 percent; reduced total cost of care by 4 percent for plan members who opted for the ACO and participated for the entire year; exceeded patient satisfaction targets; [and] scored number-one in quality for all Boeing ACOs.”
Earlier this month, Adam Solomon, M.D., the chief medical officer of the MemorialCare Medical Foundation—which encompasses both the MemorialCare Medical Group and the Greater Newport Physicians IPA—co-presented with two other integrated health system leaders, at the APG Annual Conference, held at the Manchester Grand Hyatt Hotel in San Diego. On Thursday, April 11, Dr. Solomon co-presented in a pre-conference session entitled “How to Move from Upside-Only to Downside Risk.”
During that session, Dr. Solomon said that “Each [value-based] contract will be different, and there will be different things to focus on to be successful. Outside of the contract, the most important element to consider is your network. Who will you include? The basis is your primary care physicians,” he emphasized. “If you don’t select primary care physicians who naturally manage patients well—who utilize properly and don’t refer excessively—you won’t be successful. Physicians won’t alter their care, so thinking about that is essential.” Meanwhile, he added, the specialty physicians who participate in your network need to “utilize appropriately, utilize the right locations for cost-effective care, and communicate well with primary care physicians and patients. And the last element, of course, is facilities. You may have your own facilities that are part of the structure. But also, what is the ability of those facilities to collaborate and coordinate with us?”
This past week, Dr. Solomon gave Healthcare Innovation Editor-in-Chief Mark Hagland an interview, in which he elaborated on some of the comments he had made during the APG session, and was able to provide further richness around the opportunities and challenges involved in MemorialCare’s journey around value-based care delivery. Below are excerpts from that interview.
Tell me a little bit about the range of your value-based contracts?
We have Medicare Advantage, and we take both professional and institutional risk for nearly all of those lives. Greater Newport Physicians started in Newport around Hoag Hospital. In 2012, GNP affiliated with MemorialCare and added physician networks around Saddleback, Orange Coast, and Long Beach Medical Centers.
We also have commercial lives, and we take professional risk; MemorialCare Medical Care Group and Greater Newport Physicians take professional risk for those commercial lives. The total includes around 42,000 commercial lives for Greater Newport, and around 50,000 for the medical group. Altogether, about 92,000 lives. In terms of commercial payers, among the larger ones we’re working with are Anthem, UnitedHealthcare, Humana, and HealthNet.
We also have commercial lives, and we take professional risk—MemorialCare Medical Care and Newport, take professional risk for those commercial lives. The total includes around 42,000 commercial lives for Greater Newport, and around 50,000 for the medical group. Altogether, about 92,000 lives. In terms of commercial payers, among the larger ones we’re working with are Anthem, UnitedHealthcare, Humana, and HealthNet.
What has your journey into value been like?
I’ll share just a little more history. Long Beach Medical Center has been around since 1907. The other two came in the 70s and 80s. In 2011, we decided we needed a larger outpatient presence, as that was the direction HC was going, and we were going to move out of hospitals, and needed to be prepared. So they decided to bring in Bristol Park Medical Group. So Bristol Park came into the Foundation in 2011. As a medical group, Bristol Park had taken risk for decades. So we brought in all this knowledge and experience of managing populations, and in addition, we brought on some ambulatory surgery centers. We now have 8 of those. Freestanding imaging centers. We now have 34 ambulatory freestanding imaging centers in Southern Cal, co-managed with RadNet. In 2014, did a joint venture with Fresenius, so we’re part-owners of 13 dialysis centers; all of those outpatient-based centers are all off-license.
One of the big decisions made in 2010 was that as things were moving ambulatory, the differential cost in terms of services performed in a freestanding center versus a hospital, that’s where we wanted to go. Hospitals have continued to keep centers on-license in order to increase their revenues; we’ve done the opposite, so those ambulatory services are all within the foundation instead of on the hospital side.
What have been the organization’s biggest learnings so far around risk-based contracting?
Even though there’s a fair amount of overlap between the managed care environment and ACO relationships, they still are different. But in both cases, the network is everything. Getting to know the physicians who are going to be a part of your network, is absolutely essential. Also, if you’re in a managed care environment with delegation, and the primary care physician orders a test or refers a patient to a specialist, if the patient is seen based on that referral, the health plan looks at that as if that physician is us. So even if our doctor acted on our behalf, we are financially responsible. So we have to know that our doctors will do the right thing.
But sorting out who the primary care physicians are who manage patients to the fullest extent of their license instead of referring out, is big. And you’ll see that same behavior in specialists. Even though they’ll tend to manage all patients the same, some will be a little more sophisticated and recognize, this capitation payment doesn’t vary, the fee-for-service payment does, so they’ll hire a PA [physician assistant] to do a lot. So—knowing that the physicians who will be a part of your network, will do the right thing regardless of payment methodology, and will optimally manage the patients in their panel, that is a huge component. In any risk contract, that is huge; it’s important in the HMO world, but crucial in the ACO world.
So being involved in ACO payment, puts additional pressures on you?
It puts pressures on our network, yes. In the HMO network, we get to see everything they’re doing, we can assess what they’re doing, and approve it; so we can be a little bit more lax about who’s in our network, because we can see everything they’re doing. But in the PPO world, we have none of those controls; the patient can just walk into the specialist. But we’ve had such a long history on the managed care side, and have been able to see how primary care physicians manage their patients and how the specialists manage their patients, that we could see which specialists we wanted on our rosters, because we could know they’d do the right thing without our even looking. You’re still trusting someone, and that’s where the data becomes so invaluable.
You have to get that information from the health plans, because you don’t have that data. And you don’t know what’s happening outside your own employed physicians; you need the claims data. So if you don’t get that data from the health plans and pharmacy benefit managers, in a timely way, you don’t know what’s going on in your network, and you have no ability to do anything. Sometimes, plans will provide you with pre-processed reports; oftentimes, that information is so old that you can’t do anything with it, and it’s so formatted that you can’t use or manipulate it. And sometimes you can use the plan’s portal to get to certain kinds of information. And sometimes, plans give us the raw data, we put it into an enterprise-wide data warehouse, and we can use tools to interpret it.
In part two of this interview, Dr. Solomon will speak about MemorialCare’s participation in the Next Generation ACO Program, about data analytics, and about the path forward into the future.
