Heritage Medical Systems’ Voyage to Value—and How Physicians are Leading the Way
As the accountable care train continues to speed up, innovative healthcare leaders are realizing that physicians—the ones who are working side-by-side with patients on a regular basis—will be key to making the transition to value successful. In California, Heritage Medical Systems, which also has providers operating in New York and Arizona, has been at the forefront of the accountable care revolution, and its senior executives point to its physicians as the ones who are leading the change.
Mark Wagar, president of Heritage Physicians Organization, which operates under the broader Heritage Medical Systems umbrella, recently spoke with Healthcare Informatics about his organization’s value-based care journey, its accountable care organization (ACO) progress, and how physician culture can be changed as providers take on more risk for their patients. Below are excerpts of that interview.
Where do things stand regarding Heritage’s value-based care evolution?
Heritage Physicians Organization is part of Heritage Medical Systems, which has lots of medical organizations in several states. I believe we have about 3,700 primary care physicians and 12,000 specialists that are involved in our ACO endeavors. This has been driven off the original and largest piece of our business in California. And it was a policy decision early on, from our founder, Dr. Richard Merkin, to get into [the Center for Medicare & Medicaid Services’] Pioneer ACO model, even though it was not our core business.
We have been involved in value-based care, the full-risk version, for decades, but we wanted to demonstrate that if you can surround private fee-for-service physicians with the kind of capabilities and infrastructure that we give our traditional business, an ACO has potential. So we did that and are continuing to move forward with that program. But we also believe this: the country would benefit if this all moved faster.
Heritage has evolved from the Pioneer ACO model, to the MSSP (Medicare Shared Savings Program), now to the Next Generation ACO model. Can you talk about the biggest lessons learned so far?
Generally, it’s a step in the right direction. The ability to get more of the funding earlier enables provider organizations to have the funding, change the system, and change what we do. You don’t have to drive off billable events only. We finally have this exploding recognition suddenly that social determinants and behavioral health are important. But that has been apparent to any physician organization for decades, particularly for us as we have been involved in value-based care and risk arrangements since the 1970s.
It became obvious that depending on the patients and the circumstance—what happens in their home and community, what surrounds them, and what their other issues are—may be more important than the physical interaction with their providers. You have to know that in order to manage their health. Once you move away from the mindset of, “I just need to be excellent when you fall in the door, sick or injured,” and move toward, “I will try to help you not fall in the door sick or injured,” or at least have it take longer for it to happen, or maybe you won’t be as bad when you do fall in the door, that’s when the light bulb goes on. We are happy that it’s becoming a broad part of the equation.
Mark Wagar
What are some of the most important IT and data elements to being successful in this transition?
I think as much real-time data and access as you can get is extremely important—so what care a patient is getting, and where, and what is happening in his or her life. If you work from the traditional basis, we pay claims in partnership with our health plan partners, and we pay the claims on the vast majority of our business. And when we do that, our physicians, nurses, pharmacists, social workers, and everyone else involved in the patient’s care, don’t have to wait every three to six months for a review of the data. We see the data today—this hour.
If someone shows up with a conflicting set of prescriptions, or an event that the primary care physician didn’t know about, you want to find out about that right away, and find out what’s happening and what’s wrong. Looking back at trends is important in terms of a future planning perspective, but in terms of what is happening with the patient right now, especially those who are at risk, you want to have that information right now—today, tonight, this hour—and do something about it.
Dr. Merkin’s next question after he talks with physicians about a patient is, “So you know this information, and what are we doing about that right now?” It’s much different than the traditional fee-for-service system where the data just isn’t available to the provider at the level until much later.
What are your thoughts on the recent policy developments on the ACO front these days? Are the government’s proposals to push providers into risk more aggressive than some would like?
Yes, it’s more aggressive than some would like. But this is not about what all of us would like; it’s about how you get to where things are optimal and most effective faster. If you fully embrace both the access to the resources, and the risk, and you are able to spend the money on the resources—in terms of changing the system, changing the way you do business, and not accepting the status quo—you can make a significant difference.
The one-sided risk models are a very important way for providers who may be uncertain to get started, but we are talking about managing a human being-based system of care. If you have no risk at all, how hard you work at something is different than if you have some risk. Providers always want more dollars to do something with, but you don’t get dollars if you aren’t in a position to do something materially different, and essentially guarantee that at least some of it will happen.
We still have a fee-for-service-based system and much of the value-based payments that health plans have moved to is a positive thing that has stimulated some change, but it’s paying you a year or a year-and-a-half later—maybe a little differently if you happen to administer a result as a bonus—but you are still getting that underlying fee-for-service payment. If you are in a one-sided model, it masks and slows down how quickly you get to what could be done if you had more of the resources.
How have you and your colleagues been able to change the physician culture, in terms of moving physicians to a new understanding of what’s going on in healthcare?
In Heritage’s markets where the models are most mature, it’s a combination of physician groups where the doctors are employed, as well as significant numbers of independent practices and smaller offices in the community, and we can blend those. But the physicians individually are not at personal material downside risk. There is an organizational structure that manages the money that comes in when we are fully at risk, but regardless of whether they are employed or an independent practice, they are all tied to a payment at the individual physician level.
That’s one of the things that is missed in the whole conversation over providers being put more at risk—an individual practice office with a few thousand patients is not in a position, actuarily, to accept all that risk. You have to be partnered with some kind of system.
In our instance, in our most mature markets, it’s a blend of employed physicians and independent practices, but in some markets all we have are independent practices. So we can do this if we surround them with the infrastructure if you aggregate enough members from the plans that give you an actuarily valid risk base, and then you have the money up front, so you can help them with information and give them information faster. Then, they can do good things for their patients faster.
What advice can you give to others who are just starting out on this journey?
I [wouldn’t] sit and stew about how difficult it is to be in your position and be surrounded by all these regulations and requirements that can become tough to manage. You can talk about that all day, but it’s ultimately the people’s money and they are asking for better quality, better service and access, and more moderated costs. The only people that can ultimately change things on all those fronts, for the better, are provider organizations—predominately those led by physicians.
But we cannot afford to take decades to make the next set of changes, unless we want government intervention that breeds mediocrity as a result. Physicians and providers should lead this change, and moving this faster will bring the best things for their patients in the long run. Demand more of the dollar in your control immediately, and in order to do that you have to have the structure around you and the willingness to accept responsibility for that dollar. We are trying to show people out there that you can partner with others, and it’s possible to get net better across these factors if you enable the physicians to manage more of the dollar from a clinical perspective, to the patient’s benefit.
