New Startup Helps Physicians Transition from Pay-For-Service to Value-Based Care

Richard Kimball Jr. has spent over two and half decades advising healthcare organizations on strategy and capital structure at some of the country’s leading investment firms. He started at Morgan Stanley where he eventually rose to the position of Managing Director and was a Partner at Goldman Sachs. Now he is leading his own healthcare startup, HExL (which stands for health x longevity). This new venture is focused on helping primary care physicians to transition to the new outcomes-based healthcare system through population health management. Rick spoke with PM360 about his new company and where he thinks healthcare is headed under this new system.

PM360: Can you briefly describe HExL and how your system will help physicians make this transition?

Rick Kimball: What we’re doing is working to help change the way primary care physicians get paid to care for their patients. Ultimately, we help them get paid more for healthier patient outcomes rather than per visit and per procedure, the current model under the fee-for-service reimbursement environment.

Our solution provides physicians with three components: 1) Managed care contracting for taking capitated risk on their Medicare Advantage patients. 2) The financial reconciliation tools to help manage those contracts. 3) The care coordination technology required to manage populations and keep patients, particularly with chronic diseases, stable at home and out of the hospital.

Is this only for primary care physicians with their own practices or can physicians at an ACO or larger hospital system use it?

We will focus specifically on independent primary care physicians who have their own practices, which can range from one physician up to 3,000 physicians in one group. Specifically, we’re focused on physicians who are not employed by the hospitals. My view is that the hospitals are really part of the problem here because they are the high cost venues for care. In fact, 80% of the $3 trillion that we spent on healthcare is spent on people with chronic conditions.

For instance, people who have diabetes, obesity, heart failure—they’re going to have that disease for the rest of their life and that needs to be managed on a daily basis. So it’s not really appropriate for the acute care setting. The U.S. healthcare system was never built to manage the extensive chronic disease problem in this country.

You are a very big proponent of the ACA and the move to an outcomes-based model. How do you respond to the criticisms against this model, such as issues around determining which quality metrics are the right ones to use in order to determine better care?

We are still in the early days of understanding what the right quality metrics are, and how to drive better outcomes. But anything in that direction is progress for more radical movement, because at the moment this fee-for-service, volume-driven industry is very dysfunctional, ultimately costs a lot and drives poor outcomes. It’s extraordinary that in the U.S. we spend two to three times what other countries spend on healthcare and we have the shortest life expectancy, highest infant mortality rate, highest incidence of diabetes, obesity, etc. Despite spending all this money, we are not getting any value for it—and we’re ending up with poor health and poor outcomes.

Your program is a population health management initiative, which helps determine whether there are better ways to treat a specific patient population. Does that at all help determine what quality metrics might be best for a specific disease state?

At the end of the day, in my mind, what you’re talking about in terms of quality metrics include questions, such as: Are you avoiding the catastrophic events of heart attacks and foot amputations that come with unmanaged, chronic disease? On one level, this is all very simple. For example, with a diabetic, it’s about managing glucose levels. But what we find: Patients have less than a 50% compliance rate with medication prescribed by their doctor. They generally don’t change diet or lifestyle. And in a number of years, they are back in the hospital with a heart attack or foot amputation.

So it’s also about figuring out the other chronic diseases an individual may have and helping them help themselves to manage that chronic condition. This is very much about tackling how you help people with diabetes or heart failure to take their medication—and staying connected with them.

If a COPD patient gains 5% of their body fat in a week or two, for instance, you know the body is filling up with fluid and they’re going to have a heart attack in the next couple of weeks. If they’re stepping on a weight scale every day, you can see when that weight increase occurs and literally go knock on their door and give them the medication to avoid the heart attack.

Your company also has a telemedicine component. Does that help in the management of these chronic conditions?

The focus of our business is helping doctors to take the so-called “capitated risk” on their Medicare Advantage patients. So, for a Medicare Advantage member, CMS is paying, say $15,000, for somebody with one chronic condition and the physician group—if they own the risk on that patient—get paid $15,000 to care for the patient. They now want to figure out, “How can I stay as close to that patient as possible and as cheaply as possible?”

That’s where telemedicine comes in. It’s a much lower cost delivery channel for providing care, particularly for people in the home. Whether that is through remote monitoring or televisits, they become different ways for doctors to stay connected to patients. It is much cheaper and more convenient than bringing them into the physician’s office or, even worse, the hospital.

You have also written about the growing importance of community based health workers. How do you see their role evolving under the new healthcare system?

Community health workers are going to be absolutely critical to these types of programs, because what we’re really talking about is moving the care back into the home. So the community health workers can be very helpful in going to the home and helping support patients. It is also important to connect patients with communities, not just with health workers, but with other patients with similar disease states so that they can support each other in disease management.

The more involved a circle of caregivers and supporters are with the patient, we generally find, the better the outcomes are going to be. Patients are more likely to take their medication and make the right decisions in terms of diet and lifestyle.

This also seems like an area in which pharma companies can get involved by helping to provide information to physicians and community health workers that patients would need.

Yes, I think that’s absolutely right. We have a tremendous variation of care across the country and individual doctors have different training and different points of view on how to care for the patient. Yet we also have all this data that demonstrates what is best practice and what drugs and procedures are most effective, but they’re not consistently employed. Part of what we are able to do is deliver that type of clinical decision support at the point of care to ensure more consistent care and, ultimately, help the doctors follow the protocols for standard of care.

Can you provide data that helps physicians make these decisions in real time or do you have to wait to analyze that information over the long term?

It’s done in real time and starts at the beginning of any program. One of the key elements here is performing updated wellness exams on the individuals so you have all the data that you can put into your data warehouse. Then you can run risk stratification and identify where the patient is most likely to be sick and put them in categories so that you can then divert them to the right venue of care.

With all of the data, we can then say, “This group of patients needs to go into a diabetes clinic. This group is going to need home care because they’re frail and elderly.” And so on. It’s about having all of the real-time data that then can be used to drive the care protocols and drive evidence-based medicine.

Additionally, the care protocols include proactively caring for people. So the individual may not have even come to the point of care, but the physician has the information that we need to proactively call this person or go to their home and help them learn to manage their disease better. It’s real time at the point of care, but it’s also proactive in terms of reaching out to help patients help themselves.

Moving to the big picture. Where do you see healthcare headed under this new outcomes-based system?

The country is set up with a dysfunctional healthcare system, but increasingly consumers and patients are getting information comparing quality and cost information from different providers. So people are increasingly going to demand better care and demand change for reimbursements.

The first step: The high deductible plans started to shift the onus of the cost of care to the individual. But as the plans were first introduced, we really had no information for consumers about how to make educated decisions regarding which provider to go with and which treatment to undertake.

But that’s now available on the Internet. Patients are getting much more involved in understanding where to get a lower-cost MRI. In some communities, an MRI can be $300 and in another $2,000. Increasingly, consumers know that and are starting to vote with their feet and go to the lower-cost alternatives, subject to quality of course. This consumerism is very important to shift the industry—and it’s here to stay.

The other piece here: Under the ACA—which created the accountable care organizations—CMS made bold statements about their commitment to alternative payment models, which is really another term for value-based reimbursements. CMS is determined to go down this road and is absolutely convinced that this is the future of healthcare in this country. Generally, where Medicare goes, the rest of the industry goes. And over the next 5 to 10 years, we’re going to see a profound shift in how we think about our healthcare system—with consumers becoming much more engaged.

In terms of consumerism, as patients become more sophisticated healthcare shoppers, what role will physicians play in helping to direct them to better deals?

Now that physicians are on the hook for the cost, they’re going to want to know the low-cost venue for an MRI, as an example. So, physicians are absolutely going to be involved in helping patients understand where to get treatments and how to deliver better quality care at a lower cost. Patients will ask their doctors for that type of information as well.

I was at a major academic medical center, for instance, with an executive health program and they suggested getting a sleep test done. I asked, “Well, how much is the sleep test?” I was told, “Oh, we don’t know.” I investigated and it was $9,000. I circled back to the clinic to say, “You can’t be suggesting everybody have this sleep test done when it’s a $9,000 test and you didn’t even know that. Shame on you.” I think more and more the hospitals and doctors are hearing this from their patients.

Having said that, the hospitals are still largely paid on a fee-for-service basis. So they continue to want patients to take these very expensive care programs, but patients are starting to push back and say, “That’s not acceptable.”

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