MH: You’ve made the commitment to be all-in on bundled payments. Why?
Jackiewicz: Bundles are the first step in healthcare’s evolution.
We’ve had transplant bundles for years. We always had 60- or 90-day risk on those patients, sort of post-transplant that we had to manage those patients and we did. We used hepatology, we used nurse coordinators, and kept connected with those patients.
Bundles are not about how great the surgery is, or one piece of an episode of the care, they’re really about the outcome that patient receives for the next two or three years. It’s actually moved us to make changes that were long overdue. We adopted the Enhanced Recovery After Surgery program—ERAS.
What you do after the surgery obviously matters, but it’s also about the presurgical evaluation, making sure people are healthy enough for surgery. You can perform the best operation possible, but if you don’t manage that person’s diabetes, if you don’t manage weight control and all their other comorbidities, they’re going to get readmitted, they’re going to have a bad outcome, even if you did a technically fantastic surgery.
Jackiewicz: Yes, but we’re neophytes at it. The reality of it is, we’re going to wind up having bundled payments for almost every sort of complicated service. It’s clear that the medical groups and insurance companies are trying to move risk down the spectrum, because they’re saying, “Well, you’re providing the care. You should be able to take some risk for this, because why should we take the risk?”
We’ve just taken on risk for oncology patients with one medical group. This is going to be stepping into a level of risk that we haven’t been at before because cancer patients are very complicated.
MH: How much of this is trying to get ahead of the curve and how much is being driven by the market and payers?
Jackiewicz: It’s probably 50/50. You want to get ahead of it because we are just at the tip of the iceberg. The other side of it is the tea leaves are right out there. We’ve got Optum buying DaVita’s big medical group, giving them about a million lives. Heritage Provider Network, which is another for-profit medical group, has about 800,000 lives, and those groups really do push risk down.
We’re in complicated contract negotiations with them, but what they really want us to do is take bundles for these patients. They’re willing to partner with us and help us with some of their primary-care network and other things. But they don’t want to take 100% of the risk for the sickest patients in their populations. To be honest with you, for an academic medical center with a very high case mix index, this is kind of our sweet spot.
The issue that we have is building up the other specialties around it, and putting in the data systems that we’re going to need so we can be effective in managing this.
MH: What’s the process like for building that analytics capability?
Jackiewicz: The cost accounting and the data analytics are probably among the most complicated pieces because getting data back that physicians can use to adjust care has been one of our challenges. We actually have a contract with Optum where they help us with our data analytics.
We’ve also entered a contract in Las Vegas with the Culinary Health Fund, which provides healthcare for all the casino culinary workers. We had a tertiary and quaternary contract with them, but then we entered into a primary-care agreement. This is a real application about population health on the ground level. There are 125,000 people, so it’s not insignificant; it’s like a small town.
The Culinary Fund is willing to pay more for outcomes to see the improvement in health, but I also said, internally, “At the end of the day, if we can’t show the fact that we’re delivering value, then why are they going to pay us more?” They’re going to be able to compare it because the employees self-select themselves. They either go to community providers or they can come to these clinics, but all the data is there because they’re self-insured.
MH: How did you set benchmarks with them?
Jackiewicz:They supplied us with all the data on their employees. They want us to design programs that improve care—with the idea that improving care is actually going to lower the cost. This is a defined population. People have been in this fund for years, because even if you change casinos, you would stay in this fund. We have a lot of longitudinal data.
MH: Are you staffing clinics out there?
Jackiewicz: They had a very large clinic. Optum actually runs their pharmacy. They provide dental care there, they provide eye care there. We’re moving all the employees over to USC employees. The doctors are becoming USC physicians. We officially take over Jan. 1. Their goal is for us to open up three more clinics.
MH: As you think about that expansion into the Vegas area, what about your footprint in Southern California? What are you looking at, and is there growth on the horizon?
Jackiewicz: Southern California has been late to the consolidation game, but I think it’s coming around. We have three more hospital acquisitions that are a possibility—one in downtown, one in the eastern side of town, and one in the North San Fernando Valley. This would give us the geographic footprint and the ability to coordinate care around the eastern side of Los Angeles.
MH: Are those three independent hospitals?
Jackiewicz: Three independent hospitals and three sets of negotiations, with three boards, which is always the biggest thing in not-for-profit consolidation. Independence has always been a big part of their culture, so we need to bring them in to be part of the system, but let them keep what made them successful.