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Q&A: Geisinger executives talk healthcare affordability

Geisinger Health System, which saw Dr. David Feinberg jump ship late last year to join Google, is pushing some innovative ideas, including giving patients refunds if they aren’t satisfied with their care and using new technology platforms designed to improve care delivery. Interim CEO Dr. Jaewon Ryu and Chief Innovation Officer Karen Murphy sat down with Modern Healthcare finance reporter Tara Bannow to talk about what’s ahead for the Danville, Pa.-based system. The following is an edited transcript.

MH: Some integrated health systems are talking about lowering their commercial premiums, including for ACA exchange plans. How are you keeping the costs down on your health plan side?

Ryu: I think we’re pretty darn affordable when you lay us up against the other options that are out there. We’ve recently come down further in our commercial exchange pricing. If you look at what we’ve done in Medicare Advantage this year, we actually enriched benefits in many of our offerings, which is sort of the opposite of where the world’s going.

I think that’s been a nice way for us to continue our growth. Part of this is also proven by competition. That’s why ultimately we believe competition is a good thing for our consumers and for our communities, because it keeps us honest and keeps others honest to make sure that we’re doing everything we can to reduce the total cost of care, create better affordability, and most importantly, when that happens, to deliver it back to the end consumer. I think there are a lot of systems out there that may have made some different choices about where they drive that profitability.

Obviously, we have to pay as much attention to sustainability and maintaining a profit margin as anybody else. One of the things we’re pretty proud about is that we’re able to do so in a way that promotes health and affordability. A lot of our areas have seen better days. Affordability in healthcare is a really important thing for us. I think we take that more seriously than just about anybody else out there.

Murphy: Geisinger’s Steele Institute for Health Innovation (is going to be looking at) what we mean by affordability. Is it lowering the total cost of care? Is it returning savings to the members? We believe it is returning savings to the members by decreasing premiums.

We’ll put a stake in the ground on goals. We’re going to be working on that over the next year collectively so as an organization we can articulate what we mean by affordability, set our goals, and then track our progress. What are we doing? How much do we have to lower the total cost of care before we can get this return?

In a proactive way, we can actually give a return to our members.

Ryu: Clearly, to build some of the programs that we build, whether it’s Geisinger at Home, our genomics program, our transportation program, our program around opioid reduction, our readmissions program, our primary-care redesign—they impact the health of the communities that we serve, but they do cost money to operate. Your choice is: Do I want to deliver this much back to the community through lower premiums, let’s say, versus can I build this awesome program that’s going to improve the health of the community even more?

Those are the questions we face every year and we view it through the lens of value.


If we could build programs and keep people out of the hospitals 
… we can reduce the total cost of care.”

MH: Health systems are also striving to be more nimble and cut costs in general. What have you done in terms of cost cutting?

Ryu: The danger sometimes is focusing so much on administrative costs. You do have to do that stuff, don’t get me wrong, but let’s keep in mind that 85 cents of every dollar in healthcare is medical cost. Medical cost means, if we could build programs and keep people out of the hospitals—and this is probably where we’re very different than every other hospital system—we can reduce the total cost of care by keeping them out of the hospital. Those savings are astronomical compared with the 2% I could take off of my pharmacy drug cost. Or I could take 4% off of my hip-and-knee supply cost.

You have to do those things, too, but you don’t want to do that to the detriment of missing the boat on utilization. Geisinger at Home is taking the sickest 5% of our patients and this is a population that has difficulty sometimes getting to the care. So when we can’t get the patient to the care, this is a program that takes the care to the patient in the home. The physicians, the nurses, the care coordinators, social workers, keep them in the home with medications, nebulizers, IVs, the whole nine yards.

We’ve driven down the rate of admissions by 48% and ER utilization by 43%. That’s stripping costs out of the system. If you look at the value of what those things end up being, that’s more than a $500 per member, per month reduction in cost of care for the people in that program.

To get that same number out of supplies or out of drugs, you have to make percentage reductions that are unrealistic.

Murphy: With the exception of programs like Geisinger at Home, the way we organize care has not really changed in 25 years. The only thing we’ve done is add technology and complexity on top of it. To think that we’re going to be able to cost-cut our way out of this is very unrealistic because we’ve built this huge system with nothing to replace it. To think that you’re just going to be able to say, “I’m going to cut 10% of the staff and still do things the same way,” isn’t going to work.

At the Steele Institute for Healthcare Innovation, we want to take a hard look at the fundamental way we’re delivering care and say, “How do we do it better and less expensive?” understanding that the demand for services, because of demographics, is only going to go up.

MH: How is Geisinger approaching consumerism?

Ryu: One of the things we’ve gone live with probably six, eight months ago is making sure patients are directly booked for appointments. If you’re leaving your primary-care office and you know you’re going to come back 12 months from now, we want to make sure you schedule an appointment. If you want. Some people say, “12 months from now? I don’t know what I’m doing.” That’s fine, then give us a call later, but we want to make sure that’s in your control and having the ability to book that like on

The other area is, let’s say you’re leaving primary care and you need to see a cardiologist or some other specialist. It used to be we would give you a number and you’d contact a call center and we would go ahead and schedule you. Now we’re trying to make sure that’s also done through that OpenTable concept. We have to still categorize you—are you going to a cardiologist?—so you get to the right provider, but that’s something we’re rolling out right now.

Another is, we were one of the first organizations to partner with Apple so our electronic health record is feeding information directly into the Apple Health app.

There’s also our ProvenExperience model. I don’t know if you’ve heard of this, but we have an app that if patients are dissatisfied with their experience for whatever reason, and some of the reasons that we hear had nothing to do with the care—the toilet paper holder was on the left and I’m used to it being on the right—they have a toggle switch that says, “Here’s the percentage of my cost share, whether it’s a deductible or a copay, and I feel like I’m entitled to receive back as a refund, because my experience was subpar.” We give them that refund, no questions asked. The thing that’s valuable to us is the feedback.

We’ve heard tremendous feedback. It’s not just something esoteric like the toilet paper holder. Sometimes it’s, “When I close the door in the patient exam room, and you told me to get into the gown, there was no hook to hang my clothes so I had to put them on the chair and then they fell to the ground and I don’t like my shirt getting dirty.” We said, you know what, that’s a really good point. We need to put hangers on each exam room door.

MH: Is that an actual example?

Ryu: That’s an actual example. The toilet paper holder is an actual example. I don’t make this stuff up. We didn’t change the toilet paper holder though. You want it on the left or the right; you can’t please everybody. We did refund the person.

MH: Is there a refund of the cost of their medical service?

Ryu: Whatever was out of pocket. So whether it was their deductible, or their cost shared. Whatever they paid for, not what insurance paid.

It changes culture because now all of a sudden you’ve put a guarantee out there, and I think the staff are all laser-focused on making sure that the experience is a good one.