PREFACE

The fundamental challenges in healthcare have not changed significantly in the nearly five decades of our involvement in health system leadership. Access, quality, and cost have always represented the underlying combination of intersecting and sometimes conflicting goals.

During President Lyndon B. Johnson’s Great Society and the inception of the public payer with the introduction of Medicare and Medicaid in the 1960s, the focus was solely on ensuring adequate access for the elderly and poor citizens who could not then afford available insurance either on their own or through their employers. Interestingly, the opening lines of the Medicare law asserted that the new entitlement would not in any way influence how medicine should be practiced. Through the “Hillary care” debates in the 1990s and into the new millennium, it became obvious to the entire nation and even more so at the individual state budget level that increased access to care without formal expectation of better outcome would drive societal cost to unsustainable and uncompetitive levels.

Amazingly, state and federal regulations continued to demand unfettered fee-for-service reimbursement, as it was felt to be critical to maintain the sacrosanct relationship between patients and providers. Implicit in all of this was the fantasy that all doctors were practicing optimal caregiving and all hospitals were uniformly motivated to do what was right for patients, not what was most convenient and financially beneficial for the hospitals themselves.

Inevitably, the percentage of U.S. gross domestic product (GDP) spent on healthcare grew into double digits and is now approaching 20 percent. And as the public payer has expanded to represent more than 60 percent of the provider payment mix, the question of what everyone is getting for their money has become as important, if not more so than access. The original Dartmouth College studies in the 1970s through the 1990s first reported there was no apparent relationship between cost of care and short- or long-term quality outcomes. Most notable was a region-to-region variation in frequency and cost of most diagnostic and therapeutic interventions.¹

At Geisinger and other innovative integrated systems, particularly those with insurance and provider components in the same fiduciary structure committed to working together to analyze total cost of care for their mutually shared populations, a relationship between cost of care and quality outcome was established. The link at first, though, seemed counterintuitive. Almost always, the highest-cost patients were those with the least acceptable short- and long-term health outcomes. In a very important way, this inverse relationship helped those of us who were leading the transformation to high-quality, low-cost care to establish a rationale to fundamentally reengineer hospital and ambulatory care to achieve better outcomes for patients and not focus primarily on extracting cost. If unnecessary or hurtful care was removed, a better outcome would result.

Healthcare professionals are motivated to do things differently by knowing that the changes are better for patients—not merely saving money for the insurance company, hospital, or purchaser. So much the better if the reengineering results in increased quality with lower cost as a side effect. That’s a double value win. And since professional pride of purpose is what truly motivates the needed behavior change, it was key that the rationale for change focused on patients achieving better outcomes.

All of this created a natural progression in the discussion of how expanding Medicare and Medicaid could influence the access, quality, and cost triangle. Then came the turbulence of our society’s attempt to provide insurance for a majority of the 45 million Americans who were uninsured prior to the inception of the 2010 Patient Protection and Affordable Care Act (ACA). Although the primary intention of Obamacare was to decrease dramatically the number of uninsured, there were many incentives to move the provider system as quickly as possible away from what was acknowledged as the key promoter of unhelpful or hurtful costs: fee-for-service reimbursement.

The two main components of the soon-to-be 20 percent U.S. GDP commitment to healthcare spending were higher prices compared to any other developed country in the world and a dominant fee-for-service payment incentive. This incentive based financial success on number of units of work performed, adding irrational momentum to producing more and more units, regardless of whether those units of work helped patients. If pressure successfully pushed down the price per unit, the rational response of any successful provider system would be to produce more units, whether or not that work helped to achieve better patient outcomes.

Depending on political point of view, one could argue whether ACA/Obamacare achieved even its primary goal, but it definitely altered the unsustainable trajectory of significantly rising medical utilization and expenditure. And whatever comes next post-ACA will have to address the same fundamental interplay of access, quality, and cost. Nothing has changed in these fundamentals, and we believe that nothing has diminished the value of the lessons learned at Geisinger summarized in this book. As turbulence in the public payer undoubtedly will increase with the Trump administration’s commitment to repeal the ACA, we believe financial pressure will increase on providers facing an uptick of uninsured patients for whom they still are obligated to provide care. Cost shifting will not be the usual easy way out, as commercial payers increase their leverage through continued consolidation. Even the large self-insured employers are banding together—for example, the Health Transformation Alliance and Pacific Business Group on Health—to begin to define high-performing provider networks or centers of excellence to transact value-based healthcare for their employees. Quite simply, these big companies do not want to be the last standing redistribution engines providing caregivers high margins as all the other payers squeeze down.

What do these changes mean in the face of unchanging fundamentals in caregiving, payment for care, and our society’s continued expectation of improved health status? And who should be held responsible for its improvement? We believe that unlocking value by changing how care is provided and received remains the only serious way to improve access and quality while lowering cost. This is not easy to transact, but nevertheless is doable as we have seen with the ProvenCare innovations at Geisinger.

The following chapters are designed to provide tangible, practical learnings, and four transformational themes underpin nearly all of the straightforward innovation road tests. The first and most basic transformation is our definition of an integrated health system. In a truly integrated health system, all employees—pharmacists, nurses, administrators, desk clerks, security guards, engineering, food services, employed and nonemployed associated physicians, specialists, subspecialists, PCPs, trainees, and even financial officers—know they are working together and are incentivized to ensure that everyone is focused on benefiting individual patients.

During Dr. Steele’s tenure, it was with great pride, and some occasional anxiety, that job applicants were invited to randomly stop any Geisinger employee—pushing a food cart, providing security in the parking lot, or sitting behind a reception desk—and ask what it was like to work at Geisinger and what was the employee’s mission. Almost always, the answers to these questions from the frontline workers carried more weight than anything the CEO said about shared mission and staff morale. And the answers most often were about true integration; everyone involved understood how what they did made a difference in achieving optimal patient outcomes. Without this basic definition and understanding of integration, most so-called integrated delivery networks are really no more than financial contrivances to obtain better rates in the capital markets. Without true integration, none of the innovation road tests we describe here could have happened.

Second and even more unique to the Geisinger concept of integration was the unusual structure where both the insurance company and all of the providers involved in caregiving ultimately are overseen by a single parent fiduciary. Numerous attempts to create new models of the Geisinger vertical integration, either real or virtual integration between payer and provider, have proliferated over the past decade. Hospital-centric integrated delivery networks have created new insurance companies. Large independent insurance companies have purchased doctor groups and even hospitals. Nonfiduciary partnering has been structured between large independent insurance payers and a variety of provider systems throughout the country. And of course, the whole concept of accountable care organizations is based on payer and provider working together to benefit their mutual constituency. How many of these actually will achieve higher quality outcome and lower cost is unknown, but the prognosis is not good when the main currency of interaction is simply a change in reimbursement incentives.

True transformation in the Geisinger vertical integration represents a fundamental change in the relationship between payer and provider, sharing information as well as financial risk and, most important, sharing a joint mission to improve health outcomes for individual and populations of patients. Whether this new relationship can be scaled will definitely be affected by the radical change under way in our political environment. It remains to be seen exactly how and when this change will happen.

At Geisinger, because of our unusual payer/provider structure and century-old culture, it really doesn’t matter which component of the system does better financially as long as patient outcomes improve and costs decrease. We have the ability to focus together on total cost of care, with access to healthcare delivery data as well as insurance claims data, because patients we care for also are, by and large, those we insure.

A third critical transformation on the provider side of Geisinger was our concept of leadership. We assumed that the combination of a great clinician, great teacher, great administrator, great financial mind, and great innovator would be rare indeed in any single human being. Historically, the most important pillar of credibility at Geisinger always had been to be a great clinician, so that was our starting point. But we insisted that the great clinical leader be paired with a great administrative partner or partners. If the facility or service was large enough or critical to our clinical mission, we often added a financial expert to the leadership team. These leaders together were held responsible for strategic plans, operating budgets, performance metrics, and performance evaluations. Leadership partners also were celebrated together when success occurred. Clinical leaders either learned to share the spotlight or were replaced.

We were trying to change behavior in all of our care reengineering processes. Doing a simple inventory of the details of each care process at the initiation of reengineering was eye-opening. During Dr. Steele’s three-day hospitalization for his heart surgery, 147 different individuals legitimately logged in to his electronic health record. The complexity of changing processes and behaviors among everyone involved in the care process was hard enough, but even more difficult was the subsequent transformation in the relationship between caregivers and patients. Fundamental to most of our innovation efforts was an attempt to create an active and much more symmetrical interaction between patient and provider, whether in the context of an acute care episode or when reengineering the management of chronic diseases.

The progression from activated patients and more symmetrical interactions between caregivers and patients to Dr. Feinberg’s focus on achieving extreme patient satisfaction is natural. This is not just about the quality and temperature of the food provided in the hospital. It isn’t just about having aesthetically pleasing and functional facilities. And it’s not simply about giving patients exactly what they want even when that doesn’t make sense. It is about understanding that the ultimate choice in the patient/provider transaction is in fact the patient’s choice. Getting to an optimal outcome depends critically upon a unique blending of provider expertise and an activated, fully engaged patient who feels every interaction with Geisinger and our people is beneficial.

Most recently, as mentioned earlier, the purchaser of care has been added to the traditional patient, provider, and payer triad. Not just the Medicare and Medicaid public payers, but also the self-insured employers who represent the buyer of healthcare for about 169 million U.S. workers and retirees², are demanding better outcomes for their sponsored employees and are pushing their employees to better understand and choose real value in maintaining optimal health or getting better when they are sick.

A fourth and final transformation underpinning the kind of continuous innovation that Geisinger is about is the need not only to create value from the care reengineering process (higher quality and lower cost) but also to ensure that the benefit is distributed to the patient, to the provider, and back to the purchaser. All of these stakeholders have to experience direct benefit from the value created. If there is no sustainable benefit (or sustainable business model in the case of the provider) plus some allowance for innovation failure, good intentions alone or an altruistic mission will not survive. Innovation stops if all of the value is perceived as going exclusively to one stakeholder in the system, such as the insurance company. And if the patient can’t feel a tangible benefit in service, decreased aggravation, and improved outcome, he or she will have no motivation to seek out value-based innovative systems. Instead, the patient will continue to demand access to the best-known brands, regardless of whether those brands have anything to do with higher quality at lower cost. Finally, for the purchaser who is footing a significant amount of the bill in either direct or indirect costs, recruiting and retaining the best and healthiest group of employees (and keeping them as healthy as possible) is an absolutely critical factor in staying competitive, particularly in an increasingly global market.

So the fundamentals are exactly the same pre- and post-ACA. Higher quality at lower cost, plus access to health insurance, are critical and intersecting goals. And the transformational themes will continue to cut across all of the necessary innovations in which we take great pride at Geisinger.

Going from innovation—even continuous innovation, which is hard enough to systematize—to scaling innovation is a huge leap. But scaling is what we need as a society, not just more boutique innovation efforts. What we’ve learned at Geisinger and at Geisinger’s scaling engine, xG Health Solutions, about the dynamics of scaling, the very different areas of expertise required, the differences in market forces between for-profit and nonprofit settings, and the importance of committed leadership in both the payer and provider components of the healthcare system could fill a book. But that would be the next book, not this one. What we attempt to do here is describe how we’ve innovated at Geisinger and our first scaling attempts outside of our system. We hope you will take what seems interesting and applicable to your own organization, modify it, customize it, even claim it as homegrown if necessary, and begin to see the value proposition work. We stand ready at Geisinger and at xG Health Solutions, should you need any help.