About Editor

Charlotte Rowe is the editor of Transforming Healthcare. She has covered, among other topics, federal tax policy and healthcare business news. Follow her on Twitter @CharlotteSRowe.

We’ve Moved! Join Our Community of Innovators at Oliver Wyman Health

Transforming Healthcare is itself transforming to better support the collaboration required of an industry undergoing a revolutionary shift.

We’re launching Oliver Wyman Health, a digital platform designed to better facilitate insight sharing and innovation diffusion among industry thought leaders and Oliver Wyman’s own global team of experts.

Find us at http://health.oliverwyman.com – and share your view of future health.

10. Four forces panel

MMC Advantage Webinar: Adopting Data Driven Intelligence

MMC-Advantage-email-bannerHealthcare providers must meet higher standards for clinical quality and patient safety in the new value-based healthcare world. Data-driven intelligence proactively identifies vulnerabilities and engages physicians and clinical leaders in solutions that transform the safety of patient care and provide a real catalyst for change.

We invite you to join us for a complimentary webinar entitled “Brave New World: Adopting Data Driven Intelligence in A Value-Based Healthcare World” on October 6 at 11:00 a.m. Eastern.  Experts from Marsh ClearSight and Mercer will join Oliver Wyman’s Dr. Aaron Gerber, Partner and U.S. Leader for MMC Provider Advantage; Dr. Bruce Hamory, Partner and Chief Medical Officer; and Donna Jennings, Senior Consultant for Clinical Healthcare Practice to discuss:

  • How data driven transparency and reporting best practices help reduce adverse events.
  • How data driven intelligence can proactively identify vulnerabilities and recommend solutions that transform patient safety claims and drive informed decision making.
  • How MMC’s Provider Advantage can uniquely position your organization on your journey to provide value-based healthcare … from concept, to design, to implementation.

Who Should Attend?

This webinar will be of interest to healthcare provider leaders responsible for ensuring clinical quality and patient safety including Chief Medical Officers, Chief Financial Officers, Legal Counsel, Chief Human Resource Officers. Professionals responsible for risk management, quality, claims management, and patient safety will also find the webinar of value.

Learn more and register here.

Incentivizing Docs: Lessons for Payers From the World of Physician Compensation

As payers are under ever-increasing pressure to control costs and improve the quality of care, the focus on stronger incentive programs and a greater shift to value-based payments shows no signs of slowing. A recent Forbes article noted that figures from the Medical Group Management Association show nearly 11% of primary care doctor payments come from value-based contracts compared to just 3% in 2012 and 6.7% in 2013. Oliver Wyman’s Tomas Mikuckis, Parie Garg, and Eric Lu share observations of how this trend is playing out in the market:

We’re seeing payers implement a range of innovative new ways to encourage providers to deliver higher quality, lower cost care. Many payers are further increasing and refining P4P-style bonus payments to incentivize providers to achieve desired target outcomes, especially as quality in Medicare Advantage Stars becomes a do-or-die priority for many Medicare Advantage plans. Shared savings models are becoming more prevalent to align payer and provider incentives to lower costs. And the market is shifting towards full-risk arrangements where financial success is wholly based on total cost and quality performance.

These initiatives all require great effort and investment – but how can payers ensure they are achieving the value they need from providers? And more importantly, in a world of increasing pressure on cost performance, how do payers make sure they are not throwing good money after bad, but establishing incentive programs that are effective and valuable in driving change in outcomes?

Payers must shift from the historical approach of designing initiatives that target the desired value-based outcomes in a vacuum. To truly grab the attention of providers and drive behavioral change, payers must understand and align with the provider’s existing compensation and incentive models. The models can differ significantly across a payer’s network. While independent providers may be compensated primarily from the payer’s fee schedule, employed providers receive salaries and bonuses that are calculated largely based on volume-based productivity performance. Understanding how the payer’s initiative will impact the overall compensation for a physician is critical to gauge how strongly they will respond.

More importantly, as provider organizations have started to shift compensation models for their physicians to align with value-based outcomes, there are a number of lessons learned from the world of physician compensation that payers should consider when developing new value-based initiatives:

  • Cause and effect: Most incentives tied to specific value-based metrics assume that the rewards will influence a physician’s practice patterns and resulting performance on that metric. However, physicians may not receive those payments directly because their compensation is distributed via their employer’s own compensation model, or incentives are retained by their IPA or PO. Understanding where the dollars go, and collaborating with physician groups to ensure they reach their target audiences, is critical.
  • Don’t operate in a vacuum. Just as payers are shifting towards value-based payments, provider organizations are also shifting towards incorporating value-based outcome performance into their compensation models. Payers should collaborate with providers to ensure that the targeted outcomes are aligned and that they are incentivizing physicians to perform against the same set of goals.

[Read more…]

Save Money, Live Better: Lessons for Serving Diverse Income Populations

In the world of healthcare, the Medicaid segment is one that plans and providers alike struggle with serving well. The financial constraints, language barriers, transient housing, and varying needs make this a difficult population to focus on. However, as Oliver Wyman Principal Parie Garg explains, even in healthcare, necessity can prove to be the mother of invention:

Managed Care Organizations (MCOs) are being recognized for the role they are playing in managing the Medicaid population. While these MCOs have made significant strides in managing Medicaid, they can learn from a retailer who knows a thing or two about serving an economically diverse population: Walmart. Lessons from the big-box retailer for healthcare include:

  • Do what you are good at. In the healthcare world, Walmart is a provider of convenient, affordable healthcare services – rather than a master integrator of all things. In other words, Walmart has an important role to play in value-based care, but not as the risk-taking population health manager (PHM); instead, it’s the low-cost front door that can make any PHM more effective.
  • Take the horse to the pond. Consider that ~50% of the US population does not have a primary care physician (PCP) today, while approximately 60% of the US population goes through a Walmart store once a week. By bringing healthcare to Walmart retail stores, Walmart is essentially bringing healthcare to a historically underserved population – driving a revolution among people who weren’t interested in or who couldn’t see a PCP before the advent of retail clinics.
  • Make healthcare affordable. $4 generic. $40 PCP visits. Enough said.
  • Stretch the value of the dollar. Research has shown that Walmart costs (on average) 8-20% less than competitors for food, household items, and over-the-counter drugs. In recognition of this, Walmart has recently partnered with Michigan Medicaid to offer $50 gift cards for members who see their PCPs and agree to certain healthy behaviors. While there are plenty of critics for the program, it is a start – and a step in the right direction for a population that is remarkably difficult to engage.

We acknowledge that there are dissenters who would argue with the business practices of Walmart, and would challenge its presence in a community. However, Walmart offers a good example of how to leverage your core strengths to address the needs of your customers…to Save Money and Live Better.

Push to Value: CMS Presses Payers to Accelerate Pace of Innovation

The recent announcement by the Centers for Medicare & Medicaid Services (CMS) to launch the Medicare Advantage Value-Based Insurance Design (VBID) model is just the latest step in the recent trend of new programs reinforcing the federal push towards value-based principles . This program is uniquely targeted toward Medicare Advantage (MA), a notable shift as CMS is now pressing on payers to accelerate the pace of innovation. The VBID test provides broad guidelines for health plans, which will be responsible for proposing and implementing specific programs. The seven states included in the pilot program have approximately 2.5 million members enrolled in MA, or 15% of the national MA population. Oliver Wyman’s Tomas Mikuckis, Dan Shellenbarger, and Rohit Singh analyze the implications for payers and providers:

  • While targeting “only” 7 conditions, the program takes a long-term view towards actively managing the health of a majority of Medicare. An Oliver Wyman analysis shows that over 70% of the Medicare population has been diagnosed with one or more of the seven conditions targeted by the VBID program. The conditions span the continuum of chronic disease status, trying to “intercept” those members with early indicators such as hypertension while also offering new ways to actively manage those who may have already progressed to more severe stages such as CHF. The VBID program will enable payers and providers to design better coverage programs for a majority of their MA enrollees.
  • By enabling designs and incentives to direct member care, the VBID model represents a significant shift in CMS’s historically conservative approach to influencing provider selection by beneficiaries. It’s no secret that the Medicare Shared Savings Program has had mixed results over its first three years, in part because the program does not formalize the relationship between patients and providers. That is, the program’s retroactive member attribution model—coupled with patients’ nearly universal access to provider networks—makes care coordination very difficult. This has been a similar challenge for MA plans as well, which have had to rely on an “all or nothing” approach of either including or excluding any given provider from their network. Under VBID, MA plans will now have opportunities to use benefit design, like in the commercial market, to align member incentives and directly promote both integrated high-value services and high-quality providers. If this first step proves successful, we can imagine CMS testing similar constructs outside of MA in traditional Medicare as an additional lever to enable and improve outcomes of various ACO and other programs.
  • VBID presents an opportunity for payers to actively design programs and allocate resources in new initiatives to better manage the care of patients. Within Medicare Advantage, the “managed care” element has been gradually deprioritized. The old “all members are equal” restrictions that have hindered innovation in this space will now be lifted. Payers will have a new ability to competitively differentiate themselves. Payers will be able to reinvest savings into richer plan benefits or lower prices. Patient experience will improve. Both of these shifts will reward the payers through new enrollment and improved retention.

[Read more…]

In the News: Terry Stone in Managed Care Magazine on Evolution of ACA

MC_1509_cover_520x721The September 2015 issue of Managed Care Magazine features an in-depth article on the evolution of the Affordable Care Act in which Terry Stone, Oliver Wyman’s managing partner for Health & Life Sciences, provides perspective on remaining challenges and the impact of the law on the industry as a whole.

In “The ACA as a Survivor,” Stone explains how many people who lost their jobs during the recession have continued to struggle with health insurance. “They don’t qualify for Medicaid and they are not poverty stricken enough to necessarily qualify for big subsidies,” she says in the article. “They are the ones who incur more cost personally when they go to the doctor and are not covered. How do we get them care and coverage?”

While the affordability issue needs to be addressed, she observes that “I think that we’re in the messy early stages….I don’t think people should despair over whether every aspect of the ACA is perfect. It’s just the starting stages. If we focus on the ultimate goal there are ways to get there.” The trend of consolidation in the insurance industry, she further notes, is driven mostly by the need to reduce administrative costs, identify synergies, and gain efficiencies.

However, she says, fundamental change in the system won’t be realized until consumers share more responsibility for their own health. “If we want to get more affordable care,” she says, “we have to get the cost of care per person less expensive. The way to do that is to drive more focus and attention on wringing out excess and waste. The next step is to get consumers to change.”

Read the full article here.

If we want to get more affordable care, we have to get the cost of care per person less expensive. The way to do that is to drive more focus and attention on wringing out excess and waste. The next step is to get consumers to change. – Oliver Wyman’s Terry Stone in Managed Care Magazine

Mercer Forms Strategic Alliance with Livongo Health to Help Employees Better Manage Diabetes

livongo-diabetes-health-image-600x464Mercer announced this week that it has formed a strategic alliance with Livongo Health to provide employers and their employees and dependents with better tools to manage diabetes, a chronic disease affecting nearly 10% of the US population and growing rapidly. Diabetes is a major health issue and represents more than 245 billion dollars in costs in the U.S. annually. With this alliance, Mercer will combine its health benefits consulting capabilities and market reach with Livongo’s cloud-based diabetes management program. Terms of the agreement were not disclosed.

“The problems surrounding diabetes for our clients and their employees are real, and growing,” said Mercer’s Dr. David Kaplan, Senior Partner and Global Clinical Leader. “These issues go beyond the enormous expenditures tied to diabetes and speak to the human toll of poorer employee health, higher absenteeism and lower productivity. We believe that Livongo Health’s diabetes management program is a groundbreaking solution that can start to help our clients win the previously losing battle with diabetes.”

The Mercer strategic alliance with Livongo Health represents one of the inaugural solutions brought to market by Mercer’s Health Innovation LABS team.  The Mercer LABS team continuously researches the healthcare landscape, evaluates emerging trends, and identifies promising solutions. The LABS team engages with innovative companies to accelerate the development of their ideas and test them with forward-thinking employers.

Livongo’s diabetes management program offers three key components: a connected glucose meter that transmits data and messaging in real-time, a smart analytics platform that provides predictive and personalized insights, and a human touch via virtual coaching from Certified Diabetes Educators (see infographic). This approach encourages more frequent blood glucose checks, provides just-in-time outreach from Certified Diabetes Educators, and automates the often cumbersome task of ordering supplies and manually tracking blood glucose readings. Most importantly, participants receive personalized, real-time information that can enable more confident self-management and improved glycemic control.

“Livongo is revolutionizing the way we treat chronic disease, beginning with diabetes.  The Livongo ecosystem, including our smart cloud and two-way interactive glucose meter, empowers people with diabetes to live better, healthier lives, today and everyday,” said Glen Tullman, Chief Executive Officer of Livongo Health. “We are excited to announce this strategic alliance with Mercer, who employers trust how to drive measurable value for their companies and better health for their employees.”


Infographic: Payers & Providers Striking Value-Based Partnerships Around the Country

A team led by Oliver Wyman’s Tomas Mikuckis and Shyam Vichare has been observing payers and providers work more closely in the marketplace. The results of their monitoring program confirm the growth of partnered products built around value-based compensation: As of August 2015, the number of yearly announcements of payer-provider partnerships had quadrupled since 2012, when Oliver Wyman began its monitoring initiative.

Vichare says they expect more public announcements as open enrollment for Affordable Care Act exchanges and Medicare Advantage approaches, both around partnered products and other similar initiatives. Oliver Wyman’s recent report “Payer-Provider Partnerships: The Future of Insurance Products” explains why partnered products matter and how both providers and payers can make them a core part of their strategies. Learn more about the geographic distribution of the partnerships through the infographic below:

Office visit complexity

GuideWell Podcast: Optimizing the Startup Accelerator Experience

The latest GuideWell Insights podcast features an interview with Nina Nashif, CEO and Founder of Healthbox, and Renee Finley, head of GuideWell Innovation. Partners for the past three years on a new accelerator program in Florida, they share lessons on how to optimize the startup accelerator experience. GuideWell’s Kate Warnock offers the following top takeaways:

  • What makes Healthbox unique
  • If the entrepreneur – or the idea – matters most
  • Why certain applications rise to the top
  • What common pitfalls can sap your startup’s momentum
  • How more women entrepreneurs can connect with funding

While Nina and Renee provide perspective from the top down, we invite you to supplement their counsel with peer advice. Our Startup Survival series features interviews with graduates of the Healthbox accelerator program. Check how Peerfit broke through lackluster product adoption by disrupting their business model. Or how CareSpotter perfected its award-winning pitch. Don’t miss survival notes from health tech’s bleeding edge with eTect. Coming soon, Yo-Fi Wellness explains why your solution designer needs to pay as much attention to the buyer as he or she does to the user.

Royalty Financing: Oliver Wyman – Duke Royalty Collaboration Unlocks Value in the Life Sciences

co-branded-logo-3Duke Royalty Limited, a Guernsey-based public diversified royalty company, and Oliver Wyman announced this week a financing collaboration in the rapidly developing pharmaceutical and healthcare-related royalty market. This unique collaboration brings together a global, respected source of deep healthcare knowledge with a publicly-quoted royalty company to create a unique offering to healthcare companies and public investors alike.

Collaboration Highlights

  • Exclusive arrangement aligns both Duke Royalty and Oliver Wyman interests to unlock value, growth, and innovation by offering royalty financing solutions
  • Long-term commitment, signifying belief and dedication to the opportunity for healthcare companies and investors
  • Leverages Oliver Wyman’s global presence, deep healthcare expertise, and proprietary datasets and methodologies to offer a financing alternative from a trusted advisor
  • Collaboration details significant commitment from both parties to drive success for both healthcare innovators seeking capital and investors seeking yield

Oliver Wyman is proud to partner with Duke Royalty and combine our deep healthcare experience with their royalty financing acumen to unlock value and ultimately fuel innovation in healthcare. – Scott McDonald, CEO of Oliver Wyman

[Read more…]