Archives for January 2015

ACO Buzz: HHS Pushes Providers to Tipping Point on Value

NYC-MKT08001-036Monday’s announcement by the Department of Health and Human Services (HHS) that it plans to move 30 percent of Medicare payments into alternative payment models by the end of 2016 and 50 percent by the end of 2018 has put providers on notice. HHS said these goals will be achieved through investment in alternative payment models such as Accountable Care Organizations (ACOs), advanced primary care medical home models, new models of bundling payments for episodes of care, and integrated care demonstrations for beneficiaries that are Medicare-Medicaid enrollees. Observes Oliver Wyman ACO advisor Niyum Gandhi:

HHS wants to push providers to a tipping point on value. This is a big deal because CMS is trying to push the market more aggressively to take on the affordability of the overall healthcare ecosystem through realigning providers’ incentives.

In the wake of the announcement, Gandhi offers his perspective on how providers can take an integrated, comprehensive approach to transformation:

  • It’s hard to have a foot in the two canoes of commercialization and value capture. Providers need a calibrated strategy for sequencing various products and contracts. A multiyear plan will need to be developed for most organizations. Contracting opportunities create an opportunity to accelerate the development of clinical capabilities by rewarding the performance improvements that they deliver, and product partnerships can help lock in membership, market share, and loyalty. Staging and aligning this transition is critical, as a mismatch between performance capabilities and risk taking can create significant downside.
  • Shift the clinical model in sync with the payment model. As the market moves towards population health reimbursement, providers will need to reduce utilization to be successful. This requires investment in clinical transformation. To be successful, ACOs need to fundamentally change the way they deliver care. We have seen ACOs roll out many incremental tactics that address low-hanging fruit such as readmissions or moving care to more cost-effective settings. These plays – such as embedding care coordinators – are necessary but not sufficient for the transformation to full population health. The reality is that to achieve significant savings in total cost of care, providers need to effectively manage the overall health of patients, especially the highest-risk patients, in primary care and specialist offices. This is real investment, but also real disruption. Across the country, healthcare innovators are deploying next-generation clinical models that improve quality and outcomes while drastically reducing downstream utilization and cost. And they are maintaining financial stability throughout the transformation of the business by thoughtfully sequencing the value-based contracting and the investments in care redesign (see chart below).
  • Changing the reimbursement model necessitates a different model for engaging physicians.The old FFS/RVU model was designed to drive the behavior of productivity. In this new reimbursement climate, providers will have other behaviors that they want to drive, including spending time managing high-risk patients, following clinical protocols, working with a more effective multidisciplinary, holistic team, and innovating clinical models. The various levers available to drive these behaviors include physician group structure, communication strategies, data strategies and motivators, MD leadership development, and incentive alignment. The trick is to identify which levers work best for which behaviors, and then figure out how to time and sequence them.


HealthBuzz: HHS Push to Value, Mental Health Innovation, Iora Health Raises $28M +

healthbuzz1On Monday the Department of Health and Human Services (HHS) set a goal to have 30 percent of Medicare payments in alternative payment models, such as ACOs or bundled payments, by the end of 2016 and 50 percent by the end of 2018. Overall, HHS seeks to have 85 percent of Medicare fee-for-service payments in value-based purchasing categories by 2016 and 90 percent by 2018. “[The] announcement is, in some ways, the big change that some healthcare experts pleaded for in 2010,” writes reporter Sarah Kliff on Vox. “It’s the first time the federal government has set a specific goal for moving towards a healthcare system that rewards value.” Premier, a healthcare performance improvement alliance of some 3,400 US hospitals and 110,000 other providers, said in a statement: “We particularly applaud HHS’s determination to advance reforms that will incent quality and cost-effective care, while removing many of the antiquated impediments to change. Without important changes to the rules governing ACOs and the bundled payment program, providers will avoid taking the risks necessary for these programs to succeed.” American Hospital Association Executive Vice President Rick Pollack noted: “We need to phase in changes in a thoughtful manner that is tailored to the specific needs of individual communities,” adding “we look forward to learning more from HHS on the details and metrics of this program.” In other health innovation news:


Over the last couple of years I have started to see not just one or two, but probably 20 companies that have the improvement of mental health and substance abuse treatment as their primary focus….The massive uptick in interest and innovation around mental health stems from two things, at least in my opinion. The first is the largest expansion of mental health coverage in decades that was built into the Accountable Care Act….A second factor in the growth of behavioral health innovation is the recently opened dialog about the important role that behavioral change plays in all forms of healthcare and wellness.- Venture Valkyrie

Dollars & Deals

  • Iora Health announced it has secured $28M in its Series C funding round from four new investors: Foundation Medical Partners, Rice Management Company, GE Ventures, and Khosla Ventures, and its existing investors, including .406 Ventures, Fidelity Biosciences, and Polaris Partners. Iora Health will use the additional financing to fund rapid expansion to continue delivering transformative healthcare. Already in six states, Iora expects to double in size in 2015.
  • Cigna has entered into an agreement to purchase New Jersey-based QualCare Alliance Networks. The agreement was struck to combine Cigna’s broad and integrated portfolio of health-related products and services and national scale with QANI’s expertise and capabilities in working with hospital systems to drive innovation, affordability, and value. The transaction is expected to close in the first quarter of 2015.


Pharma must come to terms with reality that they can no longer get away with premium pricing in US and discounted pricing elsewhere. Pharmacy benefit managers are getting aggressive on pricing, and it won’t be long before Medicaid and Medicare will step up because no longer will US taxpayers be able to subsidize these prices. Drugmakers must look at their value proposition and other benefits beyond just the pill. – Oliver Wyman’s Suresh Kumar on the FiercePharma report that Gilead will be offering a new-and-improved generics deal in India

Health in Action Shot

3 Keys to Offsetting Health Plan Margin Pressures

health_formAs the underlying pressure of rising healthcare costs continues to challenge employers, health plans are at risk of losing small and mid-sized employer groups. Millions of lives are expected to be offloaded onto the healthcare exchanges in the next five years. One survey released last week by Grand Valley State University found 30% of firms in West Michigan are uncertain about offering health insurance in 2015. For health plans, trends like this can create significant margin pressures. Oliver Wyman’s Tomas Mikuckis and Jack Fitzgibbons offer strategies that can help mitigate the potential blow:

  1. Demand-based pricing optimization: Health plans that have developed predictive, demand-based approaches for modeling the impact of pricing on retention and margin at a customer-specific level can significantly optimize book performance. This tactic has been shown to have a substantial membership impact over 12-18 months and create a strategic advantage to sales teams in managing account relationships, identifying key at-risk groups, and improving overall sales success.
  2. Innovative networks and products: As affordability continues to be a challenge, employers are increasingly open to alternative approaches that provide step-down options on price without further increases in member deductibles and cost-share. While employers have historically disliked limiting access, a next generation of network constructs is emerging around provider partnerships and ACO-like arrangements, with more creative approaches via tiering and incentives. Plans that can be first-movers in this space have significant opportunity to deliver 10%+ affordability savings in a sustainable way.
  3. G2I transition management: Inevitably, some groups will drop coverage. Continuing to have a comprehensive plan in place to retain members moving to individual exchanges will remain critical over the coming years. Health plans can create “trigger points” that alert call centers when former contracts have been dropped. Health plans can also strategically modify their broker commission schedule to create the right incentives for brokers to “keep members in the fold.”

Davos Ebola Panel Advances Architecture for Robust & Responsive Global Health Security

Participants (l-r)  IFRC Sec Gen Elhadj As Sy, J&J CSO Paul Stoffels, Gapminder Co-founder Hans Rosling, Oliver Wyman's Suresh Kumar, UN Special Envoy David Nabarro, & Gavi CEO Seth Berkley

Participants (l-r) IFRC Sec Gen Elhadj As Sy, J&J CSO Paul Stoffels, Gapminder Co-founder Hans Rosling, Oliver Wyman’s Suresh Kumar, UN Special Envoy David Nabarro & Gavi CEO Seth Berkley

Crispin Ellison is a London-based partner in the Health & Life Sciences practice group of Oliver Wyman where he advises senior government and health decision makers on policy, strategy, performance improvement, and cost reduction. He shares this dispatch from the World Economic Forum annual meeting in Davos, Switzerland:

There’s no place like Davos, Switzerland, during the World Economic Forum’s annual meeting if you want to bring together world-class experts and significant global leaders to discuss an urgent issue where you have knowledge and a perspective. This year, Oliver Wyman’s Health & Life Sciences practice took advantage of the opportunity and convened a panel focused on what the world has learned from Africa’s Ebola epidemic—and what needs to happen to prepare for the inevitable next outbreak.

We were especially interested in pursuing a topic that has become increasingly important in the discussions we’ve had with numerous parties with a stake in preventing future epidemics, up to and including the White House and 10 Downing Street: Now that the world understands that episodes like the African epidemic are not just local crises but truly global events, how do we proceed? How do we engage and coordinate multiple stakeholders from vastly different institutional and cultural backgrounds? What will it take to overcome the cultural and political challenges that were all too obvious in responding to Ebola? What steps can governments and other institutions take to develop scientific cures and disease control? And how can the global community rebuild healthcare, especially primary care and community clinics in affected countries?

We will need another $4 billion before we are finished: to stop Ebola and rebuild shattered healthcare in affected communities. – David Nabarro, UN Special Envoy

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Global Health: Panel Sparks Debate on Ebola Response & Rebuilding

More than 60 attendees gathered at Oliver Wyman’s breakfast briefing early Wednesday morning in Davos, Switzerland, during the World Economic Forum annual meeting. Panel participants, as pictured left to right below, included International Federation of Red Cross and Red Crescent Societies Secretary General Elhadj As Sy, Johnson & Johnson Chief Scientific Officer Paul Stoffels, Gapminder Co-founder Hans Rosling, Oliver Wyman’s Suresh Kumar, UN Special Envoy on Ebola David Nabarro, and Gavi CEO Seth Berkley. Learn more about their work here. Highlights below:


From USAID Administrator Dr. Rajiv Shah:

NYC-HPI13101-004-HLS handout-coverBest wishes to the panel and the extraordinary leaders from around the world gathered at this event. Your continued leadership will help ensure that we win in the fight against Ebola.

From the UK Prime Minister’s Office:

This event ‘Responding to Ebola’ fully reflects the priority the UK attaches to fighting Ebola and global health security, which the Prime Minister set out in his recent visit to Washington. Through our action in Sierra Leone, the US action in Liberia, France in Guinea – we are beginning to turn the corner in our fight against Ebola. But as the Prime Minister and President Obama set out last week, we must improve how we face down the threat from diseases and get better at responding collectively to these global health emergencies. The Prime Minister has set out two specific areas where he would like to see immediate progress prior to the G20 at the end of this year:

  • A new international rapid-response team of epidemiologists who can deploy to assess risks from new disease outbreaks as they emerge.
  • Development of an international platform to support rapid discovery, development, and deployment of new drugs and treatments in response to new global threats.

We look forward to hearing the outcomes from today’s discussion, and to exploring these issues further in coming months.

#WEF15 by the Tweets. Join in the conversation on Storify and the Oliver Wyman Tagboard:



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Davos Preview: Experts on Ebola Global Response to Share Priorities

Oliver Wyman’s “Responding to Ebola” briefing this week at the World Economic Forum in Davos, Switzerland, will feature a distinguished panel of experts both on the ground and leading global coordination. Panelists include Dr. Seth Berkley, CEO of the Gavi Alliance, which has been at the forefront of vaccine development and delivery across the world; Dr. David Nabarro, Special Envoy on Ebola for the United Nations; Dr. Hans Rosling, a star statistician who co-founded the Gapminder Foundation and is now working with the Liberian leadership on their response effort; and Dr. Paul Stoffels, Chief Scientific Officer, Johnson & Johnson. Find below a selection of their recent comments on the ongoing crisis:

Dr. Seth Berkley, CEO of Gavi, the Vaccine Alliance, specializes in infectious disease epidemiology and global health. Last month, the Gavi Board endorsed plans that could see up to $300 million committed to procure Ebola vaccines for affected countries. Learn more:


Dr. Nabarro with Dr. Hadja Fatou Sikhe Camara, Director of the Donka National Hospital in Conakry, Guinea. Photo: UNMEER/Martine Perret

The UN News Centre caught up with Dr. David Nabarro, United Nations Special Envoy for Ebola, in a January 16 interview in New York between his latest visit to Liberia, Guinea, and Sierra Leone and a trip around Europe where he will visit the World Economic Forum and national capitals. An excerpt:

I’ve been on six visits to the region. When I started in August, it was frightening. We really didn’t know what was going on. I would say to people: ‘We don’t know what the next few weeks are going to be like,’ ‘We don’t know how many cases there will be altogether,’ ‘We don’t know how much suffering and misery we’re going to see.’ and we were bracing ourselves for some very bad news. And there was bad news. September was worse, and October was difficult. But in the last few weeks, we’ve seen a big shift, a sense of self-confidence a sense that it can be beaten. It started in early December in Liberia, some parts of the country which had been so badly affected beforehand reporting near zero or zero cases; other parts of the country at least beginning to feel better. But even in early December it was scary. And in Sierra Leone in early December was very scary indeed. But the big shifts in Liberia and Sierra Leone and even in Guinea have really only been since the new year started and I feel an incredible sense among everybody of ‘Yeh!’ not we’ve done it but ‘Yeh, we can do it!’ – Dr. David Nabarro, United Nations Special Envoy for Ebola

Dr. Hans Rosling, a statistician famous for his TED Talk charts of global population, health, and income data, co-founded the Stockholm-based Gapminder Foundation to advance a fact-based worldview and to make data easy to understand. Rosling has released a series of informational videos on Ebola. The latest in “Hans Rosling’s Factpod” playlist covers Ebola contact tracing:


Dr. Paul Stoffels

Last week Johnson & Johnson announced the formation of consortia with leading global research institutions and non-government organizations to work in conjunction with Janssen Pharmaceutical Companies to accelerate the development of  its Ebola vaccine regimen. In a related blog post, Dr. Paul Stoffels, Chief Scientific Officer and Worldwide Chairman, Pharmaceuticals, Johnson & Johnson, wrote:

Testing of a new vaccine regimen is only one part of the equation. We need to ensure that if the vaccine is approved by appropriate health authorities, no time is wasted in making it available to the people at greatest risk. Because every day counts  we are substantially accelerating the production of our vaccine regimen to ensure that if the vaccine is approved,  it will be immediately available. To date, we have produced more than 400,000 regimens of the prime-boost vaccine for use in large-scale clinical trials by April. All of us – across governments, health authorities, NGOs, and industry – are dedicated to working together and pushing as hard and as quickly as we can to help fight Ebola’s spread. Through this unprecedented collaboration among the global health community, I’m hopeful we will meet our goal as fast as possible so that those at greatest risk may be protected for the long term. – Dr. Paul Stoffels, Johnson & Johnson Chief Scientific Officer

HealthBuzz: Tavenner Exits, New CareMore CMO, J.P. Morgan Insights

healthbuzz1Marilyn Tavenner announced today that she’s resigning from her position as administrator of the Centers for Medicare and Medicaid Services (CMS). Principal Deputy Administrator Andy Slavitt will reportedly become acting CMS administrator when she leaves at the end of February.

Johnson & Johnson has formed a consortia with leading global research institutions and non-government organizations to work with Janssen Pharmaceutical Companies to accelerate the development of  its Ebola vaccine regimen. Funding will come from Europe’s Innovative Medicines Initiative.

Unchartered territory: Several startups and big pharmaceutical companies like Pfizer and Roche are exploring new treatments for ear problems from constant ringing sounds to vertigo and hearing loss.

The FDA has clarified the line between wellness and regulated medical devices in a new draft guidance document, reports MobiHealthNews.

Renee Finley, GuideWell’s Vice President of Enterprise Innovation, shares her takeaways from the Exponential Medicine conference in the latest GuideWell Insights podcast.

WebMD SVP Dave Chase, who earlier co-founded the patient relationship management company Avado, blogs on LinkedIn about how women are re-entering the workforce today and reshaping how products are made across key tech sectors like health & wellness: 

As a member of the “sandwich generation,” many former professionals turned stay-at-home moms not only have had responsibility for their children but many are also increasingly responsible for their parents’ health. This gives them a particularly unique perspective. Since patient engagement is our central focus, the perspective of a boomer female head of household is invaluable. – Dave Chase, Smart Startups Tapping a Deep Reservoir of Talent”

Join an interactive discussion with Dr. Sachin Jain, formerly Chief Medical Information and Innovation Officer at Merck who begins his new role as Chief Medical Officer of CareMore Health System on January 19. He’s taking questions in an NEJM Group Open Forum here. View his latest exchange:


Executives at J.P. Morgan’s healthcare conference discuss with CNBC’s Meg Tirrell the technologies they believe will transform medicine:

Dr. Jeremy Lim, who leads Oliver Wyman’s Health & Life Sciences practice across the Asia Pacific region, spoke recently on healthcare transformation at Jarkarta-based Indonesia International Institute for Life Sciences (i3L):


Responding to Ebola: What Must Be Done Now & How Do We Get Ahead

iStock_panel-2Oliver Wyman is hosting a breakfast discussion Wednesday, January 21, at the World Economic Forum in Davos, Switzerland, on the current Ebola crisis. Voicing support for the event,  the Office of the UK Prime Minister sent a note remarking that the gathering “fully reflects the priority the UK attaches to fighting Ebola and global health security.” A panel of administrators, donors, scientists, and doctors will review the structure of future health security that will keep global communities safe. Panelists include Dr. Seth Berkley, CEO of the Gavi Alliance, which has been at the forefront of vaccine development and delivery across the world; Dr. David Nabarro, Special Envoy on Ebola for the United Nations; Dr. Hans Rosling, a star statistician who co-founded the Gapminder Foundation and is now working with the Liberian leadership on their response effort; and Dr. Paul Stoffels, Chief Scientific Officer, Johnson & Johnson. The session will be moderated by Oliver Wyman Partner Suresh Kumar, Head of Public Sector North America and former US Assistant Secretary of Commerce. Find more details on our panelists and their work here. Below, Suresh Kumar shares goals of the discussion:

What are your aspirations for this panel?

We believe this panel can stimulate a discussion that will influence collaboration, identify what worked well and what less so, surface opportunities to better serve affected populations, and contribute significantly to an architecture for global health security in the future. Our discussions on Ebola with leaders across the globe have informed us of diverse perspectives, the need for convergence, and for all stakeholders to take responsibility.

Why is Oliver Wyman focusing on Ebola in Davos?

An epidemic like Ebola is not an African problem – it is a global problem, a human problem, the solution to which lies in building local, regional, and global collaborations and shared responsibility encompassing governments, public, and private sector, multilateral institutions, and civil society. The resources to fight disease are dispersed across many constituents, the leaders of which are all here in Davos. The future of global health security cannot be what it used to be.

What do you hope leaders at Davos learn from the panel?

Global leaders must develop a shared understanding of what health security truly looks like, and what it will really entail. We do not expect the panel to solve the problem over a discussion, rather that they will help to design a provocative architecture for change, lay out what needs to be done, by whom, when, and how. Then the discussion must continue at forums like the G7 and G20.

An epidemic like Ebola is not an African problem – it is a global problem, a human problem, the solution to which lies in building local, regional, and global collaborations and shared responsibility. – Suresh Kumar, Oliver Wyman

UPDATED: Jan 20, 2014

ACO Buzz: CMS Can Keep Innovators in the Game With Strong MSSP


Oliver Wyman Partner Niyum Gandhi

This latest installment in our ACO Buzz series is contributed by Oliver Wyman Partner Niyum Gandhi, who has worked on more than 20 healthcare transformation projects. Among them, he helped a Blue Cross Blue Shield create its strategy for accountable care organizations and recently guided a large physician group in a renegotiation of its contracts to align financial incentives with patient interests before redesigning its care delivery models. In this post, he continues with his analysis of the recent changes proposed by the Centers for Medicare & Medicaid Services (CMS) to the Medicare Shared Savings Program (MSSP):

If you’re a value-based healthcare provider, you need to be able to tap into the Medicare system. For one thing, it’s a huge part of the market, accounting for 20 percent of U.S. healthcare spending and more than a quarter of the average hospital’s revenue. For another, it consists disproportionately of the right sort of patients for improving population health—high-risk, potentially high-cost seniors. If you’re playing that game, looking to make your money by reducing the risk-adjusted cost of care, you need them.

The problem? Until recently, a healthcare provider could move to value-based care contracts with patients covered by commercial insurance or Medicare Advantage but not with patients covered by traditional Medicare. As a result, some key elements of value-based care models weren’t available under traditional Medicare. CareMore, for example, famously gives seniors strength training and helps fall-proof their homes to reduce hip fractures. That’s great, smart care, but those services aren’t covered by fee-for-service Medicare. Some of them can’t even be provided free of charge, because under the law, many freebies are considered inducements to consume care and are strictly prohibited. Even waiving copays on treatment for chronic disease—an important element of many patient-centered care programs—is out.

That’s why Medicare Advantage has been such a boon for innovative population health managers. Because MA places a risk-bearing entity, typically an insurance company, between CMS and the practitioner, it has relieved CMS of much of the responsibility for policing the kind of care patients receive. It makes it possible for providers to use the most effective population management techniques on patient populations that benefit most. It gives them access to at least part of the Medicare market.

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