UPMC This Week in Health IT
May 14, 2020

 – Episode #

Guest Information

Share this clip:

Share on linkedin
Share on twitter
Share on facebook
Share on email

May 15, 2020: Today’s guest is Rob DeMichiei, recently retired CFO for UPMC, Strategic Advisor for Health Catalyst, and board member with Waystar. As a Board Director and retired CFO, Rob brings a diverse operational background and a record of success in delivering exemplary results at the highest levels of global business. In this episode, we sit down with Rob to discuss the financial impact of COVID-19 and the rise of the insurers. We discuss our expectations and speculations for the impact on healthcare facilities during COVID-19, and the reality of that impact over the last few months. Rob also explains how the pandemic can be seen as an opportunity for transformation within healthcare institutions, to change the way in which they deliver care, as well as how the markets will affect commercial rates and contracts going forward. We talk about the negative effects of this on payer mix and volumes, and Rob suggests some strategies for hospitals and healthcare facilities to drive down their cost of revenue, especially fixed costs, as well as the importance of having an accurate and robust cost accounting system. We chat growth addiction, juggling debt burdens, reducing cost consumption, and investment losses, given that revenue will not return to pre-COVID levels. Finally we dive into what Rob calls ‘the rise of the insurer’ and how he believes that independent physicians and healthcare providers are under threat from insurers moving into the provider space, as well as how they can mitigate that risk. Tune in to find out more!

Key Points From This Episode:

  • Expectations versus reality for the pressure on healthcare facilities dues to COVID-19.
  • COVID-19 can be transformational, an opportunity to change the way care is delivered.
  • How the state of the markets will affect commercial contracts and rates.
  • The negative effects on payer mix and volumes.
  • Strategies for driving down cost of revenue, especially fixed costs.
  • The advantages for a hospital with an accurate and robust cost accounting system.
  • Managing an addiction to growth, juggling debt burdens, and reducing cash consumption.
  • Different struggles for small rural communities versus large IDNs.
  • Investment losses for IDNs and the necessity of lowering service delivery costs.
  • Amount and quality of revenue will not return to pre-COVID levels.
  • Rob talks about ‘the rise of the insurer’.
  • Independent physicians are vulnerable to acquisition by insurers.
  • Healthcare providers must transform the cost structure of the traditional hospital care delivery model, or they will be under threat from insurers.
  • While there is financial impact on the provider side, there are benefits on the payer side.
  • Large IDNs and health systems should be looking at becoming a payer and mitigating risk.

The post-COVID Rise of the Insurers

Want to tune in on your favorite listening platform? Don't forget to subscribe!

Thank You to Our Show Sponsors

Related Content

Amplify great thinking to propel healthcare forward and raise up the next generation of health leaders.

© Copyright 2021 Health Lyrics All rights reserved

The post-COVID Rise of the Insurers

Episode 249: Transcript – May 15, 2020

This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong.

[0:00:04.5] BR: Welcome to This Week in Health IT where we amplify great thinking to propel healthcare. My name is Bill Russell, healthcare CIO coach and creator of This Week in Health IT a set of podcasts, videos, and collaboration events dedicated to developing the next generation of health leaders.

If you missed our live show, it is only available on our YouTube channel. What a fantastic conversation we had with Drex DeFord, David Muntz, Sue Schade, around what’s next in health IT. You can view it on our website with our new menu item, appropriately named, Live. Or just jump over to the YouTube channel and, while you’re at it, you might as well subscribe to our YouTube channel and click on ‘Get Notifications’ to get access to a bunch of content only available on our YouTube channel. Live will be a new monthly feature only available on YouTube.

How many times I say YouTube in that paragraph? Subscribe to YouTube, we’re going to have some great stuff over there. This episode and every episode since we started the COVID-19 series have been sponsored by Sirius Healthcare.

They reached out to me to see how we might partner during this time and that is how we’ve been able to support producing daily shows. Special thanks to Sirius for supporting the show’s efforts during the crisis. Now, on to today’s show. 

[0:01:14.0] BR: This morning we’re joined by Rob DeMichiei, recently retired CFO for UPMC, and Strategic Advisor for Health Catalyst, board member with Waystar. Two great companies whose CEO’s have been on the show. Good morning Rob, welcome back to the show.

[0:01:26.1] RD: Good morning Bill, great to be here, good to be back.

[0:01:29.1] BR: Yeah, we were talking earlier that – we talked early on in this process, I don’t know how long ago it was but it feels like it was six months ago, but it was probably more like six weeks ago. We did a show and, at that point, we were looking forward. We were trying to figure out what was all this going to mean. I thought it would be great to catch up with you, and having this experience, and starting to see the first signs of revenue returning, to sort of look back and then look forward to what’s going to be next. I’m looking forward to this conversation.

[0:02:04.9] RD: I as well. It was actually March 25th that you mentioned it, and so we know so much more now than we did then.

[0:02:12.5] BR: Yeah, we did. We were speculating a lot back then, we were saying well, we think this and we really – a lot of the things we were catching with, we don’t know, we think. What have we learned in the last 50 days or so?

[0:02:28.8] RD: I did watch that, I re-watched it last night, and I think the thing that we underestimated, at least from my standpoint, I thought that every city and town would ultimately look like New York City, right? We knew what happened with the electives but we thought that would be replaced with this wave of COVID-19 volumes, right? Bursting at the seams with medical patients versus surgical.

What happened was even worse Bill, because the electives effectively were shut off, the emergency rooms emptied, but that wave of COVID for the most part did not come. If you think of, other than on the coasts, did not see a surge of patients, thankfully. Given all the great work by the healthcare providers. But financially, that ended up being even worse because there were no volumes. We had empty facilities, empty outpatient facilities, empty beds. It was really a double whammy financially for  health systems.

[0:03:28.4] BR: Yeah, I’ve talked to – well, you know, we’re recording on Wednesday. This morning’s show was with Baptist out of Memphis, and what they said is we prepared. We ended up with 10% of the COVID capacity being used that we anticipated. Really, accentuating your point, I have a client who said to me, look, we shut everything down and we have one positive, COVID positive patient and they didn’t really shut everything down, right?

I mean, the capacity for the OR was still at roughly about 50% for most health systems. There were some mitigating factors here on the revenue side. What were some of those mitigating factors?

[0:04:14.8] RD: Well, I go back to, if you think about where we are now, so we were coming out of this on the other side. We’re starting to see some  of the volumes return. But you know the saying, never let a good crisis go to waste? People think that was a political term or it was invented by politician, but I tried to trace this back, it was actually a medical analogy, right? If you have a blocked artery, use that crisis as a way to change your lifestyle, your eating and diet. To emerge from that crisis better and healthier.

I think it’s very fitting analogy for where we are as health systems. Really, at a crossroads Bill with where do we go from here? Is it back to normal? And I think there may be some bias that okay, things are going to return to  normal, the volumes would come back, we’re fine. Or does this become a transformational time in healthcare? Where you have the opportunity to change the way you deliver care? To use this as a – really, as a major event to change the velocity or the direction of healthcare or otherwise, I believe, if we don’t,  we’re all going to be working for insurers. That may happen sooner rather than later.

[0:05:37.4] BR: Wow, you opened up to two channels of significant conversation. I did want to get to the insurers, and they seem to be coming out of this pretty strong. I do want to focus on that, but you also set up a conversation around fundamentally changing how we deliver care and how we think about delivering care. We’ve talked a little bit about this on the show with the advent of telehealth and the funding for telehealth from CMS, which will probably be followed by commercial payers. The question becomes, you know, how will healthcare look different and what are the opportunities for it to look different to maybe increase access, to hit the triple or quadruple aim that we’ve been looking for?

[0:06:26.6] RD: There are a lot of negatives that go into this. If you think of the traditional ways of recovery or the traditional ways of improving healthcare finances, rates are always the first go to. It’s usually the commercial payers that are paying the freight for that, but given where we are with the economy, those commercial contracts come from the big corporations and from the – and small businesses – from the employer population. We know right now, employers, businesses are struggling mightily so when we come out of this, there will be bankruptcies, there will be companies that are trimming down their insurance offerings, they’re not offering insurance.

We’re not going to get any relief from commercial rates. Payer mix is going to be very negatively affected, they’re talking about ultimately 20% unemployment, right? The rates that we’re going to be getting for the same level of volumes will be negative. We will be dealing with Medicaid, in exchange, and uninsured patients as supposed to that bulk of commercial patients that we’ve had in the past.

Children’s hospitals will be particularly impacted by that. They traditionally have very strong, lucrative, commercial contracts. Some of that volume in the children’s hospitals will be moving to Medicaid, so payer mix will be impacted. Volumes will go down Bill. I don’t believe it will ever come back completely. As you said, with telehealth, there will be more movement to away from physical locations. Utilization, there’s some things where people just did not seek care, for back pain, just excessive use of the emergency room. I don’t know that that will ever come back. We may see some volume upticks just through provider consolidation, which we can get to later.

Those traditional levers to improve the finances will not be available, so now you’re stuck with then okay, now what do I do? Things I have traditionally done, I can no longer do. I need these transformational initiatives, we can talk about those.

[0:08:33.6] BR: Yeah. I do want to talk about those because, generally speaking, we make the most money on commercial contracts. We break even from time to time on Medicare contracts, we lose money on Medicare/Medicaid traditionally. The large health systems, at least the health systems I was associated with. When I look at the numbers, I think that’s true across the board that it’s either break even or losing money on the Medicare/Medicaid contracts.

I remember our CEO talking about, we’re not done redefining healthcare until we’re actually a little bit better than break even on those contracts. We have to figure out how to be an efficient health system in delivering those – to those contracts, the way they’re written, and still be able to make money and serve that entire population. There are some health systems that just choose not to serve certain populations, which is their prerogative. What are some things we’re going to do to – I assume that the strategies have to be to really be hyper-efficient and drive down the cost of delivering care. To make money across all those contracts.

[0:09:40.9] RD: They do. We have a problem in that the cost of revenue is too high, right? We’re not going to be able to increase revenue, increase volume, increase rates, so we have to start looking at the cost of the revenue. Kind of the dirty secret of healthcare is that we’re a highly – I don’t know if it’s a dirty secret but – we’re a highly fixed cost environment. I like to use the benchmark, about 70% of the costs in a healthcare system were fixed, in that they move very little with volumes, Bill.

The cost of an OR, the cost of in patient stay, with one patient or a hundred patient, there’s a minimum level of costs that are incurred. So this is really about a structure, the physical locations and, really, how sub-optimal the utilization of assets are in healthcare. Inpatient beds are underutilized, exam rooms are under utilized and physician offices. Surgery suites are all under utilized. That’s the kind of fundamental change we need around. Forget about lowering supply cost, right? 

Forget about overtime and variable labor. What we’re talking about is transforming this fixed cost that I’m talking about of healthcare. It’s sites of service, it’s the length of stay, it’s the things which drive up the need for this fixed infrastructure. That is new territory. These are difficult things to do, difficult decisions to make around closures, around transformation, but I think it’s really the only lever that we have. If you think about it, the types of strategies and initiatives you need –

I’ve talked – I listened to some of your other guests talk about service lines. And the – and, really service line implementation is nascent at most health systems. It’s talked about quite a bit but it’s an area where they still continue to operate as these very strong vertical hospitals, if you will, within the four walls of a physical location as opposed to looking at the geography that they’re serving and creating a service line – an efficient service line delivery method which is – we’ve seen both better for quality and for cost of efficiency.

I think this is really going to accelerate service line consolidation and that’s one of the new levers that can be utilized.

[0:12:08.0] BR: Yeah, two episodes ago, you and I talked about really understanding your cost. We talked about some examples of once you understand your cost, you can get transparency into where those inefficiencies lie. The un-utilized exam rooms, under utilized beds. What kind of advantage does a system that has really a firm understanding of their cost have coming out of this crisis?

[0:12:36.4] RD: I think it’s going to be absolutely critical now and if you think about – the traditional way of looking at a hospital, is as an individual hospital and so most systems, many systems find it very difficult to look horizontally across their system from location to location to compare physician to physician. They’re  – the traditional way is to look vertically within the four walls of the hospital. You’ve got to have the capability to look horizontally and to understand your costs within those service lines.

Having an accurate cost accounting system, you’ve got to understand the key is consumptions. You have to understand where resources are being consumed. If we compare a physician with a two day length of stay versus a four day length of stay, right? That’s double the actual consumption of inpatient resources but many hospitals will – they’ll blame or they’ll hold the hospital president responsible for the length of stay but, really, you have to hold the caregiver responsible, the physician in charge of that particular location and the service lines. 

Having that robust cost accounting system allows you to do this type of service line analytic, these types of productivity analysis in a systemic, repeatable, real-time manner, Bill. Many systems don’t have the capability and becomes more of an exercise as opposed to a repeatable, analytical function. That’s an absolutely critical skill and center of excellence that’s needed in the new world.

[0:14:12.9] BR: I know our listeners are going to want me to come back to this insurer and I do want to come back to it but I want to stay on this just for a little bit more. We’ve sort of – as healthcare – we sort of had an addiction to it to capital to debt. To a certain extent, didn’t we – isn’t that going to be a significant burden trying to come out of this as we’re sort of dealing with a 15, 10, 15% revenue loss and we’re trying to redesign at the same time and then we have these hundreds of millions, billions of dollars of projects that we’ve done over the years that becomes  a debt burden, is that – how are we going to juggle that?

[0:14:52.3] RD: Well, I think we’ve got to stop the addiction to capital and the addition to growth in healthcare, right? If you look from an industry standpoint, the healthcare has one of the lowest returns on invested capital. We create these facilities and locations and then they’re grossly under utilized in most cases, and that was all driven by this addiction to growth and the fee for service environment. I call kind of the golden goose, you know, the more you do, the more you make and, like the golden goose, we’re killing it because our employers and our country and our GDP can no longer pay for it. 

I think this also becomes a cash conservation method, right? By reducing new capital projects in the cash consumption that’s related to them. This is no longer about growth, the capital needs to be spent on transformation. How do we look at our existing facilities? What can we do to increase the throughput of those existing facilities?

How can we consolidate? It’s actually fewer physically locations. How do we close, I can’t say outright hospitals, but that may even be the case for a large system, but how do we close physician offices, how do we close surgery centers? Increase the volume and the throughput of the existing remaining facilities? Capital will need to be redeployed in a way, which delivers productivity and efficiency, and lowers cost as opposed to providing capacity for additional volume or amenities for patient experience. This is really about transforming the system and the way it delivers care because the insurers, we’ll get to those guys eventually, are starting from a green field. They’re creating a competing provider capacity in a green field environment in a highly efficient.

They’re starting on a green field, we’re starting with existing, inefficient assets which need now to be redeployed and transformed in a more efficient way.

[0:17:00.2] BR: I know you’re teaming up to go to insurance, and I am going to get there in a minute, because they are efficient. I mean my insurance carrier has telehealth as sort of an entrée into the care platform. It is just interesting to me, so we will get there in a second. But the last question on this is going to be – and this maybe a little free consulting for some of the listeners, but it’s we talked about these strategies and a lot of it because I came from a large IDN. You came from a large health system.

Are these strategies the same for small rural community all the way through large IDN or are they fairly different? 

[0:17:39.4] RD: I think they are quite different. If you think of what is happening with the small rural, they are going to struggle mightily through this. Their strategy is one of survival. When we think of critical access hospitals they are going to need to be provided funds. You know we can call it being saved, a bail out from federal government. Many of the other smaller regional systems which are competing today with large academic medical centers and large IDNs, I think will be faced with closure.

That is difficult to say and there is political implications. We can’t forget that healthcare provides such an impact on the economy in terms of jobs and employment in a local community as well as the construction, trades work that comes from the capital projects. But this is really a contraction. I think what you are going to find are those smaller medium hospitals, which are competing with larger systems are going to be forced with potential acquisition or affiliation, and we may have to change the way that the FTC and the Department of Justice defines competition.

Do we now include insurers in that calculation as to the actual entity that we are looking at for competition and competitiveness? I think there needs to be this kind of shakeout in the industry, Bill. The critical access hospitals though, they will need to be – they are the only in some cases, the only way to get care in our very large region. So those, there will need to be some that are saved. 

And there will need to be others that actually will fail. That is part of this transformation that’s needed, because the cost of healthcare and the inefficiency of healthcare as it stands today can’t continue. 

[0:19:39.7] BR: All right, so do you anticipate any large IDN declaring bankruptcy or not just being able to make it at this point or they have too many resources to be put in that situation? 

[0:19:54.5] RD: No, and we talked about this on the last broadcast that you and I did. The financial resources are there. They will be impacted significantly. So we saw the announcement from Keiser, but that was really more so their investment losses, and you are going to see those large investment losses. So when we see these things in the news, don’t really look at the net income per se. You will look at the operating income to see what is really happening with the day to day stability. 

And cash flow of these entities but the larger systems will have losses. You can’t lose 70 or 80% of your volume and not have significant loss, but they will be fine. They will need to transform. They will be fine in the short term and also in six months, nine months, 18 months. They have very large cash reserves. So if they are break even or we are losing tens or even hundreds of millions of dollars, that can be sustained for some amount of time, but it cannot be sustained in the long term. So that is why I am seeing transformations absolutely necessary to lower the cost of delivering services.

[0:21:04.6] BR: So it is interesting because I said – I am not sure we will ever return to the pre-COVID levels of revenue. I received an email this morning, in fact, from someone who said, “Hey, we are starting to see a significant rebound in our numbers,” and I think we will see it. We have a lot of pent up demand, right? So we are going to see a significant rebound but we may get stuck at that 80 to 85% because people are still going to stay away from a fear standpoint. 

That the payer mix, as you’ve talked about, is not going to be as profitable or work and that’s where we are going to get stuck in. So you are saying the same thing, we are not going to return to pre-COVID levels of revenue or even the quality of revenue, pre-COVID levels?

[0:21:51.3] RD: Exactly and I think that is one of the traps in this is that we start to feel good a bit while the volumes are returning, but 85 or even 90% of the revenue still needs a significant gap, right? That revenue falls straight down to the bottom line as I said. In a highly fixed cost environment that falls straight through the bottom line. So there aren’t many systems around that are going to be able to be profitable at 90% of revenue and I don’t see the economy – 

They are saying, you know this is going to go into 2021 in terms of the COVID-19 situation and it’s impact on the economy. So there is not going to be any quick return. So even at 90% of revenue returning or 95%, we are still going to be faced with this cost issue. So I don’t see it going away. In fact I view it as a little bit of a trap, if you will, in that we get comfortable saying “Well, it’s going to be like it was.” We aren’t going to be back to normal and I am saying Bill that it never will be.

[0:22:51.5] BR: All right so last five or six minutes of the show, I want to talk about what you called part of the starting of the recording the rise of the insurer. Talk a little bit about what you mean by the rise of the insurer. 

[0:23:07.0] RD: Yes, so it is sort of like a bad movie, right? The Rise of the Insurers. If you think about the opportunity that they have now, this has been a financial benefit, right? This lack of utilization, this lack of healthcare expenditure, has been a benefit to the insurer. As opposed to the provider network, which is, again, it’s basically a regional network. So we have large providers, but no providers are as large in scale and in economic clout and cash reserves as the large insurers. 

And so they are only getting better and stronger right now. Many of their investment portfolios, because of the regulatory capital, it is more fixed income than it is equity. So they haven’t had the impact of the overall market like the providers have. If you think of what is happening – their ability to expand, Bill. Many of the valuations are very low now. So we talk about the independent physicians, which are struggling right now because they have lost all of their volume, or their practices were even closed. 

And so the valuations and the financial struggles of the remaining independent physicians, they will be susceptible to acquisition. They may need to be acquired by somebody, whether it is another hospital system, but this provides an opportunity for the insurers to expand their footprint in the provider space. As I said they are cash rich, so they have the ability to acquire physicians, surgery centers. So they are going to grow their footprint in a very efficient manner. 

Remember, they are starting from more or less a green field. What the high unemployment does is that, in terms of benefit design – so when in times are good, when you have very low unemployment, employees will look at the health plan of a company. So they will decide, “I am going to leave this company because somebody else has a better benefit plan, or allows me to see the hospitals and doctors that I want to see.” But, in times of high unemployment, they’re happy to have a job. They’re happy to have healthcare.

So what does that mean? You start to see now again changes in benefit design. You start to see more narrow networks. You start to see rate compression. You start to see the insurers tiering and steering people to low cost opportunities to get healthcare. All of these things are bad for the traditional large providers and for hospitals, right? Because they are trying to find lower sites of care. They are trying to steer people to their own facilities, right? 

CBS and ETNA, United, owning physicians and medic stress. So this is only going to make their position, both as providers and as the people that directionally control healthcare, their position is even stronger. So I don’t view the threat necessarily – again, the threat is if we don’t transform as providers, they’re now stronger, and more aggressive, and less impacted by COVID-19. In fact, you could argue in a way they have been helped by COVID-19 financially. 

So I view the big threat ultimately as: the failure to transform allows the insurers the opportunity to continue to make inroads in the provider space.

[0:26:25.7] BR: But I mean gosh. Okay, if I am a CFO for a health system, and I just heard that and I am looking at my market, here is what I’m hearing. I’ve got to get hyper efficient or I am going to become the high acuity center for our region and I am going to have a ton of competition for my surgery centers. A ton of competition for buying medical groups. The medical groups will essentially have big offers from the insurance carriers or the payers. 

And I am going to have a lot more competition there. I am going to have essentially – I mean, the employers are going to really work on their relationship with their carrier, and they are going to guide and direct more care is delivered all over the community. So they’re going to be the driver. Am I hearing that correctly or am I overstating that? 

[0:27:25.0] RD: No, I think this is, again, a very difficult time for providers because the risk is that you sort of get lulled to sleep by thinking things are going to return to normal. But what has to happen right now is that the chief financial officer needs to be the chief provocateur, along with the CEO, along with the operators, to say, “You know this isn’t a created crisis. This is a burning platform we have right now. How do we begin to transform?” Because the insurers will continue to use the providers for the high end, the high acuity, the ICU.

But all of these other services, many of which are very lucrative whether it is the imaging, whether it is the things that can be done in surgery centers, these type of very lucrative procedures are going to be steered away from a high cost medical centers, to assets that are either owned by the insurer or that are low cost alternatives. Employers will be happy to still be in business. Employees will be happy to have insurance of any kind. 

And so again, in low unemployment, you are saying, “Well look, I don’t want to go to this second tier reputational hospital. I want to go to the academic medical center in my community.” In the new world it is, “Geez, I am happy that I have healthcare coverage, and I’m just glad that I can get serviced.” So it is a paradigm shift Bill and we’ve got to make sure that the providers can now create this transformational change now to lower the cost structure of the traditional hospital care delivery model.

[0:29:03.4] BR: Yeah so the CFO, early on the pandemic, was about knocking down barriers but now we are saying, “Hey CFO, you’ve got to be looking at transformation.” We talked about a couple of things, cost based accounting across the board, visibility into what is going on, looking at the market, understanding the trends that are going on. Are you recommending that – I mean a lot of health systems either had plans, health plans, or they had cover lives in partnership in some way.

I guess what I am hearing from you is some expansion of that, is that – all of those things are long term plans. They are not things that you can turn around overnight. 

[0:29:43.2] RD: No I think definitely there are some systems that have embraced the idea or risk and capitation and kept taking up, taking on covered lives in different forms, whether it’s a Keiser or a Geisinger or UPMC, they have large health plans. Again many of them have now a natural hedge in that they are both a provider and a payer. So while their financials have been impacted on the provider side, they are seeing the benefit on the payer side.

For the others, I think again, the insurers are entering. So this is a new space now. They aren’t just payers and providers. They’re these hybrids which are IDFS’s, Integrated Delivering Fencing Systems, payer-providers. The payers are doing it, the providers need to begin to do it as well. They need to understand that if we are truly committed to the triple aim, quality, value. The benefits of the triple aim really accrue more so to the insurer because the old model of fee for service goes away. 

So yes, this is a multi-year journey. If you haven’t started now, how do you hire and create the capacity to underwrite risk, to understand population health? I think it has to be a part of the strategy of any large system because, if you think about it, the crown jewel of delivering health care is the provider network that they have. It’s the world class physicians that they have. So they have all of the tools to build a world-class insurance operation, and deliver that directly if you will to the employers and not need the payer as a middle person if you will.

So I think you asked the whole idea of risk and becoming a payer has to be strategy of any large IDN or any large health system. 

[0:31:29.9] BR: Rob, you have given us a ton to think about. Thanks, I always appreciate these conversations. It is going to be these are challenging times. It is going to be interesting, maybe not over the next three or six months but it will be interesting over the next couple of years to see how these plays out. 

[0:31:48.7] RD: And it is always great when you make them and we make these kinds of predictions and they’re captured on video. We have to see what they look like in six months, in 12 months to see how right or wrong we were. So we’ll see. 

[0:32:01.0] BR: Yeah, absolutely. Well, I will give you a shot towards the end of the year to adjust again. I will call you up and we will do another. See how things are progressing, but gosh, I think we are seeing that. We are seeing the health systems that had covered lives of some kind. I talked to one health system and they said, “Look, we are losing this much from operations but that is being halved because we have this spending covered lives in our community.”

And we are taking in that money, so there was a benefit. But a lot of health systems have shied away from that because their first foray into taking on risk was not that good because it ties back to what you said earlier: we don’t know our cost.

[0:32:45.3] RD: And it’s that and it’s not that the ones that are backed away, it is not a bad strategy. It is usually about execution and being – and underwriting risk is not like being a provider. I think a lot that went in and got out quickly, it was because of poor execution. The strategy is a good one and it really needs to be one that they have that capability and competency for the long term. 

[0:33:08.8] BR: Fantastic. Well Rob, thanks again for your time. I really appreciate it. 

[0:33:12.6] RD: Thanks Bill. 

[0:33:14.5] BR: That is all for this week. Special thanks to our sponsors, VMware, StarBridge Advisors, Galen Healthcare, HealthLyrics, Sirius Healthcare and Pro-Talent Advisors for choosing to invest in developing the next generation of health leaders. If you want to support the fastest growing podcast in the health IT space, the best way to do that is to share with a peer. Send an email, let them know that you value and you’re getting value out of the show and also, don’t forget to subscribe to our YouTube channel while you’re at it. 

Please check back often as we continue to drop shows until we get through this pandemic together. Thanks for listening. That is all for now.

Play Video