Why Hospitals Keep Defaulting to Medicare Logic

For years, hospitals managing value-based contracts have been doing so with one hand tied behind their back, defaulting to Medicare logic because that was the only playbook precise enough to follow.

In this clip from our episode “Why Value-Based Care Is Finally Hitting Its Tipping Point”, host David E. Williams and David Snow, Chairman & CEO of Cedar Gate Technologies, an IQVIA business, break down why that era of generalization is over and what precision contract analytics actually makes possible now.

Listen to the full episode here

🎙️⚕️ABOUT DAVID SNOW
David Snow is a nationally recognized healthcare executive with 40 years of experience leading Fortune 50 companies, health plans, hospitals, and innovative healthcare startups. He has been named one of America's Best CEOs by Institutional Investor and ranked #27 on the Harvard Business Review's list of Best Performing CEOs in the World.

He is currently the Founder, Chairman, and CEO of Cedar Gate Technologies, a provider of technology-powered end-to-end solutions designed to enable success in value-based care. Prior to Cedar Gate, Snow served as Chairman and CEO of Medco Health Solutions, a Fortune 34 company, which he took public in 2003 and grew from $30 billion to $72 billion in revenue over nine years.

🎙️⚕️ABOUT HEALTH BIZ PODCAST
HealthBiz is a CareTalk podcast that delivers in-depth interviews on healthcare business, technology, and policy with entrepreneurs and CEOs. Host David E. Williams — president of the healthcare strategy consulting boutique Health Business Group — is also a board member, investor in private healthcare companies, and author of the Health Business Blog. Known for his strategic insights and sharp humor, David offers a refreshing break from the usual healthcare industry BS.

Need a Strategy Partner?
For over 20 years, Health Business Group has helped healthcare software companies, tech-enabled services businesses, life sciences companies, and payers make smarter strategic decisions. Led by podcast host David Williams, the firm advises clients on sharpening AI positioning, entering new segments, and building commercial strategies for value-based care. See examples of our work here.

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Transcript

David Snow: 0:06

That's a really, really good point. And, uh, you know, I ha- I have a different way of talking about this, um, and that is that moving from fee-for-service to value-based care is like crossing a chasm of death. Imagine yourself walking on this rickety bridge, this gorge down below, nothing but rocks, and you'll definitely die if you f- if that bridge breaks in the middle. Uh, and as you're, as you're making the journey, um, it gets harder and harder as you get to the middle of the bridge because when you're 50% value-based care and 50% fee-for-service, you're schizophrenic. They're completely different ways of managing a patient, to your point. And doctors aren't gonna say, "I'm gonna treat this patient this way. I'm gonna treat that patient that way because of the way I'm reimbursed." So it's, it's really hard, uh, to, to create the c- company-wide muscle memory about running your business in a, a value-based care world when you're only 10% value-based care and 90% fee-for-service. So to me, the tipping point is when I'm more than 50% value-based care, I'm committed, and I've gotta finish the journey. I'm not gonna run back to the other side. So, you know, if I s- go to the public policy level, when people mess around with these value-based models as people are trying to learn and create muscle memory, every time we do it, we risk them running back to fee-for-service. Uh, so we need some stability in these programs so that we can c- get through this learning curve that we're going through. We're literally retraining generations of healthcare, uh, providers to think about patient care, uh, and outcomes differently than they historically have thought about it.

David E Williams: 2:03

You know, I remember-- I'm thinking about now the role of the federal policy versus state and, and you've talked a lot about the commercial payers and what they can do. I remember way back when, uh, when Charlie Baker was running what was then Harvard Program- Mm-hmm ... you know, before he became governor of Massachusetts. They did this program. They were really trying pretty hard with, uh, whatever the flavor was of, uh, you know, pay-for-performance or value-based care. And- Right and they said, you know, they-- When they're, they were one of the biggest players or maybe even bigger at Blue Cross at the time. But, you know, big, well-known, nationally ranked- Yep ... top one or two players. And what they said is they went to the hospitals, and then when they went to see what the impact was, basically the hospitals say, "Well, my biggest customer is Medicare. And so what I do is I just take, uh, what you've given me, whatever it is, and I just sort of convert it into, like, Medicare equivalent, and I just do whatever I'm doing for Medicare for you." What is the interplay these days between- You know, the federal side in particular, and what's happening in the commercial space

David Snow: 3:00

Yeah, so I, I, I know Charlie Baker, and back then I was, I was at US Healthcare back then. And, uh, you know, when docs say they, you know, they convert it to the thing they know, it's because they don't have the precision analytics. Today, our platform has the ability to monitor and manage and project actuarially how you're doing in each and every value ba- based contract you have. So you can understand what are the levers you pull to perform well or, and optimize your outcomes both financially and clinically. And so the world is different today than that world that Charlie talked about or that I experienced. We're so much more precise now. It's so much more manageable that you don't have to generalize the way you just described.