As the industry moves toward collaborative, integrated healthcare across the continuum, providers and payers need to forget the "us-versus-them" mentality and work together in meaningful ways. And with accountable care organizations moving forward in coordinating patient care, both groups need each other to really reach the "triple aim" of improved patient care and experience at lower costs.
FierceHealthcare recently caught up with Richard Maziarz, M.D., (pictured), medical director of the Adult Stem Cell Transplantation Program & Center for Hematologic Malignancies at Oregon Health & Science University to talk about how healthcare organizations can foster cooperative relations within the industry.
Maziarz, who spoke at the Healthcare Financial Management Association's Annual National Institute earlier this week, explained what hospitals can, and should, bring to the negotiation table with payers, and stressed that simply having an environment for both sides to share information is the first step to solving healthcare's problems.
FierceHealthcare: Why is the provider-payer relationship so important to improving healthcare?
Richard Maziarz: It's all of our responsibilities, to be honest. Providers deal with patients; payers ultimately help plan and evaluate eligibility. But it's more complex than that. We all know there's a difference between governmental payers and private payers. Under the Accountable Care Act, there could be as many as 100 million recipients of governmental healthcare. Between all the uninsured that will now get coverage and current growing Medicare and Medicaid patients, we have an aging population, we have more and more technology, and technology is sort of expensive these days. The costs and charges are going up, there's a shrinking ability to pay for it and I think all of us getting together and working together for a solution--at least to vocalize the problems--will create solutions.
Payers take the brunt of a lot of people's discontent but it isn't always their fault. Ultimately, they are selling a product. The majority of private insurance in the country is self-funded group health plans. Big business purchases what they want to offer and payers, as an industry, could insure a lot of activities, but the more specialized you are (such as what I do, which is stem cell transplantation) the more costly the procedure may be. Well, that means if you're going to insure against it, it's a relatively rare event but it's going to cost money. And you have a lot of payers that often will chose not to purchase that insurance, figuring it's never going to happen to them, and then the employee whose health insurance plan has a restriction falls victim. So it's a complex set of overlapping circles.
Part of the reason of getting together is just to talk about it. There's a problem, it's huge, it's getting worse, let's put our heads together.
FH: Based on your committee's experience, what can hospitals do to improve industry relations?
RM: What individual hospitals can do is in a way collaborate to try to keep costs down. And hospitals are doing that; they're setting up best practices. Part of the potential of accountable care organizations is collaborative interaction between health centers to lead to better care. Every payer has to negotiate contracts, and hospitals will negotiate with payers because most people don't just have pure fee-for-service insurance and most of it has a lot of restrictions.
In the world of dialogue, what does it take to achieve center of excellence status for a payer? A lot of payers have particular milestones they use to measure quality. Communication between hospitals and payers makes it transparent what the goals are, what everybody wants to achieve.
FH: How has your institution's relationships with payers changed?
RM: We have an interesting history because we were a very tightly state-affiliated institution in the 90s. But actually, recognizing some of these issues of managed care and cost-containment, it became very difficult to compete with more private hospitals.
OHSU is one of the first public academic hospital to privatize. With a state institution, if you want to negotiate a contract with a payer, you go through a lot of time and effort and then you have to send it down to the state for their final approval, and that can add a lot of extra time and extra dollars because it's not an efficient process.
They chose to privatize, which means they gave up some state benefits, but they gained the ability to have a direct voice with the payer industry and to compete in an open market.
FH: What barriers did your program face when trying to improve payer relations? How did it overcome them?
RM: Let's start with what has been created through the national marrow donor program. We have a very large geographic catchment area and managing patients across the large square miles is difficult. And you also have patients coming in with different financial problems and a whole host of different payer plans.
But the American population is aging, are we're seeing with that aging population people are also living longer. So we have more elderly patients that need care than ever before, and it's projected to increase even more over the next decade.
This has also created a workforce shortage. So in areas of specialty care, such as what we do in transplantation, it is a niche. And limited institutions tend to offer it because it requires a commitment from specialists to focus on a particular area and the ability to deliver this type of care. It requires collaboration between many many services, as well as a commitment of the institution. In general though, we're facing other problems (the workforce shortage, more patients) and yet we still have the barriers.
Any time you're at the negotiation table it's hard to talk openly with each other because you're negotiating, you're playing a game, a blind man's bluff or poker. This is just how business works.
The National Marrow Donor Program committed to offering more patients across the country more transplant options. They're nonprofit but they're also a third party. This ability to create a vehicle for people to talk to each other was brokered with the national marrow donor program. For our finance committee, everyone comes to the table willingly; they recognize there's major issues. How do you solve them? Can I go right to Blue Cross to solve them? Well I could, and Blue Cross may willingly come to the table, but then someone else may be irritated--why were they left off?
Here, we've created a vehicle that our finance committee within the National Marrow Donor Program, which is made up of hospital administrators, heads of payer groups and leading physician providers in the field. And the table is neutral, and therefore, you really can get down to identify the problems. But now you create solutions together and you actually look to be inclusionary. It's not someone looking inside saying why aren't you talking to me. Anyone who looks in and says "hey I wouldn't mind being a part of this" gets invited.
FH: When working with payers, what should providers bring to the negotiating table?
RM: Individual physicians, in general, don't negotiate with the payer; it's usually your institution that will or your business entity. Payers, basically, are committed to their clientele; just like we're there to take care of our patients and we want to give them the best care. Sure it's a business and someone has purchased insurance from them. If I've got Blue Cross, what does Blue Cross want? Blue Cross wants to know that a member goes to the provider most likely to create the best outcome for my patient.
So what everybody wants to see is outcomes. That issue of being transparent is important, and being willing to show what you do is what payers really want to see. I think the difficulty is sometimes when you try to do cross-comparisons between institutions or between individuals it's apples-to-oranges. As an example, one of my colleagues from Boston was headed to cardiac surgery but decided instead it was a wide open field to develop the field of in-utero surgery. So you can identify defects in-utero and do the surgery when the fetus is still developing and you're going to have better outcomes.
Well he's one of the best in the country. What happens is, he gets the most difficult patients. And if you actually try to balance on a straight ledger how many procedures you did and what the outcomes were, someone may say 'I've got the best outcomes" because the kids I take care of are perfect. The reality is they didn't take the challenging cases.
So in that world of what someone can take to a payer: It's being transparent and showing outcomes, but also dissecting them to show the severity of illness and create a good risk assessment score.
This hasn't been available generally in the past. But increasingly everyone has become aware of this and there are new software and new programs to create a severity of illness index, a co-morbidity index, a risk assessment score. Again, the data are out there, it's just allowing the data to be analyzed so you can actually do those comparators.
FH: How can provider-payer teamwork and industry collaboration help grow service lines and better serve patients?
RM: I think it's awareness, communication and visibility.
Payers are out there trying to deal with evidence-based medicine, and ultimately looking as those outcome measures that we talked about. I sit in several positions--I work with the National Marrow Donor Program, I also work with the International Society of Cell Therapy. They are looking at the science for regenerative medicine and how we are using stem cells, not for treatment of leukemia, which is now a standard of care, but stem cell therapy for stroke, spinal cord injury and multiple sclerosis.
Under the auspices of our committee, last September we held a forward-looking workshop on obstacles to reimbursement of cell therapy. We had heads of payer companies, as well as heads of stem cell companies talking about the future, but also openly sharing cost of goods of manufacturing. As opposed to looking at a pure price tag, they were able to see how the payer industry will build contracts and payers were able to see how cell therapy is evolving and what it costs--and will cost--to cover the goods of manufacturing, as well as the R&D involved. It was very fruitful. I can't say we had solutions but it has definitely opened the floodgates.
It's all about sharing information. It sounds trivial to say transparency helps, but at the end of the day it isn't just being transparent; it's education and knowledge. Everyone gets so specialized and so focused, how do you keep up with the information? We're in information overload time, and you have the opportunity to glean down to different perspectives if you just give the forum for people to talk.
FH: As the industry aims to lower healthcare spending, how can institutions maintain access to costlier procedures?
RM: I think of the issues in American healthcare that has not yet necessarily been dealt with is the separation of approval of a drug and pricing. And that's one of those things we're trying to address in our communications. By communicating with the industry--the cell therapy industry--the current status of reimbursement, it may lead to more appropriate pricing.
Part of health expenditure is recovery of funds lost in R&D, but part of it also is pricing. I think some of our dialogue is focused on that we need to be cognizant of a shrinking dollar and what is going to be available to pay for it, and drug development companies need to be responsible also. It doesn't necessarily do them any good if they price a drug so high it's never going to be used. So in the world of what everyone's doing these days, there's a shrinking dollar, Medicare is going to add more recipients of Medicare coverage, but what we see year in and year out in Congress, we see a debate whether we need to cut the budget.
It's a zero-sum game; everyone knows this. It's one sum of money. And if we add 500,000 new recipients and the same collection of money, we're going to have to look at how that money is distributed and something is going to get cut.
FH: Any final thoughts you'd like to share?
RM: I've been to a number of strategic health discussions over the last 10 years of how are we going to deal with this growing problems and what I'm pretty convinced is that it needs to be grass roots. No one is going to have the global answer so what we need is a whole host of grass roots movements so community by community we can make a difference. In effect, I think that's what we're trying to do.
Stem cell transplantation is costly; a lot of it is costly because of the commitment of healthcare resources it takes. At the end of the day, currently 20,000 patients a year get stem cell procedures. It doesn't sound like a lot when you consider the thousands of people with myocardial infarctions or strokes or diabetes--these are bigger health industry issues. But we recognize we are expensive and that we want to create the same degree, or more, of curative options for our patients. But we also know the available dollars are shrinking, so we have to be proactive in what we can do to develop new therapies and new technologies that will create those best outcomes and decrease the complications. If we can decrease the complications, we can decrease the cost.
Ultimately, it's trying to work together and create a vehicle where people have a forum to bring their concerns to the table, whether it be outcome measures, severity of illness or how do I recover my cost of goods of manufacturing. We're trying our own little grass roots fashion, working with the National Marrow Donor program as our neutral body to help create those forums for discussion.
Editor's Note: This interview has been edited for length and clarity.