Bill Frist Takeaways

Apr 11th 2014

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At this year’s NIC (National Investment Center for the Seniors Housing & Care Industry) Conference I was provided an opportunity to speak on a panel with Clint Malin, of LTC Properties REIT, on using market intelligence for predictive modeling purposes.
Due to our history with the NIC, the president and CEO Bob Kramer invited me to eat with the legendary Senator Bill Frist, who is a world-class surgeon, former senate majority leader, Modern Healthcare’s second-most influential leader, a Harvard alum, son of HCA founder Dr. Thomas Frist, great father and so on. And, he is considered to be one the preeminent healthcare thought leaders in the world. At lunch, Senator Frist actually knew quite a bit about the Signature Revolution because of our deep Tennessee roots and the recent Bordeaux partnership with the city of Nashville, where Senator Frist has deep roots for decades.

But here is the skinny between lunch talk and Bill’s keynote address…
We needed something like Obama Care for decades, but they made three huge blunders that we will recover from but it will take a long time. First, they used an unfair policy process called the “process of reconciliation,” which jammed everyone and left it half-written. Senator Frist talked about his leadership in the Medicare Modernization Act of 2003 that has been effective as a 10-year policy overhaul of technology, rural subsidization, structural pharmacy changes, registry and more. Second, the implementation plans were the worst he has seen, just adding fuel to the already blazing fire. And lastly, the communication plan around the program has been poorly delivered and this, combined with the policy approach, has left it fractured to say the least.
But keep in mind Senator Frist likes the high-level principles and is known as a physician, surgeon, health care investor, and top public health policy leader. He believes we needed to get on par with most of the G8 countries in the world to compete long term and eliminate our two economic health care systems.
He believes, like we talked about here at the Revolution in our CEO Open Forum, that at least 1,000 hospitals will close over the next decade because small ones are only 47% full right now, while semi-urban hospitals are only 67% occupied – and Obama care is not even close to full force. There is not enough money to subsidize low volume or poor performing hospitals anymore based upon the ‘job only’ argument this time around.
He is already bundling payments as a doctor right now, and he stressed that it works. I sat next to naviHealth CMO Ken Botsford, who gave an amazing talk about their innovative partnerships with MCOs, and how they are narrowing networks quickly because of poor quality metrics, gave me an uncertain feeling in my stomach, thinking, ‘are we moving fast enough at Signature?’
Senator Frist stressed that providers need to be first to embrace and learn bundling because it will be the only material payment source in the future. He talked about the alignment it brings, and he sees it as the only way to align interests, lower costs and reduce utilization effectively.
At Signature, this is a mental mode we need to embrace today and be ready to pilot tomorrow, and master in the next 3 to 5 years. The government will push so hard, we must embrace what Senator Frist is already doing today.
He talked about how many insurance companies will close, or the ones that do survive will be so different in the next decade for three obvious reasons. First, they are getting paid way too much now to kick off the fed and states’ divesture of the Medicaid financial exposure, while getting overpaid to expand Medicare Advantage programming and the underwriting of healthcare insurance exchanges. But eventually, he predicts the phasing out of employer-based health insurance programs as well as providers fighting back by creating their own risk programs and insurance programs.
They cannot keep taking 20% off the top – this cannot be rationalized. The insurance companies must take bigger risks to survive, or buy medical practices and providers, which will be the next buying binge. He talked about how 150 million Americans, or half the U.S. population, are insured by their employer. But he believes healthcare exchanges will win and companies will get out of the health insurance business over the next 10 years.
At the same time, we need to deal with the huge loss in U.S. productivity due to providing uncompensated care for 42 million Americans. This creates $34 billion in lost wages that, if solved, could really change the economy if insurance companies find a way to solve the growing epidemic.
In the near future, he believes the strong healthcare providers will have many tough challenges but will win big and be considered true innovators who helped create the new, transparent, value-based integrated health care delivery system that is a world model if they can: join transformation of palliative care, strike critical partnerships aggressively, understand the importance of branding, jump early into learning the art of bundling, get aggressive in the emergence of home monitoring technology, accelerate the full implementation of EMRs, raise their quality quickly, and pilot new technologies any time.
He reflected about rounding with his father when he was 14-years-old or doing transactions with his brother as a very young man at the family dinner table. He also recalled how much his dad loved seniors, being one of the first healthcare pioneers to testify on their behalf in the U.S. senate decades ago, which made us all feel comfortable that despite Obama Care’s three mistakes we needed these changes to happen.
I know we are living through both ‘the best of times and the worst of times’ (as Dickens wrote) in our healthcare industry, but Senator Frist made me remember that these are the most important times just to be part of the conservation as we approach a new day!

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