September 3, 2025 • 57 mins
Join host Chad Mulvany as he shares the latest healthcare policy and legislative updates for the week of September 1, 2025. Later in the episode, Chad is joined by special guests from Wisconsin-based health system Froedtert ThedaCare Health: Scott Hawig, chief financial and administrative officer, and David Olson, chief business development officer. They share insights from their experience helping lead the recent integration of Froedtert Health and ThedaCare into one combined system.
- Washington Watch (1:41)
- Froedtert ThedaCare Interview (21:25)
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Episode Transcript
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(00:01):
On today's episode of Achieving Health,
I've got the latest policy and legislativeupdates from Washington, D.C.
for the week of September 1st, 2025.
Then I'll be joined by special guestsfrom Wisconsin-based health system
Froedtert ThedaCare Health.
My guests are Scott Hawig, chieffinancial administrative officer,
and David Olson, chief businessdevelopment officer.
(00:24):
They'll share insightsfrom their experience helping lead
the recent integration of Froedtert Healthand ThedaCare into one combined system.
Stay tuned for a fantastic conversation.
This is AchievingHealth, a podcast from Forvis Mazars,
where we delve into the topicsthat matter most to healthcare
organizationsacross the continuum of care.
(00:45):
Our goal is to help younavigate the dynamic healthcare landscape
and achieve health at your organization.
Here's your host, Chad Mulvaney.
Welcome to Achieving Health.
I'm Chad Mulvaney, director inthe healthcare practice at Forvis Mazars.
Thank you for joining me.
I'd like to start with a quick reminderabout our OBBBA Tuesday webinar series,
(01:08):
happeningevery other Tuesday through November 4th.
We just hosted the first session, whichprovides an overview of the impact of H.R.
1, also known as the OneBig Beautiful Bill
Act, and exploreshow providers can prepare.
Our next session will focus onunderstanding the financial impact
of the billand communicating that impact with key
(01:29):
stakeholders,including the board, staff, and community.
We'll have a link in the show noteswhere you can register for the series
and view past sessions.
I hope you'll join usfor these insightful conversations.
We'll begin today with our WashingtonWatch segment, where I share updates
on the most recent actionsof federal policymakers and their
anticipated impact on healthcare providersand payers.
(01:51):
Today's WashingtonWatch reflects information as of noon
Eastern Time on Friday, August 29th, 2025.
My comments are based onwhat's being reported by the D.C.
trade press.
At the time of the conversation, mixedwith a lot of judgment
about where things may gobased on my experience in D.C.,
so today's remarks reflect informationas of this moment and will change.
(02:14):
While we're
gearing up for Congressto come back from the August recess
and then have to immediately jump into Fed
fiscal 2026 budgeting,things are still a little slow.
As far as our agenda is concerned,
first, we'll cover the StatutoryPay-As-You-Go sequester.
The Congressional Budget Office recentlysent a letter to congressional leaders
(02:34):
from the Democratic Party
suggesting that the One Big BeautifulBill Act, also known as H.R.
1, will triggerthe mandatory S-PAYGO sequester.
While it's technicallythe Office of Management and Budget
who makes this call, this is somethingthat we will need to monitor
and hopefully Congress will addresswhen it gets back from recess.
(02:54):
Next, we'll talk about Medicaredual status hospitals.
The House Ways and Means Committeeissued a press release this week
expressing concern about urban hospitalsthat have obtained rural status.
While this has longbeen an issue of interest for House Ways
and Means, the press release in questionwas triggered by an Arnold Ventures
funded study tracking the growth of dualMedicare status hospitals.
(03:18):
We'll also cover CMS’
new draft cost reportforms to collect Medicare Advantage data.
As you'll recall in the 2026 OutpatientPerspective Payment System rule,
CMS is proposed to require hospitalsto report on their Medicare cost reports
the median of their negotiated MedicareAdvantage rates
for each MSDRG for all MA plans.
(03:42):
This data would come fromthe most recent version of the hospital's
price transparency machinereadable file, and create
a new reporting burden for hospitalsif finalized.
From there, we'll talk about the HRSA 340Brebate model
and new FAQsthat were recently issued on August 18th.
HRSA issues these FAQs to provide clarityon a number of issues
(04:05):
related to the proposed rebate model,and we'll run through a couple of them
that I think are particularly interestingand illuminating.
And then finally, we'll talk about healthinsurance exchange premiums.
An analysis by the Kaiser FamilyFoundation and Peterson
Institute of 312insurers rate filings for the ACA
marketplace plans in 2026show a median increase of 18%.
(04:29):
That's the largest jump since 2018.
And we'll talk throughwhat's driving those increases.
All right, diving in.
So, for Statutory PAYGO,in a recent letter to Congress,
the Congressional Budget Officefinds that H.R.
1 or the OBBBA, would lead to $536billion in cuts to Medicare
(04:50):
and billions more to other programsover the next decade,
unless Congress takes action
to prevent the automatic reductionseither later this year or early next.
If the cuts are allowed to go into effectwithin 14 days
after the end of the current sessionof Congress,
the OMB would have to begincutting federal expenditures.
The cuts to Medicare are limited to 4%,but they still net out
(05:13):
to an estimated $45 billionin fiscal 2026 alone,
and another half billion or so,or more, over the next 10 years.
For perspective on the scale of the cut,CMS’ proposal to accelerate
the recruitment of OPPS overpaymentsrelated to the impermissible 340B
separately payable PartB drug policy is estimated
(05:35):
to be $1 billion, actually, $1.1billion, in calendar year 2026.
Also,to give similar scale from the same rule,
the proposal to implement site-neutralpayments for drug administration services
is expected to shave $280million off of hospital payments,
so this would be orders of magnitudebigger and a significant cut
(05:55):
to Medicare payments for both inpatient,outpatient, and Medicare Advantage.
The reasonwhy some are unaware of the S-PAYGO cut
is that Congress has never actuallyallowed them to go into effect.
They've always,and normally at the last minute,
quote unquote, “wiped the PAYGOscorecard clean.” And while I suspect
they'll do so again, I am less certainthan I've been in prior years.
(06:19):
And again,as I mentioned earlier, it's important
to remember thatif the cuts go into effect,
they apply to all Medicare payments,including those to MA plans.
And so for providersthat are contracted with MA plans
based on the pricer, the plan will likelytry to pass that rate cut through.
Moving on to the House Ways and Means,
House Ways and Means issued a pressrelease this week expressing
(06:41):
concern about urban hospitalsthat have obtained rural hospital status.
The press release states, quote unquote,“using the so-called dual-classification
scheme, hundreds of sophisticated urbanhospitals have gamed Medicare's wage index
to get financial benefitsof being urban facilities,
while at the same timeposing as rural hospitals to receive
(07:02):
the significant benefits Congressintended for truly rural hospitals.
This includes an increase of up to 30%more Medicare funded GME slots
and the ability
to care for fewer low-income patientsto qualify for the heavily discounted
outpatient drug program under 340B,without any benefit to rural community.”
And that's the Ways and Meanspress release.
(07:23):
I think it's important to remember that
when urban hospitals achieve dual status,
this isn't a zero-sum gamelike much of the rest of the IPPS.
They're not actually taking benefitsfrom rural providers.
As I mentioned at the top,the press release was triggered by a study
published in Health Affairsthat highlights the increase
(07:44):
from three dual statushospitals in 2017 to 425 in 2023.
You know,
it's worth noting that this was already onHouse
Ways and Meansradar and has been there for a long time.
It's also important to remember that thelanguage was not included in the OBBBA,
and the reason why I call that out isit was cited as saving $10 billion
(08:08):
over 10 years
in the menu of savers that was circulatingat the beginning of the year,
when discussions of the reconciliationpackage that eventually became H.R.
1 or OBBBA were under discussion.
But this is yet againanother issue to watch
that could be includedin a second reconciliation package
targeted as a deficit reduction bill,as was rumored to be in the process prior
(08:30):
to recess, or a comprehensivebipartisan health package
also under discussion prior to recessthat would likely ride
along with whatever bill ends upfunding the federal government for 2026.
At this point,
we're hearing conflicting messages onboth packages.
There's some in D.C.
that I talked tothat think the prospects are low,
and there only be a minimal extenderspackage
(08:52):
that accompanies the Fed fiscal 2026funding bill.
And these include kind of yourtraditional extenders like your Medicare
dependent hospital, low volume hospitalwould be kind of in that minimal package.
There are others in D.C.
that are suggesting that conversations
about a broader package are ongoing,and staffers are in the process
of aggregating policies into a billthat could garner the most support.
(09:12):
I guess it is possiblethat two things could be true at once,
but again,an issue that remains to be monitored.
In terms of the new draft costreport forms,
in the 2026OPPS rule CMS proposes requiring hospitals
to report on their Medicare cost reportsthe median of their Medicare Advantage
(09:33):
negotiated rates for each MSDRGfor all plans.
This data would comefrom the most recent version
of the hospital's pricetransparency machine readable file.
And critical access
hospitals would obviously be excludedfrom this requirement.
CMS intends to use this data to set
MSDRG rates effective for Fed fiscal 2029.
(09:56):
The agency believes that there is a needto reduce reliance on hospital
charge masters and develop quote unquote“market based approaches to establishing
payment rates under the MedicareFee-for-service system.”
If this proposal sounds vaguelyfamiliar, it's
because the prior Trump administrationfinalized this policy
in the 2021 IPPS rule and the Bidenadministration subsequently repealed it.
(10:21):
Given that the IPPS is
budget neutral,the impact of changing the data sources
CMS uses to set MSDRGrates won't change the amount of dollars
flowing through the system, butit will likely create winners and losers.
However, at this point, it would bedifficult to model the impact in advance
because the MA data by volume, by payerfor each
(10:42):
hospital is not publicly availableto create the weighted average
rate for each hospitaland calculate new relative MSDRG weights.
I think my concern with this policyis that it will definitely increase
administrative burden without actuallyimproving the accuracy of MSDRG rates,
and in fact,it actually may make the MSDRG rates less
accurate as a reflection of resources usedto provide inpatient hospital services.
(11:07):
And I say this for a couple of reasons.
First, CMS ignores in this proposalthe outsized role
that Medicare fee-for-servicerates and weights play in negotiations
between hospitals and providerswhen they contract for inpatient services.
So the circularity introduced, shouldthis policy actually be implemented,
(11:29):
could cause Medicare fee-for-service ratesto become detached
from actual resource use,which is what the statute or what
the language in the statuteactually requires when CMS sets
Medicare fee-for-servicerates for inpatient services.
Second, CMS is rebasing concept
using median MA negotiated rates
(11:49):
also assumes that MA rates are negotiatedunder open market conditions,
similar to the conditionsunder which hospitals contract with health
plans for rates in the large group,small group and individual markets.
However,nothing could be further from the truth.
There are a number of legaland statutory constraints
that prevent MA rates
from functioning, or occurring,in a functioning market environment
(12:13):
that are completely ignored by thispolicy, and that is reflected by data.
Actually, CMS has cited,at least in the 2021 proposal,
about the relatively limited deviation
“a percent or two, 3%,plus or minus, at most”
in most cases of MA rates from the actualMedicare fee-for-service rates.
(12:34):
If you want more on the technical issues,the comments I wrote for HFMA in response
to the 2021 proposedrule are still available on their website.
In terms of the 340B rebate
model, earlier this week, HRSA issued FAQs
clarifying provisions of its proposal.
(12:54):
A couple of the key clarifications
include that manufacturershave to give CEs, or covered entities,
all the details they need to participate
60 days before the rebate model goes live.
While it's helpful, my concern isthat they're not going to provide
enough detail for itto be useful for the covered entities.
(13:14):
It's certainly not hard to imaginethat manufacturers may skimp
on some of the more pertinent details.
And while 60 days is nice that they'regetting at least that much heads up,
it's still not going to be enough timeto set up a rebate cycle.
So that's something that coveredentities need to start working on now.
Another one of the
(13:35):
FAQs opens the door to manufacturersrequesting from HRSA
the ability to collectadditional data elements beyond the 11
listed in the rule, and that HRSAwill consider these requests.
And so, when you look at the initial11 data elements,
they're mostly aligned with things,if not completely aligned
with things, that you would need to submitfor payment to a health plan.
(13:59):
So the capture of those and the collectionof those is usually pretty standardized.
My concern is that once you startintroducing more variability
with different manufacturers,being able to ask HRSA and get permission
to collect different things,we lose standardization.
We introduce more complexity.
And as we introduce more complexity,you increase the likelihood that covered
(14:20):
entities will make mistakes and rebateswon't be paid for administrative reasons
that, quite frankly, have nothing to dowith whether or not the covered entity
was actually entitled to the rebateor what should be a discount.
The FAQ also clarifies that physician-or clinic-administered drugs are impacted.
That original list of drugs, you know,initially look like it was Part D only,
(14:43):
but that clarificationsort of removes a question mark that
I think many of us had and unfortunately,
perhaps expands the scopemore than we had originally thought.
One of the other,
I think, beneficial clarifications wasthat HRSA will review data on timeliness
of rebate payment as an accountabilitymeasure, and could revoke
the ability to participate if it findsthat manufacturers are abusing this.
(15:07):
So I think it's going to be importantagain, to the earlier conversations
that we've had around this,that covered entities do a really good job
of collecting data, kind of like whatyou would collect today around
your revenue cycle, on performance
of the rebate cycle by manufacturer,what percentage of the rebates
are paid on time, both in terms of countand dollars, by manufacturer, your denials
(15:31):
rate by manufacturer, by dollar amount,by count, and things like that.
So that way, as you see, manufacturers
not adhering to what HRSA has laid out inin the proposed rule,
you can have conversations with HRSA,you can have conversations
with your congressional representative,the administration,
(15:52):
to help educate them as to how
the rebate model is not working,and reducing resources
that are available to providehealth care services
to populations who would otherwisemaybe not have access to care.
Finally,
once the pilot is implemented,the Office of Pharmaceutical Affairs
will provide a mechanism for 340B programstakeholders
(16:16):
to provide feedback on their experienceutilizing the rebate model.
Again, as I just mentioned, you need tohave data to have that conversation.
So make sure you're collecting it.
Also, you know, they have suggestedthat it's going to be the administrative
dispute process, the ADR process,that will be the mechanism for where
covered entities can take complaintsabout manufacturers in the rebate model.
(16:38):
I continue to remain concernedabout how aggressively HRSA is going
to act to address and remedy manufacturernoncompliance.
Also, given that the ADR processis where HRSA has pointed
covered entitiesto take concerns about manufacturer
nonperformance or lack of adherenceto the terms of the rebate model,
(17:00):
I remain concerned about how aggressivelyHRSA is going to act to address
and remedy manufacturer noncompliance,simply because historically,
the ADR process has not resultedin satisfaction for covered entities.
In terms of health
insurance exchange premiums, an analysisby the Kaiser Family Foundation
(17:21):
and Peterson Institute of 312insurers rate filings for ACA
marketplace plans in 2026show a median increase of 18%.
That's the largest jump since 2018.
Insurers attribute this surge primarilyto rising medical costs (about a 10%
annual increase in claims driven by higherprices and utilization in services)
(17:45):
alongside inflationary pressureson administrative expenses, growing
labor costs amid workforce shortagesand the influence of high cost drugs
such as GLP-1 therapiesand other specialty medications.
Beyond simple health care costtrends, insurers are preparing
for the likely expiration of the enhancedpremium tax credits at the end of 2025,
(18:06):
which on average, across those filings,it's estimated, will raise rates
by roughly four percentage pointsas healthier enrollees
are expected to drop out of coverageif those subsidies aren’t extended.
Other additional factorsinclude uncertainty around new tariffs
on medical imports, the ACA marketplaceintegrity and affordability rules impact
on risk pools; however, some of thatmay be blunted by a recent court decision,
(18:30):
and the fate of federal costsharing reduction payments,
all contributing to significant variationin rate requests, which range
from a 10 percentage pointcut to a 59% hike across states.
Further analysis by the Century Foundation
finds the impact will be more profoundin rural areas.
In the 32 states using healthcare.gov,out-of-pocket premiums for rural residents
(18:53):
will jump by an average of 107%versus 89% in urban areas, driving
rural households to lose over $1,000annually in credits across 14 states.
And again, this is the out-of-pocket,not the actual rate increase requested.
And the issue drivingthat spike is the anticipated expiration
of the enhanced exchange credits.
(19:14):
Some 2.8
million enrollees, including 776,000
adults aged 55 to 64 and 223,000 children,
now face sharply higher costsand elevated coverage loss risk,
and the risk is particularly acutein the upper
Midwest and Southeast.
(19:35):
As I mentioned before,the spike in out-of-pocket costs is driven
by the same trends as discussed above,and specifically,
it's the expiration of the enhancedexchange subsidies.
However, that expiration is magnifiedin rural areas
because premiums tend to be higher,approximately 10% higher.
Couple of things to think about on this.
First, given some plansare already factoring in higher provider
(19:59):
payment rates as a result of tariffsand other cost issues.
Providersshould be sure to ask for rate adjustments
in contract negotiationsto account for the increased expense.
Given that plans are already buildingthat rate adjustment into their premium,
the impact of the enhanced interchangesubsidies
will also have a disproportionate impacton non-expansion states.
(20:20):
So for example Florida and Texas,according to the Kaiser Family Foundation,
will lose $2.2 and $1.5
billion respectively in exchange funding.
It is also possible that a bipartisanagreement could extend the subsidies.
However, again, kind of like the
extenders package, we're hearingsort of mixed signals from D.C.
(20:40):
as to whether that will happen.
If the enhanced exchangesubsidies are extended, it's very likely
that there would need to be some offset,regardless
of how long the extension wasor how much it would cost.
And so as you start to think aboutwhat might be the offsets for that,
you might see changes in Medicare, siteneutral payment policy, PBM reforms,
or given some there'sbeen some preliminary conversations,
(21:03):
changes to Medicare Advantage risk coding.
This concludes today's Washington Watch.
Up next, I'll be joined by Scott Hawigand David Olson of Froedtert ThedaCare
Health, to talk about their organization'sstrategic integration journey.
(21:25):
I'd like to welcome
our guests for today's episode,David Olson and Scott
Hawig of Froedtert ThedaCare,an 18-hospital health system in Wisconsin.
David is the organization's Chief BusinessDevelopment Officer,
and Scott is the Chief Financialand Administrative Officer.
David, Scott really appreciate youboth joining us today
and I'm looking forwardto the conversation.
(21:47):
Thanks for having us.We're looking forward to this too.
Let's have a good talk.
David, maybe I'll start with you.
And if you would,please tell our listeners a little bit
about yourself, how you came to healthcareand your professional journey.
Well, it could be a really long story,but I'll keep it short.
Almost four years now in the business.
I grew up in rural Wisconsin.
(22:08):
My mom was a nurse's aide,so I was exposed to healthcare very early
and I always knewI wanted to be a hospital administrator.
So, you know, reallyjust kind of progressively,
kind of moved up the hierarchy.
Primarily,I was mostly involved in operations,
CEO of a smallerhospital, small health system.
(22:28):
But I came to Froedtertalmost 14 years ago as the Chief
Strategy Officer and really kind of taxedwith: help us grow.
Help us grow the business.
And so, we've done that.
I think, you know,Froedtert has been very successful and
now kind of capping off with,you know, the combination
(22:50):
of ThedaCare just really
about 18 months ago was when thiskind of finally came to pass.
Great.
Thank you.
It's great background and certainly,you know, aligns with a lot of what we've
heard from others on the podcastabout just how they got into healthcare,
because it meant something personalto them and they felt a calling to it.
Scott, how about yourself?
(23:11):
Well, thanks, Chad.
I, too, am a Wisconsin native.
I've worked, long, stretchmy career in the South,
and so I mix a little bit of Fargoand a little bit of y’all.
It's hard to throw the accent off,but I got into,
a traditional accounting, finance,
by education or educational pedigree.
(23:32):
Got into the business through a startup company.
So my first venture was disease managementin the 90s,
when we would call people on the telephoneto check in on them versus
all the cool digital apps and internet, at the time when that came later.
And so that was my intro.
I had a long history with family and, kind of seeing,
(23:55):
I'll say, healthcare firsthand, butI'd say it was the business side of that
first company that that took meeventually to consulting and auditing,
where I did all healthcareand got a good chance to see a
lot of different facilities and structuresand setups throughout the southeast.
And so, largelyI was stationed North Carolina,
but worked throughout SouthCarolina, Virginia, Tennessee and Florida.
(24:16):
And so some of that work entailedpost-acute providers.
A lot of it was health system, a lot of itwas medical groups and insurance plans.
And so I'd say I got a chance to seeevery facet during that period of time.
There was buying of medical groups.
There was selling of medical groups.
There was buying of health plans,there was selling of health plans.
So, it also was a view on strategy.
(24:36):
What did the industry
think they could do with risk enter it,vertical integration or not.
And so I got a sideline seat of that,at least as a consultant.
Eventually I needed to get off the roadand so that got me into my career
in academic medicine.
So I've worked at Duke UniversityHealth System.
I've worked at Universityof Florida Shands,
(24:59):
and now the last 13 years with Davidat Froedtert.
So it's been a fun journey.
All the things that brought me backto Wisconsin
were what David mentioned,kind of a very focused strategy on growth
and risk, which I'm
sure will be part of the conversationtoday, too.
You know, Scott, what I really appreciateabout your background, particularly
(25:20):
the consulting piece, when I think abouthow that applies to the role that you're
in, that expertise that you gathered, thatlook into the different components
that start to put together, that look likewhat the combined system is,
probablyhas been an incredibly big leg up.
I agree with that.
And, you know, a lot of timeswhen you bring in a consultant,
that's in a case where it didn't work.
And so hopefully there'ssome amount of lessons learned.
(25:42):
Whether it was a strategic,you know, gap, in thinking
or operational execution.
And so, yeah, I try to remember those.
Would you
please tell us a little bitabout Froedtert ThedaCare,
just kind of the system in general,and then how it came together?
I'll go ahead and start and Scott,you jump in at any point.
(26:03):
So, we are the largest Wisconsin-basedhealth system now.
18 hospitals, really kind of covered
almost the entire easternhalf of the state of Wisconsin.
And as far as how we came together,
and ever since I came to Froedtert,I kind of had this map,
(26:24):
a map I'd show with our, sharewith our board of directors and had kinda
every health system that we thoughtwas one that we wanted to work with.
I don't want to say target.
It wasn't a target.
But you know, health systemsthat were kind of built like us, you know,
nonprofit, high quality, and ThedaCarewas always at the top of the list.
(26:45):
But, you know, fiercely independent.
And so it was about,I'll say it was about five years ago.
You know, I think I'd been stalking them.
I remember Cathy Jacobson,our CEO at the time, had said, boy,
guess who just called me out of the blue?
The CEO at ThedaCare.
I said, oh, Cathy,that was not out of the blue.
(27:05):
That was not out of the blue at all.
But, we had kind of a common story.
And that is,
ThedaCare very much wanted to have,
you know, hard physical assets,a hospital in Oshkosh, Wisconsin.
And so just north of us.
We had the same exact story,but it was in a different community,
(27:26):
Fond du Lac, Wisconsin,just a little bit south of Oshkosh.
And so we had this thing in common,that is, we had attempted
to work with the providersthat were in that market.
They weren't interested, but the marketswere too important to both of us.
And so we said, you know what?
We should build two hospitalsand we should build them together
(27:47):
and do it as, what we agreed to dois as a joint venture.
We've had a very successful
micro hospital strategyin the Milwaukee market.
And so that's what we kind of said.Well, yeah, that makes sense.
Let's do it together.
And if we like each other,maybe we’ll do more together.
So, like I saidthat was about five years ago.
(28:08):
And really that process of planningthose two small hospitals,
what that would look like,it just did it really kind
of put us in a situation where we got toknow each other a lot better.
But thenI think we started seeing the market move.
You know, there was another health systemin Wisconsin.
Bellin and Gundersen.
(28:30):
They decided to get together.
And then you hadthe Aurora-Advocate-Atrium
kind of happenedwhile we were all meeting.
And we said, guys, the market's moving.
If we're going to get together,we should do this now.
And so I think that'swhere everyone was really surprised.
We, you know, announced our joint venture.
That was April, I think Scottor you know, somewhere in that timeframe
(28:53):
and in about eight months, we kind of cametogether as a single entity.
And I think what probably
helped us facilitatethat is, you know, before
we even announced our letter of intent,we kind of had governance figured out.
We had senior leadership figured out.
I mean, and those are the two big thingsthat, you know, sometimes will derail,
(29:15):
you know, combination.
Anything else to add, Scott?
Well, I would just, I'll talk a little bitabout all of our capabilities.
David does such a good jobkind of describing,
you know, the recent historyand so I'll put it in context, because
I do think maybe some of this conversationwill morph into scale.
(29:35):
What are the benefits?
What is the rationale?
And so, what I would say is broadly
we were, David cued it up,we were two strong systems.
What I would say
is very regionally focused, in the state
we call it the coast or we're,we're on the coast of Lake Michigan.
Along the east side.
And when together,we feel like we are, you know, approaching
(29:58):
kind of that super regional status,but single state,
which we think is importantand we'll get we'll get more into that.
But it's probably more aboutthe collection of what we're capable of.
We think we have, along this geography,
a really compelling,comprehensive solution for the community.
And so David mentioned
kind of the number of hospitalswe've got a relationship with.
(30:21):
I'll call with 3,400 providers.
I say relationshipbecause some of that we've got experience
with some being employed.
We've got experiencewith the Medical College
of Wisconsin and affiliation structurewith an academic.
We've got experience with folkswho want to be independent.
And, how we can work with them.
And so, I think just the skill set to workwith all the different types
(30:43):
of structures,
we’ve shown that within what I'll callis kind of a super-regional structure.
We've got 370 sites of care.
So that clearly is an ambulatory strategy.
Some of those high-acuity, I'm going tocall them high-acuity outpatient centers.
Some of them neighborhood hospitalsthat David mentioned all the way up
to, you know, large communityand academic medical centers.
(31:04):
So we really have the acute
spectrum, ambulatoryspectrum, different models covered.
You know, you get into those 1,600 beds,
8,600 discharges, 22,000 employees.
And so that kind of scaleand role in a community,
you have 7 billion of revenue.
What we have, what we talk about, atthe same time is a health plan strategy.
(31:28):
I mentioned risk earlier, but
included in that,just two months before Froedtert
and ThedaCare came together,so in November of 2023,
we acquired the remaining 50% of a networkhealth plan.
So now we are, this comprehensive careincludes,
100 and almost 70,000 member,health plan, predominantly Medicare
(31:50):
Advantage licenses out Medicaid livesthat aren't included
in that number as a commercial program,as an ACA coverage line.
Included in that is a TPA, a growing TPA,or strategy for self-funded.
So when I'm when I kick this offby saying comprehensive
from insurance and self-funded vehiclesall the way to academic,
(32:12):
community, ambulatory settings,we work with physicians.
We think we have a really compelling, kind of super regional play.
Scott, when you describewhat the two organizations had,
certainly having spent some timewith you and Cathy
when she was CEO at Froedtert,and then knowing a little bit
(32:32):
about ThedaCare from my timeat HFMA, for me, when I saw the press
release of the two organizationscoming together,
at least at the surface level,it made sense to me.
And then, as you've described,it certainly makes a lot more sense.
When you think about the opportunitiesthat the combined system creates
for patients and communities,what can the two organizations
(32:53):
do together specifically that you couldn'tdo as independent systems?
I'll start.
Scott, you please add.
But, no, I think what we really nowhave is capability
in rural Wisconsin as well, thatthat was not really something that was in
Froedtert’s wheelhouse at the time.
I think the other thing is that,
and the other assetthat we probably don't talk so much
(33:15):
about is our relationshipwith the medical college.
Over half of the physiciansthat practice in Wisconsin have somehow
been, you know, educated or produced,at the Medical College of Wisconsin.
So, we have this ability to run
a very tight, you know,
health network that kind of can do A to Z.
(33:38):
I mean, you know, some of the highest-endstuff that happens,
you know, in Wisconsin is on our campus
and how we impact,you know, small, rural Wisconsin.
And I'm glad thatScott touched on the health plan, too,
because I think that that doesn'tnecessarily get all the headlines.
But, its growth potential is justenormous, especially up in the Fox Valley,
(34:00):
because ThedaCare had not beenthe provider network for almost a decade.
And so it's just had explosive growth.
So, I think those, it's all those piecesthat kind of fit
together, that really kind of powerwhat we can do as a system.
Yeah,maybe a couple pieces to add to that.
I will get into talking about culture,but one of the elements,
(34:22):
that was consistent acrossthe systems was the spirit of innovation
transformation,a boil that down to digital,
each kind of pursuing digital strategyand so forth.
And so,you know, when you ask, Chad, kind of
what are some of the benefitsor early opportunities,
it's putting those two innovationvehicles and cultures together.
(34:44):
And so we foundthere is a fair amount of overlap.
And it was another way we crossed overand that their team frequently was
there is a little bit of overlap
and digital pursuits companiesthat we were working with.
And then for those that didn't overlap,you know, it really inspired,
I'll say, the teamto dig in deeper on benefit realization,
(35:05):
ability to implement more broadly.
And so I'd say that innovation spiritis probably one item that came together.
I think David nailed it with the MedicalCollege of Wisconsin and subspecialty.
I'll add to that.
There'sprobably some capabilities in the South
or in the legacy Froedtert marketaround pharmacy and lab as examples,
(35:26):
specialty pharma capabilities, mail orderpharmacy capabilities, outreach lab
capabilities, esoteric labtesting capabilities that can now
be delivered more broadly to the communityand expanded across the geography.
So that's an example.
And then, Chad, I think you,and particularly HFMA and the modern
(35:46):
healthcares of the world knew ThedaCarewell from its lean mindset,
it's kind of cultural focus on driving
excellence, driving out zero defects.
That’s a great element.
I'd like to say that that was consistent,I'll say across the systems.
But Theda’s long pursuit and history in it
(36:06):
brought a lot of talent,a lot of experience to build off.
There is probably early wins in the ACO
CIN structures and capabilitiesand results and performance.
So all those culturally usea lot of alignment about driving forward.
Sounds like a lot of opportunities–one,to preserve access, expand access
with the innovative digital technologies,expand access in new ways,
(36:28):
and then with alignmentwith the health plan
and the broad physician networkin the work that you've done in pop health
to really get crisp around managing
total cost of care and really offera more compelling insurance product.
When you, we've touched on ita couple of times, and I certainly thought
David's comment earlier was interesting,or the comment earlier was interesting,
that even before conversationsstarted around the integration,
(36:50):
you guys had a pretty good sense
as to who was going to sit in what chairsfrom a leadership standpoint.
And I think that really doesspeak to cultural alignment.
So can you talk a little bit more abouthow important that was in the discussions,
and sort of how you guys sort ofsussed out culture or cultural fit?
Well, I'll start
I think that, we had so much in commonright from the very beginning.
(37:11):
I mean, we were both, you know,very financially secure, you know, so,
there wasn't a driving reasonthat one of us was coming in weaker.
Both very high quality.
I think the one thing that I thinkprobably surprised a lot of people
on the Froedtert side was, that Cathy Jacobson was willing to retire.
(37:33):
Now, Scott and I had worked with Cathyfor a very long time.
She was always going to retire young.
That was her mantra.
And so it wasn't a big give on her part.
I think that she was excited about it.
And I think, you know, being able to kindof, have ThedaCare kind of be
one of her lastbig successes was important to her.
(37:53):
So, like I said, that
really kind of helped that we were ableto kind of know the leadership structure.
We kind of announced at the very beginninga lot of, like,
the senior leaders that were goingto stay with the organization.
So you had kind of this sense of, boy,this is going to come together.
I think the other thing that, I'll saymaybe a little bit surprised,
(38:17):
but it's been verygood is our new health system board.
They have bonded so quickly.
I mean, you never hear themtalk about the north, the south.
They very much view themselvesas one system of governance.
And so I think those things allowed usto kind of put,
you know, at least put thedeal together very quickly.
(38:39):
Integration,that's another part of the story
because there's always so much to dothere.
Yeah.
I'll build a minute offwhat David mentioned that we founded
a GPO supply chain structure together.
That goes back probably 15 plus years.
We formed, I'm going to call it, an ACO
(39:01):
together beforeACO was a formal definition and a thing.
And it was really aroundhow can a couple systems work together
around the stateto drive value to employers.
And so there is a long history,probably all rooted,
cheering for the Packersis probably an element of this, but
all rooted largely around qualityand experience.
Learning that the cultures werea lot of like is probably 10 to 15 years
(39:24):
in the making through
all these little things of workingtogether that David mentioned.
That sort of long experiencethat you mentioned probably does help.
And it also,
you know,
I like the factthat both of the organizations
were so community
focused and really coming togetherfor those reasons, I think maybe helped
get prioritiesstraight in their set first.
(39:44):
During the exploration of a partnershipbetween equals, there are typically
significant synergies that underpinthe logic between integration.
However, once
the partnership is formalized, it'snot uncommon for organizations to fail
to realize many of the opportunitiesthat drive deal logic.
So, what's the process, or the framework,that you put into place to support
(40:04):
disciplined execution,to capture the intended synergies?
I can jump in there at first,and I want on that one.
David,I would say a couple things on that.
We did start pre-combinationwith outside assistance.
So, David mentioned before the relationship grew very quickly.
(40:25):
And we
had outsidehelp in thinking about that relationship
and the governanceand the leadership that David mentioned.
And then when it got to that stagein April of 2023 for an LOI and, kind of,
to move the relationship to the next step,we knew we wanted to move quickly.
And so we got, you know, additional,I’ll say, outside assistance
(40:46):
to come in with that combination
and specifically to your point,Chad, integration assistance.
What were the success measures?
What is,what are we going to tell the community
that we are aimingfor as a result of this combination?
What came out of that workis the need to document
and show I'm going to call itsynergies, or value opportunities,
(41:10):
but not because that was the thingbringing us together.
So this was not a back officeconsolidation.
This was led by what we think we can bringto the community being together.
And we touched on a lot of thatkind of early on, that cape,
that comprehensive care.
And I'll say seamlessprovision of care across the geography.
(41:33):
But we also hold ourselves to a standardthat this kind of scale
should drive savings.So we got that outside help.
Upon closing, we've kind of launcheddoing that ourselves.
So we are, I'm gonna call it 18 months.
And what I would say iswe've been very intentional or methodical
around continuing to grow market share,continue to drive the quality profile.
(41:54):
Our top decile performance continueto drive and improve patient experience.
And being methodical on how we tackle,
I'll say the expensebase and growth opportunities.
So that I think in your question,you've said the words disciplined
execution, that we can continueto live up to that legacy.
And so, we haven't made headlines
(42:16):
by big, bold expense changesbecause first and foremost,
we are continuing to kind of deliveron the performance.
And, I'll say doingkind of bringing effectiveness of scale
as it relates to what we purchaseand how we deploy assets.
I think that
approach makes sensealso because you want to, given
(42:37):
the unique nature of the cultureand the fact that that's the secret sauce,
you don't want to do anything bigthat would also upset that in the process.
And to your point, it's not a turnaround
situation for either organization whereyou need to make those big, bold moves
so you can be a little more thoughtfulabout how you capture those synergies.
What's one challenge that you encounteredduring the cultural transformation
(43:00):
process that you either didn't anticipateor fully appreciate at the outset?
I'll start.
You know, because we've had successfinancially,
we've had success with quality.
We haven't had a burning platformthat we really need
to change anything.
And so I still think there are more
(43:22):
opportunitieson our integration path that,
I don't know,I'm one that I would like to go faster.
You know, I think, you know,I'd like to get to one epic platform.
You know, we just, we
don't have anything that is,
you know, creating this burning platformthat says we've got to change immediately.
And I think soas a result, some of our employees,
(43:46):
some of our leadership is like,well, what's changing?
Nothing's really changed that much.
And I shouldn't say nothing.
But, you know, we're tryingbe very deliberate.
I sometimes wishwe had a burning platform.
I think really well said by David.
You know, the good news
that we just talked aboutis we are so laser-focused on performing.
The flip side of that is,because we have done that,
(44:09):
we've been successful at that,there's not a burning platform to point to
that can corral or be a targetto look at for 22,000 people.
So, you know, being great at communicationand keeping the why
and the success measuresin front of people becomes the job.
And so I think David nailed it.
The other thingand maybe the eye opener to me,
(44:31):
and some of it is
timing, is the regulatory chaos,can I say, or the,
all the potential regulatory discussionsor what it may be and what gets passed
or what doesn't get passed.
The impact it has, in different regions,
in a critical access hospitalsetting versus a community hospital
(44:52):
setting versus ambulatoryand physician groups,
whether they be independentor affiliated up to the academic,
right?
There's a little something in the regulatory discussions that impacts all of them.
And the speed
at which we, even if many of themwere on the radar, for many years,
the speed at which we need to estimatethem, develop
mitigating plans for them, to the degreewe think they're going to happen,
(45:15):
how we synergize and work collectivelyto help solve
rural versus urban versus academiccommunity versus ambulatory issues,
you know, is a level of coordinationvery early on, you know,
within the first 18 months of integration,that was a little bit of an eye opener
just in terms of being ready for thatand being able
to provide the service to operatorsand support to operators
(45:36):
to adjust to an environmentthat's pretty fluid.
So I think if you needed a burningplatform, that's maybe
the one you can point to of saying,this is why scale is important.
It's why talent is important.
To be able to adjustwhen things like that happen.
As youreflect on the last 18 to 24 months,
what's one thing that you might have donedifferently?
(45:58):
A couple things come to mind.
I wish we would have kind of figured out,
more quickly,what our IT strategy was going to be.
I think we have a decision around it now.
But boy,
the lead time on some of those changes,which is gonna help our integration.
It's years to get to, let's say,get to a common
EMR platform and get that.
(46:21):
That's probably one of the thingsthat will help us integrate
care across the entire enterprisethe quickest.
So getting to a decision has been,I think, one thing that has been
a bit of a surprise that it's takena little longer on some things.
I'll add one to that listbecause we're getting to it now.
And so I feel so good about itnow, you know, I'll play Monday morning
(46:42):
quarterback and say, boy, on day one,this would have been great too.
And, we've talked a lot about how these were
two legacy, ambitious,you know, high-performing systems
that a lot of times, and it's truein this case, leads
to annual goals, long-term goalsthat are pretty long.
So this concept of say yes to everything,do everything.
(47:03):
Get it in tomorrow.
It's probablya little piece of each of our legacies.
These were two ambitious organizations
that would have a very thoroughannual plan.
Now, you come into an integration,and integration starts
to take up a chunk of that annual plan,but you don't slow down.
So you have your, quoteunquote, “normal” hundred things
(47:25):
you wanted to do, and then you addintegration on top of that.
And so my point, or my opportunity,is that I could have been smarter,
in terms of being a strong advocatefor focus,
knowing the amount of time, talenttime, team time,
communication time, how do you perfect a communication message
(47:46):
when you're going through an integration?
That the idea that one of the things onday one we came out with is saying, hey,
it's importantfor us to keep up performance,
but we're gonna, as part of that, we'regoing to shrink the number of tactics.
We're going to focus on a big threeas an example,
that that was somethingwe probably we're doing it now.
But you knowwhat would have the effects of that been
(48:08):
if we'd have done it a year agofor sake of argument.
Sort of temporarily set asidesome of the day-to-day work just to focus
more crisply on the integration,to put the resources there.
Kind of slowing down to speed up,if you will.
What's one thing that you wouldn't changeas you reflect
back on the last 18 monthsthat you think you got absolutely right?
(48:30):
I think the governance piecewith the board is that I said
that has been a bit of a surprisehow well they get along.
You know, they keep us honest.
They make us work hard.
But, they just so quickly, immediatelysaid, no,
we are one board for one enterprise.
They never talk about north versus southand whereas I would say,
(48:52):
you know, I think our staff,they still kind of feel like, boy,
you know, all of my work is in the South.
They're all my works in the North.
So I do think we really got governanceright.
I think David nailed it.
If you think of our timingand coming together in January 2024,
I remember again two months prior tothat was network health plan.
You have a board,
(49:14):
some constitution of a new boardthat had to drink from a firehose.
What does it mean to own a healthplan fully?
What's going on on the Medicare Advantageside of the business,
a membership side of the business,because that
that industryhas some things going on too.
What does integrationlook like for these two systems?
How are you going to decide managementteams integration?
How are we going to keep performance?
(49:35):
And in about 4 or 5 monthsyour second meeting of a new board,
you're approving a budget,
a $7 billion budget, a bigger budgetthan any of the legacy boards, you know,
had to contemplate before, and capitalspend associated with that and so forth.
And so I think David nailed it.
The governance, collegiality,the orientation that went in,
(49:58):
in teaching members about ambulatory,acute, academic, community, rural,
academic affiliation agreements,
the amount of orientation trainingthat went in that it's
that people are comfortable enoughto make votes, have discussions.
We have a high participation governance.
You know, you can maybe say a word or twoand then you're getting questions,
(50:21):
which is theI think the exactly how you want
kind of the DNA to go,in terms of positive feedback.
So I think David nailed that one.
So it sounds like
one of the things that helpedbring everything together
was the investment in additional boardeducation, so that everybody could speak
the same language, same page,and really understand
the issues that were being debatedor discussed at the at the meeting.
That's great.
(50:41):
What advice do you have for other leaders
navigating the integration process?
Well, I think the one thingthat we think about a lot is
we will probably do this again.
I mean, I think that we're stillseeing healthcare consolidate.
I think there's goingto be more consolidation in Wisconsin.
And so we have to kind of put processesin place that we don't have to kind of
(51:03):
reinvent everything the next timesomething like this would happen.
And I think the good news for usis because of, now, of our size and scale,
we're probably in a position to saythis is how we do things.
Whereas, you know,as ThedaCare and Froedtert came together,
we kind of wanted the best of both.
And this is somethingI think our board pushes us on too is,
(51:26):
you know,you got to get this integration right,
and you have to have processesthat can be repeated.
David's is really well said.
I would frame it too as, get
the success measures pre-close.
Get the success measures right
and then diligently hang on to thosefor the appropriate amount of time.
(51:49):
You know through this new integration,new relationship, new culture period.
Whether
it's access, whether it's qualityand experience,
wherever growth isand I'll say financial stability
or performance ismake sure you get those right.
Communicate them to all the people.
Have a compelling reasonwhy that moves the community forward.
(52:11):
The employers, some of the social determinant things
that we are trying to accomplish in termsof global community health or population
health, put them at the forefront,put them out in front of people,
be aspirational about theoretically,we came together for a reason.
And that's a bold movementand moving those things forward
and make sure all your messagesare tied to that.
(52:32):
The reason I say that is
there's going to be lessons learned.
We're going to go too fast or tooslow. We're going to make a mistake.
We're going to secondguess the IT platform, whatever it may be.
And I think always pointingto the success measures
and whether you're advancing
and moving them forward,even if incrementally at time versus
falling back on them, provides the focuswhen there are hard decisions to be made.
(52:56):
Operating model or design,moving someone's cheese, you know, here’s
the rationale on why we're doing it,I think is, it can be a calming,
a stable target to keep people's eyes on.
Scott, David,I appreciate the perspective on that.
And it's certainly aligned with some workthat I did HFMA when we were looking at
(53:18):
what the characteristics of organizationsthat were better at integrating
were versus those that maybe weren't.
And that was one of the thingsthat we learned from that work was that,
to your point, have the list of measuresaround quality, access, cost,
and then, you know,not only build the work plan
for the integration around that,but keep that as part of the messaging
and make sure to your point,understand the why behind it.
(53:38):
So it becomes somethingthat can bring people together.
As you think about this process,would be interested
in hearing from both of you
what your proudest moments are as youreflect back on what you've accomplished
thus far, also understandingthat there's more to be done.
But you know, as you look back,
what were the wins have been thatyou're that you really feel good about?
(53:59):
I’ll cue one up for you first, Davidand see what you think.
I am most proud of the energy,attention, focus response
to, prioritywe have been consistent about in the LOI
and then and then even louderpost-combination and that is access.
The conversations we've had about access,and you framed it
(54:21):
as maybe accomplished, Chad.
And what I'd say isit's still a journey for us, but
the amount of time, energy,focus and commitment we have
from all corners of the organizationaround access being quality, access
being populationhealth, access being good economically,
good from a patient satisfaction,
(54:42):
access being what we have to be good at.
I have never seen the engagement on thatand it could be left
without being seen ED.
It's clearly around
primary care access and specialty accessand what we can do virtually.
You’re right, access goes everywhere.
But the idea that it ispart of every conversation we have,
(55:02):
I think, you know, that there's
overwhelming satisfaction and drive to saywe are focused on the right thing.
Yeah. No, Scott is absolutely right.
I think that, you know,we've just launched, kind of,
our new missionvision principles, you know?
What is going to be our strategic planfor the next five years?
(55:24):
And boy, we have never been more kind of,you know, laser focused on,
you know, we've got three success measuresand that's what we're going to focus on.
And access is one of them.
I think the challenge is going to bewe're used to wanting to do everything.
The challenge is going to bewhat stuff are we going to stop doing?
And I do,
I think that's going to be a big effort
(55:45):
because peoplewant to keep on doing everything.
And I think that if the work effortthat they're doing doesn't kind of account
for the three success measures,then that's the stuff that you stop doing.
David, Scott,thanks again for joining us today
and sharing your experiencewith our listeners.
And thank you to our listenersfor tuning in.
If you'd like to learn moreabout Froedtert ThedaCare's
(56:07):
integration journey, we have a linkto related content in the show notes.
I hope you'll join me again in two weeksfor the next episode of Achieving Health.
You can follow
Achieving Healthon your favorite podcast platform or visit
forvismazars.us/AchievingHealthPodcastto learn more.
New episodes are released the firstand third Wednesday of each month.
(56:31):
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of Forvis Mazars Global, a leading globalprofessional services network.
Ranked among the largest publicaccounting firms in the United States,
the firm's 7,000 dedicated team membersprovide an Unmatched Client Experience
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(56:53):
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The information set forth in this podcastcontains the analysis and conclusions
of the panelistsbased upon his, her or their research
and analysis of industryinformation and legal authorities.
Such analysis and conclusionsshould not be deemed
opinions or conclusions by Forvis Mazarsor the panelists
(57:15):
as to any individual situationas situations are fact specific.
The listener should performtheir own analysis
and form their own conclusionsregarding any specific situation.
Further, the panelists’ conclusionsmay be revised without notice,
with or without changes in industryinformation and legal authorities.
On today's episode of Achieving Health,
I've got the latest policy and legislativeupdates from Washington, D.C.
for the week of September 1st, 2025.
Then I'll be joined by special guestsfrom Wisconsin-based health system
Froedtert ThedaCare Health.
My guests are Scott Hawig, chieffinancial administrative officer,
and David Olson, chief businessdevelopment officer.
(00:24):
They'll share insightsfrom their experience helping lead
the recent integration of Froedtert Healthand ThedaCare into one combined system.
Stay tuned for a fantastic conversation.
This is AchievingHealth, a podcast from Forvis Mazars,
where we delve into the topicsthat matter most to healthcare
organizationsacross the continuum of care.
(00:45):
Our goal is to help younavigate the dynamic healthcare landscape
and achieve health at your organization.
Here's your host, Chad Mulvaney.
Welcome to Achieving Health.
I'm Chad Mulvaney, director inthe healthcare practice at Forvis Mazars.
Thank you for joining me.
I'd like to start with a quick reminderabout our OBBBA Tuesday webinar series,
(01:08):
happeningevery other Tuesday through November 4th.
We just hosted the first session, whichprovides an overview of the impact of H.R.
1, also known as the OneBig Beautiful Bill
Act, and exploreshow providers can prepare.
Our next session will focus onunderstanding the financial impact
of the billand communicating that impact with key
(01:29):
stakeholders,including the board, staff, and community.
We'll have a link in the show noteswhere you can register for the series
and view past sessions.
I hope you'll join usfor these insightful conversations.
We'll begin today with our WashingtonWatch segment, where I share updates
on the most recent actionsof federal policymakers and their
anticipated impact on healthcare providersand payers.
(01:51):
Today's WashingtonWatch reflects information as of noon
Eastern Time on Friday, August 29th, 2025.
My comments are based onwhat's being reported by the D.C.
trade press.
At the time of the conversation, mixedwith a lot of judgment
about where things may gobased on my experience in D.C.,
so today's remarks reflect informationas of this moment and will change.
(02:14):
While we're
gearing up for Congressto come back from the August recess
and then have to immediately jump into Fed
fiscal 2026 budgeting,things are still a little slow.
As far as our agenda is concerned,
first, we'll cover the StatutoryPay-As-You-Go sequester.
The Congressional Budget Office recentlysent a letter to congressional leaders
(02:34):
from the Democratic Party
suggesting that the One Big BeautifulBill Act, also known as H.R.
1, will triggerthe mandatory S-PAYGO sequester.
While it's technicallythe Office of Management and Budget
who makes this call, this is somethingthat we will need to monitor
and hopefully Congress will addresswhen it gets back from recess.
(02:54):
Next, we'll talk about Medicaredual status hospitals.
The House Ways and Means Committeeissued a press release this week
expressing concern about urban hospitalsthat have obtained rural status.
While this has longbeen an issue of interest for House Ways
and Means, the press release in questionwas triggered by an Arnold Ventures
funded study tracking the growth of dualMedicare status hospitals.
(03:18):
We'll also cover CMS’
new draft cost reportforms to collect Medicare Advantage data.
As you'll recall in the 2026 OutpatientPerspective Payment System rule,
CMS is proposed to require hospitalsto report on their Medicare cost reports
the median of their negotiated MedicareAdvantage rates
for each MSDRG for all MA plans.
(03:42):
This data would come fromthe most recent version of the hospital's
price transparency machinereadable file, and create
a new reporting burden for hospitalsif finalized.
From there, we'll talk about the HRSA 340Brebate model
and new FAQsthat were recently issued on August 18th.
HRSA issues these FAQs to provide clarityon a number of issues
(04:05):
related to the proposed rebate model,and we'll run through a couple of them
that I think are particularly interestingand illuminating.
And then finally, we'll talk about healthinsurance exchange premiums.
An analysis by the Kaiser FamilyFoundation and Peterson
Institute of 312insurers rate filings for the ACA
marketplace plans in 2026show a median increase of 18%.
(04:29):
That's the largest jump since 2018.
And we'll talk throughwhat's driving those increases.
All right, diving in.
So, for Statutory PAYGO,in a recent letter to Congress,
the Congressional Budget Officefinds that H.R.
1 or the OBBBA, would lead to $536billion in cuts to Medicare
(04:50):
and billions more to other programsover the next decade,
unless Congress takes action
to prevent the automatic reductionseither later this year or early next.
If the cuts are allowed to go into effectwithin 14 days
after the end of the current sessionof Congress,
the OMB would have to begincutting federal expenditures.
The cuts to Medicare are limited to 4%,but they still net out
(05:13):
to an estimated $45 billionin fiscal 2026 alone,
and another half billion or so,or more, over the next 10 years.
For perspective on the scale of the cut,CMS’ proposal to accelerate
the recruitment of OPPS overpaymentsrelated to the impermissible 340B
separately payable PartB drug policy is estimated
(05:35):
to be $1 billion, actually, $1.1billion, in calendar year 2026.
Also,to give similar scale from the same rule,
the proposal to implement site-neutralpayments for drug administration services
is expected to shave $280million off of hospital payments,
so this would be orders of magnitudebigger and a significant cut
(05:55):
to Medicare payments for both inpatient,outpatient, and Medicare Advantage.
The reasonwhy some are unaware of the S-PAYGO cut
is that Congress has never actuallyallowed them to go into effect.
They've always,and normally at the last minute,
quote unquote, “wiped the PAYGOscorecard clean.” And while I suspect
they'll do so again, I am less certainthan I've been in prior years.
(06:19):
And again,as I mentioned earlier, it's important
to remember thatif the cuts go into effect,
they apply to all Medicare payments,including those to MA plans.
And so for providersthat are contracted with MA plans
based on the pricer, the plan will likelytry to pass that rate cut through.
Moving on to the House Ways and Means,
House Ways and Means issued a pressrelease this week expressing
(06:41):
concern about urban hospitalsthat have obtained rural hospital status.
The press release states, quote unquote,“using the so-called dual-classification
scheme, hundreds of sophisticated urbanhospitals have gamed Medicare's wage index
to get financial benefitsof being urban facilities,
while at the same timeposing as rural hospitals to receive
(07:02):
the significant benefits Congressintended for truly rural hospitals.
This includes an increase of up to 30%more Medicare funded GME slots
and the ability
to care for fewer low-income patientsto qualify for the heavily discounted
outpatient drug program under 340B,without any benefit to rural community.”
And that's the Ways and Meanspress release.
(07:23):
I think it's important to remember that
when urban hospitals achieve dual status,
this isn't a zero-sum gamelike much of the rest of the IPPS.
They're not actually taking benefitsfrom rural providers.
As I mentioned at the top,the press release was triggered by a study
published in Health Affairsthat highlights the increase
(07:44):
from three dual statushospitals in 2017 to 425 in 2023.
You know,
it's worth noting that this was already onHouse
Ways and Meansradar and has been there for a long time.
It's also important to remember that thelanguage was not included in the OBBBA,
and the reason why I call that out isit was cited as saving $10 billion
(08:08):
over 10 years
in the menu of savers that was circulatingat the beginning of the year,
when discussions of the reconciliationpackage that eventually became H.R.
1 or OBBBA were under discussion.
But this is yet againanother issue to watch
that could be includedin a second reconciliation package
targeted as a deficit reduction bill,as was rumored to be in the process prior
(08:30):
to recess, or a comprehensivebipartisan health package
also under discussion prior to recessthat would likely ride
along with whatever bill ends upfunding the federal government for 2026.
At this point,
we're hearing conflicting messages onboth packages.
There's some in D.C.
that I talked tothat think the prospects are low,
and there only be a minimal extenderspackage
(08:52):
that accompanies the Fed fiscal 2026funding bill.
And these include kind of yourtraditional extenders like your Medicare
dependent hospital, low volume hospitalwould be kind of in that minimal package.
There are others in D.C.
that are suggesting that conversations
about a broader package are ongoing,and staffers are in the process
of aggregating policies into a billthat could garner the most support.
(09:12):
I guess it is possiblethat two things could be true at once,
but again,an issue that remains to be monitored.
In terms of the new draft costreport forms,
in the 2026OPPS rule CMS proposes requiring hospitals
to report on their Medicare cost reportsthe median of their Medicare Advantage
(09:33):
negotiated rates for each MSDRGfor all plans.
This data would comefrom the most recent version
of the hospital's pricetransparency machine readable file.
And critical access
hospitals would obviously be excludedfrom this requirement.
CMS intends to use this data to set
MSDRG rates effective for Fed fiscal 2029.
(09:56):
The agency believes that there is a needto reduce reliance on hospital
charge masters and develop quote unquote“market based approaches to establishing
payment rates under the MedicareFee-for-service system.”
If this proposal sounds vaguelyfamiliar, it's
because the prior Trump administrationfinalized this policy
in the 2021 IPPS rule and the Bidenadministration subsequently repealed it.
(10:21):
Given that the IPPS is
budget neutral,the impact of changing the data sources
CMS uses to set MSDRGrates won't change the amount of dollars
flowing through the system, butit will likely create winners and losers.
However, at this point, it would bedifficult to model the impact in advance
because the MA data by volume, by payerfor each
(10:42):
hospital is not publicly availableto create the weighted average
rate for each hospitaland calculate new relative MSDRG weights.
I think my concern with this policyis that it will definitely increase
administrative burden without actuallyimproving the accuracy of MSDRG rates,
and in fact,it actually may make the MSDRG rates less
accurate as a reflection of resources usedto provide inpatient hospital services.
(11:07):
And I say this for a couple of reasons.
First, CMS ignores in this proposalthe outsized role
that Medicare fee-for-servicerates and weights play in negotiations
between hospitals and providerswhen they contract for inpatient services.
So the circularity introduced, shouldthis policy actually be implemented,
(11:29):
could cause Medicare fee-for-service ratesto become detached
from actual resource use,which is what the statute or what
the language in the statuteactually requires when CMS sets
Medicare fee-for-servicerates for inpatient services.
Second, CMS is rebasing concept
using median MA negotiated rates
(11:49):
also assumes that MA rates are negotiatedunder open market conditions,
similar to the conditionsunder which hospitals contract with health
plans for rates in the large group,small group and individual markets.
However,nothing could be further from the truth.
There are a number of legaland statutory constraints
that prevent MA rates
from functioning, or occurring,in a functioning market environment
(12:13):
that are completely ignored by thispolicy, and that is reflected by data.
Actually, CMS has cited,at least in the 2021 proposal,
about the relatively limited deviation
“a percent or two, 3%,plus or minus, at most”
in most cases of MA rates from the actualMedicare fee-for-service rates.
(12:34):
If you want more on the technical issues,the comments I wrote for HFMA in response
to the 2021 proposedrule are still available on their website.
In terms of the 340B rebate
model, earlier this week, HRSA issued FAQs
clarifying provisions of its proposal.
(12:54):
A couple of the key clarifications
include that manufacturershave to give CEs, or covered entities,
all the details they need to participate
60 days before the rebate model goes live.
While it's helpful, my concern isthat they're not going to provide
enough detail for itto be useful for the covered entities.
(13:14):
It's certainly not hard to imaginethat manufacturers may skimp
on some of the more pertinent details.
And while 60 days is nice that they'regetting at least that much heads up,
it's still not going to be enough timeto set up a rebate cycle.
So that's something that coveredentities need to start working on now.
Another one of the
(13:35):
FAQs opens the door to manufacturersrequesting from HRSA
the ability to collectadditional data elements beyond the 11
listed in the rule, and that HRSAwill consider these requests.
And so, when you look at the initial11 data elements,
they're mostly aligned with things,if not completely aligned
with things, that you would need to submitfor payment to a health plan.
(13:59):
So the capture of those and the collectionof those is usually pretty standardized.
My concern is that once you startintroducing more variability
with different manufacturers,being able to ask HRSA and get permission
to collect different things,we lose standardization.
We introduce more complexity.
And as we introduce more complexity,you increase the likelihood that covered
(14:20):
entities will make mistakes and rebateswon't be paid for administrative reasons
that, quite frankly, have nothing to dowith whether or not the covered entity
was actually entitled to the rebateor what should be a discount.
The FAQ also clarifies that physician-or clinic-administered drugs are impacted.
That original list of drugs, you know,initially look like it was Part D only,
(14:43):
but that clarificationsort of removes a question mark that
I think many of us had and unfortunately,
perhaps expands the scopemore than we had originally thought.
One of the other,
I think, beneficial clarifications wasthat HRSA will review data on timeliness
of rebate payment as an accountabilitymeasure, and could revoke
the ability to participate if it findsthat manufacturers are abusing this.
(15:07):
So I think it's going to be importantagain, to the earlier conversations
that we've had around this,that covered entities do a really good job
of collecting data, kind of like whatyou would collect today around
your revenue cycle, on performance
of the rebate cycle by manufacturer,what percentage of the rebates
are paid on time, both in terms of countand dollars, by manufacturer, your denials
(15:31):
rate by manufacturer, by dollar amount,by count, and things like that.
So that way, as you see, manufacturers
not adhering to what HRSA has laid out inin the proposed rule,
you can have conversations with HRSA,you can have conversations
with your congressional representative,the administration,
(15:52):
to help educate them as to how
the rebate model is not working,and reducing resources
that are available to providehealth care services
to populations who would otherwisemaybe not have access to care.
Finally,
once the pilot is implemented,the Office of Pharmaceutical Affairs
will provide a mechanism for 340B programstakeholders
(16:16):
to provide feedback on their experienceutilizing the rebate model.
Again, as I just mentioned, you need tohave data to have that conversation.
So make sure you're collecting it.
Also, you know, they have suggestedthat it's going to be the administrative
dispute process, the ADR process,that will be the mechanism for where
covered entities can take complaintsabout manufacturers in the rebate model.
(16:38):
I continue to remain concernedabout how aggressively HRSA is going
to act to address and remedy manufacturernoncompliance.
Also, given that the ADR processis where HRSA has pointed
covered entitiesto take concerns about manufacturer
nonperformance or lack of adherenceto the terms of the rebate model,
(17:00):
I remain concerned about how aggressivelyHRSA is going to act to address
and remedy manufacturer noncompliance,simply because historically,
the ADR process has not resultedin satisfaction for covered entities.
In terms of health
insurance exchange premiums, an analysisby the Kaiser Family Foundation
(17:21):
and Peterson Institute of 312insurers rate filings for ACA
marketplace plans in 2026show a median increase of 18%.
That's the largest jump since 2018.
Insurers attribute this surge primarilyto rising medical costs (about a 10%
annual increase in claims driven by higherprices and utilization in services)
(17:45):
alongside inflationary pressureson administrative expenses, growing
labor costs amid workforce shortagesand the influence of high cost drugs
such as GLP-1 therapiesand other specialty medications.
Beyond simple health care costtrends, insurers are preparing
for the likely expiration of the enhancedpremium tax credits at the end of 2025,
(18:06):
which on average, across those filings,it's estimated, will raise rates
by roughly four percentage pointsas healthier enrollees
are expected to drop out of coverageif those subsidies aren’t extended.
Other additional factorsinclude uncertainty around new tariffs
on medical imports, the ACA marketplaceintegrity and affordability rules impact
on risk pools; however, some of thatmay be blunted by a recent court decision,
(18:30):
and the fate of federal costsharing reduction payments,
all contributing to significant variationin rate requests, which range
from a 10 percentage pointcut to a 59% hike across states.
Further analysis by the Century Foundation
finds the impact will be more profoundin rural areas.
In the 32 states using healthcare.gov,out-of-pocket premiums for rural residents
(18:53):
will jump by an average of 107%versus 89% in urban areas, driving
rural households to lose over $1,000annually in credits across 14 states.
And again, this is the out-of-pocket,not the actual rate increase requested.
And the issue drivingthat spike is the anticipated expiration
of the enhanced exchange credits.
(19:14):
Some 2.8
million enrollees, including 776,000
adults aged 55 to 64 and 223,000 children,
now face sharply higher costsand elevated coverage loss risk,
and the risk is particularly acutein the upper
Midwest and Southeast.
(19:35):
As I mentioned before,the spike in out-of-pocket costs is driven
by the same trends as discussed above,and specifically,
it's the expiration of the enhancedexchange subsidies.
However, that expiration is magnifiedin rural areas
because premiums tend to be higher,approximately 10% higher.
Couple of things to think about on this.
First, given some plansare already factoring in higher provider
(19:59):
payment rates as a result of tariffsand other cost issues.
Providersshould be sure to ask for rate adjustments
in contract negotiationsto account for the increased expense.
Given that plans are already buildingthat rate adjustment into their premium,
the impact of the enhanced interchangesubsidies
will also have a disproportionate impacton non-expansion states.
(20:20):
So for example Florida and Texas,according to the Kaiser Family Foundation,
will lose $2.2 and $1.5
billion respectively in exchange funding.
It is also possible that a bipartisanagreement could extend the subsidies.
However, again, kind of like the
extenders package, we're hearingsort of mixed signals from D.C.
(20:40):
as to whether that will happen.
If the enhanced exchangesubsidies are extended, it's very likely
that there would need to be some offset,regardless
of how long the extension wasor how much it would cost.
And so as you start to think aboutwhat might be the offsets for that,
you might see changes in Medicare, siteneutral payment policy, PBM reforms,
or given some there'sbeen some preliminary conversations,
(21:03):
changes to Medicare Advantage risk coding.
This concludes today's Washington Watch.
Up next, I'll be joined by Scott Hawigand David Olson of Froedtert ThedaCare
Health, to talk about their organization'sstrategic integration journey.
(21:25):
I'd like to welcome
our guests for today's episode,David Olson and Scott
Hawig of Froedtert ThedaCare,an 18-hospital health system in Wisconsin.
David is the organization's Chief BusinessDevelopment Officer,
and Scott is the Chief Financialand Administrative Officer.
David, Scott really appreciate youboth joining us today
and I'm looking forwardto the conversation.
(21:47):
Thanks for having us.We're looking forward to this too.
Let's have a good talk.
David, maybe I'll start with you.
And if you would,please tell our listeners a little bit
about yourself, how you came to healthcareand your professional journey.
Well, it could be a really long story,but I'll keep it short.
Almost four years now in the business.
I grew up in rural Wisconsin.
(22:08):
My mom was a nurse's aide,so I was exposed to healthcare very early
and I always knewI wanted to be a hospital administrator.
So, you know, reallyjust kind of progressively,
kind of moved up the hierarchy.
Primarily,I was mostly involved in operations,
CEO of a smallerhospital, small health system.
(22:28):
But I came to Froedtertalmost 14 years ago as the Chief
Strategy Officer and really kind of taxedwith: help us grow.
Help us grow the business.
And so, we've done that.
I think, you know,Froedtert has been very successful and
now kind of capping off with,you know, the combination
(22:50):
of ThedaCare just really
about 18 months ago was when thiskind of finally came to pass.
Great.
Thank you.
It's great background and certainly,you know, aligns with a lot of what we've
heard from others on the podcastabout just how they got into healthcare,
because it meant something personalto them and they felt a calling to it.
Scott, how about yourself?
(23:11):
Well, thanks, Chad.
I, too, am a Wisconsin native.
I've worked, long, stretchmy career in the South,
and so I mix a little bit of Fargoand a little bit of y’all.
It's hard to throw the accent off,but I got into,
a traditional accounting, finance,
by education or educational pedigree.
(23:32):
Got into the business through a startup company.
So my first venture was disease managementin the 90s,
when we would call people on the telephoneto check in on them versus
all the cool digital apps and internet, at the time when that came later.
And so that was my intro.
I had a long history with family and, kind of seeing,
(23:55):
I'll say, healthcare firsthand, butI'd say it was the business side of that
first company that that took meeventually to consulting and auditing,
where I did all healthcareand got a good chance to see a
lot of different facilities and structuresand setups throughout the southeast.
And so, largelyI was stationed North Carolina,
but worked throughout SouthCarolina, Virginia, Tennessee and Florida.
(24:16):
And so some of that work entailedpost-acute providers.
A lot of it was health system, a lot of itwas medical groups and insurance plans.
And so I'd say I got a chance to seeevery facet during that period of time.
There was buying of medical groups.
There was selling of medical groups.
There was buying of health plans,there was selling of health plans.
So, it also was a view on strategy.
(24:36):
What did the industry
think they could do with risk enter it,vertical integration or not.
And so I got a sideline seat of that,at least as a consultant.
Eventually I needed to get off the roadand so that got me into my career
in academic medicine.
So I've worked at Duke UniversityHealth System.
I've worked at Universityof Florida Shands,
(24:59):
and now the last 13 years with Davidat Froedtert.
So it's been a fun journey.
All the things that brought me backto Wisconsin
were what David mentioned,kind of a very focused strategy on growth
and risk, which I'm
sure will be part of the conversationtoday, too.
You know, Scott, what I really appreciateabout your background, particularly
(25:20):
the consulting piece, when I think abouthow that applies to the role that you're
in, that expertise that you gathered, thatlook into the different components
that start to put together, that look likewhat the combined system is,
probablyhas been an incredibly big leg up.
I agree with that.
And, you know, a lot of timeswhen you bring in a consultant,
that's in a case where it didn't work.
And so hopefully there'ssome amount of lessons learned.
(25:42):
Whether it was a strategic,you know, gap, in thinking
or operational execution.
And so, yeah, I try to remember those.
Would you
please tell us a little bitabout Froedtert ThedaCare,
just kind of the system in general,and then how it came together?
I'll go ahead and start and Scott,you jump in at any point.
(26:03):
So, we are the largest Wisconsin-basedhealth system now.
18 hospitals, really kind of covered
almost the entire easternhalf of the state of Wisconsin.
And as far as how we came together,
and ever since I came to Froedtert,I kind of had this map,
(26:24):
a map I'd show with our, sharewith our board of directors and had kinda
every health system that we thoughtwas one that we wanted to work with.
I don't want to say target.
It wasn't a target.
But you know, health systemsthat were kind of built like us, you know,
nonprofit, high quality, and ThedaCarewas always at the top of the list.
(26:45):
But, you know, fiercely independent.
And so it was about,I'll say it was about five years ago.
You know, I think I'd been stalking them.
I remember Cathy Jacobson,our CEO at the time, had said, boy,
guess who just called me out of the blue?
The CEO at ThedaCare.
I said, oh, Cathy,that was not out of the blue.
(27:05):
That was not out of the blue at all.
But, we had kind of a common story.
And that is,
ThedaCare very much wanted to have,
you know, hard physical assets,a hospital in Oshkosh, Wisconsin.
And so just north of us.
We had the same exact story,but it was in a different community,
(27:26):
Fond du Lac, Wisconsin,just a little bit south of Oshkosh.
And so we had this thing in common,that is, we had attempted
to work with the providersthat were in that market.
They weren't interested, but the marketswere too important to both of us.
And so we said, you know what?
We should build two hospitalsand we should build them together
(27:47):
and do it as, what we agreed to dois as a joint venture.
We've had a very successful
micro hospital strategyin the Milwaukee market.
And so that's what we kind of said.Well, yeah, that makes sense.
Let's do it together.
And if we like each other,maybe we’ll do more together.
So, like I saidthat was about five years ago.
(28:08):
And really that process of planningthose two small hospitals,
what that would look like,it just did it really kind
of put us in a situation where we got toknow each other a lot better.
But thenI think we started seeing the market move.
You know, there was another health systemin Wisconsin.
Bellin and Gundersen.
(28:30):
They decided to get together.
And then you hadthe Aurora-Advocate-Atrium
kind of happenedwhile we were all meeting.
And we said, guys, the market's moving.
If we're going to get together,we should do this now.
And so I think that'swhere everyone was really surprised.
We, you know, announced our joint venture.
That was April, I think Scottor you know, somewhere in that timeframe
(28:53):
and in about eight months, we kind of cametogether as a single entity.
And I think what probably
helped us facilitatethat is, you know, before
we even announced our letter of intent,we kind of had governance figured out.
We had senior leadership figured out.
I mean, and those are the two big thingsthat, you know, sometimes will derail,
(29:15):
you know, combination.
Anything else to add, Scott?
Well, I would just, I'll talk a little bitabout all of our capabilities.
David does such a good jobkind of describing,
you know, the recent historyand so I'll put it in context, because
I do think maybe some of this conversationwill morph into scale.
(29:35):
What are the benefits?
What is the rationale?
And so, what I would say is broadly
we were, David cued it up,we were two strong systems.
What I would say
is very regionally focused, in the state
we call it the coast or we're,we're on the coast of Lake Michigan.
Along the east side.
And when together,we feel like we are, you know, approaching
(29:58):
kind of that super regional status,but single state,
which we think is importantand we'll get we'll get more into that.
But it's probably more aboutthe collection of what we're capable of.
We think we have, along this geography,
a really compelling,comprehensive solution for the community.
And so David mentioned
kind of the number of hospitalswe've got a relationship with.
(30:21):
I'll call with 3,400 providers.
I say relationshipbecause some of that we've got experience
with some being employed.
We've got experiencewith the Medical College
of Wisconsin and affiliation structurewith an academic.
We've got experience with folkswho want to be independent.
And, how we can work with them.
And so, I think just the skill set to workwith all the different types
(30:43):
of structures,
we’ve shown that within what I'll callis kind of a super-regional structure.
We've got 370 sites of care.
So that clearly is an ambulatory strategy.
Some of those high-acuity, I'm going tocall them high-acuity outpatient centers.
Some of them neighborhood hospitalsthat David mentioned all the way up
to, you know, large communityand academic medical centers.
(31:04):
So we really have the acute
spectrum, ambulatoryspectrum, different models covered.
You know, you get into those 1,600 beds,
8,600 discharges, 22,000 employees.
And so that kind of scaleand role in a community,
you have 7 billion of revenue.
What we have, what we talk about, atthe same time is a health plan strategy.
(31:28):
I mentioned risk earlier, but
included in that,just two months before Froedtert
and ThedaCare came together,so in November of 2023,
we acquired the remaining 50% of a networkhealth plan.
So now we are, this comprehensive careincludes,
100 and almost 70,000 member,health plan, predominantly Medicare
(31:50):
Advantage licenses out Medicaid livesthat aren't included
in that number as a commercial program,as an ACA coverage line.
Included in that is a TPA, a growing TPA,or strategy for self-funded.
So when I'm when I kick this offby saying comprehensive
from insurance and self-funded vehiclesall the way to academic,
(32:12):
community, ambulatory settings,we work with physicians.
We think we have a really compelling, kind of super regional play.
Scott, when you describewhat the two organizations had,
certainly having spent some timewith you and Cathy
when she was CEO at Froedtert,and then knowing a little bit
(32:32):
about ThedaCare from my timeat HFMA, for me, when I saw the press
release of the two organizationscoming together,
at least at the surface level,it made sense to me.
And then, as you've described,it certainly makes a lot more sense.
When you think about the opportunitiesthat the combined system creates
for patients and communities,what can the two organizations
(32:53):
do together specifically that you couldn'tdo as independent systems?
I'll start.
Scott, you please add.
But, no, I think what we really nowhave is capability
in rural Wisconsin as well, thatthat was not really something that was in
Froedtert’s wheelhouse at the time.
I think the other thing is that,
and the other assetthat we probably don't talk so much
(33:15):
about is our relationshipwith the medical college.
Over half of the physiciansthat practice in Wisconsin have somehow
been, you know, educated or produced,at the Medical College of Wisconsin.
So, we have this ability to run
a very tight, you know,
health network that kind of can do A to Z.
(33:38):
I mean, you know, some of the highest-endstuff that happens,
you know, in Wisconsin is on our campus
and how we impact,you know, small, rural Wisconsin.
And I'm glad thatScott touched on the health plan, too,
because I think that that doesn'tnecessarily get all the headlines.
But, its growth potential is justenormous, especially up in the Fox Valley,
(34:00):
because ThedaCare had not beenthe provider network for almost a decade.
And so it's just had explosive growth.
So, I think those, it's all those piecesthat kind of fit
together, that really kind of powerwhat we can do as a system.
Yeah,maybe a couple pieces to add to that.
I will get into talking about culture,but one of the elements,
(34:22):
that was consistent acrossthe systems was the spirit of innovation
transformation,a boil that down to digital,
each kind of pursuing digital strategyand so forth.
And so,you know, when you ask, Chad, kind of
what are some of the benefitsor early opportunities,
it's putting those two innovationvehicles and cultures together.
(34:44):
And so we foundthere is a fair amount of overlap.
And it was another way we crossed overand that their team frequently was
there is a little bit of overlap
and digital pursuits companiesthat we were working with.
And then for those that didn't overlap,you know, it really inspired,
I'll say, the teamto dig in deeper on benefit realization,
(35:05):
ability to implement more broadly.
And so I'd say that innovation spiritis probably one item that came together.
I think David nailed it with the MedicalCollege of Wisconsin and subspecialty.
I'll add to that.
There'sprobably some capabilities in the South
or in the legacy Froedtert marketaround pharmacy and lab as examples,
(35:26):
specialty pharma capabilities, mail orderpharmacy capabilities, outreach lab
capabilities, esoteric labtesting capabilities that can now
be delivered more broadly to the communityand expanded across the geography.
So that's an example.
And then, Chad, I think you,and particularly HFMA and the modern
(35:46):
healthcares of the world knew ThedaCarewell from its lean mindset,
it's kind of cultural focus on driving
excellence, driving out zero defects.
That’s a great element.
I'd like to say that that was consistent,I'll say across the systems.
But Theda’s long pursuit and history in it
(36:06):
brought a lot of talent,a lot of experience to build off.
There is probably early wins in the ACO
CIN structures and capabilitiesand results and performance.
So all those culturally usea lot of alignment about driving forward.
Sounds like a lot of opportunities–one,to preserve access, expand access
with the innovative digital technologies,expand access in new ways,
(36:28):
and then with alignmentwith the health plan
and the broad physician networkin the work that you've done in pop health
to really get crisp around managing
total cost of care and really offera more compelling insurance product.
When you, we've touched on ita couple of times, and I certainly thought
David's comment earlier was interesting,or the comment earlier was interesting,
that even before conversationsstarted around the integration,
(36:50):
you guys had a pretty good sense
as to who was going to sit in what chairsfrom a leadership standpoint.
And I think that really doesspeak to cultural alignment.
So can you talk a little bit more abouthow important that was in the discussions,
and sort of how you guys sort ofsussed out culture or cultural fit?
Well, I'll start
I think that, we had so much in commonright from the very beginning.
(37:11):
I mean, we were both, you know,very financially secure, you know, so,
there wasn't a driving reasonthat one of us was coming in weaker.
Both very high quality.
I think the one thing that I thinkprobably surprised a lot of people
on the Froedtert side was, that Cathy Jacobson was willing to retire.
(37:33):
Now, Scott and I had worked with Cathyfor a very long time.
She was always going to retire young.
That was her mantra.
And so it wasn't a big give on her part.
I think that she was excited about it.
And I think, you know, being able to kindof, have ThedaCare kind of be
one of her lastbig successes was important to her.
(37:53):
So, like I said, that
really kind of helped that we were ableto kind of know the leadership structure.
We kind of announced at the very beginninga lot of, like,
the senior leaders that were goingto stay with the organization.
So you had kind of this sense of, boy,this is going to come together.
I think the other thing that, I'll saymaybe a little bit surprised,
(38:17):
but it's been verygood is our new health system board.
They have bonded so quickly.
I mean, you never hear themtalk about the north, the south.
They very much view themselvesas one system of governance.
And so I think those things allowed usto kind of put,
you know, at least put thedeal together very quickly.
(38:39):
Integration,that's another part of the story
because there's always so much to dothere.
Yeah.
I'll build a minute offwhat David mentioned that we founded
a GPO supply chain structure together.
That goes back probably 15 plus years.
We formed, I'm going to call it, an ACO
(39:01):
together beforeACO was a formal definition and a thing.
And it was really aroundhow can a couple systems work together
around the stateto drive value to employers.
And so there is a long history,probably all rooted,
cheering for the Packersis probably an element of this, but
all rooted largely around qualityand experience.
Learning that the cultures werea lot of like is probably 10 to 15 years
(39:24):
in the making through
all these little things of workingtogether that David mentioned.
That sort of long experiencethat you mentioned probably does help.
And it also,
you know,
I like the factthat both of the organizations
were so community
focused and really coming togetherfor those reasons, I think maybe helped
get prioritiesstraight in their set first.
(39:44):
During the exploration of a partnershipbetween equals, there are typically
significant synergies that underpinthe logic between integration.
However, once
the partnership is formalized, it'snot uncommon for organizations to fail
to realize many of the opportunitiesthat drive deal logic.
So, what's the process, or the framework,that you put into place to support
(40:04):
disciplined execution,to capture the intended synergies?
I can jump in there at first,and I want on that one.
David,I would say a couple things on that.
We did start pre-combinationwith outside assistance.
So, David mentioned before the relationship grew very quickly.
(40:25):
And we
had outsidehelp in thinking about that relationship
and the governanceand the leadership that David mentioned.
And then when it got to that stagein April of 2023 for an LOI and, kind of,
to move the relationship to the next step,we knew we wanted to move quickly.
And so we got, you know, additional,I’ll say, outside assistance
(40:46):
to come in with that combination
and specifically to your point,Chad, integration assistance.
What were the success measures?
What is,what are we going to tell the community
that we are aimingfor as a result of this combination?
What came out of that workis the need to document
and show I'm going to call itsynergies, or value opportunities,
(41:10):
but not because that was the thingbringing us together.
So this was not a back officeconsolidation.
This was led by what we think we can bringto the community being together.
And we touched on a lot of thatkind of early on, that cape,
that comprehensive care.
And I'll say seamlessprovision of care across the geography.
(41:33):
But we also hold ourselves to a standardthat this kind of scale
should drive savings.So we got that outside help.
Upon closing, we've kind of launcheddoing that ourselves.
So we are, I'm gonna call it 18 months.
And what I would say iswe've been very intentional or methodical
around continuing to grow market share,continue to drive the quality profile.
(41:54):
Our top decile performance continueto drive and improve patient experience.
And being methodical on how we tackle,
I'll say the expensebase and growth opportunities.
So that I think in your question,you've said the words disciplined
execution, that we can continueto live up to that legacy.
And so, we haven't made headlines
(42:16):
by big, bold expense changesbecause first and foremost,
we are continuing to kind of deliveron the performance.
And, I'll say doingkind of bringing effectiveness of scale
as it relates to what we purchaseand how we deploy assets.
I think that
approach makes sensealso because you want to, given
(42:37):
the unique nature of the cultureand the fact that that's the secret sauce,
you don't want to do anything bigthat would also upset that in the process.
And to your point, it's not a turnaround
situation for either organization whereyou need to make those big, bold moves
so you can be a little more thoughtfulabout how you capture those synergies.
What's one challenge that you encounteredduring the cultural transformation
(43:00):
process that you either didn't anticipateor fully appreciate at the outset?
I'll start.
You know, because we've had successfinancially,
we've had success with quality.
We haven't had a burning platformthat we really need
to change anything.
And so I still think there are more
(43:22):
opportunitieson our integration path that,
I don't know,I'm one that I would like to go faster.
You know, I think, you know,I'd like to get to one epic platform.
You know, we just, we
don't have anything that is,
you know, creating this burning platformthat says we've got to change immediately.
And I think soas a result, some of our employees,
(43:46):
some of our leadership is like,well, what's changing?
Nothing's really changed that much.
And I shouldn't say nothing.
But, you know, we're tryingbe very deliberate.
I sometimes wishwe had a burning platform.
I think really well said by David.
You know, the good news
that we just talked aboutis we are so laser-focused on performing.
The flip side of that is,because we have done that,
(44:09):
we've been successful at that,there's not a burning platform to point to
that can corral or be a targetto look at for 22,000 people.
So, you know, being great at communicationand keeping the why
and the success measuresin front of people becomes the job.
And so I think David nailed it.
The other thingand maybe the eye opener to me,
(44:31):
and some of it is
timing, is the regulatory chaos,can I say, or the,
all the potential regulatory discussionsor what it may be and what gets passed
or what doesn't get passed.
The impact it has, in different regions,
in a critical access hospitalsetting versus a community hospital
(44:52):
setting versus ambulatoryand physician groups,
whether they be independentor affiliated up to the academic,
right?
There's a little something in the regulatory discussions that impacts all of them.
And the speed
at which we, even if many of themwere on the radar, for many years,
the speed at which we need to estimatethem, develop
mitigating plans for them, to the degreewe think they're going to happen,
(45:15):
how we synergize and work collectivelyto help solve
rural versus urban versus academiccommunity versus ambulatory issues,
you know, is a level of coordinationvery early on, you know,
within the first 18 months of integration,that was a little bit of an eye opener
just in terms of being ready for thatand being able
to provide the service to operatorsand support to operators
(45:36):
to adjust to an environmentthat's pretty fluid.
So I think if you needed a burningplatform, that's maybe
the one you can point to of saying,this is why scale is important.
It's why talent is important.
To be able to adjustwhen things like that happen.
As youreflect on the last 18 to 24 months,
what's one thing that you might have donedifferently?
(45:58):
A couple things come to mind.
I wish we would have kind of figured out,
more quickly,what our IT strategy was going to be.
I think we have a decision around it now.
But boy,
the lead time on some of those changes,which is gonna help our integration.
It's years to get to, let's say,get to a common
EMR platform and get that.
(46:21):
That's probably one of the thingsthat will help us integrate
care across the entire enterprisethe quickest.
So getting to a decision has been,I think, one thing that has been
a bit of a surprise that it's takena little longer on some things.
I'll add one to that listbecause we're getting to it now.
And so I feel so good about itnow, you know, I'll play Monday morning
(46:42):
quarterback and say, boy, on day one,this would have been great too.
And, we've talked a lot about how these were
two legacy, ambitious,you know, high-performing systems
that a lot of times, and it's truein this case, leads
to annual goals, long-term goalsthat are pretty long.
So this concept of say yes to everything,do everything.
(47:03):
Get it in tomorrow.
It's probablya little piece of each of our legacies.
These were two ambitious organizations
that would have a very thoroughannual plan.
Now, you come into an integration,and integration starts
to take up a chunk of that annual plan,but you don't slow down.
So you have your, quoteunquote, “normal” hundred things
(47:25):
you wanted to do, and then you addintegration on top of that.
And so my point, or my opportunity,is that I could have been smarter,
in terms of being a strong advocatefor focus,
knowing the amount of time, talenttime, team time,
communication time, how do you perfect a communication message
(47:46):
when you're going through an integration?
That the idea that one of the things onday one we came out with is saying, hey,
it's importantfor us to keep up performance,
but we're gonna, as part of that, we'regoing to shrink the number of tactics.
We're going to focus on a big threeas an example,
that that was somethingwe probably we're doing it now.
But you knowwhat would have the effects of that been
(48:08):
if we'd have done it a year agofor sake of argument.
Sort of temporarily set asidesome of the day-to-day work just to focus
more crisply on the integration,to put the resources there.
Kind of slowing down to speed up,if you will.
What's one thing that you wouldn't changeas you reflect
back on the last 18 monthsthat you think you got absolutely right?
(48:30):
I think the governance piecewith the board is that I said
that has been a bit of a surprisehow well they get along.
You know, they keep us honest.
They make us work hard.
But, they just so quickly, immediatelysaid, no,
we are one board for one enterprise.
They never talk about north versus southand whereas I would say,
(48:52):
you know, I think our staff,they still kind of feel like, boy,
you know, all of my work is in the South.
They're all my works in the North.
So I do think we really got governanceright.
I think David nailed it.
If you think of our timingand coming together in January 2024,
I remember again two months prior tothat was network health plan.
You have a board,
(49:14):
some constitution of a new boardthat had to drink from a firehose.
What does it mean to own a healthplan fully?
What's going on on the Medicare Advantageside of the business,
a membership side of the business,because that
that industryhas some things going on too.
What does integrationlook like for these two systems?
How are you going to decide managementteams integration?
How are we going to keep performance?
(49:35):
And in about 4 or 5 monthsyour second meeting of a new board,
you're approving a budget,
a $7 billion budget, a bigger budgetthan any of the legacy boards, you know,
had to contemplate before, and capitalspend associated with that and so forth.
And so I think David nailed it.
The governance, collegiality,the orientation that went in,
(49:58):
in teaching members about ambulatory,acute, academic, community, rural,
academic affiliation agreements,
the amount of orientation trainingthat went in that it's
that people are comfortable enoughto make votes, have discussions.
We have a high participation governance.
You know, you can maybe say a word or twoand then you're getting questions,
(50:21):
which is theI think the exactly how you want
kind of the DNA to go,in terms of positive feedback.
So I think David nailed that one.
So it sounds like
one of the things that helpedbring everything together
was the investment in additional boardeducation, so that everybody could speak
the same language, same page,and really understand
the issues that were being debatedor discussed at the at the meeting.
That's great.
(50:41):
What advice do you have for other leaders
navigating the integration process?
Well, I think the one thingthat we think about a lot is
we will probably do this again.
I mean, I think that we're stillseeing healthcare consolidate.
I think there's goingto be more consolidation in Wisconsin.
And so we have to kind of put processesin place that we don't have to kind of
(51:03):
reinvent everything the next timesomething like this would happen.
And I think the good news for usis because of, now, of our size and scale,
we're probably in a position to saythis is how we do things.
Whereas, you know,as ThedaCare and Froedtert came together,
we kind of wanted the best of both.
And this is somethingI think our board pushes us on too is,
(51:26):
you know,you got to get this integration right,
and you have to have processesthat can be repeated.
David's is really well said.
I would frame it too as, get
the success measures pre-close.
Get the success measures right
and then diligently hang on to thosefor the appropriate amount of time.
(51:49):
You know through this new integration,new relationship, new culture period.
Whether
it's access, whether it's qualityand experience,
wherever growth isand I'll say financial stability
or performance ismake sure you get those right.
Communicate them to all the people.
Have a compelling reasonwhy that moves the community forward.
(52:11):
The employers, some of the social determinant things
that we are trying to accomplish in termsof global community health or population
health, put them at the forefront,put them out in front of people,
be aspirational about theoretically,we came together for a reason.
And that's a bold movementand moving those things forward
and make sure all your messagesare tied to that.
(52:32):
The reason I say that is
there's going to be lessons learned.
We're going to go too fast or tooslow. We're going to make a mistake.
We're going to secondguess the IT platform, whatever it may be.
And I think always pointingto the success measures
and whether you're advancing
and moving them forward,even if incrementally at time versus
falling back on them, provides the focuswhen there are hard decisions to be made.
(52:56):
Operating model or design,moving someone's cheese, you know, here’s
the rationale on why we're doing it,I think is, it can be a calming,
a stable target to keep people's eyes on.
Scott, David,I appreciate the perspective on that.
And it's certainly aligned with some workthat I did HFMA when we were looking at
(53:18):
what the characteristics of organizationsthat were better at integrating
were versus those that maybe weren't.
And that was one of the thingsthat we learned from that work was that,
to your point, have the list of measuresaround quality, access, cost,
and then, you know,not only build the work plan
for the integration around that,but keep that as part of the messaging
and make sure to your point,understand the why behind it.
(53:38):
So it becomes somethingthat can bring people together.
As you think about this process,would be interested
in hearing from both of you
what your proudest moments are as youreflect back on what you've accomplished
thus far, also understandingthat there's more to be done.
But you know, as you look back,
what were the wins have been thatyou're that you really feel good about?
(53:59):
I’ll cue one up for you first, Davidand see what you think.
I am most proud of the energy,attention, focus response
to, prioritywe have been consistent about in the LOI
and then and then even louderpost-combination and that is access.
The conversations we've had about access,and you framed it
(54:21):
as maybe accomplished, Chad.
And what I'd say isit's still a journey for us, but
the amount of time, energy,focus and commitment we have
from all corners of the organizationaround access being quality, access
being populationhealth, access being good economically,
good from a patient satisfaction,
(54:42):
access being what we have to be good at.
I have never seen the engagement on thatand it could be left
without being seen ED.
It's clearly around
primary care access and specialty accessand what we can do virtually.
You’re right, access goes everywhere.
But the idea that it ispart of every conversation we have,
(55:02):
I think, you know, that there's
overwhelming satisfaction and drive to saywe are focused on the right thing.
Yeah. No, Scott is absolutely right.
I think that, you know,we've just launched, kind of,
our new missionvision principles, you know?
What is going to be our strategic planfor the next five years?
(55:24):
And boy, we have never been more kind of,you know, laser focused on,
you know, we've got three success measuresand that's what we're going to focus on.
And access is one of them.
I think the challenge is going to bewe're used to wanting to do everything.
The challenge is going to bewhat stuff are we going to stop doing?
And I do,
I think that's going to be a big effort
(55:45):
because peoplewant to keep on doing everything.
And I think that if the work effortthat they're doing doesn't kind of account
for the three success measures,then that's the stuff that you stop doing.
David, Scott,thanks again for joining us today
and sharing your experiencewith our listeners.
And thank you to our listenersfor tuning in.
If you'd like to learn moreabout Froedtert ThedaCare's
(56:07):
integration journey, we have a linkto related content in the show notes.
I hope you'll join me again in two weeksfor the next episode of Achieving Health.
You can follow
Achieving Healthon your favorite podcast platform or visit
forvismazars.us/AchievingHealthPodcastto learn more.
New episodes are released the firstand third Wednesday of each month.
(56:31):
Achieving Health is produced by ForvisMazars LLP, an independent member
of Forvis Mazars Global, a leading globalprofessional services network.
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the firm's 7,000 dedicated team membersprovide an Unmatched Client Experience
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(56:53):
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The information set forth in this podcastcontains the analysis and conclusions
of the panelistsbased upon his, her or their research
and analysis of industryinformation and legal authorities.
Such analysis and conclusionsshould not be deemed
opinions or conclusions by Forvis Mazarsor the panelists
(57:15):
as to any individual situationas situations are fact specific.
The listener should performtheir own analysis
and form their own conclusionsregarding any specific situation.
Further, the panelists’ conclusionsmay be revised without notice,
with or without changes in industryinformation and legal authorities.
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