EP460: Rushika Fernandopulle, MD’s Theory of Change Starts With Status Quo Healthcare

Episode Transcript
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Stacey Richter (00:00):
Episode 460.
"Rushika Fernandopulle MD's Theory ofChange Starts With Status Quo Healthcare."
Today, I speak with Dr.
Rushika Fernandopulle.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.

(00:25):
Relentlessly Seeking Value.
This is one of those episodes wherewe consider top line strategic
imperatives and key drivers.
I thought there was no betterperson to do this with than Dr.
Rushika Fernandopulle, who Incase you were unaware, was the
founder of Iora Health, an advancedprimary care group that was sold

(00:46):
to One Medical and then to Amazon.
Listen to the show with Brian Klepperentitled, "Why is Private Equity
Willing to Pay $55,000 Per Patient?"
for more on that dynamic.
It is not what we talk about today.
In fact, we talk about almost the oppositeof this $55,000 per patient today.
This is a conversation about actuallygetting patients great care, great health,

(01:08):
great experiences at an affordable price.
We talk about how to actually getAmericans care that keeps them healthy.
And the reason I set mysights on getting Dr.
Fernandopulle on the pod to talkabout this is something I heard Dr.
Kenny Cole, who Iinterviewed in episode 431.
But something that Dr.
Kenny Cole told me, that Dr.
Fernandopulle said during aconversation that the two of them

(01:31):
had, the gist of it is this.
There's a lot of innovativestuff that's going on at this
point, kind of around the edges.
But if we want to impact the care of99 percent of Americans, we have to
impact those in the mix who are caringor paying for the care that 99 percent
of Americans are currently getting.
And that is the status quocohort of hospitals and carriers.
This is exactly also why I am a hugecheerleader of anybody who works

(01:54):
at a big jumbo, anybody who choosesto recognize the downstream impact
of their company and of their ownwork and tries to tweak said impact.
Because as I said in that personalcharter show at the end of 2024,
when there's millions and millions ofpatients or members on the spreadsheet,
switching up any given vector, what,.05 percent will have a macro impact

(02:16):
Dr.
Rushika Fernandopulle says, If you'regoing to change anything, you've
got to have a theory of change.
He has a four prong theory thatI'm going to run through right now.
And because I can't leave well enoughalone, I plucked one more prong from our
conversation and stuck it on the end.
So this show covers a fiveprong theory of change.

(02:36):
Here's the sum up of these five prongs.
Prong one.
New payment models.
We have to have payment redesignif we want actual, real change to
happen, such as getting advancedprimary care for all Americans.
Small detail of note, to actuallyget real payment design, my
eyebrows went up when I heard Dr.
Fernandopulle say the same thing I hadjust heard Lisa Wetherby from Trinsic

(02:58):
say at a recent Thinc Conference.
And it's also the same thingthat Cora Opsahl and Claire
Brockbank from 32BJ said.
And when I say they all said this, I mean,they all said this in a formidable way.
They said, You walk into the doorof the carrier, whether you're a
plan sponsor or you are a clinicalorganization, you walk into the door
of the carrier with your own paper.

(03:20):
You bring your own contract andyou start from your own contract.
Do not take theirs andtry to hack away at it.
This will not result inchanging the payment model.
And unless the payment model ischanged, it's really hard, it makes
it much more difficult to do the rest.
Prong two, change the process andinnovate a new clinical model.
It's all about teams, real teams,navigators, behavioral health, social

(03:43):
work on that team, physical therapists,nutrition, population health, inside
of the practice and all that data.
It definitely takes a village.
Care has to be proactive, not reactive.
Can't wait for somebody to showup when they are already in an
acute situation because then wecannot prevent the acute situation.
Of course, all of this is easier saidthan done, but thinking hard about

(04:04):
all of this is the second prong in Dr.
Fernandopulle's theory of change.
Here's prong three, a differentset of technology tools that are
relational, not transactional.
Dr.
Scott Conard is going to talk aboutthis also in an upcoming show, the
whole imperative to be relational.
And aligning infrastructure and tech andhow data is used around that relationship.

(04:25):
Dr.
Tom Lee talked about thatalso in a recent show.
All of these links are inthe show notes, by the way.
Problem four, change the culture.
Doctors have to be on boardand want to work on a team.
And then that team has to be competentand take ownership and accountability.
There's so much cynicism, and rightfullyso, where doctors have been told, you

(04:45):
know, go ahead and leave your shift.
There's a team that's going to helpout and keep patients in good shape.
And so often that has turnedout to be a false promise.
And so team based care andworking at the top of your license
basically became synonyms forcutting costs to maximize profits.
So yeah, we have to reset on thatin such a way that doctors really
want to be part of the change.

(05:05):
Prong five.
Again, I'm adding this one to the end.
This prong five gets discussed, butit kind of came out organically.
It wasn't part of Rushika's original list.
Make collective action,collaboration, happen.
That's prong five.
Think about creatinglong term partnerships.
If there's a giant beast of a marketpower in any given market, ganging

(05:26):
up together is a strategy with alot of historical success to combat
that giant beast of a market power.
To this end, and I've said this severaltimes in several recent podcasts,
including the Thanksgiving show, Butin that Trilliant report and also in a
recent Advisory Board podcast, as wellas a bunch of other articles I've read, I
keep hearing over and over and over againthat organizations who are good at forming

(05:50):
payer provider partnerships and or plansponsor provider partnerships and or plan
sponsors ganging up together and or othertypes of partnerships, have a very big
competitive advantage over those who arefighting tooth and nail with each other or
trying to do stuff all by their lonesome.
So that's prong five.
And with that, here'sthe conversation with Dr.

(06:11):
Rushika Fernandopulle.
My name is Stacey Richter and this podcastis sponsored by Aventria Health Group.
Dr.
Rushika Fernandopulle, welcometo Relentless Health Value.

Rushika Fernadopulle (06:20):
Thank you.
It's so great to be here.

It is such a pleasure and an honor to have you here today.
So before we kick into our conversation,which I'm super looking forward to
having with you, do you want to justgive the briefest of backgrounds?
I'm sure a lot of our listenersare incredibly familiar with your
work, but do you want to just givea little bit of background on how
you came to be where you are today?

Sure.
So I'm a primary care doctor and about20 years ago, I realized that the
model we have to deliver care is, isnot just a little bad, but it's awful.
That, that kind of secret, by the way,it's awful experience for the patient.
It's an awful experience for the doctor.
Our outcomes are embarrassing.
The costs are too high, et cetera.
My sort of crazy insight wasmaybe it's rotten to the core

(07:00):
and we have to start over.
So again, 20 years ago.
Set out on this journey to say, whatif we started over, rebuild healthcare
from the bottom up and the rightplace to start with primary care?
And what if you had a differentpayment model and a different
process and used different technologyand built a different culture?
So that set out on a 20 year journey,started with a little primary care
practice in Arlington, Massachusetts.

(07:21):
I eventually started working with someemployers, got some publicity, were able
to raise some venture capital money,starting in 2011, built a company called
Iora Health, we ended up selling to OneMedical, and then we sold the combined
company to Amazon, and I decided at theend of that I didn't really want to work
for Amazon, and so I left and I've beentaking a little time off since then.

So speaking of the background and experience
that you have building a companylike Iora, advanced primary care,
helping patients in a very deep way.
I understand, a little bird told me, thatyou were having a conversation with Dr.
Kenny Cole from Ochsner.

(08:02):
Do you want to recap what was the, whathappened in that conversation with Dr.
Kenny Cole?

Yeah, so, so Kenny's a good friend.
We've known each otherfor many, many years.
And there's always been a tension, Ithink, between what I call the disruptors
of the existing healthcare system.
And the conversation was, you know,people like us at Iora, and I would add
other folks, Oak Street, and ChenMed,and One Medical, who are disruptors.
They decided outside of the healthcaresystem, exisiting healthcare system,

(08:28):
let's actually build new modelsand break what people think are the
rules, and we've been able to showmuch better outcomes at lower costs.
But the problem is that you add up thenumber of people that we all serve.
You're lucky to get a single, a verylow single digit percentage of the U.
S.
population.
And the conversation with Kenny is,this was almost certainly the right

(08:50):
first step to show that it can be done.
But if we really want to change healthcarein this country, we have to figure out a
way for the big guys, the health systemswho have the 99 percent of the patients
to be able to, you know, do what wedid, learn from us and actually do it.
And I think that's the next challengefor the industry is how do we go from

(09:10):
this small number of disruptors to, uh,sort of really taking this to scale.
And I think that route has to gothrough the existing delivery model.

You have a bunch of disruptors.
If you add up the total impact, I mean,not on a per patient basis, because you
may have had and probably did have alot of impact on individual lives there.
But if you're thinking about thisrelative to the entire United States of
America, the number of patients impactedis low single digits, as you said.
So the point that you're making is,okay, consider the disruptors maybe

(09:42):
a bit of a skunkworks, if you will,or a bit of a proof of concept.
If we want to legitimately, for real, inthe biggest possible way, have the biggest
possible impact somehow or another, weneed to figure out how to gain adoption
on a much larger scale of some of theideas that have been operationalized and

(10:08):
proven to actually make a difference.
Like the rest of the industry has topick up what we were putting down here.
Did I get that right?

Rushika Fernadopulle: Yes, that's exactly right. (10:15):
undefined

Okay.
So easy enough.
We chuckle.
But what do you think thekey challenges are there in?
Right, like if you just had, and I canthink of like 90 off the top of my head,
so I guess I'm asking you to prioritize.

A bunch of things.
So, so point one is, we needto have new payment models.
So I think one of the lessons we havelearned is that trying to innovate
the care model in the absence ofpayment redesign is a waste of time.
There was this whole effort calledMedical Homes that happened 10ish years
ago, where they sort of had these newmodels and gave people grants, but they

(10:55):
didn't change the fundamental paymentmodel, and people were still paid to
keep people sick, to be quite honest.
So if you don't change that, thesecond the grant runs out, the champion
leaves, people stop paying attention,it goes back to the way it was.
So point one is you have tohave different payment models.
What's interesting is we decidedthat that was an active statement,
not a passive statement.
So in every other industry in the world, Ithink, the people who deliver the good or

(11:19):
service decide how they want to get paid.
And they tell the buyers, doyou want to buy it this way?
You know, I open a restaurant.
I say, I'm selling the à la carte.
You're like, no, I want all you can eat.
You're like, that's not what we do.
Go somewhere else if you want a buffet.
But in healthcare, the payers sort ofsay, this is how we're going to pay you.
And we say, thank you,sir, may I have another.
Right?
But if a little guy like us could go topayers and say, look, I don't want to get

(11:41):
paid fee for service because it won't letme do the job that I took an oath to do.
So I'm not going to take it.
This is how we need to get paid.
When and if you're ready to pay usthis way, we're happy to work with you.
If we could do this, imagineif a big health system had the
guts or the courage to do that.
Again, I think they don't.
The point one is you haveto change the payment model.

So let me just interrupt right there and then
we'll move on to number two.
It's really interesting what you're sayingand I'm reminded, I was at a conference
myself the other day, uh, Thinc360,and I'm reminded of this because I was
listening to Lisa Wetherby from, she'sthe CEO over at Trinsic, which is an ACO.

(12:21):
Similarly to the show with , uh,Claire Brockbank's, where 32BJ is
like, look, have your own paper.
You walk in the door to a carrier andyou get them to sign your contract.
You don't take theirsand then try to edit it.
Lisa Wetherby she was actuallysaying the same thing from
the standpoint of an ACO.
She's like, I walk in the door withmy own contract and I tell them if

(12:44):
they want to work with me, they signmy contract as opposed to, again, the
other way around, which I think isexactly what you're saying and kind of
floored me a little bit, I have to say.

And like I said, it's how virtually every
other business in the world works.
I don't know why we've gotten thisplace in healthcare where we have
people who actually deliver the service.
That providers, you know, justtake whatever we're given.

Yeah, because I could see absolutely how exactly the same
rules apply as the employers, you know,the plan sponsors are saying, which
is you take somebody else's contractnow all of a sudden you are playing
by somebody else's rules that mayactually not be good for either party.
Because they don'tunderstand your business.

But this is really important.
If you don't get the payment, you willnot be able to do anything the rest of it.
Point two is you haveto change the process.
That what we and other people whoare disruptors learned is that
if your goal is not, remember thegoal of the current fee for service
system is do more stuff to people.
And in some ways you perverselydon't want to make them better

(13:47):
because you get paid less.
And there are all sorts of examplesof people who create these great
programs to keep people out of thehospital and the ER and they get fired
because they lose revenue and income.
But if you install all of this andsay, no, our job is to actually improve
people's health and keep them outof trouble, you end up designing and
implementing a very different model.
So the biggest fool's errand that a lotof these health systems do is they think

(14:09):
that they need to implement both modelsfrom the same place at the same time.
So the same poor doctor has to say,well, for these patients over here,
I'm going to operate under my fee forservice mindset and churn this stuff.
And for these people,I've got some new payment.
And I want to do it differently andsomehow I'm going to color code the charts
or put a flag on the Epic or something.

(14:30):
And it's an unholy mess.
Unholy mess.
I think one of the conclusionswe and other people came to is if
you want to do this, it's okay todo both things at the same time.
The reality is the world is goingto be a hybrid for a while, but
don't do it in the same place.
Create two different business lines,create two different processes,
get different people doing it.
And I think that's really important.

So let me react to that.
I had Dr.
Beau Raymond, also interestinglyfrom Ochsner, works with Dr.
Kenny Cole, on the podcastseveral months ago now.
And one of the things that he saidis, first of all, he's like, I'm
done with the two canoes metaphor.
Because like, this is, as you justsaid, it's not like we're going to
have one payment model anytime soon.

(15:12):
He's like, I liken it to a catamaran.
And you have to figure out how todrive your catamaran, where you've
got fee for service as one of theskids or whatever you call them,
and then value based as the other.
Now, what Beau Raymond said was, youactually probably can put everybody
in the same setting of care becauseif you operationalize it right,
giving good care also can be wellreimbursed in a fee for service way.

(15:36):
It's just you get reimbursedfor doing the good things.
And following up in meaningful ways,as opposed to letting the same heart
failure patient get readmitted tothe ER once a month, which is, yeah.

Yeah, so one of the interesting things, there's
actually data on this about you don'tneed to have all of your patients in
a value based thing, so how do you getsort of a system wide transformation?
And there's a threshold that, you know,everything I've read is at about 60%, not
100, not 90, not even 80, but around 60%.
So when 60 ish percent of your peopleare in this sort of value based

(16:07):
payment model, then it makes sensefor you to treat everyone that way.
So by the way, this is the correlation.
What everyone else is doing is that themantra is, we should slowly move our way
from this old world to the new world.
And maybe that's exactly wrong.
Maybe the right thing is you'vegot to move as fast as you
can to cross that threshold.
So you want to maybe acceleratethrough this transition and

(16:30):
say, we're going to get there.
And I think a very few sort of progressivesystems that the Inner Mountains
of the world, even the Ochsner'sof the world, seem to believe that.

So basically as fast as you can get to 60 percent
because then the math works outfrom a financial perspective.

Then the math starts working out.
Yes.

What's your advice for how to do that and then I'm going to go
back to maybe some of the operationalstuff that you were talking about
there about changing the process.
But just to continue on this threadfor a sec, I could see how if you
are necessary for network adequacy,or you had a big enough brand that
you had to be in network, right?

(17:04):
Like now you got some powerrelative to negotiating.
But I hear over and over again fromsmaller entities who are trying to do the
right thing where it's almost like thecarriers have a scorecard and they see
who's actually providing good enough carethat Star Ratings are met and cost of
care is low, they see who's doing that.

(17:26):
When those entities go into thecarrier and say, all right, pay
me value based, they're like, oh,no, no, no, nothing available.
Or they, they say, well, send a selfaddressed stamped envelope to some PO box.
Uh, cause like, that'show our process works.
Meanwhile, the physician organizationswho are doing a terrible job,
somehow or another, they getvalue based opportunities because

(17:48):
it's seen as a way to kind ofget them to level up their care.
So it's like the carriers have this kindof thing going on where they're using
value based care incentives to ensurethat they get their Star Ratings met.

You know, I think that the, the secret ingredient
to all of this, that people don't payenough attention to is the consumer.
And I think, uh, if I were one ofthese folks, I would be, you know,
the, the general secret about healthplans is no one cares what the name
is on the card sitting in your wallet.
And people care a ton about whotheir doctor is and where they're

(18:18):
getting care because they've metyou and you've saved their life.
Again, no one gives a witabout who their health plan is.
And the key is to leverage thatif I were a provider group.
And there are two ways to do that.
So on the commercial side, it'sgoing upstream to the employers.
The health plans on the employer side are,by and large, Working with self insured

(18:38):
employers for a variety of reasons, andthey don't care about lowering health
care costs because they get a percentageoff the top, and a percentage of a
bigger number is a bigger number, sodespite the rhetoric, they don't care.
So talking to the health planabout lowering health care
costs is a waste of your time.
So we would go straight around,and around them, go straight to the
employer, Boeing company, DartmouthCollege employees, the union trust.

(19:00):
You mentioned 32BJ and saylike, look, they work for
you, not the other way around.
Let's do this together.
And by the way, we had a thing whereat Dartmouth, where their carrier
was, we don't like working withthese people because it's disruptive.
And they were like, wait a second,we didn't ask what you thought.
If you don't like it, we'll find someoneelse to handle our account and , you know,
you work for us, not the other way around.

(19:22):
Too many employers, by the way, don'tunderstand that, that they work for
you, they're spending your money.
So, for one, it's on theemployers that go around.
On the Medicare side, you know,you can go direct to the consumer.
So find some plans.
Who, uh, who are willing to giveyou risk and willing to do this,
and then tell your patient switch.
Right?
You know, you can vote with your feet.

(19:43):
This is who we work with.
If you want to stay with us, you workwith these plans because they're willing
to pay us the right way so we candeliver the right sort of care with you.
So it really is about the go upstreamof people who are not with the program.

Which is kind of reinforcing actually the point
that you made at the top of thisconversation about be proactive.
Don't be reactive.
Succeeding here will require thinking ina different way, probably, and not to say
it's easy at all, because there's somevery creative people who have not been
successful trying to figure out how to dothis, depending on the area of the country

(20:15):
and kind of the power dynamics there.

The only thing I know for sure, Stacey, is that
if we keep doing what we're doing,we're going to hit the iceberg.
We're in the Titanic heading forthe iceberg, so being afraid to turn
left or right is almost irrelevant.
At least I've got my hands on the wheel.
Albert Einstein, the short sign ofinsanity, is doing the same thing over and
over again expecting different results.
This current model doesn't workfor people, doesn't work for
patients, doesn't work for doctors,doesn't work for the health system,

(20:39):
doesn't work for the finances.
So we need to be doing differentthings, and if one of these many
middlemen that we have in healthcaredon't like it, you know, such as life.

So you said your second thing was change the process.
Obviously a lot of this is intertwinedwith how are we getting paid and for
what, but what can you dig into thechange the process a little bit more?
You said two care settings is probablyoptimal, but what do you mean?

Yeah.
So, so again, a few lessons that allof us who've done this, you know,
and trying to optimize on this,this sort of actually taking care of
population for one is team based care.
So this model of I, the doctor, andthe doctor tells you what to do.
I often joke in our, in my practicebefore Iora patients would come
to me, I'd have seven minutes.
I'd say, you Stacey should eat less,exercise more, take your medicines.

(21:29):
Good luck . I'll see you in three months.
And by the way, I get paidfor telling you what to do.
I don't actually give a whitabout whether you do it or not.
Actually, I sort of hope you don't doit so you'll come back and pay me again.

To be as cynical as, yeah.

In the Iora model, I don't get paid for telling you what to do.
I get paid for you doing it.
But you're actually taking yourantihypertensive, not getting a stroke,
not getting down to the hospital.
And so that's why you realize youneed these other human beings.
We call them health coaches,people call them care navigators,
or a whole lot of names for it.
But almost everyone who does thisseriously realizes you need human
beings who are not the doctor orpicked for empathy, whose job it is

(22:03):
to partner with the patient to makesure they can execute on the plan.
And then you end up needingintegrated behavioral health
because that's a barrier.
You need social workingpeople for low income.
You need physical therapiststo teach people how to move.
You need nutrition people.
The whole, it takes a village.
And so you need team based care.
You know, number two is you need tobe proactive and not just reactive.
Think about in typical fee for servicepractice, you sit in your office,

(22:24):
you wait for people to come in.
If you are on the hook for a population,that's the stupidest thing to do.
The person who is getting intotrouble isn't the guy coming in today.
It's a person sitting on his couch eatingDoritos, not taking his meds, so you
need to know who they are, you need toreach out to them, you need to do that.
You need to really just think verydifferently about sort of helping people
navigate to the right set of specialists.
And co-manage them in the hospital.

(22:45):
Again, it's not a little different.
It's completely different.
You need to embed the populationmanagement within the practice, not
some other person sitting in Idahoduring the disease and case management.
It's your job, you know the patient.
If it's not your job to managethe diabetes, what are you doing?
This is why you have to end up evolvinga very different clinical model.

So you said team based care with integrated behavioral health,
social work, etc., nutritionists.
You said definitely got to be proactive,not reactive, because obviously if
we're talking about engagement, the onlypeople showing up are engaged patients.
You talked about navigating tospecialists, especially if you're
on the hook for downstream costs.
Like you absolutely have to know thespecialists that are producing the

(23:26):
outcomes that you're looking to create.
And then embed pop health becauseobviously finding the patients
at risk is a data exercise here.

It's data and it's stratification and all of that.
So by the way, my number three, if onewas the payment, two was the process.
Number three is you need adifferent set of technology tools.
So unfortunately, the technology thatmost healthcare people use are to help
them document code and bill higher andnot do any of the things I just mentioned.
So, really, we and almost everyoneelse who did this seriously, again,

(23:58):
Oak, Chen, One Medical, QMIMES, allmade the same decision independently
that we needed different technologytools in order to manage this.
And by the way, the Epic's andCerners and Allscripts of the world,
you know, weren't good enough.
Now they're getting better, slowly.
They're typically built onthe wrong platform, though.
They're very transactionaland not relational.

(24:18):
But in general, one needs torethink the technology platform.

If I am thinking about this, first from a physician's standpoint,
So, and we have had a number of people onthis podcast talking about similar themes
to the things that you just mentionedabout team based care and being proactive
and reactive and using data and analytics.
I'll put a list in the, in the shownotes if somebody really wants to dig
in, but you know, I actually had Dr.

(24:42):
Kenny Cole on the, on the pod whoechoed very, very similar themes.
As I just mentioned, Dr.
Beau Raymond, we had Dr.
Scott Conard saying similar things.
So like, there's broad agreement.
I am going to ask you aboutphysicians though, because there
are doctors who are gonna, here'sgoing to be some typical pushback.
First of all, the, my patientsare well managed pushback.

(25:04):
The second one is, I am accountablefor my patients, so I kind of
don't trust anybody else to do it.
I would almost think that a success factoralso is going to be having a culture.
Physicians are obviously essentialfor this, but this is not how medical
schools, you know, bring people up.

You hit by number four, which is changing the culture.
So if one is payment, two is process,third is get the right IP platform, and
the fourth is culture or people if youwant to be cute and name it or tease.
And you are absolutely right.
So we would do this.
At one point we tried to, weworked with Virginia Mason,
a really great health system.
We would go, we did a pilot with theBoeing company and went to one of Virginia

(25:46):
Mason's practices in Issaquah outsideof Seattle and group of 10 doctors and
talk about this model and, you know,look, you're going to get an extra
payment and you've got a health coach andyou've got population management tool.
It turns out that oneor two doctors love it.
They're like, where haveyou been all my life?
I've been waiting to practice this way.
Three or four are like, oh, this soundsvaguely interesting, but I'm skeptical.
I want to.
to see what happens.

(26:07):
And then one or two are like, Idon't like data, I don't like nurse
skills, what's wrong with what I'mpracticing now, I practice well,
you know, all the things you said.
And the problem with most medicalgroups is they work largely by
consensus, and one or two of thesepeople, they just put the kibosh.
So what we did, and we said, great,we're going to create a thing over
here, and those two people are givingme the hugs in the hallway, you're

(26:27):
going to come over here and practice.
And the rest of you keepdoing what you're doing.
So you build the culture withthe people who want to be there.
But what happens, by the way, is sixmonths later, that third guy, who,
uh, was a little skeptical, said,yeah, can I come visit the practice?
He comes over and he said, well,not only is this not scary,
this is better than what I have.
Can I come over?
Great.
Then six months later,the fourth one comes over.

(26:48):
By the way, seven, eight,nine, ten will never come.
And by the way, we're going to beliving in this catamaran world, to
put it your way, you know, we'regoing to need people doing the fee
for service stuff, so let them do it.
But the fools errand is trying to get,make them do something differently.
Getting doctors to do things theydon't like is a waste of time.
So find the people who want to do this.
It's partly training, but it'spartly just getting the people who,

(27:10):
who attach and building the right.
So again, what we did is we did nottry to convert existing practices.
We built new ones and created the culture.
And we'd, we'd also build markers tomake sure people were the right fit.
So for instance, we didn'tgive doctors private offices.
The doctor wants a private office sothey can put little diplomas up, etc.
We're like, great, wrong place foryou, keep doing what you're doing.

(27:31):
If you like it here and want to bewith the team and sit together with
the team so we can communicate well,this is the right place for you.
So it is about changing culture.

And I could also see that if I'm a patient in this
mix, there's obviously a rightdoor to be going through here.
Because like any time you get patientswho are in the kind of care models where
somebody is helping them and navigatingthem and they actually feel taken care of
and they feel like there's relationships,those patients are like, to use your

(27:59):
term, where have you been all my life?
Whereas on the other side of thehallway, you go see the doctor,
they say, go do these things.
They have no idea where to start.
Some specialist is not available.
They're trying to figure out how touse Yelp or like, it's kind of a mess.
And, and even I'm not even talkingabout patients of Medicare age.
Like it's a mess for everybody'strying to figure this out.

(28:20):
So I also could see that there is aconsumer preference that is at play here.
And sooner or later, you're going tohave people on the one side of the
hall talking to their buddy on theother side of the hall and trying
to figure out how to get over there.

Yeah.
So, so, so our theory of change,one tries to change the world, one
needs to have a theory of change.
So my theory of change was what I callthe Southwest Airlines Theory of Change.
So, U.
S.
Airlines circa 1980, highfares, crappy service.
You know, what changed?
It wasn't the government, it wasn'tconsultants, it wasn't American and Delta

(28:54):
waking up and deciding to be better.
It was the new entrant showingup, Southwest, getting patient
customers to vote with their feet.
That not only got those customerslower fares and better service, but it
kicked Delta and America in the behindand said we better change or someone's
going to come and clean our clock.
So, I'd like to think that part ofthe reason why Kenny Cole is able to

(29:15):
sort of get his folks at Ochsner toactually do something is a bit of a chor.
Mark Harrison back in the day when hewas at, I think at Cleveland Clinic,
actually said in a speech to ModernHealthcare that we are petrified that
someday Iora Health will come to mymarket and start taking our patients away.
We better disruptourselves before they do.
So when, when those doctors, youknow, I told you the two will come

(29:37):
over here, the other eight, I tellthem keep doing what you're doing.
And then I mumble under my breath.
Someday we'll take your patients away.
That's how we will change healthcare.

All right.
So I know that there is probably,I'm going to say 68 percent of our
listening audience here who arethinking to themselves, yes, but how
consolidated health systems make the vastmajority of the money that they make.
Primary care is basically afeeder to the specialists.

(30:09):
I'm just talking economics here.
One of the reasons why primary careat some of these big entities is so
chronically underfunded is becausethere's absolutely no incentive.
How much money to recoup the marginthat would be appropriated from seven

(30:30):
commercial heart failure patientsgetting readmitted, you know?

The real honest answer is, I think, to our health system.
So if this is the right economic,makes the right economic sense.
So by the way, I think hospitals arereally dangerous places, by the way.
You get COVID, you get some strange,you know, MRSA infection, you fall and
you sundown, you get the wrong drug.

(30:54):
Just putting it from a human point ofview, if you need to be in a hospital, by
all means, you need to be in a hospital.
If you don't need to be in a hospital,you should stay as far away as you can.
And that's true of myself, it's proofof my mom, it's true of my wife.
And so people like us haveshown that we can reduce
hospitalizations by 40 percent, 4 0.
So by the way, if that's theright answer, it's better for
the patient, and it's better forthe payer, it's going to happen.

(31:16):
So if you are a health system,you have two and only two choices.
You can either do this yourself, and getin some version of a risk contract where
you can benefit from the falling cost,or you could watch someone else do it
and just take these people away from you.
And you are left with the shrinkingand shrinking pie, with someone
else taking all the surplus.
Those are the two and only two options.

(31:37):
I think, you know, there was a bigdrumbeat, uh, when it was thought
the retailers would do this.
It turns out, by the way, that betwas wrong, that these retailers seem
not to know how to do healthcareand don't have the patience for it.
They're all, fleeing.
But guess who is doing this?
It's Optum.
Right?
Optum is the number oneemployer of physicians.
They are coming to your market andthey're buying the physician groups up.

(31:58):
If it's not Optum.
It's the PE firms, right?
It's Welsh Carson and CDNR, oftennow paired with, uh, Elevance
or Humana or Deerfield and,um, with Horizon Blue Cross.
You know, and so if this is the rightanswer, someone else will do it.
And you can either watch them do it, oryou could think about doing it yourself.

(32:19):
And by the way, they're your patients, Mr.
Health System.
You've been taking care ofthem for hundreds of years.
By the way, last I checked, thisis what your mission statement
says you should be doing.

So it is very clear, despite now, and I, and I'm not,
and no one should lump all hospitalsin the same bucket, obviously.
So let me just start out with that caveat.
So you're saying that there'sactually enough money there that
you have private equity and Optum.

By the way, they're not doing this because
they want to help save healthcare.

Yeah, obviously.
Like.

Again, they are doing this because they think
they can make money off of it.

If we want to find somebody with for profit in all caps,
like I think you hit the nail on the head.
And to a certain extent, I'm like,It's like watching Succession.
There's absolutely no character,which is likable in any way, but, but
you're basically saying even despitethe fact that we've got a little bit
of a Succession scenario on our handsand money is certainly on everybody's

(33:13):
minds, just the fact that you haveother entities that are popping up here,
the competition just in and of itselfis going to, enable forward change.

So the one, one thing that's really clear in
health care is health care is local.
So I think this will play outdifferently in different markets.
And what's interesting is, you know, sowe did a project years ago, uh, with the
Casino Workers Union in Atlantic City.
And it was in partnership with ahealth system called AtlantiCare,
which was essentially theonly health system in town.

(33:42):
They were by far the dominant player.
And Jim Nolan, the CFO of AtlantiCare,said two things that were very profound.
He said, and we built these practicesnot just for the workers in the union,
but also for AtlantiCare employees.
So number one is the biggestemployer in most markets
happens to be the health system.
So you are paying foryour own care, right?

(34:03):
So number one.
Number two is, he said I don'treally want to be in a business
where my interests and those of mycustomers are opposed to each other.
That's just a crappy thing to do.
And number three is if I keep raisingprices and sort of over utilizing, et
cetera, what's going to happen is theemployers have already run out of room.
Their first response has been tocreate higher and higher deductible

(34:25):
plans and pass it on to the consumer.
We've reached the end of that.
We can't squeeze more blood from a stone.
We can't go any higheron these deductibles.
So now what they're going to have todo is just start cutting benefits.
So if people are cutting benefits, nowall of a sudden if the economy starts
tanking because of me, the healthsystem, I'm going to be left with all
these uninsured people who now I needto take care of and for free, because

(34:46):
they're still going to come to me.
I'm not going anywhere.
So this idea that we need to comeup with a sustainable thing between
us and the employers in town.
And by the way, I can make the sameargument with the federal government
in Medicare, that if this becomes anunstable thing, people are just going to
be uninsured and people are uninsured, orthey're going to cut the prices, right?
This is, the federal government has onelever that the commercial people don't
is they can just change the fee schedule.

(35:07):
Like when we saw the physicianfee schedule just got dropped.
So, they're just goingto drop the fee schedule.
So then what the health systems do isthey try and pass it on to the employers.
But remember, no moreblood from the stone.
We're hitting the endof all of those things.
So again, I think this will play outdifferently in different local markets.
But like, we have to thinkabout this in a sustainable way.
And I think we're starting to reachthe end of the unsustainable sort

(35:29):
of ratchets that we're having.

David Muhlestein was on the pod a while ago that
said the biggest sector employerin 48 states is healthcare.
Like, healthcare employs more peoplein 48 states than any other industry.
But then also Zach Cooper just releaseda study where for every, I think
it was percentage point of hospitalprice increase, employment in non

(35:53):
healthcare businesses goes down .3%.

I love that study.
I think it's true.
The vast majority of these healthsystems are theoretically not for profit.
By the way, we got a lot of flackfor being a for profit company.
If you think non profits and for profitsact any different, you're being naive.
It doesn't matter.
I've sat in a non profit board meetingand a for profit board meeting,
you can't tell the difference.
No margin, no mission, et cetera, right?
But they are non profits.

(36:17):
In theory, they are serving the community.
I think the people who fallasleep at the switch are the
boards of these health systems.
And they're not holding these folksaccountable for the mission of the,
what the hospital should be doing andthe health of the community, which
is what their mission statement say.
So yeah, I would put out a pleafor boards of health systems.
But I think it's, you'vegot to think long term.
If I'm a health system we'vebeen here for 100 years.

(36:38):
We're not going anywhere.
These people are not going anywhere.
Hopefully the jobs aren't going anywhere.
So we have to come up withsustainable long term models.
This is not like a, you know, Amazon whocould get customers from other places.
It's a fixed thing andit's a long term game.

Yeah.
So we had Suhas Gondi on the podcast, Dr.
Suhas Gondi, who did astudy about hospital boards.
Spoiler alert.
It's really hard to figure out, youhad said, hold people accountable.
It's actually very difficult to figureout who is even on a hospital board.
Well, these boards havelike 50 people on it.
Some of them do.
They have 11 to 50.
I think like, it was actually a reallyinteresting thing just understanding like,

(37:16):
how do these hospital boards function?
So first of all, you have to bea, you know, researcher sometimes
to figure out who's on the board.
But also, do you know thebiggest occupation or former
occupation of most board members?
What sector are they in?

Banker?

Yes.
Yes.
Finance.
Generally speaking, there's likepoint, and I'm now I'm making stuff
up, it's something along these lines.
There's like one physicianand like point oh two nurses.
You know what I mean?
Like, the vast minority of peopleon these boards have had anything to
do with healthcare in their career.
So, you throw a majority financeprofessionals in a room and

(37:55):
tell them to manage a hospital.
And I don't want to underestimate,like obviously things have to
be sustainable, like you haveto figure out how to do things.

Yeah.
Absolutely.

But at the same time, if, if all you're trying to do is
maximize the short term, which a lotof finance people, like that was their
job, just like figure out how to makeas much money as fast as possible.

Rushika Fernadopulle: That's what they'll do. (38:11):
undefined

Yeah.
Then that's what they're going to do.
So who is shocked?
I guess.
It does take courageousness.
I guess on the part of individualsand then also creativity and the
willingness and the understandingof how to collaborate.
Like I often talk about moreand more lately, collaborative
EQ or collaborative IQ.

So it's one lesson we learned about how to do collective
action well, you know, when we wentinto the Medicare space, we formed a
partnership with Humana, who at the timewas sort of one of the most progressive
and, you know, forward thinking, wesigned a 10 year contract with Humana.
10 years.
The problem with doing all ofthis stuff is it takes a while.
It takes a while tofigure out how this works.

(38:50):
It takes, you know, and by allthose things, it's the same way
when people get married, right?
The second things go badly ifsomeone pulls the plug, like you're
never going to go anywhere, right?
So we did a 10 year relationship.
We're in this together.
We're not going to put itup to re-bid every year.
And so that's the way you solve problems.
And to me, that's the only way we'regoing to make progress is, is form
long term partnerships and solve thistogether and not be like, find some

(39:14):
lower bid next year and just jettisonevery year and get someone else.

Yeah, which becomes a race to the bottom at a certain point.

Absolutely, which a lot of this happens.

So I could talk to you for quite some time, but I do feel us
coming up to the end of our time together.
Is there anything that Ineglected to ask you that you
kind of want to sum up here, Dr.
Rushika Fernandopulle?

You know, there's lots of activity going on in the space.
The job of healthcare isto make people healthy.
It seems like an obvious statement.
And I think we need to startrealigning our systems.
And by the way, oursystem is not doing that.
Look at, you know, ourlife expectancy in the U.
S.
and maternal mortality despite spending.
close to five trillion dollars a year,we're getting crappy outcomes from it.

(39:54):
And I think, A, as consumers, we need tostart holding the system more accountable,
but B, as people in the system, whetherit's running a health system or a health
plan, like we need to start takingour mission statements seriously and
start thinking about how do we sort ofchange what we do in order to do this.
Because, like I said, the currentpath we're on is unsustainable,
and bad things might happen.
So it's up to us, we can either designthis well and do it in our control

(40:17):
where we can wait for things to collapseand then bad things might happen.

Dr.
Rushika Fernandopulle, thankyou so much for being on
Relentless Health Value today.

You're very welcome.
Thank you for having me.

Chris Skisak (40:25):
Hi, my name is Chris Skisak.
I am the Executive Director ofthe Houston Business Coalition on
Health, as well as Texas Employersfor Affordable Health Care.
I've been a long time listener andI've had the privilege of getting to
know and work with Stacey Richter.
There is no doubt in my mind thatRelentless Health Value is the best

(40:47):
podcast out there that addressesthe financial challenges and
opportunities in healthcare delivery.
I think it gives hope and encouragementto what can be accomplished through
collective perseverance and resolve.
Thank you very much.

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