Unlock the secrets behind the impact of Certificate of Need (CON) laws on healthcare providers, especially in rural areas, with our special guest, Tom Campanella. Drawing from his extensive experience at Blue Cross and Blue Shield of Ohio, Tom sheds light on the frustrations and inefficacies associated with these regulations. We delve into the critical balance between maintaining an optimal number of healthcare providers and fostering a competitive marketplace. Tom passionately argues that competition is key to driving value-based care and discusses how government regulations can sometimes be more of a hindrance than a help.
Ever wondered how non-compete clauses and NDAs are stifling innovation and patient care in the healthcare sector? Join us as we examine the Federal Trade Commission's (FTC) recent ruling against non-competes, exploring its potential to drive innovation, enhance patient choices, and reduce unnecessary legal expenses for practices. We also tackle the pressing issue of cybersecurity, emphasizing the urgent need for a national strategy to combat ransomware attacks and data breaches. The growing demand for cybersecurity consultants across industries is also highlighted, underscoring the evolving landscape of healthcare security.
To wrap up our enlightening discussion, we shift gears to the complexities of value-based care and its intricate relationship with value-based reimbursement. Drawing parallels to outdated but still prevalent communication methods in healthcare, we scrutinize different reimbursement methodologies and the challenges faced by hospital CFOs in transitioning to value-based care. Don't miss this engaging and thought-provoking episode.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Aaron C. Higgins (00:00):
Welcome to Beyond the Stethoscope Vital
Conversations with SHP.
As we take our summer break toprepare for Season 5, we are
revisiting some of our mostinsightful episodes.
In this episode, we continueour discussion from last week
with Tom Capanillo, who bringshis extensive experience from
Blue Cross and Blue Shield ofOhio to help us explore the
(00:21):
impact of the Certificate ofneed laws on healthcare
providers, particularly in ruralareas.
Tom discusses the challengesand inefficiencies of these
regulations and argues thatcompetition is crucial for
driving value-based care.
We also examine that recent FTCruling against non-compete
clauses and its potential tofoster innovation, enhance
(00:43):
patient choice and reduce legalexpenses.
Additionally, we address thepressing issue of cybersecurity,
highlighting the need for anational strategy to combat
ransomware and data breaches.
And finally, we dive into thecomplexities of value-based care
and reimbursement methodologies, focusing on the challenges
faced by hospital CFOs in makingthe transition.
(01:05):
If you find this episodeenlightening, please be sure to
rate and share the podcast inyour favorite podcast app.
It really helps us reach morelisteners.
Tom Campanella (01:17):
Aaron and Jason, thank you.
I'm really looking forward toit.
I do miss Mike, but I'm sureyou guys can fit those big shoes
we're going to be missing.
Aaron C. Higgins (01:27):
Yeah, unfortunately Mike couldn't join
us today, but that's okay,Jason and I will struggle to
fill in the blank spots.
I'm sure he will be with us, inspirit that's right, that's
right, okay, well, hey, let'sjump into the conversation, I
guess.
Well, I know we have a lot tocover.
Jason Crosby (01:45):
Yeah, so Tom.
Hey, this is Jason.
I know we spoke earlier in theweek and we touched on some
various challenges out in themarketplace now, particularly
rural health care and where weare in Georgia, cons has been a
hot topic Particularly.
We had some recent legislationgo through the state here just a
couple of months ago actually,and I believe where you are in
(02:06):
Ohio you're also a CON state.
So not to necessarily dive intothe you know nuances and
details, knowing that eachstate's going to be a little
different, just want to hearyour thoughts on how you're
seeing CON development over theyears, trends that you're seeing
and maybe impact on providersthe years trends that you're
(02:26):
seeing and maybe impact onproviders.
Tom Campanella (02:33):
Okay, well, thanks, jason.
First of all, we no longer haveCON in Ohio, at least as it
relates to hospitals, and thatWe've been involved with that in
the arena of long-term care,nursing homes.
There's a little bit of thatgoing on, but the interesting
story there is.
I mentioned earlier, I'm oldenough that I can go by past
different decades and give youwar stories, so this is a war
story from the 80s, and I wasvice president of healthcare
(02:58):
finance and care management atBlue Cross and Blue Shield of
Ohio, which is now MedicalMutual, and Ohio at that time
had CON laws and each region ofthe state had a grouping of
diverse stakeholders as itrelates to CON.
(03:20):
So we had representatives fromthe hospital sector, from the
physician sector, from thecommunity sector, from the local
political sector, and alsorepresentatives from the
employer sector and, finally,the health insurance or payer
sector.
I was the representative fromthe health insurance and payer
(03:42):
sector and so I was on thisgroup, and what would happen is
we would have, obviously,various pieces thrown to us,
where a hospital wants to add300 beds, or a hospital wants to
add more beds to their OB unitor a hospital, and most of it
(04:06):
was hospital-related, and thiswas, by the way, prior to a lot
of the consolidation.
Obviously that has occurred inhealthcare, you know, towards
the mid to end of 90s, so therewas definitely a lot of
competition going on between thehospitals, and we would hear
reasoning behind it, and thebottom line.
(04:27):
What occurred, though, is therewere many times after and there
was a lot of detailed analyticswhere the analytic people came
through and basically said okay,based on the demographics, you
know the number.
Say, if you're talking aboutadding more delivery beds, you
know the number.
Say, if you're talking aboutadding more delivery beds, you
know from a maternity standpoint.
(04:48):
They would, you know, in effect, say you know our analytic
people would come up and, ineffect, say how many women are
of childbearing age?
Where is that trend going?
That type of thing, loss ofpopulation, how many beds do we
really need in the differentareas?
Where are we at today?
And then, ultimately, theanalytic types independent group
(05:10):
would make a recommendation, wewould evaluate it and then,
ultimately, make ourdetermination.
Where it got really frustratingprobably eight out of 10 times
that if we voted against anaddition to a hospital, say, or
adding a new building orwhatever it happens to be the
(05:31):
way the state law was written.
The hospital had the ability toappeal to the state and then,
once it appealed to the state,it became in the world of
politics, and the name of thegame is probably 90% of the time
.
All that work that we did, allthose discussions and meetings,
(05:52):
it was overturned, and so thatwas part of the frustration
where, in effect, we had CON butit really wasn't effective.
Going to CON in general, yes,there's some merits behind it.
The theory makes sense whereyou're trying to find an optimum
balance of providers within aparticular geographic area to
(06:14):
service a certain population.
On the other hand, on the flipside of it is that whenever you
get into and I know personallygovernment and regulation,
there's a lot of side effectsand it doesn't necessarily mean
those optimum providers that youcurrently have may not be
(06:35):
value-based providers and I knowwe're talking about that
earlier and there may be newvalue-based providers that want
to come into the marketplace tobuild or compete and they would
be outlawed, you know, dependingon the CON.
So, bottom line, from apersonal basis and I think from
a business standpoint for astate like Georgia and others, I
(06:57):
would be concerned.
At least you know there may beexceptions.
We always got to look at ruralareas separately.
I would focus more on trying tocreate a competitive
marketplace to allow competitionto occur and, just like when it
comes down to selling computers, restaurants, you know other
types of things that are outthere let the good ones survive
(07:21):
and let the ones that aren'tproviding value not make it.
Aaron C. Higgins (07:24):
So that's really my perspective on this,
yeah and I think, not to get toohyperlocal to Georgia.
So Georgia did a lot of CONreform and hopefully either this
season or next we're going toget some perspective on that
from a state legislator.
But what you describe is sort ofthe situation that plays out at
(07:45):
least in our local market herein the Savannah area.
You have two systems andthey've effectively used the CON
to weaponize against each other, prevent each other from
expanding, and so now you havethis system where the tool
that's being used normally andwas designed to help ensure care
(08:06):
is provided is being weaponizedand used to prevent care from
being provided, purely becauseof market competition.
So you know, it's thattwo-edged sword.
Right, it has hurt and helped,but to varying degrees and in
different places.
A CON law helps and right now,at least in the Savannah market,
(08:29):
the CON law hurts, and sohopefully we can see that
straighten up a little bit inGeorgia with some of the reforms
they passed this spring.
Time will tell, because the lawdoesn't take effect until July
1st, so we're not quite thereyet.
The law doesn't take effectuntil July 1st, so we're not
quite there yet.
Tom Campanella (08:45):
Well, what I would be focusing on if I was in
Georgia and maybe you alreadydo this is instead of looking at
restrictive ways although again, there may be reasons
geographically to have some CONsin that.
So I'm not making a carteblanche statement, have some
(09:07):
CONs in that, so I'm not makinga carte blanche statement.
But I would focus on ensuringthere's price transparency and
quality transparency in themarketplace so both consumers
and employers can be morediligent and more aware of
value-based providers that areout there, or value-based
services, because that's theother thing.
Just because you know, you mayhave a provider that's really
(09:29):
strong in a lot of specialtiesbut very weak in orthopedics,
and you know because it justdoesn't mean just because you've
got a good reputation in hearts, for an example, doesn't mean
your orthopedic program is realstrong.
So you know, having thattransparency, which facilitates
a more competitive market, isimportant.
My only other question withGeorgia is what about new
(09:53):
players that want to come in,build outpatient facilities and
compete against your incumbent?
Does the CONs prevent that?
Yes, they did.
Aaron C. Higgins (10:05):
Again, there's been some reform, so it'll be
interesting to see how thatreform actually takes effect
because, interestingly enough toyour process, the state is the
one who oversees CONs in thestate of Georgia, so it's
already a state board.
But then if someone say, isgranted a CON, their competitor
(10:27):
can appeal that CON, which isthe situation that I'm
describing, where it getsweaponized.
So you have Hospital A, theywant to expand to the suburbs,
but Hospital B also wants toexpand to the suburbs but
they're not quite ready yet, andso Hospital A will get the CON
to expand to the suburbs.
Hospital B will then appealthat CON and it goes through
(10:50):
this very lengthy judicial levelprocess that will then tie it
up for years.
And so it's broken, at least inthe state of Georgia, because
now you have suburb areas thathave 100,000 people, that the
nearest hospital is a 45-minutedrive away, all because they
want to protect their littlecorner that they have, but they
(11:14):
don't yet want to invest in thesuburb area because they have
other plans etc.
So that's where I think theCONs, at least in the state of
Georgia, are broken.
Hopefully we'll be reformedhere Again.
The state law passed and nowit's up to the CON board to
implement those changes, sowe'll have to see how they
interpret the law.
Tom Campanella (11:35):
And you know, as we talked last time, hospital
inpatient is in effect goingdown.
More acute patients are goinginto the inpatient setting.
But the big growth area, as weknow, and it's growing like
crazy and it's always been likethat, but since COVID even more
has been the outpatient arenaand, of course, care in the home
setting.
(11:55):
So that outpatient arena, whenyou're talking about suburbs,
again, what I don't like aboutthe CON, if it prevents
value-based providers, you know,say ambulatory surgery centers
or whatever, from moving intothe region to provide better
value for both consumers andemployers, I would have a real
(12:15):
issue with those types of CONlaws.
Jason Crosby (12:18):
Yeah, exactly To Aaron's point.
Just further, sort of filteringdown the accessibility and
profitability of those ruralhospitals that they're trouncing
in on the competition there.
Yeah, got it.
Yeah, yeah, yeah.
So lots of changes.
I know you know this particularlegislation I went through, you
know kind of partisan lies, butyet there were some middle
(12:39):
ground to be had for futurediscussions.
You know maternity services,you know acute care hospital
being built, as long as theymeet certain trauma levels and
certain length of time.
So there's some stretching ofnuances as long as they meet
certain criteria to allow themto move into those counties.
But I'll be curious if thoseyou know actually take hold or
(13:01):
not.
Got it?
Tell you what?
Let's stay on the sort ofregulatory legislation side of
things.
Other items that Aaron and Ihave talked a lot about this
year on the FTC front, somerulings have been tied to data
breaches and non-competes.
Right, and we've talked a lotmore probably about non-competes
.
Love to hear your thoughts onwhat you're seeing or hearing in
(13:22):
the market and, just again,sort of like the CONs, how you
see that impacting providers,whether it's urban or rural
settings.
Tom Campanella (13:30):
Well, again, you're going to see a bias for
me and maybe it's my economicsbackground, but as much as
possible, I'm a big believer incompetition.
I'm a big believer incompetition and I think
(13:51):
competition can provideultimately, value.
But a key element ofcompetition, as I mentioned
before, is awareness of thedifferences between the
providers.
For an example and that's whereboth the price and the quality
component comes in the issue Ihave with non-competes and there
may be some rationale behind itin certain areas, you know, as
it relates to certain types oforganizations, as they've been
(14:15):
involved in certain research andeverything else that is very
important and proprietary andthe idea of them potentially
sharing that information orbeing part of another competitor
is a big issue and I can seethe rationale.
As it relates to non-competes,I in some ways disagree, but I
(14:40):
can understand the rationale is,for an example, if a hospital
purchases a physician group,they might feel there's key
value there in regards to themyou know are the physicians and
if all of a sudden they pay Xamount of dollars and these key
physicians leave to a competitor, there could be some issues
(15:03):
there and in either case thereneeds to be a way to make sure
that it's not totallyunreasonable.
Ultimately, the issue I havewith non-compete is it really
ultimately creates a lesscompetitive marketplace?
Now, all of a sudden, there's alot of disruption occurring in
(15:24):
healthcare a lot of differenttypes of organizations, all
different types and ifphysicians, for an example, or
other people in healthcare, arerestricted from going to
competitors, what that's goingto do is stifle competition
within that area and region aswell as put, I think, an undue
(15:45):
burden when they're talkingabout doctors and others having
to move from a geographic regionwith kids and you know, in
grade school and high school andeverything else.
I really think that that'sunfair.
So, and as, if I remembercorrectly, with the FDA ruling
on this, each and I can see whythey're doing this.
(16:08):
As relates to non-competes,they're going to be looking at
it on a case-by-case basis, youknow, as it relates to health
care, and so there's probablysome merit to that.
On the other hand, it couldprobably be a pretty slow
process too.
Aaron C. Higgins (16:24):
All righty.
Julia DiGiacomo (16:27):
Let's take a quick break.
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Jason Crosby (16:58):
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Yeah, there's some interestingstatistics that I recall from
that ruling.
One that stands out to me wasthey estimated something like
95% of those with non-competesalso have an NDA in place and I
thought that's quite interestingthat you've got sort of that
nuance of those duplicative sortof arrangements.
How much do you need in placeto restrict that?
But yeah, I found itinteresting.
(17:20):
You know, aaron and I havetalked about it quite a bit this
year already but how that mayhelp drive a little bit
innovation.
Like the FTC estimates, youknow they estimated an increase
in patients as well.
That'll come out into the mixbecause you have more
flexibility in employment.
Not sure how that'll unfold butwe'll see if it does.
(17:42):
You know, sort of.
Tom Campanella (17:43):
Give the patients more choices and then
again, you know, from anemployer standpoint, gives them
more options, as they may be.
You know, putting togethervalue-based benefit designs and
if you only have two choices,for an example, and you don't
like A or B, you know that's anissue.
More importantly, we see thisoutside of healthcare all the
(18:05):
time.
You know that's an issue.
More importantly, we see thisoutside of healthcare all the
time.
You know, again, as it relatesto computers, technology or
anything, it's evolving likecrazy and the world out there
and I think you're sort ofstifling that evolution which I
think ultimately will hurthealthcare, hurt healthcare
(18:25):
costs and quality.
Aaron C. Higgins (18:28):
Well, I also think too, it actually saves
money ultimately.
I can think of a few instancesI can't be too specific of my
own personal experience with apractice where a doctor left to
the competition.
They had signed a non-competeand there was this lengthy
lawsuit that was eventuallysettled out of court.
(18:49):
Think of all the money that wasspent on that.
Yeah but the lawyers did.
Tom Campanella (18:53):
Well, come on now.
Aaron C. Higgins (18:55):
Yeah, the lawyers, you got to pay the
lawyers.
Tom Campanella (18:57):
Yeah, you got to .
Aaron C. Higgins (19:00):
I think there's a certain bias there,
tom, but all that money that wasspent on something ultimately
hurt the practice.
It was money that they couldn'treinvest.
It was money that they couldn'thire other staff or buy
technology that was necessary toimprove the practice.
So I think ultimately theremight be outlying cases where a
(19:22):
non-compete hurts patient care.
I'm not disputing thatEverything's a bell curve.
I think, generally speaking,getting rid of the non-competes
will improve patient carebecause we're not going to be
spending money on these thingsneedlessly to fight in court or
make bad feelings.
Tom Campanella (19:39):
I agree.
Jason Crosby (19:40):
Another interesting thing to your point,
aaron, about costs is I believethey estimated close to like
$200 billion.
They estimate just from thistype of ruling over like a 10,
maybe 15 year span.
So that I found interesting aswell.
That's a pretty gigantic numberto come up with in addition to,
(20:01):
you know, 3% increase inpatient volume sort of thing to
hit both you know aspects of theP&L.
If you will top and bottom linethat, I'll be interested to see
how this impacts over the10-year span.
But yeah, more to come on thenon-competes.
But another ruling, tom, thatI'd like to get your input on.
Lots of you know cybersecurityissues, ransomware attacks et
(20:25):
cetera resulted in you know databreach rulings by the FTC we've
talked about before.
I know you've got some input onthat.
Tom Campanella (20:36):
I'd love to hear your insight there.
Well, you know that's a toughone.
You know, when you think aboutit this whole ransom stuff you
know you go back to even indifferent countries where it's
common practice, where they willkidnap people that work for
engineering companies orwhatever, and then you know it's
(20:59):
almost like a routine setupthey kidnap, you pay them money,
they get the people back, andit's sort of like a quid pro quo
.
They build it in, but you know,sooner or later you got to say
no and there needs to be ways toaddress it.
I recognize kidnapping is awhole different ballpark than
we're talking here, but still,as it relates to data, if we
(21:23):
continue to pay off these peoplethat are putting a gun to our
head, it's going to continue.
Our head it's going to continueand we need to find a way.
Obviously, one to be able tohave better security blocks from
a cybersecurity standpoint.
And number two, we need to have, I think, a national strategy
in regards to this, not to saythat every organization has to
(21:47):
follow it to a T, but we need tohave, I think, a more focused
national discussion, becauseit's only going to get worse and
it's affecting us in all walksof life and you know, as it
relates to healthcare, recentlyin the city of Cleveland there
was a breach at the city ofCleveland.
So you know, I'm not sure whathappened there.
(22:08):
Hopefully the breach was onlyin parking tickets, so I don't
have to pay that parking ticket,but we'll see what happens
there.
But ultimately it's an issuethat needs to be addressed.
It's interesting.
I've been at conferencesrecently sitting at tables for
dinner and I'll ask somebodywhat do you do?
(22:31):
And I can't believe.
Every year I'm sitting withmore and more cybersecurity
consultants.
I thought it was bad whenlawyers are increasing all the
time.
Now you got cybersecurityconsultants Everybody's a
cybersecurity consultant, butit's needed because it really is
.
You know the billions ofdollars as a country that we
(22:53):
paid out.
So I'm not a techie to be ableto give you the answer to silver
, and I don't know if there is asilver bullet answer, but we
definitely have to have astrategy to address this.
Aaron C. Higgins (23:05):
Well, I'll put on my old system administrator
hat for a minute.
You're right, there is nosilver bullet.
But honestly, this problemdates back to the 90s it's a
30-plus-year-old problem when wemade the mistake of inviting
what was then the former SovietUnion onto our internet.
(23:26):
They had their own internetthat they were developing, but
when the iron curtain fell, weinvited them on and it was kind
of the Wild West.
It was not a security-firstinternet that we invited them on
to, and so we invited somepretty shady folks onto our
internet, and this may be a hottake for some.
(23:48):
But we're now reaping what wesowed 30 years ago.
And now, you know, we havethese Western European and
former Soviet bloc gangs thathave turned to cybersecurity to
make their billions, and we'vemade it super easy on them by
having an internet that is notsecurity first.
(24:09):
Honestly, the only way to reallyfix this problem would be to
fundamentally change the way theinternet works.
I don't know if there is enoughpolitical will or enough money
in the world to actually makethose kinds of changes.
We're all so reliant on theinternet.
But the fundamental way theinternet works, it works on
trust instead of security firstLiterally it's.
(24:34):
I mean there's a reason whyit's called a handshake protocol
, because you're just trustingthe other connection inherently.
So we could spend billions moretrying to protect our
environments, but I actuallythink there needs to be a
fundamental rethink on how theinternet works, to inverse the
way that we're doing security onthe internet, because otherwise
(24:55):
this is going to continue tohappen.
It's going to be an arms race.
It's a digital arms race.
Who can hire and build the besthacking tools?
Who can hire and build the bestanti-hacking tools?
And it's constantly going to bethis way.
Particularly going back to youranalogy of ransoming or
kidnapping one or two engineersout in the oil fields, well,
(25:17):
what if you can kidnap 150,000patients and hold them at ransom
?
And that's what we're seeing.
We're seeing huge health caresystems go down.
I mean, all I need to say ischange health care, and I think
everybody shudders a little bitwhen, when you can hold millions
of lives and billions ofdollars ransom, you're going to
(25:40):
get paid.
That's just the way that it is,so that that incentive is
always going to be there,because if you don't pay,
literal people die or get hurttremendously.
Don't pay, literal people dieor get hurt tremendously.
And so, yeah, I think the onlyway to fix this is a fundamental
way of how the internet itselffunctions which is way beyond
(26:01):
the scope of our discussion.
Tom Campanella (26:02):
Well, I appreciate your background on it
in the 90s too and you know,with the fall of USSR and that
part I wasn't aware of, I didknow we were always looking back
in the 90s and late 80s andI've always talked about it was
trying to get that region of theworld to embrace capitalism.
(26:25):
I don't know if this was theexact way we wanted them to
embrace capitalism, but at leastin this arena they not only
have embraced it, they've goneto the nth degree.
So, yeah, you're right, it'ssomething that we need to be
able to address and, like I said, I don't know what the issues
(26:48):
would be about changing theinternet.
I got a feeling that that wouldbe a big challenge, but it's.
I think in the ideal world youwould love to see these
countries where this isoccurring, the ability to track
them down and have thesecountries in force and with us.
But you know, at least as itrelates to Russia, things
(27:09):
haven't been going too welllately, if you've been following
the news well, we did talk onwhat marshall plan, campanella
plan, I think we should mentionlast episode.
We're gonna have a lot of theseplans out there.
Jason Crosby (27:21):
We are solving world problems here, that's
right.
I mean you just.
We went campanella plan, forwhat was it?
Just health care altogether.
Aaron's decided we're going tojust reinvent it all together,
and then that's right.
Aaron C. Higgins (27:35):
Reinvent the internet.
Jason Crosby (27:37):
It's not the higgins plan or or algor 2.0
plan, I don't know what.
Tom Campanella (27:41):
Well, hopefully it won't be like uh.
When I was a kid, I remembergoing with my dad to the
neighborhood bar and, uh, andbeing so impressed at the age of
10 and 11 that these guyssitting at the bar had the
answer to all the world'sproblems.
I said, man, these guys must bereally, really smart Cancer.
(28:02):
They got the answer.
War they got the answer,whatever it happens to be, so
hopefully the MarshallCampanella plan would have a
little bit more meat to it.
Aaron C. Higgins (28:15):
Fair.
You know, going back to you,said it'd be great if the states
you know Russia, china, etcetera would actually help
enforce it.
The thing is is they aredirectly benefiting from these
hacks.
You know a lot of these arestate sponsored groups, so they
are getting some kind ofpercentage or benefit from
sponsoring these groups.
(28:37):
North Korea actually gets a lotof its funding from ransomware
and I don't think a lot ofpeople are aware of this.
It's also how they laundertheir money.
So you know, because there areso many sanctions against these
countries, they are turning tothe dark side of the Internet
and delving into the areas thatdirectly hurt people to make
(29:00):
their money.
I'm not saying we should liftsanctions, but sanctions are
actually part of the problem andare driving some of these
countries to the extreme ends ofdoing the ransomware.
So it'll be interesting to seehow the FBI and the FTC and the
other alphabet agencies continueto work on this problem.
(29:21):
I don't see it really changinganytime soon.
We're in a new hot war, it's adigital war, and it feels like
right now, at least the innocentbystanders, the businesses, the
hospitals, the average everydayJoe, they're the ones suffering
from this.
Tom Campanella (29:41):
You know, as the war unfolds online, yeah, and
speaking of war, the big issue,too that I think we all need to
be worried about is, as itrelates to, like, our defense
department and stuff like that.
There you know, you, just howmany movies have you seen where
you know where, all of a sudden,some third party is able to be
(30:07):
able to control our missiles andbe able to launch things
remotely?
You know, and have that abilityto have that secret black box.
They were able to get you knowinto that.
You know that's got to be anarea that we need to protect and
you need to know that,obviously, that no matter where
(30:27):
they're going now, that's got tobe, depending on the player,
one of their ultimate goals toget into those environments.
Jason Crosby (30:36):
I've got the solution Faxing.
Let's go back to fax.
Let's go back to fax, okay,your.
Aaron C. Higgins (30:44):
Crosby plan is go back to 1992.
Jason Crosby (30:47):
We actually just had a back and forth.
I'll just with a, I want to saya TPA, I'm just going to leave
it general A TPA on which securefax line to use.
So we're still in the fax.
Tom Campanella (31:01):
Oh got it.
Yeah, and for the audience, tpais third-party administrator
that administers healthcareclaims.
Jason Crosby (31:10):
There you go, and the fact that we're still
talking about which fax line touse with them is very
interesting to me.
But it's still being used andsome rural practices are still
utilizing it as well, so I guesswe can't laugh too much about
that.
It's still in practice, right?
Tom Campanella (31:27):
Well, you also have the bicycles too.
Where, what was it?
Silvers, whatever, but theywould do all the back and forth
with mail and everything else byimmediate mail through bicycle
delivery service in the bigcities, uber.
Jason Crosby (31:44):
Hey, we're there.
Tom Campanella (31:45):
And Uber right.
Jason Crosby (31:46):
Uber Health exists .
It's a national entity.
Who knows?
Tom Campanella (31:49):
Okay, I'm back to the bar scene.
And what world problem are wegoing to take care of next?
It's an actual entity.
Who knows?
Okay, I'm back to the bar scene.
What world problem are we goingto take care?
Aaron C. Higgins (31:57):
of next.
Let's take a quick break.
We'll be back in just a moment.
Julia DiGiacomo (32:02):
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managed care contractingservices?
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Jason Crosby (32:35):
Well Day, let's let's wrap a bow on this.
We touched on value-based careearlier this week.
We're talking a lot aboutlegislation and regulation and
such.
Now maybe we can tie thosetogether.
So, you know, let's touch onvalue-based care a little bit
again.
Just general thoughts on onhospital stream, but also with
(32:55):
your background, where thatvalue-based care is maybe
impacted by various tort reformas well.
That's out there.
There's got to be a lot ofoverlap between the two.
I want to get your insight onthat.
Tom Campanella (33:08):
Okay, again, going back to my background, for
13 years I was vice presidentof healthcare finance and care
management of Blue Cross of Ohio, which is now Medical Mutual of
Ohio, and in that arena we wereresponsible for all the
different reimbursementmethodologies that were out
(33:29):
there.
Diagnostically related groups,drgs you know those types of
things and, needless to say,despite what some people think,
we were really trying to incentvalue in the marketplace,
obviously make profit, but atthe same time share that profit
with employers and consumers init.
And it was, you know, always abig, challenging thing.
(33:53):
But where I the lesson learnedfrom that experience was as I
think we touched on it a littlebit before is how you pay for
services.
The revenue stream andeverything else will dictate a
lot on how providers respond.
Providers respond so, for anexample, if it's bundled
payments or other things, theymay.
(34:14):
You know the whole theorybehind that is to promote
efficiencies.
Diagnostically related groups,drgs where they're given a lump
sum of dollars for an inpatientcare, it winds up in sending
them to release a little bitearlier, rather than keeping
them in the hospital too long orrelease them to lower cost
settings.
So there was a lot of positivethat you know potentially gets
(34:37):
out of it.
So where I'm saying is, as itrelates to value-based care, it
really starts with value-basedreimbursement, that
reimbursement that incents andprovides value and incentives to
the provider, and incentives tothe provider, like a hospital,
to be able to provide that.
Right now we have areimbursement methodology, as
(35:02):
we've talked about previously,which is fee for service that
overall basically incentsoverutilization and that's one
of the major reasons why we haveescalating healthcare costs.
So we need to come up with sometype of other stream and you
know and there's differentdiscussions about hybrid models
some form of capitation which isbasically a per member per
(35:22):
month, where a hospitalhealthcare system or whatever,
as an example, would then beresponsible for all that care
for the individuals that are inthat plan you know, if there's
2,000, 3,000 people, say, or10,000, and they would get per
member per month, actuariallymoney from the carrier or
(35:44):
whoever the payer happens to beCould be a Medicare Advantage
plan too, or Medicaid managedcare and then they would.
You know the way they mademoney, because the name of the
game is the provider nonprofitor profit is looking to make.
Money is, in this case, to beable to provide and keep people
healthy and, at the same time,make sure that they're providing
(36:07):
optimal care, not unnecessaryservices, unnecessary surgeries.
Care, not unnecessary services,unnecessary surgeries,
unnecessary referrals tospecialists, which are all
occurring today, and so all ofthat makes a lot of sense, you
know.
From that standpoint, we needto evolve to that.
Where the challenge comes is youknow, if you're a CFO of a
(36:30):
hospital, you're in a reallyperplexed situation.
Put yourself in the seat of aCFO of a hospital.
You're in a really perplexedsituation.
Put yourself in the seat of aCFO of a major hospital system.
Currently, right now, you're ina position the way you get
revenue, the way you'resurviving for-profit or
non-profit is, in effect, byfee-for-service reimbursement.
(36:51):
And you know, and you'regetting that stream Now, as you
get into and you're trying toprovide more value-based
reimbursement, which, by itsnature, means there may be less
referral to specialists, theremay be less tests done, well,
those, historically, have beenrevenue sources for you.
(37:11):
So how do I, you know, sort ofmaneuver myself to be able to do
that?
And how do I address where Ihave certain individuals that
are in a value-basedrelationship and others that are
not?
Do I treat them differently,like I put them in one bucket
versus the other.
Oh, this is one that we don'thave an issue referring to
(37:34):
different tests and specialists,but this one we need to
cart-baunch.
I mean, you know you also havelegal issues coming out of that.
Well, you know, all of a suddenyou treated this group one way
and you treated another groupanother way, you know, and it's
all about your profits.
So there's a legal issue there.
And then, finally, where theother issue is and then we can
(37:55):
have some back and forth on this, is tort reform.
Here we are telling, for anexample, you've heard the term
defensive medicine, which isdefinitely a situation that is
out there.
And so one would say physiciansand hospitals might provide,
they may feel there's a certainlevel of care that needs to be
(38:17):
provided for an individual, butto protect themselves from a
lawsuit, they might say, okay,we're going to do these extra
tests because we don't want tobe sued, or we're going to do
this additional procedure justto be on the safe side.
In that, this additionalprocedure just to be on the safe
side in that, and even thoughthey recognize there is less
(38:37):
value, they're in a positionthey're really protecting
themselves defensively from anytort form or lawsuits that are
coming out of it.
Well, if you are really goingto address value-based, trying
to create an environment whereoptimal care is going to be
provided, there is always goingto be those exceptions where
(39:00):
this individual, if he wouldhave had, winds up getting
cancer or has a health issue andthe lawyers come out and say,
yes, but if you would have donethis test, this test and this
test, you would have found it.
But you come back and saying,yes, but based on the evidence
and evidence-based protocols.
(39:21):
That's something that wouldhave added.
You know, this is a one in amillion or one in 100,000 or one
in 5,000 chances that thisoccurs.
It doesn't.
You know, really is not aneffective use of resources from
a society standpoint.
So I think there needs to be,going along with the focus and
(39:42):
push for value-based care, thereneeds to be also major tort
reform from that standpoint,possibly tying it.
There's a number of ways toaddress tort reform.
One way would be to really linkit in even more with
evidence-based medicine that canbe potentially used and you
(40:04):
know, and this is very muchrecognized evidence-based
medicine and it would need to befrom a third party and at that
you know clearly out therethating, you know poor outcomes
overall, you know from not doingthat extra test.
(40:38):
So there's a balance in thosetypes of situation.
The other issue, just as anaside with malpractice, the US
is definitely different thanmost countries.
We do not.
We're one of the few countriesthat have contingency base,
which incents in many waysindividuals to file lawsuits
because they have nothing tolose, and you see the
(41:00):
commercials on TV and everythingrelated to that.
Then you're also in a positionwhere we have jury trials.
We have sort of jury trials,trial by your peers, who none of
them have any real healthcareunderstanding and, as experts on
both sides make theirpresentations to the jury,
(41:23):
aren't necessarily in the bestposition to evaluate and make
the right type of decisions, anda lot of times those decisions
are more emotionally based thanfactually based.
So what a lot of times thosedecisions are more emotionally
based than factually based.
So what a lot of othercountries do is they have a
three panel group of judges thatare also involved and have
(41:44):
background and their specialtyis as it relates to health care,
and they have an understandingand experience in that
particular arena and a certainlevel of expertise.
A pre-judge panel makes thatdecision, or there may be other
ways to address it.
So it is something that we needto, and when you talk about
malpractice and tort reform,you're really talking both at
(42:08):
the federal and state level, butit is something that needs to
have the discussion occurring.
It may be occurring today Idon't see it, but I think you
know it definitely will besomething that needs to
accompany value-based care.
And then, ultimately, as I saidbefore, the fuel for the growth
(42:29):
of hospitals has beenfee-for-service.
So as we push more and more fora whole different type of
reimbursement, it will createsome major challenges for
hospitals.
They will need to change theirbusiness model.
But think about it Instead ofjust saying, oh, because of that
, we don't do anything.
(42:50):
Maybe we need to look at howother industries the banking
industry went all through this.
The auto industry, the steelindustry all these industries
have had major changes and,based on competition or whatever
, had to become more value-based.
Auto industry, let's face it,cut down plants throughout the
country.
People lost jobs or whatever,but they tried to recreate
(43:14):
themselves to be morevalue-based Hospitals, depending
on the hospital I don't want tocarte blanche say it across the
board many of them are stillworking off of their old
business models and they need toevaluate and come to more of a
value-based business model thatis focused on a world of
competition.
(43:34):
That's my story.
I'm going to stick to it I loveit.
Jason Crosby (43:38):
you know you're exactly right with the various
reimbursement models that areout there now.
It's just only going to getmore complex, right.
Whether it's fee for serviceand we're in georgia, it's
value-based is a little bit moreslow adoption, but it's
value-based is a little bit moreslow adoption.
But you've got, you know, acoand MSSP side and those same
entities are going to have acommercial contract portfolio.
(43:59):
Within that commercial contractportfolio, some may be, you
know, upside risk only, some maybe two-sided risk.
There are just so many modelsthat a small practice, for
example, has to keep up with thenuances within each of those
agreements and in and of itselfit's just going to be
complicated.
(44:19):
So completely understand whereyou've got to have some
compliance checks in there andoversight aside from the
clinical side of things, justmaking sure you're checking the
boxes on the reimbursementmodels as well.
It's just a little bit much.
Anyways, I know we're runningup on time.
We've solved a few worldproblems.
Tom Campanella (44:37):
Guys, I really enjoyed this conversation.
I mean, we survived withoutMike, which isn't necessarily
easy, but I think we made it andhopefully we can have these
discussions periodically.
Aaron C. Higgins (44:50):
Yeah, we really enjoyed having you on and
would love to have you back Ournext season.
We usually take a small summerbreak here, but our next season
will be starting up probably inabout the late August early
September timeframe and I thinkyou'll be visiting our area, so
(45:10):
maybe we can sit down and havean extended conversation sitting
at the bar and then he and youknow, we will basically, as I
said before, address all theseworld problems that we're trying
(45:37):
to do it.
Jason Crosby (45:38):
I think it's a great setting for it all, I
think that's perfect you know,just like southwest, you know
they developed their businessmodel on the bar napkin.
I think the campanella crosbyhiggins plan is best served at
pinky masters.
Masters, here in downtownSavannah, the first logger is on
air.
You got it Sounds good.
Tom Campanella (45:59):
to me Sounds great.
Aaron C. Higgins (46:01):
See you, gentlemen.
Thank you, tom.
Good talk, Tom.
Take care.
This has been an episode ofBeyond the Stethoscope Vital
Conversations with SHP.
If you enjoyed this podcast,please be sure to rate and share
it with your friends.
It sure helps the show.
Jason Crosby (46:15):
Production and editing by Nala Weed.
Social media by Jeremy Miller.
Aaron C. Higgins (46:20):
And our co-hosts are me, aaron C Higgins
and Jason Crosby.
Our show producers are MikeScribner and John Crew.
Jason Crosby (46:29):
Thank you for listening and we'll see you next
time, just like before, wesaved the most important
question for last.
Thank you for listening andwe'll see you next time.
We'll keep it unsportsmanlikethis time.
(46:50):
Tom, if you had a superpower,just one, one superpower, what
would it be, and why?
Tom Campanella (46:59):
I guess I would say the ability to fly, because
I've been so frustrated with theairlines lately and between
cancellation and delays and Isee these birds having no
problems at all and they lookdown on me and sometimes if I
look up I got a duck real quickbecause something may be coming
from the birds.
But I'm thinking they got itright and so maybe that would be
(47:21):
the issue the ability to fly.
Jason Crosby (47:23):
I love it.
I love the reasoning behindthese.
We always ask these kind ofquestions.
The reasons always catch me offguard, but I love that one.
There you go.
Welcome to Beyond the Stethoscope Vital
Conversations with SHP.
As we take our summer break toprepare for Season 5, we are
revisiting some of our mostinsightful episodes.
In this episode, we continueour discussion from last week
with Tom Capanillo, who bringshis extensive experience from
Blue Cross and Blue Shield ofOhio to help us explore the
(00:21):
impact of the Certificate ofneed laws on healthcare
providers, particularly in ruralareas.
Tom discusses the challengesand inefficiencies of these
regulations and argues thatcompetition is crucial for
driving value-based care.
We also examine that recent FTCruling against non-compete
clauses and its potential tofoster innovation, enhance
(00:43):
patient choice and reduce legalexpenses.
Additionally, we address thepressing issue of cybersecurity,
highlighting the need for anational strategy to combat
ransomware and data breaches.
And finally, we dive into thecomplexities of value-based care
and reimbursement methodologies, focusing on the challenges
faced by hospital CFOs in makingthe transition.
(01:05):
If you find this episodeenlightening, please be sure to
rate and share the podcast inyour favorite podcast app.
It really helps us reach morelisteners.
Tom Campanella (01:17):
Aaron and Jason, thank you.
I'm really looking forward toit.
I do miss Mike, but I'm sureyou guys can fit those big shoes
we're going to be missing.
Aaron C. Higgins (01:27):
Yeah, unfortunately Mike couldn't join
us today, but that's okay,Jason and I will struggle to
fill in the blank spots.
I'm sure he will be with us, inspirit that's right, that's
right, okay, well, hey, let'sjump into the conversation, I
guess.
Well, I know we have a lot tocover.
Jason Crosby (01:45):
Yeah, so Tom.
Hey, this is Jason.
I know we spoke earlier in theweek and we touched on some
various challenges out in themarketplace now, particularly
rural health care and where weare in Georgia, cons has been a
hot topic Particularly.
We had some recent legislationgo through the state here just a
couple of months ago actually,and I believe where you are in
(02:06):
Ohio you're also a CON state.
So not to necessarily dive intothe you know nuances and
details, knowing that eachstate's going to be a little
different, just want to hearyour thoughts on how you're
seeing CON development over theyears, trends that you're seeing
and maybe impact on providersthe years trends that you're
(02:26):
seeing and maybe impact onproviders.
Tom Campanella (02:33):
Okay, well, thanks, jason.
First of all, we no longer haveCON in Ohio, at least as it
relates to hospitals, and thatWe've been involved with that in
the arena of long-term care,nursing homes.
There's a little bit of thatgoing on, but the interesting
story there is.
I mentioned earlier, I'm oldenough that I can go by past
different decades and give youwar stories, so this is a war
story from the 80s, and I wasvice president of healthcare
(02:58):
finance and care management atBlue Cross and Blue Shield of
Ohio, which is now MedicalMutual, and Ohio at that time
had CON laws and each region ofthe state had a grouping of
diverse stakeholders as itrelates to CON.
(03:20):
So we had representatives fromthe hospital sector, from the
physician sector, from thecommunity sector, from the local
political sector, and alsorepresentatives from the
employer sector and, finally,the health insurance or payer
sector.
I was the representative fromthe health insurance and payer
(03:42):
sector and so I was on thisgroup, and what would happen is
we would have, obviously,various pieces thrown to us,
where a hospital wants to add300 beds, or a hospital wants to
add more beds to their OB unitor a hospital, and most of it
(04:06):
was hospital-related, and thiswas, by the way, prior to a lot
of the consolidation.
Obviously that has occurred inhealthcare, you know, towards
the mid to end of 90s, so therewas definitely a lot of
competition going on between thehospitals, and we would hear
reasoning behind it, and thebottom line.
(04:27):
What occurred, though, is therewere many times after and there
was a lot of detailed analyticswhere the analytic people came
through and basically said okay,based on the demographics, you
know the number.
Say, if you're talking aboutadding more delivery beds, you
know the number.
Say, if you're talking aboutadding more delivery beds, you
know from a maternity standpoint.
(04:48):
They would, you know, in effect, say you know our analytic
people would come up and, ineffect, say how many women are
of childbearing age?
Where is that trend going?
That type of thing, loss ofpopulation, how many beds do we
really need in the differentareas?
Where are we at today?
And then, ultimately, theanalytic types independent group
(05:10):
would make a recommendation, wewould evaluate it and then,
ultimately, make ourdetermination.
Where it got really frustratingprobably eight out of 10 times
that if we voted against anaddition to a hospital, say, or
adding a new building orwhatever it happens to be the
(05:31):
way the state law was written.
The hospital had the ability toappeal to the state and then,
once it appealed to the state,it became in the world of
politics, and the name of thegame is probably 90% of the time
.
All that work that we did, allthose discussions and meetings,
(05:52):
it was overturned, and so thatwas part of the frustration
where, in effect, we had CON butit really wasn't effective.
Going to CON in general, yes,there's some merits behind it.
The theory makes sense whereyou're trying to find an optimum
balance of providers within aparticular geographic area to
(06:14):
service a certain population.
On the other hand, on the flipside of it is that whenever you
get into and I know personallygovernment and regulation,
there's a lot of side effectsand it doesn't necessarily mean
those optimum providers that youcurrently have may not be
(06:35):
value-based providers and I knowwe're talking about that
earlier and there may be newvalue-based providers that want
to come into the marketplace tobuild or compete and they would
be outlawed, you know, dependingon the CON.
So, bottom line, from apersonal basis and I think from
a business standpoint for astate like Georgia and others, I
(06:57):
would be concerned.
At least you know there may beexceptions.
We always got to look at ruralareas separately.
I would focus more on trying tocreate a competitive
marketplace to allow competitionto occur and, just like when it
comes down to selling computers, restaurants, you know other
types of things that are outthere let the good ones survive
(07:21):
and let the ones that aren'tproviding value not make it.
Aaron C. Higgins (07:24):
So that's really my perspective on this,
yeah and I think, not to get toohyperlocal to Georgia.
So Georgia did a lot of CONreform and hopefully either this
season or next we're going toget some perspective on that
from a state legislator.
But what you describe is sort ofthe situation that plays out at
(07:45):
least in our local market herein the Savannah area.
You have two systems andthey've effectively used the CON
to weaponize against each other, prevent each other from
expanding, and so now you havethis system where the tool
that's being used normally andwas designed to help ensure care
(08:06):
is provided is being weaponizedand used to prevent care from
being provided, purely becauseof market competition.
So you know, it's thattwo-edged sword.
Right, it has hurt and helped,but to varying degrees and in
different places.
A CON law helps and right now,at least in the Savannah market,
(08:29):
the CON law hurts, and sohopefully we can see that
straighten up a little bit inGeorgia with some of the reforms
they passed this spring.
Time will tell, because the lawdoesn't take effect until July
1st, so we're not quite thereyet.
The law doesn't take effectuntil July 1st, so we're not
quite there yet.
Tom Campanella (08:45):
Well, what I would be focusing on if I was in
Georgia and maybe you alreadydo this is instead of looking at
restrictive ways although again, there may be reasons
geographically to have some CONsin that.
So I'm not making a carteblanche statement, have some
(09:07):
CONs in that, so I'm not makinga carte blanche statement.
But I would focus on ensuringthere's price transparency and
quality transparency in themarketplace so both consumers
and employers can be morediligent and more aware of
value-based providers that areout there, or value-based
services, because that's theother thing.
Just because you know, you mayhave a provider that's really
(09:29):
strong in a lot of specialtiesbut very weak in orthopedics,
and you know because it justdoesn't mean just because you've
got a good reputation in hearts, for an example, doesn't mean
your orthopedic program is realstrong.
So you know, having thattransparency, which facilitates
a more competitive market, isimportant.
My only other question withGeorgia is what about new
(09:53):
players that want to come in,build outpatient facilities and
compete against your incumbent?
Does the CONs prevent that?
Yes, they did.
Aaron C. Higgins (10:05):
Again, there's been some reform, so it'll be
interesting to see how thatreform actually takes effect
because, interestingly enough toyour process, the state is the
one who oversees CONs in thestate of Georgia, so it's
already a state board.
But then if someone say, isgranted a CON, their competitor
(10:27):
can appeal that CON, which isthe situation that I'm
describing, where it getsweaponized.
So you have Hospital A, theywant to expand to the suburbs,
but Hospital B also wants toexpand to the suburbs but
they're not quite ready yet, andso Hospital A will get the CON
to expand to the suburbs.
Hospital B will then appealthat CON and it goes through
(10:50):
this very lengthy judicial levelprocess that will then tie it
up for years.
And so it's broken, at least inthe state of Georgia, because
now you have suburb areas thathave 100,000 people, that the
nearest hospital is a 45-minutedrive away, all because they
want to protect their littlecorner that they have, but they
(11:14):
don't yet want to invest in thesuburb area because they have
other plans etc.
So that's where I think theCONs, at least in the state of
Georgia, are broken.
Hopefully we'll be reformedhere Again.
The state law passed and nowit's up to the CON board to
implement those changes, sowe'll have to see how they
interpret the law.
Tom Campanella (11:35):
And you know, as we talked last time, hospital
inpatient is in effect goingdown.
More acute patients are goinginto the inpatient setting.
But the big growth area, as weknow, and it's growing like
crazy and it's always been likethat, but since COVID even more
has been the outpatient arenaand, of course, care in the home
setting.
(11:55):
So that outpatient arena, whenyou're talking about suburbs,
again, what I don't like aboutthe CON, if it prevents
value-based providers, you know,say ambulatory surgery centers
or whatever, from moving intothe region to provide better
value for both consumers andemployers, I would have a real
(12:15):
issue with those types of CONlaws.
Jason Crosby (12:18):
Yeah, exactly To Aaron's point.
Just further, sort of filteringdown the accessibility and
profitability of those ruralhospitals that they're trouncing
in on the competition there.
Yeah, got it.
Yeah, yeah, yeah.
So lots of changes.
I know you know this particularlegislation I went through, you
know kind of partisan lies, butyet there were some middle
(12:39):
ground to be had for futurediscussions.
You know maternity services,you know acute care hospital
being built, as long as theymeet certain trauma levels and
certain length of time.
So there's some stretching ofnuances as long as they meet
certain criteria to allow themto move into those counties.
But I'll be curious if thoseyou know actually take hold or
(13:01):
not.
Got it?
Tell you what?
Let's stay on the sort ofregulatory legislation side of
things.
Other items that Aaron and Ihave talked a lot about this
year on the FTC front, somerulings have been tied to data
breaches and non-competes.
Right, and we've talked a lotmore probably about non-competes
.
Love to hear your thoughts onwhat you're seeing or hearing in
(13:22):
the market and, just again,sort of like the CONs, how you
see that impacting providers,whether it's urban or rural
settings.
Tom Campanella (13:30):
Well, again, you're going to see a bias for
me and maybe it's my economicsbackground, but as much as
possible, I'm a big believer incompetition.
I'm a big believer incompetition and I think
(13:51):
competition can provideultimately, value.
But a key element ofcompetition, as I mentioned
before, is awareness of thedifferences between the
providers.
For an example and that's whereboth the price and the quality
component comes in the issue Ihave with non-competes and there
may be some rationale behind itin certain areas, you know, as
it relates to certain types oforganizations, as they've been
(14:15):
involved in certain research andeverything else that is very
important and proprietary andthe idea of them potentially
sharing that information orbeing part of another competitor
is a big issue and I can seethe rationale.
As it relates to non-competes,I in some ways disagree, but I
(14:40):
can understand the rationale is,for an example, if a hospital
purchases a physician group,they might feel there's key
value there in regards to themyou know are the physicians and
if all of a sudden they pay Xamount of dollars and these key
physicians leave to a competitor, there could be some issues
(15:03):
there and in either case thereneeds to be a way to make sure
that it's not totallyunreasonable.
Ultimately, the issue I havewith non-compete is it really
ultimately creates a lesscompetitive marketplace?
Now, all of a sudden, there's alot of disruption occurring in
(15:24):
healthcare a lot of differenttypes of organizations, all
different types and ifphysicians, for an example, or
other people in healthcare, arerestricted from going to
competitors, what that's goingto do is stifle competition
within that area and region aswell as put, I think, an undue
(15:45):
burden when they're talkingabout doctors and others having
to move from a geographic regionwith kids and you know, in
grade school and high school andeverything else.
I really think that that'sunfair.
So, and as, if I remembercorrectly, with the FDA ruling
on this, each and I can see whythey're doing this.
(16:08):
As relates to non-competes,they're going to be looking at
it on a case-by-case basis, youknow, as it relates to health
care, and so there's probablysome merit to that.
On the other hand, it couldprobably be a pretty slow
process too.
Aaron C. Higgins (16:24):
All righty.
Julia DiGiacomo (16:27):
Let's take a quick break.
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Jason Crosby (16:58):
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Yeah, there's some interestingstatistics that I recall from
that ruling.
One that stands out to me wasthey estimated something like
95% of those with non-competesalso have an NDA in place and I
thought that's quite interestingthat you've got sort of that
nuance of those duplicative sortof arrangements.
How much do you need in placeto restrict that?
But yeah, I found itinteresting.
(17:20):
You know, aaron and I havetalked about it quite a bit this
year already but how that mayhelp drive a little bit
innovation.
Like the FTC estimates, youknow they estimated an increase
in patients as well.
That'll come out into the mixbecause you have more
flexibility in employment.
Not sure how that'll unfold butwe'll see if it does.
(17:42):
You know, sort of.
Tom Campanella (17:43):
Give the patients more choices and then
again, you know, from anemployer standpoint, gives them
more options, as they may be.
You know, putting togethervalue-based benefit designs and
if you only have two choices,for an example, and you don't
like A or B, you know that's anissue.
More importantly, we see thisoutside of healthcare all the
(18:05):
time.
You know that's an issue.
More importantly, we see thisoutside of healthcare all the
time.
You know, again, as it relatesto computers, technology or
anything, it's evolving likecrazy and the world out there
and I think you're sort ofstifling that evolution which I
think ultimately will hurthealthcare, hurt healthcare
(18:25):
costs and quality.
Aaron C. Higgins (18:28):
Well, I also think too, it actually saves
money ultimately.
I can think of a few instancesI can't be too specific of my
own personal experience with apractice where a doctor left to
the competition.
They had signed a non-competeand there was this lengthy
lawsuit that was eventuallysettled out of court.
(18:49):
Think of all the money that wasspent on that.
Yeah but the lawyers did.
Tom Campanella (18:53):
Well, come on now.
Aaron C. Higgins (18:55):
Yeah, the lawyers, you got to pay the
lawyers.
Tom Campanella (18:57):
Yeah, you got to .
Aaron C. Higgins (19:00):
I think there's a certain bias there,
tom, but all that money that wasspent on something ultimately
hurt the practice.
It was money that they couldn'treinvest.
It was money that they couldn'thire other staff or buy
technology that was necessary toimprove the practice.
So I think ultimately theremight be outlying cases where a
(19:22):
non-compete hurts patient care.
I'm not disputing thatEverything's a bell curve.
I think, generally speaking,getting rid of the non-competes
will improve patient carebecause we're not going to be
spending money on these thingsneedlessly to fight in court or
make bad feelings.
Tom Campanella (19:39):
I agree.
Jason Crosby (19:40):
Another interesting thing to your point,
aaron, about costs is I believethey estimated close to like
$200 billion.
They estimate just from thistype of ruling over like a 10,
maybe 15 year span.
So that I found interesting aswell.
That's a pretty gigantic numberto come up with in addition to,
(20:01):
you know, 3% increase inpatient volume sort of thing to
hit both you know aspects of theP&L.
If you will top and bottom linethat, I'll be interested to see
how this impacts over the10-year span.
But yeah, more to come on thenon-competes.
But another ruling, tom, thatI'd like to get your input on.
Lots of you know cybersecurityissues, ransomware attacks et
(20:25):
cetera resulted in you know databreach rulings by the FTC we've
talked about before.
I know you've got some input onthat.
Tom Campanella (20:36):
I'd love to hear your insight there.
Well, you know that's a toughone.
You know, when you think aboutit this whole ransom stuff you
know you go back to even indifferent countries where it's
common practice, where they willkidnap people that work for
engineering companies orwhatever, and then you know it's
(20:59):
almost like a routine setupthey kidnap, you pay them money,
they get the people back, andit's sort of like a quid pro quo
.
They build it in, but you know,sooner or later you got to say
no and there needs to be ways toaddress it.
I recognize kidnapping is awhole different ballpark than
we're talking here, but still,as it relates to data, if we
(21:23):
continue to pay off these peoplethat are putting a gun to our
head, it's going to continue.
Our head it's going to continueand we need to find a way.
Obviously, one to be able tohave better security blocks from
a cybersecurity standpoint.
And number two, we need to have, I think, a national strategy
in regards to this, not to saythat every organization has to
(21:47):
follow it to a T, but we need tohave, I think, a more focused
national discussion, becauseit's only going to get worse and
it's affecting us in all walksof life and you know, as it
relates to healthcare, recentlyin the city of Cleveland there
was a breach at the city ofCleveland.
So you know, I'm not sure whathappened there.
(22:08):
Hopefully the breach was onlyin parking tickets, so I don't
have to pay that parking ticket,but we'll see what happens
there.
But ultimately it's an issuethat needs to be addressed.
It's interesting.
I've been at conferencesrecently sitting at tables for
dinner and I'll ask somebodywhat do you do?
(22:31):
And I can't believe.
Every year I'm sitting withmore and more cybersecurity
consultants.
I thought it was bad whenlawyers are increasing all the
time.
Now you got cybersecurityconsultants Everybody's a
cybersecurity consultant, butit's needed because it really is
.
You know the billions ofdollars as a country that we
(22:53):
paid out.
So I'm not a techie to be ableto give you the answer to silver
, and I don't know if there is asilver bullet answer, but we
definitely have to have astrategy to address this.
Aaron C. Higgins (23:05):
Well, I'll put on my old system administrator
hat for a minute.
You're right, there is nosilver bullet.
But honestly, this problemdates back to the 90s it's a
30-plus-year-old problem when wemade the mistake of inviting
what was then the former SovietUnion onto our internet.
(23:26):
They had their own internetthat they were developing, but
when the iron curtain fell, weinvited them on and it was kind
of the Wild West.
It was not a security-firstinternet that we invited them on
to, and so we invited somepretty shady folks onto our
internet, and this may be a hottake for some.
(23:48):
But we're now reaping what wesowed 30 years ago.
And now, you know, we havethese Western European and
former Soviet bloc gangs thathave turned to cybersecurity to
make their billions, and we'vemade it super easy on them by
having an internet that is notsecurity first.
(24:09):
Honestly, the only way to reallyfix this problem would be to
fundamentally change the way theinternet works.
I don't know if there is enoughpolitical will or enough money
in the world to actually makethose kinds of changes.
We're all so reliant on theinternet.
But the fundamental way theinternet works, it works on
trust instead of security firstLiterally it's.
(24:34):
I mean there's a reason whyit's called a handshake protocol
, because you're just trustingthe other connection inherently.
So we could spend billions moretrying to protect our
environments, but I actuallythink there needs to be a
fundamental rethink on how theinternet works, to inverse the
way that we're doing security onthe internet, because otherwise
(24:55):
this is going to continue tohappen.
It's going to be an arms race.
It's a digital arms race.
Who can hire and build the besthacking tools?
Who can hire and build the bestanti-hacking tools?
And it's constantly going to bethis way.
Particularly going back to youranalogy of ransoming or
kidnapping one or two engineersout in the oil fields, well,
(25:17):
what if you can kidnap 150,000patients and hold them at ransom
?
And that's what we're seeing.
We're seeing huge health caresystems go down.
I mean, all I need to say ischange health care, and I think
everybody shudders a little bitwhen, when you can hold millions
of lives and billions ofdollars ransom, you're going to
(25:40):
get paid.
That's just the way that it is,so that that incentive is
always going to be there,because if you don't pay,
literal people die or get hurttremendously.
Don't pay, literal people dieor get hurt tremendously.
And so, yeah, I think the onlyway to fix this is a fundamental
way of how the internet itselffunctions which is way beyond
(26:01):
the scope of our discussion.
Tom Campanella (26:02):
Well, I appreciate your background on it
in the 90s too and you know,with the fall of USSR and that
part I wasn't aware of, I didknow we were always looking back
in the 90s and late 80s andI've always talked about it was
trying to get that region of theworld to embrace capitalism.
(26:25):
I don't know if this was theexact way we wanted them to
embrace capitalism, but at leastin this arena they not only
have embraced it, they've goneto the nth degree.
So, yeah, you're right, it'ssomething that we need to be
able to address and, like I said, I don't know what the issues
(26:48):
would be about changing theinternet.
I got a feeling that that wouldbe a big challenge, but it's.
I think in the ideal world youwould love to see these
countries where this isoccurring, the ability to track
them down and have thesecountries in force and with us.
But you know, at least as itrelates to Russia, things
(27:09):
haven't been going too welllately, if you've been following
the news well, we did talk onwhat marshall plan, campanella
plan, I think we should mentionlast episode.
We're gonna have a lot of theseplans out there.
Jason Crosby (27:21):
We are solving world problems here, that's
right.
I mean you just.
We went campanella plan, forwhat was it?
Just health care altogether.
Aaron's decided we're going tojust reinvent it all together,
and then that's right.
Aaron C. Higgins (27:35):
Reinvent the internet.
Jason Crosby (27:37):
It's not the higgins plan or or algor 2.0
plan, I don't know what.
Tom Campanella (27:41):
Well, hopefully it won't be like uh.
When I was a kid, I remembergoing with my dad to the
neighborhood bar and, uh, andbeing so impressed at the age of
10 and 11 that these guyssitting at the bar had the
answer to all the world'sproblems.
I said, man, these guys must bereally, really smart Cancer.
(28:02):
They got the answer.
War they got the answer,whatever it happens to be, so
hopefully the MarshallCampanella plan would have a
little bit more meat to it.
Aaron C. Higgins (28:15):
Fair.
You know, going back to you,said it'd be great if the states
you know Russia, china, etcetera would actually help
enforce it.
The thing is is they aredirectly benefiting from these
hacks.
You know a lot of these arestate sponsored groups, so they
are getting some kind ofpercentage or benefit from
sponsoring these groups.
(28:37):
North Korea actually gets a lotof its funding from ransomware
and I don't think a lot ofpeople are aware of this.
It's also how they laundertheir money.
So you know, because there areso many sanctions against these
countries, they are turning tothe dark side of the Internet
and delving into the areas thatdirectly hurt people to make
(29:00):
their money.
I'm not saying we should liftsanctions, but sanctions are
actually part of the problem andare driving some of these
countries to the extreme ends ofdoing the ransomware.
So it'll be interesting to seehow the FBI and the FTC and the
other alphabet agencies continueto work on this problem.
(29:21):
I don't see it really changinganytime soon.
We're in a new hot war, it's adigital war, and it feels like
right now, at least the innocentbystanders, the businesses, the
hospitals, the average everydayJoe, they're the ones suffering
from this.
Tom Campanella (29:41):
You know, as the war unfolds online, yeah, and
speaking of war, the big issue,too that I think we all need to
be worried about is, as itrelates to, like, our defense
department and stuff like that.
There you know, you, just howmany movies have you seen where
you know where, all of a sudden,some third party is able to be
(30:07):
able to control our missiles andbe able to launch things
remotely?
You know, and have that abilityto have that secret black box.
They were able to get you knowinto that.
You know that's got to be anarea that we need to protect and
you need to know that,obviously, that no matter where
(30:27):
they're going now, that's got tobe, depending on the player,
one of their ultimate goals toget into those environments.
Jason Crosby (30:36):
I've got the solution Faxing.
Let's go back to fax.
Let's go back to fax, okay,your.
Aaron C. Higgins (30:44):
Crosby plan is go back to 1992.
Jason Crosby (30:47):
We actually just had a back and forth.
I'll just with a, I want to saya TPA, I'm just going to leave
it general A TPA on which securefax line to use.
So we're still in the fax.
Tom Campanella (31:01):
Oh got it.
Yeah, and for the audience, tpais third-party administrator
that administers healthcareclaims.
Jason Crosby (31:10):
There you go, and the fact that we're still
talking about which fax line touse with them is very
interesting to me.
But it's still being used andsome rural practices are still
utilizing it as well, so I guesswe can't laugh too much about
that.
It's still in practice, right?
Tom Campanella (31:27):
Well, you also have the bicycles too.
Where, what was it?
Silvers, whatever, but theywould do all the back and forth
with mail and everything else byimmediate mail through bicycle
delivery service in the bigcities, uber.
Jason Crosby (31:44):
Hey, we're there.
Tom Campanella (31:45):
And Uber right.
Jason Crosby (31:46):
Uber Health exists .
It's a national entity.
Who knows?
Tom Campanella (31:49):
Okay, I'm back to the bar scene.
And what world problem are wegoing to take care of next?
It's an actual entity.
Who knows?
Okay, I'm back to the bar scene.
What world problem are we goingto take care?
Aaron C. Higgins (31:57):
of next.
Let's take a quick break.
We'll be back in just a moment.
Julia DiGiacomo (32:02):
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(32:24):
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Jason Crosby (32:35):
Well Day, let's let's wrap a bow on this.
We touched on value-based careearlier this week.
We're talking a lot aboutlegislation and regulation and
such.
Now maybe we can tie thosetogether.
So, you know, let's touch onvalue-based care a little bit
again.
Just general thoughts on onhospital stream, but also with
(32:55):
your background, where thatvalue-based care is maybe
impacted by various tort reformas well.
That's out there.
There's got to be a lot ofoverlap between the two.
I want to get your insight onthat.
Tom Campanella (33:08):
Okay, again, going back to my background, for
13 years I was vice presidentof healthcare finance and care
management of Blue Cross of Ohio, which is now Medical Mutual of
Ohio, and in that arena we wereresponsible for all the
different reimbursementmethodologies that were out
(33:29):
there.
Diagnostically related groups,drgs you know those types of
things and, needless to say,despite what some people think,
we were really trying to incentvalue in the marketplace,
obviously make profit, but atthe same time share that profit
with employers and consumers init.
And it was, you know, always abig, challenging thing.
(33:53):
But where I the lesson learnedfrom that experience was as I
think we touched on it a littlebit before is how you pay for
services.
The revenue stream andeverything else will dictate a
lot on how providers respond.
Providers respond so, for anexample, if it's bundled
payments or other things, theymay.
(34:14):
You know the whole theorybehind that is to promote
efficiencies.
Diagnostically related groups,drgs where they're given a lump
sum of dollars for an inpatientcare, it winds up in sending
them to release a little bitearlier, rather than keeping
them in the hospital too long orrelease them to lower cost
settings.
So there was a lot of positivethat you know potentially gets
(34:37):
out of it.
So where I'm saying is, as itrelates to value-based care, it
really starts with value-basedreimbursement, that
reimbursement that incents andprovides value and incentives to
the provider, and incentives tothe provider, like a hospital,
to be able to provide that.
Right now we have areimbursement methodology, as
(35:02):
we've talked about previously,which is fee for service that
overall basically incentsoverutilization and that's one
of the major reasons why we haveescalating healthcare costs.
So we need to come up with sometype of other stream and you
know and there's differentdiscussions about hybrid models
some form of capitation which isbasically a per member per
(35:22):
month, where a hospitalhealthcare system or whatever,
as an example, would then beresponsible for all that care
for the individuals that are inthat plan you know, if there's
2,000, 3,000 people, say, or10,000, and they would get per
member per month, actuariallymoney from the carrier or
(35:44):
whoever the payer happens to beCould be a Medicare Advantage
plan too, or Medicaid managedcare and then they would.
You know the way they mademoney, because the name of the
game is the provider nonprofitor profit is looking to make.
Money is, in this case, to beable to provide and keep people
healthy and, at the same time,make sure that they're providing
(36:07):
optimal care, not unnecessaryservices, unnecessary surgeries.
Care, not unnecessary services,unnecessary surgeries,
unnecessary referrals tospecialists, which are all
occurring today, and so all ofthat makes a lot of sense, you
know.
From that standpoint, we needto evolve to that.
Where the challenge comes is youknow, if you're a CFO of a
(36:30):
hospital, you're in a reallyperplexed situation.
Put yourself in the seat of aCFO of a hospital.
You're in a really perplexedsituation.
Put yourself in the seat of aCFO of a major hospital system.
Currently, right now, you're ina position the way you get
revenue, the way you'resurviving for-profit or
non-profit is, in effect, byfee-for-service reimbursement.
(36:51):
And you know, and you'regetting that stream Now, as you
get into and you're trying toprovide more value-based
reimbursement, which, by itsnature, means there may be less
referral to specialists, theremay be less tests done, well,
those, historically, have beenrevenue sources for you.
(37:11):
So how do I, you know, sort ofmaneuver myself to be able to do
that?
And how do I address where Ihave certain individuals that
are in a value-basedrelationship and others that are
not?
Do I treat them differently,like I put them in one bucket
versus the other.
Oh, this is one that we don'thave an issue referring to
(37:34):
different tests and specialists,but this one we need to
cart-baunch.
I mean, you know you also havelegal issues coming out of that.
Well, you know, all of a suddenyou treated this group one way
and you treated another groupanother way, you know, and it's
all about your profits.
So there's a legal issue there.
And then, finally, where theother issue is and then we can
(37:55):
have some back and forth on this, is tort reform.
Here we are telling, for anexample, you've heard the term
defensive medicine, which isdefinitely a situation that is
out there.
And so one would say physiciansand hospitals might provide,
they may feel there's a certainlevel of care that needs to be
(38:17):
provided for an individual, butto protect themselves from a
lawsuit, they might say, okay,we're going to do these extra
tests because we don't want tobe sued, or we're going to do
this additional procedure justto be on the safe side.
In that, this additionalprocedure just to be on the safe
side in that, and even thoughthey recognize there is less
(38:37):
value, they're in a positionthey're really protecting
themselves defensively from anytort form or lawsuits that are
coming out of it.
Well, if you are really goingto address value-based, trying
to create an environment whereoptimal care is going to be
provided, there is always goingto be those exceptions where
(39:00):
this individual, if he wouldhave had, winds up getting
cancer or has a health issue andthe lawyers come out and say,
yes, but if you would have donethis test, this test and this
test, you would have found it.
But you come back and saying,yes, but based on the evidence
and evidence-based protocols.
(39:21):
That's something that wouldhave added.
You know, this is a one in amillion or one in 100,000 or one
in 5,000 chances that thisoccurs.
It doesn't.
You know, really is not aneffective use of resources from
a society standpoint.
So I think there needs to be,going along with the focus and
(39:42):
push for value-based care, thereneeds to be also major tort
reform from that standpoint,possibly tying it.
There's a number of ways toaddress tort reform.
One way would be to really linkit in even more with
evidence-based medicine that canbe potentially used and you
(40:04):
know, and this is very muchrecognized evidence-based
medicine and it would need to befrom a third party and at that
you know clearly out therethating, you know poor outcomes
overall, you know from not doingthat extra test.
(40:38):
So there's a balance in thosetypes of situation.
The other issue, just as anaside with malpractice, the US
is definitely different thanmost countries.
We do not.
We're one of the few countriesthat have contingency base,
which incents in many waysindividuals to file lawsuits
because they have nothing tolose, and you see the
(41:00):
commercials on TV and everythingrelated to that.
Then you're also in a positionwhere we have jury trials.
We have sort of jury trials,trial by your peers, who none of
them have any real healthcareunderstanding and, as experts on
both sides make theirpresentations to the jury,
(41:23):
aren't necessarily in the bestposition to evaluate and make
the right type of decisions, anda lot of times those decisions
are more emotionally based thanfactually based.
So what a lot of times thosedecisions are more emotionally
based than factually based.
So what a lot of othercountries do is they have a
three panel group of judges thatare also involved and have
(41:44):
background and their specialtyis as it relates to health care,
and they have an understandingand experience in that
particular arena and a certainlevel of expertise.
A pre-judge panel makes thatdecision, or there may be other
ways to address it.
So it is something that we needto, and when you talk about
malpractice and tort reform,you're really talking both at
(42:08):
the federal and state level, butit is something that needs to
have the discussion occurring.
It may be occurring today Idon't see it, but I think you
know it definitely will besomething that needs to
accompany value-based care.
And then, ultimately, as I saidbefore, the fuel for the growth
(42:29):
of hospitals has beenfee-for-service.
So as we push more and more fora whole different type of
reimbursement, it will createsome major challenges for
hospitals.
They will need to change theirbusiness model.
But think about it Instead ofjust saying, oh, because of that
, we don't do anything.
(42:50):
Maybe we need to look at howother industries the banking
industry went all through this.
The auto industry, the steelindustry all these industries
have had major changes and,based on competition or whatever
, had to become more value-based.
Auto industry, let's face it,cut down plants throughout the
country.
People lost jobs or whatever,but they tried to recreate
(43:14):
themselves to be morevalue-based Hospitals, depending
on the hospital I don't want tocarte blanche say it across the
board many of them are stillworking off of their old
business models and they need toevaluate and come to more of a
value-based business model thatis focused on a world of
competition.
(43:34):
That's my story.
I'm going to stick to it I loveit.
Jason Crosby (43:38):
you know you're exactly right with the various
reimbursement models that areout there now.
It's just only going to getmore complex, right.
Whether it's fee for serviceand we're in georgia, it's
value-based is a little bit moreslow adoption, but it's
value-based is a little bit moreslow adoption.
But you've got, you know, acoand MSSP side and those same
entities are going to have acommercial contract portfolio.
(43:59):
Within that commercial contractportfolio, some may be, you
know, upside risk only, some maybe two-sided risk.
There are just so many modelsthat a small practice, for
example, has to keep up with thenuances within each of those
agreements and in and of itselfit's just going to be
complicated.
(44:19):
So completely understand whereyou've got to have some
compliance checks in there andoversight aside from the
clinical side of things, justmaking sure you're checking the
boxes on the reimbursementmodels as well.
It's just a little bit much.
Anyways, I know we're runningup on time.
We've solved a few worldproblems.
Tom Campanella (44:37):
Guys, I really enjoyed this conversation.
I mean, we survived withoutMike, which isn't necessarily
easy, but I think we made it andhopefully we can have these
discussions periodically.
Aaron C. Higgins (44:50):
Yeah, we really enjoyed having you on and
would love to have you back Ournext season.
We usually take a small summerbreak here, but our next season
will be starting up probably inabout the late August early
September timeframe and I thinkyou'll be visiting our area, so
(45:10):
maybe we can sit down and havean extended conversation sitting
at the bar and then he and youknow, we will basically, as I
said before, address all theseworld problems that we're trying
(45:37):
to do it.
Jason Crosby (45:38):
I think it's a great setting for it all, I
think that's perfect you know,just like southwest, you know
they developed their businessmodel on the bar napkin.
I think the campanella crosbyhiggins plan is best served at
pinky masters.
Masters, here in downtownSavannah, the first logger is on
air.
You got it Sounds good.
Tom Campanella (45:59):
to me Sounds great.
Aaron C. Higgins (46:01):
See you, gentlemen.
Thank you, tom.
Good talk, Tom.
Take care.
This has been an episode ofBeyond the Stethoscope Vital
Conversations with SHP.
If you enjoyed this podcast,please be sure to rate and share
it with your friends.
It sure helps the show.
Jason Crosby (46:15):
Production and editing by Nala Weed.
Social media by Jeremy Miller.
Aaron C. Higgins (46:20):
And our co-hosts are me, aaron C Higgins
and Jason Crosby.
Our show producers are MikeScribner and John Crew.
Jason Crosby (46:29):
Thank you for listening and we'll see you next
time, just like before, wesaved the most important
question for last.
Thank you for listening andwe'll see you next time.
We'll keep it unsportsmanlikethis time.
(46:50):
Tom, if you had a superpower,just one, one superpower, what
would it be, and why?
Tom Campanella (46:59):
I guess I would say the ability to fly, because
I've been so frustrated with theairlines lately and between
cancellation and delays and Isee these birds having no
problems at all and they lookdown on me and sometimes if I
look up I got a duck real quickbecause something may be coming
from the birds.
But I'm thinking they got itright and so maybe that would be
(47:21):
the issue the ability to fly.
Jason Crosby (47:23):
I love it.
I love the reasoning behindthese.
We always ask these kind ofquestions.
The reasons always catch me offguard, but I love that one.
There you go.
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