Part Four, conclusion of Interview with Arnold Milstein, MD, Professor of medicine at Stanford, and co-founder of Pacific Business Group on Health an

Preface: Mercer Chief Physician and US Health Care Thought Leader Arnold Milstein, MD, has been appointed a tenured Professor of Medicine at Stanford University, where he will establish a new research center dedicated to accelerating innovations in health care delivery in the US and globally that improve the value of health care.

Because of its length, this interview has appeared in four part/ What Dr. Milstein is saying takes time to digest and is best read in three parts to leave time for pondering.

The opinions expressed by the interviewee do not necessary reflect the positions of the interviewer.
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Q: What were the new organizational models that you studied and described in your “Medical Home Run” paper in Health Affairs?

A: They form a spectrum. Some have been around, though often unappreciated, for over ten years. Others are newly evolving. They include primary care doctors owning and operating Medicare Advantage plans, visionary PCPs operating in progressive independent practice associations, as well as advanced multi-specialty groups and hospital-medical staff organizations.

Q: Which model did you find the most innovative?

A: Two Medicare Advantage HMOs founded and owned by visionary PCPs willing to take a big financial risk. Rather than complain about stress and underpayment of PCPs, they seized upon a new business model that freed them from their constraining relationships with their predominant insurers. They formed specialized new organization to fund and care for seniors.

Q: What’s unique about this business model?

A: Creative, ethical primary care practices realized that they could not afford to care adequately for sick, unstable patients if they were only paid for face-to-face care. Those that didn’t start their own MA plans forged novel payment relationships with their predominant payers before the term shared “ACO” was ever uttered. This allowed them to participate in the downstream savings generated by their intensified care models. It also funded the intensified care required to keep very sick people out of health care crisis.

Their innovation was two-pronged. It included innovations in the payment arrangements with insurers and in the care model.

Q: How does this tie in with the idea of hospitals and doctors negotiating bundled pay arrangements and sharing savings?

A: Provider participation in downstream savings can occur via several vehicles. On one end of the risk-sharing spectrum are physicians who start and operate their own health insurance company. In the middle is a kind of “super DRG” – a single payment is made to a combined hospital-physician entity to cover institutional and professional services for hospital stays and a 30 to 90 day post-hospital period.

On the other end are shared savings payments from payers to all providers involved in lowering health care spending per adult illness or annual per capita spending trend, if quality also increases. The common thread is use of payment innovation to allow physicians to take accountability for improving clinical outcomes and lowering total health care spending by improving their clinical effectiveness efficiently.

There is tremendous unlocked potential among American clinicians and hospital administrators to innovate in their methods of delivering care. Once we give physicians and hospital leaders strong incentives to generate more health with less money, we will see a faster of valuable clinical innovation.

We saw this in California in the early and mid-1990s when California‘s managed health plans began delegating responsibility for managing total annual per capita spending to organized physician groups. It spawned valuable innovations in California care delivery, such as, the hospitalist model.

Q: An expectation exists out there that HIT in general, and EHRs in particular, will transform and improve health care. What is the potential of an interoperable IT system linked by EHRs?

A: The preponderance of evidence is that when well-chosen HIT is put in hands of highly motivated physicians who are supported by skilled managers, it enables big improvements in care. Like any tool, it carries a risk of adverse consequences. However, its potential for benefit far exceeds its risks.

Q: Early on, you mentioned Kobe Bryant of the Lakers. Because of your education at Harvard and Tufts and later in California, you must be a little schizophrenic about the outcome of the Celtic-Lakers NBA finals.

A: I am from Wisconsin. My loyalty lies with the Green Bay Packers and the subtle delivery system design innovations of Vince Lombardi.

Q: With that confession, I will pack this interview up. Thank you for sharing your thoughts.