Mike Long is chairman and CEO of Lumeris of St. Louis, MO.
Tell me about yourself and the company.
I’ve been in the software industry since its early beginnings, almost the beginning since when software was separated from hardware as a bundle. I worked in and around large financial services, insurance companies, healthcare organizations, and also in the geophysical science space. I’ve worked through multiple technology migrations to mainframes to client server to Internet to cloud computing.
We are a company that was – it’s somewhat an abused term – “purpose built” for accountable care. We started down this journey over seven years ago before accountable care was as obvious as it is now.
We have four entities inside the holding company called Essence Group. Lumeris is our technology platform company. We’ve invested in building a cloud computing infrastructure to integrate all the data and deliver it to the right person at the right time. The connectivity company is called NaviNet that we purchased in partnership with three large payers to make sure we got access to the market as far as delivering improved decision-making tools and content, particularly to providers.
Then we built a proof-of-concept company where we actually manage 40,000 lives of seniors. We’re responsible both clinically and financially for their healthcare, where we have proven the concepts around accountable care over the last seven years. The final component of who we are is we established in educational institute called the Accountable Delivery System Institute, where we educate industry leaders in everything that we know about accountable care.
You have an interesting perspective in having both the technology arm as well as actually running the accountable care organization arm.
Very odd. [laughs]
A lot of folks are probably interested to know what lessons you’ve learned since most of them have a long way to go to get where you are now.
The number one learning is that it’s harder than we thought than seven years ago, probably not a surprise. But the good news is we’re seven years in and we didn’t lose faith. We’re very pleased with what we have learned and what we’re able to now translate into helping partners in the industry actually make this transformation.
One of the biggest learnings is if you look at the fundamentals of accountable care, it’s the right tools, which are very important. It’s obviously the right information and the timeliness and quality of that information. It’s also incentives. You need all three – the right tools, the right information, and the right incentives — to incent the providers and consumers to actually use all this great information we now have. That’s a big learning.
We would have liked it to have been just, “Let’s build great technology” and that would be sufficient. It’s necessary, but not sufficient. We found that we share a huge burden of responsibility to help providers. Largely we see accountable care as — from an economic perspective — massive risk-shifting to providers, financial risk-shifting. They’ve always had clinical risk.
We find that we have a responsibility to help them make that transition: the cultural changes, the workflow changes, make sure the incentives are aligned as well as adapting new technologies to effectively manage a much higher level of risk. That’s a big learning. We are in the transformational services business as well as in the technology business.
Being a practitioner gives us an enormous innovation laboratory to learn from, to figure out what works and what doesn’t work. We have a very good handle on what does not work. An ability to learn from that is immeasurable. And of course this gives us credibility that if we were just a technology company trying to deliver cool technologies that work really well in the software lab, but in the real world just don’t work quite as effectively. We don’t have that credibility issue as we work with providers and payers and participants in this new accountable care market segment.
Do you think providers are jumping in to being committed to some version of ACO without really knowing what the heck they are doing?
Yes. I admire them for taking the leap. Everybody’s got to make a choice here. Is accountable care discontinuous change and disruptive innovation, or is it another head fake by healthcare? We’re seeing, particularly both in the payer and the provider community — and we are agnostic in our model — three variations forming out there.
We see payers and providers choosing to collaborate around accountable care, taking advantage of their historical core competencies — particularly the payer’s financial risk management skills – and doing this collaboratively.
Then we’re seeing the model where the providers are saying, “I’m going to do this myself. I’m going to fully integrate all components of the supply chain.” You know, the Kaiser model, the IDN model.
Then we’re seeing that on the payer space, where they’re saying, “Providers, for whatever reason, we’re not going to be able to collaborate with providers in their market, so we’re going to have to create a vertically integrated solution here.” Providers that are taking that route around ACOs or vertical integration, our advice to them is be aware of all the competencies that you actually have to have in place to manage both clinical and financial risk.
We’ve gone to a great deal of effort from my seven years of learning as a practitioner to break accountable care down into what we call 22 core competencies. There’s not enough time to go through all 22, but the fact that we have done that gives us credibility to be able to educate a practitioner of accountable care or a future emerging practitioner on where they need to apply technology, where they need to apply business model changes, where cultural change has to occur, where new incentives need to be put in place, where new workflows need to be put in place.
If everybody’s got their eyes wide open, all of these models will wind up working successfully. If they don’t have the necessary core competencies, there’s going to be some spectacular blowups.
Are organizations jumping in early because they really believe they can be successful in outcomes and margins or are they just trying to hold the position they have against others who are doing it?
We’re blessed to be able to spend a lot of time with leadership in both the provider and the payer community, particularly the organizations have taken advantage of coming to our institute. We find different motivations, so it’s not one size fits all.
In some cases, it might be a market share battle in that particular community, where there is concern that if they don’t make this move, whoever controls – I use that word “controls” very loosely here – the membership or the patients in that community, many organizations feel they’re going to have to make this leap to be able to compete for share.
Some organizations are making the leap because they know the burden of their cost structure is too high. Their cost structure might be 40 percent too heavy and they’re jumping into ACOs to train their organizations on how to become more efficient and to make this a soft landing on the other side, assuming the momentum towards accountable care is going to continue. We actually believe it will, because the government is determined for it to continue. Without the government incentives around government programs, I don’t think the market would be moving as quickly as it is.
Then we see organizations that see accountable care as an opportunity to retool their business model, and rather than defend their current position, to actually take share and leverage the core competencies they already have as well as new ones. They’re taking a very aggressive offensive move. We see both defensive and offensive moves.
You’ve said that you tried to bend off the healthcare cost care with Healtheon/WebMD and failed. Do you think you can do it now?
I hope so. We can’t do it by ourselves. The lessons learned is that is it’s a big collaborative effort to get this done. I’m more optimistic than I ever have been in the industry. Twelve years ago, I certainly held the belief, among others, that just the existence of the Internet, which yields data transparency, was enough to restructure an industry and to lead the restructuring. Actually that’s largely been true in almost every industry except for healthcare. We underestimated the resistance to data transparency that healthcare as an industry had. It was just not in their DNA.
That has broken down over the last decade. The tools, the technologies, the ubiquitous connectivity makes this technically fairly low cost and easier to do, but fundamentally, the willingness of leadership — key leaders, not every leader in healthcare – but key leaders to step out and say, “OK, I’m going to share my data and my information, but I expect everyone else to share with me and we’ve got to focus on the health of our population.”
When we got started down this path seven years ago, we thought there was special sauce around population health management. This was before Mr. Obama was elected President, before the Affordable Care Act. The population health management resonated with us and was driving a lot of our innovation, particularly providers who wanted to assume financial risk. Now we see leaders of health systems, hospital-centric systems as well as payer systems, saying, “You know, I’m a community-based healthcare delivery system. I’ve got to find out a way to manage this population more effectively.”
We’re excited about that, because that means they need better tools. They’ve got to have better information. They’ve got to be willing to share. Our world with accountable care requires a multi-payer, multi-provider environment in a local community to actually achieve the benefits of accountable care. It cannot be a closed proprietary business model or solution. It just can’t.
Every vendor says they have analytics, tools with vague descriptions that make it hard to understand how the client will use them. How are providers going to sort out what exactly they need and who they should buy it from?
I think providers have got to make a clear choice here. Do they look for solutions that are broad enough and tested enough and to actually manage the target environment where they want to go longer term, knowing that everything evolves — requirements change, technology changes? In other words, being a true population health manager? Or are they going to take incremental steps to get there from the fee-for-service world?
There are steps some organizations have decided to take rather than going all the way. You start with, say, pay-per-performance around quality measures. That requires good analytics, so you’ve got to have an analytics solution to do that. Kind of the next step up the ring is gain-sharing. It’s upside gain-sharing, no downside risk. That requires a lot of process tools, particularly around care management. Then the next logical step is, do I want to manage both upside and downside financial and clinical risk? That requires a lot of data aggregation — financial data, claims data, clinical data that’s in various EMR systems, and the like.
Finally, you get to what we used to call global capitation. You’ve got the whole risk. That requires a comprehensive population health management solution.
What have providers got to decide to do? Am I going to be a systems integrator? In other words, am I going to go out and buy all these packages? This is a viable strategy. I’m going to systems integrate those packages and hope at the end of the day it adds up into a population health management solution, and I’m also going to have to develop competencies around data aggregation. Or do I go and put in place a solution now from a population health management perspective that can manage my destination solution? That’s the choice that they have to make.
There’s lots of point solutions out there that are really of high quality — good analytics packages, good care management packages, there’s good data integration solutions you can buy out there. But who’s going to have the responsibility of integrating all that into a coherent, cohesive, efficient platform? Platform is a word I’m sure you’re tired of hearing, that word platform. Nobody wants to do a product any more – we’re all platforms. But I can assure you that population health requires a platform approach — in our case, these 22 core competencies are our definition of a platform — effectively integrating all the solutions for each one of those core competencies in an integrated, flexible architecture.
Those are viable strategies. We feel that we should plan long term make investments now to your destination, as opposed to taking incremental steps in what may prove to be expedient, short-term solutions that exacerbate the problem.
Where do EMRs including the one you offer, fit into the vision?
We have chosen not to compete as an EMR vendor in the market in any meaningful way. It’s a part of our laboratory of understanding of how you implement functionalities – “functionalities” is not even a word, the software people invented that word — that tend to be resident inside of an EMR can be part of the destination of an EMR. We tend to operate at the population health level.
The way we see the market is that there are three fairly distinctive workflows that are emerging around accountable care. One of them is a clinical workflow that is built around the EMR. The industry is making huge investments in installing EMRs. The beautiful thing about that is we’re finally — certainly on the provider side — getting rid of a lot of the silos of information, and certainly we’re eliminating paper-based systems completely, finally. Once information is digitized inside these EMRs, that’s a wonderful thing, because once data is in digital form, you can do a lot more with it. That’s one workflow.
There’s a business workflow that tends to be influenced and controlled by hospital administration systems in the case of hospitals, or practice management systems in case of physicians.
What we found is that there is a third workflow, the population health workflow, that needs to tightly integrate with the clinical workflow of the EMR and the business workflow of the hospital administration and practice management systems. The EMR is a critical component of this. I admire the EMR companies that have helped digitize certainly the clinical side of healthcare over the last three or four years. But population health is different.
I’m sure you get asked this a lot, but describe your philosophy of missionary versus mercenary.
Everybody makes a choice when they’re building a business. It’s not one is better than the other, it’s just that they produce different outcomes.
The mercenary approach, which is a very valid approach, says, “I want to make a lot of money or I want to build a successful company. What problem do I need to solve to make a lot of money and build a company?” That’s the mercenary approach. It’s not that mercenaries are bad people. As a matter of fact, in this country, it has provided enormous incentive for innovation.
Then there are missionaries. The missionary says, “I want to solve a really important problem. I’m going to focus on solving that problem because I believe in the country, I believe in the economic system in this country, that if I solve a really important problem, the economics will work out.”
In both cases, the goal is to build a sustainable company, because if you don’t build a sustainable company, you can’t commit to service your partners and customers long term. It’s just a different philosophy.
We’re very much a missionary company focused on solving the problem as opposed to maximizing the economic outcomes for us in the short term. We’re not a charity, but we are willing to defer economic gratification to some distance into the future. As a matter of fact, we never discuss what that might be. There’s never been a discussion of exit strategies with our board. There’s a lot of those discussions, particularly around healthcare IT companies, and that’s just not who we are.
We are focused on trying to be reliable, significant company to help the US healthcare system make this transition to accountable care. We can’t do it by ourselves. That’s our mission. That’s what gets us up in the morning and as we go to bed at night thinking about it. A lot of passion, and hopefully we control that passion so we don’t create unrealistic expectations.