Wow, your Zoom/Teams/Skype skills must be better than mine! "She noted that she thinks relationships are deeper because there has…
Todd Cozzens is CEO of the Accountable Care Solutions group of Optum.
Give me some brief background about yourself and your new job within Optum.
We were on our way to going public last year with Picis. Along the way, healthcare reform hit smack dab in the middle of that process. The services business of Ingenix — really, the analytics and information technology part of that business — was getting much more involved in the provider space.
They really started to see what’s going to happen in hospitals for the sickest patients. Hospitals are going to become big EDs, ORs, and ICUs. You’re going to need a technology that can give you the data to follow those acutely ill patients. That’s why they were interested in Picis. We talked, it was a good fit, and we finished that transaction almost exactly a year ago. I joined the company and stayed on.
About four months ago, we started a new business unit called Accountable Care Solutions, which is really the bringing together of the technology — the analytics pieces, the clinical transformation capabilities, some population analytics — clinical transformation, and care management capabilities. Those are the three essential components, and these are fairly service-intense technologies. There’s technology at the core, but you need actuaries on the population health, you need clinical people, change management people, on the clinical transformation end you need one-on-one people, case managers on the care management piece. Those are the capabilities that we have in this new business unit.
We signed our first major deal with Tucson Medical Center last year. That’s getting close to going live. We’re working on several other of these where we are really enabling what we call Sustainable Health Communities. Not really ACOs, because ACO is a defined term by Medicare.
It’s been really exciting. It’s the third time in my career that I’ve been at that next big change point in where things are going. I think we’re in the top of the first inning of the biggest change in healthcare that we’ve seen.
You obviously made a fortune selling Picis to Optum, but then you had to turn your company over to a bigger company, ending at least one chapter of your role as an entrepreneur and starting a new one as a corporate executive.What was going through your mind?
Throughout my career, I’ve been able to change my thinking cap and my leadership cap from a small-company entrepreneur to a bigger company CEO. My only bad experience was when we sold Marquette to GE. GE doesn’t appreciate domain experts that they bring in. They like to bring in their lighting and plastics leaders and put them over the healthcare businesses that they acquire.
Optum was more experienced. They’re just chock full of domain experts from all aspects of healthcare. I thought I was a healthcare expert, but I can tell you after being with all these guys on the actuary side, on the payer side, on the provider side, on the physician side, and all the capabilities they have in government policy and analytics and payer mechanics – it’s incredible the knowledge within this company. They’ve got a lot of great thinkers and they’ve got a lot of raw research being done.
I’m extremely impressed by the depth and breadth of the talent in this organization. That’s why it’s been exciting and refreshing, especially as we approach this more collaborative model of care that we’re seeing.
How is the company approaching that market?
Optum is purpose-built for this. The payer part of Optum deals with 1,700 payers, not just United, so they’ve got a huge portfolio of products and services that they enable payers with. On the provider side, with the acquisition of Picis, Executive Health Resources, A-Life Medical, etc. you’ve got big revenue cycle practice, big clinical performance practice, big consulting, one of the largest Epic implementers. Then on the government and policy side with Lewin Group. It’s really been a very strong combination of skills that we’re able to bring to bear into a hospital.
These Sustainable Health Communities or ACOs are really being led by health systems. The larger IDNs are now starting to really grasp that this is where they got to go. They’ve got to learn how to adopt a lot of the techniques that payers have used for years. Not just how to analyze my census, but how do I analyze population in the community, and how do my lines of service relate and adapt to that population? Do we have the correct number diabetes experts and doctors and care services? Can we predict what’s going to happen? Are lines of service performing above or below national benchmarks? Are we looking at the patient care more longitudinally rather than transactionally?
As hospitals go from fee-for-service to fee-for-value — which many are doing — they’re going to need a lot of help. That’s not been their core expertise in the past. They’ve been focused on core operations in the hospital and not even that much on the pre-hospital or post-hospital care. But they’re the ones that are leading this new kind of care model. They need to pick up a lot of these skill sets and capabilities to be able to manage risk. That’s what Optum. with all the analytics technology and capability in this area, has been doing for years on the payer side.
Enabling Sustainable Health Communities is our core focus. We help clients with the three qualities they need to build them – connected, intelligent, and aligned.
We says Sustainable Health Community because a) it’s got to be sustainable, because the current system is unsustainable; b) it’s community-oriented — you’ve got to understand the entire community, not just the patients who are coming into the hospital census. Health is not just about who’s getting sick — it’s about how do you keep people out of the hospital. That’s what we really focus on. In order to do that, we tell hospitals that you’ve got to have these three capabilities.
You got to be connected. Your physicians and your hospital and your payers have got to all be connected and looking at the same set of data. That’s what happens when businesses vertically integrate — they get connected. They’re going to be aligned and incentives align in how you’re looking at the data.
Intelligent means you’ve got to be intelligent about it because you got to have the analytics and be able to look at the patients, the population health empirically. We bring those three capabilities around those areas and it’s been taken very well in the marketplace.
Kaiser is one of the few programs that has really addressed population management. Do you think others can follow their lead, and if so, what kind of technology are they going to need compared to what Kaiser has invested in?
Kaiser’s done a lot. They’re a health plan, provider, and a physician group all under one roof. We look forward to the day where it’s not just the Kaisers and the Geisingers that are recognized as the collaborative care models.
We see virtual Kaisers being put together every day, or even more integrated models where the IBM might want to start their own health plan. In addition, as everybody knows, the IDNs are back to buying up physician groups like there were during the managed care days, but there’s a much different motivation for doing it today. They’ve got better tools to manage that.
But you’re right. In order to integrate to a more collaborative model, they’re going to need the type of technologies we have to enable them. We see large IDNs and community hospitals like Tucson Medical Center who are getting ready. Some of them are starting with their own employees. Some of these health systems – 38,000, 40,000 employees – that is a great population to go at risk on. They’re already self-insured in most cases with these.
Some are just trying to realign with their payers. Some want to get clinically integrated to pass FTC muster. Some want to do it comprehensively — they see this as the future. They see that with the way that healthcare reform is going, with the federal budget cuts, that they’re going to have to do entitlements. They don’t see any way to avoid moving in this direction.
One of the presumably unintended consequences of the combination of Meaningful Use and Accountable Care Organizations has been that practices are selling out because they really can’t compete technologically. Do you think we’re better off with fewer independent physicians and even more dominant healthcare systems?
I think in most markets there’s going to be two or three viable competitors. I do believe, though, that the real benefit out of this is much more collaborative care. In other words, the less transactional care, much more focused on longitudinal care, where you understand what kind of population is going to come to the hospital, you transform the way you take care of those patients, and then you follow them up individually, post-discharge — are they taking their meds, etc. Then you overlay that with significant wellness programs. That’s the new model. That will benefit all of us greatly.
As far as the competition point of view, healthcare is a $17 trillion business. Hospital and physician care is $3 trillion. I’ve never seen a trillion-dollar company, so I think there’s going to be plenty of room for competition and innovation.
Healthcare is local, so it will be specific by market. That’s its competitive nature. But in most markets, there will be viable competitors. There will be the ones that really grasp this whole concept of accountable care and collaborative care before the others and enable themselves. They’re going to be the real winners. There definitely will be some more consolidation and there definitely will be some winners and losers in this.
There’s some urgency for providers who’ve never really been very good at working with each other to suddenly come together in a way that’s mutually rewarding and efficient so they will be ready to take on broad risk for outcomes. How long do you think it will take for them to be ready to do that? Will it be in time given the push to have ACOs in place?
The legal push here is the CMS’s definition of 2014 rules coming into effect. I think it’s going to take longer than that, there’s no question about it. Implementation of all those regulations will take longer than expected.
We’re seeing a three- to five-year horizon, where early adapters like Tucson Medical Center and others that we’ll see in the 2012, 2013 timeframe. You’ll see a big early market the end of 2013, and then you’ll see an early majority in 2014, 2015.
There’s a lot to do. The ideas are already pretty well organized. The ones that already have some sort of risk pool, you know, they may have a group left over from the old days or they have done something with their own employees or something. The ones that have already done some experimentation with risk will be the first ones to cross over.
There’s a lot of CEOs out there in health systems that do have extensive risk experience, people that have worked in Massachusetts and California. It’s not that there’s no experience out there on the provider side.
We do believe that within five years, over half of the health systems are going to have some sort of accountable care model.
A lot of the providers are just now implementing electronic medical records, which were designed mostly just for transactional efficiency and episodic billing, not really anything related to population health. Do they have a choice about whether to buy and use additional tools that support something beyond just their own transactions?
The data that we have right now to manage populations is largely claims data. Claims data is rich and pure and really empirical. You can get a lot of mileage out of claims data and will in the future.
Obviously once you can take the discrete clinical data and really leverage that, you’ll get an even richer data set. The problem with clinical data is that in one hospital, there will be 85 different definitions of heart rate, even in the best implementations done across the board with one system by really good implementers. Getting clean data out of the hospital, the clinical data, will take some time. Having the right analytic tools overlaid on the claims data tools and used in conjunction with them is how technology will develop over time.
Right now, we already have tools that are capable of doing the job. They will get better, the tools that will be doing this four or five years from now. I’m fully convinced that the next EMR will be an accountable care information management system, or some acronym we’ll develop that rolls off the tongue better by then. A lot of the data will come from the EMRs, but other sources as well.
Any concluding thoughts?
It’s exciting times. I’ve been very impressed with the capability of this company and their willingness to put the assets together and understand that this is both an early market, but an inevitable market. I laud them for their foresight and I’m excited to lead this effort.