HIStalk Interviews Seth Blackley, President, Evolent Health

Seth Blackley is president and co-founder of Evolent Health of Arlington, VA.

Tell me about yourself and the company.

Evolent partners with health systems and providers to support their acceleration of value-based care, which we define as providers receiving some form of prepaid healthcare or other incentives that manage the total cost of care. Our customers are generally providers, like Indiana University Health; WakeMed in Raleigh, NC; Premier in Dayton, OH; and other organizations like that. Typically they’re pursuing prepaid healthcare because they think it’s the best way to meet their mission for their patients, but they also feel like it’s the best way to steward their finances.

We generally are either supporting them with a value or risk contract with a payer, CMS, or their own health plan. Evolent is providing our customers with both technology and services in an integrated way that helps them ensure they’re hitting their cost and quality targets.

Frank Williams, Tom Peterson, and I founded the company back in 2011 along with the Advisory Board and UPMC, which is the biggest provider-owned health plan in the country after Kaiser. We looked all around the country and saw lots of software companies, consulting companies, and health plans, but nobody providing an integrated solution to help providers accelerate in this direction. We’re about 1,000 people today, working in 25 organizations. We’re an independent company listed on the New York Stock Exchange.

Surveys suggest that even those providers who participate in an ACO aren’t sure if ACOs improve quality or cost. Will the model will work?

What is definitely proven is that integrated medicine does work. If you look at things that UPMC has done over the years, or that Kaiser has done, or many other systems where you have aligned incentives, it absolutely drives healthcare value — cost down and quality up. The issue that’s an open question is what ACO models will drive the right incentives to make those sorts of outcomes work.

There’s a spectrum of ACOs. There are ACOs that have more full upside and downside incentives for providers, where they make the full investments that they need to provide integrated medicine. There are ACOs in name only. They’ve got the C and the O right, but they don’t have the A — the accountable part. Lots of those want to migrate towards a type of ACO that really does drive value.

I think it proven that integrated care works and you can drive incredible value. That’s why the markets are pushing that way. Some people are on Phase One of that and haven’t yet migrated to an ACO model that is sustainable over time.

We’ve created a health system based on the premise that provider competition is good, but many of the hot issues such as interoperability and integrated care try to force those competitors to work together. Will the competitive pressure go away and allow those things to happen?

The direction that CMS and the buyers of healthcare are pushing for is to have healthy competition that will create alternatives for consumers and buyers to purchase networks and products that are higher value. That kind of competition is healthy. What it will cause at is providers and payers to look at each other differently and find out the right way to configure those networks.

The organizations that may have been competitive in the past may become partners and vice versa, but we have to continue letting that evolve such that we do have healthy competition of selection choices of different provider networks and different tiered networks. The buyers of healthcare will have options and the volume in healthcare flows to those payers and providers who are creating value. We’ll have more collaboration areas than we’ve had it in the past, but we still want the competition over time that’s set up around the right issue, which is the total cost and quality of healthcare.

You mentioned UPMC, which is a key player in the western Pennsylvania market where health systems bought insurance companies and vice versa trying to control the market. That may have been a preview of what we can expect as health systems and insurers try to maintain their business. Is it constructive for the big to get bigger?

Without speaking to Pittsburgh specifically, what will be constructive is if the buyers of healthcare — and CMS is really leading the way here with this 50 percent target by 2018 under true value-based care, but then also their value-based purchasing bundles, the doc fix — all lining up the structure where you really on the provider side will only get paid well if you’re creating value over time. If the market continues to move that way, whether you’re big or small, you’re going to have to create value in order to have a viable financial structure as a health system. That’s the biggest force that we see happen.

I do think that FTC and the DOJ and whatever markets will continue doing their work, both on the payer side and the provider side, which they need to do, but generally, the structure of value-based reimbursement is probably the most healthy thing we have to kind of make sure we end up with a cost and quality outcome that’s attractive to people who are buying healthcare.

What will hospitals look like in five to 10 years?

Our view, from an Evolent standpoint, is that there’s going to be some winners and some losers over the coming years in the health system space. We feel that progressive health systems will increasingly become entities that provide a very broad set of services and that ultimately take accountability for the total premium dollar all the way back to the buyer of healthcare. That includes acute inpatient, outpatient, and probably more primary care and more care management and population health services than they’ve had in the past.

We see a lot of those systems investing more heavily in those types of services that help manage the total cost of care then they do in new bricks and mortar. As an example, the things that are part of the premium, like pharmaceutical costs that we see health systems investing more around, “How do I manage the total cost of pharmaceuticals?" which traditionally hasn’t been part of their purview.

We think those many systems that are going to be the winners will continue to invest in that broad spectrum in ability to take all that, coordinate it, and offer something back to a buyer of healthcare that is attractive. We think that there will be a swath of systems that move that way. There are some systems that, if they don’t move as fast, may be boxed in a little bit more in terms of the spectrum of services they offer. Those will have a harder time financially than those that attempt to move upstream and take on a Triple Aim approach to healthcare.

Health systems haven’t had much interest in managing consumer health and haven’t done a good job holding down costs, and yet now they’re being appointed as the best hope for doing both. Will it be a challenge for health systems to move quickly away from transactions and filled beds to managing health and costs?

We do think it’s a big shift. It requires a lot of new competency and new capability. It’s the reason we created Evolent as an acceleration partner for those health systems as they build up their own talent and their own infrastructure around this. We think they can benefit from a partner like Evolent to provide the expertise in these areas where they’ve had less of it in the past. Things like our Identifi technology platform that is purpose built to help optimize their EMR investment in order to do this work and take an EMR investment which historically was more focused on the areas you asked about and make sure it’s optimized to do things that are going to be critical in this new world.

There are all kinds of issues. One example is risk adjustment, which is a really important issue for the exchanges or for Medicare Advantage that traditional health systems haven’t had as much exposure to. Or managing pharmaceutical costs. Just generally coordinating care and prioritizing outreach to a patient who may not be in their hospital or in their physician practice on any given day. Our Identifi platform is one example of what we bring to the table to help them make that pivot.

Your description is very accurate. It’s a big leap to go from here to there. That’s where we’re focused in supporting them.

The EMR is becoming less he center of the universe and is getting walled off by other technologies that are just as essential, just in different ways. Is there a market outside the core EMR business and are people paying enough attention to using them optimally rather than just buying them?

We’ve seen most of our health system partners betting deeply on the EMR as a critical part of their future. We’re spending a lot of time helping them make sure they’re getting the most out of that platform and leverage and identify to do that in concert with the EMR.

That said, most of our partners have networks that may be very broad. We have one partner that working with that has about 40 different EMRs that are relevant across their network. Being able to integrate and optimize population help across all those is critical. Having all the clinical content and knowledge about how to do population health is another thing that we’re bringing to the table through Identifi. We see other companies doing similar work.

In answer to your question, people are betting on the EMR but also realizing that they need to supplement it to be proficient at population health. We are trying to help them in both of those ways.

What are the most important characteristics of a provider that is well positioned to succeed under value-based care?

The things that we see that are critical are that the health system leadership has a vision that, over time, having a value-based structure is the best answer from a mission standpoint for their patients and is the best way to steward their financials. Those that get that and believe that or feel like the world’s headed that way is probably the most important thing.

After all, you can develop additional assets. You can develop your brand. You can develop more physician relationships if you start with that and you’re committed to do it. That’s probably the first and most important thing.

Obviously having a physician network, particularly primary care physicians, is, also a critical asset, so we look a lot at that. Many of the things that go beyond the leadership and the physician base can be developed over time.

One thing that we see a lot is that health systems, at times, need support in helping understand the full array of capabilities and competencies that they need to be successful. We do a lot of that in the Blueprint process. It’s not just about technology. It’s not just a consulting project. There’s a broad set of services and technologies that they need to make the pivot, as you articulated. It’s a new frontier for many of them. We try to bring that depth and understanding during the Blueprint as well.

Where do you want the company and the health system to be in five to 10 years?

Like many of the systems we’re working with today, I hope that there are systems in every market across the country that have a vision and a plan to execute on an approach to take the value-based model and make it a core part of their business. Not a pilot or initiative, but a core part of the business. That’s certainly where CMS and the payers are pushing.

We hope they have that in place. We hope that they’re the ones that do it and are the market leaders, able to gain market share and have a stronger financial position than they have today based on that strategy. You can see that happening today and a number of our partners are getting great outcomes out of the gate. We’re hopeful that that spreads and scales nationally and that they’re successful as part of it. As a result, the patients they’re taking care of are getting better care at a lower cost. That’s where our mission lies and where the missions of our customers lie as well.

Do you have any final thoughts?

We increasingly see that the future direction for payers and providers is pretty clear. CMS and the other payers are speaking clearly about where they want the market to head. We feel like that creates a huge opportunity or risk for the provider. If you can move and be a market leader, it’s a huge opportunity, and if not, it’s a risk.

Our experience with IU Health, WakeMed, Premier, and MedStar is showing, already over the last few years, that they can both do better financially and do better for their patients if they’ve got the right support. Evolent is uniquely set up, based on our heritage, to help them do that.