Transparency

How matters

How matters more than most leaders thought.

Corporate America is changing. Business leaders are realizing that they need to think beyond the bottom line.

Some investors are pushing back but what they might not realize yet is companies can do even better when they consider the social and environmental impact in their policies and business practices.

Haven

Haven Healthcare is the new healthcare company formed by Chase, Amazon and Berkshire Hathaway that is led by Atul Gwande MD. Dr. Gwande has been sharing his experiences, thoughts and insights about the cost and quality of healthcare in his books and articles for more than a decade. 

Since formation, the company has been working to understand the needs of their patient population so that they can “create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.”

The “whatever else” in this case likely refers to the way American Corporations have focused solely on the bottom line. It should come as no surprise to any of us that Jamie Dimon, CEO of Chase is one of the leaders championing this change. 

He is likely getting some good data and management insights to support his position. Hopefully we’ll learn more about that when the Forbes article is published next month. Until then, you might want to check out this book.

Dying for a Paycheck

We’re likely going to hear about some of the work published by Stanford Professor, Jeffrey Pfeffer. In Dying for a Paycheck, he talks about the management practices that “literally sicken and sometimes kill employees” which as you might imagine also negatively impacts productivity and the bottom line. 

Professor Pfeffer hypothesizes that prescription drug data is a better indicator of health and wellbeing than solicited input from employees because it is unbiased. Researchers in Denmark are reportedly using prescription drug data to draw correlations between prescription drug use and the effects of entrepreneurship, organizational change, compensation and more.

My guess is that Haven is using their medical data to investigate the policies and business practices of the operating companies and drawing similar types of insights. It could be game changing for Americans and the healthcare industry.

Times change, we need to change as well. 
~ Nelson Mendela

Changing how

A lot of this might seem like common sense, but without data it is harder to convince people change is necessary.

I was a very early pioneer in the online learning space. Our solution helped clients enhance their operations while providing a path for a brighter future for their employees. How you ask?

Our training solution provided the much needed training to those responsible for the revenue cycle and financial management. Most had never received formal training on the systems or best practices which from a financial perspective is a recipe for disaster.

Staffing decisions are emotional but became so much easier with data about the time spent on course work, modules completed and assessment results. 

We enrolled everyone in their required training modules and gave them time on the job to complete the course work. Some just didn’t complete all of their modules and not surprisingly, they underperformed in those areas of their job. It was a clear indication that they had no interest in the work.

Rather than terminating their employment, it was our opportunity to start a conversation about the right career path for them. There are really only three career options: 

1/ Develop functional depth

2/ Transition to a cross functional role

3/ Retrain for something entirely new

Even though the organization had less than 100 people, we were able to offer all of these options within the organization and financially, we had some of the best years. 

Investments in fundamentals and people pay off in companies of all sizes.

Training investments help people perform better on the job and prepare for a brighter future. Many of the people who successful completed our courses have already transitioned into new jobs. They didn’t have to experience the stress of having their job eliminated.

Industry leaders need to making these types of investments to be profitable and accountable to all constituents going forward. If you’re coming from a strong viking and victim culture such as in law, finance and tech it might be harder for you to make the mental shift but it’s necessary now. 

Regulation vs. Ethics

Can the healthcare industry self regulate?

I had a discussion recently with a CEO to fortune 1000 companies about the need for proper regulation. At the start of the conversation, he asked what I meant by regulation. So to ensure that we’re all on the same page for this discussion, let’s start with the definition of regulation.

Definition: A regulation is a rule or directive made and maintained by an authority.

Regulations are tricky to get right because they need to be protective but not restrictive – and somehow, they need to be efficiently and effectively enforced to work well. It takes a lot of work to strike the right balance. That may be why some politicians and business leaders would like to do away with all regulation and let the markets self regulate. 

AdvaMed


The AdvaMed Association for medical technology is taking on a self regulation initiative for 2020. They are developing a new code of ethics that is values based to better engage everyone in and involved with the organization in compliance. To do so, they have been reportedly working with all of their stakeholders including teaching hospitals, hospitals, clinicians, device and diagnostic companies to develop the new code.

At this point, they have identified six [6] key values for the new code of ethics:

1/ Innovation
2/ Education
3/ Integrity
4/ Respect
5/ Responsibility
6/ Transparency

It’s not clear yet how they plan to operationalize the values. What we know is that member companies will need to have policies and programs in place signed by the CEO demonstrating compliance in order to be awarded the AdvaMed seal of approval.

There is a carrot for member company participation. The seal will help business partners and customers identify organizations who are in compliance. That may also give companies selling solutions an edge in competitive bid opportunities.

There is no stick for non-compliance. AdvaMed will not initiate investigations or bring any action for non-compliance. 

The question that remains unanswered is whether ethics can protect consumers from corporate wrong doing and greed better than regulations?

However, the industry should welcome the attempt to self regulate even if it’s an added regulatory measure. With all the advances in medicine that are raising new ethical questions and concerns for the healthcare industry, ethics need to be ingrained in the culture for companies to earn the trust of partners, customers and patients around the world.

Relativity applies to physics not ethics.
~ Albert Einstein

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method of compensation needs to reflects your risk tolerance. Methods include:

1/ cash + benefits
2/ stock + options
3/ blended

Time is one of your most precious resources that can only be valued by you. The method of compensation should be negotiated.

From a leadership perspective, we need to think about the person not just the position when offering stock and options. Doing so will help address pay inequity.

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method should reflect your risk tolerance.

Compensation Methods:

1/ cash + benefits 

2/ stock + options 

3/ blended 

Time is one of your most precious resources that can only be valued by you. The method should be negotiated.

Operating in the Grey

Morally wrong but not illegal. That’s the fine line that many companies walk.

There is a really good documentary called the Drug Short that uses the story of Valeant to explain the problem with drug pricing in the US.

Valeant operated more like a hedge fund than a pharmaceutical company. The model was pretty simple:

1/ Buy companies that have a drug with a monopoly.

2/ Strip out the R+D so that the typical 18% spent on R+D goes to the bottom line.

3/ Raise prices on existing drugs.

The problem is that many of the drugs were life sustaining drugs for people in middle America who couldn’t afford to pay for them. 

So the company took extraordinary measures to bilk insurance companies into paying for the prescriptions. To keep patients quiet about the issue, they provided just enough financial support to them through their advocacy efforts.

Hillary Clinton started tweeting and talking about the issue during her campaign. Investors and board members could have looked into it and taken action, but they didn’t. They were reportedly paid large sums to look the other way. 

The returns on biotech companies now are largely due to price increases. The companies can’t afford to lower their prices and profits.  So nothing has changed.

Experience vs. Service

The Hudson Bay Company [HBC] is a really good case study for modernizing healthcare. Why?

The retail customer is becoming the healthcare consumer. In an era where the retail customer is becoming more knowledgable and empowered with choice, HBC is struggling and stores will likely close.

After attempting one transaction with HBC, I told a healthcare colleague that the company is in for a rude awakening as Amazon expands operations throughout Canada. 

1/ Lack of Customer Focus: They’ve tried to be things that they are not [ie. competing in the luxury market] and failed. They clearly don’t have a strong grasp of their customer and what their customer expects of them.

2/ Product over Experience: HBC is still focused on what to sell rather than curating the experience for their customer. Companies thriving in the modern era of retail are doing so by focusing on the entire customer experience rather than simply curating product. 

3/ Ease of doing business: Retail consumers expect the payment system to work for all their transactions whether online or in person. The more friction there is with the purchase process the more likely the customer will go elsewhere.

Healthcare service companies are also in for a rude awakening if they don’t get these three things right.

Trust

Transparency is the key to consumer engagement in healthcare. Why? In one word – trust. 

Yesterday I participated in a film being made by a US physician who’s trying to wrap his brain around the patient – physician relationship. The film is being presented at a US Public Health event later this year. I’ll be sure to share the link.

Trust is one of the themes that has come up in several interviews that he’s had with both patients [aka: healthcare consumers] and professionals. Reportedly, no one knows who to trust when it comes to healthcare.

Trust has been eroded in both Canada and the US but for slightly different reasons. 

In Canada, the lack of choice and ability to actively participate in treatment decisions is eroding patient trust. Canadian physicians have no financial incentive to invest the extra time needed to educate their patients. 

In the US, the lack of pricing information and network participation is eroding patient trust. American physicians need to educate and almost sell their patient on their plan but patient trust has been undermined with various out-of-network and billing strategies.

When I ask people if the 80/20 rule [80% right thing done] applies in healthcare – most don’t agree. The responses are pretty dismal.

Trust is clearly a problem. Transparency will help to re-establish trust.

Political Risk

Lower cost is one element of the triple aim. How does your company’s values address the cost of healthcare?

Cost is a big issue for the 2020 election. Some of the government findings about healthcare pricing and billing practices are clearly an issue that could blow back on companies that aren’t proactively addressing cost.

What are patients being promised about the cost of their care? Is your company promising the lowest cost, a market rate or a high cost for a premium service? There is no one right answer but patients need to know what your company is promising. Why?

Stakeholders have the ability to influence government action now more than ever thanks to social media. Social pressure from stakeholders including patients, employees and employers will force the government to regulate the reported problem. We’re seeing it now with proposed regulation for pricing and billing practices.

Leaders of companies should be thinking about:

1. Risk profile as it relates to cost.

2. Prioritizing cost as a risk and integrating it into their values + strategies.

3. Mitigating existing risk.

Companies that don’t will expose themselves to unnecessary political and reputation risk by not making a clear statement about cost.

Doubling Down

Why are Americans doubling down on a broken healthcare system?

The current healthcare system is commonly referred to as broken, it’s rife with fraud and abuse, it has little transparency – yet we expect people to act as consumers.

Here’s just a few clips from Axios that has to make you wonder.

1/ Both Democrats and Republicans support Medicare Advantage, so the enrollment wave likely won’t subside in the near term. But there are still deep concerns about insurers gaming the program.

2/ The entire Medicare Advantage industry — estimated to cost the federal government $250 billion in 2019 — remains under the microscope for gaming the payment system. Dialysis chain DaVita agrees to pay $270 million to settle allegations of fudging claims billed to Medicare Advantage plans.

3/ Getting an unexpected bill for thousands of dollars is a gut-level problem. Yet that problem is a product of the health care system’s complexity, and every potential solution runs into roadblocks: from an industry that wants to protect its profits; or skepticism from policy experts; or political opposition.

4/ Balance billing is especially common for emergency-room care, where patients are often in no position to inquire about their insurance networks.

5/ Putting a stop to balance billing requires shifting the cost to someone else, or reducing the size of the bill, or both.

Thoughts?

 

The definition of insanity is doing the same thing over and over again, but expecting different results. ~Albert Instein

 

 

 

Post: Values

Salesforce is one company that truly walks their talk.

Here’s what I inferred about their values and culture from just one day at Dreamforce:

1/ Environment: Be Mindful. All the nomenclature and products used referenced the environment reminding us all to tread lightly and reduce our impact.

2/ Transparency: Build trust. Customers asked for greater pricing transparency so what are they getting….published rates! Transparency is used to build trust within the organization and with customers.

3/ Inclusion: Be Open. The diversity of the people attending, speaking and customer involvement spoke to their commitment to inclusion and the value of sharing of ideas and lessons learned.

4/ Community: Empower. Community leaders are recognized and empowered to help everyone thrive. After all, big initiatives take a village to do well.

BTW – they are doing some pretty amazing things with their technology too that will help us all blaze new trails. We’ll share more about that in future posts.

Foundation for Growth

Invest in fundamentals and growth to move forward

Scarcity mindset is toxic to you and companies. It is a result of something lacking in your life that causes you to do things for short term relief rather than taking actions that provide long term benefit.

I had several exchanges with colleagues recently and scarcity mindset came up in every exchange whether the topic was foreign investment or potential business partners taking information for their own gain. When people feel their job or survival is threatened they tend to protect their turf with short sited decisions.

It’s hard to make any meaningful progress in business when people are protecting their turf because it limits their ability to think creatively and resourcefully. People need a certain level of support to shift their mindset to growth. It’s why leading edge companies provide employees with continual learning opportunities and benefits that support health and wellbeing.

Processes will be automated and jobs will be eliminated. As leaders we need to be thinking ahead, making investments in people and supporting their transition in the workforce. There is always something better when people can imagine their role in a brighter future.

Reframing mistakes, screw ups and failure all have a seemingly negative impact but they are not all the same and shouldn’t be treated the same way.

Screw Ups are just simple mistakes that happen even though you normally get whatever it is right. Don’t beat yourself up over a screw up. Just make amends and move on.

Failure is a necessary part of growth. If you try something new and it doesn’t work as expected, don’t get caught up in negative self talk. Grow from the experience and achieve something even better.

Representation matters. You might not agree with what was done in the past but when you see opportunity, you can change the future.

A few years ago, colleagues questioned my decision to work with a certain client. Admittedly, that client operated with business practices that were definitely questionable in terms of ethics, but that were not illegal. I had even struggled with the decision at the time because the practices didn’t fit with my own moral code of conduct and later wondered if I made a mistake.

However, watching the interview with Bozoma Saint John, Chief Brand Officer for Uber her words confirmed for me that I made the right decision. Accepting the client didn’t mean that I condoned their past business practices. Rather I saw the opportunity at the time to move the client forward in a way that created a win for everyone.

Some health plans have been developing narrow networks that are economically credentialing some providers out of their networks for past behaviors. Unfortunately, no one really wins with that strategy because patients value choice and penalizing providers usually forces more consolidation which drives up the cost of healthcare.

No one can change the past. We have to look for the opportunities to correct past wrongs and move forward in a way that serves everyone’s best interests.

You don’t have to cheat to win. Healthcare is a tough business but investments in the fundamentals pay off over time and ready your organization for the future.

1. Market Assessment: Assess your value to the patient population you serve in terms of the 3 P’s of marketing: product [your service], place and price.

2. Invest in your People: Too often healthcare companies only provide required training to professionals. They forget that every single person within the organization affects the overall patient experience. Leading edge companies that routinely invest in their people perform 45% better than their competitors.

3. Automate all Routine Processing: Streamlining and automating processes increases accuracy, increases cash flow and enhances the experience for healthcare consumers [patients] by giving them more control. Training investments make it easier for people to transition up or out of the organization when the time comes.

4. Manage your Contracts: Use data from your market assessment to negotiate ‘fair value” rates with commercial payers and mange those contracts. 3–5% annual increases may not seem like much but when you compound it over time, it adds up.

Laying the foundation takes some upfront work and investment but the pay off is long term financial success.

More change ahead is likely as patients demand more transparency and become sophisticated healthcare consumers.

Reference pricing offers way to engage healthcare consumers that allows for more choice and full access to providers. What is it?

The allowed amount for a specific service is limited to a defined contribution or in other words, a flat amount for a specific service. If a more expensive provider is chosen, the employee/patient has to pay the difference. The employee receives the full benefit when treated by low cost providers.

A reference price gives employees/patients more control over the entire experience in terms of their providers [facility and physicians], setting, implants, drugs etc. which is what most people want. The challenge is the lack of pricing transparency.

The prices available to most patients now are estimates based on historical claims data. The data fails to reflect real time market changes resulting from consolidation, new contracts and new technology or services. The only way to get accurate prices is from the providers involved and the health plan contracts with those providers.

We have standard transaction sets for authorization and claims submission but for some reason we’re not using them to facilitate estimates. The question is why not? Current revenue cycle costs exceed $52 Billion annually and do little to serve the healthcare consumer.

Collection Risk is a real problem for healthcare providers especially when patients are underinsured. Who should pay for the collection risk?

Policy benefits are assigned to the provider when care is provided. Assignment of benefit was meant to protect the provider from patients who fail to remit insurance payments made for their care.

The problem now is that providers may or may not get paid even when they have been assigned the benefits. In many cases, the first dollars under many policies are now due from the patient not the commercial payer.

There are new solutions to help providers collect from patients but it’s adding more time and effort to the process. Many small retailers cringe at the thought of a credit card transaction fee which is a drop in the bucket compared to the cost of collection in healthcare. Even with the new tools and increased effort, collection risk is increasing because patients don’t have the money to pay or just don’t pay.

Should insurers selling the policies and/or companies providing the policies be required to reinsure the underinsured? Technology being used to help people select policies can probably also predict the reinsurance need. So should premium dollars be set aside to cover the collection risk?

Gravity Problems: Watching “ObamaCare” twist in the political winds has not been easy especially for those directly impacted by the changes.

I have started reading a new book called Designing your Life. It breaks life down into 4 aspects: Work, Play, Love and Health and uses a metering like system to help you evaluate what areas are working and what areas need improvement. I like the simplicity of the framework.

One idea that has stuck with me is “gravity problems” and the fact that you can’t change gravity. You have to work with gravity or work around it to achieve whatever it is that you want. Gravity problems can be environmental, circumstance related or even political.

So tackle the problems that you can solve, change your tact on some and prepare for others that are likely in the future.

Innovation: Companies that want to innovate and perform better need to accept that failure is part of the process. The learnings are as valuable as the result if you allow people to harness the insights into doing or creating something better.

Not everyone is prepared or willing to take on the risk to chart a new path or create a new product. So people willing to take the risk should be rewarded not punished when they fail especially when they can explain and act on their learnings.

Innovation is about experiments. The very nature of experiment is about trial and error. The concept of innovation gets lost when people make huge bets that don’t pan out. Don’t make a huge bet until you know what works.

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About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success. She is also the founder and CEO of Hello Workout.

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