Chuck McDevitt, CIO, Self Regional Healthcare, Chapter 1

The healthcare system has its share of issues, some of which will take years to fix, and some — like the amount of inefficiency embedded into processes — that can be solved much sooner, according to Chuck McDevitt, CIO at Self Regional Healthcare. McDevitt sees a great deal of potential in implementing lean methodologies to drive down costs and boost patient satisfaction. In this interview, he talks about how his organization is using evidence-based medicine to streamline processes, the challenges of straddling the ACO and fee-for-service worlds, and the cultural change taking place within Self Regional to improve employees’ health. He also discusses integrating the acute and ambulatory environments, his device management strategy, and how he is applying lessons learned from working in other industries.

Chapter 1

• About Self Regional
• McKesson inpatient/Allscripts ambulatory
• Self Cares
• McKesson’s ACO package, Premier for PCMH
• Prepping for an ACO world (while inhabiting a F4S one)

LISTEN NOW USING THE PLAYER BELOW OR CLICK HERE TO DOWNLOAD THIS PODCAST AND SUBSCRIBE TO OUR FEED AT iTUNES

Podcast: Play in new window | Download (13.3MB)

Subscribe: Apple Podcasts | Spotify | Android | Pandora | iHeartRadio | Podchaser | Podcast Index | Email | TuneIn | RSS

Bold Statements

The first step in the process is trying to understand what your existing population is doing health-wise, and for us, we chose our employees. We said, ‘okay, we’re 2200 people — that’s about 5,000 covered lives across the community, and we can determine where they’re going for their healthcare, and how they’re doing in terms of their healthcare.’

The last piece is financial modeling. If we do move into a formal at-risk ACO, how do you share the payments, which I think is actually going to be the toughest part of the equation.

We want to have concepts like patient-centered medical home defined in managing our patient population, because it feels right now like the industry and the hospitals in particular have a foot in both canoes. We’ve got the fee-for-services model and then more of the accountable care model

It’s almost like trying to change the wheels on the car while you’re driving down the road 60 miles an hour and change the vendors and everything else, because you have to keep operating in the fee-for-service world at the same time that you’re trying to get ready for the transition into this new environment.

With the payers, I don’t think the payment process is quite where they need to be to get that far ahead, but I do think we’re trying to walk a cautious step in terms of going down this road, because we don’t know how things are going to change.

Guerra:  Good morning, Chuck. Thanks for joining me to talk about your work at Self Regional.

McDevitt:  Good morning.

Guerra:  Let’s start off, and this opening question asking you to describe the organization will be more interesting than most, because you have Self Regional Healthcare and you also have the Self Regional Healthcare plan, unless I’m mistaken. So just tell me about the structure of what’s under your purview, both on the health system side with inpatient and ambulatory, and then also the healthcare plan aspect, which may certainly differentiate you from some of your colleagues.

McDevitt:  We’re a 414-bed, tertiary facility for about seven counties in the northwest part of South Carolina. We take care of about quarter a million people in what’s known as the Lakelands region. We’re a McKesson shop internally in the hospital, but we’ve got mostly Allscripts in our ambulatory practices. We have a wholly owned subsidiary group of physician known as Self Medical Group that has about 120 physicians with all kinds of different specialties.

On the Self Cares Plan side, we started about two years ago looking at creating two different types of benefit plans for our employees, and as you know, South Carolina is right in the heart of the stroke belt and diabetes and obesity are a problem in this part of the country. So one of the things we did was we said, ‘Okay, if you want to stay on your current low rates that we have for insurance, you have to participate in what’s called the Self Cares Plan. It requires a health assessment and then you earn points every quarter that you have to go through smoking cessation — we’re smoke-free hospital. And you have to modify diet, participate in exercise, and document all that, and if you fall off of it or don’t participate, you drop back into just the standard plan, which is a lot more expensive.’

But it’s really whole culture change that we’re trying to do. We went through our cafeteria and made the food a lot healthier and made it a lot less expensive as well, and bundled together options. So you can come in and you can just order the Self Cares meal for the day, and it’s grouping of stuff through the cafeteria line that’s a little bit more healthy and it’s a little more cost effective too, and it’s been pretty successful so far. We’ve dropped our benefits cost by roughly about $2 million a year. We’re about 2200 employees, and we found about 50 of them that had some conditions that they didn’t even know they had, so that was pretty interesting too.

Guerra:  There’s a lot of interesting stuff in there. On one level, that makes just perfect sense. We’re feeding this people, we’re paying for their healthcare to a large extent, so let’s feed them healthy stuff.

McDevitt:  That makes a lot of sense to us. Our CEO is an avid bike rider so every time we have a contest, he offers to ride so many miles depending on if we hit a threshold.

Guerra:  You just sit there and you go, ‘That makes a lot of sense.’ One day people wake up and say, ‘What are we doing here? Why are we doing this? Why are we giving them Twinkies and paying for their healthcare?’

McDevitt:  I don’t want to say a lot yet, but several of our employers in town — it’s a small community, so a lot of our board members are also leaders in the different manufacturing organizations in town — and several of them are looking to follow the same model that we’ve got in place trying to drive their healthcare costs down.

Guerra:  I interviewed a CIO the other day and we talked about some similar stuff. Are you ‘at risk,’ let’s say, for these lives? For example, he was telling me that there’s a certain percentage of people that they cover or that are covered where, from the insurance company, the hospital’s going to get a certain amount of money for the year, and anything they spend under that, they get to keep. So there’s an incentive to take of that person in the primary care setting and keep their cost down. Is that what you have going on?

McDevitt:  No, not yet, but we are a McKesson ACO demonstrator site. In fact, I think we are one of the first ones in the country with them, and so we are actively working toward moving into an accountable care organization. We’re not doing the formal program where you sign up yet, because I think we’re still trying to see how everything falls out of that. They just modified the rules, as you know, a few months back to make them a little bit more palatable. We’re not at risk for our population, but we are having conversations with Blue Cross Blue Shield of South Carolina and they’re very interested in trying to work with us on that kind of stuff.

As part of the McKesson ACO demonstrator project, we are looking at one or two of our practices — whether they would make a good patient-centered medical home and how do you put one of those together. We’re in the middle of implementing McKesson Analytics Advisor. We know McKesson in the hospital software business is McKesson Provider Technologies, but their larger part of the company—they’re a Fortune 500 company worth about $105 billion — sells a lot of software to the insurance industry as well. So they came in and bundled together an accountable care package — Rose Higgins and some of the folks there, and one of those is bringing the analytics to us. The first step in the process is trying to understand what your existing population is doing health-wise, and for us, we chose our employees. We said, ‘okay, we’re 2200 people — that’s about 5,000 covered lives across the community, and we can determine where they’re going for their healthcare, and how they’re doing in terms of their healthcare.’

So analytics is the first piece, working on the patients that are in the medical home. And then you start looking at case management — not just case management in the hospital, but case management across the community. How do you try to help folks do better about their healthcare? And then the last piece is financial modeling. If we do move into a formal at-risk ACO, how do you share the payments, which I think is actually going to be the toughest part of the equation.

Guerra:  Help me with some terms here. Is it fair to say that you’re always at risk for your employees or does that not make sense?

McDevitt:  Yes it does, because we’re self-insured, and so I think you’re exactly right there.

Guerra:  So you’re always at risk for your employees, and the question is, as we move into the ACO world, when and how do you go at risk for a population beyond just your employees?

McDevitt:  I think when you move into a formal at-risk, you’re applying to be an Accountable Care organization with Medicare and trying to look at sharing some of that risk with the physicians and with the other providers in the area. I’m not sure quite yet how the insurance industry is going to fit into some of that, but our philosophy is even if what we call big ‘a’, big ‘c’ in terms of a formal program doesn’t end up being, we all know something has to happen to change the cost curve. So we’re thinking that we need to get ready for even little ‘a’, little ‘c’, so if accountable care from the concepts involved coming into being, we want to be ready. We want to have concepts like patient-centered medical home defined in managing our patient population, because it feels right now like the industry, and the hospitals in particular, have a foot in both canoes. We’ve got the fee-for-services model and then more of the accountable care model where you’re paying so much for a covered life and the incentives actually 180 degrees the other way in terms of trying to keep people healthy.

Guerra:  It’s interesting period right now in the sense that you need to position yourself to be ready for some of these pilots and programs, and tell me if I’m right or wrong, but there aren’t enough programs. They aren’t big enough to where you can actually completely move your organization into that ACO model because there’s nothing to move into yet on that larger scale.

McDevitt:  I think you’re right, particularly in a rural setting. I’m sure there are some very successful ACO demonstrator-type models out there. Geisinger and some of the larger health systems are doing some of those, but there’s got to be hundreds of hospitals similar to us across the country that are servicing a rural population of four or five counties and trying to look at how do we move in to this type of environment. And I think you’re right there in that there isn’t a lot of formal structure to it yet. But we’re excited about the partnerships. We’re working with not only McKesson but also Premier; they’re helping us more with the patients that are in the medical home piece. They’re trying to get our processes straight and trying to figure out what’s a good physician candidate to work with. And do you look at diabetes first — what are the chronic conditions? And so McKesson is trying to help us basically put the software in place in order to align ourselves connectivity-wise between the hospital and the physician practices, and eventually the payers, whereas Premier is trying to help with our internal processes. Because it’s almost like trying to change the wheels on the car while you’re driving down the road 60 miles an hour and change the vendors and everything else, because you have to keep operating in the fee-for-service world at the same time that you’re trying to get ready for the transition into this new environment. So it’s a challenge, along with Meaningful Use and everything else.

Guerra:  Well, sure. Is it a legitimate concern to be afraid of moving too quickly to an ACO model, and therefore you’ve got empty beds and you’re doing the right thing for patients but all of a sudden you become insolvent because you’re not billing? Or is it just silly to think that you could get that far ahead?

McDevitt:  With the payers, I don’t think the payment process is quite where they need to be to get that far ahead, but I do think we’re trying to walk a cautious step in terms of going down this road, because we don’t know how things are going to change. There are so many things out there from the Affordable Care Act and the individual mandate going before the Supreme Court this summer and what a new administration might bring if that were to happen. So you really are trying to get ready for it, because you know something’s going to happen to the current path that we’re on. Although I saw a presentation from the American Hospital Association and the gentleman was talking about back in 1973 when healthcare was about six percent of the national GDP and they were saying this was not sustainable, and now it’s 16 percent today I guess.

But I think we all realize we can’t keep going. We’re trying to make sure that we are ready, no matter which direction it goes or how things happen. I think that what people are missing a little bit is the impact of health insurance exchanges that are coming in on 2014. I think if employers can get a stipend from the government to move people off of the insurance provided by the employer, I think that’s going to be a significant impact on our industry.

Chapter 2