David Johnson of 4sight Health: “Move to full risk-based contracting”

Move to full risk-based contracting: full-risk bundles for episodic care and capitation for population health. America won’t change the way it delivers care until it changes the way it pays for care. Predetermined prices for knee and hip transplants in California cut market prices by as much as 80%. If a provider or healthcare system […]

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Move to full risk-based contracting: full-risk bundles for episodic care and capitation for population health. America won’t change the way it delivers care until it changes the way it pays for care. Predetermined prices for knee and hip transplants in California cut market prices by as much as 80%. If a provider or healthcare system is paid the same amount every month to care for a person, regardless of what treatment that person needs, that provider only makes money by keeping the patient as healthy as possible.

As a part of my interview series with leaders in healthcare, I had the pleasure to interview: David W. Johnson.

David Johnson is the CEO of 4sight Health, a boutique thought leadership company. Dave is the author of Market vs. Medicine: America’s Epic Fight for Better, Affordable Healthcare (2016) and The Customer Revolution in Healthcare: Delivering Kinder, Smarter, Affordable Care for All (2019). Dave’s expertise encompasses health policy, economics, statistics, behavioral finance, disruptive innovation, organizational change and complexity theory.

Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

After decades of success as a healthcare investment banker, I saw a path and core strategies to transform America’s very broken healthcare system. Currently, the U.S. healthcare industry is designed to deliver very expensive medical treatment. We need a system focused on care that delivers health. Frankly, as a banker I contributed to the cracks in our broken system, as many of the transactions sustained status quo business practices.

For the sake of the American people and economy, I wanted to do my part to refocus the industry on achieving better care outcomes, lowering costs and delivering superior customer experiences. I launched 4sight Health in 2014 as a platform for my ideas and those of other revolutionary leaders. As an independent voice, 4sight Health advances industry thinking and business models through our writing, speaking and advisory work. Our audience includes today’s leaders in all segments of the industry, and the people who will lead over the next 10 years.

I believe the huge shift we need will come through market-driven change. Consumers, self-insured employers and government will be the priority for innovative care delivery models, and they’ll pay for outcomes, not activity. My core idea is summarized in six words we use at 4sight Health: Outcomes Matter, Customers Count, Value Rules.(TM)

Can you share the most interesting story that happened to you since you began leading your company?

I participated in an Oxford-style debate in Mumbai, India, on the topic of whether healthcare was a commodity or a basic human right. I had the “commodity” side of the debate. In the pre-debate vote of the 1,200 attendees, only 3 agreed with my position and one of those was a pity vote. I made the case that healthcare was both a commodity and a basic human right. Post-debate, two-thirds of the audience agreed with me.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we launched 4sight Health, we used @marketvsmedicine as our Twitter name. Another enterprising company scooped up the @4sight_Health and began tweeting on topics unrelated to market-driven healthcare transformation. That created significant and sometimes funny message confusion. Ultimately, our intellectual property attorney persuaded the company to change their screenname and website. Balance returned to the virtual universe.

What do you think makes your company stand out? Can you share a story?

We live in a world of knowledge explosion, information overload and the minute-by-minute challenge of finding signals within the noise. We excel in knowledge exchange and network optimization. Translation: We use the tools professionals seek to get traction for their ideas among targeted audiences. By creating incisive content, presenting it in accessible and interesting ways and distributing it through multiple channels in multiple formats, we break through the static and deliver the signal.

Our commentary “Letting Go” featured Steward Health Care’s strategic decision to sell its hospitals, lease them back and pursue explosive “asset-light” growth. We helped show the nuances of the strategy, centered on consumers’ “jobs to be done.” Over 10,000 healthcare leaders read and distributed that piece. Steward’s CEO described the commentary as the clearest, most succinct description of the company’s strategic vision he’d seen — internally or externally.

What advice would you give to other healthcare leaders to help their team to thrive?

Teams thrive when they share information, have a common purpose and pursue activities consistent with the company’s desired outcomes. The best leaders create environments where constructive activities occur routinely. This requires active listening, clear communication and constant reinforcement (in word and deed) of the company’s mission, values and goals.

Ok, thank you for that. Let’s jump to the main focus of our interview. According to this study cited by Newsweek, the US healthcare system is ranked as the worst among high income nations. This seems shocking. Can you share with us 3–5 reasons why you think the US is ranked so poorly?

The primary reason is that the U.S. health system operates under an artificial economic model: supply of healthcare services drives the demand. For example, the best predictor of how many cardiac treatments will happen in a geographic area isn’t tied to sick patients, demographics, environmental conditions, lifestyle behaviors or any other seemingly logical factor. It is the number of cardiologists. They literally drive the demand for their services.

Secondly, large providers and health insurance companies, many of them not-for-profit organizations, dominate the nation’s regional markets to the point where they exercise monopoly and monopsony pricing power. Consequently, prices for routine procedures disconnect from normal supply and demand forces. Entrenched incumbents use their influence to negotiate pricing and minimize the negative impact of regulatory and legislative change. The combination of supply-driven demand and inelastic pricing lead to fragmented delivery, overtreatment and/or overpricing in the vast majority of healthcare interactions.

The U.S. healthcare system is built to treat acute disease, illness and injury in a reactive manner, meaning as they present. But 90% of U.S. healthcare expenditure goes to treat chronic — often preventable — conditions. Fundamentally, today’s allocation of healthcare resources does not meet consumers’ on-the-ground needs. Consumers need holistic care services that emphasize prevention, health promotion and well-being, including vital mental health support, chronic care management and aligned social care.

The result of these massive incongruities is the world’s most expensive healthcare system that underperforms on outcomes, access and equity.

You are a “healthcare insider”. If you had the power to make a change, can you share 5 changes that need to be made to improve the overall US healthcare system? Please share a story or example for each.

1. Move to full risk-based contracting: full-risk bundles for episodic care and capitation for population health. America won’t change the way it delivers care until it changes the way it pays for care. Predetermined prices for knee and hip transplants in California cut market prices by as much as 80%. If a provider or healthcare system is paid the same amount every month to care for a person, regardless of what treatment that person needs, that provider only makes money by keeping the patient as healthy as possible.

2. Develop full data interoperability with privacy protections of patient health records. Data wants to be free and free-flowing to support better outcomes in real time. Accurately profiling patients’ need for blood thinners (low to high) during surgeries has dramatically improved the application of blood-thinning drugs to patient needs.

3. More aggressive regulation to create level-field competition and stimulate innovation. New decentralized, asset-light, tech-savvy and consumer-friendly business models have the power reshape supply-demand dynamics for healthcare services. This requires regulatory schemes and oversight to promote business practices that improve outcomes, lower costs and enhance consumer experience. Transparency, site neutrality and data interoperability are essential features of high-performing markets. Hospitals should not be able to charge 5,000 dollars for the same MRI a patient can get at a free-standing MRI clinic for 500 dollars.

4. More aggressive antitrust regulation to reduce the market power of monopoly providers and monopsonist payers. Led by Attorney General Becerra, (now U.S. Secretary of HHS) the State of California won a 575 dollars million judgment against Sutter for anti-competitive behaviors in Northern California.

5. Create an independent, Federal Reserve-like entity to make cost-benefit decisions for U.S. government-insured patients. This would eliminate the ability of corporate lobbyists to tilt government payment and regulation in ways that favor entrenched incumbents. Here’s a recent example of what this entity could avoid. Consumers and lawmakers agree that there’s a compelling need to eliminate surprise billing. Instead of a solution a 2-year legislative process — with the usual lobbying by incumbents — produced provisions that benefit the providers that bill. Provisions that, of course, limit consumer protections and will drive up prices.

Ok, it’s very nice to suggest changes, but what concrete steps would have to be done to actually manifest these changes? What can a) individuals, b) corporations, c) communities and d) leaders do to help?

The most important step that individuals, corporations and governments can do is become better buyers of healthcare services by insisting upon receiving greater value for their healthcare purchases. For example, a consumer can take their non-emergency MRI order to a freestanding MRI company rather than the hospital’s MRI department. The hours will probably be better, the cost will be lower, benefiting them and their insurance company.

I’m interested in the interplay between the general healthcare system and the mental health system. Right now, we have two parallel tracks, mental/behavioral health and general health. What are your thoughts about this status quo? What would you suggest to improve this?

It’s among the ignorant practices in healthcare to separate mental and physical healthcare services. Physical and mental well-being are inextricably linked. Americans should demand absolute parity in mental and physical health service provisions, and that care should be coordinated. Capitated population health programs create financial incentives to provide holistic care in ways that prevent and mitigate acute episodes of care.

How would you define an “excellent healthcare provider”?

Excellent healthcare providers engage their customers to understand their health and healthcare needs and then work in partnership with those customers to address those needs.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Luck is where preparation meets opportunity,” is a quote often attributed to the Roman philosopher Seneca. On innumerable occasions, being prepared positioned me to recognize and leverage opportunities as they presented themselves. Particularly in sales, understanding what I call the “picture” in prospective customers and making the effort to help solve their problems pays enormous dividends.

Are you working on any exciting new projects now? How do you think that will help people?

We’ve just started putting healthcare lyrics to popular songs (e.g. “Obamacare Is Here to Stay”) to create a fun and surprisingly informative way to characterize healthcare policy issues. The first few songs have gone viral — in our healthcare circles anyway.

What are your favorite books, podcasts, or resources that inspire you to be a better healthcare leader? Can you explain why you like them?

The Origins of Wealth” and “Non-Zero” have deeply informed my perspective on how markets work (and don’t work). I’ve also learned from them the power of collaborative enterprise to achieve higher performance levels. More recently, Jill LePore’s “These Truths” has given me a fuller and more nuanced understanding of the structural fissures in America’s history and how they manifest themselves. It provides breathtaking insights on the societal divisions roiling America today.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I’d encourage everyone to become better active listeners and make the effort to walk in others’ shoes before making judgments. Intellectual curiosity and empathy are a great leader’s distinguishing attributes.

How can our readers follow you online?

Read our free commentaries and listen to our podcasts at 4sighthealth.com/insights. Join the revolution!

Thank you so much for these insights! This was so inspiring!

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