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The Art of Healthcare Innovation: “Accelerate the slow migration to value-based care” with Jim Rechtin SVP at DaVita & Christina D. Warner

Accelerate the slow migration to value-based care. Value-based care is when we create incentives for our providers to manage the total cost of care for their patients. While these payment structures have gained some momentum, 95% of medical groups in the US still operate primarily in a fee-for-service setting. I had the pleasure to interview […]

Accelerate the slow migration to value-based care. Value-based care is when we create incentives for our providers to manage the total cost of care for their patients. While these payment structures have gained some momentum, 95% of medical groups in the US still operate primarily in a fee-for-service setting.


I had the pleasure to interview Jim Rechtin. Jim joined DaVita in 2014 as senior vice president of corporate strategy and was appointed president of HealthCare Partners’ California region in 2016.

Prior to joining DaVita, Mr. Rechtin advised large health systems, physician groups and health insurers on a variety of strategic issues including market development, joint ventures and partnership formation, physician recruitment, clinical integration and population health management as a partner at Bain & Company.

Previously, Mr. Rechtin ran a not-for-profit health and human services clinic in Indianapolis. He also served in the Peace Corps for two and a half years directing a public health project as a volunteer in the Democratic Republic of Congo.

Mr. Rechtin is a board member and member of the executive committee at the Center for Health Care Strategies and Colorado Succeeds. He earned his MBA from Harvard University, and a bachelor’s degree in political science from DePauw University.


Can you tell us a story about what brought you to this specific career path?

In college I participated in a service trip to the Dominican Republic. During that trip I spent a couple of days in our makeshift health clinic. I witnessed two things there. The first was the debilitating impact that poor access to healthcare can have on entire families and communities. The second was the enabling impact that came not just from healthcare, but from the human connection of warmth, empathy and caring that occurs when healthcare is delivered the right way. This felt like a cause worth pursuing.

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

We operate healthcare delivery systems without owning hospitals. And that says something about our focus — we invest up front in keeping our patients healthy and managing their illnesses so they can avoid hospitalization. And when they must be hospitalized, we invest in getting them healthy and out of the hospital as quickly as possible. We are differentially focused on patients wrestling with multiple chronic conditions or patients who lack easy access to care.

One of the most vulnerable populations we serve are those who suffer from Chronic Obstructive Pulmonary Disease (COPD), which obstructs airflow in the lungs, making it difficult to breathe. COPD is a leading cause of death in the U.S. and patients with COPD are several times more likely to encounter a healthcare issue and become hospitalized. Because our focus is to keep our patients healthy and out of the hospital, we have developed programs to support them in the home. For example, our COPD patients get a phone call immediately after a hospital visit to ensure they are prepared with medications and supplies and transitioned safely back to their daily routine. We also spend a lot of time educating patients and families on “warning signs” — how to look out for red flag symptoms and when to reach out to a provider before it gets worse.

On the flip side of this, we ensure our clinicians have special VIP appointments set aside for urgent cases in case patients need to be seen right away. This COPD care pathway is implemented by our care teams to ensure COPD patients don’t end up back in the hospital unnecessarily. In fact, our program results have shown a 30% reduction in hospitalizations and 34% reduction in total cost of care, which is good news for the patient and also minimizes wasteful care in the system overall.

What advice would you give to other healthcare professionals surrounding health systems best practices and patient outcomes?

I would advise health systems to spend more time measuring and managing total cost of care — starting with empowering their medical staff to keep patients out of the hospital. Too many health systems are still focused on filling their bed capacity. That is a great short-term strategy — and a losing long-term strategy. To put this in perspective, the average hospital stay in the United States is about $2,400 a day. At that rate, hospital spending is accounting for about one-third of the nation’s healthcare spending — that’s about $1.1 trillion a year. And that spending is increasing by about 5% every year.

Sometimes, very simple changes — like meeting patients where they are — can have a dramatic effect on patients’ health and can help avoid unnecessary hospitalizations. Over a decade ago, DaVita Medical Group sent their first physician into a patient’s home for a house call. While house calls have grown popular in the last few years, at the time, we were only answering a need to meet our patients where they were and didn’t draw any boundaries at the clinic walls. Our house calls providers found patients without food in their refrigerators, sharing medications with their spouses, and poor lighting throughout their two-story homes. We realized that sometimes the version of the patient we see in the doctor’s office was not necessarily what their reality looked like at home. We assembled interdisciplinary house calls teams including a Nurse Practitioner, Social Worker, Nurse Care Manager, and sometimes a Pharmacist. This team focused on not just the medical ailments but also the lifestyle issues — transportation, meals, finances, caregiver support. For our most high-risk patients, we brought holistic healthcare to their door — and we saw them thrive again. Since 2007, we have seen more than 20,000 patients in these high-touch programs and have improved patient quality of life, end-of-life management, and reduced unnecessary hospitalizations.

According to this study cited by Newsweek, the U.S. 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 U.S. is ranked so poorly?

First, as a society we aren’t healthy. The United States has the highest levels of obesity in the world, the highest levels of diabetes, and almost 16 million Americans have been diagnosed with COPD.

Second, we invest too much in high-cost interventions like specialty drugs and devices. Since 1998, the United States has been the leader among other high-income countries in per capita pharmaceutical spending. In 2014 and 2015 that already high spending spiked by another dramatic 20% at the introduction of several very expensive specialty drugs to treat cystic fibrosis, Hepatitis C, cancers and other conditions. Some of these treatments are revolutionary for patients, but in a handful of cases these drugs have less than certain efficacy given their astronomical cost. Some cancer drugs only extend life by a few months at very low quality of life. Other wealthy countries spend less on these interventions because they collectively bargain prices; in cases where the cost of a drug is high and efficacy is uncertain, these countries won’t even make them available. Yet, they still achieve better overall health outcomes than the U.S.

Third, we don’t invest enough in primary care access and preventative medicine.

Fourth, we have created a healthcare ecosystem supported by a government lobbying ecosystem that provides incentives to keep doing these very things that we know don’t work.

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 U.S. healthcare system? Please share a story or example for each.

  • Expand access to primary care. It would be great to increase the number of Primary Care Physicians (PCPs) graduating from residency each year — but we don’t even need to do that. Nurse Practitioners and Physician Assistants are more than capable of delivering on most of our patients’ primary needs, especially when it comes to preventative care. But to do these things we need more flexible state regulations and we need to train our PCPs to lead teams of caregivers.
  • Focus on our most vulnerable populations — those with multiple chronic conditions or lower income areas that are lacking access to care. Right now, our vulnerable populations cost the system the most when they end up in the hospital as a last resort. And they end up in the hospital because we have insufficient financial incentives for our health systems to focus on their preventative care.
  • Accelerate the slow migration to value-based care. Value-based care is when we create incentives for our providers to manage the total cost of care for their patients. While these payment structures have gained some momentum, 95% of medical groups in the US still operate primarily in a fee-for-service setting.
  • Pharmaceutical patents should not be a license for predatory pricing. But too often that is exactly what they are today. Compared to European countries, we’re paying two to five times what they pay for the exact same drugs. We’ve seen Humira, one of the top used drugs by our patients, double in price over the past 10 years. Hepatitis C drugs continue to be a top driver of drug spending among our patients. It’s because of high pricing like this that nearly 20 percent of adults in the U.S. report skipping doses of their medication due to cost. Why do we allow that? We have an aversion to “government price fixing” but we don’t seem to have an aversion to “private sector price gouging.” Other nations’ health systems are bargaining with the pharmaceutical companies to secure lower drug prices and it’s clear that the resulting affordability is leading to better access and better overall health outcomes.
  • Our medical schools and our state provider licensure frameworks help drive up the cost of care and are therefore reducing access to care. Kaiser Permanente has grown tired of the traditional, high-cost medical school system and have started their own medical school. It’s time for more healthcare systems to consider doing the same.

What concrete steps would have to be done to actually manifest these changes? What can individuals, corporations, communities and leaders do to help?

This is the wrong question. What to do is well known. The question is whether we, as individuals and as a society, have the political will to do it. Fixing the healthcare system requires tradeoffs. As individual consumers, we will have to be open to giving up some flexibility — some choices or options — in order to attain greater affordability. As corporations, we will need to be willing to risk the stability of short term profits in order to create a more stable — and thus profitable — long term ecosystem. This is particularly true for hospitals, pharmaceutical companies and higher education. (The irony is that two of those three industry sectors are largely, from a tax status standpoint, not-for-profit. And yet it is their entrenched financial interests in the current system that impede reform.) History has demonstrated that it is hard for entrenched actors to reform themselves, no matter how logical or clearly self-interested that reform might be. But if they can’t reform themselves then they should assume the worst about the reform that will inevitably, in time, be thrust upon them.

As a mental health professional myself, I’m particularly 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 is hard to claim that we have two tracks when one of those tracks — behavioral health — is barely accessible. The first issue we have to address is access. The second issue is eliminating the societal taboo around mental or behavioral health. Nevertheless, you raise a good question — why does medicine treat our mind as if it is not part of our body when in fact it directs everything that our body does? Good health starts with a sound mind and we need to do a better job of integrating care of our mind into care for our body.

At DaVita Medical Group, we’ve seen the evidence that patients with behavioral health issues spend two to three times more in medical costs than an average patient. So, one of our medical groups in Washington, The Everett Clinic, set out to improve poor access to specialists, overutilization of emergency rooms, lack of coordinated care, and variable quality. We decided to put behavioral health providers inside primary care clinics. We also found huge value in the behavioral health specialists sharing the same electronic medical record as the primary care provider and leveraged advanced practice clinicians since psychiatrists are such a scarce resource. The Everett Clinic has seen 9–16% reduction in medical spend savings by integrating behavioral health and physical health in this way and I think this could serve as a great example for other health systems.

How would you define an “excellent healthcare provider”?

An excellent healthcare provider does three things. First, they ask questions and are intensely curious about their patients. Second, they are as focused on improving their patient’s ability to care for themselves as they’re treating the ailment in front of them. Third, they know this is a team sport — they work seamlessly with other physicians, with care managers and with medical assistants.

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

I believe strongly in the concept of “divine discontent.” If we want to do great things — whether in sports, the arts, business, parenting or anything else — we must be afflicted with a divine or holy sense of dissatisfaction. We must recognize that perfection is an objective pursued but never realized because perfection does not exist. We must realize that the world is not static — every day we wake up and we will either be better than the day before or worse than the day before — and we should be inspired to be better. This is how I want to live my life and how I want my teams and organizations to pursue life.

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

We are investing heavily in time and dollars into our clinic workflow and into digital technology. We are focused on helping patients access and navigate the right care resources. For example, we are rolling out the CarePhone program to many of our primary care clinics in Southern California, creating an easy way for our physicians to care for patients in phone-based appointments. If we continue to make the right investments here, we will enable our physicians to spend more time with their patients, providing the right care, and enabling our patients to live healthier lives.

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

A timeless book that I am constantly coming back to is “The Prophet” by Khalil Gibran. Being an effective healthcare leader starts by living a sound and healthy life and being an effective leader more generally. The words of Khalil Gibran have helped shape how I think about our purpose in life and to maintain perspective through moments of stress and difficulty.

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?

A sound mind is essential to better health. And the foundation of a sound mind is established early in life by our experiences with our caregivers, our families and our communities in which we grow up. The work of Dr. Nadine Burke and others around adverse childhood events — and the potential we have to take that work and begin addressing the true root causes of so many health issues — is a movement that I hope I can help to enable.

How can our readers follow you on social media?

Twitter: @DaVitaMedical

Facebook: https://www.facebook.com/DaVitaMedicalGroup

Instagram: https://www.instagram.com/davitamedgroup/

LinkedIn: https://www.linkedin.com/in/james-rechtin-65b2b3/

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