The Future of Healthcare: “Healthcare providers must have financial incentives to keep people healthy” with David J. Jacofsky, MD

Healthcare providers must have financial incentives to keep people healthy rather than only incentives for caring for the sick. Physicians should be incentivized to prevent falls and fractures for patients rather than getting paid to fix them. Asa part of my interview series with leaders in healthcare, I had the pleasure to interview David J. Jacofsky, […]

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Healthcare providers must have financial incentives to keep people healthy rather than only incentives for caring for the sick. Physicians should be incentivized to prevent falls and fractures for patients rather than getting paid to fix them.

Asa part of my interview series with leaders in healthcare, I had the pleasure to interview David J. Jacofsky, MD, Chairman and CEO of Healthcare Outcomes Performance Company (HOPCo) and The CORE Institute, one of America’s largest and most respected orthopedic management companies and physician practices, respectively. Dr. Jacofsky has won numerous awards for healthcare leadership and innovation, is an inventor listed on over 30 patents, has published over 25 book chapters and over 85 peer reviewed publications, and has three orthopedic textbooks to his name. He is a leading expert on healthcare reform strategies, whose thoughts have been featured in numerous publications, including the Harvard Business Review.

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

I always had a robust interest in both business and medicine. I also was enamored with martial arts. When I was young, after someone was injured in a sparring session, a martial arts instructor said to me, “Hurting people is very easy. Healing people is the real challenge.” That challenge stuck with me and was a driving force in my desire to go to medical school. Once I became a physician and experienced the United States healthcare system, it became obvious to me that there had to be a better way. In many regards, the way we structured the healthcare delivery system in the United States makes little sense. Incentives for stakeholders are not aligned with the stated goals of improving health. Surgeons, for example, generally make no money for preventing fractures or arthritis, but rather get paid to fix those problems only after they occur. Additionally, medicine is viewed as a zero-sum game. Stakeholders generally assume that if the patient wins then the insurance company loses. If the physician wins then the hospital administration loses. So, although I very much enjoy caring for one patient at a time, I found an opportunity to try to fundamentally transform the way healthcare was delivered, hoping to help the broader patient population.

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

It’s been interesting to watch the merger of business and medicine over time. In many ways, it seems like a slow motion ‘car crash’ as deep rooted behaviors are meeting new healthcare needs. The history of medicine in the United States was one of ‘cost resistance’, something that people never thought much about. There was an expectation that if you had insurance then you would get the healthcare you need, and it would be paid for. Based on that pervasive notion, nobody really focused on value nor cost, nor often even what was the best care. It has been interesting to watch as this new reality of needing to bend the cost curve in healthcare has crashed into a culture so historically focused on physicians getting paid on volume of care rather than value of care. We have watched as some people resisted it, because they hate change, while others have embraced it as a win-win opportunity for all stakeholders and for patients. When you look at those who have embraced that change, it’s amazing to see the innovative ideas that come out of thinking differently. You’re able to do things better, provide better patient care, and do it less expensively, because people have focused on new solutions and creative strategies.

Can you tell our readers a bit about why you are an authority in the healthcare field?

I don’t know that I am comfortable calling myself ‘an authority’. I hope that I am good at recognizing problems and bringing people together to solve them. We believe that we have done a better job than most at bringing the stakeholders in healthcare together to be able to provide treasured patients with lower costs and better care, while at the same time being able to partner with insurance companies and hospital systems to improve not only the care they deliver, but also their financial performance. Ultimately, we have been able to bend the cost curve for musculoskeletal care in ways not generally seen before. I think perhaps my team is an authority in the healthcare field, but as an individual I never could have been able to drive such success in these programs.

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

People make our company stand out. I think we have the most dedicated, engaged group of healthcare entrepreneurs and leaders that I know of in the country. From a ‘product’ perspective, what makes us stand out is that we vertically-integrate the delivery of musculoskeletal and neurological care in such a way that we provide high value turnkey solutions to all stakeholders, meaning physicians, insurers, hospitals, and, of course, patients. Having driven a negative cost trend in musculoskeletal care in a world with accelerating cost trends certainly is a data point we would say stands out. However, what we really love is that outcomes continue to improve and we are able to deliver better care despite costs going down year over year.

Can you share with our readers about the innovations that you are bringing to and/or see in the healthcare industry? How do you envision that this might disrupt the status quo?

One of the reasons we can provide better care while decreasing costs is because we developed a ‘suite’ of customized, proprietary I.T. tools that help provide stakeholders with improved, evidence-based clinical decision support, outcomes tracking tools, a customized electronic medical record to streamline care, and predictive analytics. What that means in layman’s terms is that we have built specialized tools that allow us to better manage data and help our physicians and providers make the right decision for a specific patient at a specific time, all in real time.

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

The next step in this evolution is the development of tools to convert ‘active’ work for providers and patients and convert it into it more ‘passive’. We have a lot of development happening in this area and are developing a lot of intellectual property around strategies to do this. How do we use wearable sensors, smart phones, or smart homes, to help provide patients and healthcare providers with improved passive data collection and other information about their healthcare? How can we use our predictive analytics to help determine, for example, if someone is a fall risk? We have a project right now in which we are looking at whether a certain medication might throw off a patient’s balance, and we are doing this through validated proprietary algorithms using tiny wearable sensors and a patient’s smart phone.

What are your “5 Things I Wish Someone Told Me Before I Started” and why.

1) For one person that wants to see change, there will be 99 making it difficult. Most change will be resisted, even if it seems to make sense to everyone.

2) The things that you expect to be the easiest may present the most obstacles, so never take careful strategic planning for granted.

3) Finding the right team is extraordinarily difficult, but never settle.

4) Dig deep, hard and honestly to find your 3 biggest weaknesses and hire people with those strengths

5) The mission is the lighthouse. Be ready to adapt to a changing sea with changes in operations and strategy, but always stay focused on the mission.

Let’s jump to the main focus of our interview. According to this studycited 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?

1) Diet. Regardless of the interactions you have with healthcare providers, during the other 99.99 percent of your life, you are your own doctor. Many studies have shown both that not eating enough good food is the biggest predictor of healthcare problems.

2) Inactivity. At HOPCo and The CORE Institute, we encourage our patients to Keep Life in Motion. This is not just our tag line, but is actually a prescription from your doctor. Inactivity leads to not only ailments such as diabetes and obesity, but also can lead to depression and a variety of other health problems.

3) Stress. Although the world is wired in most developed nations, few nations are as addicted to their devices as Americans. Along with that, there’s an expectation of immediate gratification and constant entertainment, which has caused a disconnection from friends and family. Social isolation is the breeding ground of stress and subsequent health issues.

4) Patient expectation in the medical-legal environment in the United States leads to massive overprescribing of both testing and medication. Both of those drive up price without adding value, hence the lack of correlation between cost and outcomes.

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) Reimbursements for physicians and hospitals must be based on outcomes performance and quality rather than volume. For example, a surgeon who does a surgery properly once should be paid more than a surgeon who, due to an avoidable error, must do the surgery twice. Currently doing the surgery twice in most programs means the surgeon gets paid twice.

2) Healthcare providers must have financial incentives to keep people healthy rather than only incentives for caring for the sick. Physicians should be incentivized to prevent falls and fractures for patients rather than getting paid to fix them.

3) Those who deliver healthcare need to have more control over the healthcare spend, meaning insurance companies must figure out ways to partner with physicians, so that when patients do better, everybody wins while decreasing bureaucracy in the healthcare system.

4) The medical-legal environment needs to be reformed so that unnecessary care is not provided simply to prevent the possibility of a lawsuit, and hours of documentation are not required to meet insurance company or government requirements that add no value to the healthcare system. Record keeping should be done for the benefit of patient care rather than expanded simply to protect yourself from coding audits or government regulations. Everything each stakeholder does should be adding real value to the delivery of care.

5) Software tools should be developed in conjunction with physicians and their patients. Tons of money and tons of products that are launched every year don’t really solve the problems that we see in our day-to-day work because they are not really developed by physicians or patients to solve our actual, everyday problems. These tools need to enhance the delivery of healthcare and decrease rather than increase complexity.

Thank you! It’s great to suggest changes, but what specific steps would need to be taken to implement your ideas? What can individuals, corporations, communities and leaders do to help?

As surprising as it may sound, all of the things I’ve discussed here are things we are already doing at HOPCo and The CORE Institute. The hard part is always getting people to accept change. Leaders, especially leaders of the insurance world and the corporations that help fund them, should be demanding transformational change to provide real value to patients. Patients themselves should better engage in self-care and should seek out quality and value in the healthcare services they choose.

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

“Measure of a Leader” by Aubrey and James Daniels is one of my favorite books, and it’s required reading for our leadership team. It’s a great resource for developing the kind of leaders who are prepared to take on our ambitious agenda. I also find inspiration in “The Last Lecture” by Randy Pausch and “Tuesdays with Morrie” by Mitch Albom. Both are poignant reminders that life has meaning, that challenges are a fact of life, and that dreams delayed are not dreams denied. And I say, if you are going to dream, why not dream big? Changing the American healthcare system is indeed a big dream, but I’ve already seen the profoundly positive impact we are having, both on the system itself and on our hundreds of thousands of treasured patients. These are exciting times in healthcare.

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