Part Two: How to protect your most valuable asset - your health

As we conclude this second of a two-part series on our country's healthcare system, we explore what changes are currently underway. And more importantly, how they will impact both doctors and patients. Department Chair of Health Policy and Management at the IU Fairbanks School of Public Health, Nir Menachemi shows us what these changes look like and how his team's innovation already saves millions of dollars in waste. 



On the last episode, we sat down with the Department Chair of Health Policy and Management at the IU Fairbanks School of Public Health, Nir Menachemi, who took us inside why healthcare in the United States is so high, yet still has a low rank amongst other developed nations. Using the nursery rhyme, Humpty Dumpty, Nir showcased how, as a country, we’re pretty good and putting Humpty Dumpty back together, however we fail to explore why or even help prevent him from climbing the wall in the first place. If you missed last week’s podcast, I highly recommend you go back and listen because this week’s episode is picking up where we left off.

Let’s get to the podcast…

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Welcome to another episode of the ROI Podcast presented by the Indiana University Kelley School of Business, I’m your host Matt Martella alongside Associate Dean Phil Powell. And today we’re going to conclude this two part podcast by exploring what changes are on the way inside our healthcare system that will affect both doctors and patients. But before we dive into this week’s content, we just want to say thank you for tuning in today. We work hard to put out a weekly podcast that helps organizations make better business decisions. For those tuning in for the first time, we want to say welcome to the Kelley Family. We’re honored you’re taking the time to see what we’re all about. If you have any questions, suggestions for a topic you would like us to explore, or just recommend a guest for our show, send us an email to ROI-pod, that’s  And for those who are enjoying our podcast, it would mean the world to us if you could leave us a review on your favorite podcasting app. Your reviews help our show grow.

So last week, Nir Menachemi said as a country we spend, on average, $10,000 per person in the United States on healthcare. The focus on that spending is being able to put a sick person back together. Yet, access to great care is only 10% of our overall healthy well-being. We fail to address or even prevent people from getting sick in the first place.

Nir Menachemi: The healthcare system is a misnomer, and I focused on the term "healthcare" because we really have a "sickcare" system. We also don't have the "systemness" associated with the term “healthcare system”. Systems, and I think of the best analogy as the digestive system, it's a whole bunch of things working together towards one common goal. Our healthcare system doesn't work well inherently together across all these different settings.


He also used the term “fee-for-service” as a way to describe how doctors see patients. A patient is sick, they go see a doctor, the doctor fixes them and the doctor collects a fee from the insurance company. There are little to no incentives for prevention. As Nir also said, it can be perverse at times because the sicker a patient is the more money that can be generated for the healthcare provider under our current “fee-for-service” mentality. Leaving a lot of room for poor decisions to be made that ultimately affect us, the patient.

Nir Menachemi: You ask someone in elementary school and they'll tell you it's your diet and exercise, and those are all those health behaviors that that in the 15 minute clinical encounter with your doctor, even though they know that's what's the most important, they just don't get a chance to focus on it, in part because that's not how the healthcare system gets financed. Reimbursement is for fixing you when you go wrong, not for when counseling you on what to do to prevent you from getting sick in the first place. 


So what can be done to change this mentality inside our current healthcare system? The first thing to understand is the culture of how we view healthcare as a country has to change. And here’s the good news, it’s already changing.

Nir Menachemi: Right now, we're in the midst of a literal revolutionary change to how we reimburse healthcare in this country. For the last 7 or 8 years, we have been transitioning off of this fee-for-service mentality and on to what's called value-based healthcare. Leading the charge is CMS, which includes Medicare, Medicaid, and the big governmental payers of healthcare, and they're basically recognizing that we're at this crossroads right now. We cannot afford as a nation to continue spending as much as we do, and worse, we have an aging population that's going to go onto Medicare, the Baby Boomers. Mathematically, we just don't have enough money in the system to not focus on prevention anymore.


According to the US Census Bureau, there are roughly 76.4 million baby boomers that are starting to enter the latter years of life. And if we look at the industry data available, by 2020 the baby boomers are expected to double the cost of Medicare and Medicaid. And this “value-based” healthcare could give us the answer to not only an aging baby boomer generation ready to retire, but also how we can better our healthcare system. It starts with changing how physician offices are incentivized.

Nir Menachemi: Value-based says rather than focus on fee-for-service, where the incentive is to increase the number of patients that you see, value-based purchasing are a collection of different payment mechanisms to physicians and hospitals that says, "let's see if we can incentivize value". Value is basically the ratio between cost and quality, so you can improve the value of something by either reducing the costs or by improving the quality. The way they're incentivizing value includes a full gradiation of different approaches. One of the lowest approaches involves what's called pay-for-performance - that says to a doctor or a hospital, if you achieve certain benchmarks amongst your patients in terms of either mortality rates, adherence rates to certain things, or the quality of the care that you provide reaches a certain benchmark, we'll give you a bonus. Pay-for-performance is a very low-level way to change fee-for-service to start being more value-focused. Pay-for-performance also includes the concepts of no pay for no performance, and that also includes not reimbursing for certain things that should've never occurred in the first place. Certain types of nosocomial infections, these are infections that occur within the hospital as a result of being exposed to the hospital environment. That should not occur, and if that happens, CMS is saying they’re not paying for it. Likewise, the whole idea of CMS not paying for hospital re-admissions - so if you are a hospitalized patient, and you go home, you should not be re-hospitalized in the next 30 days. CMS says that if that occurs, they're docking the pay of the hospital that first discharges [a] patient before they should've been let go. All the way on the other end of the continuum is something called accountable care, and accountable care says rather than paying you per person, per issue, per disease, per fix, it re-conceptualizes payment to be, an insurance company might assign a hospital company 20 or 50,000 patient, and say, "you are responsible for all the care that these patients need for the next year, and we're going to pay you a fixed amount per patient, per month." Once you accept that contract, you are responsible for keeping them healthy. If they all get really sick and come to you, that doesn't change how much you're going to make, you're going to have to expend more resources to tend to their needs. If you're, however, able to figure out a way to keep them healthy and keep their disease at bay so that they're not over-utilizing unnecessary care, you'll get to keep more at the end of every month because those individuals would not have used your resources that you've made available to them. That really begins shifting the way doctors and hospitals think about what their role is. Under accountable care, where you have what's called this capitated rate, this per-member, per-month fee that you collect - it starts getting you motivated as a provider to say, "How can I prevent this person from needing this expensive procedure?" You are now suddenly spending much more time on things that previously did not generate you revenue, but instead, is averting the bad outcome for the patient. That's in your interest, under accountable care, as a provider, it's in the interest of the insurance company who doesn't want runaway costs that continue to happen. It's also in the interest of the patient who does not want the complication soon in their future. As a nation, we're learning how to find the right combination of financial incentives to bring everyone onto the same boat rowing in the same direction, because previously fee-for-service was not in anyone's best interest, per se, when thinking about everyone together. 


The second thing to understand is this change will not come easy because as organizational leaders, we know how hard culture change can be just inside our company – let alone an entire industry.

Nir Menachemi: It's very stressful for physicians, for hospitals, and for all the players where the rules are changing, mainly because these entities and individuals have never really been trained to think this way. You rarely learn in medical school how to keep someone healthy - you are focused much more on how to fix them when they are broken. Hospitals have never really developed the cultures, structures, or infrastructures to deal with people who are healthy. In fact, it's scary to all those individuals because under accountable care, for example, you are responsible for say, the population of patients that you are "at-risk" for - the reason why we use the term "at-risk" is because if they all get sick, it hurts you financially, not the insurance company, because you signed up for that per-person, per-month payment. How do you engage a population that doesn't walk through your clinic doors? How do you think about things to keep them healthy and managing their risk factors so that they don't get sick when the entire history of your business and conceptualization is about, "wait for them to show up in my waiting room, and then fix them". This involves lots of things that healthcare just hasn't been doing well, that we have developed much better outside of healthcare. I always think about how Delta, the airline, gets my loyalty based on status that they give me, and I sometimes scratch my head and find myself in Atlanta on a layover just because I'm so loyal to the airline, and what I feel like I get is a glass of wine and a bag of peanuts, but nevertheless, I am intensely loyal and play the game of I do what they want me to do, and they do what I want them to do for me. I love the upgrades, sitting in the VIP rooms, being able to have my luggage come out first, and all the things that they're rewarding me for my business. All the different hotel chains have figured out how to engage consumers. Healthcare organizations are now trying to figure out how to incentivize the patients that they are at-risk for to engage in the behaviors that makes everyone win. That is scary, in part because it requires business skills, healthcare skills, grounding in marketing, grounding in informational technology - because you need to leverage a lot of data that's available to you - it requires skills in strategy-making and operations, which operations really focuses on quality improvement, which again, plays into value. These are not the average things that physicians, for example, feel well-grounded in.


A baked in teamwork, as Nir said of allowing a sort of “self-governing” body so to speak create checks and balances across multiple health networks in order to receive reimbursement for providing valuable care to patients. Nir also said that a lot of physician offices are becoming part of a larger health network, like Community Health Networks as an example. He says this also helps in managing responsibility of a population under this new value-based care.

Nir Menachemi: When you are an accountable care organization, contracting with CMS, let's say, for Medicare-covered lives, and you get 80,000 assigned to you, you as the accountable care organization needs to be able to provide every last service that this patient is going to need in your market. You need to cover all the different specialties, emergencies, primary cares, hospitals, rehabs, nursing homes, anything that this patient is going to need. You have to band together into these larger consortiums, either formally or informally. You could be acquired and literally be a subsidiary of this larger group, or you can contract with them to be business partners to share these responsibility and the care that this person needs. Either way, whether it's formal or less formal, you are now, as a group of providers, expected to coordinate what you all do for that patient better. For example, if someone gets their hip replaced, that might require a whole bunch of out-patient care prior, an in-patient stay, then more post-in-patient care, and maybe some nursing and rehab. Then, there might be some home health associated with it after the patient is home and still needing some kind of services. If you, as the entity collectively, are all responsible for it, you are going to start saying, "Wait, physical therapist, you guys are doing things that are not evidence-based, and that's taking money away from our shared hive that we were each going to get a piece of". Or, if the group determines that the orthopedic surgeons were doing things that were not consistent with some of the best guidelines, someone might say, "Wait a second, we have no money left over because one of the team members that's responsible for the entire continuum care that this person needs is inconsistent with best practices."


And finally, the third understanding about how healthcare is changing is to see it in action.

Nir Menachemi: My group here at the Fairbanks School of Public Health has been working on lots of different population-health management strategies, developing them in conjunction with partners: we work with Eskenazi Health, IU Health, and other health systems throughout the region and country. One of the innovations that we were recently recognized with as being the first place winners of the Inject Tech Competition here at the Life Sciences Summit in Indiana was an algorithm that is designed to improve and identify individuals who come to primary care clinics who might be in need of social services by clinicians, such as social workers, dietitians, mental health counselors, or medical legal partnership providers. We developed this machine-learning algorithm that's running live at Eskenazi Health right now, and basically it helps identify in the morning, with the entire roster of patients coming in today, it helps identifying based on every bit of information that's available to us - which includes all the info embedded in the electronic health record of that patient - all of the information available to us through the Health Information Exchange in Indiana - sometimes referred to as either the Indiana network for Patient Care, or commercially as the Indiana Health Information Exchange, IHIE - all the information that's available to us based on a zip code of where the patient lives, and we have either zip code level data, or in some cases even smaller census-track level data, of things like crime rates, how far they are from a food desert, whether or not there are sidewalks in the neighborhood, what the unemployment rate is, and we take all this information that is assembled from the POLIS Center, the Regenstrief Institute, the electronic health records, and all these sort of different partners that we have on campus, and we predict what the probability is of you, the patient, are of needing either a social worker, dietician, etc. That allows folks in the clinic to then match the neediest patients to the limited providers that are available to help with those needs. Going back to the original thing that I said, the vast majority of our health is a function of our behaviors, and our behaviors are a function of our life circumstance. If you're a diabetic who happens to live in the highest crime area and in a food desert, exercising and eating right is not an option for you. You need help with that, and let's just put this context, a teen with diabetes: mom's not letting him run around outside if it's a high crime area, she's not letting them walk back and forth from school if there are no sidewalks, she's not able to get the diet that this kid needs to get his disease under control because there is no place to buy that kind of food. And by the way, even if there was, it's unaffordable because the “healthiest" food is typically the most expensive. So, if we can have a dietician intervene during that kid's diabetic check-up, and instead of trying not to wait for that diabetic kid to have complications that he will then have to deal with, maybe we can proactively figure out a way to help that family cope with that kid's disease, given their life circumstances. Social workers know how to do that, nutritionist [as well], all of these ancillary "wrap-around" service providers know how to do that. Our algorithm figured out a way to optimize the use of those providers in such a way that we can address the behavioral and environmental conditions that are exacerbating people's health. What we found was - and this article just came out in the current issue of Health Affairs, it's been getting a lot of attention nationally both in the media and social media - that using this algorithm and these wrap-around service providers is able to save millions of dollars in averted unnecessary emergency room visits and hospitalizations for some of the patients that are most vulnerable to having their health exacerbated. This is just scratching the service of what's possible, but this was an innovation of leveraging big data, new artificial intelligent approaches to computation and identifying people at risk, and more importantly, deploys resources that we already have in the community that are just not being orchestrated for the end goal of better health for everyone. Doctors and nurses can do what they do best, social workers and dieticians can do what they do best, and patients embedded in their environments and communities are engaged in such a way that's consistent with their life situation. Everybody hopefully wins, and again, is rowing in the same direction towards the shared goal of improved health for the individual.

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So let’s recap. Last week we explored the problems inside our healthcare system, as a country. This week we went into what changes are already taking place and what we can expect as doctors and patients. First, how we view healthcare needs to continue to change. Baby boomers are reaching retirement and our current system cannot support them. But the good news is, we’re starting to see the change take effect. Value-based healthcare offers ways to give patients superior care by focusing on prevention and doctors more incentives to keep people healthy. The second thing to know is change will not come easy. As leaders, a culture shift takes time – especially across an entire industry. Healthcare providers are currently at work figuring out how these changes will be made. And finally, the third thing to know about this change is we can see it at work, right here in Indianapolis. Nir and his team have created a computer algorithm that pairs a patients highest needs with the right specialist. Whether that be a nutritionist, social worker, physician, or counselor, this program is already saving millions of dollars in unnecessary procedures – creating a win-win for both health providers and patients.

This has been another episode of the ROI Podcast presented by the Indiana University Kelley School of Business – where we work hard to help organizations make better business decisions. I’m your host Matt Martella alongside Associate Dean Phil Powell – we’ll see you next week.

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