Overview
We spoke to a Medical Director at an Oak Street* (OSH) practice in the Midwest and think there's a lot more to managing care for the 65+ population than many people may realize. Companies like OSH, Iora (ONEM), Cano (CANO), ChenMed, and others have their hands full dealing with a sick population that's expensive to manage. Value-based, at-risk care models are a huge opportunity because barriers to entry are higher than we appreciated (scale and data matter, a lot), and CMS spends billions of dollars on these patients, so any improvements in care that flatten the [cost] curve are welcomed with open arms (i.e., we don't expect margin pressure any time soon). Comments from our field work suggest that OSH, ChenMed, Iora, and Cano are well-positioned to capitalize on the opportunity.
Highlights
- There's no exact answer for how to quantify the savings that funds the model, yet (i.e., the extra care that keeps a managed Medicare patient healthy) - money is shifted around, and it takes 2-3 visits, on average, to get the relevant health records and right diagnoses in place for each patient
- An extreme amount of coordination and communication is required at the care-team level to execute the model - it's not for everyone
- A combination of scale, data, and trust/a real relationship is the key to success - without enough data and the right AI/algos, care team members can't identify risks ahead of time and intervene in a timely fashion; if there's no trust, the patient will go to the ER instead of calling
- COVID-19 disrupted in-person volume (our contact's practice has "almost caught up to pre-COVID levels, but some patients are still terrified and won't come in") and post-COVID is hard to manage
Call Notes
Background: Our contact has nearly a decade of experience in family and emergency medicine (both FFS and value-based practices) and has been with OSH for over 5 years.
What's in the bin of savings with advanced primary care vs. legacy that helps providers afford all the extra "care" for members/patients?
- There's no exact answer. CMS pays a lot of money for these [very sick] patients and then there are healthy ones in an average panel too so money is shifted around.
- Not spending the money on hospitalizations and related costs is very fluid - there's really no way to say how much you can save given the thousands of dollars per patient, per year.
- The panel of patients is ~85% high-cost, so everyone must be skilled in how patients are brought into the panel vs. FFS, where we had expensive/sick patients, and we were not aware of the cost - you just bill for visits.
- With value-based care and risk, you get the patient through 2-3 visits, and it's your job to find missed diagnoses - you might think a new patient is "stable," but you've got to draw down payment to treat things and are creating a pool.
Does it really take 2-3 visits for everyone to get the right records?
- Yes. At least 2-3. It can be very challenging - especially for patients who move (cross state borders). It's important to be thorough and efficient going through the records, addressing the diagnoses, etc. Stable patients have often had issues in the past. They could be very costly and you've got to accumulate money from CMS at the end of the year. I'm always thinking about medical history and figure risk. It takes a few years to really learn how to do this and uncover hidden sources of cost.
- There are consultants and other companies out there that help people learn how to document, look for clues, etc. A good example is skin changes for a patient on a blood thinner - purpura. That can draw money from CMS because the patient has a higher risk of hospitalization (blood vessels are thin, the risk for bleeding is higher). You can't miss something like that.
- It's important for everyone to be aligned and aware of clinical findings - the whole team. The medical scribes get training too.
85% seems high, no?
- In an average practice, like I used to work in, the high-cost patients were probably about 30% of the panel. There are more wellness and acute visits in FFS, and not as many chronic. To your question earlier, if I had 30% chronic/high-cost and tried to take risk, add additional services like transportation, food service, health coaches, etc. - I'm not sure you can make it work (that might not be enough in a risk-based model).
What are the main sources of "income" with the at-risk model and these Medicare members?
- If you work hard to prevent hospitalizations and readmissions, it works. The issue [w/ the system] right now is not the quality of care, compliance, etc., it's hospitalization and readmissions. With COVID-19, patients are not stable, and there are penalties associated with readmissions.
- For value-based, it might be >40% of costs are associated w/ hospitalizations. Much of that is diabetes-related, and a lot of that is uncontrolled (in part due to COVID-19). That's a major driver of costs. So, you want to see those patients every 2-3 weeks for a visit or call with a coach. The quality score is triple weighted (HbA1c control).
What else is in that "bin" of hospitalizations?
- #1 is Diabetes - ER and admissions is the big one because there are many complications: MI, stroke, cardiac events, infections - UTI, bladder infection, sepsis because of uncontrolled diabetes, and foot ulcers too. Vascular disease. We don't have diabetes patients without hypertension - combined, diabetes is the worst, then you add hypertension/cardiac issues.
- #2? COPD, lung issues. There are still a lot of smokers out there. Shortness of breath often = go to the hospital. A lot of these patients have oxygen tanks and are not compliant. There's a lot of pneumonia, bronchitis, and/or other infections from COPD. They might not use inhalers or might not be able to afford them ($40-$45 out of pocket), but they can still afford cigarettes.
- #3? A combination of cardiac events - TIA - vascular issues - surgery for veins, arteries - legs.
- #4 is end-of-life-related issues (mobility, falls). There's room for improvement there - hospitalizations and rehab are expensive for these patients too.
- #5 is Cancer. Post-COVID-19, and not seeing patients as frequently in-person, doctors didn't hear about possible risks/symptoms, screening windows were missed. Lung and Colon cancer, Breast cancer - it's depressing.
On COVID-19, you mentioned post-COVID syndrome, and we've heard about the issue in patients that may or may not have been hospitalized. How do you think about managing things like brain fog, prevalence, and the cost?
- I've seen it quite a bit. Long-haulers are a problem because nobody goes through COVID and says, "I'm feeling great" right after. And nobody knows what to do with these patients. They come in for visits frequently, may be sent to neurology or rheumatology, but the fogginess, dizziness, etc. that a lot of them report is concerning. These patients are "unsteady" - they may get tired of visits with no answers. And, if the patient gets upside, they might go to the ER and come back with nothing (because the ER doc won't be able to figure it out either).
- PT at home tends to help and that's covered fully, but we're talking about at least 15-20% of this demographic.
- Is there a higher payment for them? Are they in a higher acuity bucket? There isn't a long-hauler or post-COVID bucket, but if you add up the risk factors - dizziness, memory loss, etc. (there are 5-6 of them), you know they are a risk (of going to ER), so it helps cover the cost.
- Post-covid - have practices caught up? No, but I think it's getting close. Some patients are still terrified and providers try to see them via video or phone, but maybe 3%-5% of patients won't come in, yet, and some are refusing vaccination.
- The big issue is screening - sending FIT tests to houses in lieu of a colonoscopy because there was an access issue or the patient refused. They are now coming back w/ colon cancer. Cologuard isn't fully covered, so FIT was used, but either way, it's not equivalent. The Gold Standard is colonoscopy and while it's reassuring to have a check via FIT, everyone wants to catch polyps early and avoid progression. I would double down on colonoscopy now. I don't feel great about a negative FIT test, but prep is also a problem for colonoscopy.
- Another one is screening for diabetic retinopathy - it can be done in-office, but I'd rather have an optometrist or better yet, an ophthalmologist, do it correctly for sure.
Digital infrastructure and personnel seem like the keys...
- Team collaboration is the key to success in advanced primary care. The leader - the provider or MD - is supported by an NP or PA, and then there are 2 RNs, 2 medical assistants, scribe(s), and maybe a shared social worker on an average care team. The amount of communication can be overwhelming - physicians need to decompress at the end of the day. FFS, we didn't talk enough.
- If a provider is not a good communicator they will fail in a risk-based/value-based environment.
- Greenway isn't the best EMR, but Canopy is great on the back end. Infrastructure helps because you don't want delays in data or transmission errors. I'm in Canopy all the time because of the data and algos around the high-risk patients. Any advanced primary care MD wants to know about the patients, who has the highest risk, who is dealing with acute issues, etc. There is decision support - it's quite advanced - and there is a lot of planning. You can't have anyone on the team that doesn't buy into the program.
- The biggest problem can be with the providers. It's difficult to exchange them - it could cost $1MM to replace a provider - training, patients, etc. If an RN can't communicate, can't make 15 calls, it's not efficient. They are on the phone all the time. There is some staff turnover in this model, on average - it's easier to replace medical assistants but hard to replace scribes - medical records, documentation, complicated job. Trained scribes are important.
- Health Coaches - depending on the company, there can be one or two per clinic, depending on the area too. Many of the coaches are remote. They help elevate problems, manage diet or even patient finances, provide nudges, etc.
- RPM - It's very important to have the ability to use a smart blood pressure cuff, scale, or whatever a patient might need to their home. Patients want care at home, especially post-COVID-19. The device depends on the diagnosis(es).
How's the competitive environment?
- VillageMD and ChenMed are around but I'm not sure if patients are aware of other options. Once a relationship is established, a real relationship, they aren't shopping. The health systems have tried over the years, opening clinics for geriatrics or advanced primary care - but past attempts have failed. I don't think you can have true on-demand, advanced primary care (at risk) with FFS - it doesn't work. You have to switch because it's a different mental and practical approach. Having inpatient services might make it impossible.
- At 5-6 years, an APC clinic might be at capacity - it just depends. If you open a new one a few miles away, it can open up some space for FFS and at-risk, but there's a risk of patient loss and whether it'll backfill. Value-based care is growing, and specialists are trying to get involved too.
- Burnout risk around an EMR is still an issue - but as processes improve and teams become more efficient, it helps.
- VillageMD and ChenMed - competition - is increasing. ChenMed seems to be doing very well - I think they are more outspoken, but VillageMD seems to pay providers like a FFS model, and that may not be attractive in this environment.
Please reach out to with feedback or inquiries.
Thomas Tobin
Managing Director
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Justin Venneri
Director, Primary Research
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William McMahon
Analyst
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*The call was completed through an expert network partner and the expert satisfactorily completed all compliance requirements including pre-screening of questions/discussion topics and a reminder that we could not discuss or receive any information that might be material non-public or confidential information pertaining to OSH, any other public company, or any of the experts previous and other employers.
