Comments to BCBS Annual Board Meeting; Woodstock Inn 062123

Thank you for the opportunity to talk with you today, I will use a portion of my time to raise what I feel are the key issues in healthcare today and will seek out your questions and thoughts for the latter part.

By way of background…we spend more on healthcare than any other country in the world and rank 28th in the world for healthcare outcomes. According to the Commonwealth Fund, we rank last on nine of the ten component healthcare quality measures. We have the highest infant mortality rate among developed nations (5.4/1000). Our rate of preventable mortality (177/100,000) is more than double that of Switzerland (83/100,00), and we have the lowest life expectancy at age 60. In 2021, 36% of Vermonters met the Commonwealth Fund’s definitions of being “underinsured.”

As one of the few countries in the world today that does not have one form or another of universal coverage, we ignore the success of our peers, who by different admixtures of public and private funding, achieve universal coverage and understand it as a basic component of civil society.

I don’t want to polarize our discussion by sinking into the murk of politics or by using judgmental terms, but how do we explain our failure to regulate the pharmaceutical, and medical device industries? And why have we not taken a keener look at private equity’s deep and deleterious incursion into hospital, clinic, and private practice ownership… into residential, dental care facilities and hospice?

Do we not understand that regulation is part and parcel of a civil and just society?  According to the NIH, in 2020, US healthcare lobbying expenditures totaled $713.6 million, almost twice the $358.2 million spent in 2000. Pharmaceutical and health product manufacturers spent the most on lobbying activities ($308.4 million), followed by providers ($286.9 million), payers ($80.6 million), and other firms ($37.7 million).

We must ask ourselves, is lobbying really “free speech” or “education,” or is it simply corruption? Why do we tolerate such massive business investments meant to deter social mission and our own wellbeing?

Alvarez and Marsal Consulting has a private equity client that has hired them to help them acquire all the cardiology firms in the Northeastern U.S. Will the private equity firm focus on patient wellbeing?

I’m a firm believer in Berwick’s Moral Determinants of Healthcare. We must understand that “population health” is much broader than healthcare infrastructure and policy. It’s inexorably linked to racial and economic justice, intergenerational transfer of trauma, environmental wellbeing, place of birth, criminal justice, and equitable access to education, nutrition and healthcare. Our failure to understand and adequately legislate and regulate in support of these moral determinants is integral to our failure to achieve population health.

But let’s focus today on Vermont.

I believe that one of the greatest deficiencies in healthcare performance today is the poor understanding of board governance in the nonprofit or “mission-driven” sector.

I cannot speak to your understanding of governance and performance but, as former chair of Fletcher Allen Healthcare and an avid observer of hospital board governance, the general lack of understanding of a board’s ultimate responsibility for delivery on mission is disturbing.

The assumption that the Board’s chosen leader is solely responsible for an organization’s performance belies the fact that the board chooses, compensates, and must annually review the performance of their chief executive, replacing them if they do not deliver appropriately on budget, goals, and mission.

As a board chair for some dozen state-wide organizations, I’ve overseen eight leadership changes initiated by the Board to the betterment of each organization. This is not easy. But since the chief executive serves at the will of the Board, if the organization falters, it’s the board’s responsibility.

Trustees’ greatest vulnerabilities are their failures to:

  1. recognize delivery-on-mission, not just retained earnings,
  2. conduct an annual or biennial 360 performance review including input from communities served, measured against job description, current budget, current year plan, and mission statement,
  3. establish and adhere to an appropriate organizational compensation philosophy,
  4. insist on direct regulatory communication rather than delivery through the chief executive, and finally,
  5. maintain a self-perpetuating board rather than just a constituency board or a board chosen by the chief executive.

Errors and Omissions(E&O) insurance does not excuse board accountability for poor governance.

I’ve tried for as long as I’ve had any understanding of politics and governing in Vermont to understand what state agency is accountable for Vermont healthcare policy, going back to Governor Deane Davis. I’ve given up trying to follow the tangled web that seems to run from the Agency of Human Services to the funding in 2011 of the Green Mountain Care Board under Con Hogan, the former Secretary of Human Services.

That same year, Governor Shumlin brought healthcare leadership under his wing in the executive branch in a failed attempt to establish universal coverage through a single-payer system for all Vermonters. Now back at the Agency of Human Services, the Vermont Dept of Health oversees ten health services but does not regulate healthcare infrastructure.

Who today is responsible for Vermont’s healthcare delivery and oversight? It would seem that it’s devolved legislatively to the Green Mountain Care Board.

After Con’s six-year leadership of the Green Mountain Care Board, Governor Scott appointed Kevin Mulllins, who saw the Board’s role as primarily analyzing and approving hospital budgets, rather than establishing and overseeing healthcare policy. I relay all this only to try to explain how confusing the path toward the goal of population health for Vermonters has been. Are we there yet?

In Vermont, we license hospitals using our “certificate-of-need” (CON) statute and presumably hold them accountable as nonprofits focusing on access, affordability, quality outcomes, and mission rather than just growth and earnings. But so far, we’ve largely failed to do so.

UVM Health Network has absorbed dozens of clinics and small practices over the years with no regulatory oversight. It has acquired five hospitals, two in Vermont and three in New York which is beyond Vermont’s regulatory purview. It now owns some 50 primary care and specialty clinics, 37 of which are in Vermont. As of 2021, UVMHN accounted for half of all hospital discharges in the state. In the same year, Vermont had the sixth highest per capita healthcare costs of any state. UVMHN claims that this drive to grow and consolidate creates efficiencies, but do they redound to the benefit of the patient or the institution itself? In a 2018 study, The New York Times determined that hospital mergers most often result in higher patient costs.

Wait times have led many private practitioners to refer their patients to Dartmouth or other regional hospitals rather than to their local UVM Health Network. Wait times for diagnostic visits and imaging often delay diagnosis leading to higher acuity when treatment is finally scheduled. The legal standard by which the courts determine liability in such cases is called “standard of care,” and in most cases, the standard of care is “early diagnosis and treatment.” How does this square with quality outcomes?

Meanwhile, accelerating costs affect patients in the form of higher deductibles, copays, and insurance rates, which all get blamed on you the insurer by an under-informed public, not on the hospitals whose bills you have to pay. This may need to be a focus of your communications going forward.


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With all these storm clouds, there is some light emerging.

First, there’s a groundswell of professional, political, and patient advocacy for meaningful reform of our system focused on patient wellbeing rather than institutional revenue and size. There’s also strong pushback against the medical community’s traditional “guild” mentality that differentiates physiological, mental, dental, rehabilitative, and end-of-life care, and seeing these instead as all integral to population health.

There’s an emerging understanding that our socio-economic investments must be moved upstream to education, prevention, trauma-intervention, and chronic disease management  ̶  an infinitely more cost-efficient investment than expenses made downstream to remediate our failures.

It’s clear to all, including the largest hospital competitors, that we must refocus healthcare investments into primary care. But hospitals aren’t enthusiastic about ceding the primary care market to rural areas where it’s most needed and most cost-efficient. Small practices, clinics, and federally qualified health centers (FQHCs) situated in small communities offer greater access with measurably better outcomes at lower cost than primary care services offered in crowded hospital emergency rooms in urban areas.

It’s been said that our ERs and our jails are monuments to our failures as a society.

With new leadership and fresh vision, the Green Mountain Care Board is examining its mission and practice, articulating measurable goals for population health in Vermont, and beginning to hold providers and payers accountable to those goals.

A recent regulatory decision (June 14, 2023) makes clear the challenge of cultural change. GMCB’s recent approval of OneCareVT’s FY23 budget request in the face of a firestorm of opposition, evidence that it has wasted some $100M in costs during its seven-year lifespan, and your own decision to abandon it, was at least conditioned on a cap on the total compensation for OneCareVT’s executives and a requirement that hospitals use earmarked “primary care funds” for their intended purpose. This leaves open the question of how GMCB plans to regulate toward expanded access and lower costs going forward.

Some areas that will require attention:

We know we must refocus our medical schools on training more primary care doctors and physician assistants. When at Fletcher Allen, I briefly chaired the physicians’ compensation committee and knew what every doc in our system made. It was clear to me then that we needed to rethink the current compensation philosophy of doctors, whose compensation rationale is largely tied to their billing capacity, with specialists and marquee-surgeons making 6-7 times as much as primary care docs. We’ll also need to look at innovative incentives like tuition forgiveness to incent service where it’s most needed. In some communities, people can wait years just to find a primary doc and then wait months to get an appointment with them.

Another divisive issue is healthcare data, especially as it relates to hospital budgets and clinical outcomes. There’s an old saying in the logistics industry, which my company specialized in when I was in business, “I’ll tell you the conclusion I want and you bring me the data to support it.”

During the first 11 years of the Green Mountain Care Board’s oversight, hospitals developed and supplied the data that underscored their budget approval requests. It was generally accepted prima facie. The Board recently made clear in a letter to hospital CFOs the data they expect, the definitional basis of that data, and the format they want it in. That includes a telling array of quality outcome data, infrastructure overheads, administrative costs, and costs allocated to patient care. How, for example, do the costs allocated to administrative executives’ compensation compare to the costs allocated to actual providers of patient care? At last count, some 19 administrative leaders and managers at UVM Health make a combined income of $16M. Do the math. How does that compare to actual healthcare providers where most cost-efficient care is administered: RNs, PAs and LPNs?

I believe the Green Mountain Care Board’s making a good start towards more patient-focused regulation. Their own data analyst has recently partnered with another experienced medical data analyst, consultant, and former head of a number of hospitals to review and compare the performance data of some 200 hospitals around the country as a basis for comparison in their own review of the hospital budgets and performance they regulate. That comparative data will inform their analysis of how Vermont’s hospitals compare in cost and quality outcomes.

One of the more troubling issues for me is the relentless effort to lower patient transactional costs. As hospitals, providers, and payers move more and more of their patient interface online to lower costs, they exclude more and more patients. A large number of the oldest and sickest are excluded for lack of broadband, computer access, or technical expertise and are simply giving up. 20 Million Americans still lack access to broadband at threshold speeds. About a quarter of adults with household incomes below $30,000 don’t own a smartphone. 43% don’t have home-broadband service and 41% don’t have  a computer or laptop.

That said, the introduction of the electronic medical record (EMR) makes sense since providers and patients both need to have an accurate medical record of their healthcare conditions and maintenance. If I’m in a car accident in Brattleboro, I want the surgeon working on me to have full access to my medical record in Burlington. The EMR, protected by HIPAA, is a vital tool.

I recently had a coffee with an 88-year-old who went to see his local doctor in a small town in mid-Vermont complaining of severe shortness of breath. The receptionist asked for his contact details and for a copy of his credit card. He said he didn’t use credit cards and had never had one. The receptionist insisted patients had to have a credit card on file in order for them to provide service. He expressed exasperation and offered to leave his wallet full of cash at the desk and let the receptionist help herself to whatever fee he was charged. The receptionist said they couldn’t provide service without a card on file and the patient left, later telling me he’d given up on healthcare even though he had Medicare. There are still countless among us who rely on human contact to enter the complexities of the medical system.

And finally to your side of the market, I was recently asked by a former Board trustee and now-retired UVMHN CEO Dr. John Brumsted during a discussion about one of my columns about the healthcare system in Vermont, what it was I found most troubling.

I answered that I felt the UVM Health had crossed an “ethical Rubicon” in entering the insurance business  ̶  one that could never be managed. The natural friction between payer and provider negotiated by “denial management” teams on both sides would inevitably run deeply afoul of patient interests.

When asked for an example, I suggested the following. I’m diagnosed with advanced prostate cancer by a UVM Health provider and am given a course of treatment along with an explanation of costs. I go to the provider’s wholly-owned insurance company UVM Medicare Advantage and am told what is covered and what is not. I’m then in the position of having to decide what treatment I can afford and what I must forego for lack of coverage. Whom do I hold accountable  ̶   the provider or the payer if they are, in fact, one and the same? He could not provide an answer to my question.

I do believe you all are focusing on many of the right issues. Your withdrawal from OneCareVT was wise and courageous and raised a lot of good questions which the GMCB is debating as we speak.

In a January panel discussion with VT Business Roundtable executives, which included the VT Hospital Assoc. (Devon Green), OneCareVT (Vicki Loner), UVM Health (Anya Rader Wallack), and BCBS (Andrew Garland), several executives expressed to me their observation that the only speaker who did not seem as if they were reading from a press release was Andrew Garland, who jumped right into the issues at hand including BCBS’s departure from OneCareVT. You were well represented.

Your decision to scale investments in patient software management with Michigan was, in my view, another wise move. It’s not, as many assumed, a “merger” but rather a collaboration to control costs so that they can be further applied to mission. This is difficult for the public to comprehend, but healthcare in general has been relegated to a complex system and many average citizens have given up trying to understand it.

Finally, Thank you for your substantial investment in the production of the film “Care in Crisis” which will debut on PBS in 2024.

As one who rarely dispenses advice (broad smile), I would urge the following:

Pay attention to good board governance and trustee responsibility,

Collaborate, don’t compete,

Stay focused on your mission, and

Stay the course.

Thank you,

Bill Schubart

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