IN THE NEWS: Saint Thomas' Hail Mary
The Nashville Business Journal recently sat down with Dr. Mike Schatzlein, president and CEO of Saint Thomas Health, to talk about the system's changes and focus on MissionPoint Health Partners. Find more online.
Risky business: Saint Thomas bets big on unproven formula
E.J. BoyerStaff Writer-Nashville Business
When Mike Schatzlein graduated from medical school in 1974, his plan was to become a transplant surgeon, a ground-breaking but risky new field that would change lives.
The young doctor didn’t know that 40 years later, he’d be taking on another high-risk mission — not in the operating room, but from the corner office of Middle Tennessee’s largest hospital system.
Three years into his role as chief executive officer of Saint Thomas Health, Schatzlein is leading the Catholic health system’s most ambitious and risky move in its 100-year history. He’s out on a lonely limb with a controversial solution to fix the nation’s health care system. It’s a high-stakes game for the nonprofit Saint Thomas, which is facing increased competition from hospital giant HCA Holdings Inc.
Schatzlein is going all-in on MissionPoint Health Partners, a partnership between a group of health care providers that agrees to care for a set population of patients for a set fee. They’re called accountable care organizations, or ACOs, and they’re arguably one of the most contentious concepts in health care. They tie financial incentives to care delivered, aimed at improving quality and lowering costs.
Saint Thomas launched MissionPoint last year. If successful, it could bring a flood of new patients to the hospital system. And Schatzlein has set big goals, aiming to reach 1 million patients by the end of the decade.
ACOs have gained steam since the Affordable Care Act offered health care providers financial incentive to form the organizations. But no one in Nashville has as much skin in the game as Schatzlein. He sees MissionPoint as the dual solution he had been waiting for — an opportunity to fulfill Saint Thomas’ faith-based mission and a valuable tool in its battle for market share with HCA.
“It is now apparent to me that what we’ve been driven to is the best way to care for our fellow Tennesseans,” Schatzlein said. “But if God had whispered that in my ear in ’05, I don’t know that the circumstances around it could have been right.”
Simply put, an ACO is managed care led by providers. The participating providers (hospitals, doctors, nurses, etc.) agree to be accountable for the health of a group of patients, sharing responsibility for the care, costs and risks. Patients, however, aren’t locked in, giving them more choice than a traditional, insurance-run health maintenance organization, or HMO, that grew in popularity in the 1990s.
Some experts question not only the model’s ability to fulfill its goals of improving quality and lowering costs, but also whether it can even function.
“I don’t think they are going to work,” said Josh Nemzoff, a Pennsylvania-based health care consultant. “Having been in health care for 35 years, I don’t think the entire concept makes any business sense. … Hospitals have never been really great at controlling doctors. The heart of the matter is people think if you have an ACO you are going to be able to reduce expenses because doctors and hospitals will have a common goal of sharing dollars. … Doctors are not just going to give up money because it’s more efficient for us.”
MissionPoint was in the second wave of organizations to join Medicare’s ACO shared-savings program in July 2012. Under the D.C.-led pilot program, for the first two years, MissionPoint shares up to 50 percent of any savings it produces with Medicare, and beginning in year three, is also exposed to any losses.
MissionPoint launched with 15,000 members under its fold, nearly half of whom were Saint Thomas employees. As of March 2013, it had more than tripled to 50,000 people under management. Schatzlein wants to reach 1 million members by 2020.
“If you are going to do it for only 10,000 lives, the economics aren’t great, so that ambition is the right one to try to get as many lives under management as possible,” said Matt Cinque, an executive director at the Washington, D.C.-based health care consulting firm The Advisory Board Co. “That approach to grow and grow quickly makes economic sense and is the right approach if you are committed to the model.”
But many providers aren’t committed to the model, as it increases an organization’s risk, exposes it to losses and is a Medicare pilot program, meaning tweaks can be expected. Of Nashville’s publicly traded hospital chains, only Vanguard Health Systems has tried an ACO.
Diving in first
So why is Schatzlein so committed to MissionPoint?
“Health care is extremely disjointed,” he explained. “It’s far less organized than the typical patient realizes. … Our job is to pull the system together and get it organized and make the experience for the patient better, but also improve the outcomes and lower the costs, which is breaking the country.”
MissionPoint aims to do that by using health partners, a mix of nurses, health coaches and social workers who guide patients through the health care system, from billing to home visits.
The idea is to focus not only on medical care but also on home life and socioeconomic situations that could make it hard for a patient to stay on track. MissionPoint is quick to share stories about health partners helping members install wheelchair ramps and hot water heaters to aid in a recovery.
In that sense, the chance to launch MissionPoint may have been the moment Schatzlein had been waiting for, but it also was a moment that Saint Thomas, a nonprofit system in the heart of for-profit health care, was ripe for.
“The beauty of population health … is that it’s the way our founders and sponsors would want us to care for people — where they are, on their terms, holistically, reverently. So I can’t imagine not doing this regardless of economics or anything else,” Schatzlein said.
Schatzlein has tapped 38-year-old Jason Dinger to lead the day-to-day operations at MissionPoint. Dinger, known as Saint Thomas’ “resident entrepreneur,” got his start in health care as a hospital administrator in Zimbabwe.
“Jason and I both see that now is the time for [MissionPoint],” said Schatzlein, who is 62. “But I think the execution requires somebody willing to be a little bolder.”
In its first year, MissionPoint reported 12.2 percent cost savings and a decrease in hospital readmission rates from 7.2 to 2.2 percent.
Over the past several years, Saint Thomas has been competing with HCA’s TriStar Health for market dominance. According to Schatzlein, the two had been neck-and-neck at about 65,000 admissions, with Saint Thomas pulling slightly ahead for the first time in 2010. But when TriStar Centennial opened its women’s and children’s hospital and Heart & Vascular Center in 2012, it was at the expense of Saint Thomas.
“I’m an admirer of what [TriStar President] Steve Corbeil has done. He is a fierce competitor. He competes harder than I can representing a faith-based organization,” said Schatzlein, citing TriStar’s recruitment of Saint Thomas heart doctors and nurses.
Although his battle tactics are less obvious, Schatzlein has them — using patient referrals and payer relationships to grow MissionPoint.
“Our 30,000 Medicare patients are talking to their friends about [MissionPoint]. I would think this would give us the hope of a market share increase,” Schatzlein said.
As MissionPoint aims to add patients, Schatzlein is most concerned about adding health partners to keep pace. Currently, it has 25 people in this role.
“Our rate of growth will be constrained by how rapidly we can bring health partners on,” he said. “Our work with Medicare and BlueCross has got us in a situation where we are going to have to limit enrollment.”
Schatzlein is referencing a five-year partnership that BlueCross BlueShield of Tennessee and MissionPoint announced in March. It’s widely expected in the insurance world that MissionPoint will be the exclusive provider in Middle Tennessee for BlueCross’ Network E, the network the insurer is launching for health plans for sale on the state exchange. When the deal is finalized, it could bring thousands of new patients to MissionPoint.
Being first to market with an ACO is a gamble, said the Advisory Board’s Cinque, but if it works, the rewards could be big for Saint Thomas.
“The argument for doing it now is that if you are in a market and you get those million lives now, those are a million lives that will not be shared somewhere else,” Cinque said. “The risk is you are not very good at managing those lives because you are moving so quickly. You could lose credibility with a payer in your market, who will shift to another provider.”
Saint Thomas’ parent company, Ascension Health, is the nation’s third largest health system with about $16 billion in revenue and more than 100 hospitals. Ascension has launched ventures similar to MissionPoint in a few of its markets, including Austin and Detroit, which has gotten the system attention at the highest level in Washington.
“I got to meet with the president not too long ago, and he was singing the praises of Ascension,” Schatzlein said. “One or more of these models will emerge as Ascension Health’s model and I like to think it will be MissionPoint.”
By the numbers
220: The number of accountable care organizations today in Medicare’s shared-savings program. The program launched with 27 ACOs and added 89 in July 2012, including Saint Thomas Health’s MissionPoint.
3.2 million: The number of Medicare beneficiaries the Centers for Medicare & Medicaid Services estimates are covered by ACOs in 47 states, Washington, D.C., and Puerto Rico.
$940 million: The amount of money CMS estimates can be saved in four years through the initiative.
12.2%: Estimated cost savings for MissionPoint in its first year.
2.2%: Readmission rate among MissionPoint’s patient population, down from 7.2 percent last year.
Sources: Centers for Medicare & Medicaid Services; Saint Thomas Health