MANAGED CARE December 2000. ©2000 MediMedia USA
A CONVERSATION WITH BECKY J. CHERNEY
The CEO of a large Florida employer coalition insists that the information that companies are beginning to demand will force the industry to change.
As president and CEO of the Central Florida Health Care Coalition in Orlando, Becky Cherney helps shape the benefits purchased by 128 public and private employers covering more than one million lives in central Florida. Major coalition members include Walt Disney, Lockheed Martin, Harris, and Sprint. The coalition's Quality Initiative seeks to make health care delivery more efficient in order to improve clinical quality, patient satisfaction, and the community's overall health status.
Prior to assuming her present job in 1994, Cherney served as a consultant to Florida's Agency for Health Care Administration under Gov. Lawton Chiles, and helped to set up 11 community health purchasing alliances in the state. Before that, she held senior human resources positions at Holiday Inns International and other Fortune 500 companies. Cherney spoke recently with Senior Contributing Editor Patrick Mullen.
MANAGED CARE: Once your coalition decided that quality-improvement efforts would yield better results than negotiated discounts, what were the first steps you took?
BECKY J. CHERNEY: When we started out we did what we referred to as the trust walk. Businesses started the coalition because we were spending a ton of money on health care but had no idea what we were buying.
MC: What did you do to change the situation?
CHERNEY: We learned some interesting things. For example, there was a group of obstetricians whose C-section rate was three times higher on Friday than on any other day of the week. We honestly didn't know why that was, so we asked the doctors. After a while, a couple of doctors said, "I've had weeks when I've gotten less than four hours sleep every night, because I've gotten up and delivered a baby every night. Friday afternoon at 4:30 p.m., my patient comes in nine-months pregnant, one centimeter dilated. I have a tee time Saturday morning. I need to sleep and I desperately need to play golf to keep my sanity. The patient is sick of being pregnant, so we agree to a C-section." And it stopped. As soon as they knew, they said as a group, "We had no idea."
MC: What did you learn?
CHERNEY: It became obvious to us that we employers were going to be brokers of information. We saw that if we gave doctors good information, they would be happy to make changes.
MC: What is the coalition working on that would reward physicians who do a better job?
CHERNEY: We've had a system of quality measurement in our area's hospitals for nine years, so all doctors working in the hospitals have profiles. For nine years they have been able to see how they practice, and have been able to compare their practice with other physicians.
MC: Tell me about those profiles.
CHERNEY: It's the Atlas system from MediQual [a unit of Cardinal Health Information Cos., of Dublin, Ohio]. Atlas measures appropriateness of care, effectiveness of care, and efficiency of care on an inpatient basis. All information for Atlas is abstracted from the patient's clinical record. Physicians will tell you that data that don't come out of the record aren't any good.
MC: Or that it didn't happen.
CHERNEY: Atlas measures the patient's response to care. So under appropriateness, we'll look at admission and apply algorithms to see if the admission was appropriate. In other words, it looks at whether other things should have been tried before the admission or the surgery. Then it looks at effectiveness. After admission to the hospital, did the patient begin to get better or sicker? If sicker, then you'd look at why. Perhaps you had a pneumonia patient who didn't get an antibiotic in the first 15 minutes, so it ends up adding a whole day to the length of stay and increasing morbidity. Last, the system looks at efficiency. Once the patient is out of the hospital and treatment is done, what resources were used to get to that outcome? When we started this, it wasn't unusual to have two patients at the same level of morbidity, both in the hospital the same number of days, and have a 2000-percent difference in their charges.
MC: Has that kind of discrepancy diminished over time?
CHERNEY: Absolutely. It was just like the Friday C-sections. Once doctors began to look at outcomes information and found out that other people were getting the same outcomes they were for a whole lot less money — or were getting better outcomes — they realized that this was powerful information, and saw the need to change.
MC: How were you able to collect these data? Did the coalition say it would like to do this, and the doctors and hospitals said "Yes?"
CHERNEY: The coalition said, "We'd like to do this," and all the hospitals initially said "No."
MC: So you said, "Do this if you want to do business with us?"
CHERNEY: We came back and said, "We're really insulted. This costs .002 percent per discharge. If you're not willing to spend that, and collecting this information is not important enough to you, then we'll pay for it. You can create a new billing line for our members, call it the MediQual Abstraction Charge, and charge us because it's that important to us." They thought that was great, until they heard the next part. We said, "Of course, we believe in choice and we know how important choice is to you, so when you create that line that shows the cost impact per discharge, we'd like you to create another billing line and show us the cost impact per discharge of your executive bonuses."
MC: I like it.
CHERNEY: That's just business, isn't it? That's fair. We were willing to step up and pay.
MC: Do those two billing lines exist today?
CHERNEY: No. Somehow those two items got buried in the bills.
MC: What are some of the big lessons you've learned now that you've got nine years of data?
CHERNEY: All physicians are not created equal. Physicians are very smart and very competitive, and if you give good people good information they will make good decisions. We also learned that while most doctors have a difficult time with change, they are willing to make it — as long as it's based on facts and not on what somebody likes or dislikes. They won't accept a formulary that's based on rebates. They'll challenge data, and that's good. We've had occasions where physicians felt that one of MediQual's algorithms was unfair. We've had the medical director in charge of that come to Florida and meet with our doctors. That kind of physician input has sometimes changed algorithms. If the doctors believe that the system fairly measures them, it works.
MC: Have physicians in Central Florida largely bought into this measurement system, or are they looking for a way to get rid of it?
CHERNEY: Most of them have bought into it, because physicians in Florida recognize that we are moving very rapidly toward a single-payer system in this country.
MC: Do you agree with them?
CHERNEY: Absolutely.
MC: Why?
CHERNEY: Because every couple of weeks in Congress, one more person jumps on the Patients Bill of Rights bandwagon. If a bill of rights passes that allows employees to sue employers over health care — though I don't think one will pass in this kind of Congress — a number of major employers are going to bail out of health care. They'll give employees the same amount the companies had been spending on health care and tell them to go buy their own benefits. When that happens, there will be such chaos in the health care system that Congress will decide it's a national disaster, take the system over, and save the world.
MC: What are the implications?
CHERNEY: The implications of a single-payer system are that the physicians aren't going to ever have any input. Find me a doctor who thinks Medicare is great. I hasten to remind doctors of that, because sometimes we get into real arguments over some of these quality-measurement questions. That's healthy, but ultimately our goals are not different. All any of us want is the best health care for the people in our community.
MC: How long do you expect this journey down the road to a single-payer system to take?
CHERNEY: I think one more presidential election is all we have. Medicare was the number one issue in this election. When you get four years out, the baby boomers will be on the edge of retirement, and that turns everything upside down. They're going to want to save Medicare at all costs.
MC: In a way that they didn't when their parents were getting it.
CHERNEY: Exactly. There's going to be a voting majority interested in protecting Medicare. Suppose people remain unhappy with the care they're getting, and add the notion that Medicare is threatened. Somebody is going to propose putting the whole country into one system and saving Medicare in the process.
MC: Let's come back to the present. The coalition is trying to figure a way to pay the best performing doctors more than other physicians. How would a performance-payment initiative work, and where does it stand?
CHERNEY: Using the inpatient data we have, we've been profiling physicians who make their livings in hospitals. We also have an extensive database of more than a million outpatient encounters, current through September 2000. The next step is to put the two sets of physician profiles, inpatient and outpatient, through an actuarial analysis.
MC: What do you hope to learn from the actuarial studies?
CHERNEY: We will profile physicians based on outcomes measures. For the sake of simplicity — and I'm sure the labels will change, but just to have a delineation to talk about — we've created three levels of physicians: platinum, gold, and silver. The best, identified as platinum, will get a percentage of pay greater than gold-level physicians. I don't know what that percent is because the actuaries will have to tell us what makes sense. A platinum physician would have none of the vestiges of managed care: no precertifications, no preauthorizations, no formulary, no anything. Just keep practicing good medicine. We would set a significantly lower copayment for platinum-level physicians to help direct patients to them, although I don't think we'd ever go with a zero copayment because that encourages overuse of services. At the same time, platinum physicians must agree to go to a miniresidency every two years to stay current, to learn about new drugs, new devices, new everything. Platinum physicians also must agree to use a handheld computer that will digitize prescriptions and track referrals and lab tests. We see the ability to track referrals and labs as a huge patient-safety issue. After two years, platinum physicians would have to agree to buy a common computer system so that we could get information into and out of their offices.
MC: You mean doctors would agree to use the same practice-management software?
CHERNEY: Right. We'd have task force meetings, ask them what works, and show them different things, then let them together select the program they think would work in their offices.
MC: How would life be different for gold-level physicians?
CHERNEY: Obviously you'd get a lower reimbursement rate. You would probably have to preauthorize admissions and adhere to a few of those types of rules, and there would be a slightly higher copayment. Miniresidencies and the opportunity to use the handheld device would be available to gold-level doctors who were willing to step up and try to learn more and get better. All of the tools to make them better would be made available because the best thing that could happen would be if all the doctors in our community ended up platinum.
MC: What about the silver physicians?
CHERNEY: My preference would be to not include silver physicians. Two things would probably prevent that. One is that in every legislative session in our state, someone brings up any-willing-provider legislation, which is nothing more than any billing provider. If somewhere down the road such legislation passed, I would not want to have to go back and redo the whole program. The second factor is that people want choice, and we want to provide that choice. You can have anything you want as long as you pay for it. If somebody's in love with a silver-level physician and doesn't care that the data show that physician isn't the best clinical option, fine. They will just have to pay more.
MC: What role do managed care plans and insurance companies play in all of this?
CHERNEY: There are some things that managed care plans can add, but they're not going to come in and set a formulary by rebate. We want medical people to decide what's on the formulary. One of our rules is that no one except another physician should tell a physician what to do medically. Our sense is that insurers and health plans have crept way too far into the medical side of things, and we don't want them there. We see managed care and insurance companies filling the administrative role, and doing it right. They have the computers and the expertise to do that. We would hope to never see another EOB form. People who work in benefits understand EOBs, but nobody else in the world does. Yet we keep sending out these confusing things that just aggravate the daylights out of people. We want a third-party administrator that will send out a letter and say, "Becky, you had an appendectomy. Your hospital charge was $9,000. Your plan has paid $8,700 of it. You owe $300." A lot of obstacles in managed care are intentional inconveniences. A lot of rules governing referrals, use of specific labs, and many other things are there so that people won't jump the barriers. As a result, they don't get the care. We want to take the intentional inconvenience out of it. Whoever administers this plan has to simplify employees' lives, period.
MC: How have local medical societies and large physician groups responded to the idea of pay for performance?
CHERNEY: It's nebulous at this point, because we're still at the theoretical stage. The first thing physicians want to know is how much more money a platinum physician gets. There is no pushback from physicians, yet, because all physicians in our community believe they're platinum. They don't have a good way of knowing, and there isn't one who wants to practice bad medicine or thinks he or she is practicing bad medicine.
MC: When do you hope that pay for performance will be up and running?
CHERNEY: I would love to see it in two years, but there's so much involved. Our actuaries are looking at how much more we could pay platinum physicians and make it work financially. This has never been done before. We are pretty certain of the basic plan design but every employer would be allowed to modify it.
MC: How?
CHERNEY: We did side-by-side comparisons of every plan that our members offer, and 95 percent of them match up. So, we're only talking about a 5-percent difference. That boils down to whether they pay for birth control, or in-vitro fertilization, or some lifestyle drugs. Some people want to cover weight-loss medications; others want to cover Viagra because it's important in retaining or attracting employees.
MC: What role might the Internet play in all of this?
CHERNEY: It is part of the solution. A lot of administrative requirements cost a lot of money, but are very inefficient. It's pretty darn silly that I can fly to Paris today and use my ATM card and take cash out of a bank, but I can't have an enrollment card that I can take to my local hospital and give them a clue to what's covered. We've got to use the technology that's there, including the Internet, so people can have a current list of physicians and their quality levels. We need to do a lot of enrollment processing over the Internet. I understand that everyone doesn't have access to the Internet or know how to use it, but we have to move ahead with what's available.
MC: You're putting a lot of work and time and effort into creating a new delivery system. Given your sense of where the country is heading, are you worried that you'll build an elegant system that will be rendered obsolete after the 2004 election by a single-payer system?
CHERNEY: No. You have to try something. I don't know anyone who wants to think about getting health care through a single-payer system.
MC: Ralph Nader does.
CHERNEY: Well, I don't know him, by choice. My husband had a heart event while we were in England in August. While everybody talks about socialized medicine and all the availability of services, I don't ever want to have to go anywhere close to that system again, and that's what our system will become if we end up with single payer.
MC: Did it turn out OK for your husband?
CHERNEY: Yes, because we left the hospital and came home. When we left they said it would be very risky to fly. We decided the health care system there was a greater risk. So we flew home.
MC: So you would dispute those who look to other countries as models of how to reform our system?
CHERNEY: Those people never compare apples to apples. They'll take one piece, like infant mortality rates, and point out that we're not the best in the world. Then they'll point out that people are waiting eight years for hip replacements in Canada, so we're better on that score. You can't be best in all things. I'm convinced that we can be better, but I still think we're good. We should be best in infant mortality. Unfortunately we get tied up in politics and trying to create financial models like fee-for-service or managed care. You change care by going right back to the delivery of care, not with financial models, not with the German plan. You change care doctor by doctor.
MC: Thank you.