NASP Podcast
Episode: 861 – Value-Based Health Care & Specialty Pharmacy
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transcript
Dr. Kyle Hogarth MD, host
Well, thanks, everybody, for joining us for another podcast here for Heritage Biologics. It is my distinct pleasure, because I'm gonna have a discussion today with Dr. Mahek Shah. He is a senior project leader and senior researcher at the Harvard Business School. And he works with several people, including professors Robert Kaplan and Michael Porter, to design and implement new frameworks for restructuring health care systems around the world. Value based health care with the overarching goal of delivering more value for the patient ⎻ better outcomes at lower costs. That introduction alone should explain why he is ah, perfect person for Heritage to interface with his work and his set of values and goals pretty much echo exactly what Heritage is trying to accomplish. He received his medical degree from Baylor College of Medicine and went to undergraduate and graduated cum laude from Rice University, where he studied economics and religious studies. So, Mahek, thanks for joining us today.
Dr. Mahek Shah MD
It's a pleasure.
Dr. Kyle Hogarth MD, host
So give us, you know, I suppose I just stole your thunder and gave some background, but give us a little bit more of a background in the sense of your work and your expertise.
Dr. Mahek Shah MD
No, I'm happy to do that. And thanks again for taking the time to speak with me today. As you mentioned, I'm a trained physician, and I've spent the better part of more than 10 years really focusing on redesigning our broken health care system mainly to improve the outcomes in the experience for both patients and providers. And that's the reason I went to medical school and actually, prior to medical school, I spent some time in Wall Street at Citigroup. Most currently, though, I've been spending and leading our value measurement healthcare team at the Harvard Business School, where I'm responsible for our costing projects globally. Primarily, this is a senator around our value based health care initiative. And I know we're gonna talk a little bit more about that today.
Dr. Kyle Hogarth MD, host
Yes, definitely. So obviously quite busy on, uh, one would clearly argue, looking at your c v, very well educated. And I think in a unique position to try to bring together what is, I think historically been thought of as sort of differing, you know, conflicting views. Almost, if you will, in the sense of I'm a doctor and I'm only thinking about patient delivery care and or I'm on the business side, and I'm trying to look at it, you know, from the value, perspective and cost savings. And, you know, there's sometimes been, I think, a difficulty in the dialogue between those two. I'm clearly oversimplifying this, but those two sort of worlds and you have a unique ability. Thio quite literally have a foot in both
Dr. Mahek Shah MD
Yes and looking back. And sometimes when I have a moment of reflection and historically, Healthcare's had this sort of what I would call a Chinese wall between the finance administrative folks and the clinical front line physicians who are highly educated, highly trained. But they're not educated or trained in business practices and business lingo and business skills, and they're very different skill sets fundamentally and so my background is kind of like to your point being having both feet in on both sides. It's enabled me to really understand the language both from the provider perspective and their needs and understanding there desires and goals and ambitions, as well as what the administrative is particularly. Nowadays. The C suite and leadership of these health systems and ministries of health around the world were trying to tackle when it comes to moving from this fee for service model to a value based model
Dr. Kyle Hogarth MD, host
well, and that's a lot of what the Harvard Business School's Institute for Strategy and Competitiveness is trying to help accomplish. Right, And that's That's the core of a lot of what you do is there? Do you want to expand on that?
Dr. Mahek Shah MD
So the Harvard Business School has a number of initiatives where focused on advancing the body of knowledge but also putting many of these areas of interest into practice. And so one of them happens to be value based health care, which is led by Michael Porter and Bob Kaplan, professors at Harvard Business School. And this stemmed from Professor Porter co authoring his book, Redefining Health Care from that he developed this strategy. He is a strategy professor that many of us know, and he developed a framework to implement healthcare focused around value, where every other industry in the economy that he has been closely involved with and has helped influence is focused around value. Where he found that health care is this sort of outlier in the in the economy, where it wasn't focused around value and value for the customer and then healthcare or a customer is the patient. And about seven years ago he talked to Professor Bob Kaplan, who is the world's expert on cost accounting professor. Kaplan is known for his work in Balanced Scorecard as well as a cost methodology known as time driven, activity based Costing. That's my particular area of expertise is cost measurement using the bottoms up approach that he developed. And so we work with health systems and providers, suppliers and governments to design pilots using time driven, activity based costing or TD ABC. We work with these organizations to help them create pilots and present strategies on how to take those pilots and scale them across their organizations. Many of these organizations are often faced with challenges of how to move for this antiquated, broken fee for service model and move towards more value based system to where the business interests align with their clinical interests. And as you and I both know, the reason we're in medicine and the reason we practice on in the front lines. Every doctor wants to provide the best outcomes for their patients, and and so around the world I had the fortune of working with incredible partners to advance this mission.
Dr. Kyle Hogarth MD, host
You started to touch on this and and obviously some of the methodology. But just so I wanna make sure our listeners air clear on it, what are some of the core fundamentals behind something like value based health care or put maybe another way, you know, how are we defining it? And some of it, I suppose, seems obvious, like, make people better. Well, okay, values of that. But like we said earlier, the sort of new thought process for a lot of both the customers, aka the patients, but as well as the doctors, is to examine other aspects of what the word value means.
Dr. Mahek Shah MD
Certainly it's the latest buzzword within the health care system. You know, a few years ago, if you recall, it was big data and analytics, right? And patient engagement kind of was also brought in, and now it sort of seems to be value based health care. But if you take a step back, and if your listeners think about it just from ah, very mountaintop eagle eye perspective, the goal of any system or healthcare system is to maximize the value for its customers, which is the patients, and we defined value as the health outcomes that matter to patients over the costs deliver on those outcomes. And based on this premise, Profess reporter outlined a six step framework, and the first piece of the framework is to organize around the medical condition because in health care, what we've been doing is we've divided up ourselves into departments, you know, dermatology, cardiology. But we really should be organizing around the medical condition, treating breast cancer or treating headaches and migraines, particular areas of medical, of conditions that people are affected by. And and so if we organize around the medical condition, we recommend creating what we call it integrated practice unit or I P U, which is a multi disciplinary team focused on treating and managing that medical condition. So you have not just doctors, but you have nurses. You have a physician assistance. You have speech pathologists. If it's necessary. You have a clinical pharmacist, you have medical assistance and other frontline folks that are all basically on this team organized on how to most effectively treat that particular medical condition. The second step is to measure outcomes, and so we've been doing a very good job of measuring clinical outcomes and tracking certain laboratory markers that determine normal abnormal status of health. But what we really should also be incorporating is the patient report outcomes. How are patients feeling? What are their goals? In addition, there are some other surrogates that we use length of stay readmission, etcetera that many of your audience is familiar with. But we What we need to do is package those outcomes together and measure them in a standardized form. Right, and the third piece of the framework is measuring costs.
Dr. Mahek Shah MD
Now. This is a particular fun area for me is a former investment banker. But I think that measuring costs is something that, from a bottoms up approach, hasn't been done enough and needs to be dunmore lot of, at least in the US primarily a lot of our what we call cost we refer to as charges. And those charges air from a charge master, uh, primarily set by CMS and large government organizations, right? But those aren't the true costs to deliver a care, and so it's is using this very bottoms up and granular form of costing and using this methodology of TD ABC. That really aligns the clinicians with the administrators to understand how to deliver the care at a manageable amount of cost and then fourth. Once you know your costs and you've measured your outcomes and you're having a standard approach to both of those things, then you could do what we recommend is a former payment is a bundle payment. It's a single payment where encompasses all the the things that are necessary to treat that particular medical condition, and then you take that bundle payment. You negotiate that number because it's going to differ from organization organization, and you negotiate with a commercial payer. A. An employer now are doing direct bundle payments and direct contracting. You would negotiate with governments in the ministries if you're in a lot of European countries or South Asia, and so and then 45 and six get into how you expand and hire organized around there. But fundamentally, it's around, you know, measuring outcomes and measuring costs and organizing around the medical condition.
Dr. Kyle Hogarth MD, host
Thank you for that, because the large overview of is unbelievably important. Now let's start to Segway into it. From the perspective of one of these other key players and and probably the one that's been historically the least monitored because it's now out of the direct health system, if you will, like, you've left the hospital or you've left my clinic. And now we're moving on into the world of specialty Pharmacy. And I have, you know, transferred my sort of care for the patient onto an independent entity that, you know, isn't interfacing with the clinic or interfacing with the hospital. And so the work that you've been doing now to help bring the value based specialty pharmacy model toe life with heritage and the work you've been doing with, you know, major industry conferences and speeches there can you segued into, ah, sort of the more detailed approach of the historical problems we've had in the whole specialty pharmacy world and why your work can very much apply to what Heritage is trying to accomplish?
Dr. Mahek Shah MD
Most certainly, I think that the value based health care agenda has been focused a lot on providers and health systems, and how to better improve their mission and meet their needs is a transition from this future service to value based model. However, there are other stakeholders in the health care industry. And when you spend three trillion in the U. S. Per annum, there are other large players and entities that are important into the entirety of a care cycle for patients, and one of those is specialty pharmacy, and very little has been sort of known probably to the average consumer about specialty pharmacy. But it's a very significant part of the business in a very important member of the value chain and until often that you become a patient requiring engagement with the specialty pharmacy. Do you not realize the frustration and the broken system that is within the traditional specialty pharmacy model? And, I believe, therefore an opportunity for a company like Heritage to come in and introduce initiatives and programs to become the premier value based specialty pharmacy in the country, if not the world. And so being able to have the privilege of speaking at these national conferences allowed me to meet other people that were for thinking and had questions around the value agenda, because it may have been exposed to that from health systems or from reading Harvard Business Review or other media. But I think that the leadership that heritage has been taking in terms of both human capital in hiring the incredibly talented people they have, as well as these programs like RXPX™ that I'm a proud to be involved with in a part of and I know you're very proud of. A swell allows the patient's voice and patient experience to be a measurable outcome.
Dr. Kyle Hogarth MD, host
I'm struck by one of things. That, and correct me if I'm wrong. You know, one of the difficulties that's going on in all aspects of health care and in particular, and specialty pharmacy is, you know, change is always difficult for everybody. You've had the model of how you've done it. Even a broken model, though, is still a, you know, a familiar model. But the idea of essentially starting a specialty pharmacy but starting it from scratch and it from the core of it, building it around these principles of value based health care of that is the core principle. And we're going to be measuring outcomes, you know, etcetera, etcetera. I mean, that seems to be the core of RXPX™
Dr. Kyle Hogarth MD, host
and in all aspects of what heritage trying to accomplish. But by taking, you know, everything that you've been doing and others, obviously with the Harvard Business School's Institute for Strategy and Competitive, but building it from the ground up. So you're not having to fight a culture of, you know and change things. This is just how it's gonna be within your company.
Dr. Mahek Shah MD
Exactly. And I think that the folks that leadership here at Heritage has been taking that approach is change is hard. And once you admit that and move past that, then you say, OK, what do we need to do? And what do we need accomplish? And how are we going to get there? And I think that in health care, because of the many stakeholders that are involved, as well as three large, uh, anchor on tradition, um, some of it is into the clinical mentality of this is the way my mentor did it. Or my my chair does it, so I'm gonna do it this way. It's difficult, and also it's about incentives. In alignment of those incentives. I think it's very difficult for physicians to practice in a value based world when they're compensated, and they're expected to meet certain metrics based on a fee for service model. So until you make some changes that move the whole system and incentive model towards value,
Dr. Mahek Shah MD
it's going to make it difficult to change. But if you take the approach that heritage has been taking in a, let's see what the current landscape is, what do we actually want to accomplish? And then third, how do we create initiatives to do that around patient experience, around measurement around leadership? And I always like to say, And I've said this for a number of years that if you have better design plus better experiences, that equals better medicine and very few people could argue with that particular statement. When you do those things, it's very difficult, you know, implementing are costing, approach is intensive and devotes. Resource is, But once you do it, sort of like riding a bike. Once you get on that bike and you get going, you'll see the tremendous opportunities of the road ahead.
Dr. Kyle Hogarth MD, host
There's nothing could stop you after that.
Dr. Mahek Shah MD
That's right,
Dr. Kyle Hogarth MD, host
I think that's the part that's most exciting. I mean, and I wonder, I mean for yourself included. You know, a times when you're thinking things on a very large macro scale of trying to change all aspects of health care to then quite literally, almost boil it down and say, OK, we're gonna take one spot and just make this change here. We're gonna implement our principles, and now we're gonna bring it really world. You know, we've we've given someone a blueprint in a guideline, and now let's watch them do it and let's do it. And let's keep measuring it. Because, of course, no one is under any illusion to get it right the first time. That's why you could make tweaks. But because you're constantly measuring, you know there are X P X experience allows the patient experience to be out measured and could be adjusted. And if there's something that heritage needs to do differently, we're going to know it because we can constantly assess it.
Dr. Mahek Shah MD
That's right, And the mission and the agenda doesn't stop. Once you figure out what your current state of activities and delivery of care looks like around a medical condition, that's the foundation of where you can build an entire value based home. And if you're lucky, you could build a large mansion to where everyone underneath that roof is fantastic in what they're doing and delivering care. But those that come visit I e. The patients. You're getting an incredible experience because there's a whole team focused around them. It's almost when you go to the Four Seasons, the Ritz Carlton. When you have those unique opportunities in life versus they a standard, you know, motel on the side of the highway, there's an incredible difference. I think there's a willingness to pay for those experiences. That's why that a lot of patients are sort of had this expectation. Other areas of their life, finance and banking has changed the whole experience of going to the mall or even buying online. If you look at everyone buys everything from Amazon now, so there's an expectation of meeting me where I'm at providing the right care at the right time at the right place with the right team. And I think if you could tackle those for elements in addition to kind of wrapping it around measurement both on outcomes but also on costs to you as a business and as an organization can understand how to improve right then you're setting up yourself for success, you know, Professor Caplan always like to say, You know, you cannot improve things that you don't measure, you know, And health care is no exception to that rule.
Dr. Kyle Hogarth MD, host
That's fantastic. We've been talking for a little bit. I want to see if there's anything you know, that a key component that we haven't touched on or something that, you know, you're like, gushing ways. That guy would ask me, This s o there. Is there anything that we haven't touched upon our final thoughts?
Dr. Mahek Shah MD
Sure. No. I think that, you know, in doing these elements of the value agenda and any organization, I think one you have to get leadership to be engrossed or understand the mission in the agenda. And I think that will help every organization and every group that wants to be involved with getting on this mission to really buy it in. And I think that the Value train has already left the station. It's it's full throttle accelerating on its rails. And I think that, you know, capturing and understanding the patient experience in real time and setting new standards for for not only health systems are doing this right now like Mayo Clinic and M D Anderson and others, but a new standard within this very large important point of specialty pharmacy. And that's where Heritage is coming in with their patient centered. And I think that the value based health care initiative will continue. There's a global need for this, so it's not just isolated to the United States. Other countries are doing it and then seeing the results and opportunities that present themselves. And I think if we fundamentally want to improve our health care in the US and compete with the rest of world on health outcomes, we need to not only measure outcomes far better and understand the patient experience, but we must measure our costs, and that will take this costing approach that I implement.
Dr. Kyle Hogarth MD, host
Fantastic. Can't thank you enough for your time. I'm excited about your work. I'm excited about how your work interfaces with what hair it is trying to accomplish, and I think this is a good thing and a great great movement forward eso Thank you so much for your time and for explaining to our listeners you know what you and others were trying to accomplish and how we're trying to bring it now to the real world.
Dr. Mahek Shah MD
My pleasure. I really appreciate you discussing this with me, Dr Hogarth. And you know, our group puts out articles and papers in clinical, academic medical journals as well as other mainstream management press. So for your audience, please look out for many of those that are coming forth in this year.