[00:00:01.290] – Announcer
America’s healthcare system is almost unanimously viewed as being unaffordable, dysfunctional, and severely in need of transformation. APG President and CEO, Don Crane, talks with leading healthcare executives, physicians, and other visionaries to explore solutions to lowering costs and improving quality of care by accelerating the movement toward value-based care models and away from fee-for-service. Want to be inspired by our nation’s foremost thought leaders in healthcare? Then this show is for you!
Here’s your host, Don Crane.
[00:00:36.420] – Don Crane
I want to thank the TDC Group, the exclusive sponsor of our APG On American Healthcare podcast. We’re glad to have you on board. TDC Group has been serving healthcare organizations and practitioners for over 40 years. They are the nation’s largest physician-owned provider of insurance, risk management and healthcare practice improvement solutions. They work with a range of large and small healthcare groups nationwide. TDC Group is endorsed by such well-known organizations as the American College of Cardiology and the American Society of Plastic Surgeons.
[00:01:10.950]
To learn more, visit their web page, the TDC Group dot com. I sat down the other day with Richard Anderson, the CEO of The Doctors Company, the second largest med mal carrier in the country and the largest physician owned med mal carrier. TDC Group, as it’s now called, is the sponsor of our APG podcast. And is an interesting example of health care companies that are diversifying as they respond to a rapidly changing industry. Now, with multiple business units providing a range of services to physicians and other providers across the country, TDC really is far more than just a medical malpractice carrier. Dr. Anderson, a practicing oncologist, most of his career and I had a chance to discuss a hypothesis that I have long held, namely that integrated coordinated care models generate far fewer med mal claims than do fragmented fee-for-service models. If this hypothesis is correct, it could have far reaching implications for the progress of the value movement. Take a listen.
[00:02:26.400]
Well, Dr. Anderson, so nice to be talking with you today. Thank you for doing this for us, with us. And while I’m at it, thank you and The Doctors Company, TDC Group for agreeing to serve as our exclusive sponsor of our podcast series. That is very much appreciated. So thank you for that.
[00:02:44.460] – Richard Anderson, MD
Well, thank you, Don. It’s a great pleasure to be with you.
[00:02:47.790] – Don Crane
Very good. Very good.
[00:02:49.020]
So, you know, you’ve got this amazing background I want to ask you about after all of this superb education off to Scripps where for 18 years you were the Senior Oncologist there and the Chairman of the Department of Medicine and then off to TDC, The Doctors Company. How did that journey happen?
[00:03:08.520]
Can you tell us about that?
[00:03:11.610] – Richard Anderson, MD
I can. Although it was pure serendipity, none of this was planned. I was very happy in my oncology practice and really wasn’t looking for anything else. But along the way, I was an insured member of The Doctors Company. I had my medical malpractise insurance with The Doctors Company and ultimately was asked to serve on some on a claims review committee and underwriting committee. I was elected to the Board of Governors while still practicing full time. And long story short, ultimately I became Chairman of the Board and then CEO.
[00:03:51.160]
None of that was planned. It was just one, just putting getting out of bed every morning and putting a best foot forward. And that’s what happened. For me personally, it’s worked out extremely well. I think my proudest professional achievement is becoming a physician. But after 20 years in private practice there was I felt in some ways I’d reached the apex of what I could accomplish in that role. The Doctors Company gave me a very powerful institutional force to work on behalf of the medical profession.
[00:04:32.850]
And from that point of view, it’s been a great privilege.
[00:04:36.810] – Don Crane
Very,very good. So, tell us a little bit about the TDC Group. I’m calling it by its proper name, I think the TDC Group, but I think most of our listeners know of it, you by The Doctors Company since so many APG members are covered by The Doctors Company. So tell us about your enterprise.
[00:04:56.010] – Richard Anderson, MD
Well, The Doctors Company is actually the official name of the organization, and it encompasses The Doctors Company and a number of subsidiaries. And together we call them the TDC Group.
So, The Doctors Company started and continues to be primarily a professional liability insurance company, medical malpractice insurance company. Today, in total, we insure nearly 100,000 physicians. But we started in 1976 in California with a few hundred physicians in the midst of the medical malpractice crisis in 1975.
[00:05:38.980]
The company has grown and its subsidiaries and created a startup of our own that are included in the subsidiary, so Hospital Risk Associates, HRA, covers large integrated delivery systems in New York City at present, although we plan to take that platform nationally, including such luminous systems as Mt. Sinai, Mount Mount, if you’re in montmonties.
[00:06:09.280]
So that’s HRA and it has a wide range of other services that it’s capable of providing. Medical Advantage Group is on the other end of the spectrum. Medical Advantage covers, does practice level consulting. It’s a data and infrastructure specialist helping future-proof medical practices from an I.T. structure, data standpoint. And I say future-proof. But today it’s very hard to survive as a practice without having these capabilities in effect. So Medical Advantage has been instrumental, for example, in creating back-office data analytics and portals, but also very important in helping offices adopt to electronic health care records, installing electronic health care records.
[00:07:02.050]
Medical Advantage doesn’t create the record, but it does something that in some ways is even more important, which is it teaches the practice, the medical practice, how to use the record effectively and efficiently, both at the physician level and the staff level and TDCSU is our excess and surplus lines carrier.
[00:07:24.850]
So it’s a full spectrum insurance company that works in excess and surplus lines and limits to itself to health care.
[00:07:36.760]
So it covers a broader range of products than traditional professional liability. For example, you know, errors and omissions or management and directors coverage. Life science coverage is clinical trials, that sort of thing, cyber liability. All of those things are covered exceptionally well by TDCSU. And in a world where large, where health care is becoming more and more a collection of large institutions rather than large practices or even small practices, TDCSU is able to craft custom insurance coverage just because it’s in the ENS world, whereas in the admitted market still the core of many insurance programs.
[00:08:30.610]
But the admitted market is very heavily regulated. And each time you change the language of a policy, requires regulatory approval. In the ENS world, that’s not necessary. So, it’s much more flexible and much more customizable.
[00:08:46.000] – Don Crane
You know, I love the term future-proofing clients that Medical Advantage subsidiary does. I mean, with the future coming upon us so fast, it strikes me as maybe it’s equally accurate to say present-proofing it.
[00:09:02.240] – Richard Anderson, MD
Yes. Yes, it’s exactly right. I mean, it’s almost as though we’re going back to the future. It’s getting ahead of us.
[00:09:08.260]
There’s no question about it.
[00:09:10.660] – Don Crane
Such are our lives.
[00:09:13.060]
So, my quick research the other day revealed that you’re the largest physician-owned med mal company in the nation and then across all but a physician owned or otherwise, you’re, I think, the second largest in the country right now.
[00:09:27.460]
Is that correct as well?
[00:09:28.690] – Richard Anderson, MD
That is correct. And actually, the largest is Berkshire Hathaway. But Berkshire Hathaway, as you know, is huge and consists of many, many companies. If we look at their primary professional liability insurance company, that’s MedPro, very respectable company, part of Berkshire Hathaway and TDC is already today comparable in size to MedPro.
[00:09:52.540] – Don Crane
Wow.
[00:09:54.460]
And the difference is, of course, TDC is owned by its members. And by the way, I have enormous respect for Berkshire Hathaway and Warren Buffett. So, there should be no mistaking about, no mistaking that.
[00:10:06.370] – Don Crane
Yeah.
[00:10:06.610] – Richard Anderson, MD
But at the end of the day, we write dividend checks to our members, MedPro writes dividend checks to Warren Buffett, very different organizational structure.
[00:10:17.260]
Well, yes. And then I imagine with that, that creates a different level of sensitivity. Basically, of customer needs. I mean, your customers are your bosses. And so that closed loop just has to create, I think, a high level of sensitivity as to their need, their demands and the like. Is that a reasonable observation?
[00:10:38.350] – Richard Anderson, MD
I think that’s absolutely true. Absolutely, yes.
[00:10:41.800] – Don Crane
So, and here we are, what month are we in now?
[00:10:44.830]
I guess we’ve made it to March of 2021. We’re into the whatever months, maybe 13 to call it that, or 12th of the COVID pandemic. And so I’ve got to ask them. The very obvious question is, how is that impacted basically your business and the whole business of medical malpractice insurance? What do the actuaries think of it? Does it generate more claims, fewer claims? We do a lot of talk around APG around, you know, a marked decrease in utilization that occurred approximately April, May, March, April, May of last year that since rebounded.
[00:11:23.050]
But the changes have rippled through, you know, the care model in profound ways. And so, as I look to you, how has it impacted your business?
[00:11:33.310]
Yeah, well, it’s a terrific question. And as you described in healthcare directly, it’s had an enormous impact, some of which is clear.
[00:11:46.000]
In other words, we know what happened in 2020, but what’s much less certain is what the future looks like based on the events of 2020. So on the litigation front, as you mentioned, there were fewer claims filed in 2020 than we would have predicted or expected for the year.
[00:12:05.920] – Don Crane
Right.
[00:12:07.090] – Richard Anderson, MD
Partly because a number of services were curtailed by the pandemic. But more to the point, the legal process pretty much ground to a halt. Lawyers, courts, depositions, those sorts of things were grounded in the same way that most of life in the country had slowed down dramatically. So, we know what happened in 2020. There was less overall litigation, less by a little less than 20 percent, 18 percent fewer claims than we expected, which is a very large drop.
[00:12:38.680]
That’s thousands of fewer claims with a company like The Doctors Company than we had anticipated. What we don’t know is what happens in 2021 and beyond. How much of this, how much of the claims, the dogs that didn’t bark in 2020 will bark loudly in 2021, 2022?
[00:12:56.020] – Don Crane
Right.
[00:12:56.860] – Richard Anderson, MD
We had broad immunities in I think 37 states plus a probable federal immunity in the PREP Act, which probably also provides a layer of federal immunity to COVID related claims.
[00:13:13.750]
Most of those will expire in 2021. Not the PREP Act, but most of the others will expire in 2021. And the question is, again, with the expiration of those immunities, will we see a surge of claims, even the ones and even now? Right? Even as we’re speaking right now in the state of New York, there’s pending legislation which we hope does not pass, but there’s pending legislation that would actually not only end the immunities it would retroactively end the immunities that really were created in the state of New York.
[00:13:49.630]
So that’s a controversy that we’re fighting right now in the state of New York.
[00:13:54.700]
So with all of that, it’s very uncertain about what the litigation harvest will be overall. In 2020, the litigation picture for all the horror of the pandemic. And, of course, that’s the biggest aspect, just the horror of the pandemic, the disruption of medical care, the pain, suffering and death, disability that was created, but it did. There were fewer claims. What we’re really not clear of is what happens going forward. And that just simply remains to be seen.
[00:14:31.830]
I think the other thing is and I think this was obviously true in medicine too, the company, our company and many companies, of course, just as medicine pivoted dramatically to telemedicine. Right? You know, I saw one cumulative set of statistics that implied that about one percent of medical visits were telemedicine visits, say, in 2019 during the height of the pandemic, that peak to over 50 percent of medical encounters were telemedicine variations. And currently it’s back down to around 20 percent.
[00:15:07.900]
I mean, that’s an enormous increase. That’s the sort of thing that if you were projecting in 2019, you might have said, well, perhaps we’ll reach 20 percent telemedicine visits in 2030. Who knows? But we’re there now. And I think we’ll stay there. It might even continue to go up.
[00:15:27.250]
We’ve seen a, that’s reflected not only in medicine, but it’s also reflected in the way that we and other companies work. We did 90 percent of our employees worked from home for all of 2020. Most of them are still working from home.
[00:15:44.560] – Don Crane
Right.
[00:15:45.520] – Richard Anderson, MD
And I have zero doubt that whenever we revert to whatever the new normal is, because the new normal won’t be the old normal, it’ll be a hybrid of traditional office work. Probably rearranged but office-based work with very flexible work schedules with a number of people working exclusively from home. And most people and I think this is the key, most people working part-time from home and part-time at the office. So dramatic changes in that aspect of it.
[00:16:20.140]
And, you know, it’s not just where the, you know, it’s not just where you’re sitting when you’re on your computer.
[00:16:26.710]
I think the other thing that happened is this dramatic acceleration of the use of technology to inter mediate human contact. There’s really no substitute for breaking bread together or face-to-face meetings or the kind of valuable dialog that occurs, unscripted dialog that occurs in a face-to-face meeting with a group of engaged people.
[00:16:51.430]
But on the other hand, the ability to sit to convene meetings and, you know, in a virtual heartbeat with 500 or a thousand people or 50 people, the ability to stare eye to eye on a virtual meeting really has and the quality of the broadcast has really changed the way we think about the technology enabling aspect of the way business is done, the way human communications are done. So, an incredible, incredible accelerator of change throughout, I really think throughout the country and throughout almost all aspects of business.
[00:17:34.840] – Don Crane
So I couldn’t agree more. You know, telehealth and televisits get so much of the attention. But I think also of all those patients that have remained at home and are being supported by remote monitoring or in the way of devices, Wi-Fi and Bluetooth enabled such that physician and patient are very different places, not, for example, in a hospital, but instead of at home. And of course, that in and of itself is a very important dynamic. But the whole kind of psychology that grows up around that. I mean, do you have to get into the car, get on the freeway and get into the parking structure and get into an office, wait with another eight or 10 people that are coughing and sneezing, or is your physician able to peer into the screen and say, oh, Mr. Crane, your blood pressure’s up a little bit.
[00:18:23.890]
And I’m looking at, you know, these other, you know, data points and you’re not doing very well. Come in or you’re doing very well. Don’t come in. I mean, I just think the profundity of the change on psychology of the patient, doctor patient relationship is going to be important. And that may be then even bleed on over into level of satisfaction of doctor delivered care and maybe even med mal claims. Is that a reasonable theory also?
[00:18:52.480] – Richard Anderson, MD
Yes, extremely. I absolutely agree with you. You know, I think for a couple of decades we’ve been talking about patient-centered care. And I think the first decade was just getting over the fact that most physicians can’t imagine anything other than patient-centered care, even when we weren’t providing it. What else would it be centered on? Well, I think we’ve learned in that second decade that it wasn’t really centered on what was always best for the patient in terms of convenience, access and so forth.
[00:19:24.870]
And now we have this dramatic change in 2020, combined with the succession of generations and social media and incredible richness of resources on the Internet. It’s merged into consumer driven care.
[00:19:45.150]
Right? So, patient-centered care is now becoming consumer-driven care. And that looks really different. The notion that I’m going to drive a half hour to my doctor’s office, pay for parking, and then wait in a waiting room for an hour and then go three other places to get tests and consults doesn’t really comport with the way most of us live our lives in other aspects of our lives.
[00:20:14.730]
The technology that we experienced in 2020 is changing all of that in medicine. The retail, you know, 10 years ago, 20 years ago when we started to get retail medicine, I mean, that’s been in development for a long time. And there have been some powerful partnerships between traditional integrated delivery systems and some of the large pharmacy chains and other kinds of things.
[00:20:39.630]
But the weight has really changed, right? I mean, retail medicine went from, gee, do I want to get what I really want to have my medical care at Wal-Mart to gee, isn’t that a convenient place to to get care? And I can do lots of other things when I’m waiting there. And now all of a sudden retail medicine, much, much more broadly, of course, than just Wal-Mart. But retail medicine is now an important part of primary care delivery in the United States.
[00:21:10.650]
These large CVS, CVS is the eighth largest company in the United States, not the eighth largest healthcare company, the eighth largest company in the United States.
[00:21:22.290]
Eight out of 10 Americans live within ten miles of a CVS pharmacy. And when they’re when they’re providing primary care or variations of primary care in those environments, it changes everything.
[00:21:36.390]
By the way, I read one thing just the last day or two that really struck me. I mean, I had been saying for a while that the vaccination process, the difficulties with facts and getting the vaccines into arms that I’ve experienced in the United States and elsewhere in the world was that that retail medicine was going to become a very important part of solving that problem.
[00:22:03.210]
Right. You cannot imagine having 300 million people standing in line for doctor’s appointments. Right. So, it had to be much more distributed and retail medicine is part of the solution to that. So that seems obvious enough that it would familiarize lots and lots of people with medical services.
[00:22:21.630]
What I hadn’t really appreciated was what is this. When you sign up for your vaccination at a retail site, you’re going through their medical portals, right?
[00:22:36.270] – Don Crane
Yes.
[00:22:36.600]
So you have to give them all sorts of data. And I don’t mean this in a malicious or privacy sense. Right. You’re signing up for a vaccination.
[00:22:43.320]
They need to know your name. They need to know your I.D. They need to know your birth date, they need know your email. They need to know your cell phone numbers and so on and so on and so forth. Well, and they need to know it for the right reason, which is it’s necessary for you to make sure that you get the vaccine, that you get your follow up appointments. It all makes sense.
[00:23:01.740]
However, the data is now theirs. And so all of a sudden, they will have tens of millions of additional people in their databases, in their records and databases to expand their base of retail medicine. So, very powerful impact of the pandemic and the interface of that with retail medicine.
[00:23:25.930] – Don Crane
I couldn’t agree more. Let me shift you to a topic you and I discussed a little bit, you know, of high interest to me. And that is really my hypothesis. I’ll use that word right now that value-based care, I’ll define that in a second, is associated maybe causally with a lower incidence rate, severity or frequency, I think is the word you guys use of med mal claims. So here we know APG members are very much devoted to a payment model, which is a prospectively paid population-based payment, also known in some quarters as a capitation.
[00:24:07.790]
We’re also very much devoted to a care model, which is the coordination of care all across the continuum, right. Often piloted or quarterbacked by a primary care doctor that helps the patient navigate through the system, but also coordinating the services of multiple other providers, some specialists, but, you know, radiologists and pharmacists, psychologists and so forth.
[00:24:33.740]
And so it’s very much coordinated and paid for in a fashion that in sense, the delivery model, in this case, the physician group to look to causing the population to be healthy. The healthier the population, the greater the profit for the physician and physician group, very different from the volume-based fee-for-service. We all know that speech. But my hypothesis is that well managed care, if I may use those four words, you know, have those kinds of characteristics, will produce fewer claims because the patient Don Crane is working with a primary care doctor. There’s ongoing communication, seems to be kind of a team- work. I’m not lost with a seven different specialists, one for each one of my body parts. And I’m just going to be, quote unquote, more satisfied. And then should there be some kind of a problem, it’s likely to be discussed. And I’m less inclined to be suing those that are working as a team to help me get better.
[00:25:35.780]
So, my theory is that, and I’m not getting to say, Richard, you need to charge all my members a lower premium tomorrow morning.
[00:25:44.060]
I’m not bargaining on this right now, but I’m trying to get at really policy because if this hypothesis holds some amount of water, let’s say any amount of water, then in that event, it’s important as we try and transform American healthcare. We do want to save money. We do want higher quality. But we also would like to have fewer claims, frankly, for all of the obvious reasons. So, what do you make of my hypothesis?
[00:26:09.470] – Richard Anderson, MD
I think it’s a strong hypothesis.
[00:26:12.260]
I mean, a medical malpractice claims are blunt instrument to measure quality care, but they are nonetheless a powerful instrument and a costly instrument. And the challenge is you, as you well know, it’s been a little bit hard to do studies too that would isolate capitation and integrated delivery from fee-for-service and more atomized care, because very few systems are 100 percent one, or 100 percent of the other.
[00:26:42.040]
So it’s difficult to tease apart, those things in a large enough study to make sense.
[00:26:49.820]
On the other hand, intuitively, it seems really clear that would be the case. I mean, this. No, it’s odd, really, isn’t it? I mean, that we talk about integrated delivery systems as something novel or as something that really makes sense. Well, I mean, of course it makes sense. How could it not make sense? Who today is advocating unintegrated care or disintegrated care or yes, I think it’s a really great way of I’m not going to buy a car from Tesla or General Motors or Mercedes. I’m going to go out and buy 30,000 individual parts and then assemble them. And I’ll have a really good car.
[00:27:27.800]
No, nobody would ever do that. And yet that. But, you know, with some hyperbole, that’s pretty much how we’ve tried to purchase medical care in the United States for a very long time. It makes no sense. And again, from the point of view of patient centered care, it makes even less sense. Right, because having 500 bills, separate bills and having to make uncoordinated individual appointments, at different times, different places in the community and then having to scramble to get the results of those tests, some of which come to you directly, some of which goes to the referring physician.
[00:28:03.740]
Some of which some of these need to be delivered in person, some by phone. It’s a very strange, it’s a very strange way. We understand how medicine evolved in that direction, but it’s not a sustainable direction.
[00:28:17.690]
And, again, the confluence, so the confluence of integrated care. Once you have integrated care, it makes the payment mechanism, value-based care, capitated care. It makes it quite feasible. It’s very hard to do it. To come up with a capitated model when medicine is atomized the way it traditionally has been. So, yes, I absolutely think it’s the wave of the future.
[00:28:44.600]
And I think, you know, you can sort of keynoted look at it from just another lens as well.
[00:28:50.450]
You ask almost anybody where the best medical care in the United States is, the answer is almost invariably going to be an integrated delivery system, right? It’s going to be Mayo Clinic or Scripps Clinic or it’s going to be Sloan Kettering or it’s going to be any notable famous institution.
[00:29:12.830]
Nobody’s going to say, it’s you know, as much as people may like their local physicians or their community physicians, no one’s going to say that that’s the world model where people are coming from all over the country to get their care. So, yeah, it’s the wave of the future. And I think from the point of view of both the quality of care and better outcomes, it makes sense.
[00:29:38.160]
And here’s the silver lining.
[00:29:39.870]
I think that in this day and age when physician burnout is so high, so it’s a, I mean, that’s nothing as has been as awful as the COVID pandemic. But the epidemic of physician burnout in the United States is a very, very, very serious problem.
[00:29:59.790]
Obviously, having physicians who are who are exhausted, who are angry, who are frustrated is not where you want to be getting care. And my own anecdotal experience, but based on a number of years, and I’m sure it’s very similar to yours. When you find satisfied physicians in the United States, people who enjoy practicing medicine, who are proud and pleased with the environment in which they’re practicing, those physicians are almost invariably in integrated delivery systems.
[00:30:33.420]
It’s the way we all learned medicine. It’s the way we were taught medicine. And it’s the way in which I think inevitably the system will come together and that transitions are difficult. Transitions are painful. They may require a whole generation before one works through them, but it’ll get us to a better place. I’m absolutely convinced of it. Better place for patients and a better place for clinicians.
[00:31:03.240] – Richard Anderson, MD
It sounds to me like we have, among other things, a data issue on our hands. This present inability, maybe that’s too strong a word, but I’ll use it to actually look at a data set and determine whether, you know, Richard Anderson is an HMO patient and Don Crane is a PPO patient, which is there’s no such field on most medical records. I’m told by my members. And so note to self that maybe you and I now have a project on our hands, which is, there’s an all-payer claims database that is just sprung up in California as a different acronym HPD or something, I think.
[00:31:41.700]
And it’s designed, I think, to create some greater transparency around pricing. I think that was the motivation, but it may be likewise an opportunity. Here we have a venue, I think it’s governmentally sponsored and so on, but with OSHPD there. And so, you know, wouldn’t it be great if in the interest of improving healthcare and we somehow talked them into adding fields to their databases or something, where that could be tracked and traced so that certain hypothesis can be proven true and we can change policy and move patients and dollars and resources around accordingly.
[00:32:21.750]
I think that would be a good thing to do. So I’m taking a note and saying, Don Crane now you’ve got something to do tomorrow afternoon.
[00:32:29.640] – Richard Anderson, MD
I think it would be a great if we had better data, I think we could move the field along faster. I absolutely agree.
[00:32:37.860] – Don Crane
How often have we said that about the data generally? So, our system is so fragmented. It’s very hard to know being certain areas. I think we just had a conversation yesterday, about self-insured PPO, which is, but no one knows what’s behind the curtain or in the black box at all.
[00:32:56.250]
No, that’s exactly right. And in fact, you know, in a way, you know, just describing, just describing the nature of the data problem actually gives I think gives you pretty good, gives us all a pretty good insight into the nature of the healthcare delivery problems that we have. We can’t get better data because the system is so uncoordinated and it’s so atomized that there’s no, we can’t even get electronic healthcare records in this country, by and large, to talk to each other just on the lifeblood of of electronic health care records themselves, let alone all of the operational institutional outcomes data that’s really critical to talk and then integrate that with all the healthcare financing data. Why shouldn’t we? I mean, that data. It’s all out there. It all exists, but no one’s really in a good position to put any of it together.
[00:33:53.790]
And inevitably with computer, with the power of computer processing, artificial intelligence, the technological capability of being able to wrangle all of this data is really here. And if it’s not, it will be here shortly. And inevitably we will get to where we need to be and I think the results will be really quite stunning.
[00:34:20.900] – Don Crane
So that is a perfect segue to the next topic I wanted to get your thoughts on.
[00:34:25.370]
And it is the big word consolidation. And the ultimate question is, what do you think of it? But a little more background. You know, we have now secretary of HHS, who is, I think, established a reputation around antitrust enforcement against providers and so forth in connection with consolidation and alleged antitrust violations and the like. But the promise of consolidation was and is or is and was, you know, better integration and one would hope with that better care and maybe create fewer med mal claims.
[00:35:07.790]
Do you have a perspective on consolidation as it impacts your business? And quickly to define consolidation clearly involves hospital and hospital mergers and acquisitions, horizontal looking sort of acquisitions. But I’m thinking also the vertical ones where hospital acquires physicians or physician groups and even, you know, these diagonal ones. We’re inventing new words here where, you know, a health plan all of a sudden merges with a PBM or retail pharmacy thing and all manner of consolidation going on, making, you know, these institutions larger, larger, larger.
[00:35:47.570]
Are they getting better, as in generating fewer med mal claims?
[00:35:54.090] – Richard Anderson, MD
Yeah, I think, again, I think it’s, it sort of blends into the larger problem that we’re talking about.
[00:36:01.790]
I think that consolidation, for first of all, it’s inevitable. Right? It’s happening. It’s happening in every industry on planet Earth and it’s happening at ever increasing speeds because we’re now consolidating ever larger entities. And so the larger entities are getting even bigger, which means everyone else needs to get bigger to compete and so on and so forth. And that’s happening in medicine. The promise of consolidation in healthcare is enormous for the reasons that you’ve already touched on. If we’d have decent electronic healthcare records.
[00:36:35.120]
One would expect that we’d have decent electronic healthcare records that would be useful, accessible, inter-compatible, user friendly, accessible to patients and physicians, all of those kinds of things. We’d have best practices. We’d have quality assurance because large institutions need to be responsible for reasonable policies.
[00:36:57.050]
We wouldn’t have random ordering of laboratory tests or multiple ordering laboratory tests because once the test was done, it would be accessible to any clinician who needed the result appropriately.
[00:37:09.680]
And we would know, by the way, which tests to order. We wouldn’t have each individual doctor reinventing a thyroid workup. We know, you know what the most efficient studies that are actually needed for the conditions. All of those can be easily accomplished or not easily, but they can be accomplished within a consolidated healthcare system, just about impossible to accomplish in a fractionated healthcare system.
[00:37:35.870]
So, having said that, and this gets back to what we were talking about earlier, that integrated care was the only care, ultimately, that makes sense.
[00:37:43.940]
However, that’s not really what’s driving healthcare consolidation in the United States right now. What’s driving healthcare consolidation in the United States right now, as it is in other industries is economic. It’s revenue protection. It’s enhancing revenues and profits. And enhancing revenues and profits, I 100% understand no margin, no mission. Understand that and you don’t even have to go into business to break even. I understand that. But, if consolidation in medicine is too much about profit, then care is going to suffer. If consolidation in healthcare is about maximizing revenue and profit, then pretty soon you start dispensing with patients who aren’t profitable or services that are unprofitable, or you get this kind of crazy cost shifting that we have in medicine now where the precisely the same care might have five-fold variations in charges within the same system, let alone among systems.
[00:38:55.340]
So, healthcare consolidation is a necessary step towards getting integrated healthcare.
[00:39:01.760]
And in that sense, I think it’s positive. But we really are going to have to decide as a country what we’re going to do about healthcare financing. How is it going to be financed and what margins are necessary to optimize healthcare delivery and what margins? And are those margins sustainable within the economic realities of medicine?
[00:39:28.620] – Don Crane
Does it make a difference where the margins go once they are earned? So, this is the for profit versus non-profit kind of debate. So, if it were a for profit, even a reasonable margin. But it went off to shareholders on Madison Avenue or wherever in the form of dividends, one circumstance. If, however, the profits were enjoyed by a non- profit tax exempt organization that was already statutorily required to reinvest those profits into an improved enterprise, that might be a very different outcome I would suspect you would agree.
[00:40:10.950] – Richard Anderson, MD
Yes, I think so. Although I have to say, you know, I want to make clear I’m not really an expert on profit versus non-profit in healthcare. A part of the reason for my ignorance is that in the superficial way I looked at it, I’ve not been able to see much difference.
[00:40:28.800]
Non-profits act an awful lot like for-profit.
[00:40:32.480] – Don Crane
Yes, I agree.
[00:40:33.660] – Richard Anderson, MD
And the charges, it’s hard to show charges being healthcare costs and charges being any different in for-profits and non-profits.
[00:40:44.160]
And so it’s, so while it makes 100% sense that there should be differences and that money staying and reinvested in healthcare as opposed, staying inside the system of health care as opposed to moving outside the system, you’d build a stronger system if you were continually able to reinvest in quality outcomes. You’d have to be incentivized to do it. Incentives drive human behavior. We obviously have to recognize that. Account for it, plan for it and incorporate it into the models.
[00:41:23.100]
There needs to be appropriate incentives.
[00:41:26.340]
But at this point it’s a little bit hard for me. If I wish I could see, I wish I could see more difference between for-profit and non-profits.
[00:41:33.900]
And again, this isn’t to impugn the for-profits because I mean,
[00:41:42.290]
Again, there’s no margin, no mission. And you got to have enough. You have to have profit for growth and competitive reasons. But non-profits in medicine don’t look, they don’t act that differently. And that’s what my source of my confusion is.
[00:42:01.590]
I think we all serve that, frankly. So, we’ve talked a lot about future here as we try to bring value into the marketplace because the atomization that we see in our dysfunctional system. So, but rather than ask you to peer out into the future and tell me what you think it’s going to look like, let me be a little more specific and ask you to look through the TDC lens. I’ll put it out 20 years. And this will be our final question.
[00:42:30.840]
We kick it around.
[00:42:31.710]
But where do you see TDC and The Doctors Company in 20 years? You’re very responsive to the environment. We can see that with Medical Advantage group. We can see what you’re doing with your diversification. You know, in and working with you and your teams, we can see how it’s sort of how innovative you are and so on. So I think you are a good person and a good firm to put this question to. And you may even have a strategic plan tucked away in a file somewhere that speaks to this.
[00:43:05.400]
I don’t know, 20 years out is a pretty long way. But I’ll use 20 because I think that evens out the peaks and valleys. Where do you see TDC in 20 years?
[00:43:16.930] – Richard Anderson, MD
I think our mission won’t have changed. And the mission is to advance, protect and reward the practice of good medicine. I think the lens with which we see that mission will have broadened a little bit. I mean, historically, the company was physician centric and will always. I think medicine is always going to be physician centric. But obviously it’s a team sport now and institutions, multiple skills and talents that are required to produce good medical outcomes.
[00:43:55.210]
Institutions will play a larger and larger aspect as healthcare consolidates. Institutions become larger and larger. So, I see The Doctors Company 20 years from now bigger because medicine will be bigger. We need to be scaled to serve the needs of our members.
[00:44:16.760]
We will ultimately, we’re following the fortunes of healthcare. It’s our job to serve the healthcare community, but that service is partly mitigating financial risk. But it’s also on the mission part of it, it’s also to enhance medical outcomes, to enhance the quality of life of those whose career is devoted to healthcare. And so I think you’ll see The Doctors Company interacting with a broader range of healthcare.
[00:44:53.090]
And certainly healthcare is morphing before our eyes. 20 years from now I could imagine that all hospitals will be surgery centers. And by that, I mean that you’ll stay in the hospital for a very, very short period of time. If at all. And that most care will be home based. And so, medicine will look different.
[00:45:20.330]
But 20 years is a really long, long time to project.
[00:45:26.570]
I can tell you that we used to, we did a lot of work and planning for the decades.
[00:45:32.990]
So, we had a 10-year plan. We had yearly plans, five-year plans and a 10-year plan. And we just completed our 10-year plan in 2020. And in 2020, instead of launching a plan for 2020, for 2030, we decided that the smartest thing they could do would be to limit the lines to 2025 and then reboot.[00:45:57.500] – Don Crane
That sounds very smart under the circumstance. I thought you were going to say 2021. You know, let’s get through this pandemic, breath deep and figure it out.
[00:46:06.920] – Richard Anderson, MD
Yeah.
[00:46:07.370]
Well, 2021 is so cloudy in terms of the conversation we had at the beginning that I figured, well, we might smooth it out if we project it to 2025.
[00:46:17.540] – Don Crane
Very, very good. Well, I’ll tell you, this has been a pleasure. It’s going to be fun being a partner with you guys going forward. I think we’ve got very copasetic and an awful lot of affinity between our organizations. So, Richard, I want to thank you very much for this, They’re throwing flags at me that we need to wrap up. So, to be continued, we’ll do this again here in some number of months or quarters and see how we’re doing.
[00:46:42.080]
And I just want to thank you very much.
[00:46:44.450] – Richard Anderson, MD
Well, thank you, Don. It’s a great pleasure. It’s a genuine pleasure. It’s an honor. You do wonderful work on behalf of healthcare. And I’m honored to be with you today. Thank you very much.
[00:46:56.900] – Don Crane
OK, be well.
[00:46:56.900] – Announcer
Thanks for listening to APG On American Healthcare with your host, APG President and CEO Don Crane. For more information about APG and transcripts of this show, visit the APG website at APG dot org.
