In this episode of Elevate Care, Kerry interviews Tom Kiesau, Chief Innovation Officer and Managing Partner at the Chartis Group, where they introduce the concept of hospital-at-home and its place within the care-at-home ecosystem. He clarifies that hospital-at-home suits specific populations and conditions but isn't a full replacement for inpatient care. Tom outlines the patient transition from hospital to home, emphasizing clinical decision-making and the need for staff with acute care experience. The discussion highlights the cost savings and potential for better clinical outcomes with hospital-at-home. It explores the future of hospital-at-home care, its benefits, and challenges, including patient and physician preferences, necessary reimbursement adjustments, and program scalability. This episode underscores the importance of proactive healthcare delivery and the role of technology, like AI, in enhancing consumer engagement. Learn more about the show: https://www.amnhealthcare.com/campaign/elevate-care-podcast/
In this episode of Elevate Care, Kerry interviews Tom Kiesau, Chief Innovation Officer and Managing Partner at the Chartis Group, where they introduce the concept of hospital-at-home and its place within the care-at-home ecosystem. He clarifies that hospital-at-home suits specific populations and conditions but isn't a full replacement for inpatient care. Tom outlines the patient transition from hospital to home, emphasizing clinical decision-making and the need for staff with acute care experience.
The discussion highlights the cost savings and potential for better clinical outcomes with hospital-at-home. It explores the future of hospital-at-home care, its benefits, and challenges, including patient and physician preferences, necessary reimbursement adjustments, and program scalability. This episode underscores the importance of proactive healthcare delivery and the role of technology, like AI, in enhancing consumer engagement.
Learn more about the show: https://www.amnhealthcare.com/campaign/elevate-care-podcast/
Chapters:
00:00 Introduction and Overview of Chartis Group
01:21 Understanding Hospital at Home
04:10 Challenges in Changing Clinicians' Mindsets
05:34 Positioning Hospital at Home as a Distinct Care Model
08:23 Staffing Considerations for Hospital at Home Programs
11:09 The Continuum of Hospital at Home Programs
15:54 The Potential Size of the Hospital at Home Market
19:41 The Future of Hospital at Home and Changing Care Delivery Models
25:31 The Role of Reimbursements in Hospital at Home
28:55 The Path to a Fully Scaled Hospital at Home Program
30:21 The Hopeful Future of Healthcare
35:05 Shifting Healthcare Delivery from Reactive to Proactive
40:01 The Role of Consumers and AI in Healthcare
About Tom:
Tom Kiesau serves as the firm's Chief Innovation Officer and co-leads the Digital & Technology Transformation Line of Business. Prior to assuming leadership of Digital & Technology Transformation, he led the firm’s Strategy practice. He specializes in the areas of: digital transformation, enterprise strategic planning, clinical partnership development, next-generation service line growth strategy, and economic alignment. Tom has also participated in the development of corporate strategy and product development strategy for multiple integrated business process and technology firms that serve the healthcare industry.
Before joining Chartis, Tom was a Vice President with Apollo Health Street, a healthcare operations and information technology consulting & outsourcing firm, and Alta Resources, a brand-focused customer relationship management (CRM) solution provider. In his leadership role at Alta, he led the development of customer-centric, multi-modal integrated engagement hubs and consumer experiences for some of the world’s most prestigious brands, including Disney, Revlon, UnitedHealth Group, FedEx, S.C. Johnson, Eli Lilly, Johnson & Johnson, and Novartis. Prior to those roles he worked at a leading healthcare revenue cycle management consulting firm, where he served as an Engagement Manager and Methodology Service Line Leader for the Patient Access Practice.
Tom graduated with high honors from the University of Chicago Booth School of Business with a Master of Business Administration concentrating in finance, economics, and strategy. He also holds a Bachelor of Business Administration in information systems analysis and design as well as operations management from the University of Wisconsin, where he graduated with distinction.
Learn more about the Chartis: https://www.chartis.com/
Linkedin: https://www.linkedin.com/in/tomkiesau/
About Kerry:
Kerry Perez hosts the Elevate Care Podcast, dedicated to driving innovation in workforce technology, total talent management, and workforce staffing needs.
As the Vice President, Enterprise Strategy at AMN Healthcare, Kerry Perez leads the design and implementation of enterprise strategies to fuel growth and achieve market leadership.
With over 15 years of experience in various healthcare roles at AMN, including recruitment, marketing, innovation, strategy, and mergers and acquisitions, Kerry established AMN's Diligence and Integration Management Office in her previous role. There, she oversaw the strategic and functional integration of new acquisitions to enhance value.
Guided by principles of customer obsession, ambitious thinking, and tangible results, Kerry's personal and professional mantra is "Be a Somebody who Makes Everybody Feel Like a Somebody." Committed to mentoring emerging leaders and building high-performing teams, Kerry holds Bachelor of Arts degrees in Business Economics and Communication from the University of California, Santa Barbara.
ABOUT THE SHOW
Elevate Care delves into the latest trends, thinking, and best practices shaping the landscape of healthcare. From total talent management to solutions and strategies to expand the reach of care, we discuss methods to enable high quality, flexible workforce and care delivery. We will discuss the latest advancements in technology, the impact of emerging models and settings, physical and virtual, and address strategies to identify and obtain an optimal workforce mix. Tune in to gain valuable insights from thought leaders focused on improving healthcare quality, workforce well-being, and patient outcomes.
Learn more about the show: https://www.amnhealthcare.com/campaign/elevate-care-podcast/
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Welcome to Elevate Care. I'm your host, Keri Perez, and I am joined here today with Tom Kiesau, who is the Chief Innovation Officer at the Chartis Group, been a resident expert in healthcare for a long time, graduated from the University of Chicago Booth School of Business, and just an all around great person. Tom, thank you for joining. My pleasure. Great to be
To begin, could you tell us a little bit about Chartis Group? What's kind of the areas of focus and how long you've been there? Yeah, I've been at Chartis for 16 years and I've been here to witness a somewhat substantive transformation, much like we've seen in healthcare broadly of growth, growth, aggregation. Chartis is a management consulting firm. We're exclusively dedicated to healthcare. This is all we do. There's over a thousand of us now at Chartis. And to your question of kind of the areas we work in,
four major lines of business, strategic transformation, financial transformation, clinical transformation, and digital transformation. And one of the managing partners in our digital line leading that line of business. Awesome, thank you. So we've had a few conversations throughout kind of the last couple of years, and I've always come to you to talk about shifting sites of care, in particular, a hospital at home. It's definitely been a topic of conversation as of late, and you've been kind of forefront talking about that.
Can you give our listeners a little bit of an overview of what Hospital at Home is? Yeah. Well, Hospital at Home, as the name implies, is the delivery of acute -level care in the home. I think there are often misunderstandings, misconceptions, when people hear Hospital at Home and kind of conflate it with home care or home health. Hospital at Home is just one component of a broader care at home delivery ecosystem.
It is the highest level of acuity within the care at home ecosystem, but it is its own separate and distinct thing. I think the other piece I would highlight, and there's been a couple of posts that have been popping lately about this in the the nerdery press of hospital at home, which is the area I love to live in, which is it is not, it will not, and it's never been intended to be a replacement for all things inpatient care.
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It is appropriate for certain populations, certain conditions, and it depends on the organization, the clinical capabilities they have. So it is a very specific thing, but it is not a consistently universally defined thing. It is acute care in the home, and that can have lots of different definitions relative to the other, the broader care ecosystem that our system operates in. Can you walk through that process of there's a patient in the hospital, and now there's a patient at home? How does that sort of transition happen? How are we deciding who's going?
to be served at home and who's going to do the care? Yeah, so right now there are a couple of technical structural components that have been put in place through the CMS waiver, which is really the driver that has basically created a financial foundation for a lot of organizations to really invest in this. prior to the waiver, the only way hospital at home made sense is if you were under full cap risk, because you're not getting paid for those patients. So if you were avoiding hospital admission and you maintained risk, it worked.
The waiver essentially brought parity and we're now with the extension of the waiver, we'll have had over four years of reimbursement. It looks very likely that it will extend again. There's a proposed out there for a five year extension right now. But what this is gonna, what it's done is it's created a mechanism that CMS and Medicare patients are being paid for at parity. If they go in through two dimensions, they either come in, they're at the emergency department and then they can be directly admitted to the hospital at home or
they're in an inpatient unit and they're transferred into the hospital at home. it's outside of that, again, if we're not talking about CMS commercial plans, you can have different structures. There are some, but most of them tend to kind of follow that CMS structure, that CMS guideline. And how gets, how patient gets put in there is really a clinical decision -making effort for the attending physician, the ED attending, the hospitalist, the nursing team, and...
with maybe without, I know we've talked a little bit about this, but that is also the biggest stumbling block to growth of these programs, right? It is hard to change people's mindsets. And we go back to what we were just talking about with the definition, a lot of clinicians know exactly what home health is and home care is, and they know it is not a proxy or a replacement for the acute level care that that patient is gonna need. And so a big issue, you see a lot of these hospital at home programs operating at just tiny, tiny volumes, know, one or two patients
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a month, right? ABC of less than one, the average of the census of less than one on average. And it's because they haven't done the process, the change management, they haven't educated people, they haven't, or even maybe they haven't built a care model that is appropriate to take care of patients that the clinicians really believe and support. So the ones that do it really well, it is just another option in the where should this patient be admitted? I am the clinician, I know their needs, I've assessed them, the ED attending.
And I'm going to decide should they go to the floor? Do they have certain needs that are only available there versus into a home unit versus discharge or observation status? Again, it's just one more arrow in the quiver, if you will. Yeah. So as far as maybe the stigma or the change management education for clinicians, how would they normally think about home care versus how the education might help them think about hospital at home differently?
Yeah, we often recommend in programs we've helped build and launch is do not base it in your home care group because there are, again, there are very real denotations and connotations associated with home care that physicians all know. And so you have to build it as something distinct. You have to explain it about how it's optimally built and engage those physicians in building the care model to take care of, you know, cellulitis, community acquired pneumonia,
they have to know exactly what is gonna happen with that patient. And the implications of not doing that, you have two very different populations. An ED attending whose job is treat a patient, place them somewhere else, They're a gate, right? And they're not holding patients, they're pushing them off to somebody else as soon as their needs are defined versus a hospitalist, which is used to treating this entire episode till it's objectively complete. So you've got very different.
kind of clinical mindsets and care manager, or change management needs, An ED attending just needs to understand the patient is gonna be safely taken care of. They don't actually want to follow the detailed care. They wanna know the tools are there, the resources are there. And that's often where we see home hospital programs starting. Get that population, transform off, and then going to the floors and looking at all the clinical populations and who can we start moving in? And it's a different set of teaching and training. And that's where you need to highlight this isn't home care. We hear a lot of hospitals say,
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I understand when a patient is ready to discharge, I understand what this is. This is an ambulatory care model. like, it is ambulatory. is outpatient in a structural, it is not in the hospital, but the clinical capabilities we can deliver are not that this is not home care. This is not your physical therapy. This is not the personal caregiving assistance. This is we're monitoring this patient 24 seven, if 24 access to care, we can get into them within 30 minutes on demand.
you have to train and explain to people and then frankly, let them experience it. And a big part of that communication, that change management once it's done is communicating it, highlighting the successes, celebrating the successes, sharing the patient stories. This is, it's a big change. None of us are built for change, any person, right? As much as we, even those of us who are in change management for a living don't like to change, right? So it's, you have to get people to agree to the need to change. And a lot of people just...
Frankly, they don't see that there's no motivation and no need for them to have to change. Interesting. So it's actually taking people from the clinical floor versus a pool of nurses who's used to home care to introduce them to this new model. Yeah. So the staffing side of it, we strongly recommend not staffing it out of home health. There's some conceptual long -term benefits where the lines will start to blur between
You're in acute interaction versus a more sub -acute but still pretty active versus truly home health level nursing and clinical needs. But the nursing skill sets, and we have numbers of nurses on our team, they're very different skill sets and the roles of things like paramedics. The acute episode, we tend to recommend starting with nurses with acute experience. If they've got acute and home health, that's ideal because they've operated in that environment, but they've got the level of care for the acute side.
But yeah, it's a different level of skill and it's actually, it's a different interests and aptitude. So it's not just that they don't have the skills that they could learn it, but a lot of times there's just a different expectation of the work they wanna do. And would you find that sometimes they're doing hospital at home and then they're still kind of keeping their, some of their on the floor work or do they pretty much move over right to being a hospital at
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Yeah, it depends on very much on the scale of the program. We definitely recommend when you're launching the program to have dedicated staff focused on it. But there's some value in having it as an option that certain people that are kind of trained and qualified in can rotate into it, can spend some time in it. Again, it just changes the clinical delivery model. So if you're a acute care nurse and you want to do something different, you want to be able to have some days where you can work from home. Maybe you get training, you can staff the command center if you want to.
Be out in the field. You get training, you're a field caregiver. That tends to be the programs that are a little bit higher scale that could be more of the flex and float pools. For the ones that are starting, it's actually dangerous to do it with all flexible staffing because the hospital is always gonna have staffing needs, right? And the risk you run is that you essentially have to shut down your home hospital because the hospital facility needs are so high.
And then you're basically not investing in your future operating model and it will always kind of limp along. So there's a lot of value in having dedicated staff that are focused on this, that understand it. And frankly, they become, this care model is highly dynamic. evolves. You're going to be dealing with things that you've never thought about in the context of acute care. You want nurses who've seen it, who've experienced it and can provide feedback and help adapt the model. And I say nurses, but it's also, it's the broader care team, right? You're going to have physical therapists, occupational therapists.
Float bottomists, paramedics. Like again, you're going to have a whole coordinated ecosystem of participants that you want them to understand what they're doing and how they hand off with each other so that it's not kludgy and inefficient. It makes sense. So you touched on a little bit sort of this continuum of people who are maybe just starting versus scale of fully scaled programs. Can you talk a little bit about the players, either who they are or kind of what the characteristics are?
that might fit into this continuum of maturity or maybe starting. Yeah, I mean, and we actually have done some surveys on this and there are a wide range, but what we have seen is in the last year, we looked at presence in mind of hospital at home specifically, care at home generally, but hospital specifically. And in two years, it has gone from something that two years ago, a vast majority of organizations certainly were not doing and even fewer
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were thinking about. It was just, it was not something that was was central to their viewpoint too. The most recent survey ran 97 % of the health systems that were part of the survey and this is a several hundred respondent survey. 97 % were either doing hospital at home or planning for hospital at home. So planning for launch and planning to go through. So it's practically eliminated that last bucket of those that aren't doing anything, right?
And again, whether everyone knows about it within the organization, pretty much every health system is doing something. And I think then there's kind of three, maybe four, depending on how you split hairs categories, is those that are evaluating it, they think they want to do it, but they're not really sure what to do. Maybe they're doing some light financial planning. We find a lot of them are looking at the financial models wrong. They're using legacy inpatient structures and legacy inpatient financials where the whole idea of hospital at home.
is fundamentally changing the cost structure. And there are pros and cons to the cost structure. You've got a much less efficient variable cost with your clinical staff. You've got much more efficiency with consolidation, command center, know, resources that can be virtualized. So there's, it's a complicated analytics app, but there's a lot of organizations that are kind of in the let's plan, let's figure it out. This is not sequential either because this next one is where we often find a lot of organizations have jumped to. There's those that are just launching
They haven't done any real planning. They haven't looked at the financials. What we find is those are exclusively the programs that jump directly into it will live as low volume programs because they're not going to invest sufficiently. They're not going to resource it sufficiently. They're not going have a dedicated management team. going to just maybe they get a patient or two, right? They're very low volume, but there are a lot of, so some goes through planning and their launch process is it's just, does take time. Others jump directly to launch and
as you might expect, a less effective launch. And then there are those that are live, accepting patients and rolling patients in this row, so you could kind of break it into potentially two categories, right? There's a lot in that, once you get past the kind of launch phase, five average yearly census, getting up into the five, 10, 15, there's probably two dozen programs, three dozen now that are in that five to 15 range, right? They're growing, they're scaling, they've got
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good operational processes that kind of got their clinical core clinical populations defined. They're probably starting to add new clinical populations and use cases. And then there's a handful of the big guys, right? The ones who have really invested in it, who've built the infrastructure, they're running average daily census, you know, north of 50 to the point that, you know, at 50 average daily census, you're a small hospital, right? You are, are bigger than critical access numbers, right? You're sizable. You know, you look at
The big name ones there tend to be Master General Brigham on the academic side, Atrium Advocate on the integrated delivery network side, commonly looked at as the two largest and most advanced programs. But there are lots of others that are starting to get into there. Mayo, Kaiser, that are growing their programs, and each has a different flavor. Mayo is a multi -region hospital at home. So it's operated principally out of Jacksonville, but it's covering multiple
So you're starting to see now a little bit more of the creativity, the expansion, the growth, but it's very different when you're talking about building to something that's gonna be 50. Mass General Brigham has publicly said they're shooting for 200 as their average yearly census target. So when you start thinking about that scale, it's just a very different build and a very different planning and growth plan to get to that versus, we wanna check the box and say we have hospital at home, so we're gonna put a few.
doctors on this and maybe an administrative fellow and figure it out. Right. So that's interesting. I'm sure there's a lot of variables to the question that I'm about to ask, but looking at that daily census of 200, do you have a sense of, what is the size of the pie that could be served by hospital at home? And like, what percentage is a fully scaled program kind of
So that would sort of leave the delta of how much there is to grow. Yeah. There have been, we've run some of these analyses. There have been others. I think the number tends to vacillate around the, from the lower end 5 % to the higher end 12 to 15 % of the medical admissions. Our analysis, we came in a little bit closer to like right around 10. And again, we're going DRG by DRG.
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case by case, putting some deflators based on our experience of what isn't gonna be eligible for social determinants, geography, things like that. But realistically, based on the capabilities we have today and recognizing there's a growth curve to get there, we think 10 % of the medical admissions today are achievable. What I think is gonna change, well, not I think, it's already starting to change, is what is the clinically eligible population that you can put into a hospital at home?
And initially it was very focused on some of those specific DRGs as clinical conditions, again, cellulitis, CHF, urinary tract infections, things like that. There were kind of a lot of infection management and chronic disease exacerbations that would make it end that we could potentially be more effective in the home. What we're seeing now is the reductive approach that we've typically taken saying these patients are not eligible, don't put them in, we carve them out is, well, maybe they're not eligible at admission. The most extreme example of this is transplant,
It's a transplant at home. That's absurd. That's ridiculous. You're not going to have a transplant at home. But when you look at a transplant stay for transplant patient, they often have weeks in the hospital or around the hospital before the transplant. And then they often have weeks or months in the hospital, even after they're relatively stable. And so now it's like you'll get a hundred day like to stay on a transplant case or 60 day again, whatever the number
Is it going to be 60 days into home hospital? No. But what we're seeing is some of these academic medical centers looking at it saying, well, you know what? This portion of the stay, we could actually do this better. The patient would be happier, more comfortable. They've got less exposure to infection. Like this is actually better for these first 10 days before the transplant to be at home. We can get them in. can have, here's how the episode works. have, they'll be in the ICU. They'll have this. And then these last 40 days, we actually can put them into an acute hospital at home. can visit them every week. We can even put
caregiver in the home with them. This is the other issue. There's so much cost in our facilities. We have clients that have put a personal caregiver in the home for not necessarily 24 seven, but waking hours for the patient. Like you have a lot of flexibility because there is so much cost in the in facility model. And again, if you haven't done the modeling exercise, you don't know where your gaps are and where you've got some of that wiggle room. But now you're sitting here saying, well, what clinical population isn't at
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partially eligible for some portion of their care to potentially be in an acute hospital at home model, which then gets people saying, well, then it's not acute hospital and then it's this post -acute. It's like, well, no, they would still need admission criteria, but ultimately what it kind of signals the future was this line, arbitrary line of admission criteria versus not is gonna start to blur as we get more and more of this care at home ecosystem. And the acute hospital at home line to post -acute, sub -acute, chronic,
that becomes the fat tail on all the capabilities we need to build into the home. And ultimately building those will allow us to avoid the admissions in the first place. And so you start to think differently about the home just becomes a site of care. And it's how that then allows you to manage that patient, not in just that episode, but in the longitudinal interactions that patient's gonna have going forward. whether they're ambulatory, other high intensity inpatient services or not, but it has to be a part of the conversation in the future.
this analogy to a client the other day, it's like retail, right? It's the dot -com boom of the late 90s. And again, we now have the benefit of 25 years later, retail has not gone all e -commerce, right? It's not all digital. We still have stores, just like people said in the 90s. It doesn't change the fact that e -commerce is a huge factor. We actually are doing more because of it. We buy more because it's easy, it's accessible. It will be the same for care at home. We will use
lower intensity care when it's available to us, which will avoid high intensity waste, heavy resource and utilization issues. again, we are so early in this progress, but the hospital at home just provides a way for health systems to financially, sustainably do it today, to start down this path of the care at home transformation. So much rich information in there. Maybe I'll start with the last thing that you talked about as far as kind of cost savings.
Give us a little bit of a range of what people can can expect from a savings perspective Yeah, well, let me start with what we often see the mistake people make they take their inpatient costs and say well Here's what it's cost to deliver inpatient care and we're gonna add these other costs to build a hospital at home, We're gonna have to you know get mole Imaging and we're gonna have mobile nervous by cars and have these RPM kits all this we're gonna have have a command center Look, so here we were losing money on this. We're gonna add those extra costs. We're losing way more possible
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work. You have to go into the unit economics of it. You have to break apart the costs that an inpatient encounter has. I'll generalize, but these are pretty quick for most health systems to look at. Half of your costs are variable costs associated with the actual elements that change based on the patient coming in, the nursing staff, the supplies that are being used on the patient. The other half are fixed costs. And in most health systems, between two thirds and three quarters of those fixed costs,
our facility fixed costs. It's the bricks and mortar the patient is sitting in. It's the infrastructure supporting the bricks and mortar. It's the parking lot and the attendance and the security and all that other stuff. When you start going through and breaking, there's also fixed overhead that doesn't change. You need executive leadership. You need central serial processing. But a vast majority are things that do not have any impact whatsoever for that care episode. When you pull that
you're pulling out thousands of dollars of costs a day. Now, this is where you get into the debate of does it work when you don't have a capacity problem? That's a much more nuanced conversation that, but the short version is it is less expensive in total. The number varies based on how expensive the health system is for their inpatient care, their infacility care versus this arbitrage. But we find in many of our clients that for you looking at the hospital at home eligible populations, when you look
Medicare patients, for example, that are eligible. Most, I don't have a single client, this isn't the case, but maybe there are some out there. They are losing significant amounts of money on Medicare admissions, especially medical Medicare admissions. This can reduce that loss and in a couple of cases, flip it into actually a gain, I mean, not a big gain, but not a loss. That is the arbitrage. And it tends to be about, the numbers again vary between a 25 and a 40 % cost arbitrage.
So it costs about 25 to 40 % less on a fully loaded, fully allocated basis. So it's sizable. And then again, when you look at small numbers, it's a laughable amount of it doesn't matter, right? When you look at it on some of the big guys programs, know, 50, 100 average daily census, it's a big number. And the other thing to remember is it's creating capacity in your hospital for your average.
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patient, not your lower acuity admission, but your average patient, which for a lot of health systems actually does generate margin. So you're getting like double dip. You're losing less on that patient. You're creating a new revenue stream that has higher margin or potentially even if you get surgical cases, you can now run your ORs more because you're not on divert hugely beneficial. okay, well, this is all about the finances. No, it's actually better clinical outcomes. Patients prefer it. It is better.
in pretty much every measured dimension, it is better. Patients prefer it, doctors prefer it. So it is one of those few things. And Sachin Jain just posted an article about the toxic positivity. It's interesting because it has flipped so much from people didn't believe in it at all two years ago to now, think people are starting to see the benefits and some are realizing the benefits. So now you're starting to get a little bit more of the, we are definitely in a hype cycle, but just like the e -commerce hype cycle.
Not every single element is gonna be the same in 10 years that it is today, but this site of care and what it pretends more broadly is not gonna go away. It is the right thing for our patients. It is the right thing for our health ecosystem broadly. And so I think it's just how it continues to evolve is gonna be the really important thing to watch for and really push for health systems.
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Right. You know, the other element that you spoke to was this, the nuance of maybe old school ways in which we were having lines of demarcation between acute and post -acute and, you know, hospital at home. How much has like kind of reimbursements either caught up or needs to sort of catch up to make this even more tenable? Reimbursements were, they were the impediment, right?
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Historically, they've been the impediment, even with the waiver, somewhat paradoxically, when the waiver came out, a lot of programs didn't launch because they were concerned that the waiver wasn't going to stick around. This is temporal funding. there is a, to do this even sort of well, there's a significant investment, right? This is not something, it's not going to be successful in a fly by night type of let's piecemeal it together. You have to build the programs, to build the clinical workflows, the clinical pathways. There's a lot of complexity here.
This is where that complexity I think is often misunderstood or not understood. And so people talk about over time, I fundamentally believe the site of care should not be reimbursed at parity in perpetuity because it is cheaper. However, there is no way for a health system to fund it without parity now. So a lot of people are very black and white about parity versus not parity. I agree over time.
we should eliminate parity for home hospital -based care. But right now, when health systems are being tasked with having to build this on their own, and most health systems, the average health system margin with more than half still have a negative operating margin, it is completely unrealistic to say, let's get to that equilibrium price now, because the health systems will then be put in an impossible position of, then we're out of the cut services, do something else negative elsewhere.
to able to finance the investment with no return on investment, right? Or a much, much longer return on investment. Whereas parity right now, and if we can get parity more broadly, if the waiver were to become a five -year extension or even hopefully eventually become permanent, now Medicaid follows along, hopefully commercial plans follow along. Now you've actually created a sustainable revenue stream. And then I think you start having discussions about, let's look at costs, let's look at outcomes, let's look at eligible populations. And then I think you can start to draw more of a disparity, just
You wouldn't expect ICU and general med search care to be reimbursed the same way. Over time, we shouldn't expect that for home hospital. But today we need it because otherwise the economics start to break, right? And it can be very creative in the near term. It can create really impressive financial pictures. When we work with our clients, we don't tell them to do a 15 year plan on it. Do three to five years and it will be positive for almost all of us, especially if they have a capacity issue. It will be
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But you also should assume the reimbursements will come down at some point because it does, know, some of the, the, the contrarian's perspectives are right. This should be cheaper. This should reduce our healthcare costs overall. And it will, it just shouldn't do it yet because otherwise we will, we'll cannibalize the seed corn if you will. Right. Like we have to something we can invest in that, that short term ROI is what is allowing so many health systems to do it
So if you had a crystal ball, you mentioned that sort of three to five year range, but if we're on the happy path and everything is going well as far as the reimbursement's becoming permanent and people gaining traction, what is that sort of timeframe where you think it's kind of a fully humming machine and we can get to that right equilibrium of the right reimbursement rate? Well, I think we're gonna see, I think the next three to five years, you're gonna see more and more programs launch and the bigger programs grow.
The first movers are there. I think you're to see the fast followers quickly catch up. And we work with all of these, the line between the leaders who are continuing to find the new issues of massive scale, right? Thousands of patients a month in these programs to the fast followers who are learning from their plowing the field forum, if you will. You're going to see a lot more fast followers start to catch up. I think you will also see a market shift
patients are going to start to expect this. And I know there are some negatives, there have been more anecdotal frankly than research driven, but there have been some examples of patients who've been a part of it or family members who've been a part of it and the implication it on them and some of the challenges. I think it's incumbent on the healthcare organizations to make sure we are not forcing patients into this inappropriately. There are clinical populations it is great for, there are huge populations that love this. mean, you talk to the big programs, have just
troves of client test patient testimonials about how they love the program. So I think we've got three to five years of the tide growing and the wave growing of this. And I think there this is not a sales pitch. I think it justifies the need to move now and to move fast because the I do not believe the reimbursement will be permanently elevated. And so I think getting it now will enable you to build it when the revenue is there and to get through the learning curve when the revenue is there.
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I think within 10 years you will see, I know I'm getting a little bit far between five and 10 years, I'm kind of ignoring, I realize, but I think by 10 years out, you will have a differential pricing model for acute home hospital that I think will be and should be. It is less costly, frankly, and it will be at scale. And the more these programs scale, so the unit costs come down very quickly, right? The efficiency of your nurse routing or your care team routing, the more scale you have.
the more touch points they can do more effectively. You're running two patients, three patients a day in a metro area, you're spending most of your time in the car. You're running a thousand, you've got a lot more effective routing and scaling. So I think by 10 years from now, if the waiver extends five years, I think there will be a good discussion about it after that to say, should we do a differential? I think there are also hybrids somewhere in between. I think a 30 day bundle,
makes a lot of sense. think bundling the technical fee and the pro fee together makes a lot of sense. Like there are things that we could do that would systematically bring the care ecosystem together more and will generate some savings, but aren't necessarily shifting massively all the costs back to our delivery systems, which are teetering a little bit right now. Makes sense. You know, it's been a thread throughout
but is there anything else that you want to speak to as far as hospital at home and how it speaks to the larger concept of changing care delivery models? I know you've kind of touched on it a lot, but maybe there's anything else you wanna tee up. Well, I just think hospital at home, it's kind of created a new market context for itself that works in fee for service that never did before. But I don't think people should lose the fact that the home and non -clinical sites of care, and when I say non -clinical, I
Sites of care, a health system doesn't have to build. Places they can deliver care that are not clinical settings, they have to be a part of our future. We are facing a massive capacity crunch as the baby boomers now age. They're into Medicare as they age into late Medicare and their utilization doubles as they get, which between early Medicare and late Medicare, utilization goes way up. We have to figure out how we can do this without having to put all the capital it's going to take to go after the population.
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To me, hospital at home, it's like, it's the gateway drug to this transformed future, right? Where we can provide urgent care in the home, primary care in the home. Again, if you've got phlebotomists running around supporting your hospital at home program, now all of a doing a primary care at home project or program where, you know, you're gonna have a virtual visit with your doctor and we're gonna come to you, we're gonna do your labs, we're gonna do your physical assessment in person, because it's five minutes out of the way for a 20 minute visit and it's a paramedic, med tech, whatever it is,
all of sudden those models start to make economic sense, right? And it becomes the way that we transform care delivery to create value in the home for risk -based populations at smaller scale because hospital at home is financing the core structure. And ultimately, again, it pretends this future that I fundamentally believe would lay down in traffic asserting, which is our future care delivery model will have a whole component of virtual care, a whole component of clinical setting -based care, and a whole component
care delivered hands -on, not in a clinical setting. And those three things working seamlessly, it has to be the solution to our problem. If we lean in on one or the other or try to do it without any one of those three legs of the stool, it's not as good as it would be with the third leg. It's a great sound bite. I love that. And you heard it here first. He's willing to lay down a graphic for this. Shifting gears a little bit, to general purview of health care.
The usual suspects are kind of the same things we talk about over and over in any sort of, you know, conference, but labor shortage, shifting sites of care, advancement of AI, value -based care, cybersecurity, thin margins, platform plays, reimbursements. It's all that kind of everybody is talking about as it should be because these are big, meaty topics that have a lot of nuance. But from your
What are some things that maybe aren't getting talked about or a little bit of a nuance that we can inject a different sort of perspective into some of those categories? Well, I realize that as a consultant, I always run the risk of being chicken little, saying the sky is falling and things have to change, right? And I think this is one of those areas I recognize there's two sides to this, right? But I truly believe that
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those factors, whether it's the shift towards value -based care, the cybersecurity incidents we're facing, whether it's reimbursement degradation, and not even just reimbursement coming down within a payer, but it's the demographic shifts we're facing. There's so many different factors. The fundamental economics of healthcare, and this is where the chicken little moment may be, and I acknowledge it, at worst, it is broken,
half of our health systems are not making operating profit. That is not a sustainable position for our care delivery ecosystem to be in. At best, it's breaking, right? We are seeing real cracks here. I don't know, and again, I've been in healthcare now for two and a half decades of, it feels like it's always, it's not good, we've got to fix stuff, but we have actually made some pretty good progress in some areas. Like, value -based care was not a thing when I started.
made some progress, we've got started on that path. I think we have to fundamentally change and the old solutions are not gonna work. They're necessary, like we have to be focused on operational efficiency, we have to be focused on quality, but they're not enough. We have to do more, right? And I think this is just one example. There are a lot of other things that I think we have to be really creative on how to change the care model.
and changing the care model in a way that recognizes we have a disintermediate economic model. The person who benefits from these approaches are not the ones who are necessarily paying for it. The ones who are paying for it are not necessarily incentivized to the things the end customer wants. Like healthcare economics are really complicated and broken in a lot of ways we're not going to solve. But I don't think trying to plow our way through this on traditional staffing approaches is the way to do it. I don't think trying to look
You know, it's cost cut, cost cut, cost cut. We need to be more efficient. know, the stress that the analogy of eventually you hit bone, right? You do start to create some real damage that compromises your ability to do what these health systems are in their communities to do, which is serve the population, right? Improve health outcomes, deliver value to the communities. They are not for profits, despite all the media spin that you're hearing now of health systems out for maximizing profit. They
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Community endowments, they have community board members. There's no shareholder profiting off of their motivations. So I think it is a time we have to think differently. The old models just, again, it's either will break or are breaking. So then let's flip the coin. think fair point as far as the call out on Chicken Little. I think it's actually, I share a lot of those same views, but if you were to kind of flip that coin and say, why are you hopeful?
about the future of healthcare, what would you say? You know, I think don't waste a good crisis. I think people feel the pain, right? think prior to the pandemic, things were, I think looking back prior to the pandemic, people were like, man, things were great back then and the pandemic shook everything up. But I think it just accelerated a lot of change. think digital, virtual care, we track the consumer adoption of virtual care.
For two months during the pandemic, there was more virtual care delivered in this country than physical care in the ambulatory setting. So that's huge, right? Now, of course, it fell back, it changed, but the overall number, it went up to 51 % and it dropped back down. But it dropped down not to the sub 1 % it was before, it's like 9%, it's kind of where it leveled Now it's starting to trend back up. mean, we are seeing real signs
people are embracing innovation, embracing care delivery, thinking about different ways to approach what they're gonna do to treat these, to address these needs. And I think things like Medicare Advantage, it's not perfect, it's not a panacea in and of itself, but it is driving positive change. And again, I can hear the cynics who are listening going, yeah, I drove everybody to get more creative about how they code for revenue and it's driven up costs and it's driven up revenue to these companies.
I get it that that's a fair counterpoint, but it's also now, unless you think they're committing fraud, they are more accurately coding the sickness of the patients they're serving. And now they have to care model. They have to innovate the care model to serve them, right? It is the necessary first step to say, this is how sick this patient is. We should be paid that amount. Now, how do we build a care model to serve them more effectively?
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that really resonated with me as far as it doesn't have to be binary. It doesn't have to be this exact model is going to work or fail. It is iterative and we're going to learn and that is the approach we should be taking versus, you know, just tearing things apart because a fear of change or it's not exactly perfect. So I really appreciated that. Okay, so last question before maybe kind of going into our closing.
Is there anything you're kind of a prognosticator, you know, by trade, reading the tea leaves, reading the market trends, anything maybe even far afield that you are thinking maybe nobody's thinking about without giving away maybe your secret sauce? No, this is despite Chardis being a consulting firm and we are not a not -for -profit, we are committed to improving healthcare. So any secret sauce, if it helps others and helps our industry be better, we're happy to share.
Having said that, there are a lot of really smart people thinking about this. So I don't know that I will say anything that's earth shattering, but I think the next step in healthcare delivery is switching our fundamental orientation from being a reactive enterprise. Healthcare is built to react to crises, right? It is built to react to failure and it is built to react to failure as articulated by a consumer who doesn't hold the financial mechanism of the business, right? We have to change.
healthcare delivery from reactive to proactive. And that has been economically infeasible historically because there is no incentive to engage consumers when they're healthy, when they're not super sick. Hospitals made all their money on the hospitals, right? On the high intensity imaging labs, the inpatient admissions, the surgeries. We actually had, I don't think health systems did this, but there was a systematic structural incentive to let the train wreck happen because that's where our economic engine
I don't think health systems are consciously trying to let people get really sick so they can take care of them, but that's just the byproduct of our system. I think the future of healthcare broadly, and I think the question is who's going to play this role, is engaging consumers and that will drive and catalyze more of a shift to risk, more of a shift to accountability, and it will crack open valid AI use cases. I think we've seen really good application of AI use cases in administrative contexts, but also in areas
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Other industries have already figured out using AI and call centers, right? It works using AI and financial analysis, financial modeling, and for the application and healthcare, but then the revenue cycle, it works. is a no brainer. There are dozens of use cases in each of those that are proven using it in a clinical setting. Gets dicey gets into risk, gets into a whole bunch of things that, that expose a lot of challenges and
kick people into the contrary and saying AI doesn't work if we push into those before we're ready for them. But as we think about a proactive model, there is a lot less risk in we should be engaging this patient about this thing now when the alternative is we sit here and we wait for them to get wheeled into our emergency room. There is some risk of being wrong. There's some risk of some awkward moments. You know, we're going to reach out to a patient that died at another hospital and we didn't know. But the future has to be that we as a healthcare
enterprise and in this case, not just providers, this is payers, this is med tech pharma. There's going to be a much bigger cohort playing into this domain. How do we get to consumers, engage with consumers? So this is where now you're talking, well, who engages with consumers really well, Amazon, Google, Apple, they are going to be playing in this domain with the provider. So how do we get there? And then how do we build an intelligent system that helps the patients and, and advises and navigates the patient because
Anyone who works in this industry knows patients make terrible decisions every day. And we're asking them to do things and telling them to do things that they don't understand why. So they don't. And so that has to be the solution. That then helps us avoid all the impending doom we have, but we don't have capacity to meet the needs over the next 30 or 40 years. have, I think that's where we have to go. You're seeing it in little, little microcosms, but I just think it's going to be more of that building it out. The consumer having
a role that they actually understand and value, which is a role in their health, that it's always been kind of a disconnected reality for people historically. Very motivating, actually. Makes me want to go for a workout and take care of my own health right after this. For our listeners who might be eager to learn more about you or about what's next for Chartist Group, where can they find
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I mean, what would a digital firm or a digital consultancy be without talking about our website? mean, we are, we try to promote the stuff we publish on this. We put a bunch of thought leadership out there. Our, our website is the best place for all that content, seeing all the things that we've done, cool work we've been able to do with really cutting edge clients. I'm sure our listeners learned a lot. If you enjoyed this episode of Elevate Care, please subscribe and we will catch you next time. Thank you. Thank you for joining us today on Elevate Care.
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