As the ACO Program Illustrates, Mandates Only Go So Far

The following letter was printed in the "Comment" section of  the May 28, 2018 edition of MODERN HEALTHCARE magazine. 


The article “Rather than face risk, many ACOs could leave” (, May 14) illustrates the limits of top-down mandates.  Accountable Care Organizations can be a great way to improve patient outcomes in an economically viable way.  But between the CMS program’s constantly changing rules and increased pressure on ACOs to accept financial risk, it’s not surprising that some are re-evaluating the cost/benefit of the program and considering leaving.  

Additionally, the concept of assigning patients retrospectively makes no sense.  Expecting physicians to manage an undefined group of patients sounds like someone’s master’s thesis that somehow got implemented as policy. The first step in any management process includes defining upfront who and what you are trying to manage.  

We are seeing a similar pattern in the provider world, where many older physicians are deciding that the overhead burdens from MACRA and other regulatory requirements outweigh the benefits of remaining in practice and are retiring early.  

Those who want to prompt new behaviors have two choices:  Design something that achieves the program’s objectives while being acceptable to those on the receiving end, or make the changes mandatory and live with the consequences.


Glenn E. Pearson, FACHE

Principal, Pearson Health Tech Insights, LLC

Marietta, GA




MH ACOLEtter Cover May 28 2018.jpg

Will Value Based Reimbursement Finally Bend the Cost Curve?

On April 19, I had the pleasure of moderating a Georgia Association of Healthcare Executives panel addressing The Shift to Value-Based Purchasing.  Panelists were Ray Snead (Interim CEO, Grant Memorial Hospital in Petersburg, WV), Ellis “Mac” Knight, MD (SVP and CMO, The Coker Group), and Mike Cadger (Founder/CEO, Monocle Health Data).  

 Ray Snead, Dr. Mac Knight, Mike Cadger, and Glenn Pearson

Ray Snead, Dr. Mac Knight, Mike Cadger, and Glenn Pearson

To kick things off, I observed that, over my 30+ year career, I have lived through various inflation control attempts:  DRGs, HMOs, Provider-Sponsored Organizations, and others.  Few would argue that the strategies of the last three decades have been a smashing success.  Thirty years ago, healthcare represented 11.0% of GDP, and in 2016 it was 17.9%.  Is Value-Based Reimbursement (VBR) just another in the long string of marginally successful efforts?

One of the great things about panel discussions is the variety of opinions.  True to form, our group had varying predictions about VBR’s ultimate impact.  Dr. Knight had the most positive expectations, while Ray Snead was more skeptical.  

Dr. Knight pointed to evidence from such risk-bearing organizations as Intermountain Healthcare whose emphasis on prevention and coordinating care has yielded modestly favorable results –  Intermountain’s ability to tamp down its inflation level to CPI plus 2%.  

As CEO of a small, rural hospital, Ray was not so upbeat.  Although all hospitals face daunting financial challenges, rurals seem unusually stressed.  The fact that rural hospitals are disproportionately represented in the hospital closure statistics demonstrates their extraordinary hardships.  Ray lives them out every day, and he is not all-that-optimistic about smaller hospitals (or, for that matter, safety net hospitals) being able to adapt the VBR model to their settings.

Although I appreciate the points Dr. Knight made, I lean more towards Ray’s position.  VBR is a great idea.  I’m all for stressing common sense preventive care and aligning incentives.  However, so many factors must be in place for true sustainable impact.  Among other things, hospitals need working relationships with primary care physicians, specialists, community-based services, and post-acute care providers.  Furthermore, patients and their families and/or extended communities must be actively engaged.  Tying all this together requires reliable wrap-around communications processes.  All this is challenging for many hospitals, and all-the-more so for rurals.

For years, I have suspected that the designers of each new approach to cost containment has a particular hospital profile in mind:  a medium-to-large hospital or health system, probably suburban-based and at least reasonably successful financially.  (Intermountain fits this description.)  Even though these systems may include rural hospitals, those rurals have the advantages of a deeper healthcare delivery system backing them up. 

I don’t want to in any way diminish the successes of Intermountain or others in response to VBR incentives.  However, I sympathize with rural and inner-city hospitals that face such extra challenges as poor payer mixes, difficulties in attracting physicians and other clinical personnel, typically out-dated facilities, and other problems.

So will VBR succeed in controlling costs?  I certainly hope so, but I think the complexities healthcare faces outstrip the ability of a single concept to deliver the silver bullet.

VBR Panel GP.jpg

Why Startups Fail

One of Facebook’s cool features is its habit of occasionally reminding you of your previous posts.  Our friends in Menlo Park recently notified me of a link to an article called The Main Reason Why Startups Fail I forwarded two years ago when my business – Pearson Health Tech Insights, LLC (PHTI) – was still relatively new.  (PHTI helps tech-oriented startups selling into the hospital world hone their strategies to maximize market success.)  As I re-read the article with two more years of helping clients under my belt, I was able to confirm just how easy it for a hospital-targeted product to get derailed.  PHTI’s tagline is If you build it, they might not come.   

The article’s author Gijs van Wulfen presents some sobering statistics.  He cites a study of 2,000 startups financed by venture funds between 2004 and 2010 that reports that an estimated 30% - 40% failed outright.  Only 60% lasted three years or more, and only 35% made it to ten years.  Van Wulfen also references a report by cb insights that presents the top 20 reasons why startups fail.  (Since failures are caused by multiple factors, the total percentages add up to over 100%.)  The top two reasons for startup failure were:

·         No market need – Cited by 42% of the failures

·         Company ran out of cash – Cited by 29%

Other factors were:

·         Poor product – 17%

·         Need for or lack of business plan – 17%

·         Poor marketing – 14%

·         Product being mis-timed – 13%

In addition to these factors which plague startups in any industry, companies selling to hospitals face additional challenges.  A couple of weeks ago, I met with the CEO of a leading medical device innovation center.  Her opening statement reflected what her organization has learned over the last few years.  She observed that most device developers clearly understand the following hurdles:

·         Achieving FDA approval

·         Understanding the reimbursement climate

However, she said they often overlook one that is equally important:

·         Figuring out how to get hospitals and clinicians to actually adopt their technology

And that brings me back to our tagline:  If you build it, they might not come.

PHTI can help any company targeting hospitals sharpen its approach and strategy.  Our signature offering is the Healthcare Marketing Tune-Up Program that consists of three parts:

1.  A review of the company’s products in light of the “7 Ps of Marketing” 

  • Product
    • Place (distribution methods)
    • Positioning
    • Promotion
    • Packaging
    • Price
    • People

2  Suggestions for avoiding the relevant pitfalls PHTI has identified from our list of 79 Pitfalls of Marketing to Hospitals

  • 3 Timing Pitfalls
    • 9 Credibility Pitfalls
    • 4 Product Design Pitfalls
    • 3 Market Misreading Pitfalls
    • 10 Data/Technical Pitfalls
    • 9 Communications Pitfalls
    • 14 Financial Pitfalls
    • 3 Legal/Regulatory/Bureaucracy Pitfalls
    • 2 External Political Pitfalls
    • 11 Internal Political Pitfalls
    • 11 Organizational/Operational Pitfalls

3.  A summary S/W/O/T analysis


Let us help you avoid becoming an unfortunate statistic.  Contact me at or (770) 861-6941.


Two Very Different Reasons for Implementing Telemedicine

Why do hospitals launch technology-based telemedicine services?  To extend their geographic reach? Because doing so is the latest trend?  Because they can?  Because their competitors have similar programs?

Last week, I had the privilege of moderating a panel called “Achieving Provider Buy-In for Connected Healthcare Programs” at the Care Coordination and Technology Congress in Atlanta. We focused largely on why hospitals start telemedicine programs.

The first order of business was defining terms.  “Telemedicine” can mean:

·         Traditional use of technology for real-time clinical visits to patients in a remote location


·         Any type of health activity – such as remote patient monitoring, app-based care, etc. –  conducted using technology

Our discussion focused primarily on the first definition.

Unfortunately, a family emergency prevented one of our scheduled panelists attending.  However, we got rich insights from the other two experts.  I especially enjoyed their insights into two very different reasons their organizations implemented telemedicine programs.

Rob Marchuk, Vice President of Ancillary Services for Adventist Health on the West Coast, described how traditional telemedicine has allowed his system to address the health needs of its rural population spread throughout three states.  With about 20 hospitals and 300 rural health clinics, Adventist is California’s largest provider of rural health.  Its rural outreach fits the classic model for telemedicine:  extending the reach of specialists into areas that would otherwise go underserved.  Since the program began about four years ago, Adventist has expanded it to include other non-video modalities.  And Adventist’s telehealth program has emerged as a critical element of the system’s integrated care model.

The other panelist – Erich Fogg, PA-C, MMSc. EM-CAQ – is Director and Lead Provider at York Hospital Virtual Care Walk-In Clinic in York, Maine.  Since York is essentially part of the Greater Boston market, patient access is not an issue.  Instead, York developed the virtual care program as a cost avoidance and ER throughout management program.  

York Hospital offers three levels of immediate care: 

·         Standard ER services – at full ER prices

·         Low-intensity walk-in care – at $125 per visit

·         Virtual visits – for a $39 flat fee

Patients access the York website and describe their medical situation.  If the triage process identifies the patient as a potential candidate for the virtual visit program, they are offered the option of a video conference with a clinician using their smart phone, tablet or camera-enabled computer.  Less complex problems such as headaches, rashes, sprains, and seasonal allergies are good candidates for virtual visits.  This program has proven to be a convenient, cost-saving care option for patients who otherwise would have incurred much higher costs – and would have increased unnecessary traffic –  through more conventional care delivery channels.

The audience at the Care Coordination and Technology Congress was impressed by the effectiveness of these very different applications of telehealth care, each tailored to the health systems’ respective market needs.  As virtual care continues to proliferate, we can expect to see more and more examples of how it continues to transform healthcare delivery in creative and cost-effective ways.