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How to Save Money While Improving Care: A Conversation with Aledade's Farzad Mostashari

Farzad Mostashari is a health care extraordinaire and bow-tie fanatic. He was also the National Coordinator for Health Information Technology under President Obama and is a current health care entrepreneur.

Farzad started Aledade in 2014, aiming to help create and empower Accountable Care Organizations (ACOs), and for those who aren’t as familiar: ACOs are formal groups of physicians that enter agreements with CMS to take risk. If they save money on their patient pool they can keep a portion of that savings

Since then, Aledade has since raised $97.5 million to build strategies to help ACOs drive efficiency. Let’s see what he has to say...

Hey Farzad! Super great to talk today. Want to start off by talking about how you ended up getting where you are and founding Aledade?

Sure. So I’m a public health guy by background and temperament. For the last twenty years I’ve been trying to figure out the key question: ‘How do we save the most lives?’.

My first crack at it was when I was working in the New York City Health Department and we were doing public health surveillance for infectious diseases. I also find I keep asking ‘Well, can we use a computer for that?’

So when I first started in New York as a fellow in the Epidemic Intelligence Service, we weren’t using computers for outbreak detection and surveillance. So I started this program, this discipline in academic health of using computational epidemiology and methods for doing cluster detection. We tapped into ER data or hospital data or pharmacy data for real-time disease detection. Then I started thinking more about what really kills people today: less the infectious disease stuff and more the chronic diseases. I thought, can’t we use a computer for that?!

"These doctors and hospitals get paid for seeing sick people. They don’t get paid for preventing a stroke."

The question there was how do we make doctors focus more on things like blood pressure control and statins, and what’s really right for people in the long run. My assumption was that if you give them better information and tools that they’ll do more of that. The flaw in that thinking was that I wasn’t thinking of the business model. These doctors and hospitals get paid for seeing sick people. They don’t get paid for preventing a stroke.

So, after doing that for a bunch of years, including at HHS, I realized I need to do something that combines the technology side: the workflow changes, quality improvement, and public health, with the business model that makes it more profitable for the docs if their patients stay healthy and out of the hospital. So that’s kind of the whole idea around these Accountable Care Organization (ACO) movement, that if you get a bunch of primary care docs together to take accountability for the total cost of their patients they can drive savings. Then the docs get a piece of those savings and we at Aledade share that with the docs.

From talking to you 2 years ago, one of the big pieces of this was that you argued providers really have to lead the charge in changing their behavior. Is that still something you think is really important?

Yeah, well one of the questions I ask the docs is who should be in charge of being stewards of the dollar. You don’t want to do it, and if you don’t want to, who should?

The insurance companies? We know what they do when they want to control costs - they make it harder for docs to get paid, they turn the dial on the docs, and they shift more responsibility on the patients. So no, you don’t like the implications of that.

"Americans always find the right answer after exhausting every other alternative, but the doctors who are the ones closest to the patient should care about what things cost."

Who else do you want to be in control of it? Do you want the government to be in control of it? Well I’m a big believer in the government but that ends up being a lot a lot of regulations to nitpick what you can’t do and why and how you have to do it. Who do you really want to be in charge of costs?

Americans always find the right answer after exhausting every other alternative, but the doctors who are the ones closest to the patient should care about what things cost. That’s very much our touchstone, to put the doctors, and especially primary care doctors, in the middle of it.

We don’t work with any hospitals, because their incentives are just messed up.

Switching gears a bit, I remember you told me a few years ago that health care isn’t one big trillion dollar industry, but thousands of billion dollar industries. Do you think recent news about new ventures like the Amazon, JP Morgan + Berkshire Hathaway question that?

No I really think that adds to the case. I mean in many ways health care is so fragmented. Look at those three, they have a million employees together. So however big they are, they can’t do much by themselves because in any given market they’re less than 1% of the population. How can they change the incentives? How can they change the accountability and the information flows for a practice or a hospital, based off 1% of the population that are distributed?

So, one of the reasons we chose primary care is that if you can be practice-centric around that primary care provider then you can change things for all of their patients and hopefully extend the influence of those primary care docs to all the elements downstream. It’s almost like a network effect there: who’s a node, and who’s a hub. In health care there are lots of nodes, and lots of people that think they’re a hub, and the hub we’ve identified is primary care.

It seems like then, you’re trying to prevent diseases along the 5-7 year timeline, and a lot of what insurance companies are trying to prevent is more along a 6 months to 2 year timeline. What do you think about business models around early childhood health care and the 20-year timeline?

Yeah I think the question of what is your horizon is a really important one. I like how Jeff Bezos famously says having a longer horizon than your competitor gives you an edge. Some analyst congratulated him on their quarter’s results and he said ‘Well, that quarter was baked two years ago, I’m not working on 2020’s results.’ So, who’s got the longer horizons?

So, employers have churn that’s a multiple of whether an employee is still with their job and if the job still has the same insurer, so there’s a lot of churn there. But people tend to have less churn with their primary care doctor. Certainly in many parts of the country people are there for a long time, even for life.

The Aledade Platform

So we can afford to take a little bit of a longer view. We therefore kind of blend our interventions with things that are short-term and long-term. 30 day readmissions is a great example of short term. If you can prevent someone from returning to the hospital within 30 days of leaving, you get an immediate benefit in terms of reducing cost.

On other things we take the long view: prevention stuff, vaccinations, depression screening. It’s really a blended portfolio of shorter and longer term interventions.

But you’re right. Our horizon isn’t 30 years. The only people in the world that can have that horizon are governments. It’s a public good issue.

You mentioned some of the different levers you have in reducing cost, was there anything that surprised you as impact in reducing cost?

It’s all about execution.

You know, Atul Gawande had this really interesting piece a few years ago about slow change (Read Slow Change here). The centerpiece of it was around an infant mortality project in India. He talks about how everyone is enamored with scaling technology, and everyone assumes that service stuff doesn’t scale, having a human being come and establish a relationship.

But, at the same time, that’s the only thing that actually works in making health care change. So, we do have technology that works to help us sustain the change, but change has to mediated through actual human beings visiting practice, changing their workflows, establishing a relationship, creating trust, and motivating these providers and working through the issues. It’s not an app world here in health care.

It’s no secret you have to have great technology and you have to have great people visit the sites and facilitate the workflow change.

What’s next for Aledade?

Well we got another round of funding this last December. But really it’s about execution. We’ve answered a bunch of our own questions already:

- Can we get docs engaged? Yes we can get them engaged

- Can we grow this thing? Yes we can grow, we’re adding 4 or 5 states this year and have $3-4 billion - under medical management. So we’re able to get lives under management

- Can we change physician behavior? Yes

- Can we change utilization of unnecessary or harmful care? Yes

The next question we have to answer, though—and this is the key challenge for the next two years—is does the economic unit model work out? Does it scale up the way our projections tell us that it does?

That’s the key for the next two years. Head down, we have all the gas in the tank we need for the next two years so we really just have to figure out if the unit model works economically.

Is there a part of health care that you look at and think ‘I would love to work on this if I wasn’t so busy’?

Yeah there are two things I think are interesting in very different ways:

One is behavioral design and behavioral economics. It’s an experimentation framework more than a series of answers. It’s not like you can just say *Do this* and then it will work. Sometimes it works and sometimes it doesn’t work.

—humans are horribly unpredictable.

We’re so unpredictable! And the whole thing about being predictably irrational, we’re unpredictably irrational too! But I think that there’s so much more we can do if we can instrument the interventions and the outcomes and have a learning mindset. That’s a big opportunity more broadly and I don’t know anyone that’s doing it well.

"What does hospital at home look like?"

Then in the more health care specific, a little more granular. I think moving towards home-care, moving away from hospital and more to outpatient is really interesting. Like, what is the maximum we can do in the home? What does hospital at home look like? What’s dialysis at home, infusion at home, step-down telemetry at home?

How do we actually get to the home? I’d rather be in my home than the hospital.

Is there anything you’ve seen recently in health care that’s a ‘solution’ or policy that has struck you as just not a good idea?

Well there’s a lot I’ve seen around this Presidential administration and health care that just doesn’t seem like a good idea. I mean Medicaid work requirements, that’s not a good idea.

There’s a lot of techno-futurism and techno-idealism. Someone says this thing, this algorithm, big data, AI, ML or whatever is the answer. I think the question you really have to ask is ‘How will this touch a human being?’

I think it’s more interesting to think about the possibilities on the positive side. I think it was Obama’s m.o. that was Bold Incrementalism: Be bold in your goals and incremental in your approach.

Start with what we have instead of saying it’s going to be this blank new sheet of paper. I mean in health care the blank sheet stuff doesn’t work. Everything is just too integrated and you need to think about the other pieces

That’s all for today! Thanks again Farzad

Of course

You can learn more about Farzad and his work at Aledade here

Also catch him on Twitter (he has a more than excellent feed, I promise)

Up Next: PM Series

I'll be starting a 5-post series on interviews with product managers at health tech companies to learn what makes their products tick. We'll hear from PM's working on wearables, new-age doctors offices, and healthcare policy.

#interview #aledade #aco #healthpolicy #valuebasedcare