Meet Steve Pratt

Hello, and welcome to How Health Systems Work. I'm Jim Burke, and today we kick off our first episode with my co-host, Steve Pratt. Steve? Hello, everyone. This is Steve Pratt. We hope you'll join our podcast and learn about how health care works. So, Steve, I have been working with you for over 15 years now, three health systems. You were my main go-to attorney to keep me out of trouble and teach me what was going on in health law. I'd like the audience to first hear how Steve Pratt ended up in health law in the first place. Well, I've been practicing law for a little over 40 years, and I just stumbled into health care. I was working at a poverty law clinic at the time, and I got a call from a patient in a locked psych ward who said they're wrongfully detaining me in the psych ward. So, I worked with her to get her released. Turns out she was right. She was being held wrongfully, and that led to a job offer from that hospital, which started my journey in health care. So, good work, Steve. So, the GC ended up deciding you had done such good work for one of their patients that he or she needed you on their team representing the hospital. Yes. That's how it worked out. It was fortuitous, right? Health law was not an area of specialization in the law at the time, and I just kind of stumbled into it, and it's been wonderful. And did you go from there to Hall Render? Because Hall Render, Killian, Heath and Lyman, a firm you've been associated with for the majority of your career, one of the nation's preeminent health law firms, that how you ended up at Hall Render? Yes, it is. I went from the hospital and academic medical center to Hall Render and was there for a number of years, and then spent about between four and five years at a large health system as part of their leadership team. So, I've seen health care from a different perspective, from the small critical access hospital to the 60, 70, 80 hospital system perspective. And when you started in the '80s, we were just ushering in DRGs. So prior to that, we had a usual customary and reasonable, it was cost plus. You've seen a lot of changes from DRGs to stark law to civil monetary penalties. You've seen it all. An interesting theme that flows throughout all those changes is they all reflect how health care is being financed by the federal government. DRGs came along in '86, OPPS came along some years after that. We continue to evolve, but it's all driven by how that federal government is paying for health care. But we're looking at another transition that is not really anything new. Everything we're talking about now with value based care, we've been talking about since the '90s, right? Go to your typical CFO, experienced CFO, and he or she will roll their eyes saying, "I've heard it all before. I believe it when I see it." Steve, the question they'd ask is, "Are we almost there yet?" I think we are almost there. The federal government seems to run out of patience and is determined to change how it pays for health care and to reduce the cost. Medicare and release are growing. But what's different now, Steve? We said this in the 2000s or the '90s with HMOs. We said it in the 2000s as we geared up for ACOs with some of the demonstration projects. Then we had ACOs that were going to fix it all. None of this has worked. Well, one of the differences is demographics. By the end of this decade, 20% of this country will be age 65 or older. That's up from 13% about 20 years, 25 years ago. So it's a tremendous new group of people that will be Medicare beneficiaries. Not only is it the budgets, right? That's a huge strain on budgets, but it's also a huge strain on our ability to deliver care. Yes, that's true. The other thing that's changed that's significant is the amount of data that's available in health care. With the advent of electronic medical records, the government is constantly, private individuals are constantly mining EMRs to pull records. So we have a couple of forces at work. We have very high costs. We have a growing demographic trend that's going to increase that cost more. And we now have data that we can use to control costs. So despite the — I've heard it all before — despite the constant beating the drum for the last 20 years that we're going to move to value instead of volume, we really do think now is a different time and place. We do have the resources now to make these changes. I think that's right. Hospitals, doctors either need to learn to manage the cost of their care or someone else will come along and manage the cost for them. They are either masters of their own destiny or someone else becomes their master, is how I see it. So you're a cost center or you're a revenue center, right? You're either — Exactly right. You're either managing care and looking at value and taking risk — there is risk involved in this — or you're a commodity to be bought at the lowest price. That's the key point. If you become a commodity and you're competing to join a network, it will be competition primarily based on price. And those of us who've been at health systems and gone out of network with the major carriers across the country, insurance carriers, know how it feels to be a commodity, know how it feels to really have no leverage in those discussions, right? That's right. Medicare's experimented with a lot of ways to pay in the last 10 years. They rolled out ACOs. They're flirting with Medicare Advantage plans. President Trump said, by the end of his term, he wants everyone in an MA plan. We don't know if he'll do that. But think about the impact on hospitals, how many more prior authorization denials you're going to get if all your beneficiaries are in MA plans and no traditional. So, as we look at that change around the country, as we see kind of the momentum build, Steve, we work together every day on value-based care work for clients. This is really taking off across the country. We're seeing value-based enterprise, that 2021 change to the stark law, we're seeing that implemented. Now, we're seeing new matters, I'd say at least monthly, if not weekly, we're seeing new matters pop up where we're going to use VBE. Yes. There's opportunities for service line management arrangements, employment, direct to employer. Medicare has announced that they're going to move to some mandatory bundled payments, episodic payments for certain surgical codes. Those are all opportunities where we can now partner with our physicians to improve quality, cost, and coordination to care. Yeah. So, whether or not you're looking at bundled payments or capitated payments, or you're actually taking risk in an insurance-like product, we are seeing hospitals, health systems, and physicians being forced into a different role in this industry right now. Yes, we are. And we have the tools now that we haven't had in the past to work with our doctors, so it starts slowly, create the data we need, create the management skills we need, create the physician participation we need to meaningfully change quality, cost, and coordination. So whether somebody's a skeptic and they still think that it's all hype, or they're curious and want to know what's going on at the health system down the road, we're getting to see a lot of that firsthand. And that's what we're hoping to do with this podcast, right? The name of the podcast, How Health Systems Work. It's really how health systems work in this new paradigm. That's right. And we hope to have CEOs, some CFOs, chief medical officers, and others that will offer a perspective on how this can work, what their experience has been that's worked, and maybe what has failed. Yeah, I'm thinking through just some of the work we've been doing together lately, whether it's restructuring a service line co-management agreement, whether it's helping a health system convert clinics that are eligible for oral health clinic status, and a team-based care compensation model using VBE. We've got a lot of examples and a lot of folks who are willing to talk about their experience. Sometimes it's a thrilling success, a lot of times it's an agonizing defeat. It's a journey, and it's certainly something that hospitals need to learn, physicians need to learn, so they can prepare themselves for how healthcare will be paid in the future. And the alternative? You become a commodity in someone else's network, and someone else is managing the care that you provide, and you are competing primarily on price, and the winner is the lowest price, which seems like a terrible, terrible future as a provider. But thankfully, Steve, that's not the only future available to our listeners. We've seen a lot of success stories, we've seen a lot of things at work, and so I'm really excited to go on this journey with you and help folks learn how health systems work. Thank you, Jim. I am too. Healthcare is changing, payment for healthcare is changing, and I get the great opportunity for providers to evolve and be successful. I'm excited about our next guest, and we'll be back to our audience soon with a great episode.