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MoneyBall Medicine is Driving Hospitals to Look at Value Differently

In the early 1970s, Geisinger Health Center, located in rural Pennsylvania, began a pilot project to offer a prepaid health insurance plan to residents and employees in nearby counties and was granted the ability to act as a health maintenance organization (HMO) by Pennsylvania in 19851. Fast forward to today, and Geisinger continues to operate as an integrated health system, encompassing not only the providers and hospitals, but also covering a substantial number of its patients and employees. It’s in the context of that business model that a unique perspective emerges: by aligning incentives between providers and payer, innovation isn’t just a buzzword, but a constant drive forward.

In MoneyBall Medicine: Thriving in the New Data-Driven Healthcare Market, I described how Geisinger has embraced MoneyBall Medicine strategies. Their ProvenCare2,3,4model for a variety of chronic health conditions is a case in point. First, it’s important to recognize that while “standard of care” is a term that implies some level of standardization or consistency for treating a patient for a specific condition, there is little that is “standard” across hospitals, from state to state, even city to city. The result is that it’s nearly impossible for patients to compare whether the care they receive from their doctor is essentially the same as they would receive if they went someplace else. An even larger issue is that this variation in care contributes to the large cost differences that have been well documented in the press. Consequently, it’s been nearly impossible until now to ascertain whether Doctor A is treating patients with the most cost-effective means, or if Doctor B always orders expensive tests when the results won’t change patient management5,6.

Because of Geisinger’s business model (a note that this model has been copied by others in recent years and Accountable Care Organizations (ACOs) attempt to offer some level of this care coordination), they were in a unique position to innovate, and any cost savings would be realized by the providers, not just the payer(s). This required a shift in thinking on the part of providers: rather than the financial benefit of a payment for service model, Geisinger was moving toward a payment-for-performance model. Doctors would be financially rewarded for keeping their patients healthy and yielding better outcomes—a key component of MoneyBall Medicine.

In the first episode of the MoneyBall Medicine podcast, I sit down with Glenn Steele, the former President of Geisinger Health and xG Health, and currently the Chairman of G. Steele Health Solutions and Vice Chairman of the Health Transformation Alliance, a cooperative of more than 40 major companies who have joined forces to tackle healthcare spending (Episode 1). We discuss the ProvenCare programs at Geisinger and some of the initiatives continued by his successor, David T. Feinberg, including the customer satisfaction money-back guarantee that has generated significant publicity7. Steele outlines some of the reasons why the Geisinger model is so difficult to reproduce and where he thinks the biggest impacts of data, analytics, and technology in healthcare are going to be felt next. Join us for the MoneyBall Medicine Podcast!

  1. Geisinger Health. 2018 Geisinger Health Plan: A history of Caring.
  2. Casale, A. S., Paulus, R. A., Selna, M. J., Doll, M. C., Bothe, A. E., Jr., McKinley, K. E., Berry, S. A., Davis, D. E., Gilfillan, R. J., Hamory, B. H. and Steele, G. D., Jr. 2007. “ProvenCareSM”: a provider-driven pay-for-performance program for acute episodic cardiac surgical care. Ann Surg 246 (4):613-21; discussion 21-3.
  3. Paulus, R. A., Davis, K. and Steele, G. D. 2008.Continuous innovation in health care: implications of the Geisinger experience. Health Aff (Millwood) 27 (5):1235-45.
  4. Interview with Ronald A. Paulus, M. M. 2009. ProvenCare: Geisinger’s Model for Care Transformation through Innovative Clinical Initiatives and Value Creation. American health & drug benefits 2 (3):122-7.
  5. Herman, B. 2016. The striking variation of commercial healthcare prices. Modern Healthcare.
  6. Meier, B. M., Jo Craven; Creswell, Julie;. 2013 Hospital Billing Varies Wildly, Government Data Shows.
  7. Vartorella, L. 2018. Steal this Idea: Geisinger CEO David Feinberg explains how giving back money is his system’s most valuable expense. Becker’s Hospital Review.