Unpacking CON Laws: Impact on Rural Healthcare, Cybersecurity Challenges, and Value-Based Care (Part 2) with Tom Campanella

Unlock the secrets behind the impact of Certificate of Need (CON) laws on healthcare providers, especially in rural areas, with our special guest, Tom Campanella. Drawing from his extensive experience at Blue Cross and Blue Shield of Ohio, Tom sheds light on the frustrations and inefficacies associated with these regulations. We delve into the critical balance between maintaining an optimal number of healthcare providers and fostering a competitive marketplace. Tom passionately argues that competition is key to driving value-based care and discusses how government regulations can sometimes be more of a hindrance than a help.

Ever wondered how non-compete clauses and NDAs are stifling innovation and patient care in the healthcare sector? Join us as we examine the Federal Trade Commission's (FTC) recent ruling against non-competes, exploring its potential to drive innovation, enhance patient choices, and reduce unnecessary legal expenses for practices. We also tackle the pressing issue of cybersecurity, emphasizing the urgent need for a national strategy to combat ransomware attacks and data breaches. The growing demand for cybersecurity consultants across industries is also highlighted, underscoring the evolving landscape of healthcare security.

To wrap up our enlightening discussion, we shift gears to the complexities of value-based care and its intricate relationship with value-based reimbursement. Drawing parallels to outdated but still prevalent communication methods in healthcare, we scrutinize different reimbursement methodologies and the challenges faced by hospital CFOs in transitioning to value-based care. Don't miss this engaging and thought-provoking episode.

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Transcript

Aaron Higgins: 0:51

Welcome back to the podcast. We had such a great conversation last week with Tom Campanella. Such a great conversation last week with Tom Campanella. We found some time on the schedule to get him back and get into the second half of the conversation that we weren't able to get into on our first episode. So welcome back, Tom. We're happy to have you with us.

Tom Campanella: 1:11

Aaron and Jason, thank you. I'm really looking forward to it. I do miss Mike, but I'm sure you guys can fit those big shoes we're going to be missing.

Aaron Higgins: 1:21

Yeah, unfortunately Mike couldn't join us today, but that's okay, Jason and I will struggle to fill in the blank spots. I'm sure he will be with us, in spirit that's right, that's right, okay, well, hey, let's jump into the conversation, I guess. Well, I know we have a lot to cover.

Jason Crosby: 1:38

Yeah, so Tom. Hey, this is Jason. I know we spoke earlier in the week and we touched on some various challenges out in the marketplace now, particularly rural health care and where we are in Georgia, cons has been a hot topic Particularly. We had some recent legislation go through the state here just a couple of months ago actually, and I believe where you are in Ohio, you're also a CON state. So not to necessarily dive into the nuances and details, knowing that each state's going to be a little different, just want to hear your thoughts on how you're seeing CON development over the years, trends that you're seeing and maybe impact on providers.

Tom Campanella: 2:19

Okay, well, thanks, jason. First of all, we no longer have CON in Ohio, at least as it relates to hospitals, and that We've been involved with that in the arena of long-term care, nursing homes. There's a little bit of that going on, but the interesting story there is. I mentioned earlier, I'm old enough that I can go by and pass different decades and give you war stories, so this is a war story from the 80s, and I was vice president of health care finance and care management at Blue Cross and Blue Shield of Ohio, which is now Medical Mutual, and Ohio at that time had CON laws and each region of the state had a grouping of diverse stakeholders as it relates to CON. So we had representatives from the hospital sector, from the physician sector, from the community sector, from the local political sector, and also representatives from the employer sector and, finally, the health insurance or payer sector. I was the representative from the health insurance and payer sector and so I was on this group, and what would happen is we would have, obviously, you know, various pieces thrown to us where a hospital wants to add 300 beds, or a hospital wants to add more beds to their OB unit or a hospital, and most of it was hospital-related, and this was, by the way, prior to a lot of the consolidation. Obviously that has occurred in healthcare, you know, towards the mid to end of 90s, so there was definitely a lot of competition going on between the hospitals, and we would hear reasoning behind it, and the bottom line what occurred, though, is there were many times after, and there was a lot of detailed analytics, where the analytic people came through and basically said okay, based on the demographics, you know the number, say, if you're talking about adding more delivery beds, you know the number. Say, if you're talking about adding more delivery beds, you know from a maternity standpoint. They would, you know, in effect, say you know, our analytic people would come up and, in effect, say how many women are of childbearing age? Where is that trend going? That type of thing, loss of population, how many beds do we really need in the different areas? Where are we at today? And then, ultimately, the analytic types independent group would make a recommendation. We would evaluate it and then ultimately, make our determination.

Tom Campanella: 5:10

Where it got really frustrating probably eight out of 10 times that if we voted against an addition to a hospital, say, or adding a new building or whatever it happens to be the way the state law was written. The hospital had the ability to appeal to the state and then, once it appealed to the state, it became in the world of politics. To the state. It became in the world of politics. And the name of the game is probably 90% of the time, all that work that we did, all those discussions and meetings, it was overturned and so that was part of the frustration where, in effect, we had CON but it really wasn't effective.

Tom Campanella: 5:54

Going to CON in general, yes, there's some merits behind it. The theory makes sense where you're trying to find an optimum balance of providers within a particular geographic area to service a certain population. On the other hand, on the flip side of it is that whenever you get into and I know personally government and regulation, there's a lot of side effects and it doesn't necessarily mean those optimum providers that you currently have may not be value-based providers and I know we're talking about that earlier and there may be new value-based providers that want to come into the marketplace. There may be new value-based providers that want to come into the marketplace to build or compete and they would be outlawed, you know, depending on the CON.

Tom Campanella: 6:54

So, bottom line, from a personal basis and, I think, from a business standpoint for a state like Georgia and others, I would be concerned. At least. You know there may be exceptions. We always got to look at rural areas separately. You know there may be exceptions. We always got to look at rural areas separately. I would focus more on trying to create a competitive marketplace to allow competition to occur and, just like when it comes down to selling computers, restaurants, you know other types of things that are out there, let the good ones survive and let the ones that aren't providing value not make it. So that's really my perspective on this.

Aaron Higgins: 7:22

Yeah, and I think not to get too hyperlocal to Georgia. So Georgia did a lot of CUN reform and hopefully either this season or next we're going to get some perspective on that from a state legislator. But what you describe is sort of the situation that plays out at least in our local market here in the Savannah area. You have two systems and they've effectively used the CON to weaponize against each other, prevent each other from expanding, and so now you have this system where the tool that's being used normally and was designed to help ensure care is provided is being weaponized and used to prevent care from being provided, purely because of market competition. So you know, it's that two-edged sword. Right, it has hurt and helped, but to varying degrees and in different places. A CON law helps and right now, at least in the Savannah market, the CON law hurts, and so hopefully we can see that straighten up a little bit in Georgia with some of the reforms they passed this spring. Time will tell, because the law doesn't take effect until July 1st, so we're not quite there yet.

Tom Campanella: 8:39

Well, what I would be focusing on if I was in Georgia and maybe you already do this is, instead of looking at restrictive ways although again, there may be reasons geographically to have some CONs in that. So I'm not making a carte blanche statement, but I would focus on ensuring there's price transparency and quality transparency in the marketplace so both consumers and employers can be more diligent and more aware of value-based providers that are out there, or value-based services, because that's the other thing. Just because you know you may have a provider that's really strong in a lot of specialties but very weak in orthopedics. And you know because it just doesn't mean just because you've got a good reputation in hearts for an example, doesn't mean your orthopedic program is real strong. So you know, having that transparency, which facilitates a more competitive market, is important. My only other question with Georgia is what about new players that want to come in, build outpatient facilities and compete against your incumbent? Does the CONs prevent that?

Aaron Higgins: 9:56

Yes, they did. Again, there's been some reform, so it'll be interesting to see how that reform actually takes effect Because, interestingly enough to your process, the state is the one who oversees CONs in the state of Georgia. So it's already a state board. So it's already a state board. But then if someone say, is granted a CON, their competitor can appeal that CON, which is which is the situation that I'm describing where it gets weaponized.

Aaron Higgins: 10:30

So you have hospital a they want to expand to the suburbs, but hospital B also wants to expand to the suburbs, but they're not quite ready yet. And so hospital a will get the CON to expand to the suburbs, but they're not quite ready yet. And so hospital A will get the CON to expand to the suburbs. Hospital B will then appeal that CON and it goes through this very lengthy judicial level process that will then tie it up for years. And so that's. It's broken, at least in the state of Georgia. Because now, now you have, you know, have suburb areas that have 100,000 people, that the nearest hospital is a 45-minute drive away, all because they want to protect their little corner that they have, but they don't yet want to invest in the suburb area because they have other plans, et cetera. So that's where I think the CONs, at least in the state of Georgia, are broken. Hopefully we'll be reformed here Again. The state law passed and now it's up to the CON board to implement those changes. So we'll have to see how they interpret the law.

Tom Campanella: 11:28

And you know, as we talked last time, hospital inpatient is in effect going down. More acute patients are going into the inpatient setting. But the big growth area, as we know, and it's growing like crazy and it's always been like that, but since COVID even more has been the outpatient arena and, of course, care in the home setting. So that outpatient arena, when you're talking about suburbs, again, what I don't like about the CON, if it prevents value-based providers, you know, say ambulatory surgery centers or whatever, from moving into the region to provide better value for both consumers and employers, I would have a real issue with those types of CON laws.

Jason Crosby: 12:12

Yeah, exactly To Aaron's point. Just further sort of filtering down the accessibility and profitability of those rural hospitals that they're trouncing in on the competition there. Yeah, got it. Yeah, yeah, yeah. So lots of changes. I know this particular legislation. I went through kind of partisan lies but yet there was some middle ground to be had for future discussions. You know, maternity services, acute care, hospital being built, as long as they meet certain trauma levels and certain length of time. So there's some stretching of nuances as long as they meet certain criteria to allow them to move into those counties. But I'll be curious if those you know actually take hold or not. Got it? Tell you what? Let's stay on the sort of regulatory legislation side of things. Other items that Aaron and I have talked a lot about this year on the FTC front, some rulings have been tied to data breaches and non-competes. Right, and we've talked a lot more probably about non-competes. Love to hear your thoughts on what you're seeing or hearing in the market.

Tom Campanella: 13:23

And just again, sort of like the CONs how you see that impacting providers, whether it's urban or rural settings. Well, again, you're going to see a bias for me, and maybe it's my economics background, but as much as possible, I'm a big believer in competition and I think competition can provide ultimately value. But a key element of competition, as I mentioned before, is awareness of the differences between the providers, for an example, and that's where both the price and the quality component comes in. Price and the quality component comes in. The issue I have with non-competes and there may be some rationale behind it in certain areas, you know, as it relates to certain types of organizations, as they've been involved in certain research and everything else that is very important and proprietary, and the idea of them potentially sharing that information or being part of another competitor, you know is a big issue and I can see the rationale. As it relates to non-competes, I in some ways disagree, but I can understand the rationale is. For an example, disagree, but I can understand the rationale is for an example, if a hospital purchases a physician group, they might feel there's key value there in regards to them you know are the physicians and if all of a sudden they pay X amount of dollars and these key physicians leave to a competitor. There could be some issues there, and in either case, there needs to be a way to make sure that it's not totally unreasonable.

Tom Campanella: 15:04

Ultimately, the issue I have with non-compete is it really ultimately creates a less competitive marketplace? Now, all of a sudden, there's a lot of disruption occurring in healthcare, a lot of different types of organizations, all different types, and if physicians, for an example, or other people in healthcare, are restricted from going to competitors, what that's going to do is stifle competition within that area and region, as well as put, I think, an undue burden. When they're talking about doctors and others having to move from a geographic region with kids and you know, in grade school and high school and everything else, I really think that that's unfair. So, and as if I remember correctly, with the FDA ruling on this, each and I can see why they're doing this. As it relates to non-competes, they're going to be looking at it on a case-by-case basis, you know, as it relates to healthcare, and so there's probably some merit to that. On the other hand, it could probably be a pretty slow process too.

Aaron Higgins: 16:18

All righty, let's take a quick break.

Julia DiGiacomo: 16:22

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Jason Crosby: 16:48

Yeah, there's some interesting statistics that I recall from that ruling. One that stands out to me was they estimated something like 95% of those with non-competes also have an NDA in place and I thought that's quite interesting that you've got sort of that nuance of those duplicate of sort of arrangements. How much do you need in place to restrict that? But yeah, I found it interesting. You know, aaron and I have talked about it quite a bit this year already, but how that may help drive a little bit innovation. Like the FTC estimates, you know they estimated an increase in patients as well that'll come out into the mix because you have more flexibility in employment. Not sure how that'll unfold, but we'll see if it does.

Tom Campanella: 17:35

you know, sort of unfold, but we'll see if it does, you know sort of Give the patients more choices and then again, you know, from an employer standpoint, gives them more options, as they may be. You know, putting together value-based benefit designs and if you only have two choices, for an example, and you don't like A or B, you know that's an issue. More importantly, we see this outside of healthcare all the time. You know that's an issue. More importantly, we see this outside of healthcare all the time. You know, again, as it relates to computers, technology or anything, it's evolving like crazy and the world out there and I think you're sort of stifling that evolution which I think ultimately will hurt healthcare, hurt healthcare costs and quality.

Aaron Higgins: 18:22

Well, I also think too, it actually saves money ultimately. I can think of a few instances I can't be too specific of my own personal experience with a practice where a doctor left to the competition. They had signed a non-compete and there was this lengthy lawsuit that was eventually settled out of court. Think of all the money that was spent on that. Yeah but the lawyers did.

Tom Campanella: 18:47

Well, come on now.

Aaron Higgins: 18:48

Yeah, the lawyers, you got to pay the lawyers.

Tom Campanella: 18:51

Yeah, you got to.

Aaron Higgins: 18:54

I think there's a certain bias there, tom, but all that money that was spent on something ultimately hurt the practice. It was money that they couldn't reinvest. It was money that they couldn't hire other staff or buy technology that was necessary to improve the practice. So I think ultimately there might be outlying cases where a non-compete hurts patient care. I'm not disputing that Everything's a bell curve. I think, generally speaking, getting rid of the non-competes will improve patient care because we're not going to be spending money on these things needlessly to fight in court or make bad feelings.

Tom Campanella: 19:33

I agree.

Jason Crosby: 19:34

Another interesting thing to your point, aaron, about costs is I believe they estimated close to like $200 billion. They estimate just from this type of ruling over like a 10, maybe 15 year span. So that I found interesting as well. That's a pretty gigantic number to come up with in addition to, you know, 3% increase in patient volume sort of thing to hit both you know aspects of the P&L. If you will top and bottom line that, I'll be interested to see how this impacts over the 10-year span. But yeah, more to come on the non-competes. But another ruling, tom, that I'd like to get your input on. Lots of you know cybersecurity issues, ransomware attacks et cetera resulted in you know data breach rulings by the FTC we've talked about before. I know you've got some input on that.

Tom Campanella: 20:29

I'd love to hear your insight there. Well, you know that's a tough one. You know, when you think about it this whole ransom stuff you know you go back to even in different countries where it's common practice, where they will kidnap people that work for engineering companies or whatever, and then you know it's almost like a routine setup they kidnap, you pay them money, they get the people back, and it's sort of like a quid pro quo. They build it in, but you know, sooner or later you got to say no and there needs to be ways to address it. I recognize kidnapping is a whole different ballpark than we're talking here, but still, as it relates to data, if we continue to pay off these people that are putting a gun to our head, it's going to continue. Our head it's going to continue and we need to find a way. Obviously, one to be able to have better security blocks from a cybersecurity standpoint. And number two, we need to have, I think, a national strategy in regards to this, not to say that every organization has to follow it to a T, but we need to have, I think, a more focused national discussion, because it's only going to get worse and it's affecting us in all walks of life and you know, as it relates to healthcare, recently in the city of Cleveland there was a breach at the city of Cleveland. So you know, I'm not sure what happened there. Hopefully the breach was only in parking tickets so I don't have to pay that parking ticket. But you know, we'll see what happened there. Hopefully the breach was only in parking tickets so I don't have to pay that parking ticket. But we'll see what happens there. But ultimately it's an issue that needs to be addressed.

Tom Campanella: 22:17

It's interesting. I've been at conferences recently sitting at tables for dinner and I'll ask somebody what do you do? And I can't believe. Every year I'm sitting with more and more cybersecurity consultants. I thought it was bad when lawyers are increasing all the time. Now you got cybersecurity consultants. Everybody's a cybersecurity consultant but it's needed because it really is the billions of dollars as a country that we paid out. So I'm not a techie to be able to give you the answer to silver and I don't know if there is a silver bullet answer but we definitely have to have a strategy to address this.

Aaron Higgins: 22:59

Well, I'll put on my old system administrator hat for a minute. You're right, there is no silver bullet. But honestly, this problem dates back to the 90s it's a 30-plus-year-old problem when we made the mistake of inviting what was then the former Soviet Union onto our internet. They had their own internet that they were developing, but when the Iron Curtain fell, we invited them on and it was kind of the Wild West. It was not a security-first internet that we invited them on to, and so we invited some pretty shady folks onto our internet. And this may be a hot take for some, but we're now reaping what we sowed 30 years ago. Take for some, but we're now reaping what we sowed 30 years ago. And now we have these Western European and former Soviet bloc gangs that have turned to cybersecurity to make their billions, and we've made it super easy on them by having an internet that is not security first.

Aaron Higgins: 24:03

Honestly, the only way to really fix this problem would be to fundamentally change the way the internet works. I don't know if there is enough political will or enough money in the world to actually make those kinds of changes. We're all so reliant on the internet. But the fundamental way the internet works, it works on trust instead of security first. Uh, literally it's. I mean, there's a reason why it's called a handshake protocol, because you're just trusting the other connection inherently. So we could spend billions more, uh, trying to protect our environments.

Aaron Higgins: 24:39

But I actually think there needs to be a fundamental rethink on how the internet works, um, to inverse the way that we're doing security on the internet, because otherwise this is going to continue to happen. It's going to be an arms race. It's a digital arms race. Who can hire and build the best hacking tools? Who can hire and build the best anti-hacking tools? And it's constantly going to be this way.

Aaron Higgins: 25:02

Particularly going back to your analogy of ransoming or kidnapping one or two engineers out in the oil fields, well, what if you can kidnap 150,000 patients and hold them at ransom? And that's what we're seeing. We're seeing huge health care systems go down. I mean, all I need to say is change healthcare. And I think everybody shudders a little bit when, when you can hold millions of lives and billions of dollars ransom, you're going to get paid. That's just the way that it is, so that that incentive is always going to be there, because if you don't pay, literal people die or get hurt tremendously don't pay, literal people die or get hurt tremendously, and so, yeah, I think the only way to fix this is a fundamental way of how the internet itself functions, which is way beyond the scope of our discussion.

Tom Campanella: 25:56

Well, I appreciate your background on it in the 90s too and you know, with the fall of USSR and that part I wasn't aware of, I did know we were always looking back in the 90s and late 80s and I've always talked about it was trying to get that region of the world to embrace capitalism. I don't know if this was the exact way we wanted them to embrace capitalism, but at least in this arena they not only have embraced it, they've gone to the nth degree. So, yeah, you're right, it's something that we need to be able to address and, like I said, I don't know what the issues would be about changing the internet. I got a feeling that that would be a big challenge, but it's. I think in the ideal world you would love to see these countries where this is occurring, the ability to track them down and have these countries in force and with us. But you know, at least as it relates to Russia, things haven't been going too well lately, if you've been following the news well, we did talk on what?

Tom Campanella: 27:09

marshall plan, campanella plan, I think we should mention last episode we're gonna have a lot of these plans out there we are solving world problems here.

Jason Crosby: 27:18

That's right. I mean you just, we went campanella plan. For what was it? Just health care altogether. Aaron's decided we're going to just reinvent it all together, and then that's right.

Aaron Higgins: 27:29

Reinvent the internet, it's not the higgins plan or or algor 2.0 plan.

Jason Crosby: 27:34

I don't know what well, hopefully it won't be like uh.

Tom Campanella: 27:37

When I was a kid, I remember going with my dad to the neighborhood bar and, uh, and being so impressed at the age of 10 and 11 that these guys sitting at the bar had the answer to all the world's problems. I said, man, these guys must be really, really smart Cancer. They got the answer. War they got the answer, whatever it happens to be, so hopefully the Marshall Campanella plan would have a little bit more meat to it.

Jason Crosby: 28:09

Fair.

Aaron Higgins: 28:10

You know, going back to you, said it'd be great if the states you know Russia, china, et cetera would actually help enforce it.

Aaron Higgins: 28:19

The thing is is they are directly benefiting from these hacks. You know, a lot of these are state sponsored groups, so they are getting some kind of percentage or benefit from sponsoring these groups. North Korea actually gets a lot of its funding from ransomware and I don't think a lot of people are aware of this. It's also how they launder their money. So you know, because there are so many sanctions against these countries, they are turning to the dark side of the Internet and delving into the areas that directly hurt people to make their money. I'm not saying we should lift sanctions, but sanctions are actually part of the problem and are driving some of these countries to the extreme ends of doing the ransomware. So it'll be interesting to see how the FBI and the FTC and the other alphabet agencies continue to work on this problem. I don't see it really changing anytime soon. We're in a new hot war, it's a digital war, and it feels like right now, at least the innocent bystanders, the businesses, the hospitals, the average everyday Joe, they're the ones suffering from this.

Tom Campanella: 29:35

You know, as the war unfolds online, yeah, and speaking of war, the big issue, too that I think we all need to be worried about is, as it relates to, like, our defense department and stuff like that. There you know, you, just how many movies have you seen where you know where, all of a sudden, some third party is able to be able to control our missiles and be able to launch things remotely? You know, and have that ability to have that secret black box. They were able to get you know into that. You know that's got to be an area that we need to protect and you need to know that, obviously, that no matter where they're going now, that's got to be, depending on the player, one of their ultimate goals to get into those environments.

Jason Crosby: 30:30

I've got the solution Faxing. Let's go back to fax.

Aaron Higgins: 30:35

Let's go back to fax. Crosby plan is go back to 1992.

Jason Crosby: 30:41

We actually just had a back and forth, I'll just with a, I want to say a TPA. I'm just going to leave and forth with a TPA. I'm just going to leave it general, A TPA on which secure fax line to use. So we're still in the fact. Oh, got it.

Tom Campanella: 30:56

Yeah, and for the audience, tpa is third-party administrator that administers healthcare claims.

Jason Crosby: 31:04

There you go, and the fact that we're still talking about which fax line to use with them is very interesting to me. But it's still being used and some rural practices are still utilizing it as well, so I guess we can't laugh too much about that. It's still in practice, right?

Tom Campanella: 31:21

Well, you also have the bicycles too. Where, what was it? Silvers, whatever, but they would do all the back and forth with mail and everything else by immediate mail through the bicycle delivery service in the big cities, uber, hey, we're there and Uber right.

Jason Crosby: 31:40

Uber Health exists. It's a national entity. Who knows?

Tom Campanella: 31:43

Okay, I'm back to the bar scene. What world problem are we going to take care of next? It's an actual entity. Who knows? Okay, I'm back to the bar scene. What world problem are we going to take?

Aaron Higgins: 31:51

care of next. Let's take a quick break. We'll be back in just a moment.

Julia DiGiacomo: 31:56

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Jason Crosby: 32:29

Well, let's let's wrap a bow on this. We touched on value-based care earlier this week. We're talking a lot about legislation and regulation and such. Now maybe we can tie those together. So, you know, let's touch on value-based care a little bit again. Just general thoughts on on hospital stream, but also with your background, where that value-based care is maybe impacted by various tort reform as well. That's out there. There's got to be a lot of overlap between the two. I want to get your insight on that.

Tom Campanella: 33:02

Okay, again, going back to my background, for 13 years I was vice president of healthcare finance and care management of Blue Cross of Ohio, which is now Medical Mutual of Ohio, and in that arena we were responsible for all the different reimbursement methodologies that were out there. Diagnostically related groups DRGs you know those types of things and, needless to say, despite what some people think, we were really trying to incent value in the marketplace, obviously make profit, but at the same time share that profit with employers and consumers in it. And it was, you know, always a big, challenging thing. But where I the lesson learned from that experience was as I think we touched on it a little bit before is how you pay for services. The revenue stream and everything else will dictate a lot on how providers respond. So, for an example, if it's bundled payments or other things, the whole theory behind that is to promote efficiencies. Diagnostically related groups DRGs where they're given a lump sum of dollars for an inpatient care, it winds up in sending them to release a little bit earlier, rather than keeping them in the hospital too long or release them to lower cost settings. So there was a lot of positive that potentially gets out of it.

Tom Campanella: 34:32

So where I'm saying is as it relates to value-based care. It really starts with value-based reimbursement. That reimbursement that incents and provides value and incentives to the provider, like a hospital, to be able to provide that. Right now we have a reimbursement methodology, as we've talked about previously, which is fee for service, that overall basically incents overutilization, and that's one of the major reasons why we have escalating healthcare costs. So we need to come up with some type of other stream and there's different discussions about hybrid models, some form of capitation which is basically a per member per month, where a hospital healthcare system or whatever, as an example, would then be responsible for all that care for the individuals that are in that plan you know, if there's 2,000, 3,000 people, say, or 10,000, and they would get per member per month, actuarially money from the carrier or whoever the payer happens to be Could be a Medicare Advantage plan too, or Medicaid managed care, and then they would you know the way they made money, because the name of the game is, the provider nonprofit or profit is looking to make. Money is, in this case, to be able to provide and keep people healthy and at the same time, make sure that they're providing optimal care, not unnecessary services, unnecessary surgeries, care not unnecessary services, unnecessary surgeries, unnecessary referrals to specialists, which are all occurring today, and so all of that makes a lot of sense, you know. From that standpoint, we need to evolve to that.

Tom Campanella: 36:19

Where the challenge comes is, you know, if you're a CFO of a hospital, you're in a really perplexed situation. Put yourself in the seat of a CFO of a hospital. You're in a really perplexed situation. Put yourself in the seat of a CFO of a major hospital system. Currently, right now, you're in a position the way you get revenue, the way you're surviving for-profit or non-profit is, in effect, by fee-for-service reimbursement. And you're getting that stream Now as you get into and you're trying to provide more value-based reimbursement, which, by its nature, means there may be less referral to specialists, there may be less tests done. Well, those historically have been revenue sources for you. Well, those historically have been revenue sources for you.

Tom Campanella: 37:05

So how do I, you know, sort of maneuver myself to be able to do that? And how do I address where I have certain individuals that are in a value-based relationship and others that are not? Do I treat them differently, like I put them in one bucket versus the other? Oh, this is one that we don't have an issue referring to different tests and specialists, but this one we need to cart-baunch. I mean, you know you also have legal issues coming out of that. Well, you know, all of a sudden you treated this group one way and you treated another group another way, you know, and it's all about your profits. So there's a legal issue there. And then, finally, where the other issue is and then we can have some back and forth on this is tort reform. Here we are telling, for an example, you've heard the term defensive medicine, which is definitely a situation that is out there.

Tom Campanella: 38:01

And so one would say physicians and hospitals might provide, they may feel there's a certain level of care that needs to be provided for an individual, but to protect themselves from a lawsuit, they might say, okay, we're going to do these extra tests because we don't want to be sued, or we're going to do this additional procedure just to be on the safe side in that, this additional procedure, just to be on the safe side in that, and even though they recognize there is less value, they're in a position they're really protecting themselves defensively from any tort form or lawsuits that are coming out of it. Well, if you are really going to address value-based, trying to create an environment where optimal care is going to be provided. There is always going to be those exceptions where this individual, if he would have had winds up getting cancer or has a health issue, and the lawyers come out and say, yes, but if you would have done this test, this test and this test, you would have found it. But you come back and saying, yes, but based on the evidence and evidence-based protocols. That's something that would have added. You know, this is a one in a million or one in 100,000 or one in 5,000 chances that this occurs. It doesn't. You know, really is not an effective use of resources from a society standpoint. So I think there needs to be, going along with the focus and push for value-based care, there needs to be also major tort reform from that standpoint, possibly tying it. There's a number of ways to address tort reform. One way would be to really link it in even more with evidence-based medicine that can be potentially used and you know, and this is very much recognized evidence-based medicine and it would need to be from a third party and at that you know clearly out there that these individuals followed the way it was supposed to be and maybe that can be an adequate defense. From that standpoint, you're incenting poor quality or incenting poor outcomes overall from not doing that extra test. So there's a balance in those types of situation.

Tom Campanella: 40:36

The other issue, just as an aside, with malpractice, the US is definitely different than most countries. We're one of the few countries that have contingency base, which incents in many ways individuals to file lawsuits because they have nothing to lose, and you see the commercials on TV and everything related to that. Then you're also in a position where we have jury trials. We have sort of jury trials, trial by your peers, who none of them have any real healthcare understanding and, as experts on both sides make their presentations to the jury, aren't necessarily in the best position to evaluate and make the right type of decisions, and a lot of times those decisions are more emotionally based than factually based. So what a lot of times those decisions are more emotionally based than factually based. So what a lot of other countries do is they have a three panel group of judges that are also involved and have background and their specialty is as it relates to health care, and they have an understanding and experience in that particular arena and a certain level of expertise. Pre-judge panel makes that decision, or there may be other ways to address it. So it is something that we need to, and when you talk about malpractice you're talking about and tort reform you're really talking both at the federal and state level, but it is something that needs to have the discussion occurring. It may be occurring today I don't see it but I think it definitely will be something that needs to accompany value-based care.

Tom Campanella: 42:19

And then, ultimately, as I said before, the fuel for the growth of hospitals has been fee-for-service. So as we push more and more for a whole different type of reimbursement, it will create some major challenges for hospitals. They will need to change their business model. But think about it Instead of just saying, oh, because of that, we don't do anything. Maybe we need to look at how other industries the banking industry went all through this. The auto industry, the steel industry all these industries have had major changes and, based on competition or whatever, had to become more value-based. Auto industry, let's face it, cut down plants throughout the country. People lost jobs or whatever, but they tried to recreate themselves to be more value-based Hospitals, depending on the hospital I don't want to carte blanche say it across the board many of them are still working off of their old business models and they need to evaluate and come to more of a value-based business model that is focused on a world of competition. That's my story. I'm going to stick to it.

Jason Crosby: 43:31

I love it. You know you're exactly right with the various reimbursement models that are out there now. It's just only going to get more complex, right? Whether it's fee-for-service and we're in Georgia, value-based is a little bit more slow adoption. But you've got, you know, aco and MSSP side and those same entities are going to have a commercial contract portfolio Within that commercial contract portfolio. Some may be, you know, upside risk only, some may be two-sided risk. There are just so many models that a small practice, for example, has to keep up with the nuances within each of those agreements and in and of itself it's just going to be complicated. So completely understand where you've got to have some compliance checks in there and oversight aside from the clinical side of things, just making sure you're checking the boxes on the reimbursement models as well. It's just a little bit much. Anyways, I know we're running up on time. We've solved a few world problems.

Tom Campanella: 44:31

Guys, I really enjoyed this conversation. I mean, we survived without Mike, which isn't necessarily easy, but I think we made it and hopefully we can have these discussions periodically.

Aaron Higgins: 44:44

Yeah, we really enjoyed having you on and would love to have you back Our next season. We usually take a small summer break here, but our next season will be starting up probably in about the late August early September timeframe and I think you'll be visiting our area, so maybe we can sit down and have an extended conversation.

Tom Campanella: 45:07

Well, I actually have a great idea there when I'm in Savannah, we'll rent or clear out after hours a bar, have Mike be the bartender and the three of us sitting at the bar, and then he and you know, we will basically, basically, as I said before, address all these world problems that we're trying to do it. I think it's a great setting for it all I think that's perfect you know, just like southwest.

Jason Crosby: 45:38

You know they developed their business model on the bar napkin. I think the campanella crosby Higgins plan is best served at Pinky Masters here in downtown Savannah. The first logger is on air. You got it.

Tom Campanella: 45:53

Sounds good, to me Sounds great.

Jason Crosby: 45:55

See you, gentlemen. Thank you.

Aaron Higgins: 45:56

Tom.

Jason Crosby: 45:56

Good talk, Tom Take care.

Aaron Higgins: 45:58

This has been an episode of Beyond the Stethoscope Vital Conversations with SHP. If you enjoyed this podcast, please be sure to rate and share it with your friends. It sure helps the show Production and editing by Nala Weed.

Jason Crosby: 46:12

Social media by Jeremy.

Aaron Higgins: 46:13

Miller, and our co-hosts are me, Aaron C Higgins and Jason Crosby. Our show producers are Mike Scribner and John Crew.

Jason Crosby: 46:22

Thank you for listening and we'll see you next time. Thank you for listening and we'll see it unsportsmanlike this time. Tom, if you had a superpower, just one, one superpower, what would it be, and why?

Tom Campanella: 46:50

I guess I would say the ability to fly, because, uh, I've been so frustrated with the airlines lately and between cancellation and delays, and I see these birds having no problems at all. They look down on me and sometimes if I look up, I got a duck real quick because something may be coming from the birds. But I'm thinking they got it right and so maybe that would be the issue the ability to fly.

Jason Crosby: 47:17

I love it. I love the reasoning behind these. We always ask these kind of questions. The reasons always catch me off guard, but I love that one. There you go.