Kris Shepard, JD, PhD - The Value of Management Services Organizations

Move to Value

Today hear from Kris Shepard, Senior Vice President of Clinical Enterprise Development and Core Market Growth and Physician Partnerships at Advocate Health. In a conversation with CHESS President, Dr. Yates Lennon, Kris talks of how Management Services Organizations benefit patients and creates opportunities for practice growth and professional development for providers.

OK, Well, good morning, Chris. Glad to have you on the chess Move to Value podcast. Look forward to our conversation today.

Good morning. Yeah, great to be here.

Good. So Chris, I'm looking at your title clinic, SVP, clinical enterprise development and core market growth physician partnerships. Tell us what you do.

I do a few different things. And as that title probably implies, sometimes I'm working on your plain vanilla physician practice acquisitions. Sometimes I'm working on acquisitions that are not so plain vanilla in a more complicated in a larger scenarios, something particularly unique. And then I work on a range of other physician partnership transactions, professional services arrangements, as well as working on management services opportunities that we see with groups. And we really view that clinical enterprise development as, you know, broadly designed to look at our physician networks across the Advocate enterprise and and pursue what we think will work in a given market, a given specialty. And so that's why it's a fun job to have. I get to be creative and yeah, engage with people in a very different settings and try to put together things that that are appropriate in the right context.

Yeah, never a moment of boredom, I would imagine with that much variety. Well, you, you, you touched on managed services. You know, there's a lot going on today with various managed services organizations as well as what you might call value services organizations. Talk to me a little bit about sort of at a high level, what do you think the opportunity is in the MSO slash VSO either or both market today?

Yeah. I think I'll, I'll come at it from the perspective of physician groups that we talked to pretty regularly And you know, different groups have different needs. But one of the realities that seems to be hitting a lot of, you know, physician owned practices is that they don't necessarily have the scale to keep up with whether it's, you know, physician practice infrastructure needs or, or it's and, or the value-based care capabilities that they need to be successful. And so, it's, you know, two different buckets that are that can be addressed through management services and value services arrangements. But that's the reality. I think practices used to be able to kind of, you know may do just fine on their own. I think there are a variety of factors playing in to the challenges on independent practices now, payer relationships and kind of reimbursement challenges that exist, the cost pressures that are hitting every everybody, especially in the healthcare industry, kind of inflationary factors. And then there are things like, you know, EMRs are expensive. It's expensive to fend off cyber-attacks, to have the right cyber security frameworks in place, to make sure that you can you can continue in operations, to have the best revenue cycle, the best supply chain options. All those are things that are I think increasingly challenging even for the larger physician practices out there. So there's a, there's a scale factor there, same kind of themes with respect to value services. I think it, it takes a lot. There's analytics platforms, there's teams of people to support, to support a practice in, in delivering care the right way and then being able to record that and have that be a parent in quality metrics that get reported and cost metrics and, and everything else. So I just think, I think it's this moment. And from a, you know, I work for Advocate health for the health system. And from our perspective, we need strong physician groups and physician practices. And you know, we've, we've historically had a pluralistic approach to physicians. You know, we, we have robust employed Medical Group. We have some other, you know, hybrid arrangements. And then we have, you know, loose partnerships with practices that are wholly independent, but still great partners with us on the medical staff and all been in leadership roles and in helping us, you know, craft our service fund strategies, even those are important relationships. And we just want to make sure that we're that we have that going forward. It's the robust physician network is, is, is important to delivering care and will continue to be that for the foreseeable future.

Yeah. Talk a little bit more, if you will, about just how you see these, the MSO offering, the value service offering as an opportunity for physician from a leadership perspective. If you're independent, independent physicians today, particularly if your primary care tend to be almost, almost completely outpatient, right? I mean, and back in the day when I was coming along, there were no hospitalists, there were no laborists, there were no, you know, hospital specialist until later in my career. But today I would venture to say they're the vast majority of independent providers probably rely on hospitalists for their inpatient care. So in the outpatient setting, you tend to be less connected to the hospital, especially for primary care. So how can these MSOs be an opportunity for independent positions to take on leadership roles and maybe even have a growing connection or role with the health system?

I think the most important way in which our strategies broadly and, and, and certainly an MSO strategy in particular helps both physicians and their patients is by creating connectivity across different specialties. You know, I think of it less from the standpoint of hospitals or facilities and more from the standpoint of creating interconnected, interconnected specialties. And so whether you're a primary care physician or you're a surgeon, having a platform in which you can focus on, on delivering care and, and taking care of patients and their needs to be to be connected to other parts of the system. I think that's, that's an important way in in which these MSO services can help. You know, the in some ways it's the center of, of what we're, we're trying to build is a, you know, ideally you'd like healthcare to be delivered in a seamless way. And you know, we all go through our own issues personally and watch our family and it's not always that way. And but I think through these kinds of partnerships, we certainly improve the, the improve our chances of getting to that seamless care.

Yeah, I would agree. I think the, the most significant result for patients in my mind is the, the connectivity across the continuum of care so that everybody can see the patient's journey through the system. I've, I've said this before, I think in other podcast, but my mom lives in the different part of the state, not here in the triad, but care there's very disconnected and you know, primary care doctor doesn't know what the ophthalmologist has done, doesn't know what the cardiologist has done or said. And trying to bring all that together is, is a huge challenge. Talk a little bit more, if you will, about just what you see going on in terms of specialist MSOs, if you will. Again, my mind is in value-based care. I tend to just default to primary care, but I think they're going to be a growing need to make sure as you just talked about that specialists are connected into the, the system. So what opportunities are you seeing there? What, what are the needs you're identifying for specialist in MSOs?

The the, the main need that for specialists that that I'm seeing are in that infrastructure support, you know, the everywhere, everything from the, the EMR system to IT support generally to Rev cycle in particular. I think all those are really important to specialists. Some specialists are very focused on ensuring they have, you know, even if their value play currently is not a huge part of their practice revenue that they're positioning themselves for, for value-based care incentives along the way. And, and you know, the reality is you know better than anybody that that there are value-based incentives already in place for specialists. You know, to your point, we, we sometimes focus a lot of attention on primary care, but, but there are, there are, there are important aspects from a specialty standpoint as well. And you know, one of the things I think about this question of what are specialists looking for? You know, there's a, there's a challenge from the standpoint of a health system in that there are MSO strategies driven by private equity that have been targeting different, different specialties. And you know, they've been, they've looked at anesthesia and rolled up anesthesia. They've, there's been a lot of focus on ortho, There's an increasing focus on cardiovascular care and and so on and so forth. They seem to be, they seem to pick, pick a specialty and drive, drive at it and, and create, create an opportunity for physicians to, to get cash upfront, but also join a platform that is, you know, kind of take some of the administrative burden off. Some of those I think are actually really solid platforms. I mean, I, you know, talked to some that I think very highly of and thought, you know, I could see that being a partner because they're doing things, things the right way and not just looking to squeeze every dollar out of a, you know, the next transaction, but the really focus on taking care of people the right way. But some of them are you know a little more mercenary than others. You know those represent a challenge I think from the standpoint of creating the right physician partnerships.

Yeah, from a value lens if nothing else, and I think there are there are plenty of models out there for specialist in value based arrangements in bundles other opportunities. But if, if nothing else, from an MSO perspective, it is a, it's a network management opportunity where you're looking, you're able to identify specialists who are high quality, low cost, which is what you want in a value-based construct, right? You want the very best care, but you, you don't want that transactional mindset that you just referenced where it's just more, more and more procedures. Rather it's the right procedure, right time, right patient to really help drive success on the, on the value side of the equation, no question. So what, what kind of technology? Let me back up before I do that. You said something else I wanted to to 0 in on a little bit. So what are what are independent physicians looking for today and what are the barriers to them being open to the MSO VSO solution, whether that's private equity or whether that's a healthcare sponsored MSO VSO?

I think the barriers are well, let me just address the kind of the first part of the question, kind of what are they looking for? I think, you know, different practices are coming at it from from from different angles. Just kind of what I'm hearing is sometimes it's stability. You know, they want to know that they've got a, a partnership and that with a, with a health system that's bringing them or a, you know, private equity back to MSO that's bringing them some stability to their operations and their practice. I think that's an important factor. Sometimes we hear the legacy theme that they realize that in, in order to preserve a legacy, you know, the kind of the practices history and the, the, the practice going forward. That means a very different, a very different transaction and relationship and different moment in time for the, for the practice. And that's, you know, it takes a lot, I think, for physicians to get to, to get to that. I think there's always kind of how, how can we improve the economics of the practice is always going to be be a big part of the motivations. And I, I think, you know, the other thing that we, that we see is, you know, there are, there are a lot of examples of, of physicians really wanting to be part of building a clinical program and partnering really closely to be able to do that in whatever kind of relationship model exists. And I think that's a, that's a big factor. And, you know, sometimes there's a realization of, you know, if we're not close to the health system, then then we could get left behind. And, you know, system might have to build, build separately in order to execute on a broad strategy. I think some of the barriers are, you know, some of its cultural and this is with this we see across the Advocate footprint and the Carolinas and Georgia and then in the Midwest and Illinois and Wisconsin, kind of very different local cultures among the physician, the physicians in the market, within the physician network. Some are oriented toward employment, some are oriented very much away from employment by the health system and kind of independent, independent practice. And so, you know, in certain settings like that can even be a barrier to an MSO strategy. Now, part of why we, we, Advocate, have decided to offer an MSO relationship as a, as one way of being connected is because we realize that, that some physicians just they'll, they'll not get really ever over that hump. And they still, they may still be very important in a part of the care delivery model in a given community. And that MSO relationship kind of gives them some stability and support while, you know, also enabling that connectivity to the health system. I think some of the barriers are, are economic. You know, there, there are some practices who can, whose operating platform is going to be cheaper. I mean, you know, you can, you can, I don't want to necessarily call it fly by night, but you can use fly by night, you know, whether it's revenue cycle options and, and other relationships to help do the basics right and, and make that work. And, and for some, that transition to an MSO relationship or a VSO relationship that has, you know, a little more meat to it is just going to be an uptick in the cost structure of the practice. And, and so you have to make sure that in those situations, there's going to be an offset, they're able to grow there. You know, there's something there that that offsets that added cost. And, and for some, it's going to be, you know, a lower cost. It's not, you know, I think it's, it's different kind of practice to practice, you know, from what we're seeing. I could probably go on, on barriers and also kind of incentives, but I'll, I'll stop there for now.

One of the things you said, I think in the your answer to the first part of the question, you said I won't get it exactly right, I don't think. But you said something about physicians want to help develop or participate in clinical models and you said there are a lot of examples. Can you throw out an example or two what that has been like and how it's worked and benefited, you know, physicians, their patients, maybe even the whole system in the process?

Yeah, I'll give you, I'll give you an example of maybe a couple of of programs that that we've been successful building. outside the kind of MSO framework, although they have some elements of it. You know, one is in the greater Charlotte market, we have a service line joint venture called Spine First with with an independent neurosurgery group. And what it's allowed us to do is focus with that group, you know, on, on that spine program for the entire market. And, and that's the kind of engagement that that I think a lot of physicians want to have, you know, they're, you know, they build successful practices, they get known within their, their specialty and their trade, trade organizations. And I think they, you know, naturally want to be part of building a significant clinical presence. And you know, the, the way I think about that is it's, I think it's possible to build on those kinds of clinical relationships and some are less formal than a service line joint venture to build on that with operational connectivity through EMR and other things that is advantageous to everybody in, in almost every market that you know, I'm that I get to get to see. There are numerous examples like that of independent physician organizations engaged in in programmatic development with the with the health system, sometimes alongside Medical Group partners as well. Certainly I you know, one thing to add to that, probably when you think of physicians joining becoming employed by our medical groups, I think that that clinical program development is a main is a significant driver for people to want to do that. It really it reduces barriers to that kind of engagement, and you know, I think it allows physicians to feel like they're part of building, you know, you know, whatever, whatever programs, whether it's cardiovascular, cancer care, etcetera, in a meaningful way.

Well, Chris, thanks. Fascinating conversation. Can you stick around for just a little bit and we'll continue our conversation?

Absolutely.