BCBS of Minnesota CEO Dr. Craig Samitt: Healthcare needs reinvention. Look to the incumbents

Craig Samitt, MD, president and CEO of Blue Cross and Blue Shield of Minnesota and its parent company, Stella, is anxious about the trajectory of healthcare cost growth in his state.

"The total cost of care in Minnesota has grown over 9 percent year over year, triple the national average," Dr. Samitt told Becker's Hospital Review in an interview Jan. 7. "Our department of health and other studies have estimated that if we don't do something to address the unsustainable rise in cost of care, the total cost of healthcare in Minnesota will double within the next seven years."

The unsustainable rise in healthcare costs in Minnesota and nationwide has dominated strategy discussions among healthcare leaders for years, but 2020 will bring more urgent and provocative responses from industry players to curb cost growth, Dr. Samitt predicts.

Here, Dr. Samitt talks about how BCBS of Minnesota is working to reinvent provider contracts and why the insurer is grabbing a page out of Netflix's playbook.

Editor's note: Responses have been lightly edited for clarity and length.

Question: You think 2020 will bring more "urgent and provocative" responses to contain healthcare costs. What does BCBS of Minnesota have planned?

Dr. Craig Samitt: The focus of our strategic plan has been reinvention: If we were to rebuild the industry from scratch, would it look like it does today?

The incumbents in healthcare have viewed disruption as something that happens to us, as opposed to something that we drive. Our industry has been good at admiring our problems and not very good at fixing them. A reinvention strategy for us means taking a hard look at how we define service and quality, and what strategies will make healthcare costs more sustainable.

That includes reinventing partnerships. I'm a believer that we're going to see the "rise of incumbents." What I mean by that is we're going to see hospitals, doctors and payers work together to reconfigure and reformulate our partnership models in a co-created way that delivers on the promise of better care at a lower cost.

Q: Do you have a target number of providers you want to have in these types of contracts one day?

CS: More than 50 percent of our contracts pay for something other than just pure volume or procedures.

However, when you look at the percentage of our reimbursements that reward population health in its true definition, better care at a lower cost, it's less than 2 percent. The right measure of success is the percentage of contracts that reward both upside and downside [risk]. We haven't set a specific target for what that should be, but we'd like that 2 percent number to increase dramatically over the course of the next five years because we believe that's what is going to drive the evolution of co-created models.

It's the basis behind some of our value discussions in our relationships with [Rochester, Minn.-based] Mayo Clinic, [Minneapolis-based] North Memorial Health and Minnesota Oncology.

Q: Can you expand on those contracts?

CS: The North Memorial and Minnesota Oncology partnerships are in strategic reinvention mode because the focus is on remodeling the relationships between payer and provider to put the customer at the center. It's not just a cost strategy. It's a service, quality and affordability strategy.

We as an organization are as uncomfortable and struggle with the need for prior authorization as much as health systems do. One of the things we're concentrating on with Minnesota Oncology and others is how to remove bureaucracy. In a model where we've aligned better care at a lower cost, where there is a great incentive to follow evidence-based medicine, the need for prior authorization significantly diminishes.

Our hope is that these partnerships allow us to reevaluate the way we've historically worked. The term we've been using consistently in our discussions with health system partners is "co-creation." We've historically gone into our corners, and it's the member or the patient that has suffered. If we were to come together and ask: "What no longer makes sense about the way we've historically worked? What do hospitals, physicians and health plans need to do differently? And how do we co-create a more optimal, efficient, less bureaucratic, value-based and customer-centric model?" [Answering those questions] is what's going to reinvent healthcare from the inside out as opposed to retail and technology companies looking at healthcare thinking, "We should reinvent healthcare from the outside in because the incumbents can't get their act together."

Q: What else are you keeping your eye on this year?

CS: 2020 is going to be increasingly the year of the customer, the year of the patient. It's easy for us to get distracted by regulatory or legislative influence or external disruption. The best organizations will realize and address three things: that healthcare isn't easy; that healthcare seems to be about sickness not health; and that healthcare is unaffordable.

Healthcare also needs to be willing to adopt strategies that other industries have used to reinvent themselves. One of the organizations we've been modeling our strategy on is Netflix. Everyone's been telling us you're an insurer, so you shouldn't be in care delivery, or you shouldn't try to cure this disease, or you shouldn't be in social determinants of health, or it's not your job to drive transparency. Just like Netflix got out of only doing DVDs and they're now in streaming and content, maybe health insurers need to learn from other industries and reinvent themselves as some of the best companies have.

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