Episode 30: How to Embrace Shifting Business Models

Consumerism continues to redraw the lines for medicine, and nowhere is it more clear than in how business models are shifting for specialty providers and primary care providers alike. Scott, Michael, and Jared discuss pros and cons of new models for medical practices and whether or not they ultimately help patients receive better care. Learn how to identify the benefits, overcome the fear of change, and assess the risks and rewards of shifting business models with this timely and relevant episode.

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Full Transcript

Announcer: It’s time to think differently about healthcare, but how do we keep up? The days of yesterday’s medicine are long gone and we’re left trying to figure out where to go from here. With all the talk about politics and technology, it can be easy to forget that healthcare is still all about humans and many of those humans have unbelievable stories to tell. Here we leave the policy debates to the other guys and focus instead on the people and ideas that are changing the way we address our health. It’s time to navigate the new landscape of healthcare together and hear some amazing stories along the way. Ready for a breath of fresh air? It’s time for your paradigm shift.

Michael: Welcome to “The Paradigm Shift of Healthcare” and thank you for listening. I’m Michael Roberts with my co-hosts Jared Johnson and Scott Zeitzer. On today’s episode, we’re diving deeper into a topic that we’ve heard mentioned over the course of several recent episodes and that’s shifting business models. So to set the stage a bit more here, we’re looking at recent episodes where we interviewed a direct primary care physician and advisor to Walmart Health and a board member of the Interventional Orthopedics Foundation, a group that continues to explore new options for orthopedic care.

In each of these cases, everybody started with a new approach to patient care. That was the core of this model, but then it had to expand outward to actually include the business model itself, to actually start shaping the practices around these ways that they’re helping out with their patients. So guys, let’s jump in and just kinda talk about these different folks that we’ve had the chance to talk to and the way that it’s transformed the entire business model over of what they’re trying to approach.

Scott: One of the things that I think I’ve been seeing as a trend that keeps coming up over the past six months has been the consumerism of healthcare. It is something that has been a major force that has required a reaction with all of healthcare in general. And a lot of the people that we talk to is consumerism, is making people think differently.

When you think a little bit about Walmart Health, it’s, “Wow, man.” There’s a lot of people that need care that are in remote areas. I mean this is where Walmart has been trying to really attack this business model. They were very successful. Forget about healthcare for a second, just in just overall business like, “Hey, we’re in a very rural area. There’s not a lot out there to support all of these people. What if we created a one-stop shopping place for everything?” Right?

That was very successful for them. They took that same kind of ideology and they said, “Well, you know, there are a lot of people clamoring for the same type of thing in healthcare. Why don’t we have a one-stop in the middle of nowhere in some rural area?” I don’t mean to knock that. Where, “Hey, I need healthcare and I don’t need just one thing. I need a wide spectrum of things.”

You look at Interventional Orthopedics Foundation, you know, that whole group is basically saying, “We need a more holistic approach before we just operate on you. Why don’t we try to come up with a way just to see if we can, you know, maybe walk before we run? Do we have to do surgery first?”

I know that the doc that talked to you guys is a very qualified orthopedic surgeon and has no problem doing orthopedic surgery, but she took a step back, you know, and she said, “Maybe this isn’t the right thing to do. Maybe we need to look at this from a bigger picture.”

And you know, the same goes in terms of the consumerism of healthcare and the direct primary care physician, which was really interesting where the doc again saw this, the primary care practitioner who said, “You know, this is crazy. How am I gonna come up with a way to make a living and take great care of my patients?” And he had to change the entire paradigm. You know, it wasn’t just simply saying, “Oh, I’m gonna take a more holistic approach.” He was basically saying like, “You know what? I’m gonna change the entire model and I’m gonna absorb the risk associated with that.”

Michael: Yeah, I think that’s something that we saw was…Scott and I, you and I were talking about this before the show, but like the whole concept of risk on the practice, risk on the doctor, like all of these groups are stepping up and taking, as they seek to take on more of the patient’s needs, thinking of this from a holistic standpoint, there is more risks that they’re taking on at the same time.

Scott: Yeah, you know, without a doubt. When you talk about orthopedic surgeons, they talk quite a bit about bundled payments. You know, basically this concept of one payment for a particular procedure. It will allow for more transparency in price, which is something that a lot of consumers of healthcare patients are clamoring for, but there is risk there. What if they do need to come back for more? What if there is an unforeseen circumstance? Forget about not doing something right, I’m not talking about a malpractice situation. That’s the furthest thing from what I’m saying.

It’s like, look, when you do surgery on somebody, it’s not so simple. There’s a lot of things that come up. It may have to do with the overall health of the patient. It may have to do with just something that is an outlier. There’s a variety of different reasons that come into play here. And that risk, to your point, Michael, is being taken up by the practice, by the surgeon.

Jared: It’s interesting. I think sometimes I’m almost like too obsessed with innovating in healthcare, right? And hopefully it’s a healthy obsession, but I do. I think about it a lot. I researched it a lot. And one thing I look at it all the time, almost on a daily basis, is why some are innovating in healthcare and why some aren’t. You know, what’s holding back some of the past and what’s leading others into the future, right? And I wonder, you know, what are those underlying conditions that are causing some to try new things? And when you talk about a new business model where this isn’t just a, “Hey, I’m gonna YouTube how to do this.” You know, like I’m doing a home repair where I can just YouTube how to do something. I’m not the world’s best handyman. I try a few things, but moderately competent. Let’s just say that. And…

Scott: I’ll put myself the incompetent, but go ahead.

Jared: There we go. There we go. Well then, we might be doing the same thing. We might be YouTubing something and seeing if it works that way, we can figure something out because somebody just walks me through it. While these shifting business models are a lot more complex than that, obviously, we’re not just able to follow some exact prescribed roadmap that somebody else has done. And I think, you know, one reason, I guess, I wonder why some are innovating and some aren’t, does it have to do with the biases that we come to the table with?

Obviously, there are those who started a practice with so one thing in mind, and then as everything has shifted around them, the last thing you wanna do is kinda let go of the reasons they started the practice, the way they set up their original business model. They don’t wanna have to change. Like we as humans don’t wanna have to change at all. And so automatically, when you open yourself up to changing your business model, even slightly, you have to overcome some initial like human bias against change. And I wonder if it’s just different degrees of being able to overcome that that leads some to innovate and some don’t.

Scott: I really think that there’s a lot to be said for where you’re going on this. Essentially, change is difficult. And what’s more difficult is when you are not looking to make the change. So when change is forced upon you, it’s even more difficult. And you know, I’ve noticed with some of the younger surgeons with whom we work, they are embracing this change a little bit more readily than some of the surgeons who are looking to retire soon. And then there’s all the people that are stuck in the middle, right? So if you are a new board-eligible ortho spine surgeon, etc., coming out of your fellowship program, you’re looking at how to start your business, what is out there now? And so it’s not that crazy for you to start thinking about these different things.

The pediatrician from Texas, Justin Smith, who basically said, “You know, I’m new at this, but doesn’t it make sense to use social media to start explaining what I’m doing, right?” And everybody else said, “You’re crazy.” But as he started proving that, and this is one thing that I’m very hopeful about, more and more people adopted it. So there are a lot of people that are “stuck in the middle” that don’t wanna change or are afraid to change.

But I am optimistic that as some of these concepts are being proven to work, a lot of doctors and surgeons continually and constantly, from an education perspective, a medical education perspective, are required, thank goodness, to continuing medical education. It’s a big reason why they go to a lot of courses and why they stay on top of their game. They have to stay on top of their game. They have to continue to do this.

I think that the business side is something that they’re gonna have to look at on a regular basis. There may even be courses about it. I don’t know if it’ll be like continuing medical education where there’s actual units being provided where you keep track. But I do think that the National Association of Spine Surgeons, the American Academy of Orthopedic Surgeons, the American Association of Orthopedic Executives, all of these major groups are gonna have to start incorporating the business side. How do we take better care of our patients while we somehow can make sure that everybody’s earning a living, right?

Michael: Absolutely. You know, there’s a couple interesting points I was thinking through. Like we had Britt Berrett on the show and he brought up the concept of how practices, some of the small practices in particular are the ones that are able to transition more easily. They can jump out and do new and innovative things without having to have the entirety of a hospital or the entirety of the healthcare system that they’re trying to, you know, switch. It’s that kinda small boat versus, you know, the big, you know, cruiseliner that’s trying to try to turn. So I think that’s an interesting thing where here are some groups that can take some risks that can make some changes to their business model without having to take on as much stress.

The other thing too, and this is something that, you know, you and I have talked about for sure, is this whole concept of, you know, intrepreneurial versus entrepreneurial. And you’ve got the groups that are out there, you know, to make a major change is gonna be a very expensive risk for them. They’re gonna have to really put a lot in. But you know, somebody like Dr. Smith, here’s somebody that’s within the, you know, “safety net” of a healthcare system. And it doesn’t have to be that the entirety of his practice turns upside down. It’s, “Hey, I’m gonna try this new idea and I think I can prove this out and make this work within this healthcare system.” So it doesn’t have to be this all or nothing, I’m going to risk everything to make this change.

But it is happening and we are seeing some of these changes happening. And I think that it really does provide some really interesting opportunities to the groups that are willing to get out there and just try these new models. But it leads to two questions for…you know, that I think of would be one, if you’re not one of these groups that’s on the front line, what can these groups learn from these new business models? You know, what can they incorporate? What can they do within the confines that they’re at?

And then the second question would be… So first is, what can we learn? And then the second is, how should these other groups in healthcare be interacting with these trailblazers, with these people that are willing to take the risks? There’s obviously like a huge difference in interacting with somebody like Dr. DeMers, that’s got her own practice, that she’s, you know, the board member of the IOF, the Interventional Orthopedics Foundation. Somebody like Dr. Farnsworth, here’s, you know, another small practice. That’s one type of interaction versus Walmart Health.  You know, which is a completely other different interaction. So first question is what can other groups learn from these groups that are out there trailblazing and the second is how do they interact with those trailblazers?

Scott: One thing that I would say that could be the starting point for both of those questions in terms of the answer would be, be open-minded. We tend to essentially pooh-pooh you know, disown these changes very quickly. And you talk about Dr. Farnsworth who essentially said, “Hey, I’m gonna change everything.” If you haven’t heard that podcast, it was really interesting. And Dr. Farnsworth is a primary care provider that basically said, “Hey, you’re gonna pay me a fee and as part of that fee you’re gonna get the following services. And I’ll accept some of the risks involved to do that.” And it seemed like a great model as a patient, as a perspective patient, I started listening to it going, “Wow, I need to find somebody like him.”

And if you are a primary care provider, I think looking at all of these different models and saying, “Hey, I get it. I’m kinda comfortable with where I am right now and I don’t wanna make a change,” but what’s working well for you? What’s not working well for you? What type of things that you thought were gonna work really well or not really, you know, that you didn’t even think about when you first started this process that you’re now thinking about?

I make this joke all the time with a lot of our customers when they call me, when they’re talking about marketing, it’s like, you know, you never wanna hear from your lawyer or your doctor the following statement, which is essentially, “Wow, I’ve never seen this before. This is interesting.”

You know, you don’t wanna hear that from your doctor. And patients wanna hear from their doctors that, “Hey, I’ve seen this. I know how to take care of this. Don’t worry.” Those same doctors want a system that just works. I mean, most doctors just wanna get up to go to work, you know? “Let me just go see my patients. Now you’re making me think about that. Oh come on.” It’s like, well take a deep breath everybody, because it is changing. I think the best piece of advice I can give everybody listening is, if you are a healthcare provider, is it is changing. It’s not a question about whether it’s changing or not.

The consumerism of healthcare is here. It is changing the way medicine is being practiced and you need to keep an open mind about how some people are attacking that issue and then you can make some better decisions and how it would work best for you.

Jared: Yeah, exactly. Exactly, Scott. The question, Michael, was, what can those other groups learn from the groups that are jumping kinda on and kind of these newer business models and kind of the earlier adopters? I think first and foremost, it’s learning how they think. Learning how they embrace change. They don’t resist it. I struggle at any point to find anything good that comes from resisting change. It’s just the world we live in.

So just knowing that, learning how an earlier adopter communicates within their practice, how do they get buy in? If they needed investors or if they just needed to convince all the founding partners in the practice, who all do they need to get buy in from to make a significant change? There’s always almost some kind of investment involved in that. So learning and understanding how they overcame those biases and their inertia, their resistance to change, I think that’s definitely a lesson that we can all learn from.

Another one is I think something that’s pretty unique in healthcare is that you think about, for the majority, of course, there’s all different types in healthcare, but for the majority, the ones who are practicing, clinicians generally tend to have a community mindset. They think open source. They wanna share. They wanna connect. That’s why there are peer review journals. If everyone just wanted to keep things to themselves and figure out all the best practices and emerging therapies for themselves, there wouldn’t be any community. There wouldn’t be any means of sharing like, “Why would I need to read a peer reviewed journal, you know, somebody else conducting a trial? I’m just gonna do it all myself.”

And it’s a very community-minded mindset. And so knowing that others want to learn and understand, I think a lot of practices might be surprised when they do start reaching out to realize how open a lot of those innovators are. Not only because…

Scott: Yeah, I agree with you, Jared. But that…

Jared: It’s not just because they want the recognition of being an innovator, it’s because they know they still don’t know 100% of the answer. And maybe by sharing, you know, the 90% that they got down the road and they’re happy with, but they…that might actually help them figure out that next 10%. And I think that’s one of those struggles to have practices understanding that nobody has the 100% playbook or roadmap written out and prescribed for them. But are they comfortable with the 90%?

Scott: You know, it’s a very solid point. All of the people that we’ve talked to that have come up with new ideas on how to deal with all this change. They’ve all been very open about talking about their successes, their failures, their goals, what they’re worried about. And as you were telling me this, Jared, as you were talking about that, I thought about if this was a particular new technique, you know, and a surgeon was going to a conference to learn about a new technique, most surgeons would go like, “Man, I hope this works. I don’t know if I really buy into this particular technique, but I wanna go hear what that person has to say about this technique and see what their results are because I don’t like where I’m at right now.”

I don’t know if I’m gonna jump on this particular technique, but it’s a very open mind about learning about new procedures, new treatment options. And I think that same type of open-mindedness about a new procedure, because medicine changes and improves every day, should be in the back of the head of all providers, about how they’re delivering healthcare, new business models. I know that a lot of small practices, when I talked to them and you bring up Walmart Health, you at first get this, “Uh, now they’re getting into it.” And it’s like, “Yeah, they are, but they’re helping a lot of people.” And when they start to see that they go, “All right, I see that. How do I work with them? How do I take advantage of them?”

You know, if you are a secondary care provider, an orthopod or etc., then how do you work with Walmart? Right? And they’ll talk to you. If you are a primary care provider, “Hey, man, you’re right. They’re in direct competition with you out there. Are you actually out there? Should you join them? Should you fight them? Should you change your model?” All these things come into play. You can’t ignore it.

Michael: I found that really interesting in the conversation that we had about Walmart in particular was Walmart’s not here to displace hospitals. It’s not here to displace like every other healthcare provider that’s out there. It’s there to fill a need and to fill a gap that we don’t have anybody in right now. You think about, there’s numerous other business entities that are trying to solve these kinds of things outside of healthcare. There’s still these gaps that where that level of care and that level of business, you know, opportunities still exist. And so it’s interesting if you have this major presence like Walmart Health, which is still very much in the early, early stages…

Scott: Yeah, there’s two places, everybody, there’s two places.

Michael: We’re not like, you know, this has invaded the entire view of America, but in either case, there are groups that are out there doing new and interesting things. That plan of how you’re gonna interact, that open-mindedness of how you’re gonna interact. Like that’s something that people have to be giving thought to because this stuff is happening, whether you agree with it or don’t. This stuff is occurring. So it’s kinda like, are you gonna let it happen to you or are you actually gonna formulate some sort of response? Are you actually going to get out there and try to create some sort of connection to these groups?

Scott: Yeah, you know, when you talk about how some doctors use social media like Dr. Smith, you don’t have to jump into the deep end. You could try some out, right? When you talk about different models that you may see that may work for one person but not for another like Jared was talking about, they’re very open minded and wanna talk to you about it. You may pick some of those things and not all of the things. You may wanna follow up a year from now to see how that’s going. Ignoring it, that’s the worst thing you can do. Having an open mind, taking a look at what’s working for them and what could potentially work for you, what’s not working for them and accordingly what may not work for you, these are very important things.

Michael: One of the things that I really liked about the conversations that we’ve got to have with Dr. DeMers and with Dr. Farnsworth, both of them talked about, “We get to spend time with our patients the way that we want to.”

Scott: That’s right.

Michael: We are reimbursed the way that we wanna be reimbursed, not by insurance, but so that’s the risk. You know, here’s this awesome thing that they’re getting, they’re getting this time with their patients the way that they want it, but it’s very much not within the framework of how America does healthcare. There’s this risk/reward. There’s this, what’s the learning capabilities? Can I find time as a practitioner, as a physician to spend more time with my patients? Maybe so, but what’s that gonna cost me to do it?

Scott: Yeah, and that’s that risk/reward conversation that is so important to consider. It’s so important to be aware of. But the reward part, the ability for both Dr. DeMers, Dr. Farnsworth and so many other doctors that we talk about, it really is about how do I take better care of my patient and spend the time that I want to take care of my patient? You know, Dr. Kirschenbaum, who came up with this complex system, he takes care of more people than the city of Cleveland, right, in one of the poorest neighborhoods there is? And he came up with a way and it really started with, how do I take better care of these people?

Dr. Greene, who figured out where to sit, how to sit, where to position himself so that he could take better care of his patients. It really does. It makes me feel better when I talk to all of these people. It’s like, how do I take better care of my patients? That’s the critical thing. It’s a great starting point. How risk averse am I? What kind of risks do I wanna take? What are my rewards with this? How do I keep an open mind knowing these things? These are critical, critical components.

Jared: So Michael, one way to answer your…the second question about how should other groups be interacting with trailblazers such as some of the ones that we’ve had on this program. Would it be fair to say if a listener reached out to you and Scott and wondered if they could be put in touch with one of our prior guests, is that out of bounds for you to…for me to speak for you and say, “You’d probably be willing to do that?”

Michael: That’d be fine for sure. Like we’d be happy to connect people where we can, it’s according to their availability. I think the only caveat there.

Scott: Yeah, I think so. I really do think that most of the people that with whom we’ve spoken are…they’re in some ways, evangelizers in some place.

Michael: Advocates for what they’ve done.

Scott: Yeah, they really are. And I think that they’d be happy to talk to you as long as they have enough time. Communicate with us via email, LinkedIn, etc., and we could try to connect people. I think having a better conversation, an open conversation about what’s working, what’s not working and how to best surf this major wave that’s coming makes sense for everyone.

Jared: Absolutely.

Michael: And this is fascinating. What I love about this show is I know that we haven’t tapped out of all of the innovators that are out there in healthcare, but…

Scott: No, not even close.

Michael: So there’s a lot more folks that we will be talking to about these different, these changing business models. It’s only gonna happen faster. It’s not slowing down. It’s not stopping. This is something that whether you jump on a particular change that we’ve mentioned here or not, being ready to accommodate it, being ready to deal with it, this is gonna be a critical part of everybody’s practice. So we will continue bringing these kinds of conversations to the show and look forward to more episodes that we can do. So thank you so much for listening.

Announcer: Thanks again for tuning in to the “Paradigm Shift of Healthcare.” This program is brought to you by P3 Inbound: Marketing for Ortho, Spine, and Neuro Practices. Subscribe on iTunes, Google Play, or anywhere you listen to podcasts.