Interview with Dr. John Allen (Michigan): “[Expect] pretty stiff headwinds for many years to come”

Interview with Dr. John Allen (Michigan): “[Expect] pretty stiff headwinds for many years to come”

John Allen, M.D is the Chief Clinical Officer of the University of Michigan Medical Group and is also on the board of Allina Health. In 2019, AGA presented its highest honor, the Julius Friedenwald Medal for his contributions to gastroenterology. Previously, he was the chief of Digestive Diseases at Yale and helped build Minnesota Gastroenterology (now MNGI), one of the largest GI practices in the country.
This interview is so insightful that it’ll help you make several business and personal decisions for the long haul. Here’s specifically what you’ll take away:
1)  What does it take to lead calmly and steadily through a crisis? Especially a large health system like Michigan
2)  Planning for another pandemic (or another wave) should it occur
3)  Fundamental shifts in GI and US healthcare economics that we are not yet recognizing
4)  Weighing pros and cons of private equity
5)  Future of gastroenterology – technology, consolidation, ethics and morals
Watch this thought-provoking interview (45+min).
Do not miss this one – watch it end to end.
◘  Dr. Allen’s professional journey so far
◘  The complexity of handling COVID in a large health system: “It was brutal”
◘ “We were mandated to reduce costs by $400M (laying off over 500 people)”
◘  As a leader, how to navigate emotions and views calmly?
“This is a time to come together and show the most empathy we can”
“This is the chronic phase. We’ll have to adapt our care to exist with this monster virus”
◘  Are you planning for another pandemic?
◘  How do you disseminate learnings from the large system level to smaller practices?
“When you have high fixed costs, it’s like 80% of your home mortgaged”
“We are going to see Medicaid enrollees go up from 70 million to 80 million”
◘  “At Michigan, every 1% switch from commercial to government payors is $8 million less in revenue for the same service. Multiply that with what’s coming up with the payor-mix shift.”
◘  “[Expect] pretty stiff headwinds for many years to come”
◘  What’s the future of gastroenterology?
◘  Risks of private equity
◘  How do you put checks and balances in a way that doesn’t hurt patient care?
“Academic centers that don’t morph into a true integrated healthcare systems are going to have a tough time”
◘  “You aren’t going to be able to fight Humanas, CVSes, Aetnas, Optums in primary care”
◘  How do you re-imagine healthcare truly into a force for good? (“inequities are intolerable, immoral, and unethical”)
◘  The future of GI has to reflect that (“We have to re-establish our credentials as physicians”)
◘  “At some point, we have to level the playing field. We have an obligation to take care of people”
“It’s a time of reflection, a pandemic that hits like this really brings out how weak our safety net in this country was. A lot of people are interested in changing that”


The Transcribed Interview:
Praveen Suthrum: Dr. John Allen, I welcome you to our conversation. Thank you so much for joining me today.
Dr. John Allen: Well, thank you very much. I appreciate it.
Praveen Suthrum: So, I want to begin by asking you Dr. Allen, on what your role entails in a large system as Michigan Medicine?
Dr. John Allen: Let me give a little background on my journey first. I’m a trained gastroenterologist obviously and I think I’ve worked in almost every practice setting there is from the VA to a hospital setting to a small practice to a mega practice which was Minnesota Gastroenterology and now to academic healthcare systems first at Yale as Clinical Chief there and now at Michigan first as Clinical Chief of gastroenterology and now as Chief Clinical Officer and I also sit on the board of directors and chair the quality and population health committee for Allina Health which is a large integrated healthcare system in Minnesota. I’ve gained a lot of perspective on academics non-academics and other aspects of GI practice which has been really quite interesting. And so now I go back and forth between Michigan and Allina and can compare a non-academic, consumer-oriented healthcare system with an academic system like Michigan. It’s fascinating.
What I actually do at Michigan. So, I’m the Chief Clinical Officer of the University of Michigan medical group. And so that entails all of the faculty and all of the professionals that basically bill. All of those revenues come up through the UMMG – the medical group. We also manage the facilities for all ambulatory services. We have 40 different clinical sites. We have radiology, pathology, laboratory services, outpatient ORs. We have about 23 ambulatory ORs and an equal number of ambulatory endoscopy centers. And all those roll up to the executive leadership, which is the person I report to Dr. Mulholland who was the ex-chief of surgery and he’s the executive director and I’m the Chief Clinical Officer. I work directly with the Chief Operating Officer and Chief Nursing Officer. So, we basically manage the operations of the ambulatory part of Michigan. What’s interesting is that Michigan Medicine and Allina Health are about the same size. About 4.3 to 4.4 billion dollars in annual revenue. And so, again it’s really quite interesting to go back and forth between those two systems.
Praveen Suthrum: So, on a day-to-day basis what does your role look like is it more clinical, or is it more on the business side of medicine?
Dr. John Allen: No it’s completely administration now. I stopped scoping last September, a year ago, and have been staffing fellows clinics and things like that. But it’s really completely administration. So, I’ve switched into the administrative role completely. And on a day-to-day basis like for example this week we’re figuring out where, how often, and how to give flu vaccines to the 230,000 patients that are within our primary care catchment. And how to deliver those, and safely within COVID and social distancing and things like that. So, the operations of the clinics are our main focus. And I directly oversee 22 physician leaders and then they oversee another probably 60 physician leaders paired with administrative and nursing leaders as well. So, it’s basically that type of day-to-day activity.
Praveen Suthrum: Which world is more fun? The clinical side or the administrative side of medicine?
Dr. John Allen: They’re both fun. I practiced for 40 years and at that point, I felt I had completed that phase of my life and I was fine getting out of direct clinical care. When I was 50 actually I went back and got my MBA. Got into the business side of medicine and health economics and payors and negotiation and organization. And I find that just fascinating and in some ways, you can really make an impact on many people. When you’re providing clinical care it’s really one on one whereas if you’re really doing an administration coming from a patient-centric viewpoint you can really make a difference in terms of how we deliver care in a lot of people’s lives.
Praveen Suthrum:  Was that transition easy for you moving over from the clinical side to the administrative side?
Dr. John Allen: Well it was slow and iterative. It was not sudden. I started out at Minnesota Gastroenterology in the mid-90s and got into a leadership position there in the late 90s and began to take on more of an administrative role and it was a learning process. This is not easy and it’s not something you can learn from a book. It’s learning by experience and sitting through innumerable meetings and having to deal with all the different aspects of practice, in different practice settings. So, it’s a slow process. But, you know, I’m now toward the end of my career and you know I’ve gained a lot of knowledge there and so it’s a lot easier to make those kinds of system connections and I find that very interesting. So, it was a long process, a long learning process basically.
Praveen Suthrum: Even though we are several months into COVID now you know, I want to revisit the complexity of handling COVID you know in a system like Michigan. There were several months that you spent in handling it doing different things as its leader. So, I want to ask you how was it? How did you go about you and your team how did you go about handling the situation you know in the health system?
Dr. John Allen: Well, I mean frankly it was brutal. It’s brutal for the entire world it’s brutal for Americans and it’s brutal for healthcare workers. As you know January 20th was the first diagnosis of COVID in the United States in Seattle. In early March basically, we began to shut down elected procedures. And so, we had to shut down an ambulatory operation that sees two and a half million people a year (visits a year) within literally 72 to 96 hours. So, we had to consolidate clinics, we had to figure out what patients could have deferred care, what patients needed to come in still for an emergency, how to handle them. Everybody was short of personal protective equipment. So, it was a disaster frankly for a while. But the way we handled it in Michigan was very rapidly ramp up our infrastructure which had been there before. So, we have tiered huddles that started the unit and go all the way up to the health system in the first two hours of every day. So, we developed a command center that handled every aspect of the healthcare system. Met twice a day with the top-most leaders and the frontline workers as well. And really managed it that way in terms of communication.
We instantly converted many of the rooms in the hospital into a respiratory isolation floor with negative pressure. We got to the point where we could turn a hospital room into a negative pressure room in four hours. And we expanded in anticipation of hospitalizations, intensive care units, ventilators, and ECMO. So, we had to create an admitting officer the day that had complete control over transfers, and admissions. He was a transplant surgeon who was just superb. We identified two ex-military physicians to develop plans for a field hospital. So, we were ready to open up a 500-bed field hospital in the Michigan indoor tennis courts basically. So, we had all of these things and it really showed just the phenomenal preparation for the unknown that we had here. And I’m sure other systems had the same thing. But it was just incredible, the infrastructure that we could and the expertise that we could rely on to ramp up that quickly.
So, we basically ramped down and over the first three and a half months we obviously closed down elective procedures and ended up going from a projected operating margin of 175 million dollars per year to a little bit over 300 million dollar loss just in that period of time. And interestingly, the ramping back up has been even more difficult with the unknowns that we’re dealing with, and with all the different clinical service lines that had to go from a consolidated delivery to expanded delivery.
So, it’s just been really challenging. The second or third week of the ramp down the regents of the university and the financial people at the university level basically mandated that we reduce costs on a long-term basis by 400 million dollars. Reflecting an anticipated 300 million dollar loss plus the 100 million dollars that we send to the medical school each year we had to buffer that. Reduction in overhead basically. Which of course means personnel. So, we had to go through a very complex system of reduction in force and ended up laying off over 500 people in selected areas much less in direct patient care and more in support and administration. That on top of the COVID itself and what we’re having to do in terms of our own family was just emotionally brutal.
Praveen Suthrum: A large system like Michigan is like a mini-country. Wide variety of opinions, a lot of diversity, and many emotions that you have to navigate. Not just yours or your immediate team, but of staff, of patients at different levels. How did you go about handling all that as a leader?
Dr. John Allen: Well as a leader you don’t do it by yourself obviously. You have a lot of people around. Before 2019 we did not have the structured leadership, the infrastructure that we have now. It was very thin. So, Dr. Mulholland and I and our administrative and nursing partners have basically hired an infrastructure for leadership, tiered leadership over the last year and a half and that had nothing to do with COVID but had we not had that it would have been a disaster. So, from our standpoint as the top leadership, we have to convey a sense of calm and planning to that next layer of leadership. And also teach them how to convey that to the next layer of leadership down and then the frontline staff. But the anxiety about catching COVID, the anxiety about what to do with family, and now with schools being virtual and how do you handle home-care has been very tough.
But as a leader you just you have to not react. You have to not react from an emotional standpoint and really try to empathize and understand what other people are going through when you get those brutal emails in the middle of the night, and you basically have to learn to live with that, step back, take a couple of deep breaths, and then engage them as best you can.
We’ve been going around to the departments and answering questions from faculty, and then from staff that are you know, really quite angry and upset. Sometimes there are no answers. I mean we’re having a terrible problem hiring at the medical assistant level or the call center level for a lot of different reasons, it’s a low-paying job, and it’s very difficult to hire. So, our call centers right now are really in difficult shape. And we get emails daily about you know what are you doing about this and you just really have to present the calmest face that you can and keep trying to think through this and anticipate what’s needed.
Praveen Suthrum: At an individual level what steps do you take on a daily basis or what your routine looks like that helps you present yourself calmly as a leader to your staff and patients and the wider community?
Dr. John Allen:  Well, you have to realize that you’re on 24/7. You just cannot let down. So, the first thing is those of us in administration or in non-clinical areas, the President of the university basically said do not come on campus and don’t come on campus until the end of the year. So, I’m actually in Minnesota and I’m managing Michigan. Minnesota is my home I’ve been commuting back and forth for many years, but you know I came home to Minnesota and it’s basically eight-plus hours of zoom conferencing and managing. But it’s really a day-to-day interaction, making sure that you’re touching base with the correct people, reassuring them that they have your back or you have their back, and going on like that. So, it’s completely changed how we manage them. Most of the top leaders that again don’t have day-to-day staff interactions or face-to-face interactions are working remotely and that’s really changed things a lot. We expect to continue that well into the first quarter of the next year.
From myself personally, daily exercise, making sure I get some sleep, taking care of myself and family my kids are grown so, it’s my wife and our three dogs. Basically, you know focusing on what we need is a foundation and then again being able to project that to other people and trying to help them. This is a time when we have to come together and show the most empathy we can and a giving spirit and the more you can do that, really the better it feels internally.
Praveen Suthrum: Thank you for sharing that. I want to go back to a point that you made earlier about last week or this week you know where you are discussing internally about how do you administer 200,000 plus flu vaccines across the board in the system. I’m interested to know what kind of tools do you use? How do you go about making these decisions? How do you ensure that it gets done? What kind of a rhythm or project planning do you have in place that you see it rolls out in the coming weeks and months?
Dr. John Allen: We have a really incredible Chief Operating Officer and Chief Nursing Officer. We have project managers assigned specifically to this. Flu is very interesting. We manage the same problems every year. If you look at flu vaccinations from a straight revenue standpoint it’s really a money-losing operation. We get about three dollars in net revenue for administering a flu vaccine but that doesn’t really count all the back stuff that you have to do to prepare it. So, it’s really you know not something that you make revenue off of. However, it is an incredible emotional tie for primary care and their patients they really want to provide this to their patients. So, we have tried to say you know utilize Walgreens, CVS, and retail pharmacies to administer flu. And we have gotten pushback – they don’t administer flu for kids under eight for example so our pediatricians absolutely insist on providing that. So, then what you say is how do you do that and socially distance.
You can’t have a lot of people coming in for just flu shots to our big clinics because that literally takes the place of somebody that’s coming in for you know, care of their diabetes or hypertension because of social distancing, because of PPE restrictions. So, then we’ve popped up tents which we of course did for COVID but you know come November or October that’s not a viable option in Michigan. So, we’re now scrambling to find other areas where we can administer flu vaccines and testing in an indoor basis. And you’d be surprised at the pushback from a lot of landlords they simply don’t want that there. So, it’s been a real challenge we have people scanning the facilities that are available in our county and state to try to identify this. But it’s a process of identifying facilities, identifying staff, and identifying the cadence of bringing people in the midst of COVID that has been challenging but really incredibly interesting. And we will succeed that’s the other thing we will make it happen and I’m quite confident with that.
Praveen Suthrum: In which wave of COVID are we in? You know are we still in the first wave? Have we rolled into the second or you know is this an ongoing thing? The reason I’m asking is how do you account for it internally, when you have internal planning meetings saying are you expecting things to return? I’m curious to know about your planning process actually.
Dr. John Allen:  Sure yeah it’s really fascinating. Well first of all the wave that we’re in now whether it’s the first or second wave or whatever this is the chronic phase. This is the wave where we have to adapt our lives and adapt our care to exist with this monster virus for quite some time. Whether we get a vaccine in the next month or two, there won’t be mass vaccinations, and there won’t be enough immunity within the community to really dampen this down for a long time. I mean we’re really anticipating a year to 18 months. That being said when COVID first hit, nobody knew what to do. We didn’t quite know what personal protective equipment we needed, we didn’t have enough supplies, we didn’t really know about the aerosol transmission, and the importance of crowds and masking and all of that.
So, that initial wave hit us very hard. A lot of times it hit vulnerable people like nursing homes or people in some sort of community living. Those are vulnerable people with multiple co-morbidities and they got very sick. So, they had to be hospitalized, they had to have ICU beds, they had to have ventilators, a few had to have ECMO. And the death rate was just incredible. Now the increase in COVID is in people that don’t necessarily need those you know end-stage resources. It’s more in young people who don’t get quite as sick they obviously do get sick but the demand for beds, ICUs, and ventilators is not as much.
That being said we’ve got a four-tier program depending on the wave of COVID. You get about a two-week notice when COVID infection starts and when the need for hospitalizations occur. So, we are ready at a moment’s notice to reconvert rooms that we sent back to general medicine and surgery. We have everything ready depending on what COVID is in the community. We can predict incredibly accurately how many beds are needed what ICU beds are needed. So, we’re ready for that. And it turns out that there’s a big difference between summer and winter because negative pressure rooms require incredible demand on your HVAC system. So, in summer where you’re running air conditioning and you add negative pressure rooms, you are limited with the number that you can do because of your HVAC requirements. In winter that’s a little bit different. So, we actually have seasonally targeted plans for expansion to 15 beds to 30 beds to 60 beds. And of course, we always have the field hospital in our back pocket. I don’t see that happening. And in fact, we’re learning to live with this, and we do not anticipate ramping down ambulatory care at all. No matter what happens in the community. And I think we’ll see isolated hot spots that come up you know, around parties, or sororities or things like that but I don’t think we’re going to see the mass that we did originally frankly. But we’re not going to ramp down ambulatory short of an executive order from the governor.
Praveen Suthrum: In your internal discussions are you planning for another pandemic? You know not COVID but in the future, in case something else strikes?
Dr. John Allen:  Some of it depends on the infection routes for example Ebola is quite different from an aerosolized route like Influenza and COVID. But we went through Ebola planning and we did all the things necessary in case Ebola hit. We went through for MERS and SARS and things like that. And obviously, we did this through COVID. We’ve documented everything, we have a very specific playbook that we could activate really on a dime. So, whatever hits and whatever in infection source that pandemic rests on, we would be ready for it because we’ve done this kind of planning.
Praveen Suthrum: Now you’ve held, and continued to hold leadership roles in societies and which are at the national level. What kind of learning can you take from what you already do at the large health systems and enable that and what kind of learning can be disseminated to the smaller practices you know that are spread across the country who may not have the kind of resources that you may have at Michigan?
Dr. John Allen:  It’s a really interesting question and it particularly hits gastroenterology and some it relates to the history of gastroenterology. Traditionally in the late 70s and early 80s, you had small practices or solo practices where a gastroenterologist would have a clinic and then go to the hospital to use their equipment to scope. So, those practices had a very low fixed overhead, right? They’re asset-based, that they needed to support was relatively small. In the mid-early 80s, leaders like Gene Overholt and Cecil Chally, and Mike Weinstein realized that we could develop ambulatory endoscopy centers. Then it became infusion centers, and anesthesia, and radiology. And we were able to do that to provide a much better patient experience, much cheaper. But the downside of that is it put a tremendously high fixed cost within practices. Obviously, you know this you’re a Ross School of Business graduate. So, when you have those high fixed costs it’s like having a mortgage, where 80 percent of your home is mortgaged. If you have a down-turning monthly cash flow it can be annihilating and that’s what’s happened during COVID.
Practices depend on monthly cash flow from colonoscopy and seeing patients and when that’s cut off, you have to turn around and say ‘where’s my capital coming from?’ and there are only a limited number of capital sources – you can borrow from the bank, you can connect with a health system that has deep pockets, you can connect with a private equity group, or you can connect with a strategic partner like Physicians Endoscopy for example or Optum. You need somebody that can carry cash year to year which practices don’t do because of tax consequences. So, practices now are in the position where their cash flow is devastated and they need capital infusion. And so we’re seeing a tremendous shift in practices with consolidation, with sales to private equity, with sales to health systems all you know all based on the fact that the monthly cash flow due to COVID has stopped and the fact that the median age of gastroenterologists like a lot of other specialists is pretty high, it’s in the high 50s. So, there are a lot of people that are approaching retirement and saying “I’m out this is too much.” So, those things are going to really change the face of GI coming up.
And that’s not even thinking about the economic impact on the United States. We’re going to see Medicaid rolls go from about 70 million to over 80 million which is going to stress state budgets like we have not seen ever. We’re going to have a lot of people out of work and of course, half the country gets insurance by their employer. So, even if the economy recovers fairly well on a day-to-day basis or the equity markets recover that infrastructure is going to drive patients into either government payors or being uninsured. And that for a health system or practice is a real problem that we’re not going to see resolution for two or three years. At Michigan, every one percent switch from commercial to government payors is eight million dollars less in revenue for doing the same service. So, you multiply that times what’s coming up in terms of the payor mix shift that’s going to be really difficult to handle frankly.
Praveen Suthrum: Yeah it’s going to be a very complicated and interesting problem to solve. You know one thing that I wonder about you know, the big entities and the small entities not just in medicine but you know, we saw through COVID that large companies which we would have never thought you know would file for Chapter 11 file like Hertz or J. C. Penney or and there was an ophthalmology private equity platform that also filed for Chapter 11. So, there must be some determining factor here that might drive this. Though, I agree with what you’re saying that the smaller practices for them to handle the impact is more difficult than for larger entities which may have a cash position like you know they may have money in the bank more than smaller practices do. But I’m wondering if you know even a large entity is safe anymore and I’m talking purely from an economic standpoint.
Dr. John Allen: I don’t think it is without changing their business practice and I’m particularly worried about academic centers that have very high fixed overhead and are much less efficient than non-academic health systems for example. It is very difficult to turn the ship in a big academic center like this. You know, typically health systems carry anywhere from 230 to 290 days cash on hand that’s their bank account, right? Well, that has really diminished. If you look at the annual revenue for an organization like ours it’s about 11 million dollars so everyday cash on hand times 11 million dollars is what we have in the piggy bank.
And most of that is in liquid money but a lot of the endowments, a lot of the cash that we have, is in illiquid funds or it’s in dedicated funds for professorships or things like that. So, again from a cash flow problem, it becomes really acute. So, we’ve really had to scale back. We’ve canceled planned facility expansion of two very big multi-specialty clinics, we’ve delayed a planned new hospital build and those all have ramifications. We have you know, canceled the retirement match for all the clinical faculty for example. The leadership has taken pay cuts and I mean those are temporary things to help in cash flow but they’re not sustainable. And I still don’t think that we have fully appreciated the change in economics for the United States in healthcare because of things that I talked about a few moments ago so this is going to be pretty stiff headwinds for many years to come
Praveen Suthrum: So, that naturally takes us to my next question which is on the future of gastroenterology and healthcare in general actually. And I want to thank you first for giving a testimonial for my book Scope Forward which is on the future of GI. My question is you know what aspects of the book resonated you know, with you like what do you think is likely to happen and what then? And in your own view what is the future of gastroenterology?
Dr. John Allen: So, I appreciate both of your books actually and the Scope Forward book was very good and the things that resonated with me is your continued warning about being dependent on a single service line which is screening colonoscopy and surveillance colonoscopy. And you know we’re seeing the results of that in COVID as well, right? You perceived very well the increased dependence on technology at many levels. Whether it’s remote patient monitoring, artificial intelligence, and screening colonoscopy, all the different types of programs like SonarMD to monitor inflammatory bowel disease patients. There will be more and more of that. And we’re going to separate and I think you were right on that. And the danger of that is that those all cost practices. And the ability to handle what’s going to become routine gastroenterology or cardiology or neurology care it’s going to be more and more expensive and regulations as well.
Those expenses have reached a point in a small practice or medium-sized practices for sure that are really tough. If you’re a very small practice in a rural community, for example, I actually think you’re in pretty good shape because your overhead is low and you have a patient base that is dedicated to you and the ability to hand to deliver really high-quality GI care. I think we’ll continue with that model. We’re seeing consolidation and it’s sort of that middle spot where you have a mid-sized practice that is going to be really stressed to have the capital to handle these innovations. And I think you hit that really well in your book. You also have a lot of emphasis on private equity, both in your first book and some in this book as well. And I’d just like to speak a moment if you wouldn’t mind about some of the risks that I see in private equity.
The basic business model of private equity is to do a leveraged buyout where you basically accumulate whatever you’re accumulating, whether it’s a manufacturing plant or a practice. Strip out costs as best you can consolidate to achieve some sort of economies of scale but you have to hit about a 20 percent annual return and correct me if I’m wrong but you know if you’re an investor in a private equity company you expect that it’s high risk but otherwise you just put your com your money in mutual funds. You expect that kind of annual return. And private equity goes in with the cash influx at first, which is good if you’re a more senior partner and you know are thinking about retiring in the next few years. But it’s really that second bite when the private equity sells to a bigger private equity where the second cash infusion comes in, where you get that much of a return. Because in between that you’re basically discounting your salary because you’re investing in the private equity whether it’s a management company or whatever it is. So, it’s a little bit tough, and private equity does not come in to really improve healthcare as their primary goal. You know, they are very much in it for profit.
A side effect can be better patient care, accumulation of big data, things like negotiating power. But I’m skeptical that this is going to really play out and maybe a repeat of the 1990s where you know we saw those kind of management companies come and then get really stressed in terms of assets down the road. That’s different than hooking up with a company whose business is delivering care and again I go back to Physicians Endoscopy and Capital Digestive as an example. That’s a long-term strategic play they’re not bound by a three to five-year window. So, I think practices have to be very careful about who they’re going to give their autonomy and particularly their financial autonomy to.
Praveen Suthrum: So, how does one balance whether at an individual level we agree or disagree with private equity but this is a wave and it seems to be happening. Regardless of what a practice might opine or feel, right? How do you make it better if it is going to happen anyways you know how do you put you know checks and balances in place in such a way that it doesn’t hurt patient care?
Dr. John Allen: I think there are ways. And first of all, as you know better than I there are probably 200 private equity companies that are targeting medical practices GI things like that and there are a lot of differences between those companies. If you have a company that’s going in with a really financial dent that’s just absolutely brutal I would be a little bit hesitant. But there are some really good private equity companies that are coming in and taking practices that have multiple EMRs for example and combining them into one and then planning to use those big data to give real patient outcomes. And you can almost accumulate enough patients to target a big payor and say “We will look at your patients and show that we can deliver better care.” When you go in with that dent whether it’s private equity or a strategic partner I think managing populations again whether it’s gastroenterology, or cardiology or what can improve care a lot. There are a lot of inefficiencies and those inefficiencies are going to be definitely stripped out.
Praveen Suthrum: What kind of advice do you have for an early stage gastroenterologist who might be watching this? How should they plan their career over the next five-ten years?
Dr. John Allen: Well, I think there’s a great opportunity I think you have to be very careful about where you end up being employed whether it’s a health system or a practice. It goes back to the very basics. If the primary purpose of that practice or health system is to deliver good patient care then that’s going to come out in your interviews, it’s going to come out and how the contracts are structured, it’s going to come out in talking with the partners of the health system. You’re going to be able to tell the difference between that and a practice or health system that is financially driven. Obviously, I would choose the former. I do think that the consolidation trend will definitely continue I think that going into a small practice right now except in some of those niche areas that I mentioned is very difficult and challenging. But you want a practice that is well run, that is patient-focused, and also is embracing the new technologies that we have – AI, remote patient monitoring, basically using technology to get rid of all of the routine stuff and strip out costs from what we do. Whether it’s colonoscopy preps delivered by bots or anything like that. You have to be thinking along those lines to really be successful.
I do think you have to have a more consolidated large practice whether it’s multi-state or single state depends on the region. You also have to have a capital partner and professional management that is really good and can anticipate changes. But I do see the practice of gastroenterology really consolidating like that. I think in the academic realm, it’s going to be very tough. And academic centers that don’t morph into a true integrated healthcare system are going to have a very tough time competing with the integrated healthcare systems that are out there. And there are some really good ones. You cannot live on high tertiary quaternary care alone you have to be able to deliver that secondary care and primary care. And then also, you know, offloading the most routine care. I think at the primary care level, a health system that can partner with some of the retail pharmacies or some of the, now technology companies that are coming into you know, the lowest level routine care. I think you’ve got to partner with them. We’re not going to be able to fight you know the Humanas, the CVSs the Aetnas the Optums in terms of routine primary care so let’s partner with them and use that as a win-win and really deliver the care that we need to.
Praveen Suthrum: My final question Dr. Allen, I want to go back to this whole COVID period right. Like so to a lot of people especially in healthcare it’s also been a time for reflection. And people have reflected on their own careers at an individual level but also overall at a larger healthcare industry or at a systemic level. Now if you go back to our healthcare system, whichever part of the world, to a pre-COVID world there’s been increasing patient and physician distrust like you know with each other, then there is this whole business of healthcare aspect. The fact that there have been several articles about the evils of the corporatization of medicine and so on. Now this reflective period of this lockdown, COVID, and everything else surrounding it presents also an opportunity to re-imagine a newer healthcare system you know, that’s more geared toward doing good and being really a force for good for patient care. So, I want to ask you if you were to reflect on something like that. What would a healthcare system look like in your view?
Dr. John Allen: Well, the first thing is we have to acknowledge that this is not only COVID but the racial and economic inequities in this country are I think, simply intolerable, immoral, and unethical. When George Floyd was murdered in Minneapolis I was sitting about nine miles from that corner. And what happened in Minneapolis and now is spread across the country, has demonstrated that we still have some really tough problems to solve. With COVID coming along no matter what your politics, all you have to do is look at the statistics of who is most affected by this and it is people that have that are suffering from health disparities. So, the future in terms of healthcare or gastroenterology really has to reflect that. We can’t be in this for profit. We have to re-establish our credentials as the physician who not only says “do no harm” but feels a responsibility for the individual patient for our community and for society at large. And I think that means moving toward an infrastructure where we have healthcare for everybody however that’s delivered remains to be seen.
But to have uninsured Americans or to have Americans that simply cannot access healthcare at a fundamental level again I just think is an immoral place for this country to be. And I think we have to step up with that and decide how we want to use our resources. It gets into the whole wealth redistribution it gets into the entire economy and tax situation but at some point, we have to level the playing field and I think we have an obligation to take care of people. So, we go on from this I think really reflecting on what our individual and what our society responsibilities are is going to be very important.
Praveen Suthrum: You know we know being inside the system that preventative care will probably result in fewer procedures but then the system gets compensated by more procedures because that’s what we’ve built so far. And we keep talking about you know value-based care, but you know the evolution of that is very slow in what whatever we can see. So, how does one balance that? Because if a hospital does not do procedures then it can’t survive at you know, at an economic level? But if it goes and invests in say getting people in shape for example, right like you know, reversing their conditions that’s probably the right thing to do because then they don’t end up you know needing the procedures but then if they end up doing who pays for that? And how does one balance in both these worlds?
Dr. John Allen: Well, you’re right we’re paid a lot for the complications that we cause. I mean that’s basically what you’re saying and for illness. I do see a movement. So, for example, a line of health just signed a six-year contract with Blue Cross Blue Shield of Minnesota that switches to a value-based system with a basically a ten percent, two-sided risk in terms of reimbursement. But coming with a partnership around the reduction in pre-authorization and administrative costs, and opening up of data systems. So, Michigan is doing a similar program not quite that robust with Blue Cross Blue Shield of Michigan. So, I think both the payors and health systems are realizing that we have to put real money on the table to partner and not be at odds with each other. So, I see that movement actually happening faster. And that will have some tremendous benefits. I think there’s going to have to be an investment in health disparities because that’s where a lot of these costs come from and that’s going to have to come at either a state or federal level. We have to admit that there is a role for both the state and federal governments in supporting those kinds of health disparities.
You’re talking really hard economics we can get into a discussion about wealth consolidation in this country and what it means, but I think this is a time of reflection and a pandemic that hits like this really brings out how weak our safety net in this country was. I think there are a lot of people that are interested in changing that. So, we’ll see what happens but I mean there is no way I mean, I remember hearing Uwe Reinhardt many years ago saying, “Look however it works people that are earning more than 75,000 dollars have to shift some of their wealth to those that are earning less than 75,000 dollars to provide healthcare there’s just no other way to do it.” There are some hard questions that we have simply kicked down the road that I don’t think we can do that anymore. I know that’s not a great answer to your question but it’s you know it’s the best that I can do.
Praveen Suthrum: I don’t think I was even looking for an answer because there is really no straight answer here. Just a reflection which I was seeking and you know which you gave and I really appreciate that. Dr. Allen, thank you so much for sharing all your perspective. It was very insightful. And yeah thank you also for being so candid with everything. I really appreciate that. Was there anything else that you wish to share before we close?
Dr. John Allen: No I don’t think so I think these forums that you put together are really interesting and keep doing them basically. I really appreciate the opportunity to talk with you and to reflect on this and to really think about the future.
Praveen Suthrum: Thank you.

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.

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