The merger of Pittsburgh’s West Penn Allegheny Health System (WPAHS) and insurance giant Highmark is a sign of the times and the start of a trend, says Tony G. Farah, MD, chief medical officer (CMO) of Allegheny Health Network (AHN), now an integrated healthcare delivery and finance system.
After more than two decades as a WPAHS interventional cardiologist, Farah transitioned to the hospital’s executive suite. As CMO, he served on the front lines through 18 months of highly publicized negotiations not just between WPAHS and Highmark but also with Pennsylvania’s Department of Insurance and with Congress. When AHN was at last unveiled in 2013, he said it was more than a merger. More important, Farah told Cardiovascular Business, it’s a model for an integrated healthcare delivery and finance system where clinicians and executives work together.
Do you see the WPAHS–Highmark merger as a sign of the times in healthcare?
Definitely, although all healthcare is local. We hear the whole industry is watching Highmark/AHN, and you can already see evidence of pieces of what we’ve done here taking place in different ways and forms throughout the United States. The fact is, we are rapidly moving toward a retail market, where patients are going to demand more transparency, quality, outcomes, pricing, … in other words, greater value.
So the merger was necessary?
It was necessary because we had a burning platform in western Pennsylvania. The rate of growth in healthcare is unsustainable—18 percent of the [gross domestic product] and growing. CMS [the Centers for Medicare & Medicaid Services] has been instructed to transition 80 percent of payments toward a value-based model in three years. Cardiologists are going to find themselves in an environment where we won’t get paid every time we see a patient or perform a procedure. None of us—physicians, hospitals or payers—can solve this alone. Bringing all the parties together into one integrated delivery and finance system is the key to success. But it hasn’t been easy here, and it won’t be easy in other places.
Has the merger directly affected AHN clinicians?
Because we’re now in an integrated delivery/finance system, we’re able to bring clinicians, actuaries and healthcare executives together to look at the total cost of taking care of patients with different disease states. The idea is to get clinicians’ input on the optimal way of taking care of patients and then back into how we can effectively pay for that care. The question really is how we best spend the premium dollar. Knowing that lets our clinicians truly invest all of their time in what they do best—take care of patients. It’s refreshing and a relief to pour yourself into how we best take care of patients. Bridging the gap between the payer and provider cultures is an inevitable outcome if we want to solve the healthcare crisis.
What is your primary goal at AHN?
We want to create better value for our patients by continuing to improve outcomes and appropriately reducing clinical variation in care. We’re creating different payment models that reimburse physicians based on value—meaning quality, outcomes and how patients perceive their experience. The idea is to slowly transition doctors from today’s pure fee-for-service environment to one is that is truly value based. This should result in lower cost of care while incentivizing physicians to focus on what they do best.
To what extent is this transition happening in other health systems?
Some parts of the country are further ahead on the value journey than others. Some have been forced to go on the journey. Others have been transformative in their thinking and have taken on the challenge. We’re in a chaotic environment because most healthcare leaders understand that we need to transition to a value-based environment, but the fact is most reimbursement in the U.S. is still based on volume. I firmly believe that the successful organizations will be the ones that place quality, safety and value at the core of the mission and then allow that mission to drive the finances.
What did you learn from being CMO that you’d share with fellow cardiologists?
What has been missing is time for busy cardiologists to step back and recognize that the entire healthcare arena is going to change rapidly in the next few years. Cardiologists need to make a point of taking time to learn as much as they can about what’s going on in healthcare because, whether we like it or not, we’re going to be faced