Episode #127: Creating ‘competition-for-value’ in employer-based healthcare and breaking the tyranny of fee-for-service payment, with Francois de Brantes, SVP at Signify Health

Friends,

I’ve heard back from a few of you recently about some of the episodes we’ve had around employer health insurance & benefits. In fact, I was just speaking this past week with a physician colleague who listened to episode #125 with David Contorno, and he literally said that it blew his mind.  Well, I think you’ll find this episode illuminating and mind-blowing.

The system of employee health benefits is one of the most opaque and confusing legacy constructs we have in healthcare. Payment, financial incentives and business models are not aligned with the best interests of healthcare consumers. This is an incredibly timely and relevant topic.  In fact, I just read a piece on ACO’s in Health Affairs (Jan 24, 2022) by Michael Chernew discussing ‘why payment reform remains necessary’.

We’ve had numerous expert guests who have commented on the problem in employee-based healthcare and the need for major reform, including episode #121 with Glen Tullman, CEO of Transcarent; episode #119 with Steven Nelson, CEO of Contigo; episode #114 with Zack Cooper, a Yale economist; episode #113 with Harris Rosen, CEO of RosenCare; and episode #111 with Dave Chase, just to name a few.

In this episode, we have the privilege of hearing from Francois de Brantes. Francois has spent two decades working to transform the U.S. healthcare system by improving incentives for providers and consumers, in order to encourage value-based decisions. He brings the perspective of an economist, but also has hands-on experience deploying numerous real-life programs.

François de Brantes serves as Senior Vice President of ‘Episodes of Care’ at Signify Health. He leads customer development of the Medicare Advantage, Self-Insured Employer, and Commercial Payer markets.  From 2006 to 2016, he was Executive Director of the Health Care Incentives Improvement Institute (HCI3), a not-for-profit company that designed programs to motivate physicians and hospitals to improve the quality and affordability of healthcare delivery. This organization was responsible for the Bridges to Excellence® (BTE) and PROMETHEUS Payment® programs, which compensate and reward clinicians that focus on ‘episodes of care’ and ‘performance measures’. François holds a master’s degree in Economics & Finance from the University of Paris IX-Dauphine and a MBA from the Tuck School of Business Administration at Dartmouth College.

In this episode, we’ll discover:

• The amazing journey that Francois has been on for the past couple of decades, starting with his being in corporate benefits at GE.

• The perverse financial incentives and disincentives built into the fee-for-service, employee health benefits contracts that drive payers, providers and patients away from healthful decisions & behaviors.

• The principles and tactics required for a shift to value-based employee health benefits.

• Specific examples of programs demonstrating the benefits of shifting to business and clinical models that focus on profits generated through value rather than volume.

• How ‘episodes of care’ and ‘bundled payments’ make sense from an individual consumer perspective as well as from a clinical and risk perspective.

Every once in a while, a leader comes along stating the piercing truths that capture the core challenges of an era. Francois de Brantes makes such a statement, “There is no real competition for value [in the American healthcare system]. There’s competition for revenue, competition for market share, and competition for billboards, but not for value.” He further distills the fatal flaw in our healthcare system, “Fundamentally fee-for-service does not distinguish between high value care, low value care, or even harmful care for that matter”. Pushing the point even more, he shares that physicians and provider groups, for years, have shared with him the appalling reality that they are not paid to improve or optimize chronic conditions, better manage patient care, or reduce harm.  In fee-for-service, providers are simply paid for each incremental service offered, regardless of its intrinsic value to patients.

Just pause for a moment and let all that sink in. Payment in American healthcare does not incent providers to do the right thing on behalf of patient care, and in many ways, disincents them. And far from blaming clinicians, Francois understands the challenges and hurdles from an economic perspective, “Clinicians are really hit with an onslaught of incentives [throughout their daily practice]… that drives them away from their professional mission…”

Given that reality, Francois shares, “…the ingredients for creating competition for value are known, tested and validated: (1) transparent information on price and quality; (2) risk contracts to reduce volume incentives; and (3) benefits design that encourages steerage to value providers and reduces demand for low-value care.”

Francois and his colleagues have manifested these three principles, combining them with alternative value-based payment models around episodes of care and conditions. This is a major lesson I gleaned from this interview.  Focusing on “packaged” episodes of care or conditions vs. total costs of care makes sense from a consumer-centric perspective since consumers deal with specific episodes and conditions.  It also enables providers to construct viable clinical and business models, and to take more defined risks that they have more control over.

I came away from this dialogue, as I have from many of these other interviews, with the reaffirmed belief that the fundamental problem and key solution are bound to a shift toward value-based payment, and toward value-based business and care delivery redesign. The real challenge is the transition – creating the catalytic energy to overcome the entrenched incentives within which legacy stakeholders are mired.

There are many other critically important improvements we can make in healthcare delivery.  But, in my opinion, without that value-based payment keystone, employee health and American public health will not improve. And, as Francois points out, this is not a threat to the free market.  Quite the opposite. The private sector is actually protected and the free market is expanded by enhancing competition for value.

And most importantly, there is the human suffering and economic toll that continues to be created by legacy stakeholders clinging to FFS payment and non-value-based competition. Francois eloquently captures the call to action, “I never stop thinking about the individual consumers of care – the tens and tens of millions of people in this country… who struggle every single day with making decisions around paying for care and medicines vs. paying for food and housing. By reforming payment and benefits design, we can give those consumers what they need in order to have access to care that is good and doesn’t cost them a fortune. The moment you stop thinking about the average person and the choices they have to make that they shouldn’t have to make, you lose your sense of purpose.”

Until Next Time, Be Well.

Zeev Neuwirth, MD