Delivery of Care
The future health care landscape is challenged by financial stresses, the transition to population health
Photo by Richard Asinof
Dennis Keefe, the president and CEO of Care New England, in front of photos of his grandchildren.
By Richard Asinof
Why is this story important?
In an in-depth interview, Care New England President and CEO Dennis Keefe shares his insights about the changing health care landscape, the future of Memorial Hospital, the challenges in moving toward population health, and the kinds of potential partners Care New England may be looking for to enter a new strategic alliance.
The questions that need to be asked
What are the potential opportunities to repurpose Memorial Hospital in terms of a different use of the space? How will regulators and legislators respond to the potential of a for-profit health system forming a new partnership with Care New England? How will the growth of accountable care organizations and accountable entities reshape the footprint of hospitals? How will the state population health plan now being developed as part of the State Innovation Model reflect the new realities under a Trump administration?
Under the radar screen
The ability to sit down and interview Dennis Keefe at length reflects a willingness to engage in conversation that is unique to Rhode Island, in terms of accessibility and candor. Keefe’s openness appears to be rooted in a genuine appreciation of listening and the value of dialogue and convergence.
PROVIDENCE – When Dennis Keefe, the president and CEO of Care New England, first arrived in Rhode Island in 2011, his watchword was that he had “seen the future” of health care during his experiences in Cambridge, Mass., with the move toward population health and the integration of public health as a framework to achieve a continuum of care for patients.
Keefe has led the effort to develop Integra as an accountable care entity focused on population health, driven by primary care, serving as a kind of centerboard for Care New England in navigating the choppy waters of the changing health care delivery system, moving away from fee for service.
Since Integra was launched two years ago, there are now more than 130,000 members receiving health care through Integra, and premium revenue flowing through Integra is in the neighborhood of about $1 billion, according to Keefe.
And, on Jan. 1, 2017, Integra will launch its Next Generation version of an accountable care organization with Medicare.
During Keefe’s stint, there have also been increasingly troubled financial waters to travel through. A proposed affiliation with Southcoast Health, announced a year ago, did not work out. Care New England is now pursuing a new strategic affiliation with potential partners from both the not-for-profit and for-profit world, according to Keefe.
In addition, continuing financial losses at Memorial Hospital forced Care New England to close its obstetrical unit, leading to a contentious series of public hearings held by the R.I. Department of Health. The situation in regard to ongoing losses at Memorial remains unsustainable, according to Keefe. One of the future challenges will be how best to repurpose the current space at the Pawtucket facility, where only about 60 inpatient beds a day are being used in a 293-bed facility, according to Keefe.
Last week, ConvergenceRI sat down for an hour-long interview with Keefe in a wide-ranging conversation about the future landscape of health care delivery in Rhode Island – a future complicated by the uncertainty of what will happen with the future of Obamacare under the new administration of President Donald Trump.
Keefe, who describes himself as a glass-half-full kind of guy, offered some candid appraisals of the nature of consolidation that is driving the health care market regionally and nationally, saying that health systems with less than $1 billion in revenues would have a hard time surviving economically.
“Health care is increasingly becoming regionalized, if you look around the country,” Keefe said. “We stepped back from the Southcoast decision, and we’re looking at where we want to go in the future.”
“We still feel the need to have a strategic partner, we still feel the need to go in that direction, and we’re going to evaluate all of our options,” he continued.
“What I can tell you is that we’ve had tremendous interest from potential partners, whether it is from a not-for-profit [sector], or from private equity,” Keefe said.
“As you know, Richard, this is what’s going on all over the country,” Keefe explained further. “Not only is it not abating, it is really accelerating. This idea of consolidation, whether anyone likes it or not, it is coming, it’s here, and it’s going to continue to evolve.”
What national experts from across the county have told him, Keefe continued is this: “If you’re under a billion dollars [in revenue], you’re not going to make it. Never mind a single community hospital. [As a health system], if your revenues are under a billion dollars, you’re going to be incredibly challenged in the future.”
That’s what is going on, Keefe concluded. “That’s where we need to go. We need to figure it out. We need to find the possible partner. And, through that partnership, continue to provide superb local care.”
Here is the ConvergenceRI with Dennis Keefe, the president and CEO of Care New England, with the health care delivery system once again poised on the cusp of change. There is a lot of ground covered in the interview, as well as a fair amount of news. The interview was a rare opportunity to hear, in-depth, what a leading hospital system CEO in Rhode Island is thinking about the future. [May Kernan, the senior vice president of marketing and communications at Care New England, sat in on the interview.]
ConvergenceRI: How do you see the future landscape of health care delivery in Rhode Island?
KEEFE: It is ever changing. And, just when you think you have an idea of how the future is going to unfold, you have a new President and the very real prospect that the current President’s signature health law may go away in some fashion.
Of course, how it will go away, and what elements will change, is still very much up in the air. The certainty of what we would have expected under Clinton is gone.
With Hillary Clinton, I think we would have seen somewhat of a continuance of Obamacare; there still may have been some adjustments and improvements.
Now, it is uncharted territory in terms of what will stay and what will go away.
You can always talk about repealing the law, but when it comes down to what you would literally repeal, I think that’s where there are going to be a lot of questions.
Coverage for college students and kids in general under a parent’s health plan up until the age of 26, will they role that back?
Will they role back mandatory coverage of pre-existing conditions, which is beneficial, it really cuts across all of society?
ConvergenceRI: In terms of many aspects of health care reform, the train has already left the station, in my opinion, particularly with payment reform with Medicare and Medicaid reimbursements, moving away from fee for service, promoting a continuum of care with global payments.
KEEFE: Right, right.
ConvergenceRI: Hospital systems have made an enormous investment in that. I don’t see them as being willing to roll over and play dead and say, “We really didn’t want to spend all that money on health IT.” What do you think the pushback will be from hospital systems? Have the hospitals themselves talked about this in any sort of concerted way?
KEEFE: We have a meeting tonight, so I’ll let you know.
It’s so fresh and so new to people in terms of the change and the implications for the future. Trump is still picking his key leadership team.
I think the health care industry is going to want to keep the management of [insurance] coverage. We see that as a very good thing with Obamacare, the expansion of coverage to the uninsured, and the expansion of coverage under Medicaid.
That will be a contentious issue. Out of all of the changes, that’s what we think might be the most difficult.
But the industry, so far, and I think you hit the nail on the head, and I would have said it the same way, the train has by and large left the station when it comes to population health.
Medicare is still focused on Accountable Care Organizations, with the Next Generation model. We’ve been approved for that, and we’ll be going live on Jan. 1.
ConvergenceRI: Is that a new development? I wasn’t aware of that.
KEEFE: You have a scoop now. [laughing]
We applied to become a Medicare shared savings program through the Next Generation ACO model, effective Jan. 1.
ConvergenceRI: When did the approval come in?
KEEFE: The approval came in late summer, but we had to let them know by Sept. 30 [if we would be participating]. We literally didn’t tell them that we were going to enter the program until Sept. 30.
KERNAN: You don’t see that changing with the new administration, do you?
KEEFE: I don’t see that changing. I don’t see states not [moving ahead] with Medicaid ACOs, accountable entities or whatever you want to call it, that’s a train that has left the station.
I don’t see commercial insurers really changing in terms of wanting to go to a different kind of payment system, payment for value, [not volume.]
We have strong relationships with Neighborhood [Health Plan of Rhode Island], with United [Healthcare], and with Blue Cross [& Blue Shield of Rhode Island].
We have new payment arrangements with Integra through all of the major insurers, and with Medicare and Medicaid.
ConvergenceRI: Can you talk about Integra, where it is now and where it is projected to go? It seems that you’re making Integra a centerpiece of Care New England, in many ways.
KEEFE: We made a decision to go all in for population health, to move away from the fee-for-service payment system as quickly as possible.
In Rhode Island, with the OHIC regulations, as you know, the fee-for-service system has not been friendly to hospitals.
In fact, under the OHIC regs, the ceiling for what can be negotiated with insurers is higher if you an ACO.
OHIC and the state want to incentivize organizations to move toward population health and in becoming an ACO.
We have gone, in two years, from zero members receiving their care through Integra to about 130,000 members now who receive their health care through Integra.
We’ve gone from zero premium dollars two years ago to in the neighborhood of $1 billion in premium revenue will flow through Integra.
As I think you know, Integra includes Rhode Island Primary Care, our physicians, and South County Health.
ConvergenceRI: What are the projected increases in savings over time? Is this a long-term investment, with increasing returns after an initial investment?
KEEFE: It’s long-term, and it’s also incremental.
In the Medicare shared savings program, we are depending on the total dollars that we are projected to receive from Medicare for the Medicare patients we serve.
As you know, it is an attribution model, so patients may not know they are part of the Integra ACO. We know who is in the ACO, but they don’t know.
Medicare looks at all of the dollars that they would pay, adding up all those premiums, and if the expenses they incur are more than the overall premiums, under the Medicare Shared Savings program, you’re protected from those losses.
But if you are on the upside, you save money, unless you hit a particular corridor, and then you don’t get to share in any of the savings.
You are protected on the down side, but you have limited sharing on the upside.
This part year, we actually did better; our expenses were better than the overall premium. But because we didn’t hit that corridor, we didn’t get to share in any of the savings.
The difference, and this is intentional on Medicare’s part, with Next Gen, Medicare still gets the first 20 percent, but if you do better than the budget, you get to keep the 80 percent. If you do worse than the budget, you’re at risk.
Under Next Gen, you better be in a better position in terms of your care models, your infrastructure, everything you’re trying to do to make sure that you’re coordinating care and managing care and providing the most efficient care possible.
Of course, that takes not months, but years, and each year, trying to improve [on your performance], and each year, you’re trying to do better.
I think part of what will be a difficulty here is that the better you are, you might find it more challenging in the future to continue to do better than the baseline, as new baselines are set.
ConvergenceRI: I recently attended an event about nursing and the future workforce. It appears that there is a lack of good data for measuring the future demand for the nursing workforce needs. How has Care New England thought about this? Do you have internal numbers? How have the numbers changed as the workforce shifts from inpatient settings to outpatient facilities?
KEEFE: I wouldn’t say that we have hard-and-fast metrics. What we are seeing, and what we will continue to see, is that inpatient hospital care will decline, length of stays will continue to come down. At some point, they may bottom out. But then you always have breakthroughs and new technologies, you never know where it’s going to end.
These trends are going to continue. There will be the need for less inpatient care, the need for less inpatient beds, and the need for less inpatient staffing.
That will be a transition that occurs over time. I couldn’t sit here and tell you how quickly that will occur; it could be over a three- to five-year time period.
We are seeing as much as a half-day drop out of the length of stay. That will probably change both the supply and demand for inpatient nursing services over time.
On the other hand, and you’ve said it, things are moving into different settings [such as] ambulatory care. We are going to increasingly need more ambulatory care nurses, whether in our ambulatory care settings or through our partnership with Rhode Island Primary Care.
In a lot of cases it will be very different in terms of what nurses will be asked to do. Part of it will be practicing to top of their license.
With patient-centered medical homes, there is a continuous relationship with patients and families to make sure that the practice is proactively interacting with patients and families to keep them well, to make sure they get their annual screenings.
It’s a very different, proactive, continuous type of approach, with different expectations of professionals that work in those settings.
On the other side of it, in home care, we are really pushing the envelope around home care and hospice in our system. We are seeing a very significant transition to palliative care and end of life care, brought on by gifted professionals we have working with our physicians and nurses, working with families, to get them the right kind of care, given their conditions.
ConvergenceRI: Care New England was one of the early adopters of the Conversation Project. Is the program expanding?
KEEFE: There is almost no limit to care in the home, as you think about it. You can administer intravenous medications in the home; you can increasingly do electronic monitoring in the home. There is a whole new world around telemedicine that can occur in the home.
There is even, and we’re not yet there, the expectation that nurses can be plugged into a WiFi network, into the patients’ electronic health records, all of that is on the near-term horizon, and it will change what we can do in the home.
Home care is expanding so quickly, we actually found ourselves with a very significant shortage of nurses for our own VNA.
ConvergenceRI: Is that because of the wages being paid Or is it the demand?
KEEFE: Demand. We couldn’t keep up with the demand. And we’ve been involved in retraining efforts.
This is a direct, connect-the-dots [situation] here, where there might not be as many nurses needed in the inpatient setting, but [there may be other opportunities] for them to work as nurses, in other settings, with the VNA being a real good example of that.
ConvergenceRI: Can you talk a bit about the role of research at Care New England, and why that is an important engine for you?
KEEFE: That’s a great question, Richard. One of the real strengths of Care New England, whether in maternal and child health, or neonatal care, obstetrical care, behavioral health and population health, is our ability to do leading-edge research and then translate that directly to the bedside. It’s one of the things we have developed an expertise in.
The quality of our research we do here at Care New England is very high, very strong.
ConvergenceRI: Can you talk about the financial pressures and challenges on hospitals and health systems, moving forward?
KEEFE: Hospitals, particularly in Rhode Island, are challenged in terms of income and strength of the balance sheet.
Access to capital [is key] to support all of the things we need to do to position ourselves going forward with population health.
[It includes] the ongoing investment in electronic health records, the ongoing investments in infrastructure, the staffing transitions, adding new software that has the advanced analytics and predicting models, all of those things.
When we take on more and more risk and become sort of like an insurer, you need to have a lot of those things in place, in order to have a really good idea of how you are performing and making the necessary adjustments, every step along the way.
You can’t be surprised; you really have to know what your exposures are. You need pretty sophisticated information. Your actuary becomes a key part of the team.
ConvergenceRI: How are things going at Memorial Hospital? Are things moving in a better direction?
KEEFE: We still have challenges at Memorial. We went through the closing of the OB unit, and we have already said that our work wasn’t done there. But, at that point, we wanted to focus on the Southcoast initiative.
Southcoast is now in the rearview mirror. So, we are right back to dealing with the losses at Memorial that are unsustainable. It’s going to be a difficult situation. We will be engaging with all of the stakeholders and the community, asking: how can we best meet the needs of the community? How do we serve the community?
We want to have a presence in that community, but what is the right model? We are trying to figure out what the best approach is.
Even as we speak, we are budgeting ongoing losses at Memorial. It’s built into what we call our feasibility studies that we provide to the rating agencies.
Any time we talk to the rating agencies, if it’s not the first question, it’s one of the first several questions: where are we with Memorial and what’s the plan for the future?
They see what we see. You just can’t continue to have losses and absorb them continually.
Because it reduces our cash, it reduces our liquidity. We have worked really hard to stabilize ourselves during the past year. We were able to restructure our debt. We’re in a better position financially today than we were a year ago.
It took a lot of hard work to get there, and we can’t really now step back with continued losses and jeopardize the progress that we’ve made.
ConvergenceRI: One of the ideas that has been floated in the Pawtucket and Central Falls community is the opportunity to create a “sobering in” center at Memorial. Has that idea made it up to your level yet?
KEEFE: I am aware that we have been approached. You may also be aware that we are already providing that service in the Providence area, through the Providence Center.
This was the brainchild of Sen. Josh Miller. We’ve worked with him to get this off the ground. It’s really diverting, what’s the best way to say this, people who are chronic alcoholics. The only place for the police to bring them before was the ER, and they don’t need medical treatment. So this is an alternative that just opened. To me, this is a huge public service.
ConvergenceRI: How can the space at Memorial Hospital be repurposed in a positive way?
KEEFE: Our biggest challenge at Memorial is the decline in inpatient activity. The footprint of that building was to accommodate nearly 300 hundred beds. But we’re really only occupying 50-60 beds a day, but we still need to cover the overhead.
ConvergenceRI: The function of the acute care community hospital doesn’t seem to be workable anymore. Is there a need to redefine what the needs of the community are in terms of health care?
KEEFE: When I talk about meeting the needs of the community, we’re trying to figure that out. It’s really about what health care services are required there, and it’s also about repurposing the space.
We can repurpose the space with medically related services, of course. Or, it doesn’t have to be medically related services.
ConvergenceRI: How are the relationships with other hospitals and health systems in Rhode Island? There is not a single hospital or health system that is not feeling squeezed financially.
KEEFE: It’s kind of interesting. We’ve all been extraordinarily challenged with the OHIC regs that we’re bound by. The reimbursements for commercial contracts have maybe gone up 1 or 2 percent. Medicare has been flat to negative. Medicaid has been negative. And, the fee for service world, even when you’re looking at very low inflation, we’re not keeping pace with general inflation in terms of our reimbursements.
Some say you can make it up in volume, but we don’t make it up in volume. We don’t go out there and try to drum up volume. Utilization is flat to down.
So, yes, it’s been very challenging to make any kind of bottom line, for all of the hospitals.
Having said that, I can only to speak at my level, as I engage with all of the health care leaders and their teams throughout Rhode Island, I think the relationships are actually pretty good.
I certainly have a good relationship with Tim [Babineau] and the people at Lifespan, and the people at Prospect CharterCARE, and the people at Prime.
I deal with the leadership, we have common problems, we have common struggles, and there’s a little bit of the sense that we’re all dealing with this together. So, there’s an appreciation of each other’s challenges.
That doesn’t mean we don’t compete in some markets around the edges. But I would say, the relationships are not that fractured and bad as people might think.
With the clinicians, actually, they work pretty well together. And, it’s the same thing with the researchers.
It’s not black and white, that’s what I’m saying.
I go to meetings with Tim; we talk all the time. We probably have a lot more in common than people would ever imagine.
ConvergenceRI: How long have you been at Care New England.
KEEFE: I’m in my sixth year.
ConvergenceRI: What have you learned?
KEEFE: I think you know that I’m a glass-half-full person.
From that perspective, I continue to believe that Rhode Island is a place where you can do things. It’s a place where you can make progress.
Whether it’s with the political stakeholders, I think I’ve cultivated very strong relationships, whether it’s with the Governor and her administration, or with the General Assembly and with the Speaker and the Senate President, or the Congressional delegation, I have found everybody to be unbelievably accessible and helpful.
It’s been a very good experience. I find that the health insurers aren’t really adversarial here. Again, I think I’ve fond the leadership of the health insurers, by and large, to be willing to collaborate.
It’s still a place where you can get a lot of things done, through personal relationships. That’s very positive.