How does a 3-physician practice sell for over $100 million dollars? The answer is simpler than it seems – full-risk contracting is better for providers and patients. Aligned incentives promote better outcomes for patients, and better reimbursement for those providing the care. It comes down to this – full risk unlocks the door to a true relationship with the patient, a relationship that provides more information than sophisticated AI models, risk coding and predictive analytics. And Medicare Advantage plans are the most accessible vehicle to achieve full capitation.

We are pleased to welcome back Dr. Tom Davis as our guest. Dr. Davis is an expert in value-based care, a family physician, angel investor, founder of 6 companies, consultant, and speaker. In this episode, he articulates how Medicare Advantage is a critical strength in the race to value. You can find more from Dr. Davis at his website: https://www.tomdavisconsulting.com/

Episode Bookmarks:

01:40 Introduction to Dr. Tom Davis

03:30 Dr. Davis started a small primary care practice that took full-risk Medicare Advantage (MA) and sold it for $132M!

06:30 Dr. Davis explains the “spectrum of value-based care” in MA and how he took the first full-risk contract in his market.

09:00 Analyzing cost drivers in patient population and how that prompted investment to capitalize on a site-of-service arbitrage

11:00 Implementing internal systems to optimize on physician workflow efficiencies in value-based care

12:00 Dr. Davis describes how it felt the first time he saw that he earned $1M+ in income as a primary care physician.

14:00 Dr. Davis explains “the offer we couldn’t refuse” when his full-risk MA practice was acquired.

14:40 “Value-based care under a full-risk Medicare Advantage model allowed me to be the family physician that I had always wanted to be.”

15:30 The enrollment growth trajectory in Medicare Advantage and the continued potential for rewarding economics for PCPs

17:15 “Devolving the financial consequences of the clinical decision down to the POS unleashes the most valuable asset in healthcare–the clinicians themselves.”

18:40 How to take full advantage of Medicare Advantage – Dr. Davis explains how to take full financial responsibility in a risk contract!

20:00 Full financial risk is only up to the attachment point of the stop-loss insurance.

21:00 The pool of capital in private insurance markets and the delegation of risk to both providers and the private liability market.

22:00 “Fee-for-service medicine sucks your will to live as a clinician.”

23:30 The economics of the MA Stars system and how it aligns with improved patient outcomes

24:45 Proxy Value vs. True Value in measurement

25:15 Full-risk contracts as the only true way to unlock value.

26:15 Moving from 3 to 5 Stars in Medicare Advantage equates to an 18% increase in practice revenue.

27:00 Deriving true value in MA contracts as the most sustainable and optimal ROI opportunity

28:30 The advantages and disadvantages of physician-led risk-bearing entities

29:45 “You will never learn to swim if you only stay in an ACO.”

31:00 Working with smaller MA plans because they are more likely to collaborate with physicians.

31:45 The rise of Direct Contracting Entities (DCEs) leaves no excuse for physicians to not up their risk profile.

33:00 The value of the patient relationship in driving business performance (versus short-term revenue generation to goose the bottom line in FFS)

34:40 Referencing the father of the modern container ship system in how we unlocked true value.

36:00 “Everything, everything, everything in your organization wraps around the value between the patient and the clinician.”

37:00 Dr. Davis shares a personal story of how a patient relationship supported colorectal cancer screening compliance.

38:00 How patient relationships trump sophisticated AI models and predictive analytics

39:00 The moral, ethical, and a functional advantages of value-based care over the industrialized business model

42:00 The importance of the Annual Wellness Visit (AWV) as a key component to the MA patient relationship

44:30 Using the AWV as a reflection of the amount of engagement that a clinician has with their panel

45:30 Balancing short-term P&L “gun to your head” pressure with long-term R&D success in value-based care

47:00 “Value-based care is here to stay. The government has no interest in shouldering this burden anymore.”

48:20 Capturing SDOH data with Health Risk Assessments (referencing podcast interview with Cheryl Lulias)

49:30 Identifying the rising risk as early as possible to mitigate preventable costs

50:30 A PCP can fight the counter influences of the food industry, but you can still have meaningful interventions.

51:30 Care management as an opportunity for engagement (but never as good as a F2F visit with the physician)

54:00 Dr. Davis shares everything you need to know about Risk Adjustment Coding!

59:20 “Your job as a leader, is to stand there like superman, let those non-clinical tasks ping off your chest like bullets, and protect your clinicians to let them generate the value that only they can generate, and they generate so well.”

61:15 Dr. Davis on healthcare waste and how the easiest way to avoid it is by controlling inpatient admissions through the emergency room

63:00 Cultivation of trusting patient relationships will cause patients to call their PCP before going to the ER!

64:30 Disruption of the primary care landscape through private-equity backed practices (and how you compete with them!)