This week I am talking to Emad Rizk, MD President and CEO of Cotiviti (@Cotiviti) who are providing analytics reshaping the economics of healthcare. Emad has had extensive experience working with payers, hospital systems, government, physicians, and pharmaceutical companies, that offers a unique lens to help solve some of the hard problems in healthcare.
We discuss the challenges in healthcare finance that lacks data to make accurate determinations of risk and ultimately cost. As Emad describes, other countries are not doing any better than the USA in their pricing and understanding of costs with much of our increased cost arising from the higher available choices and speed of access that is central to the healthcare system in this country. As he points out:
The healthcare system is not broken
Disparity in Data and Interoperability of Data
We discuss the challenge of COVID19 has had on the healthcare system and the fragile finances of many healthcare institutions (the AHA estimating an average $50.7 billion in losses per month), and a shocking $600-900 Billion of waste per year, money which as Emad points ot could be going towards more and better care.
Listen in to hear how Emad describes the potential solutions, some of which has been driven by COVID19 that did not create fault lines in our system but rather opened up existing faults and exposed them for everyone to see. Solutions come from the better sharing of data with public private partnerships and more robust and accurate payments that ultimately to
“turn waste into beneficial utility for medical treatment”
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Raw Transcript
Nick van Terheyden
and today, I’m delighted to be joined by Dr. Emad, Rizk. He is the President and CEO of Cotiviti, thanks for joining me today.
Emad Rizk
Thank you for having me, Nick.
Nick van Terheyden
So as I do with all of my guests, I think it’s worth understanding a little bit of your background, you’re a physician. But you’ve had lots of other experiences. Tell us a little bit about your journey to get to this point. And this organization if you weren’t?
Emad Rizk
Sure. First, I do want to thank you very much for having me, it’s a pleasure to to meet you. I’ve been on the administrative side of medicine, I think, probably for the last 20 years or so. And various capacities, mostly in in research, and then in the payer and the provider world. So I bring kind of multiple perspectives, from research from the provider perspective in terms of payments and managing providers, and also from the payer in terms of managing networks and payment for, for services rendered. Over the last five years, we we invested into a company called versand. And we’re ascent is really at the core was an analytics company. And that started around 2016. And then in the next two to three years, we really just had sort of a roll up strategy where we acquired many organizations with different capabilities, but at its core, was healthcare IT and analytics. And then we in 2018, we bought a company called creativity, we merged the two organizations. And now we’re one of the largest, if not the most premier payment accuracy organization in the country.
Nick van Terheyden
So payment accuracy that’s sort of, you know, generates a lot of interest, obviously, a hot topic at this point in our healthcare journey. We struggle with that, certainly in the United States, I can’t comment too much on other countries. But I know this, pretty much plenty of people that are listening to this show that go, but there’s no accuracy in any of the bills that I’ve ever received. Obviously got some secret sauce, tell us a little bit about what’s going on at coercivity?
Emad Rizk
Sure. I would, it’s interesting payment. Actually, although I say we’re a very large payment accuracy company. But when you look at payment, accuracy, there are multiple dimensions that payment and your your viewership and your listeners should understand that it’s not just a financial transaction, it’s also has a great deal of clinical perspective to it. So you don’t pay just for services rendered, you pay for services, depending on the risk associated with that procedure, how sick the patient is whether there are level one or level two or level three. And then also you pay on the outcomes and the quality outcomes through payment has to take all those three into play. And so when I say we’re a large payment accuracy company, what makes us so good is the fact that we do a lot of risk stratification and risk understanding and risk assessment. We also have a lot of products that measure quality, and measure network efficiency. So by combining those three things, we can actually get a 360 view on the most accurate way to pay for a specific procedure at a point in time.
Nick van Terheyden
So as you think about that, for organizations, from a patron perspective, you know, what are the key elements that really contribute to that accuracy? I mean, you talk about the broad groupings, but what is it in there, that really makes the difference? I mean, we see some incredible variation in you know, the the numbers that come out from hospitals, some of it relates to discounts. So you know, I guess put that to one side, because that’s all about negotiated rates. But what does it come to, you know, why are we doing such a poor job?
Emad Rizk
It’s a great question, and I’m not sure that I can actually have a logical predictable answer for you. I think you will find a lot of that has to do if you’re an academic medical center, that you’re seeing higher index higher risk patients. Obviously, you’re getting paid at a different level. If you are a single provider in a community hospital, and you’re the only provider or billing services, and you can find another orthopedic surgical center for another 25 to 30 miles live izly, you’re getting paid a little bit more. So I don’t believe that at this point in time, we are at a national basis of reference pricing, or reference billing that says, All orthopedic hip transplants in non complicated patients should cost between x and y. That would be not, that would that would not be a bad thing to have some of that, but we’re far from that. It is still very different based on hospital geography center level of care, complexity that takes place during that, and whether it’s an in an urban or a community environment.
Nick van Terheyden
So you have an international perspective, are other countries doing a better job? I mean, I think there’s a mis characterization of healthcare, you know, other countries don’t pay for it. It’s free. But it’s not. I mean, that’s the case. They just pay for it in different ways. Are they better at it? And if they are, is there anything that they’re doing that we can learn from?
Emad Rizk
They’re actually not? And that’s? Oh, yes, it’s a bit of a, it’s a bit of a fallacy in the sense that somehow socializing medicine and reference pricing is is is always better. And and folks say it’s free healthcare, it’s completely free, there’s no such thing as free, obviously. And obviously, we have something here that not a lot of countries do have as as, as you know, if you wanted to get a hip replaced, or a knee replaced, and you wanted it in the next week, you could get that done. You know, that’s not necessarily what would occur in country a or country B, or concurrency, you know, there, there’s a waiting list for that to happen, you might not have a choice of which hospital to go to, you might not have a choice of which physician is going to be. So it depends on what you what you give up for that access to care and whether you give up choice. But for us here, what’s very, I do believe we have the, you know, one of the best private healthcare sort of industry in the world, because you also see in other countries, that many folks are opting out of the socialized medicine and moving into more private care. As a matter of fact, that’s one of the fastest growing pieces of healthcare is many people buying insurance to supplement their their social health care.
Nick van Terheyden
Wow, that’s, you know, I think you give everybody a little bit of pause for thought. When you describe those the lack of success around that, I would have just assumed that there would be more sort of understanding, maybe a little bit disappointing, but probably not that surprising. In hindsight.
Emad Rizk
I would say, Nick, if it’s if I could just interrupt it, it’s it depends on the lens that you see it. It’s not as I wouldn’t, I wouldn’t judge it as disappointing, I would just say there are trade offs, in almost everything. If If you want choice, significant choice, on time frame on who the physician is on where you want a procedure done, and you want that you will probably have to pay extra for that. If it is irrelevant for for you and you don’t mind those and you’re willing to forego that decision to someone else who can make it then then then you would be okay for you to have that that type of care. I think as as the an American community, we are kind of a bit impatient around what we want.
Nick van Terheyden
And we pay an appropriate premium for that in patients
Emad Rizk
are significant.
Nick van Terheyden
And importantly, I think, a premium for the choice that some people feel as an imperative in the American way, I guess is I want to be able to choose the source and you know, the physician, even the location so, you know, that explains a fair amount of that price differential
Emad Rizk
and we do have a choice now. And I think that’s the one thing too, you know, to not what we speak too much around rhetoric of everything’s broken. But we have a very successful private health care insurance business that has great app, you know, when you compare the Manage Medicare to, you know, fee for service Medicare, when you when you compare managed Medicaid to fee for service Medicaid, when you manage the commercial, we’ve had a very effective private insurance and as a Medicare recipient, or as a Medicaid recipient, you have a choice, you could get it through CMS, or you could get it through supplemental to the health care insurance companies, and the health care insurance companies have kept their prices very low, and have had all the contracts with the providers, and all the payment contracts are there, and they have the network that you could choose from. So I don’t sometimes I think our healthcare system gets a bad rap.
Nick van Terheyden
I’m sure that I think we get a bad rap all the time, because we’re held up, you know, as a negative in many instances, and you’re right, there are lots of positives. And we do pay a premium. But those positives are some of the things that people desire, and they’re willing to pay for those premiums. And, you know, I think, extraordinarily important to point that out on occasion, because it’s easy to look across. And you know, as they say, the grass is always greener on the other side. And I don’t know about you, but I’ve lived in those other systems, and they are not the perfection that people seem to think they are, for, certainly, you know, their fault. So as we think about the change that occurred, I mean, we just have this extraordinary and devastating pandemics we’ve across it’s it’s really changed the face of healthcare, it’s amplified all sorts of problems. And, you know, from a financial standpoint, I think it’s wreaked devastation across many groups. Tell us a little bit about your understanding in that space. And what you think is, is going to come out of that.
Emad Rizk
I just gave a small talk to all of our customers and our clients last week about the pandemic had basically, it did not identify any new fault lines, it actually accentuated all of our already existing forwards. It and we had, we have a lot of fault lines in healthcare, in many ways. Number one, at the at the highest level, the disparity in data and interoperability between data. Everybody sits on their own data, kingdom, you have the providers sitting on data, you have the payers sitting on data, the government sits on data. So there’s all this disparate data, you have a supply chain data, you know, neck, you have they have their own data. And you have a risk data, even for us why we excelled and we were one of the top companies that helped save the world from COVID was or save lives from COVID was the fact that we were able to bring that clinical data that financial data that risk data, that payment data, that quality data, so we had no interoperability at the highest level, in the country, between all the different mechanisms of healthcare. And so when pen that when the pandemic hit, it found every fault line neck and just drove it home. And, and I’ll I’ll kind of give you an example why. The second part, that data, that disparity of data directly translates to care. If you do not identify populations that are high at risk for X, Y, and Z for diabetes, or hypertension, if you don’t proactively find those were the populations that were the most susceptible to the pandemic. And when you look at the the response level of the country, between February March, April and May, it is the the the infection rate went really high. And the death rate went almost just as high up to like 7% in some areas. And, and but we knew which population were at risk. We knew that it was the elderly. We knew that it was comorbid population, we knew that there was racial disparities, not just racial disparities in access to care, but racial disparities because of racial predisposition to, to illnesses to hypertensives. And to diabetes, you know, my culture is very prone to hypertension, and to diabetes. So obviously, you have to be extra careful for that. So we found we didn’t, we didn’t look, we didn’t identify these patients right up front, which, which predominantly was about 60, to 70 to 80%, of every of all deaths. The interesting thing, what happened is we got our act together in May, June, July, and August. And so we went through our second way. And then we went through our third wave in the fall, each one of those waves had less associated percentage of deaths with it. And it was all because we all got together, we started to share data. We wanted with the providers, the payers, the supply chain, everybody got together all the CEOs, both public and private organizations got together. And we said we have to share data immediately.
Nick van Terheyden
So for those of you just joining, I’m Dr. Nick the incrementalist today I’m talking to Dr. Emad, rizek. He is the President and CEO of coated vissi. We were just talking about the COVID 19 impact and the multiple waves. And the message I heard clearly from what you just said, was that the cooperation was really part of the prevailing solution that helped us really suppress the ongoing effect. And you know, as you think about that, from a financial and you know, the sharing of data, do we have a pathway to better sharing better interoperability? Or are we still going to live in these islands where people know this is my data? I’m not willing to share it?
Emad Rizk
I think I think we made some very strong strides. Nick, this past year, I believe there was a lot of sacred cows that were just sacrificed. Because many of us wanted to hold on to that data. And many organizations had to. And so we actually wind up many of the CEOs and myself and others on the provider side, we wrote a sort of a roadmap on how the public and the private sector can work together for disaster planning. And, and it’s out there through the healthcare Leadership Council. And so we put it out there. And I was I was one of the authors of it, myself and Judy, of epic. And so we, we were, we said, What interoperability is required for future pandemics. But many of us also look back at everything that we’ve learned over this last year. And we’ve gathered our data, and we’ve become a lot smarter. Like one thing that we mentioned is around payment. In payment, you can’t just make payment based on a financial perspective, you have to have very robust data, to try to make payment to make sure that the payments are the most accurate way upfront versus after you pay to come back and try to get it for us. Our data, we sit on about 145 million data elements of people, longitudinal records, that has a lot of clinical data and has a lot of risk associated with it has the providers has the patients. So now what we do is we’re just we make sure we make a very educated decision on how much we pay in an accurate way. So we don’t have to go back to that provider and say, Sorry, we made a mistake. We need to we need a refund, because nobody wants that.
Nick van Terheyden
So I you get to the crux of much of this, which is that sort of exchange at the end of the process. And I think that’s where, you know, that’s one of the sweet spots for you is that process of removing that wasteful spending that wasteful exchange, that sort of essentially leaves money on the table? It’s unrecovered. Tell us, how’s that? How’s that working? What are you doing and what’s that contributing to the overall process?
Emad Rizk
So the the magnitude of waste, is it you know, whether whichever article we read or your viewers want to read, it goes, this has been identified as far back as 10 years by the Institute of Medicine and and the answer food and medicine said that almost 50% was wasteful. At that time, generally speaking, it’s somewhere between 600 to about $900 billion a year of wasteful spending. Now, that’s a big buck. Obviously, the, you know, the can can we can we create efficiencies around that, of course, but not not for all of it. But generally speaking, we’re about three and a half trillion dollars, all of healthcare, there’s 600 billion of it, or 700 billion is wasteful. And by the year 2028, we can get to six and a half trillion dollars, using the same ratio, we will be well over a trillion and a half of waste. And so how do we stop that waste? And, and from my perspective, I really do believe it is the conglomeration of data, the 360 view of information around patients, providers and illness. So as an example, a quick example, if I was to go and get a hip transplant, and I am a hypertensive, but I am a managed hypertensive. And so that payment will be x, I will know that upfront, because there will be a medical record that understands that there will be a quality indicators around how my hypertension needs to be get managed prior to that now, so I will be managed, I will be predictable, I will understand exactly what happens is a matter of fact, after I have my hip replaced, the first thing they’re going to make sure is that my heart’s fine. My blood pressure is good. Nothing’s okay. Or if I was a diabetic do the same thing. Now, if I was on identify, and I just went in, and they just managed me and all of a sudden I have an event during the surgery, a heart event or or vascular event, then all of a sudden the the appropriate precautions and predictability did not take place. The physician did not do that. So we are trying to move all that information as far forward as possible. So there’s a predictability not just in payment, but also in care. Because I believe that payment is care. Because if you could redeploy that 600 to 800 billion of waste, you could just imagine the communities we can outreach to the the the the the, the potential disparity in care that exists by putting mobile outreach to that. So there is definitely I see it as a quality, not just as a financial.
Nick van Terheyden
Interesting. So a couple of minutes remaining, as you think about the future. We’re emerging from the pandemic, however, that sort of plays out. We’ve got, you know, as you describe it, you know, existing faultlines. So this wasn’t new, it just sort of amplified exposed it. It sounds like there’s been some real progress in terms of potential pathways to help resolve some of this. Where do we go from here? How do we see a lot those fault lines and fix some of this so that we’re not going back and saying, Well, why is this still the case?
Emad Rizk
Well, we’re definitely not going to go back. I believe that the fault lines that were amplified, created scars. And, and I think those scars have left their imprint on us. I believe HHS, the public and the private sector will work together with interoperability. I believe there’ll be collaboration a lot more with organization. And we’ve now recognized the importance of data and how proactive data needs to be upfront. And I don’t think and, and we now see that even in in different levels of care like telehealth and, and and home health and all of this. So, absolutely. We are a different healthcare industry moving forward.
Nick van Terheyden
I’m delighted to hear that I know everybody else will be I think, you know, there’s a little voice inside me that’s going I sure hope we don’t try and return the original system, but I think you’re right you know, that exposure is forced us to rethink this and allow people to see the value of that cooperation, the sharing of the data. You know, I’m hopeful as you are that we can turn that waste into beneficial utility for medical treatment. So just remains for me to thank you for joining me. It’s been a real pleasure, man. Thanks for joining me on the show.
Emad Rizk
Thank you very much. Take. It’s a pleasure.
