HJNO Jul/Aug 2022

HEALTHCARE JOURNAL OF NEW ORLEANS I  JUL / AUG 2022 27 gins with changing its fundamental economic model, which is the only sustainable path for- ward to support the transition from a traditional health system to a system that delivers health. HOW DO WE CHANGE? Richard Arkwright is the name of the 18th century industrialist who is considered the founder of economies of scale. Arguably, his 21st century counterpart is the founder of Ama- zon, Jeff Bezos. Bezos stated that there are two ways to extend a business: one, to take inven- tory of what you’re good at and extend out from your skills (like traditional health systems), or two, determine what your customers need and work backward, even if it means learning new skills (like systems that deliver health). Bezos was likely influenced by the Harvard Business School professor, Theodore Levitt, who published a provocative paper in Har- vard Business Review in 1960 in which he ar- gued that companies were too focused on products and not enough on customer needs. He asked a question that all health system executives should be asking themselves, “What business are we really in?” Many of these executives will scoff at the question because they think the answer is both intui- tive and obvious, but the business of deliver- ing health is quite different from the current business model of most health systems. Under Bezos’s visionary leadership, Amazon reconceptualized an approach to business around “economies of scope,” where the pri- mary strategic question becomes, “What else do our customers need?” And in healthcare, our customers — the patients we serve — need solutions that improve, restore, and preserve health that are easily accessible, high in qual- ity, and affordable. And they need them to be delivered by a system that differentiates itself on experience of care, both for patients as well as the providers and teams who care for them. Scale-driven healthcare interventions are predominantly reactive and downstream in nature, responding to problems after they have already occurred. Scope-driven solutions are predominantly proactive and upstream in their approach and require different financing mechanisms, operating metrics, performance incentives, and reimagined methods of how value is created, in other words, an entirely different approach to metrics that matter. One example of an upstream preventive ap- proach is to design and build a new system from scratch, supported by an entirely different economic model. That’s exactly what Rushika Fernandopulle, MD, did. Fernandopulle, who trained at Harvard but spent some of his time working in rural Louisiana, founded Iora Health, whose mission is “restoring humanity to health- care.” Iora was a completely redesigned model of primary care that still treated acute problems when they arose but utilized a much more pro- active approach focusing heavily on upstream prevention while still aligning clinical and finan- cial outcomes. Rushika asserted that “trans- actions don’t heal people, relationships do.” Instead of a volume-driven, transaction-based model, Iora pursued a value-driven, outcomes- based model that utilized population-based payment —a fixed sum of money paid prospec- tively for each patient per month — instead of a transactional fee-for-service payment to treat complications and problems that predomi- nates traditional healthcare. The new economic model enabled innovation through a novel way of delivering care that included much longer visits, more time spent listening to patients and solving problems, expanded virtual care offer- ings, closer relationships with patients, and the utilization of a team-based approach with inte- grated behavioral health and health coaching. Current U.S. expenditures on primary care ac- count for approximately 5% of total healthcare expenditures. Rushika bet that if we doubled the amount of money spent on primary care from 5% to 10%, that Iora could yield a 20% reduction in total cost of care (20% of $4 tril- lion would be an astronomically large amount of money). And he was right. By understanding that clinical care only accounts for about 20% of health outcomes, and that socioeconomic factors and unhealthy behaviors drive 70% of health outcomes, Iora focused its efforts on proactively addressing the latter, thereby un- locking enormous value creation. They proved that improving health and health outcomes go hand in hand by preventing downstream complications, thus driving down total cost of care. Furthermore, patient experience scores at Iora were excellent (net promoter score > 90) and provider burnout was nonexistent, as providers reconnected with the deep sense of purpose of why they entered healthcare. But it isn’t practical or possible to redesign our entire existing healthcare infrastructure and start over completely from scratch. And we can’t just suddenly shift completely away from transaction-based, scale-driven eco- nomic models either. But we can discern les- sons from innovators like Fernandopulle. We will need both economies of scale as well as economies of scope, and we will need leaders “Changing the world of healthcare begins with changing its fundamental economic model, which is the only sustainable path forward to support the transition from a traditional health system to a system that delivers health.”