Q&A: AHA chair Brian Gragnolati wants the industry to tackle affordability

Affordability is the latest buzzword in healthcare. Nearly every sector of the industry is assessing its role in creating a care model that doesn't break the patient's bank account. Brian Gragnolati, CEO of Atlantic Health System, plans on making affordability the focus of his tenure as chairman of the American Hospital Association board of trustees. He's taken a lead role in the AHA's Value Initiative, which aims to provide hospitals with resources for moving to value-based models. Based in Morristown, N.J., Atlantic Health has a large accountable care footprint, with both Medicare and commercial payers. Gragnolati recently spoke with Modern Healthcare Managing Editor Matthew Weinstock. The following is an edited transcript.

MH: Affordability is something you said you want to emphasize during your time as AHA chair. Define affordability for me.

Gragnolati: I use the example of my daughter. A year or so ago, before she went back to school, she was on an exchange plan. Her subsidized payment was $100 a month and she had a $5,000 deductible. So she basically had $6,200 of exposure on an income of $19,000. That's the issue of affordability to me.

That way oversimplifies the issue, but I think what you saw in the midterm elections really is about the consumer's piece of the healthcare cost. And I think that is what's fundamentally different now than 10 or 15 years ago when we were talking about affordability as being a percentage of the GDP. Most people don't get that. What they get is, what are they facing out of their pockets?

The other issue is the lack of predictability about what those costs are going to be.

MH: What will the AHA be doing to address affordability?

Gragnolati: At our core, we're about advocacy. And then beyond that, we are about knowledge transfer. So I view the role of the American Hospital Association as it relates to our 5,000 members as really trying to convene an awakening around the issue of affordability.

I'm very bullish on a lot of the work that our members are doing, including my own, in experimenting with ways to improve access to care, reduce costs and always provide high quality. Atlantic Health is one of the largest accountable care organizations in the country. We run not just Medicare through that, but our commercial payers. We have about 420,000 attributed lives. We've learned so much about how to effectively drive out unnecessary utilization.

We've spent millions of dollars on data, data assistance and data analytics. And the use of data now as it relates to the care of our patients has been enormous. Getting that data in the hands of the clinicians who are making those decisions every day has been really game-changing for us. And that's where we're seeing the biggest gains.

The question for the industry is, how do we begin to use those tools and techniques more broadly and how do we collaborate with insurers or others who pay the bills? And then how do we create things that are more transparent to consumers so they know what they're facing in terms of their out-of-pocket costs?

MH: How does that relate to affordability for the consumer?

Gragnolati: That's where I think the federal program falls short. Because ultimately, I don't think it necessarily translates as directly as it could, but let me give you another example. We're constantly lamenting the fact that we're making a lot of these changes and we're driving out utilization, but we can't control the premium dollar.

I said to our team, “We keep whining about not having access to the premium dollar. Guess what guys, we've got almost 25,000 people for whom we've got complete access to the premium dollar. Those are our own team members.”

So one of the things we've done at Atlantic, which I think has been innovative, although it shouldn't be, is something called the Health Transformation Consortium. We brought together six other systems in New Jersey. We have a total of 75,000 insured lives together, where we have an opportunity to do what I call “Eat your own cooking.” In other words, we own the premium dollar now.

One of the things we did was create a Tier 1 benefit no matter where someone goes in the consortium. Employees who live maybe in a southern part of a region where Atlantic doesn't have facilities or hospitals or doctors, they'll be able to enjoy that lower cost of access.

MH: So essentially, everyone in the consortium becomes an in-network provider?

Gragnolati: Yes, and we're using our clinically integrated networks to do that.

The real challenge is how do we take what we're learning and begin to get regulations changed so we can do the kinds of things we need to do?

I have a saying, and it's not just in healthcare—5% of us do the wrong thing, and then 100% of us get regulated around that. If you look at something simple, to really make value-based payment work, we've got to be able to share savings with our physicians.

Yet in many instances that runs against this issue of buying referrals, which is not the case in terms of what we're doing. But many years ago, that was the issue. Again, it was a small number, but it was an issue. How do we pivot back so that we get regulations that enable us to do that kind of thing, but we keep in place the consumer protection provisions that need to be there to make sure that the 5% don't do bad things?

MH: Are you seeing much traction on that with the administration?

Gragnolati: The administration is very open to ideas that work. We have actually seen regulatory changes coming out of this process.

The administration is also very interested in learning what models are working in our member organizations and then beginning to look at how we use those either as further experiments that can be adopted nationally, or how do we work at creating and enabling legislation or payment policy to support those kinds of things.

The more challenging part of this is how we work with insurers. I think the days are numbered for this across-the-table negotiation over fee-for-service rates. And the more nuanced conversations that we're having with carriers are around how we do something different to decrease the per capita spending, but at the same time, have a glide path because you can't turn these things on a dime.

That's one of the concerns I have about a lot of new entrants into the market. You don't see a lot of them wanting to invest in inner-city beds. You don't see a lot of them wanting to invest in beds at all. And one of the things that we absolutely have to protect is access to care in our communities.