Dr. Jonathan Lewin took the helm at Emory Healthcare in 2016. During the past three years, he’s led the Atlanta-based academic medical system along a steady growth trajectory, boosting net patient revenue by about $1.5 billion. The health system has used partnerships and organic growth to solidify its presence in the Atlanta market, regionally, and nationally. Lewin talked with Modern Healthcare Managing Editor Matthew Weinstock about the organization’s strategy. The following is an edited transcript.
MH: How are you looking at your service lines and your overall strategy in the market?
Lewin: For our local strategic planning process, we mapped out by ZIP codes around the whole metro Atlanta area. We took a very logical and data-driven approach to where we needed primary-care sites, subspecialties and ambulatory surgery centers. In our local market, we’ve grown from around $3 billion total net patient revenue in 2016 when I arrived to about $4.5 billion in our fiscal 2019 budget. We still have some months to go, but it looks like we’re going to meet or slightly exceed that budget.
That growth happened through three different types of strategies. One has been organic. We put in nine new primary-care offices strategically placed around the city. We added 28 urgent-care locations. We firmed up our agreement with CVS where we have 38 MinuteClinics linked into our health information exchange; they’re part of our clinically integrated network.
We also used partnerships. We closed on a merger with a three-hospital system that was a local competitor. When we looked at our footprint, it is still perfectly a wedge where we had outlined ambulatory growth, but did it all in one step. We added 22 primary-care sites and 32 specialty sites with physician groups associated with that merger.
The third strategy was local, our Kaiser Permanente partnership. There we added about 375,000 insured lives with the primary-care front door that funnels Kaiser patients to Emory specialists when it gets beyond what Kaiser can do. It’s another way to capture local population from a very widely distributed Kaiser Permanente ambulatory network that was really previously excluded from our patients because they’re a very narrow network.
We also did some other very innovative things like a direct-to-employer Walmart agreement where we are an accountable care organization. We’ve disintermediated the insurance companies. It’s been a great experience.
MH: What percentage of your revenue at this point is risk-based?
Lewin: I don’t have a revenue percentage. What I can say is we look at it a little bit differently than many places. We look at cost containment as something that is part of our fiber. We’re in the process of a system-wide Lean rollout. We’re actually three years into a pilot project that was funded by the Cox Foundation, a $25 million grant to improve patient experience. We’ve now taken that pilot and are doing it systemwide. Every one of our 23,000 employees will have at least some education in Lean.
Even in our fee-for-service revenue, we see cost as something that we need to address because we’ve got about 50% government payers. We lose money on government payers. The more value we can offer, the more unnecessary admissions we can avoid for those government payers, and the more cost-effective we can be when we do provide treatment.
We save money obviously for Medicare and Medicaid, but we also save money for the system by not having to subsidize our government payers. When we look at our uninsured, we look at them as shared downside risk. The more we can provide community services and keep uninsured patients healthy at home, the less money we lose on them. We actually treat all patients as if we’re at risk, because to the commercial payers, we have shown them we save them money despite the fact we have a higher unit cost. There’s now more data to support that at other academic centers as well.
MH: How is Emory addressing concerns in some of the rural areas near you?
Lewin: Our regional strategy, unlike, certainly our community competitors, is not going out and purchasing rural hospitals. What we’ve chosen to do instead is to partner. We’ve reached out to rural hospitals around the state and said, “We are here to help. What service lines are causing you to send patients out of your hospitals to Atlanta or to other larger cities?” If you do that, first of all it’s good for the patient and good for the family. It’s good for these rural hospitals, which are struggling. If they send all of their commercial patients to Atlanta, they’re going to go under.
Lastly, it’s good for us because we are at capacity. We’re running 85% and 90% capacity in our hospitals 24/7 right now. We are happier helping to keep those patients in their local communities. We offered a slate of different options, all the way from telehealth to bringing people intermittently down for consultation to continuing medical education, to even embedding clinical service lines in rural hospitals, or smaller hospitals. We’ve been able to help hospitals, for example, keep dialysis local. They were having to send it a hundred miles away for one hospital, because they didn’t have any nephrologist. We gave them a nephrology program, so they’re now keeping all those patients local.
In a number of programs like that between nephrology, neurology, cardiac surgery, we’re able to keep them local, but when they do need to transfer for tertiary, quaternary care, we streamline the transfer.
MH: Why go this route instead of mergers or acquisitions?
Lewin: One is, we are not experts in running rural hospitals. It is not in our area of expertise. I believe that some of the systems that are going out and buying hospitals don’t really understand the local communities or their specific needs. They’re going to find that buying a hospital and trying to use the power of scale to get better payer contracts is not a long-term sustainable strategy.
We have no major system acquisitions in our sights over the next year, but with the rapid consolidation in markets, you never say never. When we get a call from someone who fits our strategic plans, we would certainly be happy to have a conversation. But if it’s not firmly within our strategy, we politely decline. The most important part of strategy is knowing when to say no. It’s often the hardest part for an academic system, and we have learned how to be disciplined in our growth strategies.