Fixing the Black Hole of American Medicine – Dr. Rahul Rajkumar, COO Optum Care Solutions

Dr. Rishi Desai: Hi, I'm Dr. Rishi Desai. One of our goals with Raise the Line is to help people understand the big picture of what's happening in the U.S. healthcare system, and today's guest is in a perfect position to do that. Dr. Rahul Rajkumar brings the perspective of a physician and experience in high-level positions in government and the health insurance industry to his current role as COO of Optum Care Solutions.

He was also a key figure in establishing value-based medicine and accountable care in the U.S. We'll be asking him about the state of health care reform as it stands today. Dr. Rajkumar earned both his medical degree and legal degree at Yale, and he was an instructor at Harvard Medical School. Thank you so much for being with us today.

Dr. Rahul Rajkumar:Of course, and please call me Rahul, by the way. It's great to be here. I appreciate it.

Dr. Rishi Desai: Sounds good. Rahul, you have an incredible background. And I feel like the question I ask couldeasily take us in different directions. So let me just back up and start with an earlier part of your life, and what got you even thinking about medicine way back when?

Dr. Rahul Rajkumar: Yeah, thank you Rishi. I grew up in a medical household. My parents are both immigrants from India. They're both primary care providers. I grew up around medicine my whole life.

Very early in my career, I began to think, wonder, learn about the ways in which other things affect health outcomes—so things like access to health care, poverty, lack of food, lack of transportation, lack of housing. And in the United States, our financing system.

My life's work is to make healthcare better, to make it safer, to improve its quality, make it more efficient for populations, for the country. And the main lever that we have right now, and the thing I've spent the last decade of my career working on, is trying to re-engineer the underlying financing systems of healthcare. To change the way that we pay for healthcare. To make it better, because the way that we pay for healthcare—it signals what we value. We are about a third of the way through a national journey or transformation that is reimagining how we can pay for healthcare to make our healthcare delivery system better.

Dr. Rishi Desai: When you were working as a clinician, when you were seeing patients, what did you notice that made you recognize that how we pay for healthcare was a problem? What are some examples of what you saw?

Dr. Rahul Rajkumar:Thank you for asking that. I don't want to make too much of my being a clinician because there are so many doctors, including my own parents, who see patients every day, and are truly working on the front lines. By comparison, I'm a hobbyist. I feel a little sheepish holding myself out as someone who's in the practice of medicine every day. My clinical practice is very limited right now.

But I think anyone who's around clinical medicine sees some of this. I have trouble even picking out the one or two most important cases. I'm a hospitalist. One of the main things that you see in hospital-based medicine—we care about what happens within the four walls of the hospital. But often, especially for Medicare beneficiaries, there is this whole post-acute period, right? That is like the black hole of American medicine, where patients go to skilled nursing facilities, inpatient rehab, sometimes home.

Often the decision of what that that next site of care is, is made arbitrarily. It's based on the next available bed. It's not based made based on science. How long does the patient stay there? Who follows them? What is their access to care during that period? It’s highly variable. It's actually the site of the highest variation in quality and cost of care in the U.S. healthcare system.

There's another case that I saw. This was a few months ago. A younger patient, a Medicaid beneficiary with secondary progressive multiple sclerosis. She had a decline in her functional status, and she had been living at home independently. She didn't have family in the area, and then a limited social network. The end result of this hospitalization was that she was really tentative to go home, physically, but also mentally, you know. It was not clear—she was a borderline case. You and any physician has probably seen many such cases of a patient who wants to go home, and could fly at home, if we could wrap them a blanket, you know, of love and support and services.

But organizing all of those things to help someone thrive at home is very, very hard. And the different players that need to be involved—their incentives aren't necessarily aligned. Of course, the main interest of the hospital is in reducing its length of stay because that's how we pay hospitals. We pay them DRGs. Is there an accountable primary care provider, or a quarterback outside of the hospital? Someone who, beyond their professional ethic, actually cares about what happens to this patient? That's the nut of the issue, and can we rally all the different sources of support that we have in our society to help this person thrive at home? You see it in a case like that. It's really, really hard, you know, and every single case like this is a puzzle with a human being at the center of it.

Dr. Rishi Desai: You mentioned the “professional ethic,” and I sometimes even question that, because I think a lot of folks feel burnt out or stressed out or frustrated, because of the pressures of being a caregiver that cares, and a lot of times because of EHRs, and all these other kinds of influences on that patient-doctor relationship, it becomes hard to maintain a professional ethic around caring about the patient's good when you're not incentivized to do so on a daily basis. And obviously, that has led to a lot of folks feeling stressed, leaving the profession entirely, etc. What is your sense on that? Are you seeing any strong reasons for optimism on that front?

Dr. Rahul Rajkumar: Well, it's very hard to be optimistic right now, but I'll share some sources of optimism. I do want to acknowledge that we are living through an extraordinarily difficult period in the history of American medicine. We have asked so much of our healthcare workforce, not just providers, not just doctors, but nurses, every level of person that works in a hospital, frontline workers. You see it in the statistics, and in the stories of the level of burnout, and even depression among healthcare workers.

I think that in some practice settings, there are reasons for optimism. So, in my current world at Optum, we work with high performing practices that practice excellence in population health and, you know, often focus on Medicare beneficiaries. We’re able to create a practice environment that gives providers enough time to spend with their patients, to advance professionally, to play a leadership role within their practice. We're certainly not the only one. I see others out there that are reengineering primary care and using new systems of financing to do that. So those things give me some reason for optimism.

Dr. Rishi Desai: You’ve been involved in health care reform efforts at the national level, at critical junctures in American history. What led you to do that? What made you think you could? A lot of folk see these problems and think, "Gosh, these are frustrating. Let me just keep plugging away in my own clinic, or maybe complain at parties?" You chose not to do that. You chose to get involved and do the messy work of politics. When I say politics, I mean policymaking. How did you get to the place in your own mind that you could do that?

Dr. Rahul Rajkumar: First it's just having an interest. I have an interest in health policy and healthcare systems, and healthcare finance. Some of it is luck—being in the right place at the right time and having sponsors, mentors that have helped me along the way. There are many to name.

But I think a lot of it is also just willingness to take a plunge. You know, at the right moment in my career. One of the greatest sponsors I've had is Patrick Conway, who's also a physician. He's the CEO of Care Solution Optum, and my boss; I've worked with him in three different jobs. But I often tease him that when I went to work for him at CMS, he had like a list of 10 people that he tried to hire before he got to me. And none of them were willing to take a 90 percent pay cut to come work for him in the government. And so, he got to me. I was like 35 years old at the time. I was like, “put me in coach.” 

If you catch someone at the right moment of their life and career, I think serving in government is a tremendous opportunity. It is one of the most impactful and joyful jobs I've ever had in my life.

Dr. Rishi Desai: So, Patrick, just for what it's worth, was in residency before me by a couple of years, and so he was a senior resident when I was coming in as an intern. And you quickly realize who's amazing, and Patrick has stuck. I've always admired his career. I'm happy you mentioned his name. He's a star.

Dr. Rahul Rajkumar: He is, yeah.

Dr. Rishi Desai: You were deputy director of CMS innovation in the early years of the Affordable Care Act. You helped push a value-based approach in which there's more emphasis on quality than there was previously. What's your assessment now that things have played out and some time has passed, in terms of where we are now? As part of that answer, I'd love you to reflect on COVID as well, and whether that's accelerated or derailed that reform.

Dr. Rahul Rajkumar: We’re 10 years into this period of learning and experimentation. I think we have a few conclusions we can draw. The accountable care organization as a construct it works. Compared to non-ACO providers, ACO's can reduce the total cost of care by a modest amount. I don't think you should expect from an ACO to see a 30% reduction in healthcare expenditures. But compared to what would have happened without providers being accountable for the total cost of care, we see that ACO's can produce modest savings.

It’s a real win. And something that has now been studied extensively. And I think there's a demonstrable impact there. I think we are still at an earlier stage of experimentation with bundled payments. Where I would love to see CMS go in the longer term is getting to 90-day DRGs. You think of a hospitalization as what happens within the four walls of the hospital. But what the patient really cares about, the most patient-centered view of things, is home to home time. The financial incentive for an episode, you know, that's anchored with a hospitalization should really be 90 days home to home, and that includes the post-acute period.

It's an explosive concept. Somebody will probably listen to this podcast and tweet about it. But I really think that the end game here is that we need to get to 90-day DRGs. We're a long way away from that. There are a few things that we've learned. Back to ACO's. I think financial risk matters. So, the providers should have some skin in the game. The type of ACO matters. We see greater success among independent primary care providers that are in ACO arrangements versus hospital-based or system-based. If you look at a company like Alidade as one example. It’s built a business model around this. Independent primary care led ACOs. I think we want to make the quality measurement as simple as possible. That's an area where there's still a lot of work to be done.

Two other things I'll name—a greater attention to health equity and the health equity impacts of new payment models. I see CMS moving in this direction. And then lastly, we need to make the alternative to being in a value-based arrangement or an ACO as unappealing as possible. And that is something that will likely require more action from Congress in the long term. About 30 percent of Medicare fees for service beneficiaries, a little more than maybe 35 percent now, are attributed to an ACO provider. But to get the other 65 percent is going to require a greater push from the federal government. That’s what I think is on the horizon. We need to make the alternative as unappealing as possible.

Dr. Rishi Desai: You brought up a few really interesting ideas, and you called out the explosiveness of one of them, which is the one that stands out for me: This idea of home-to-home time. Philosophically, what is the reason that someone wouldn't jump onto that idea? Why is that not something that we're all running to? You said it will take some time to get that idea through? Why? What hurdles do you see?

Dr. Rahul Rajkumar: Well, I think it would require a dramatic restructuring of the payment systems. Question one is, who is accountable? Or who holds the risk for that 90-day episode? Is that a hospital? Is it a post-acute facility? Is it a physician? Is it some combination or coalition of those? We have to figure that part out.

If you create 90-day DRGs that are anchored by hospital stays, it could create a dramatic restructuring of the industry. And then there's also just the question of how you get there. So, this can happen by an act of Congress, if Congress were to restructure the CMS payment systems. But the other is by testing a CMMI model, that would almost certainly have to be a mandatory model. It requires rulemaking, and a pretty aggressive path to do that, and so you would have to design the model, test it, evaluate it, and then use the authority of CMMI to expand it. And that's about a four or five-year path.

Dr. Rishi Desai: Are there countries that do approach it that way? Are there models that you're drawing from that you've seen in terms of how they might break down the percentage of what the hospital gets versus what the skilled nursing facility gets, etc., that you think that we could learn from?

Dr. Rahul Rajkumar: Not really. One thing off the bat is I suspect that we are an outlier in our use of post-acute care among industrialized countries in general. But I really have to check that fact. In terms of provider payment innovation, I really believe the U.S. to be pretty advanced in its experimentation.

One of the things that may make you laugh: When I was in government at CMMI, we used to get inbound interest from all sorts of foreign governments. Like from the government of the U.K., France, Israel. I even went to the Embassy of New Zealand once to give a presentation in Washington.

At first, I thought, like, “what do they want?” I think of the U.S. healthcare system as dysfunctional, right? And not as advanced from a financing standpoint as these other systems that provide universal access. And I was like, “this is like the blind leading the blind. Why do you want to hear from me?”

I think those countries are really advanced in the way in which they finance health insurance. They have a social insurance concept of healthcare. They have universal coverage offered through single-payer or nationalized systems. But the second-order of, how do you pay the providers? How do you incent the providers to deliver efficient care, high-quality care? That is something where we are not very far behind on. And if anything were farther along and more advanced.

Dr. Rishi Desai: When you would go to these presentations, what were some of the standout ideas on how we incent physicians that other countries were excited about?

Dr. Rahul Rajkumar: Just speaking in general concepts, the idea of a medical home, where you're paying a primary care provider to deliver enhanced services. The idea of the primary care provider as the quarterback, as controlling total cost of care, or managing total cost of care. The primary care provider is the one whose incentives are really aligned with the payer, whether that's government or commercial, and for them, if they’re incentivized in the right way, specialist, hospital, post-acute care, these are all cost centers, but the primary care provider has a tremendous amount of influence.

That concept is very powerful. Then certainly the idea of payment bundling for different episodes, but that's a vast concept. But I think those are the three main ideas, you know. All CMMI models are really variants of those. And those are the three that I've seen others latch on to.

Dr. Rishi Desai: Do you mind speaking just a little bit more about Optum now? What role does Optum play if folks aren't familiar with it, and what care solutions is it all about?

Dr. Rahul Rajkumar: Optum is a part of United Health Group. Structurally, Optum has a pharmacy benefit manager, has an analytics company, and then there's Optum Health. I work in a part of Optum Health. I'm the Chief Operating Officer for Optum Care Solutions. And we operate a family of businesses that, broadly, are trying to make healthcare better.

One of them is an Optum in Behavioral Health which, manages behavioral health care for various clients. Many of our businesses are focused on improving care for Medicare Advantage Beneficiaries. So NaviHealth manages Post-Acute Care, relates to what I had said earlier, where there's tremendous variation in the quality and efficiency of post-acute care. Landmark is another example of Optum at home that provides in-home care to high-need frail, elderly. But broadly, the unifying theme of this family of businesses are that they're trying to improve healthcare for a segment of the population.

Dr. Rishi Desai: You know, it's very confusing for folks that that are learning about the healthcare industry for the first time to jump in and hear all the buzzwords like bundled care and ACOs, all that kind of stuff.  If you could pick one topic that you feel is just so poorly understood, or people think they understand it, but they don't, what is one thing that you’d teach or educate our audience on keeping in mind our primary audience are early on in their healthcare careers?

Dr. Rahul Rajkumar: Let me give you two. For people who want to do something to make healthcare better, I would really focus on the payment systems and make a deep study of how we pay for health care in the different segments of the United States health care system. And that is the area where... I meet with a lot of early-stage companies. The biggest gap in understanding I see is in how we pay for health care, because that leads to like, how do I build a successful concept or business?

I think the second is just a misunderstanding of what health insurance is. No individual can really shop for health care alone. Most patients have immense loyalty to their providers, to their doctors, especially to their primary care provider. And that's good. I mean, that trust is important. 

But when you really think about it, no patient wants to be out there shopping for health care services alone. It is critically important that we shop for healthcare, we purchase health care as a part of a coalition. And that's the function of health insurance, whether it's a government payer or commercial payer. When you walk into an emergency room, and you pull out a United Healthcare card, or a Blue Cross card, or Aetna card, or whatever you have, it means that you're not alone. There's millions of people standing shoulder to shoulder with you. 

That's important. It's important for people to see themselves as a part of a coalition when they're accessing the healthcare system. And that that function of being a part of a buying coalition is a really important one. And I would love to see more and more Americans develop that understanding and then begin to exert influence. How do they want their coalition to act? And how can they act as a part of that buying community?

Dr. Rishi Desai: That makes a lot of sense. And I think that's at the heart of a lot of other misunderstandings and, frankly, a lot of feelings that people then generate about their insurance company.  As a close, we have a lot of students that look at your career. You mentioned that you are the son of parents that were in the industry—frontline health care providers, and you do a little bit of that. But then you do a lot of other things as well. And you have moved on to different interesting parts of the healthcare space. If someone wants to emulate your career, how do they go about doing that? It can seem quite daunting—seeing where you are today versus where they may be at the moment.

Dr. Rahul Rajkumar: For one, I would never counsel someone to emulate my career. I think you can have a better career. There's so much opportunity in the world, and I guess one piece of advice would be to become an expert in something. Like, particularly if you're in medicine, try, especially in the early years of your career, to develop your portfolio of knowledge, and have at least one area of deep knowledge and expertise, and be identified with a particular body of knowledge.

Seek mentors, sponsors that will help you along the path. And then I think it's totally okay to look at other trajectories, not to emulate them, but just to understand, like, how did that person get from point A to point B? I still find that to be very useful. Especially at the earlier years of my career, I think it’s very useful to do that.

Dr. Rishi Desai: That makes a lot of sense. And I think that idea of going deep and making yourself identified by that deep body of knowledge in perfecting your craft—it certainly resonates with me as well. Listen, that was fantastic. I gained a lot from our conversation. I'm sure a lot of our audience did as well. Thank you.

Dr. Rahul Rajkumar: Thank you for having me here today.

Dr. Rishi Desai: I'm Rishi Desai. Thanks for checking out today's show. Remember to do your part to flatten the curve and raise line. We're all in this together.