AH007 - There’s No Value-Based Care Without Considering Pharmacy, with Sunil Budhrani, MD

March 1, 2024

Capital Rx

In this episode of the Astonishing Healthcare podcast, Dr. Sunil Budhrani, Chief Innovation and Medical Officer at Capital Rx, discusses the intersection of value-based care and pharmacy. He explains the concept of value-based care in a clear and relatable way and describes how it has evolved over the years. Dr. Budhrani, who remains an active ER physician, emphasizes the importance of sharing data and integrating pharmacy in value-based care programs to go beyond just scratching the surface, to address the needs of underserved communities and pay physicians for improving patient outcomes and helping to reduce healthcare costs.

How do we consider quality, equity, and cost and bring the payer, provider, patient, and pharmacy (the 4 Ps!) together? How important are social determinants of health (SDOH) and aligning incentives? Listen to this episode of the Astonishing Healthcare podcast to find out! 


Lightly edited for clarity.

Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare podcast. I'm Justin Venneri, Director of Communications at Capital Rx and your host. And I'm joined by Dr. Sunil Budhrani, our Chief Innovation and Medical Officer, for a discussion about the intersection of value-based care and pharmacy. Sunil, thanks for joining me today.

Sunil Budhrani, MD: Wonderful. Thanks for having me. Look forward to the conversation.

[00:49] Justin Venneri: All right, so we've all heard the phrase “value-based care” being thrown around for years. Decades even. Can you explain what value-based care is and how it has progressed or evolved over the years? And if you want to take a quick step back and just give us a little bit more about your background versus your title that I just shared, that'd be great too.

Sunil Budhrani, MD: Sure. I think the best way to do it is, to your point, kind of combine the two. I've spent my entire career in different components of healthcare to try to describe and understand for myself what is the true meaning of value-based care. We use that word over and over again, and over the years it's come to mean different things.

But I hardly think we've achieved the finish line of value-based care. And what I mean by this is value-based care ties the amount healthcare providers earn for their services to the results they deliver for their patients. And those results can be in the form of quality, equity and cost of care. Now, what does that mean? As I think about my career, I've spent different phases in parts of healthcare that are all different but should be more connected than they are.

I'm an ER physician by training. I've been practicing emergency medicine for more than 25 years and spend a lot of my time in many hospitals, predominantly on the east coast, and still even practicing today. I can tell you when we are providing care at that source, we live in a different bubble -- physicians, providers, mid-levels and so on. That one-on-one patient care is an entirely different experience than if we are creating drugs through pharma for these patients or if we are running, or working, or managing in insurance firms that are helping finance this type of care, or if we are in the PBM industry and we are helping deliver the pharmacy management capabilities to our patients. Each of these different parts of healthcare live in different silos, which is why I think we've encountered the problem related to being a true value-based care system.

So, as I mentioned, I spent the first phase of my career running, managing, and working in emergency departments and acute care facilities, and really understanding the economics and the requirements and demands that are necessary to deliver that great one on one patient care. But then, in this kind of second phase of my career, I spent a significant amount of time writing early papers and researching telehealth, much before the pandemic and understanding how digital health can improve not just the cost of care, but most importantly, the quality of care that we can deliver.  

And evidently and clearly, the pandemic demonstrated to all of us that digital health, namely telemedicine, could provide incredible benefits if used in the right way, and also can result in tremendous financial opportunity of savings with better care.  

In this third phase of my career, I went on and had an opportunity to be an executive leader at a major health payer in the United States. And there, understanding that silo of how care is delivered, how we think about the utilization of care, how we think about the high cost, and the sectors of high cost, of care, really opened up a whole different arena for me when it came to what are we really thinking about value-based care.  

And finally, in this role as the Innovation and Medical Officer of Capital Rx, understanding the very important pharmacy component is that fourth piece that has been missing in my time in understanding where value-based care comes together.  

So we talk about value-based care, but the only way that we will really get to a point where that original definition, I talked about creating a situation to deliver care to patients when we're thinking about quality, equity and cost of care, and incentivizing providers to think about those things will only be achieved when we bring these pieces together, the payer, the provider, and the patient, and integrate this information.

Now, what I'll go on also to say is, in the United States, it's no secret we spend almost 20% of our gross domestic product on health care. It just grew four and a half percent or so in 2022, reaching $4.5 trillion. You're looking at almost $14,000 per person we spend on health care. And we are not seeing the kinds of results or outcomes we would expect to, having one fifth of our economy devoted to health care.  

When we spend this amount and we don't achieve the health outcomes that we are looking to achieve, we have a problem where we're stealing from other parts of the economy as a result of our health care system. Transportation and education and other areas are namely pulled away from while we spend in this kind of unlimited boundary when it comes to health care.  

To give you some statistics, compared to other high-income countries, the US has one of the highest rates of infant deaths -- this may come as a surprise to many people -- as well as the highest rate of preventable deaths in the world. We shouldn't be dealing with things like this when we're spending this kind of cost in a nation like ours. Additionally, a history of inequality to access of care. This became very evident during the pandemic, as people of color and individuals with low income are more likely to experience adverse health outcomes than the rest of the population.  

Why is this important? Because I always say the US healthcare system was designed to be a reactive health care system, not a proactive health care system. We always knew that populations that were underrepresented, populations of low economic status, and people of color were afflicted by the same chronic diseases, like diabetes, depression, and heart disease. As we clearly saw during the pandemic, Coronavirus had its greatest impact on that population. So, I would say it's no secret that anyone should be surprised by the devastation we saw in the last few years because it was the same vulnerable populations that were experiencing these conditions before.  

So, we have a long-standing, widespread problem from misaligned incentives as a result of our traditional fee-for-service payment model. This contrasts significantly in what we talk about a value-based service model. Our current model encourages physicians and hospitals to be paid for each service they provide.

If my sink or toilet breaks down and I call a plumber, interestingly and kind of humorously, what are they going to do? They're going to come and plumb. They're going to do their work because they are under a fee-for-service model, just like our providers are, right? So, this is the way we are rewarded with volume in our country, and a direction needs to be put in place. And it continues to slowly evolve towards a value-based model that allows for paying for the outcomes versus paying for the procedure.

[07:47] Justin Venneri: That was super helpful, and I love the way you explain it. You've seen and experienced the continuum of care from all angles, and you're still in it in the ER and in your role here. The slowness of the development or the evolution of value-based care -- is it solely because of how fragmented or how siloed the pieces of what's necessary to deliver value-based care are?

Sunil Budhrani, MD: Yes, that's a great question. The fragmentation and the disintegration of the healthcare system in the United States is a significant component of why we are not in a value-based model. There are a number of care organizations that have tried to integrate that model. So those silos are broken, but they have not made a tremendous impact on the majority of the population that seeks that care. So, the more integrated you are, that is fair to say, the more you can work towards a value-based care model. And I'll talk a little bit about more in detail what that means and what that looks like. But there's a cartoon that kind of I chuckle at when I see it. Imagine this. You have a doctor that is sitting in the room with their billing administrator, and the doctor says, “I really need a coder. I need something to help me code. These procedures and these visits that I'm having with my patients because I keep having to look up these codes called the ICD ten codes.” And the billing coordinator says, “Look, I really wish I could help you, but the policy states, physicians are responsible for their own coding.”  

And I laugh at that cartoon because I was always trained in medical school to be a good doctor. That means seeing a patient, learning how to prescribe, knowing how to diagnose, how to treat and manage. But the last part of this cartoon makes me laugh because the doctor then says to the billing manager, I know I'm responsible for my own taxes, but I have an accountant to deal with that. Why do I have to deal with my own billing codes when I also have to see the patients? We're the only industry where the same provider that's trained to take care of the medical matters also has to manage the administrative matters.

So, yes, in going back to your question, the irony in all of this is we have stretched ourselves so thin, especially on the provider base, dealing with administrative tasks, in order to meet these fee-for-service demands, and frankly, for many physicians to make a living, that the care has been compromised in a way that we can't spend the same amount of time, energy and think about the preventive aspects of taking care of our patients.

[10:22] Justin Venneri: Interesting. Okay. Is there a stat that you've seen recently that shows what percentage of claims are value-based versus where you think they should be by now versus where you think they're going? Because it does seem like that friction and that time and bandwidth on the physician side is a hindrance to moving forward.

Sunil Budhrani, MD: Yes, I think if one goes and tries to look at really what percentage of visits are value-based versus non value-based, i.e. fee-for-service, what you'll find is less than 5% to 10% of those episodes of care, value-based and the reason why I say that is I really don't think there's anything truly scientifically validated and published to demonstrate that, because A) that information is held very closely to the chest; B) it's very minimal when it comes to actually being done; and C) is even the value-based care that's being delivered is so variable across organizations that you can't compare apples to apples.  

It's like comparing apples to lemons. Some people are doing value-based care just for screening exams, like colonoscopies and mammograms, and some people are doing value-based care for a strep screening on a child who has a sore throat. So, you can't even really compare all of the information that's out there on value-based care. So, hopefully that answers your question there.

[11:51] Justin Venneri: Sure. So, I guess if that's a good summary of where we're at with value-based care, where do you see it going? Maybe over the next year, being that.

Sunil Budhrani, MD: I talked about, in healthcare, the more the provider is compensated, the more that's done to the patient. So, we live in this world of doing more. What I think has been the straining factor of all of this is the following.  

When I went to medical school, we were trained as providers that we save lives at any cost. It is not common, even though it's increased more now since my graduating from medical school, it is not common to have a formal training on understanding the economics of providing care to one-on-one patients. It's really, we are trained how to treat, how to diagnose, how to manage, etc. Understanding that we save lives at any cost. On the medical training side, when I later on ended up completing an MBA, I quickly learned in business school that resources are limited. Resources need to be thought of in a very careful way and in a supply demand way. And that is a complete antithesis of what we are trained in medical school.  

So, when I started entering the business world, it became very clear to me why we are in this predicament of having a nearly 20% GDP in healthcare, on spending. And it's because of that way we are trained in one part, and the way we are trained in the other that has gone completely out of control.

What I believe is that in the next couple of years, and then beyond, we are starting to see more and more disintegration of the silos. I'm talking about -- this is being done through some public sector agencies, like CMS, and the private sector organizations, namely the large payers. Realizing they were getting a lot of stress from their customers, their employers, patients, and just the stress of costs. And also, the pandemic made people realize that, as I talked about earlier, underserved populations were increasingly devastated by chronic disease, not just the pandemic. And they are a significant driver of the cost of care. And this is a burden that we all share.  

So, all of these various stresses have forced agencies like CMS, which is often cited as taking a leading role, to test a number of voluntary and mandatory programs with hospitals, physician groups, health plans and other entities. So now you're seeing policy folks, to some extent, start bringing these broken components together and trying to figure out how they can all play happily in the sandbox.

In 2010, the Center of Medicare and Medicaid Services started their innovation center, and it was established to develop and test these new healthcare payment delivery models and start creating different kinds of solutions, including encouraging the development of ACOs -- Accountable Care Organizations -- whereby providers start taking risk on a defined group of Medicare beneficiaries. So slowly, slowly, as you bring the various parts of the healthcare system together, the payers, the health system providers, the PBMs, and then start incentivizing them to pay for taking risk on patients’ care, you start seeing a move towards a value-based care model.

Now, there have been about 50 value-based care models rolled out in seven categories of initiatives in all 50 states by CMS, really touching in some way, shape or form, about 300,000 plus providers and millions of patients, both with public and private insurance. But the reality of it is, even though this sounds exciting, the scope that is being addressed with value-based care, in my opinion, is very superficial. We're dealing with basic screening initiatives, which is a great start, very common chronic diseases, but just on the surface, like hemoglobin, A1Cs, which is an indicator of progression of diabetes, end stage or advanced kidney disease. Again, we're touching the surface because while we're incentivizing providers to look out for these things, the person has already advanced in their chronic disease by the time we're trying to reward those things.  

So, we need to even go further back in the continuum of disease to really appreciate the impact of value-based care. But this is a very encouraging direction we're going. It's still going to take time to be able to share data, integrate data, because if data is not integrated or shared amongst payers, health systems, providers, and patients, it is nearly impossible to get to the type of value-based, preventive, proactive care that I talked about earlier.

[17:09] Justin Venneri: That makes sense. That sounds like data is part of the answer to the question I'm about to ask. The key things needed to ensure the success of newer value-based care programs, or value-based care more broadly. Aside from integrating data and sharing data and being able to see across the different types of providers a patient would need to see to take care of a particular disease state. What helps here? And is this where pharmacy plays in?

Sunil Budhrani, MD: Absolutely. And that is also one of the magic sectors that needs to be incorporated in value-based care. In fact, most of value-based care is between payers, providers, health systems and patients. But if we really want to do this right, then we should be thinking about this earlier than later, because most of the studies and most of the pilots are being initiated are focused on those three entities: payers, providers and patients. And I do believe that pharmacy needs to be more and more incorporated in that discussion if we're really going to get to an outcome spaced medical world. We rely very heavily on medicines for chronic disease as a band aid to their conditions. And if we got ahead of their conditions, it would mean understanding the role of pharmacy, the patient's medications in their overall disease, and in many cases trying to even prevent the disease so the person doesn't require the medicine.  

So absolutely, that is a missing part of the equation. It's almost like what the four P's now: payers, providers, patients and pharmacy. And if we get those pieces together, where again, I keep coming back to this word, data. If we can share data, integrate data, then we will see doctors taking on more risk for the diseases they care for.  

Now, what has happened is there are some key things that are required for the success of a value-based program, in my opinion, and we've talked about this, and the Commonwealth Foundation of Healthcare has looked at a number of these things, as a number of organizations have.  

But first is quality. How do we measure quality? There's so much variability in thinking about the quality of care, and that continues to be a matter of debate. Now, the National Academy of Medicine has thought about this in a few different ways. Specifically, number one, the effectiveness of the care is the care based on evidence and getting the results. Number two, is it efficient? Providers are not using all the resources the way they need to in giving and providing the care. So, are we giving efficient care? Are we doing unnecessary testing and getting to the bottom of the issue? Equity. Like I talked about earlier, does a care not vary in quality based on personal characteristics like gender, race and income, the patient centeredness, you've probably heard this, personalized care.  

Now we have technology, we have data integration systems, and we are able to capture values, preferences, needs, individualities in a way that we could not before in healthcare safety, making sure the treatment doesn't cause harm and then timeliness. Are we avoiding delay? So, these quality metrics are going to be necessary when we think about measuring the success of a value-based program. If we behave in an anecdotal way. Without data, we cannot measure quality in the way it needs to. The next success factor is cost. We need to be very attuned to incentives that encourage reduction or maintenance of costs.  

So, in other words, I'm an ER physician. I cannot tell you how many patients come to the ER because their doctor may have told them to come to the ER instead of getting seen because it was just easier for them. The reality of it is the ER is an expensive venue of care for simple procedures or simple visits, and also inpatient admissions that go longer than they need to. We need to start creating environments that allow them to understand and appreciate there are better alternatives of care for cost. I talked about equity in terms of a quality measure. We know that lower socioeconomic classes, inner city urban populations, all had poorer access to certain levels of care, which led to poor outcomes. So being able to apply metrics and a further understanding to the equity of care and where it's occurred is also necessary. Another thing I want to touch base on is financial incentives. There's got to be financial incentives for providers and health systems to change behavior.  

The reason why those don't exist right now is because we live in a fee-for-service model that is not necessarily the right model, but it's easier to track. Once we make an easier to track value-based model that provides financial incentives to doctors and health systems, we will see an incredible transition in how care is delivered in this country.  

Currently, the few value-based models that exist and the ones that are proposed by the public and private programs involve what's called upside risk. A doctor would normally see their patients in the way they do, or a hospital may do the same in an episode of care, and they are reimbursed according to the codes and the procedures and the visits they do on a fee-for-service model. But alongside with that, if they do certain things that encourage the prevention or positive outcomes of care, like screening exams, like I talked about earlier, colonoscopies, mammograms, hemoglobin, a one c's to see how people's diabetes are doing, et cetera. At the end of the year, they are open to receiving a financial upside bonus for meeting those checkbox metrics.  

Now, early on in these value-based care arrangements, if they miss anything, they're not penalized. In an ideal world, you have what's called upside and downside risk. So, providers have the potential to lose revenue if they fail to meet these goals. In many arrangements, for the first few years, there's an upside risk, and then for the latter years there is a downside risk. But the problem is these value-based contracts fall apart in the latter years because the data they are receiving is often inaccurate. It's unhelpful and doesn't really summarize the activity the doctor had with the patient. So there becomes less reliability, less trust in the information, which has resulted in a significant obstacle to having a downside risk model, which would ultimately create a two-sided risk and generate better patient outcomes, if that makes sense.

[24:06] Justin Venneri: It does. That's fascinating. It's like you want to participate in the upside, but you're like, stay away from the downside. But in this case, it sounds like the data is actually part of the problem with executing the full scope of a value-based program.

Sunil Budhrani, MD: Yes. If you create a system of healthcare that incentivizes something to be done in this way, then you're just going to follow the chassis that was built, and that is what's occurred. We have to reinvent the chassis into a value-based infrastructure.

[24:35] Justin Venneri: Got it. And then based on everything you were kind of running through there, it sounds like the two primary benefits of value-based care for patients and providers. You improve the quality, the access, those aspects of care, and you improve the cost. So that's great. Are there any others that we should think about in terms of the potential benefits and why it's so important to move faster toward this new model?

[25:00] Sunil Budhrani, MD: Yeah, I mean, there's the non-financial incentives also. Basically, most, if not all of us became clinicians because we want to create the best health, both mental and physical, for our patients. We don't want to order more tests. We don't necessarily want to bring our patients into the office more times than they need to or send them to the ER. We are trained and well intentioned under the Hippocratic Oath to want the best outcomes for our patients.  

So, there's the non-financial incentives of the gratification that comes from seeing somebody be healthy. There is the idea of also the reputational benefit of a hospital saying, we have the best outcomes in heart surgery, we have the best outcomes in orthopedic surgery. There's that reputational standard that can be achieved when we have a value-based, outcomes-based solution for our patient. So, it's not all in financial, but the reality of it is there is an integrity component, there is a financial component to doing the right thing and moving towards a value-based care system.  

Our block to that has always been the fragmentation, the silos of the various components, the payer, the provider, the patient, and the pharmacy that has obstructed this grand goal. And I am very confident that if we could break down these silos and create a system where data is shared, then you can have reliable information presented to the providers to be able to act in a way that all of those things can be achieved, where they are financially rewarded just as well, if not better, than a fee-for-service model, reputationally rewarded because their patients are healthier, the cost of care is lower, the number of opportunities are massive. If we can just break down the silos that exist, provide a credible data metric system for which the provider can behave and empower the patients with their own care, because a doctor cannot do everything, the patient has a responsibility also being part of this partnership.

[27:11] Justin Venneri: Got it. And might as well break out your crystal ball now, given everything you just said -- what's the catalyst, or what's the spark, or what's your prediction for the future that really gets this movement going, say, over the next 3+ years?

Sunil Budhrani, MD: Yeah. So, with the increased pressure on employers, more and more employers in the United States are becoming what's called self-insured or self-funded, which means that the employer is burdening a significant cost of care that they're delivering on behalf of their employees. Some of that is being transferred to the employees' cost of care in the form of high-deductible plans, which we're all very familiar with.

So, as this cost shift takes place, there's an incredible amount of pressure on the healthcare system to rethink how to keep employees healthier, because the system is getting to a breaking point where it can no longer handle the cost of care that it is incurring on an individual level and a population health level. I'm optimistic that you're going to see more data integration. You're going to see more and more patients demand access to their data and choose where their information is going so that they can stay healthier, and they can spend less of their paychecks on healthcare. You're going to see, not just patients want to become more empowered with data. Employers are going to demand from their counterparts, whether that's payers, whether that's the PBMs, whether that's the health systems, more accountability and transparency in the care they're receiving from these different vendors.  

So, this pressure is going to, I believe, break down some walls that have obstructed us from getting to this value-based world that I've talked about. You're going to see CMS, through Medicare and Medicaid and other public private partnerships, continue to expand its accountable care programs through their Medicaid and Medicaid and other programs that I had mentioned, ACO reach, which is increasing equity, access, and community health program to develop these well-coordinated, value-based outcome programs. So, you have a confluence of pressures that are all coming together where I think it's an exciting time in healthcare where we will see patients have more access and be able to think more about what it means to be healthy.  

And then doctors have always claimed -- health systems, clinicians, nurses, mid-level providers have always claimed the administrative burden. Like I talked about earlier, keeping track of all these codes, the billing nuances, the paperwork. Administrative fees have been so prohibited that they are demanding that that be moved aside and simplify the system so that we can do what we were trained to do when we started our medical education.

[30:11] Justin Venneri: All right, last one for you, Sunil. You've seen a lot as an ER doctor, provider executive, and all the other roles you've held. What's the most astonishing thing you've seen that you can share safely? No HIPAA or other violations. Please tell us a good story.

[30:26] Sunil Budhrani, MD: Yeah, it's funny. Over 25 years, there's so many stories I want to mention. One thing that I think is almost always imperative to talk about before I jump right into a story, and that's you can't have a discussion about value-based care until you think about also the social determinants of health. This SDOH acronym you may have heard over the last few years, again, one of those things we put an acronym to, but we've known has existed for centuries when it comes to people's health care. And that's the Social Determinants of Health, as evidenced by a patient's social context, their demographics, their friends, their social circles, race, ethnic, religious, gender, economic context, their employment, their income, whether they're in poverty or not, their education, their level of English proficiency, graduation rates, physical infrastructure, housing, transportation, food availability, and finally, the context of understanding their health care.  

This SDOH factor to me is almost the heartbeat of value-based care because we focus on the reactive components of what life saving procedure are we going to do when they have a terrible heart attack? We think about these things, the aftermath. But that SDOH I just told you about has so much impact on preventing those expensive band aid interventions that we do later on and is the heart of the whole concept of value-based care. So, I want to just stress that as we think about it, we need to really get to the root cause of why we are in the health care predicament we are and really focus on what we can do about our social determinants of health, because that will save us tremendous time, money, energy, and create a more prosperous health for everyone involved.

That actually falls very nicely into your question, which is I am always blown away by people's choice for their venue of care. And what I mean by that is we have this campaign in the ER, and we talk about it. It's called the “know where to go.” We sometimes scratch ourselves on the head in the ER and we say, “Why is this patient even here?” We'll sometimes see a person with diabetes and hypertension with the worst chest pain in their life and they may go to an urgent care. And I'm scratching and saying, “What are you doing here? You belong in an ER.” But then we'll have a seven hour wait on a Friday night after an incredibly busy, nutty shift, and I'll have the gentleman who's waited 8 hours in the waiting room thinking he's coming back with something significant with a splinter in his toe. And I'm always wondering how that happens. It's just because we have this “nowhere to go” problem where people just don't completely understand our health care system, not just from a financial point of view, but sometimes what is the best venue to seek the care that you need?  

[33:27] Justin Venneri: 8 hours at a splinter? That is astonishing. Okay, it's nuts. Not somewhere you want to sit with a splinter for 8 hours. Okay, Sunil, thank you so much. I look forward to covering some more of these topics with you down the road, and it was great to speak with you today and hope you have a great rest of your day.

Sunil Budhrani, MD: Thank you so much. Thanks for the opportunity.

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