In October, four large nonprofit health systems — Baylor Scott & White Health, Memorial Hermann Health System, Novant Health and Providence — announced the formation of Longitude Health with the goal of enhancing core operational functions and transforming health system performance. The new company’s CEO, Paul Mango, and Craig Samitt, M.D., who is heading up its new value-based care enablement company Longitude PHM, spoke with Healthcare Innovation about the impact they hope to have in population health and value-based care.
Mango is the former chief of staff at the Center for Medicare and Medicaid Services, deputy chief of staff for policy for the Department of Health and Human Services, and a former McKinsey executive.
Samitt is the former president and CEO of Blue Cross and Blue Shield of Minnesota. An internal medicine physician by training, his career has spanned several senior executive positions, including partner at Oliver Wyman; president and CEO of HealthCare Partners, a subsidiary of DaVita HealthCare; and president and CEO of Dean Health System.
In its first strategic move, Longitude Health hired Jigar Thakkar, Pharm.D., M.B.A., as the CEO of Longitude Rx, a specialty pharmacy initiative. The goal is to improve patient access and adherence to specialty medications by providing solutions that support health systems in managing their specialty pharmacies. Longitude Rx is expected to formally launch in early 2025. Longitude PHM (population health management) will focus on optimizing care delivery for Medicare Advantage, Medicare Shared Savings Program, and other ACO beneficiaries.
Healthcare Innovation: Paul, I am wondering if you could talk about the origins of Longitude. Is there a funny story, like four execs sitting around a cafe table drawing on a napkin?
Samitt: That’s not far from the truth.
Mango: It was a little more involved than that. It involved a number of senior executives who view the future, appropriately, as one that will be a function of new capabilities, rather than size and structure as a basis for competitive advantage. As Medicare and Medicaid takes on a bigger percentage of your total patient flow, as transparency increases, as there are new technologies that require huge investments to introduce, I think they basically said, we’re entering either a knowledge-based and/or tech-enabled world for success. They said, why don’t we all invest collectively in creating it once and then distributing it 100 times? Because in most cases, the things that we’re investing in are scalable across any market in the United States. Also, I think there was some frustration that extra-regional mergers really aren’t delivering the promise of value creation. There’s a recognition that scale is required to make these types of investments, so they created this organization, which gives them virtual scale, if you think about it, to develop new capabilities.
HCI: Is it expected that other health systems will join?
Mango: Yes, we’re already in conversation with three or four others that are moving along very nicely. We have two tiers of participation: Tier One has a higher capital commitment each year and gives you governance rights. Tier Two has a lower capital commitment and does not grant you governance. We’re looking at no more than 15 Tier One members. We are trying to create an environment where entrepreneurs like Craig and others can thrive, so we don’t want a big bureaucracy. We want rapid decision-making. We want lean, streamlined governance; therefore, we don’t want to expand this thing too much.
HCI: It seems like getting that governance structure right would be one of the keys to success, because you don’t want health system execs micro-managing projects or changing their minds about priorities too much, but you also want them to feel that it is responsive to their needs, right?
Mango: Yes. We started with about 40 different potential initiatives, and we began to apply some screens to them around value creation, around speed to impact and capital preservation, and we came up with three businesses we’re launching in conjunction not only with the CEOs, but their chief strategy officers, who have been very involved. And the subject matter experts are actually co-creating the value propositions. We want complete joint ownership.
HCI: So the first business announced was specialty pharmacy, and today we’re going to discuss population health. What’s the third one?
Mango: One we’re calling consumer collections. A number of our members have put a lot of effort and resources into improving the patient journey, and they’ve done a great job on everything from scheduling a doctor’s appointment online to accessing your medical records seamlessly from the EHR and so forth. But all the net promoter scores fall off a cliff when it comes to collecting balance after insurance obligations. Most of that is due to the fact that they were told one thing, and now they get a different number. Then they want to pay, and it’s clunky, and much more difficult for them to actually fulfill their obligation than it should be. So we’ve hired a great executive from the FinTech industry who’s going to help us create a seamless solution in working with the health insurers to make that a very positive patient experience.
HCI: We’ve written a few things about similar consortia. One is called Graphite Health, which was formed by SSM Health, Presbyterian and Intermountain and also includes Kaiser Permanente. Are you familiar with that effort, and are there similarities or differences in what they’re trying to accomplish and how they’re going about it?
Mango: I think there are three or four things that differentiate us from anything else that’s out there. I’m not familiar with the details of all those, but we follow some of the other things going on. One is that this is 100% owned and 100% governed only by the not-for-profit health systems. There’s no private equity firm or venture capitalist firm involved. That’s one big difference.
The second is that the LLC agreement required that these members commit the capital upfront, so it isn’t that we’re going to bring you some ideas, and we hope you like them. They’ve committed close to $250 million over five years, and they’ve delegated the authority to their CEOs, who comprise the Longitude Health board, to use that money as they see fit. This isn’t about going back to the member boards and asking for permission to invest. So we think we can move much more quickly.
The third one is that everything we’re doing is designed, first and foremost, to move the operating performance needle of the members. This is about developing capabilities that have near-term impact on operating performance. That could be cost, it could be revenue, it could be patient experience, it could be access, it could be quality, but it’s moving the needle substantially on operating performance. I think those are the those are the biggest differences.
HCI: The press release about specialty pharmacy said that Longitude RX is expected to formally launch in early 2025, so how much will the solutions be tested and tried at the four founding health systems, and how much will they be marketed to other health systems?
Mango: One does not have to be a member to be a customer. And Jigar Thakkar, who’s the gentleman leading that effort, has already fielded probably a half a dozen customer inquiries. But suffice it to say that members will adopt this early on. Now simultaneously, can we serve customers? Yes, but we’ve already done the analysis of impact on each of the members. It’s been syndicated with their chief financial officers; there are milestones, there are timelines, and that business will launch in January. We’re just staffing up now, and it will be implemented at the members. Customers can come along simultaneously or after that, but the members will adopt it.
HCI: Craig, with your wide-ranging background in different parts of the healthcare system, what did you think when you were first brought this idea of a fairly unique ownership structure of health systems collectively investing in new capabilities together? Did you jump at the opportunity, or did you have to think about that?
Samitt: It was an almost immediate yes. My career, in many respects, has come full circle with the opportunity at Longitude. I’ve spent my entire career focused on value-based transformation. I’ve been on a quest for those organizations that are going to fix healthcare at scale. Early in my career, I actually thought it was going to be health systems that embrace and adopt innovation and transform healthcare. Well, we know what happened. Many health systems weren’t ready. You could say the industry wasn’t ready.
Then I moved to the plan sector, thinking that maybe plans that become better partners to providers or become strong enablement companies to fix healthcare. Well, I don’t want to be overly critical of health plans, but it’s difficult to be transformative singularly through a health plan lens. For the last couple of years, I’ve thought that maybe retailers or tech companies or private equity-backed companies or other disruptors would fix healthcare, but many of them are failing, struggling, or getting out of the business. So you could argue that I’ve now come full circle to the idea that nonprofit health systems are best positioned to fix an ailing industry.
At Longitude, we have the chance to bring together the clinical expertise of systems, the scale and financial prudence of health plans and the innovative spirit and technological adoption of disruptive innovators, and we mash it all together into this solution that will once and for all move our industry forward in ways it needs to move forward.
HCI: So with the team that you’re building, are you pulling people from those four founding health systems, or going outside to find the best expertise you can find anywhere?
Samitt: Both. As Paul described, first and foremost, we’re co-creating this with the sponsors. This is sort of the convergence of the best ideas and the the identification of which strategy for value makes the most sense for these systems. In some instances. Many of these systems are already really high performers in some elements of value.
So the question is, which of those areas of expertise really should be deployed more broadly throughout all of Longitude, both its sponsors and its clients. We can create a better mousetrap by simply knitting together strong capabilities that exist in the sponsors today. There’s going to be an integration strategy that will make sense, but there are some areas where none of us are very good. We either could acquire an organization, if it makes sense, or there could be some key leaders in the industry that we’re going to partner with. I don’t think we’re going to build a lot of things, because building isn’t going to get us to value creation very fast. And you could argue that anything we’d want to build, someone is already building somewhere or has built it inside.
HCI: A press release about this says that you’ll focus on optimizing care delivery for MSSP or other ACO beneficiaries. Are there needs that those ACO leaders have expressed, maybe within the founding four organizations, that your new solutions or new approaches can address to make them more successful than they have been?
Samitt: Yes. I’m doing immersion tours to understand needs, gaps, interests, and existing capabilities. In essence, what we’re focusing on is everything related to the the clinical and operational oversight of managing populations, as opposed to managing just admissions. It is historically not something that hospitals themselves have been very good at, right? Health plans are a bit better at it; some of the disruptive innovators or advanced primary care models are better at it. You could say that for hospitals, that’s not the world they’ve been in. This is a nascent area of expertise. That’s need number one.
Need number two is we’ve got a lot of data in the industry, and not a lot of information. I think understanding important elements of data for the purposes of maximizing quality and lowering cost of care is just a weakness that everyone has. We need to focus on what data sources and what data processes and methods and solutions will get us to the right answer, cheapest, quickest and most effectively. There are probably half a dozen to a dozen core capabilities that we will put into PHM, but ultimately, we want to create within this nonprofit system-sponsored entity the highest-performing ACO in the country. The question is, what levers do you pull and what capabilities do you fill to achieve that goal?
Mango: Let me just add a couple of things to what Craig said. As you know, the regulatory landscape has changed pretty dramatically in the last couple of years as it relates to value-based care, as it relates to Medicare Advantage. There’s a recognition that the primary care-focused-only models for value-based care are now failing, and the reason they’re failing is the role of risk adjustment and just closing a few care gaps, has now migrated and has become a lot tougher. So regardless of how well the systems were performing before Craig got here, there’s a rethink in the industry as to how to create value in these risk-bearing environments, and Craig and I both share the belief that the the emphasis is shifting toward the specialists and a little bit away from the primary care docs. That’s a function of where most of the cost of managing multiple chronic diseases resides, and because of what’s happening in the broader environment, as pharmaceuticals and biologics replace healthcare services as the cost element, right?
So what we’re thinking through right now, given the changes in the external environment, is: how do we have a more intense, specialist-focused model? Of course, we believe that favors the health systems, because, as you know, across the country, the health systems employ a good percentage of the specialists, and obviously control all the ancillary services associated with what those specialists do.
HCI: Historically, the specialists have not been as involved in in value-based care models, so that may be a cultural issue of getting them to participate and getting that muscle memory of actually doing it.
Samitt: I certainly have to counter a little bit, given that I’m a primary care physician. I’d say it’s not an either/or; it’s a both/and. The impact of value-based transformation will always be, to some degree, a key primary care function. But to Paul’s point, the parts of our system that have been the last bastions of pursuit of value have been health systems and specialists. How do we bring them to the table and achieve the potential and the power of specialist involvement in value-based care that we have not yet experienced?
I’ve been quoted in saying this before: being a high-performing ACO is a team sport, and our industry has not functioned as a team to deliver on that promise.
