New Advisory Board strategy consultant talks health reform

Bonnette: Industry will learn from 'spectacular failures and spectacular successes'

The Advisory Board Co. tapped Dr. James Bonnette in early June to lead the firm's health care strategy consulting practice as executive vice president. The former chief medical officer of Oliver Wyman will oversee consulting engagements, helping hospitals and other clients respond to massive shifts in reimbursement and responsibilities. Bonnette recently spoke to the Post about health care reform, treating patients as consumers and developing specialized care models.

What does your new role at The Advisory Board entail?

I've been recruited to come in and build a strategic consulting service for The Advisory Board, which has great interactions with most of the hospitals across the country. I've been asked to create the service that helps navigate change in health care, allowing clients to survive over the long term as the system changes. I've been in health care for too long to mention, and I don't think I've ever seen this much change going on at once in so many different directions.

How do all those changes overlap?

The kinds of things that are going on, in a macro scale, are changes in the way that people have insurance and the way they interact with their insurance. The exchanges and the recent numbers of private exchanges — those are going to be massive changes, and quickly. When you combine that payment change with the fact that we have a system with increasing costs that are simply not sustainable, you have a collision force there. You've got to be able to make some changes and deliver care that doesn't drive cost at that same rate. Systems have to redesign how they deliver care and they have to do it much more efficiently and in thinking about those issues, how does one redesign and implement that change in care delivery? How do you move to more of a population-based health care system while you're still being paid through a fee-for-service model? Those two things have to sync up.

Where do you think the industry is currently on the path to value-based reimbursement?

If I was giving the health care industry overall a ranking between one and 10, I'd give it a three. We have a long way to go. We're seeing significant care delivery changes, in terms of how primary care is redesigned. We're moving more surgical procedures to the outpatient space, and there's better management of chronic diseases. That's all happening, and as the retailers start their push into the space, that will only accelerate.

And I think you have to give the Affordable Care Act credit for creating accountable care organizations, which are experimenting in management and payment. You're going to see more ACOs, both commercial and Medicare, and more experimentation, and those will get progressively more refined and sophisticated. There will be some spectacular failures and spectacular successes, and we'll learn from those and move forward faster.

What are the consequences of employers pulling back in their health coverage?

Employers that provide insurance don't necessarily want to get out of doing that for their employees, but they don't want to do it the way they're doing it now. A large number of employers will move to a combination of defined contribution and private exchanges, and that will accelerate fairly quickly, for both large and medium employers. On the employee side, getting insurance through the exchange is typically a high deductible, and you tend to treat it more like your own money. People will become much more sensitive to understanding the prices of the things they buy in health care, which will moderate how they use health care services. It will make them much more sensitive to using expensive services as much as they have in the past.

What do you expect will happen when providers treat patients as consumers?

If [providers treat patients] as consumers, its going to be quite different than how we treat people now, because we're going to have to have transparency in places we really don't have at all. We're also going to have to have convenience in the way that consumers expect, and that's why the retailers feel like they have an 'in.' They're easily accessible with transparent prices, and it doesn't feel like what traditional providers do. Providers are going to have to match that or partner with it to provide the things that consumers want.

So how do providers get there? And what's your role as a consultant in getting them there?

Basically, they need help getting from Point A to Point B, because we're dramatically changing the way physicians practice, and the way they and their staff interact with the public. We're designing different kinds of care models. We help them look at the population they serve and determine what kind of services should be provided and where you should put those to be accessible and appropriate for patients and make the pricing transparent. It's getting those actions down from the global concept into the marketplace.

Think about segmenting people by their needs and designing a care delivery system that actually helps those people. When that is successfully implemented, they can improve the outcomes for those people, and create in that system enough savings to invest in other populations. There's a whole range of these models, specific ones for cancer patients or the elderly, for example. There are roughly about 10 different ones, and we help systems implement those much more specifically based on the populations they serve.