Craig Samitt 0:03
One of the strategies is simply a partnership model. The plans and the providers have historically had a more contentious and transactional relationship and I think the patient and the member has suffered. And my vision has always been what if we can align and what if we all benefited when the patient was healthy and when healthcare was more efficient and the total cost of care was lower and quality was higher?
Gary Bisbee 0:27
That was Dr. Craig Samitt, President and CEO Blue Cross Blue Shield of Minnesota from his perch as leader of the oldest Blue Cross plan in the country. Craig was speaking about the historically contentious and transactional relationship between providers and health insurers, and the rationale for partnerships going forward. I’m Gary Bisbee and this is Fireside Chat. Craig outlined his background in both provider and health insurance organizations and how lessons learned in each are transferable to the other. Craig further discussed the relationship between health systems and health plans and noted that both are low margin businesses. As the percentage of government pay increases and continues to pressure margins, it will cause further alignment between the two. Let’s listen to Craig.
Craig Samitt 1:12
The more that we move toward the predominance of government payers, the more we’re going to see, I would say, both payers and providers come together to align interests.
Gary Bisbee 1:25
He spoke about the evolution from the traditional fee-for-service system to a value model and how the purchasers of care, employers, and consumers, will lead the way.
Craig Samitt 1:35
Someone is going to come in and show us the way. I didn’t think it would be a pandemic that would change us. I would have thought it would have been Amazon or a Walmart or Target or an Apple, and they may very well still have a transformative effect on our industry. But I very much believe that transformation is coming and it will be led by the purchasers. It will be led by the employers. It will be led by the consumers.
Gary Bisbee 2:00
Craig discussed the characteristics of a successful leader in a crisis and how communication, flexibility, compassion, vulnerability, and decisiveness are key assets. I’m delighted to welcome Dr. Craig Samitt to the microphone. Well, good afternoon, Craig, and welcome.
Craig Samitt 2:20
Thank you very much for having me.
Gary Bisbee 2:22
We’re pleased to have you at this microphone. Let’s start by learning more about you, cover Blue Cross Blue Shield of Minnesota, get into COVID, and your thoughts about leadership. You’ve lived on the East Coast, the West Coast, the Midwest, what’s the most enjoyable feature of each of those three regions?
Craig Samitt 2:38
They’re all different. If I were to choose a word I think that would describe each, I’d say in the East, it’s culture. In the West, it’s the outdoors. And in the Midwest, I’d say it’s the people. All of them it’s food, but we won’t go there or drink. But all the regions are very different, but I very much enjoyed them all and I feel very fortunate to be in the Midwest.
Gary Bisbee 3:03
Tufts undergrad, Columbia medical school, Wharton MBA. When did you first become interested in medicine, Craig?
Craig Samitt 3:09
I’m not entirely sure. I know that I was very young. What I remember is I liked to fix things and I liked people and I like variety. I like the challenge every day. So medicine made sense, because in many respects, it combined all three into a single discipline. And I’m sure that my parents had a role in this, I’m sure that they placed in my head at some point that medicine would be a good field for me to think about that. I very much gravitated toward it from an early age.
Gary Bisbee 3:42
And then you decided Business School? So why Wharton?
Craig Samitt 3:45
I went to Wharton in the mid-90s and at that time, it actually seemed to be the only business school that was focused on recruiting physicians and actually had a comprehensive health care management curriculum. When you go back to business school after you’ve done other graduate education, for me the MD, I wanted to specifically go to business school to address my interest, which was healthcare management and there weren’t that many programs around the country at that time that had invested so significantly as Wharton did.
Gary Bisbee 4:19
Yeah, I agree with that. As we talked earlier, with the Wharton degree myself, I’ve been through that and I totally agree. How did you become involved in leadership? Some of us are accidental leaders, some by design, where do you fit on that scale?
Craig Samitt 4:32
I’d start by saying that’s probably what brought me to Wharton. I was a medical resident in the early 90s and Bill Clinton was obviously in office then. And so while I was learning a clinical discipline, why I was hearing in the news at least about all the reasons why healthcare was broken and the need for health care reform. And I recognized I didn’t get it. I didn’t fully understand a.) why people felt that our industry was broken, the one I just selected to go into and b.) why physicians and hospitals and even health plans, those that are steeped in the industry, didn’t seem to have a voice in how to reform health care. And that brought me to Wharton. And so I think that’s what drove my interest in leadership. For me to understand why we needed to fix an industry, I needed to step into both the business education as well as into a position of influence and I think that’s why I got into leadership.
Gary Bisbee 5:29
So you’ve got the enviable background of being both a provider and a health plan leader, was that by design?
Craig Samitt 5:36
I would say that yes, in part. When I offer career advice to those that are newly developing their career, I will often suggest that early in your career, it’s better to go broad than to go deep. I still feel today that I’m a perpetual student, but certainly earlier in my career, I felt that for me to fix healthcare I really needed to see healthcare from all angles, whether it was clinical or operational, whether it was health plan or care system. The industry is so complex that I felt that the more that I understood the various vantage points, the more effective that I would be. I also just recognized the divide that exists in the industry, especially between plan and provider. And the best role that I could play was to, in many respects, be a translator or bridge the divide by understanding the dueling perspectives. And I’m really glad I did. The healthcare world, as you very well know, is converging and the line between provider and payer is blurring. So I feel lucky that I actually went broad and not deep earlier in my career and that I’ve learned as much as I have.
Gary Bisbee 6:46
You’ve kind of answered this in a way, but what lessons did you learn as a health system executive that informs your approach as a health plan leader?
Craig Samitt 6:55
I’d say there’s a good and a bad or maybe we think of it as a challenge and an opportunity. I certainly learned that being a physician is hard. And I also learned that in many respects, we’re very ingrained in the way that we’re trained and the way that we’re taught and we gravitate toward the status quo in health care delivery. And so I can recognize that the roots are deep, and we embed them in tradition in the way that clinical medicine is practiced. The opportunity though, what I realized is because the industry, the care delivery system is very much ingrained, I also recognize that I could help physicians change more from outside care delivery, as a payer, than I could from the inside. So I often see myself as a Trojan horse that I’m a physician that recognizes how hard it is to provide care and how difficult it is to change and I can take that with me to the other side and say, “How can I help move the industry when the industry has a hard time moving itself?”
Gary Bisbee 7:56
Why have you made change or transformation a key part of your personal mission in both your provider and health plan positions, actually, but you really have focused on this right from the get-go? Why do you think that is, Craig?
Craig Samitt 8:09
I hearken back to why I went into medicine. I’ve long had a desire to fix things. So I think that very much has a lot to do with it, that when you see something that’s broken, you want to fix it. And I’m a physician, and I’m a helpline executive that believes that we should heal our industry. Another part is my personality. I’ve been told that I am irreverent, that I will boldly face our own weaknesses as an industry and I’ll speak candidly about it. And so I feel that I am probably well suited. Our industry, if it’s going to change, needs as many internal critics as we have external critics and I have always been that way. And then I’d say the last thing is that I’ve seen the industry as a patient and as a caregiver. My father and my mother and my brother all got very sick at very independent times. And I needed to step in and help support them when they were receiving care and there is nothing like being a patient or being a caregiver that helps you realize how our industry can get better. So I think for all those reasons, I’ve made it my mission to help us be better and help us be a stronger industry.
Gary Bisbee 9:18
Well, that’s a great response and I think you’re 100% right, as far as I’m concerned, at least, so good to have you in that role. Let’s look at Blue Cross Blue Shield. You’ve been there for a little over two years now. Will you please describe Blue Cross Blue Shield for us?
Craig Samitt 9:32
Sure, actually, Blue Cross Blue Shield of Minnesota. We’re one of 36 Blue Plans. We were actually the very first Blue Plan in the US. The Blue Plan started in Minnesota. We’re the largest health plan in Minnesota, a $13 billion company, and we care for about 3 million members in Minnesota.
Gary Bisbee 9:53
Would you describe the Blue Cross Blue Shield of Minnesota as your portfolio of products, if I could use that term or services, is that pretty much extensive or have you focused on any particular type of group or type of patient?
Craig Samitt 10:07
No, we’re a full-service healthcare company. And when I say a full-service healthcare company, because we have both a health insurance arm as well as a services or a diversified business arm. In the health insurance arm, we are all products, so Medicaid, Medicare, individual and exchange, commercial, commercial fully insured and commercial self-insured. So yes, we have a very broad base. And our diversified businesses are very much about the next generation of what health plans should become if we’re going to play a role in driving transformation of the industry.
Gary Bisbee 10:45
So what’s an example of that, Craig? Is that data, data management?
Craig Samitt 10:49
Well, actually the three divisions that we’ve got, we’ve got a finance division, which is very much about support for patients that are on high deductible health plans or those that are navigating some financial challenges associated with coinsurance and deductibles and copays. We also have a care delivery division. So our care delivery division is very much about complementing the care that’s delivered by the traditional health care system. So for us, this is virtual care, mobile care, urgent care, palliative care, and community-based care. So those are two examples of our diversified businesses.
Gary Bisbee 11:28
What would you say the major priorities are for Blue Cross Blue Shield of Minnesota at this point?
Craig Samitt 11:34
Our strategic plan is all about the reinvention of healthcare. We don’t believe that we can stay where we are in our industry. We have many strengths, but when we think about, especially through the lens of a customer or a patient, how we could be a better industry, we believe that we should play a role in fixing that. I like to say that one of the things we’re very good at in healthcare is admiring our problems, but not doing a very good job of fixing them. And so our priorities, at Blue Cross Minnesota are very much about solving the industry’s problems one at a time.
Gary Bisbee 12:12
How much of your business is Medicare?
Craig Samitt 12:15
In terms of membership, about 14% of our enrollment of our membership is Medicare.
Gary Bisbee 12:26
In terms of Medicare Advantage? Is it true that Minnesota has been a little bit different than many other states in terms of number of people selecting into Medicare Advantage?
Craig Samitt 12:37
Well, actually, the distinction of it in Minnesota from a Medicare perspective is we have been one of the remaining residual Medicare cost states. We actually just over the last two years have made a more significant transition from what has been predominantly Medicare cost to Medicare Supplemental and Medicare Advantage. So we’re in the midst of a state-based transition. So our numbers and our percentages of enrollment may actually be different than some other states. But at the present time, the percentage of Medicare enrollees that select MA is about 56%. And that’s again, coming off of the Medicare cost model. So the large majority are very much choosing to go to an MA alternative versus cost or supplemental.
Gary Bisbee 13:23
Do you think that MA will in effect become Medicare, over time?
Craig Samitt 13:28
I would say yes. I haven’t been bashful to say that I think more broadly, and it’s not just related to Medicare, I would say that this is true of commercial. I think one of the major flaws of healthcare is a fee-for-service reimbursement model. And it’s fraught with all kinds of challenges and complexities, most certainly overutilization, but also fraud. And it doesn’t align about rewarding things that generate more positive outcomes. It doesn’t reward better care in many respects. It rewards more care. And so if we think about Medicare Advantage as a value-based alternative to Medicare fee-for-service, then I very much do believe that we’re going to see growth in Medicare Advantage, and we already are. When we look at what members or patients would prefer, we’re seeing a continuous growth in Medicare Advantage enrollment over Medicare fee-for-service.
Gary Bisbee 14:22
How much can the private sector lead away from fee-for-service toward some kind of value? MA is obviously a government program, but how much can the private sector do here?
Craig Samitt 14:34
In terms of how much can a private sector influence the shift to value, do you mean?
Gary Bisbee 14:38
Yeah, yeah. What programs could you undertake in the private sector to drive this move away from fee-for-service toward value?
Craig Samitt 14:46
Well, we’re very much steeped in having discussions with the largest systems in Minnesota about the merits of shifting to a more shoulder-to-shoulder, aligned financial model that rewards us both for better care at a lower cost. So I think one of the strategies is simply a partnership model. The plans and the providers have historically had a more contentious and transactional relationship and I think the patient and the member has suffered. And my vision has always been, what if we can align? And what if we all benefited when the patient was healthy, and when healthcare was more efficient, and the total cost of care was lower and quality was higher? I think if we can achieve those partnership models, then that is a role, as much if not even more than government payers that we can play in shifting the industry to a better place.
Gary Bisbee 15:39
Looking out 5 or 10 years, do you think that it’s possible we will see delivery and financing under the same roof? Could be partnership, could be ownership?
Craig Samitt 15:49
Well, first I’ll say that I’m biased because that’s where most of my career has been spent. So Harvard Community Health Plan, Dean Health System, and even now with some of the partnerships that we’ve announced in Minnesota, we are creating integrated delivery systems. And I’m biased because I think that through those forms of alignment, we will see quality improvements, service improvements, and cost reductions. And I think the other reason why I would be bullish on this is if we just look at the impact that COVID has had on health systems, it highlights the dangers of addiction with fee-for-service or volume-based healthcare. Many of the health systems are suffering because of the absence of elective procedures. Well, if we were not volume companies and we were all population health companies, then provider payer partnerships flow over the peaks and valleys of healthcare utilization. They don’t drive under any circumstance, a higher number of services and procedures. So I do think we’ve historically seen several organizations that continue to thrive under one organizational structure. You can say that Kaiser Permanente is a gold standard and that. I don’t necessarily say though, that it has to be an organizational structure. It has to be alignment of interests, which could very well be population health co accountability. We call it joint accountability here in Minnesota. That’s the kind of relationship we want to drive, not just vertical integration.
Gary Bisbee 17:27
I definitely see that. Putting on your Wharton MBA hat for a moment, you’d have to look at the health plan business and the health system business right now as being pretty much low margin businesses. And as government payment increases, probably become even lower margin. Do you think that’s going to have the effect over time over 5-10 years at causing both the financing and the delivery side to seek each other out and perhaps around some kind of value model?
Craig Samitt 17:59
I think that in many respects, the reimbursement model that we’ve been under in a fee-for-service world has driven many of us to be commodities. And when you look at the margins of both health plans and hospitals in particular, they’re very lean. But when you look at the margins of population health companies where they’re no longer addicted to or beholden to the lean margins that come with volume, then I think that’s where the world is going to go. And the more that we move toward the predominance of government payers, the more we’re going to see, I would say, both payers and providers come together to align interests, as well as to think more significantly about reinvention of our model. That less may be more, less in terms of utilization, more being quality outcomes. Less will be more in the future in a model that moves more toward government.
Gary Bisbee 18:59
Thinking about your commercial business, how frustrated are the companies these days? I mean, you hear all the time about how they’re unhappy with costs increases as they ought to be. But how frustrated are they? Are they going to drive even more change than they have?
Craig Samitt 19:17
Well, if you think about commercial businesses, I think we’ve long seen the frustration of employers, certainly in the rising cost of health care. And I just saw a stat recently heading into the election that 90% of voters believe that health care costs too much. And so it’s patients, its members, its employers look at our industry and believe that we’re broken, believe that we’re unsustainable. And I think many are looking for a solution. COVID has changed everything for us. But I was always fearful that someone was going to disrupt healthcare. If we presume that we could be easier to use and we presume that we could be more cost-effective, then someone is going to come in and show us the way. I didn’t think it would be a pandemic that would change us. I would have thought it would have been Amazon or a Walmart or Target or an Apple. And they may very well still have a transformative effect on our industry. But I very much believe that transformation is coming and it will be led by the purchasers. It will be led by employers. It will be led by the consumers that will get a taste of a better way or a higher value model and they will shift to it. And we don’t have to look much past Netflix or Uber or any other example of a significant industry disruption to realize that the purchasers of healthcare are very much going to expect something better in the future.
Gary Bisbee 20:46
Well, let me follow up if I can on your comment about COVID and how it’s been challenging payers, providers, patients, but what impact has COVID had on BlueCross BlueShield of Minnesota?
Craig Samitt 20:58
As I’m sure it’s for everyone, it’s impacting everything. It’s had a big impact on our people, certainly. We’re now 98% remote. It’s had a big impact on our members who are scared to use the traditional care delivery system. And in many respects, many of our patients we worry about not getting sufficient access to their routine care or chronic care needs, COVID aside. And certainly a big impact on our providers, which we’ve already talked about where their revenues disappeared in many respects overnight. Not as big an impact on our strategy, because ironically, our strategy pre-COVID was to reinvent healthcare and to address what’s broken about our industry, which has just now been further exposed due to the crisis. So in many respects, our strategy is very much on track. In fact, we want it to go faster, but the impact on everyone else around us has been huge.
Gary Bisbee 21:56
Telehealth visits exploded in virtually every health system in the country. Do you think that that will become a standard part of delivery practice?
Craig Samitt 22:08
I sure hope so. It’s long overdue. What other industry does not rely on modern technology to deliver its services? We used to call it, 20 years ago or so, telebanking, we just say it’s banking now. So we use the term telehealth, a significant irony and frustration to it because it’s just health and let’s use technology to do it. So yes, I very much do and in fact, we’ve seen 100 fold increase in telehealth. It was a 1% of our business in 2019. In the first three months of the pandemic, it’s been close to 90% or more of our business.
Gary Bisbee 22:48
In a recent interview with Jason Goravich, Teladoc’s CEO, he said he believes that the COVID crisis accelerated the use of televisits by at least 3 years. Any feel for that, Craig?
Craig Samitt 23:00
I disagree with him. I think it accelerated it by 10 years. When we look at the trajectory of adoption of telehealth, it was very slow. It was frustratingly slow. I think we’ve seen the recognition that several types of visits can be done by telehealth. I think we’ve reached the tipping point. I don’t think it’ll stay at the volume that it’s at. But I do think that we’re immediately 10 years ahead of how long it would have taken to get to this point, if it were not for the pandemic.
Gary Bisbee 23:28
Well, that’s good news. I mean, CMS has indicated that it will pay for televisits going forward. What about the health plans? Will they also be paying for these televisits going forward?
Craig Samitt 23:39
Absolutely. I mean, if the question is will we pay for telehealth? Absolutely. We will pay for telehealth. The bigger question is will we pay the same? You know, interestingly, we’re getting complaints and concerns from patients, from members, who are describing their telehealth experience and saying to us, you’re not paying the clinicians the same for what we’re getting through a telehealth visit as you are face-to-face are you? Because they feel the experience is different. There are several services they no longer get when it’s virtual and even the length of the visit is significantly different. Yeah, the other challenge with harmonizing reimbursement levels is it faces the same challenge as fee-for-service healthcare. We should be having telehealth visits that are truly effective and needed and we don’t want to have a model that drives up unnecessary utilization or even fraud. So my preferred approach, as you would expect from me as a loyalist with value-based healthcare, is I’d much prefer to move to more global payments or PMPM payments. So think of it this way, if I said to a primary care physician, overall we’ll pay you the same as we did last year for caring for a population of patients, then we get out of the way and you decide, does the patient need a visit face-to-face, does the patient need a virtual visit, or even more, should you return to a modern house call? And would it be best for you to go to the patient in their home where they may feel safest? And if we harmonize the Population Health Reimbursement to hold the physician harmless, then the decision is made where it needs to be made and should be made by this physician themselves.
Gary Bisbee 25:20
Yeah, the modern house call is kind of an interesting point you’re making. I was talking to a physician the other day who was saying, with this televisit, I can see what’s going on in the home and how the family is reacting and what the level of support for the patient is and it’s almost like a home visit, which would be pretty cool if it actually works out that way.
Craig Samitt 25:42
Well, I’ve asked in other talks that I’ve given, I’ve really proposed some optionality then would say well, maybe in the future, you know, historically our visits have been 99% face-to-face and 1% virtual. What if the future is 50% face-to-face, and 20% telehealth, and 30% in the home, the modern house call. Maybe that is a model that’s more convenient, equally high quality, and more efficient and effective. I think we’re going to see a significant evolution of care delivery and it may be back to the past to some degree, telehealth aside.
Gary Bisbee 26:17
So the elective surgeries in the health systems are recovering. Many of them almost back to pre COVID levels. How about your claims? Are they returning your pre COVID levels as well?
Craig Samitt 26:28
In many respects, yes. In fact, I just got a report today that our reported July utilization is higher this July than the prior-year July. And so not only has it returned to pre COVID levels but to some degree, it’s in excess of pre-COVID levels, which we could have expected. We had envisioned that we would see a double valley and a double peak. And what I mean by that is that at the beginning of the crisis, significant underutilization for obvious reasons, no elective procedures. And then a surge of backlog of scheduled procedures and electives, which is the peak that we’re in right now. But I think we very much believe we’re heading toward another valley and it’s either related to what could be another surge, or it may just be we’re going to have a period of time where there’s a new lower baseline, where people just don’t feel comfortable quite yet, coming in for traditional care delivery as they once had it. And then hopefully we’ll fully recover, which would be the fourth peak or the fourth phase. But we are now moving toward the surge of utilization that we very much expected.
Gary Bisbee 27:45
Any timing around your phases, the fourth phase, are we talking 2021 here or later?
Craig Samitt 27:52
Well, I think we’re certainly envisioning potentially a surge of the virus in the fall. So I think we’re thinking that we will see a valley again in the fall and winter of this year. And I think what we’re envisioning that valley will stay, at least through the beginning of 2021, if not even for the balance of 2021. And then the follow on surge to occur after that. There’s all kinds of modeling that it’s all speculation in terms of what the timing will be. But I think that we’re envisioning that we will be going into a valley for some time over the course of the next several months.
Gary Bisbee 28:35
Craig, this has been a terrific interview. I’d like to wrap up if we could with your thoughts about leadership, which typically, the importance of leadership is magnified in a crisis. When you became aware of the COVID crisis, what was your first thought?
Craig Samitt 28:50
I think this is probably the caregiver in me and perhaps the physician in me, but I think the very first thought was keeping our people safe. Both our associates who we sent home right away, but also our patients and our members. It’s not about our organization. It’s not about our facilities. It’s not about the money, we’re nonprofit. It was about the people. And it was about our mission. And so that was the very first thought. I think the immediate second thought was, this is scary. There’s nothing in the CEO handbook that teaches you how to address the intertwining crises. And here in Minnesota, it wasn’t just COVID, it was the tragic death of George Floyd and the economic crisis. So many would argue that we immediately had three crises all at the same time and we’re just not taught how to lead through this. So you have to lead with your heart, in many respects, more than you lead with your mind.
Gary Bisbee 29:48
That leads us into the question again, you’ve answered part of this already. But what are the most important characteristics of a leader during a crisis?
Craig Samitt 29:55
No, I think we’ve become non-traditional leaders and say it’s less about being a chief executive. And for me, it’s I’m always good with new labels, but I, I kind of feel I’ve been even more of a Chief Communications Officer or a Chief Flexibility Officer or a Chief Vulnerability Officer. I think our team has needed to see that this is hard for us too and see the empathetic and the emotional side and the compassionate side of leadership, while also seeing the strength of decisiveness and action when people are scared. So I think those are the characteristics that we have felt is important by our team.
Gary Bisbee 30:40
So how has the COVID experience changed you as a leader and a family member, Craig?
Craig Samitt 30:46
I like to joke that I feel bad for my team. My, my colleagues because I think they’re facing four crises -COVID, racial injustice, the crisis of the economy, and the crisis of Craig Samitt because what has changed in me is, I was already bad enough, but I think I’ve become more impatient, more irreverent, and even more anxious now about reinventing healthcare than I was before. And it was even hard before, for me to be more focused on that than I was. But I think somehow, I’ve become even more insistent that we change our industry and that has been how I have changed the most, and I feel bad for our team, but I think it’s the right way to go.
Gary Bisbee 31:33
This has been a terrific interview, we need to land here timewise, but I hope you will accept our invitation and come join us again in the fall because we have much more to talk about. You’re a terrific leader and it’s been a great conversation.
Craig Samitt 31:48
Absolutely. Gary, I’d be happy to come back anytime.
Gary Bisbee 31:51
This episode of Fireside Chat is produced by Strafire. Please subscribe to Fireside Chat on Apple Podcasts or wherever you’re listening right now. Be sure to rate and review Fireside Chat so we can continue to explore key issues with innovative and dynamic healthcare leaders. In addition to subscribing and rating, we have found that podcasts are known through word of mouth. We appreciate your spreading the word to friends or those who might be interested. Fireside Chat is brought to you from our nation’s capital in Washington DC, where we explore the intersection of healthcare politics, financing, and delivery. For additional perspectives on health policy and leadership, read my weekly blog Bisbee’s Brief. For questions and suggestions about Fireside Chat contact me through our website, firesidechatpodcast.com or gary@ hmacademy.com. Thanks for listening.