First take on new CMS Comprehensive Primary Care Plus model

CMS CPC IconThis morning, I read about the recently announced next generation version of the CMS Comprehensive Primary Care model, which will require multi-payer participation and will involve up to 5K practices in 20 regions.

Sounds interesting.  I need to study it in more detail.  But based on my initial assessment:
  • I agree with the idea of pursuing payment and delivery system changes on a multi-payer basis to make it more compelling to providers.
  • I also agree with the idea of prepaying some E&M and then paying reduced FFS for E&M to cover only marginal cost of E&M office visits to make providers incentive-neutral on encounter modes.
  • But I disagree with move away from shared savings and implicit abandonment of the idea of non-governmental primary care-based organized systems of care pursuing care process innovation in favor of CMS taking over responsibility for defining a nationally-standardized multi-payer “care delivery model” and injecting it into individual primary care practices using a CMS-developed  “learning system.”
  • I also disagree with the Track 2 idea of partnering with “CMS-convened” IT vendors and contractual commitment to specific IT capabilities.  That approach basically takes MU, which was a huge distraction from real improvement, to even more obnoxious levels of micro-management.
Overall, I share the Fed’s frustration with the limited impact of previous efforts to transform primary care payment and delivery models, but I think the solution should be to define incentives which are more timely, coherent and consequential, enabled by more meaningful transparency requirements, clearer care relationships and some empowerment of primary care delivery organizations to define their own referral networks.
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Physician-led ACOs now outnumber Hospital-based ACOs: Why this makes sense, and where our terminology breaks down.

At a recent meeting of the American College of Physicians covered in MedPage Today, Neil Kirschner, PhD reported on the growth of ACOs. Dr. Kirschner is the ACP’s senior associate of regulatory and insurer affairs. He reported that in March, 2012, there were only 136 ACOs  that had ACO-style gain-sharing contracts with Medicare, a commercial payer or both. Those ACOs included 91 “hospital-based ACOs” and 45 that were described as “physician-led ACOs.” In the last year, the number of ACOs has almost tripled from 136 to 391.  And, significantly, the 202 physician-led ACOs now outnumbers the 189 hospital-based ACOs.

ACOs by doctor vs hospital sponsorship 2012-2013

Why are physician-led ACOs growing faster?

The rapid growth of physician-led ACOs makes sense because ACO-style gain-sharing reimbursement arrangements are more favorable to physician organizations than hospitals. When a hospital-based health system enters into an ACO contract, it basically says “if you succeed in reducing the total cost of care (primarily by reducing your own hospital revenue), we’ll give you back a portion of your lost revenue.” That’s reminiscent of the old business joke “we lose money on each unit sold, but we’ll make up for it in volume.” But, from the point of view of a physician organization, particularly a physician organization that emphasizes primary care, the ACO contract basically says “if you do more primary care work to avoid the need for hospitalizations and emergency department visits, we’ll pay you for that extra work and we’ll give you a portion of the money we no longer have to pay to the hospitals.”

So, why would hospital-based organizations ever enter into an ACO-style gain-sharing agreement?  Two main reasons.

  • First, as a defensive measure. By forming an ACO in which they are involved, they can avoid or delay the formation of a physician-led ACO. It is better to be “doing” than to have it done to you.
  • Second, as a way to prepare for a potential future state where providers are bearing far more risk, such as in capitated reimbursement arrangements. It takes a very long time to develop effective population management capabilities, including establishing effective governance, building trust, deploying the right health information technologies and analytic systems, and, most importantly, recruiting and developing human resources that can effectively use data and improve care processes.

Ambiguous ACO Terminology

Finally, a note about the use of the term “ACO” and ACO growth statistics.

Many people get confused about the definition of ACO.   Some argue that an ACO is, by definition a specific type of Medicare reimbursement arrangement, the Medicare Shared Savings Program (MSSP), created by the Affordable Care Act (ACA).  But, I don’t agree that the term “ACO” defines a type of contract, and that the term ACO only refers to Medicare.  The “O” is for organization. On its face, the term refers to a type of organization, not to a type of contract.  When people generate statistics about ACOs, they should be counting organizations, not gain-sharing contracts.

I consider a provider organization to be an ACO if:

  1. It includes primary care physicians, and
  2. It has or plans to enter into at least one contractual arrangement where the provider organization takes responsibility for an attributed population of patients, and bears at least some risk for quality and economic performance

In common use, people are most likely to refer to a provider organization as an ACO if at least one such contractual arrangement includes a fee for service component with some risk sharing that includes at least some up-side opportunity to share in savings. The Medicare MSSP and Pioneer ACO contractual arrangements are just prominent examples of such contracts, not limiting to the definition of ACO. Because of that fee-for-service connotation, people don’t tend to describe a staff-model HMO as an ACO, even though they meet the definition I proposed above.

Furthermore, when categorizing ACOs, it is important that the categories are mutually exclusive.  The term “physician-led” seems to refer to an attribute of the governance of the ACO, such as whether the person serving as the CEO is a physician or whether the majority of the shares or votes on the board of directors are controlled by physicians or by people that are employed by physician organizations.  The term “hospital-based” seems to refer to whether the provider organizations that own the ACO include at least one hospital or hospital-based health system.  An ACO can include a hospital as a co-owner and still be “physician-led.”  Therefore, there is inherent ambiguity in the statistics comparing the number of physician-led to hospital-based ACOs.

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Beautiful video from Cleveland Clinic advocating empathy

We focus on optimizing care processes, analyzing data, implementing technology, and the other technical and scientific aspects of our work to improve health care.  But, this video created by the Cleveland Clinic is a touching reminder of the human element, advocating for empathy in our work.

http://www.youtube.com/watch?v=cDDWvj_q-o8&feature=youtu.be

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New HIT ROI lit review is a methodologic tour de force, but misses the point

JAMIA logoRecently, Jesdeep Bassi and Francis Lau of the University of Victoria (British Columbia) published in the Journal of the American Medical Informatics Association (JAMIA) another in a series of review articles that have been written in recent years to summarize the literature regarding the economic outcomes of investments in health information technology (HIT).  Such articles answer the questions

  • “How much do various HIT technologies cost?”
  • “How much do they save?”
  • “Are they worth the investment?”

They reviewed 5,348 citations found through a mix of automated and manual search methods, and selected a set of 42 “high quality” studies to be summarized.  The studies were quite diverse, including a mix of types of systems evaluated, methods of evaluation, and measures included.  The studies included retrospective data analyses and some analyses based on simulation models.  The studies included 7 papers on primary care electronic health record (EHR) systems, 6 on computer-based physician order entry (CPOE) systems, 5 on medication management systems, 5 on immunization information systems, 4 on institutional information systems, 3 on disease management systems, 2 on clinical documentation systems, and 1 on health information exchange (HIE) networks.

Lau HIT ROI results

Key results:

  • Overall, 70% of the studies showed positive economic results, 24% were inconclusive, and 6% were negative.
  • Of 15 papers on primary care EHR, medication management, and disease management systems, 87% showed net savings.
  • CPOE, immunization, and documentation systems showed mixed results.
  • The single paper on HIE suggested net savings, but the authors expressed doubts about the optimistic assumptions made in that analysis about a national roll-out in only ten years.

My take:

Bassi and Lau have made an important contribution to the field by establishing and documenting a very good literature review methodology – including a useful list of economic measures, a nice taxonomy of types of HIT, and many other tools which they graciously shared online for free in a series of appendices that accompany the article.  They also made a contribution by doing some tedious work to sort through lots of papers and sorting and classifying the HIT economics literature.

But, I think they missed the point.

Like many others, Bassi and Lau have implicitly accepted the mental model that health information technology is, itself, a thing that produces outcomes.  They evaluate it the way one would evaluate a drug or a cancer treatment protocol or a disease management protocol.  Such a conceptualization of HIT as an “intervention” is, unfortunately, aligned with the way many healthcare leaders conceptualize their investment decision as “should I buy this software?”  I admit to contributing to this conceptualization over the years, having published the results of retrospective studies and prospective analytic models of the outcomes resulting from investments in various types of health information technologies.

Process PuckBut, I think it would be far better for health care leaders to first focus on improvement to care processes — little things like how they can consistently track orders to completion to assure none fall through the cracks, bigger things like care transitions protocols to coordinate inpatient and ambulatory care team members to reduce the likelihood that the patient will end up being re-hospitalized shortly after a hospital discharge, and really big things like an overall “care model” that covers processes, organizational structures, incentives and other design features of a clinically integrated network.  Once health care leaders have a particular care process innovation clearly in sight, then they can turn their attention to the health information technology capabilities required to enable and support the target state care process.  If the technology is conceptualized as an enabler of a care process, then the evaluation studies are more naturally conceptualized as evaluations of the outcomes of that process.  The technology investment is just a one of a number of types of investments needed to support the new care process.  The evaluation “camera” zooms out to include the bigger picture, not just the computers.

I know this is stating the obvious.  But, if it is so obvious, why does it seem so rare?

This inappropriate conceptualization of HIT as an intervention is not limited to our field’s approach to economic evaluation studies.  It is also baked into our approach to HIT funding and incentives, such as the “Meaningful Use” incentives for investments in EHR technology, and the incentives created by HIT-related “points” in accreditation evaluations and designations for patient-centered medical home (PCMH), accountable care organizations (ACOs), organized systems of care (OSC), etc.  The designers of such point systems seem conscious of this issue.  The term “meaningful use” was intended to emphasize the process being supported, rather than the technology itself.  But, that intention runs only about one millimeter deep.  As soon as the point system designers put any level of detail on the specifications, as demanded by folks being evaluated, the emphasis on technology becomes instantly clear to all involved.  As a result, the intended focus on enabling care process improvement with technology slides back down to a  requirement to buy and install software.  The people being evaluated and incentivized lament that they are being micromanaged and subject to big burdens.  But they nevertheless expend their energies to score the points by installing the software.

So, my plea to Bassi and Lau, and to future publishers of HIT evaluation studies, is to stop evaluating HIT.  Rather, evaluate care processes, and require that care process evaluations include details on the HIT capabilities (and associated one time and ongoing costs) that were required to support the care processes.

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The race in on between triple-aimers and hospital defenders

This week, Julie Creswell and Reed Abelson published an interesting piece in the New York Times about how the war between hospital chains puts doctors in a bind.  I think the article includes many relevant facts about the consolidation of the health care market.  But, I conceptualize the conflict a little differently.

Here’s my take…

For a number of years, there has been an internal battle within the federal government.  The CMS has been promoting the idea of formation of ACOs to achieve clinical integration of physician and hospital services.  But, as I described in an earlier post, the FTC and the Justice Department have been concerned that hospitals would use ACO safe harbor provisions as cover for consolidation to increase market power and drive up prices.

CMS was confident that, if ACOs faced enough risk, the savings from clinical integration and care process transformation would outweigh cost increases from higher prices.  But, when CMS proposed ACO regulations that had the audacity to include a modest amount of downside risk for providers, they faced a huge provider backlash.  CMS buckled under the pressure, and approved final ACOs regs that allowed providers to choose only upside rewards, with no downside risk.  As I’ve noted before, the vast majority of providers that ended up forming ACOs have very little skin in the game.

Within hospital organizations that formed ACOs, there are a mix of leaders.  Some leaders are enthusiastic promoters of the CMS vision of clinical integration, a resurgence of primary care, and achieving the “triple aim” of improving quality, increasing satisfaction and reducing per capita cost.  Other ACO leaders are more focused on the financial health of the hospital portion of the delivery system.  Such leaders are concerned that the per capita cost take out will come out of the hides of hospitals, some of which will be forced to close when their revenue cannot cover their substantial fixed costs.  These two types of leaders have been unable to agree on the need to make substantial investments in clinical process transformation and the associated clinical information systems designed to achieve the cost take-out.  So, the federal government came to the rescue with HITECH funding for EMR technology.  The Feds were able to justify this funding based on the need to stimulate the economy, rather than the need to reduce health care cost.  As a result, the HITECH “meaningful use” regulations are focused more on quality than cost take-out.  Though well meaning, the HITECH funding and the associated meaningful use regs actually created a huge distraction for IT professionals within provider organizations.  Many ACO leaders have directed their IT professionals to focus on meeting externally-defined meaningful use requirements — studying for the test — rather than doing the far more challenging work of actually figuring out how to support the triple aim through clinical process transformation.

The one thing that the two types of ACO leaders could agree upon was physician practice acquisition.  The triple-aim-oriented leaders were in favor of acquiring practices as a means to get sufficient control to achieve clinical integration.  The hospital-oriented leaders were in favor of acquiring practices as a means of controlling the hospital’s inbound referral pipeline to keep the beds filled and to increase market share to gain bargaining power against health plans.  So, practice acquisition has proceeded vigorously.  Now, the race is on to see which group of ACO leaders is going to dominate.  To this point, the triple-aim-oriented leaders remain hampered by longstanding weakness in physician leadership and governance structures (the problem of “herding cats”), the traditional dominance of specialty leaders over primary care leaders, the lack of available analytic talent, and lame clinical information systems.

Right now, the hospital-market-power-oriented leaders are out in front. There is a great risk that they will be too successful, making it too obvious that the FTC and the Justice Department were right about market consolidation. That outcome would lead the health care policy community and the public to conclude that “accountable care” is a failure, as happened with “managed care” in the 1990s, sending the idealistic triple-aimers back into exile for another decade.  But, that outcome is not yet certain. There remains a chance for some provider organizations to figure out ways to achieve the triple aim, including per capita cost take-out, and still accomplish profitability and growth, thereby disrupting the long-standing hospital-centric order. I would estimate the probability of that outcome to be less than 50%, but still likely enough to be worth fighting for.

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We’re up to 154 Medicare ACOs

Today, the CMS announced that it added another 89 ACOs to the Medicare Shared Savings Program (MSSP).  Including the original 6 Physician Group Practice Transition Demonstration participants, the 32 Pioneer ACO, and the 27 MSSP participants announced in April, that brings the total number to 154, serving more than 2.4 million Medicare beneficiaries.  Beginning this year, new applicants will be accepted only annually.

The new ACOs includes some that serve Michigan:

  • Oakwood Accountable Care Organization, LLC, located in Dearborn, Michigan (with 1,546 physicians and partner hospitals), and
  • Southeast Michigan Accountable Care, Inc., also located in Dearborn, Michigan (comprised of 333 physicians, including group practices and a network of individual practices), and
  • ProMedica  Physician Group (250 physicians in Michigan and Ohio)

Other new Medicare ACOs that are particularly large include:

  • Advocate Health Partners (2,237 physicians in Illinois)
  • Wellstar Health Network, LLC (1,203 physicians in Georgia)
  • Indiana University Health ACO (1,837 physicians)
  • Iowa Health Accountable Care (1,551 physicians),
  • University of Iowa Affiliated Health Providers (1,791 physicians)
  • Maine ACO (1,595 physicians)
  • Essential Health (1,404 physicians in Minnesota, North Dakota and Wisconsin)
  • Balance Accountable Care Network (1,069 physicians in New York City)
  • Mount Sinai Care (2,249 physicians in New York City)
  • University Hospitals Coordinated Care (1,770 physicians in Ohio)

The full list of new ACOs is available here.

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A Happy Day: Supreme Court upholds health care reform law granting broad access through mostly free-market mechanisms, and I am $1 richer

 

This morning, the United States Supreme Court made its landmark decision to uphold the health care reform law.  I am very happy about it for a number of reasons:

  1. I won a $1 bet.  As I described in a previous post, I bet my brother-in-law, an attorney from Chicago, that the law will be upheld.  I will be driving to Chicago this weekend to attend my father’s 75th birthday.  I’ll see my brother in law there.  He’s a trustworthy guy, so I’m confident he’ll pay up.
  2. I was right about the majority argument.  Like my brother-in-law and most of the pundits, I was originally focused on the question of whether the individual mandate provisions of the reform law represented an unconstitutional expansion of the federal government’s power to regulate interstate commerce.  My first blog post on the subject explored that issue.  But, then I read an interesting piece in the Atlantic by Jack Balkin, a constitutional law professor from Yale.  As I explained in my second blog post on the subject, Balkin argued that the penalties associated with the controversial individual mandate should be considered a tax, and are therefore a constitutional exercise of the federal government’s taxing powers.  I found the argument convincing. But I never heard anything more about that line of reasoning until this morning, when we learned that this argument is exactly the one that Chief Justice Roberts made in his majority opinion.
  3. The law was upheld with a minimum of expansion of federal power.  I shared my brother-in-law’s concern that if the law was upheld based on an expansive view of the interstate commerce clause, it would have the effect of dramatically expanding the power of Congress to dictate how we all live our lives, without being constrained by the political unpopularity of raising taxes to pay for it.  But Chief Justice Roberts called a spade a spade. Despite the terminology of the law itself, and despite the repeated assertion by President Obama that the law does not raise taxes, Roberts declared at least the individual mandate penalty to be a tax.  I do still think that the reform bill has the effect of expanding expectations about the role of the federal government in our lives, and so I still have some concern about that.  But, of all the arguments that could be made to uphold the reform law, I think the one Roberts selected is the least bad in terms of expanding government powers.
  4. We can continue the journey toward a more civilized and compassionate health care system.  Almost nobody is asserting that the health care reform law is perfect.  But, in my opinion, it is a step in the right direction.  It is better than creating a government-run monopoly.  It is better than waiting forever for each of 50 states to exercise their authority to compel people to buy health insurance.  It helps millions of Americans have a sense of security. And, it underscores that our strong tradition of individualism is balanced against our sense of duty to one another as Americans and humans.
  5. I am energized to continue health care improvement.  Over the last few years, our field has built up some momentum in transforming health care.  Health care leaders were feeling a sense of urgency to increase their capabilities in population management, analytics, lean process improvement, clinical integration and health information technology.  I feared that if the health care reform law was struck down, it could lead those leaders to relax for a few years to wait and see what comes next.  I am excited by the prospect that our field can continue to build momentum that spills beyond the limited confines of the reform law itself to allow us to make more fundamental progress in the care delivery system itself.
  6. Oh, and did I mention I won a $1 bet?
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Trinity Health and BCBSM sign contract to invest in infrastructure for clinical integration and population management

Trinity Health – Michigan and Blue Cross Blue Shield of Michigan (BCBSM) recently announced that they signed a three and a half year agreement under which BCBSM will provide some funding to support a collaborative effort of Trinity Health and its affiliated physician organizations to make improvements in infrastructure designed to improve clinical integration and support population management, with the goal of improving the quality of care, enhancing patient experience and outcomes, and reducing health care costs.  BCBSM and Trinity Health will also collaborate to implement performance measures on patient satisfaction and quality.  These infrastructure improvements and measures will prepare Trinity Health and its affiliated physician organizations for a transition from a fee-for-service reimbursement from BCBSM to a “performance-based reimbursement” or “gain sharing” arrangement, to be implemented sometime before 2016.

Trinity Health is the third health system to sign similar agreements with BCBSM, after St. John Providence Health System and Beaumont Health System.    By the end of 2012, BCBSM intends to reach agreements with additional hospitals so that 50% of its hospital spending will be subject to value-based reimbursement agreements.

More details are available in Crain’s Detroit Business.

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Is current low trend in health care cost growth due only to recession? Ken Kaufman suggests that 5 other factors may be contributing.

In a very interesting recent post to the Health Affairs blog, Ken Kaufman challenges the widely repeated assertion that the current low level of health care cost growth can be attributed to the recession.  After decades of double digit trend, the rate slowed in recent years down to a mere 3.9% in 2010.  The conventional wisdom is that recessions cause decreases in employment by employers offering good insurance and general recessionary belt-tightening includes reductions in utilization of discretionary health care services.

Kaufman noted that inpatient hospital utilization by Medicare patients dropped 8% from 2006 to 2010 — patients that are presumably retired and therefore not affected by recessionary unemployment.  He also noted that states with a larger drop in Medicare utilization were the ones with the smallest drop in employment rates, the opposite of what one would expect if the recession was the driver of the drop.  From these observations, Kaufman proposes that we should look for other factors at play.  He suggests an initial list of five other factors:

  1. As doctors move from entrepreneurial self-employment to employment by hospitals and large groups, they come under the influence of care protocols, disease management and other clinical programs that attempt to drive down avoidable utilization
  2. As hospitals’ revenue growth slowed, they changed from an “all things to all people” philosophy to a policy of eliminating unprofitable programs
  3. New “care models,” including new approaches to physician incentives and reimbursement, are starting to have an effect
  4. Dramatic shift from brand name to generic drugs
  5. Health care utilization may have reached the point of “diminishing marginal utility,” where people’s appetite for more is diminished and other alternatives for resource allocation are relatively more appealing than more health care

As we (hopefully) continue to recover from the recession, everyone expects health care trends to creep back upward.  But, perhaps they won’t creep all the way back up to the teens due to these forces keeping cost growth in check.

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Of 27 new ACOs named by CMS: 93% avoid downside risk, 82% avoid CMS loans, 33% use payer-based infrastructure, and average beneficiaries per physician is 106

Yesterday, CMS announced the first batch of 27 “normal” ACOs under its Medicare Shared Savings Program (MSSP).

I found five things interesting about the list:

  1. 93% were unwilling to accept downside risk.  In the original proposed rule for the MSSP, ACOs would have been forced to accept downside risk.  Presumably, CMS thought that “skin in the game” would be an important motivator for real transformative change, and they wanted to increase the chances that the federal government would be able to achieve a net cost reduction.  But, in response to fierce backlash from providers saying they did not want to accept downside risk, CMS relented and introduced an option allowing providers to avoid taking downside risk in exchange for a smaller upside reward.   When it came time to lay chips on the table, 93% took the safe bet.
  2. Only 18% requested up-front payment.  One of the complaints from the provider community during the design phase of the MSSP was that providers lacked access to the capital needed to create the infrastructure to successfully improve care processes and manage risk — things like healthcare information technology, analytics and care management.  In response, CMS offered an option where ACO applicants could receive some up-front payments that would be repaid out of subsequent rewards.  CMS was offering to finance the investment, but it would be a loan, not a grant.  Only 18% of the first batch of ACOs selected this option.  I suspect this was due to the same risk aversion that led them to accept smaller rewards to avoid downside risk.
  3. 33% used payer-based infrastructure.  If physician organizations are to remain locally-focused, it makes more sense to share infrastructure with others to achieve economies of scale, rather than taking on the cost of creating their own infrastructure.   As I described in a prior post, this can be accomplished through a franchise arrangement.  It can also be accomplished through a management services organization (MSO), as is commonly done by PPOs and medical groups in mature managed care markets.  Or, it can be done by partnering with payers who already have such infrastructure.  Any of these approaches could potentially work, but I’m least enthusiastic about using payers’ infrastructure.  Nevertheless, nine of the 27 new MSSP ACOs are organized as partnerships between local health care providers and Collaborative Health Systems (CHS), a division of Universal American, a publicly-traded for-profit health insurance company that offers a variety of plans including Medicare Advantage plans.  For these 9 ACOs, Collaborative Health Systems will provide a range of care coordination, analytics and reporting, technology and other administrative services.  This is a popular option not only because of the economies of scale, but also because it allows the providers to avoid having to take out a loan, either from CMS or from traditional sources of capital such as banks or the equity markets.
  4. 44% did not note the number of physicians in their press-release blurb.  I hate to read too much into such a factoid.  But, for ACOs to work, the physicians must really be involved.  What does it tell you if the organizers of an ACO, when drafting their little blurb for the CMS press release announcing their selection as one of the first batch of MSSP ACOs, did not think to state the number of physicians involved?
  5. Average beneficiaries per physician is 107.  Of the 13 ACOs that did think to include the number of physicians in their press release blurb, 4 of them had between 100 and 400 beneficiaries per physician, 7 of them had between 31 and 60 beneficiaries per physician, and 2 of them had less then 10 beneficiaries per physician.  If ACOs are to really work, they don’t just need infrastructure, they need “mind share.”  If 5% of your patients are involved in some new program, and if you have not agreed to any downside risk in terms of taking on debts or being on the hook for possible negative rewards, and if the rewards are relatively small even for that 5% of your patients, are you really going to be motivated to radically transform your care processes and change your habitual clinical decision-making practices?

Here’s this list, including the beneficiaries per physician calculations.

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