Taking over what was then the third-largest hospital system in New Jersey seemed like an odd choice to many who saw Brian Gragnolati move from his former post at uber-prestigious Johns Hopkins Medicine to Atlantic Health System.
It even prompted rumors that he wasn’t long for the Garden State.
But, four years later, Gragnolati has been steadfast in his leadership at AHS, and is also serving as the board chair of the American Hospital Association this year.
“I left one of the best places in the world, Johns Hopkins, and I left there because I saw an opportunity here to do something really special,” he said.
Gragnolati sat down with ROI-NJ to discuss his new role and talk health care nationally and in New Jersey.
ROI-NJ: It’s an interesting time to be looking at health care, federally, with the public outcry mounting against high costs.
Brian Gragnolati: The issue of how much something is going to cost a patient is a very appropriate concern that they have. We have grown up in an industry of this chargemaster (list of charges). And, in many instances, the chargemaster was never intended to (be the price-setter), and legislation and regulation have been built around it where that is the only utility that is available.
I am hoping that the work we can do at the federal level begins to address that issue. The step that was taken by CMS (Centers for Medicare and Medicaid Services) recently to have machine-readable charges was the only way that they could get at this right now. But, quite frankly, it has very low use so far. It’s one of our objectives (at Atlantic) to take that on and make it understandable. So, we are starting that work and starting that journey.
ROI: How can you make it understandable for regular folks?
BG: One is going to be involving regular folks in the design. It’s including people who need this information in the design and what’s important to them. There’s a cohort of information the patients really need — and I call them shoppable services, because when someone is coming in for trauma care, they are not going to stop on the way and look at a price transparency tool and figure out what’s going to happen.
On the other hand, if they are looking for a mammogram or the cost of an office visit or an elective procedure, we ought to be able to give them that information in an understandable format and, hopefully, they will be able to access it from their smartphone. That’s really what we are trying to do here at Atlantic.
ROI: Of course, with health care, few people pay the sticker price. How do you account for that?
BG: (That is) the other piece of this, because of the nuances associated with the insurance plan. What people really want to know, in addition to the cost, is what’s the cost to them. That’s where we have to work with our insurance partners, to develop mechanisms and tools to do that so we can in real time give them a sense of where they are going to be. That means we have to integrate data systems, to an extent.
So, in the negotiations we have now with the people who pay us, that’s part of the conversation: How can we work together to provide information to our patients and their clients?
ROI: Is there a model to follow?
BG: When I was in my role at the AHA, we have these things called regional policy boards, and we got into this conversation about pricing in Ohio. I’ll always remember the CEO, he basically listened to all of us and then he finally said: ‘Look, I have a small hospital in an Amish area. The Amish pay cash. I had to develop a pricing approach here that was understandable, otherwise they wouldn’t receive their care from us.’
That organization actually identified the 600 most common things that their patients would be seeking information on and they developed a pricing mechanism for that. So, it can be done. We have to just have the will, and here at Atlantic we are taking it on.
ROI: The pricing discussion leads naturally to a changing world of downward pressures on the health care system. Specifically, value-based care, which bundles services for a single cost, and how insurers and health experts keep talking about his idea. How do you balance all that?
BG: The reality is, today, particularly in the state of New Jersey, we are still predominantly paid in the fee-for-service model. Many of us in New Jersey have really been utilizing the experiments that were created out of the Affordable Care Act — Accountable Care Organizations, as an example — to really learn how to work differently in value. Those are experiments, and they were intended to be put in place and learn from them and then iterated. And that’s happening at the federal level right now.
We are constantly lookingat how we create points of access in areas where we don’t have that. Is there an opportunity to partner? Or do we need to actually recruit and open up sites of care?”— Brian Gragnolati, CEO, Atlantic Health System
I’ve had a couple of meetings with (U.S. Department of Health and Human Services) Secretary (Alex) Azar and (CMS Administrator) Seema Verma, and they clearly want to continue these kinds of experiments. What they are interested in is the pace of change to get to both up and down side risk.
Here at Atlantic, we are going to move in that direction with the launch of another ACO that we have. At its core, it’s bringing physicians and facilities together to work with a patient population to really provide access in a different way but also stay focused on the utilization that occurs. At its core, is data. In many instances, we are flying blind in understanding patterns of utilization.
ROI: How do you solve that problem?
BG: How do you take out unnecessary utilization and at the same time keep the lights on, is an important question. All of our decisions now (at Atlantic) are predicated on data. To financially survive as you’re reducing unnecessary utilization … you’ve got to do two things. You’ve got to grow the number of individuals that turn to you and entrust you with their care. And you need to work very hard to make sure that the care they need is conducted within your organized delivery system. That gets into our strategy for growth.
ROI: Speaking of strategy for growth, many have wondered why you haven’t engaged with mergers at the pace of some of your competitors. You have remained focused on maintaining the size of AHS, but pursuing a greater focus on care delivery, even in the innovation space. Explain this strategy?
BG: We are constantly looking at how we create points of access in areas where we don’t have that. Is there an opportunity to partner? Or do we need to actually recruit and open up sites of care?
We have over 400 sites of care now in our region (serving 4.9 million people). Our growth plans are carefully predicated on filling in the white spaces. So, for example, we know now, using our data analytics, our primary care practices people tend to populate those practices from a 5- to 10-mile radius. We also know that, from the primary care office, access to a specialist tends to be in a 15-or-so-mile radius. But, generally, that’s how it works.
We are becoming less opportunistic about where we open sites of care and we are becoming more targeted. The other thing we have done in the past year is we don’t believe we have to own everything, but we believe we have to partner with people. The relationship we have with MedExpress is a great example. It’s the first (of its kind) that United (Health Group) has done in the country, where we own a portion of the MedExpress sites in this region. We have an opportunity to grow those, and we are.
ROI: How are you changing how you deliver care?
BG: We are making a lot of investments and putting a lot of time into how people interact with us on their terms. Somebody that might not be as technology-savvy is still going to want that human interaction, that phone call, that ability to talk to somebody. Others are going to want to make that appointment on a smart phone. Others are going to want a virtual visit.
We have to make sure that we have systems designed to do that. But the biggest thing is to have conversations with our patients to understand where they are. So, in our practices, we are implementing those technologies, but we make sure the patients are comfortable with them on their terms.
ROI: What about your incubator program, AHa!, or Atlantic Health Advancements, and other ways to diversify your revenue?
BG: Ambulatory care is critically important in following that pattern of moving care outside of the traditional walls of the hospital, so we are making a lot of investments in that. As it relates to innovation, we are really focused on things that will either enable us to provide care at a lower cost or it creates greater stickiness with a consumer. The ideas that we are looking at tend to fall into those two buckets.
The third area that always gets a look, particularly from our internal processes, are safety issues. But we are also looking at how we invest in companies doing those things because one of the laments I have about the health care industry is we help people develop products and we pay dearly for that opportunity to help them develop their products. You look at information technology — we help companies perfect their products. But then we pay for them. As opposed to have an equity in them.
ROI: So, if more companies work together and we remove the silos of the health care industry through greater partnerships, does that put an end to M&A?
BG: I don’t think the M&A activity will ever go away, but it will take on some different flavors. There are always going to be circumstances where organizations are going to need to come together in order to survive.
Rural medicine is under tremendous pressure and, at (Atlantic Health Advancements), we have a whole initiative to support that cohort of our members, because you have to remember 27 percent of the U.S. population lives in these rural areas. We are on the verge of creating health care deserts in some of these areas.
The other flavor you are going to see is plays where we are coming together around technology or data. The Healthcare Transformation Consortium is an example of that; Allspire is another example where we came together to reduce costs. So, you’re going to see more of that occur.