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Welcome everyone to the Becker's Healthcare podcast series.
I'm Mariah Muhammad, writer and moderator with Becker's
Healthcare, and I'm thrilled to have with me
today Chris Palmore,
president and CEO of Commonwealth
Care Alliance. Chris, welcome back to the podcast.
We're very excited to have you join us
today. To get us started, would you mind
please introducing yourself and telling us a bit
about your background?
Yeah. Sure. So so, again, I'm Chris Palmeri.
I have been in health care for 30
years, and I've been fortunate to be CEO
of 6 different companies over the past 23
years. And as you indicated, I am currently
the CEO of Commonwealth Care Alliance, and I've
done that
for, 9 years. And,
I've been involved in both for profit,
and nonprofit organizations.
Most of my career has actually been spent
on the nonprofit side, and,
CCA is a nonprofit organization that,
serves over a 100000 people across 4 states.
We are both a payer as a Medicare
Advantage Plan as well as an integrated
health plan for dual eligibles or people with
Medicare and Medicaid,
and we are a provider. We own and
operate,
primary care sites and a variety of services
that impact individuals with chronic illness.
I also founded, in 2016,
Winter Street Ventures, which is CCA's,
start up accelerator
and venture
investment subsidiary,
and, we look to invest in disruptive and
innovative companies that align our mission,
which serves people with significant
health care needs,
with companies that are looking to address a
variety of issues that we encounter
trying to meet the needs of our consumers.
Wonderful. Thank you so much for giving me
that, that explanation.
The first thing that I really want to
discuss with you, Chris, if people don't know
about the Steward Health System Crisis,
it was reported earlier this year that there
was a financial,
collapse of the health system,
which which led to a lack of adequate
staffing and supplies, media reports.
What can the health care industry learn from
this crisis, do you think?
Well, I mean, first of all, there's probably
not many people in health care that haven't
heard of the Stewart crisis. As you said,
it's been it's been fanfare in the media
for,
quite some time, and,
the entire relationship with Steward and,
its First Capital
partner,
really goes back,
over 14 years.
And,
I think in terms of the construct of
that relationship,
it was designed to actually,
create some critical mass and efficiencies,
in operations of hospitals across several states.
And, as we've we've read now,
it looks like that did not go, certainly
as planned.
I think one of the learnings is just
really, frankly, understanding
is there an alignment with the organization's mission,
in this case, to operate community based
hospitals in multiple markets and serve,
you know, medically fragile people? Is there an
alignment with the mission of that organization, its
needs for
financing, and capital,
with the with the outside capital source, in
this case, private equity? I think we all
realize that,
the the nature of private equity, while,
its interest in doing good in the businesses
it invests in, including health care, there is
also an obligation for,
that capital partner to make a return on
its investment.
And understanding what the horizon for that,
return would be, how much that return would
be, and what sources
or potential profit pools would fund those returns,
I think, are are really critical. And it
seems like just through,
the the,
sequence of events, and there's many and it's
very complicated,
of what happened in this particular Steward
situation, it it seems that there potentially was
a misalignment along the way.
Yeah. Yeah. That definitely makes a a lot
of sense. Thank you for giving us that
insight.
And kinda what you were talking about, there
are a lot of moving parts right now
in health care. Everyone has their attention focused
on several, you know, different aspects,
in what they're doing.
For you, where in the industry do you
think is the most right for innovation?
Well, I think there's a variety of of
areas. So, you know, first of all, really
across the country, but particularly in the northeast,
we are seeing an uptick, in utilization of
health care services
by all populations, both those with financial resources
as well as those that are indigent,
and, that has really raised the awareness, I
think, of of everyone in terms of what
the what the costs are,
to actually meet the needs of these consumers
and whether those costs are actually funded right
now by insurance premiums,
states, the federal government through Medicare fee for
service and Medicare Advantage.
All of this sort of goes back to
how are we meeting the needs of consumers,
and we think that one of the right
areas continues to be leveraging technology,
to innovate care for,
members and patients.
And we think that this can make sure
that consumers have the right services at the
right time,
making sure that the site of service is
exactly where they need it, and it's oftentimes
not, in the emergency department of an acute
care hospital. It could be at home.
Making sure that consumers have
great access to primary care,
and care navigation that can help somebody,
really, sort of wade through a very complicated
health care system. And and our belief is
that,
when that is all done right, you can
you can reduce the friction that consumers often
feel by trying to access health care services,
and you can also
greatly reduce costs
to get those consumers the services that they
need.
Yeah. I appreciate you giving us that that
insight right there. In your opinion,
what would you say are the key components,
to a successful collaboration between nonprofit organizations and
private capital?
Well, it's sort of what I said earlier.
I think, first of all, there has to
be an alignment
of of interest. So I think the the
the nonprofits in particular, they're they're usually community
based, mission driven organizations. They were created for
a purpose and a reason.
And, and, again, outside capital, also has a
purpose and a reason and for both parties
to understand what those what those purposes are
and how they are gonna come together. So
in this case, with a nonprofit, it's potentially
advancing,
its mission,
to serve people in whatever way it desires
to do so. And by leveraging outside capital,
understanding what that capital will be used for,
whether that will create, an opportunity to serve
more people and potentially develop scale economies,
or something else,
an acquisition perhaps, which also would be a
way to scale.
I think,
then looking at a long term financial plan,
which would indicate whether if that plan was
executed appropriately,
there would be the synergies that,
would come to play in either, more profitability
or efficiency in operating costs. And hopefully, those
synergies would then be able to repay the
use of the private capital, which is exactly
what the private capital's objective is, is to
make an investment,
and then ultimately make a return on that
investment,
to their, limited partners or shareholders.
So I think it's having that conversation upfront,
number 1. Number 2, understanding
what the time horizon is.
3rd, really understanding what are the key performance
indicators.
4th, having a plan if things don't go
as planned,
meaning that there are contingencies in the event
that
unforeseen headwinds were were hit and understanding what
would happen at that point in time, whether
it means that the the time horizon has
to be extended, additional capital has to be,
brought in, potentially a change of direction. And,
again, this is these are circumstances that when
everything is going well and according to plan,
there are no problems and there are no
complaints. Usually, the challenges arise when something unexpected
occurs and that alters the plan. And I
think it's really understanding between the two parties
what happens in those times of unforeseen circumstance
and how will situations be remediated.
Yeah. I appreciate all the the great advice
and insights you've given so far in this
podcast.
One last thing, Chris, before we wrap up
today, can you share any predictions for what
health care will look like in the next
2 to 3 years?
That's an interesting question. We have a presidential
election,
upcoming, and we're going to have a new
president. Whether we change parties or not is
is yet to be seen.
And without making this political, I think that,
you know, we have some factors
right now in the health care system. So
we do have rising utilization.
We have rising costs of labor. We have,
people that work in health care at the
front lines,
are not as desirous potentially to do those
jobs as they once were.
We have changes potentially happening in the way
the federal government funds,
Medicare Advantage, where there's, today, 51% of all
Americans are covered, and there's potentially a desire
to have,
the the folks re retreat back to fee
for service, and that potentially could be done
through, additional regulation
or changes in funding.
So you have a lot of things that
are going on,
right now, and I think the call to
action from the insurance carriers, the provider communities
that I would suggest is, you know, understand
these headwinds.
These are these are not just, I believe,
blips. These are going to be some some,
things that we're seeing that will ultimately become
longer term trends, in the organization.
We still have,
people in this country that need access
to good
quality health care and really making sure that,
again, all of the needs are met and
understanding what those costs are going to be
to meet those consumer needs. I think that's
sort of where we're gonna be over the
next couple of years.
It's amazing to think that,
some of the utilization that we're seeing could
be,
pent up demand from COVID
despite that pandemic being over for several years.
It seems like now things are getting back
to
more
normalized,
patterns, and, with normalization, the costs have certainly
gone up.
We're seeing, you know, consumers now really engage
in the use of of new therapies like
GLP ones, which is, you know,
created now and being used to help people
that are, struggling with obesity. And the whole
sort of thought of that is that there
will be downstream,
cost reduction in the health care system. We
haven't seen that yet. We're just seeing really
the cost on the pharmaceutical side, so it's
gonna take some time for some of that
promise to work through. And I think we
we have to be patient. It's hard to
be patient when you have costs rising, reimbursement,
reducing,
but we have to really understand what these
trends are so that we potentially can reset
the industry so that, again,
the insurance carriers are funded appropriately to to
cover the populations they're entrusted to. The provider
community is getting appropriate reimbursement
to cover its costs and cover potentially the
new wage index that's gonna be,
associated with getting people to wanna do the
jobs that are necessary to operate the care
delivery side. And then we, of course, have,
both the consumer that is not only a
a consumer of the services but potentially also
a payer of their insurance premiums. And then
we have the state and federal governments, which
are also,
big sponsors in the cost of of health
care and funding premiums, either through the Medicare
program or through private insurance companies.
All of these things are sort of colliding
right now. And I think over the next
2 or 3 years, again, once we get
a sense of what the if there's a
new normal of cost trend, utilization of services,
labor, etcetera, we're gonna have to reset this
so that people can continue to get the
care and services that they need and that
you have insurance companies that are in a
position to be able to do it. We
have a a Medicare program that can continue,
either through fee for service or through private
insurance to ensure the 70,000,000
Americans that it's entrusted with, and then continuing
to have appropriate funding at the state level
for its, for its Medicaid programs.
Wonderful. Wonderful. Thank you so much for those
final thoughts. I think you spoke on a
lot of hot topics that other are also
talking about, Chris. So thank you so much
for, you know,
coming on the podcast. This is a very
informative discussion,
and I look forward to connecting with you
again soon.
It was really my pleasure. Thanks for having
me today, and,
have a have a wonderful day.