HJAR May/Jun 2024

HEALTHCARE JOURNAL OF ARKANSAS I  MAY / JUN 2024 23 will find themselves highly vulnerable to dis- ruption. In that same book, Adner describes the ecosystem disruption that is taking place in healthcare. He describes how CVS has re- branded itself as CVS Health, with locations geographically dispersed such that 90% of the U.S. population lives within 10 miles of one of their retail locations. CVS Health stopped sell- ing tobacco products, voluntarily forfeiting $2 billion in annual sales; developed walk-in clin- ics for on-demand, basic healthcare services; aligned with Caremark, the nation’s largest pharmacy benefits manager; transformed valu- able retail space in many of their stores into “HealthHubs,” comprised of integrated care teams for chronic conditions management; and ultimately acquired Aetna, one of the country’s biggest health insurers with 38 mil- lion covered lives. CVS Health is moving well beyond mere diversification as they attempt to redefine the game by curating a new value proposition for the end customer while shifting efforts from competing in separate industries to creating a new ecosystem. Their most re- cent acquisition, Oak Street Health, is entirely consistent with that strategy, one that is being intentionally curated around improving health and health outcomes for their customers. Oak Street Health, in turn, provides the per- fect example of how a lean startup begins by first developing a minimally viable ecosystem or clinical microsystem that is designed from its inception to deliver a different outcome than what has been delivered by traditional health- care. A clinical microsystem is defined as the smallest replicable unit of care delivery and is comprised of its purpose, patients, profession- als, processes, and patterns of interaction or teamwork that achieves the production of a de- sirable health outcome. Named from a street in the south side of Chicago located in one of its poorest, most underserved neighborhoods, Oak Street Health formulated an entirely differ- ent business model and strategy that aligned clinical with financial outcomes. Their mission statement is “keeping patients happy, healthy, and out of the hospital.” Each physician is sur- rounded by a multidisciplinary care team that includes a “ninja” or dedicated data analyst that helps them to constantly measure their performance and iterate through rapid cycles of build-measure-learn and improve. By chang- ing their revenue model away from the trans- actionally oriented financing mechanisms (i.e., fee-for-service) of traditional healthcare, they embraced a risk-adjusted, population-based payment made possible through Medicare Ad- vantage contracts to hold themselves account- able for the total cost of care of the popula- tion they serve. Since healthier people are less expensive from a total cost of care perspec- tive, they capture financial value by improving health. First, Oak Street Health made sure that they discovered as many of the relevant known and unknown variables that could impact their outputs. Using this new, comprehensive set of input and output variables that correlated with desired performance, they structured a set of operational management processes that en- abled and empowered the reliable replication and scalability of desired performance. Once their first clinics were profitable, typically with margins exceeding 25% at each individual clinic, they began to rapidly scale the build- out of more clinics across the country. They routinely achieved fewer ER visits, decreased rates of readmission, and reductions in hospi- talizations by about 50%. It was textbook lean startup method. First, build out the minimally viable product or ecosystem, capture all the relevant variables that lead to a desired set of outcomes, adopt a business model that allows profitability for delivering those outcomes, and then scale like crazy. Indeed, their only mistake was to fall into a trap of growing too rapidly as their margins compressed only because newer clinics had a multi-year ramp up phase before reaching individual clinic profitability. That mistake did not stop CVS Health from realiz- ing the future profitability potential of its fully mature clinics, though, resulting in a $10.4 bil- lion valuation and acquisition for a company that was a lean startup less than a decade ago. Managing obesity like a lean startup Conventional approaches to the manage- ment of obesity are strongly influenced by prevailing cultural assumptions and beliefs of traditional healthcare. Because our exist- ing healthcare delivery system has been con- strained for decades by transactional fee-for- service reimbursement — where cognition, spending time with patients, mental health services, or incorporation of solutions that ad- dress social determinants of health have been historically undervalued — it is no surprise that current obesity treatment guidelines are skewed to reflect medical therapy and surgical solutions for this disease. I will not argue that surgery and medications do not have a role to play. But I will argue that we have yet to discov- er the best treatment approaches in the man- agement of obesity because of the limitations imposed by standard clinical research because of reliance on transactional reimbursement that skews to medically and procedurally oriented solutions and because of both implicit and ex- plicit cultural bias that still pervades modern medicine. One cultural bias that cannot go away soon enough is how we think about un- healthy behaviors. A prevailing construct is that people have freedom of choice, thereby decid- ing how much time to devote to exercise or not, what they choose to eat and how much of it to consume, and whether to follow the advice of a well-meaning physician or dietitian. Please tell that to the young woman who works three jobs to provide food, shelter, and clothing for her children. I once treated such a patient who worked a shift that began early in the morning as a patient care assistant. She would finish her day shift at around 2:00. Since she didn’t have transportation, she would walk or take the bus to her second afternoon job. Since there were fast food places strategically located near the bus stop, her dinner would typically consist of eating fast food on the bus as she would ride to her third job as a sitter for an elderly gentle- man with dementia. But through empathy and its action arm, compassion, and because of a different business model that allowed us to harness the domain knowledge of a multi-dis- ciplinary team, we were able to iterate through rapid cycles of education and coaching that taught her how to use Amazon Fresh for food delivery at home; how to use coupons and vouchers to select nutrient-dense, healthier food options; how to manage emotional eating tendencies; and so on. This person, like many others, was successful at losing weight and im- proving her health because we thought differ- ently about how to create and capture value. In a more traditional health system, the pre- vailing cultural bias might very well be that this patient should have undergone bariatric sur- gery. After all, the literature clearly shows how such people can achieve nearly immediate res- olution of harmful disease states such as Type 2 diabetes. I don’t deny the argument but point out that the studies that produced this scien- tific evidence were predicated on existing fi-