Here's how Liljenquist is working to streamline business strategy and bring better health to Intermountain’s patient population.
Even though innovation is rampant in healthcare, new strategies and technologies are of no use if they don't fit into a health system’s strategic plan.
At Intermountain Healthcare, headquartered in Salt Lake City, Utah, Dan Liljenquist, J.D., is the senior vice president and chief strategy officer. It’s his job to figure out how innovation can support Intermountain’s priorities. Since joining the health system in 2012, Liljenquist has prioritized switching to a more value-based care model and served as the lead architect for CivicaRx, a nonprofit generic drug company.
Before joining Intermountain, Liljenquist served in the Utah State Senate. He received a degree in economics from Brigham Young University and his juris doctorate from The University of Chicago Law School.
I spoke with Liljenquist about how he is achieving his goals as chief strategy officer, implementing value-based care models and the establishment of CivicaRx.
Editor’s Note: This interview has been slightly edited for length, clarity and style.
Samara Rosenfeld: What are your strategic priorities as chief strategy officer for Intermountain and how are you achieving them?
Dan Liljenquist: Intermountain Healthcare’s mission is to help people live the healthiest lives possible. As a large integrated health system with 23 hospitals, a large medical group and a large captive insurance payer, we believe we are in a really good position to transition healthcare in the future. Essentially, healthcare has become too expensive. The ever-increasing cost of healthcare has really priced a lot of regular people out of the regular market. So our focus at Intermountain Healthcare is to rethink about the value equation. It’s really the cost and quality over time. If we think about where healthcare needs to go, we have to change the way healthcare is paid for, realign incentives and make sure that health systems are actively participating in the process of transforming their own business.
The economic model that has driven healthcare for many years has been the fee-for-service model. And even with all of the efforts we’ve made to move to more value-based payment, it’s still an industry that is largely transactional. Our strategy at Intermountain is to switch that value equation away from service to a fee-for-value model.
In a fee-for-service world, you’re not incented appropriately to help manage longitudinal health risks in the people you serve. In fact, the better you are at managing the longitudinal health risks, the less successful your health system will be if you are paid on a transactional or fee-for-service basis. We’ve long believed that to resolve those conflicts, it’s much better to be prepaid because every time you keep somebody well, that generates an economic return that can fund your business and be shared back with the community.
Our strategy is to really migrate to a full-risk model and, once we’re prepaid, to work to right-size our inpatient and hospital assets while at the same time investing aggressively in new avenues of engaging patients in a way that keeps them well and out of our facilities.
We had a really important strategic conversation a couple of years ago when we realized that we were in two different business models. One model provided the safest and most cost-effective healthcare as possible, in our facilities, when people needed the care. But the other business was about how to keep people from needing your care as much as possible. We reorganized our business into a specialty-based care group, which has our hospital assets and orients toward our specialist. We organized a community-based care group focused on keeping people well.
S.R.: How does the community-based care group operate?
D.L.: We hired an external team that works in a triad to lead the community-based care group. Starting in 2020, 100% of our dollar risk will be flowing to their budget. Every time they keep somebody well or on their medication or avoid an emergency department visit, it will show up in the margin of the community-based group. We expect that margin to continue to grow as we get better at keeping people well.
The group is focused on longitudinal care management, care navigation, closing care gaps, appropriate documentation and coding of chronic conditions. They are working aggressively on moving services into the home so that we can do a better job of connecting with patients, particularly those with comorbidities.
We recently started transitioning the clinics we have in the community-based care group to a reimagined primary care model. We are moving away from the traditional RVU-based payment model for physicians and instead saying, “Here’s a panel of patients. We are going to move you more toward a salary-type model, and your job is to keep these people well. If you can keep them well and out of the hospital and on their medications and fully vaccinated, that has an economic value that will show up in the reduction of healthcare, and a portion of those savings will go back to the provider.”
We want our physicians to be thinking, “Who should be on my schedule today?” Not, “Who is on my schedule today?”
Our results have been tremendous. Our physicians are able to spend more time on the patients who need care. It’s reduced our inpatient and emergency department visits, our medication adherence has gone up and our customer satisfaction has gone up.
S.R.: What steps can other chief strategy officers take to implement similar initiatives in their health systems?
D.L.: I think people have waited for value-based care to happen, but until people make the proactive decision to actually go and make it happen, it won’t happen on its own. If we know it can be done and we have the ability to do it, shouldn’t we do it as a moral obligation to fulfill our mission?
As people are thinking about this, we think it’s the right long-term play for us.
Part of this is finding the courage to say, “If we don’t do this, who will?” The other part is that you need to ensure you have leaders who are ready to do this. Our CEO, Marc Harrison, M.D., comes in with the ethos, “We have to make healthcare more affordable,” and he is aggressive about it. All of us on our executive leadership team have bought into it.
Other chief strategy officers should push for more risk and payment arrangements and then work to structure the organization to be successful at managing those risks. And they need clear buy-in and commitment from their leaders.
For example, 30 years ago, we lost money the first several years. But we stuck with it and thought it was important because, strategically, it was the right thing to do. Now, the payer relationship is allowing us to make this transition.
Other health systems need to think about where they need to make investments that could actually negatively impact their bottom line now to position them for the future.
S.R.: What is CivicaRx and how did you establish it?
D.L.: CivicaRx is a not-for-profit generic drug company organized by 10 governing members, including Intermountain, Mayo Clinic and HCA, as well as three major philanthropies. It was designed to address generic drug shortages plaguing the hospital industry. There’s been a huge consolidation in this market where one or two manufacturers have a dominant market position over each individual drug. And when a hospital needs a drug to treat a patient, we’re willing to pay whatever it takes to get that product.
What if we got together with health systems around the country and created a not-for-profit generic drug company that would never pay a penny of profit to anybody and would act like a democratized public utility model? We want to make sure generic drugs are available and affordable to everyone. If we can organize this company, we can pre-contract with hospitals around the country and develop our own generic drugs through Civica and sell them back to our members and anybody on a fully transparent, cost-less model that isn’t enriching a subset of shareholders. Essentially, Civica’s shareholders are society at large and the only value Civica can produce is a stable supply and lower prices of generic drugs.
We announced this in 2018 and had people coming to Intermountain healthcare looking for help. A couple of weeks ago, we announced our first two drugs that will be on the market. They are used to treat hospital-acquired infections. We are starting with those two, and then we’ve got a whole list of others as we move forward.
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