On GI practice, beta risk, digital health, VBP and chronic care

Another in our new series of B2B thought leadership interviews with visionary entrepreneurs applying digital tools to improve care of chronic immunoinflammatory disorders (CID), including autoimmune and autoinflammatory diseases. We were delighted to speak with Dr Lawrence R. Kosinski, MD, MBA, AGAF, FACG, aka Dr K, practicing gastroenterologist since 1984 (now retired from practice) and leading clinician and researcher in the specialty for many years. Dr Kosinski founded SonarMD and serves as its chief medical officer. 

photo of Dr Kosinski
Dr Larry Kosinski

SonarMD is a care coordination and drug optimization solution for gut health conditions. SonarMD’s clinical staff and technology make it easier for patients and specialists to work together to detect and address worsening symptoms sooner and make the right treatment decisions.

Dr K is such a well-established thought leader that we had to work to find a novel angle. So we came up with three and a half!

Finance

We started from our shared backgrounds in finance (one of us is a fellow MBA alum of Dr K). Back in 2018, we were intrigued to see SonarMD using the term “high-beta” to describe medical conditions. We were already familiar with beta coefficients from our Wall Street analyst and investor relations backgrounds, where beta is used to capture stock price volatility and thus risk. So applying beta to medical conditions sounded intriguing. And sure enough, algorithms for calculating stock beta work quite well for stratifying condition risk in  payer populations. 

Digital chronic care

We have also focused on digital chronic care since 2010, and wrote one of the earliest white papers (2012) on Big Data in Healthcare. So we asked Dr K what he thinks are the next opportunities in digital chronic care and how the landscape is changing post-COVID.

Value-based care (VBC)

The US healthcare system is proceeding through a major change in medical payments and payer reimbursement. This migration is from the old fee-for-service (FFS) payments model, which incentivized procedures and volume, to value-based payments (VBP), which pay via capitation or by episodes of care. Value-based care (VBC) is the next step, in which payers and providers increasingly share cost risk to better align incentives to improve patient care at lower costs. Alternative payment models (APMs) like episodes and bundles of care present unique challenges in chronic inflammatory diseases like IBD.

Dr K hosts a podcast series that has focused largely on VBC. Here’s one that discusses the changes in mindset necessary to move from FFS to VBC, including a propensity to overlook patients, hostile negotiations between payers and providers, challenges in defining episodes of care for chronic diseases, and other issues. 

Autoimmune (autoinflammatory, chronic inflammatory) disease

This is the half angle, since our focus on CIDs only partly overlaps with Dr K’s deep focus on gastroenterology. GI specialists do treat two major CIDs: The Inflammatory Bowel Diseases: Crohn’s and Ulcerative Colitis. We are also interested in Irritable Bowel Syndrome (IBS) since some of these patients also have chronic inflammatory symptoms. 

We have both known for decades from our personal circles of autoimmune patients that current clinical practice has not served them well. What’s more, we heard similar stories from patients we met through Your Autoimmunity Connection. Then, we heard more such stories during our 2015 Stanford MedX workshop. For patients, the big complaints are denial of their symptoms, dismissals to psych, delayed diagnoses, finding effective and tolerable drug regimens, and no clinical support for non-drug treatments, such as diet, exercise or trigger identification. We heard similar stories from primary care providers (PCPs) frustrated with being out of their depth. We also heard from specialists frustrated with coordinating care with patients, PCPs, labs, and other specialists. 

Payers, of course, care about the bottom-line costs of care, and chronic inflammatory disease now looms as large as oncology or Type 2 diabetes as sources of high-cost and high-risk care in payers’, including employers’, populations. 

The opportunity in chronic inflammatory disease

Therefore, we believe managing CIDs is a big opportunity for digital chronic care. However, given existing specialty silos, we now expect it to be adopted specialty by specialty as the higher-prevalence autoimmune diseases come to the attention of payers. Once aware of these costly high-beta conditions, payers can see they are ripe for better coordinated and managed care. Beyond the top autoimmune diseases, we hope that population analytics can help find, diagnose, manage and someday even prevent the 80+ rarer autoimmune diseases as well as chronic inflammatory conditions like ME/CFS (Myalgic Encephalomyelitis/Chronic Fatigue Syndrome) and others that do not yet have clear diagnostic categories, but cause considerable human suffering and do not fit well into current medical practice standards of care. 

“A big reason I started SonarMD is that I noticed in 2011, when I was chairman of practice management and economics in AGA, that if more than 80% of GI revenue depends on one procedure, colonoscopy, an elective procedure, one that patients don’t like, this is a huge black swan risk. Look at the little guy in the ColoGuard ads on TV, or at Europe where they do FIT, not colonoscopy screening. And as the pandemic has shown, it’s not hard to delay or forego many colonoscopy procedures.”

Dr Kosinski

From GI MD to MBA to SonarMD

Dr Kosinksi’s background is unusual for a digital health entrepreneur. His original career was 30 years of practice in gastroenterology, not only as a clinician but also managing GI practices as businesses. That perspective led him to acquire an MBA from Kellogg’s Executive Program, with its real-world emphasis on practicing business people. DrK is now retired from practice and 100% committed to advancing VBC care.

Black swans in gastroenterology?

But Dr K took what he learned about financial risk at Northwestern in a new direction. First, he noticed that revenue in the gastroenterology specialty is heavily weighted towards a single procedure: screening colonoscopy. That concentration exposes GI practices to what financial traders (following NN Taleb) call a “black-swan” risk. A black swan is an unanticipated, infrequent event that causes severe consequences. For example, an undetected asteroid hitting Wall Street would cause immediate major impact on the financial markets! In the case of cancer screening colonoscopy, these are elective procedures, ones that patients do not like (and where co-pays may be high). Outside the US, FIT (fecal immunological tests) are preferred, and various alternatives, like the ColoGuard by mail test, mean that there are less expensive and invasive screening options.

Beta is a measure of financial volatility

Another risk management concept from finance is called “beta.” Beta coefficient is a measure of the systematic risk of an investment. It was developed to describe the volatility of a stock relative to the average price of an index (a portfolio of stocks). By definition, the index has a beta of 1.0; individual stocks with betas above 1 are more volatile, the higher the beta the more volatile the price. 

Dr K’s brilliant insight was to apply beta coefficient to the cost of chronic diseases. Some diseases have higher betas than others. From a payer perspective, beta is not the only factor, total cost is important too. But beta captures the risk of a particular disease costing much more than the “index” of all diseases in a category such as GI. And high-beta conditions produce unanticipated costs.

“The concept of beta came up when we were trying to understand why SonarMD was so successful in IBD, because we showed a positive return on investment to payers within a year of deployment that remained persistent over time. At the time, I was involved with the American Gastroenterological Association (AGA) on multiple initiatives, one of which was developing APMs for colonoscopy. I thought there wasn’t enough variation in the cost of colonoscopy to develop an APM. But, look at IBD! I need to quantify this.” 

Dr K

Beta applied to medical conditions

SonarMD submitted major GI ICD-10 (International Classification of Diseases) codes to the Health Care Service Corporation (HCSC – Blue Cross Blue Shield of Illinois, Texas, Oklahoma, New Mexico and Montana). HCSC agreed to run cost data on their large multi-state member database. Differences were not obvious by cost or standard deviation (SD), so Dr K requested a visual chart of cost by decile by condition. And there it was, more than 50% of the variability was coming from IBD. For the next iterations they tried various algorithms, such as SD of cost by decile, which looked like a beta rating. So they created a GI index, like an S&P 500 for GI conditions, and plotted the variability SD by decile. With that algorithm, IBD shot out as significantly different than any of the other conditions or procedures. This study was presented at Digestive Disease Week (DDW) 2020.

Comparing high-beta IBD to low-beta IBS 

IBD is high beta because Crohn’s and UC are often treated chronically with expensive specialty medications (e.g., biologicals). Furthermore, when patients deteriorate they face costly emergency care, hospitalizations and surgery. IBS (irritable bowel syndrome) produces long-term chronic psychosocial drain, slow diagnosis, poor QoL and other costs, but those do not show up in claims data. An employer might be concerned about these costs because of absenteeism/presenteeism, leaves of absence and other factors. Of course, these all matter terribly to patients, but those are not captured in claims data.

VBP conclusions form SonarMD analysis. Low beta best for bundled VBC. High beta calls for care coordination & management + patient engagement.

The implications of beta analysis for value-based care

“It has to do with our limits. Patients are symptomatic in IBS, as they are in IBD. When a IBD patient deteriorates, bad, expensive things happen: abscesses, fistulas, hospitalizations, bowel resections, colostomies. There is a lot of morbidity in the IBS population, but we can’t measure it financially from claims data.”

Dr K

The 2020 DDW study concludes that payers should take two different approaches to value-based GI care. Low-beta conditions, like IBS and GERD (Gastroesophageal Reflux Disease – persistent acid indigestion), may be better suited for bundled or episode-of-care payments. High-beta chronic conditions call for care coordination, active long-term disease management and patient engagement to improve clinical and financial outcomes. This is the target that SonarMD’s platform is best suited to tackle.

A looming high-beta condition not in this analysis is NASH (non-alcoholic steatohepatitis, aka fatty liver disease), which is rapidly growing in incidence in tandem with obesity. NASH & NAFL (non-alcoholic fatty liver – a related condition) become costly when patients develop fibrosis and require more intensive care. There may be an opportunity there, but so far the only treatments are diet management, and obesity is notoriously tough to deal with. Specialty drugs are 12-24 months away. Once they are on the market, then managing NASH/NAFL will be more like managing IBD today.

Is Sonar MD a high-beta company or a deep GI company? Rather than replicate the knowledge base over multiple specialties, SonarMD has so far opted to focus deeply on chronic GI conditions. But there are clearly opportunities to tackle other conditions and specialties going forward.

“The unacknowledged elephant in the gastroenterology room is NASH.”

Dr K

High-beta conditions beyond GI

HCSC was also interested in asthma. So, SonarMD did the same beta analysis exercise in pulmonary diseases. The high-beta ones turned out to be chronic obstructive pulmonary disease (COPD), emphysema and sleep apnea. Asthma was not retrospectively high-beta but, like NASH, is prospectively high-beta, with anti-eosinophil biologics coming on the market in the near future. 

In the cardiac space the high-beta conditions are Congestive Heart Failure (CHF) and heart arrhythmias. In rheumatology, not surprisingly, it’s autoimmune diseases: Rheumatoid arthritis (RA), psoriatic arthritis (PSa) and lupus (SLE, systemic lupus erythematosus). 

And in neurology, multiple sclerosis (MS).  

Given our professional work on the high costs of autoimmune disease, we were not surprised to hear that high-beta conditions include many autoimmune diseases. Of course, this is largely due to the widespread use of costly specialty drugs. For example, compare RA, lupus, or MS to autoimmune thyroid diseases, which are currently treated with lower-cost hormone replacement therapy. 

However, other factors are in play, including the ones that matter most to patients. One is delayed diagnosis, often by years, during which disease progresses, damaging affected tissues and increasing the risk of expensive care. Managing disease flares is another high-risk activity. When patients flare, emergency care and hospitalization loom as costly alternatives to specialty drugs and non-pharmacological interventions. 

Some challenges in adopting VBC

Payers have generally been slow to innovate. (Kaiser is an exception, but they are a unique payer/provider hybrid with in-house risk management, R&D and IT.) Payers may talk about VBC, but are only starting to walk the talk. Most would prefer letting hospital systems take the risk and develop VBC programs. Hospital-based systems have their own financial needs which don’t necessarily align with payers, patients, or practices. These are mostly concerns about managing hospital usage for financial viability. Nevertheless, SonarMD is gaining a lot of traction in the payer space. Big-name payers are signing agreements, thanks to the company’s deep clinical knowledge, proven data, innovative technology and unique shared savings model.

There was a 2016 CMS initiative using a physician-focused payment model to explore APMs. SonarMD was the first approved physician-payment model, but unfortunately the new administration’s HHS dropped the entire program! There are still barriers with the current state of VBC and CMS approval despite unimplemented legislation. A VBP oncology model has been adopted. The Medicare Bundled Payments for Care Improvement (BPCI) programs are aimed at well-defined procedural episodes (e.g., knee & hip replacement surgery). Furthermore, BBCIs are hospital-admission rather than chronic-care focused.

The quotable Dr. K on the impact of COVID-19…

“COVID-19’s impact on the healthcare system was like an F5 tornado ripping through a Midwestern town. While terribly destructive, it also offers a once-in-a-lifetime opportunity to fix things and rebuild in a better fashion.”

…on Telemedicine

“Many of us have wanted to practice telemedicine for a long time, but we had to travel to face-to-face encounters to get paid. We can provide much of that care for less time, effort and cost if we can do more virtual visits. COVID prompted CMS to change the reimbursement regulations around telemedicine, including forgoing co-pays.”

…on VBC

“The pandemic will also accelerate the move to VBC. We talk a lot about changes during normal times, but things get done when we are forced to do them. Unemployment, payers losing enrollees, government coverage picking up more patients. All these are factors pushing migration to VBC”

… on GI practices

“COVID’s the black swan we discussed earlier. GI practices have taken a huge hit, especially colonoscopy procedures. What happens after COVID subsides?” Listen also to this podcast.

… on SonarMD

Here’s a real world use-case, accelerated by the COVID pandemic, of Allied Digestive Health’s go-live of the SonarMD program.” 

4 things to know about SonarMD

1. SonarMD identified something that’s fallen through the cracks of reactive health care. Practices can’t wait for patients to call and tell their physicians they’re deteriorating. Patients living with chronic disease live with chronic symptoms and they often can’t tell when they are deteriorating. SonarMD proactively engages patients with chronic diseases and monitors their symptoms without intruding. It’s like a guardian angel, patients don’t know the guardian angel is there, until they need them.

2. The need for digital analytics, because sudden deterioration in chronic diseases are black or at least gray swans. This is because patients get used to coping with variable symptoms and providers see patients infrequently. Therefore, neither can see a looming crisis. But AI can. This is true for finding high-risk patients today. Moreover, it will be key in the future for finding at-risk patients early to prevent chronic conditions.

3. Proactive CCIT care coordination tech platforms leverage scarce and busy medical professionals. There is simply not enough money in the system to have human staff manually call every patient. The tech platform makes it cost-effective and easier to do. In 2018 SonarMD did a study on 2017 data. Propensity matched a 5:1 control group p=.03 15% cost savings, mostly driven by a reduction of hospitalizations. That, of course, includes a reduction in surgeries!

4. It’s essential to get everybody–providers, payers and patients–rolling in the same direction. Project Sonar could be viewed as an intensive medical home model for managing IBD and other chronic GI diseases. This means patients can work with doctors who are focused on keeping them healthy, rather than just wait until they are sick enough to qualify for reactive health care. 

Contact SonarMD

SonarMD cost savings
SonarMD Cost savings

SonarMD is a virtual care coordination and drug optimization solution for gut health. Clinical staff and technology make it easier for patients and specialists to work together to detect and address worsening symptoms sooner and make the right treatment decisions. The company contracts with payers and works directly with sub-specialists in their networks to provide value-based care. SonarMD is starting in inflammatory bowel disease where the program has proven to reduce hospitalizations, saving health plans more than 15% per member per year. 

For more information, visit www.SonarMD.com

CONTACT: Patty Keiler patty@collaborate.health 312-550-5394

Contact Dr Bonnie 360

We approach these interviews from two different multi-lens perspectives. 

  • DrBonnie360: clinical dentist, Wall Street analyst, patient advocate, and digital health consultant. 
  • Ellen M Martin: evolutionary life science, finance & investor relations, marketing, communications and writing/editing.

Dr Bonnie360 strategic consulting and professional services

We provide professional consulting and content services to companies working to bring the best of digital, conventional and functional medicine to patients with chronic inflammatory diseases. 

  • We are thought leaders in helping our clients apply digital health innovations to chronic disease, especially chronic inflammatory, autoinflammatory & autoimmune disorders. 
  • Our subject matter expertise includes oral health and microbiome, autoimmune patient advocacy, digital health, self-hacking and more.
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