Q&A: Mike Alkire, CEO of Premier Inc.

RamaOnHealthcare August 9, 2021

Has His Sights Set on Transforming Healthcare From the Inside Out

Michael Alkire, President and CEO of Premier Inc.

RamaOnHealthcare (ROH): Welcome, Mike, to our thought leadership series. Congratulations on taking over as the CEO of the Charlotte-based Premier Inc. Can you talk about your company’s mission?

Mike Alkire (MA): At Premier, our mission is to leverage the collaborative power of our alliance to improve the health of communities. We have four core values by which we operate that help us maintain focus on Premier’s mission:

• Integrity
• Passion for performance
• Innovation
• Focus on people

Since our membership is comprised of more than 4,100 hospitals and health systems and roughly 200,000 other providers (including nursing homes), we have a vested interest in ensuring the success of our members. Our friends and families live in the communities they serve and rely on these critical institutions for care. We are on a quest to transform healthcare from the inside out. We believe in our work, the good that it can accomplish for communities across the country.

ROH: Premier is a technology, data, analytics company in the provider space with remarkable success in group purchasing, supply chain, value-based care, interoperability and advocacy. Please tell us – from a technology perspective – what you see as the next frontier for Premier to affect change.

MA: There are a number of areas we think are ripe for disruption through tech-enablement.

The first is prior authorization. I find it horrifying that we still have providers faxing paperwork to the insurance companies in order to authorize treatment – especially since administration delays can cascade into treatment delays that ultimately harm patients.

We hear that doctors say it eats at least two days a week of staff time – and delivers no value. Speaking of value, don’t even get me started on cost (roughly $11 per instance).

And the outcomes are awful. A survey from AMA found that 30% of doctors have had a patient experience a serious adverse outcome while waiting on prior authorization, including permanent impairment. Only 15% of doctors say the final decisions adhere to the evidence in the public domain. We can do better than this.

Premier is testing a new app within our clinical decision support technology that automates the process. Our aim is to shorten the time to approval to a matter of seconds by giving the payer all the necessary data, as well as proof of the medical necessity of treatment, electronically.

We think we can eliminate $600 million in administrative costs and foster a drastic increase in productivity.

A second area that has been desperate for tech enablement is payment. Our data shows that that as many as 70% of all invoices are paper-based, and nearly 85% of purchasing is still done manually with paper checks.

These processes can almost double transaction and processing fees and can take up to four times longer to process.

We recently launched a new offering – Remitra – with the goal of automating these processes, starting with the contracting and ordering process and moving through invoicing and payment to deliver a seamless, paperless experience for health systems.

This is also a win for suppliers as automation will cut the time to payment, making cash flows more predictable and consistent, while lowering administrative costs.

We’ve seen this work result in millions in savings with the health systems we have piloted the offering with.

These are two examples, but they are illustrative of our approach – which is to find all the low- or no-value activities – all the manual processes, all the paper-based activities – and disrupt them with technology that leads to better, smarter healthcare.

ROH: Healthcare costs the U.S. nearly $4 trillion annually. Research shows that social determinants of health (SDOH) accounts for up to 80% of health outcomes. Talk to us about the work Premier is doing to help address these issues.

MA: Historically, the issue with addressing SDOH has been a lack of real, actionable data. To go to work on this problem, providers need to know what the social determinants are and what populations are affected by them – and many can do that. But going down a layer to uncover root causes has been much more challenging, as has specific targeting at the individual level.

We are working with our members to build an integrated IT ecosystem that enables us to go down to that missing level of data. To find and close the gaps in prevention, diagnosis and care delivery at the patient level.

We are leveraging our data, technology and applied research to achieve equity.

One of the most exciting ways this is coming to life is through the use of our data and collaborative approach to tackle disparities in maternal health, an area that our country has underperformed in for far too long.
Historically, our country’s approach to addressing maternal health issues was weak because we couldn’t fully quantify the problem.

Premier was recently awarded a contract with HHS to study the maternal health problem using our data.

Together we are going to find the gaps, and we’re going to organize learning collaboratives to help providers share insights with one another and make meaningful strides in this area. Core to this is understanding and quantifying the impact of social determinants of health on a patient’s maternal journey – and then testing and implementing evidence-based processes that prevent a negative outcome.

Another example of this work comes from our research arm – Premier Applied Sciences – which has cost, quality, operational and outcomes data from more than 3.7M discharges and 800 hospitals nationwide. In this case, the CDC asked us to help analyze the question of equity.

Our data showed that LatinX patients made up the bulk of COVID hospitalizations, and that the problem was most prevalent in the Midwest and West. We armed the CDC with this information so they could help local public health agencies allocate resources and prioritize vaccinations within LatinX communities.

ROH: The pandemic expedited the adoption of technologies like digital health, telehealth, and remote patient monitoring. How did the pandemic impact your strategy for operationalizing these tools?

MA: We bring together an incredibly powerful and robust membership base, deriving cost, quality, outcomes supply chain and operational insights on 45% of patient discharges in the United States.

Our mission was the same before the pandemic and during the dark times of it: to drive high-quality, cost-effective outcomes. This will continue to be our strategy as things return to normal.

The outbreak of COVID-19 only served to reaffirm our commitment to tech enablement for the hundreds of thousands of provider organizations we work with across the country.

To combat the pandemic we rapidly pivoted to enhance our existing offerings. This included:

• Adding COVID alerts/flags to existing technology solutions
• Using natural language processing and machine learning to monitor for spikes in symptoms and flag suspected cases
• Leveraging predictive modeling capabilities – using our experience working with hospitals in New York City during the initial wave – to make actionable forecasts on caseload surge and better prepare for greater demand on supplies and staff
• Offering providers the latest clinical data to ensure adherence to evidence-based care at the point of clinical care
• Expanding our COVID data points to support industry-leading research on therapies and the impact on different communities

We recently announced a new brand within Premier. It’s called PINC AI™, and we believe it will help power the next exciting chapter for Premier.

PINC AI includes Premier’s benchmarking, analytics, reporting and clinical technologies. We believe PINC AI offerings will help optimize performance in three main areas:

• Clinical intelligence solutions including current analytics, real-time clinical surveillance, AI-enabled clinical decision support and performance improvement consulting and collaboratives designed to improve the quality, safety and overall outcomes delivered to patients. Also included is Premier Applied Sciences® for the development of research, real-world evidence and clinical trials innovation for medical device, diagnostic and pharmaceutical companies.
• Margin improvement solutions including analytics, workforce management, integrated financial reporting, enterprise resource planning and consulting services to help lower total costs and improve provider operating margin.
• Value-based care solutions including analytics, benchmarking, physician enterprise technologies, consulting and collaboratives to help health systems implement effective models of care and succeed in new, value-based payment arrangements.

PINC AI is also the data and technology engine powering Contigo Health, which connects tech-enabled, high-value provider networks to employer-sponsored health plans, and Remitra, which automates e-payables and invoicing between providers and suppliers.

PINC AI has the potential to be a large and powerful innovation catalyst in healthcare.

With PINC AI, we’re putting all the pieces together to create an exciting new brand that we believe will power the future of healthcare transformation – one that is distinctly devoted to our technology solutions.

ROH: How do you see the ecosystem of paying for care changing over the coming years?

MA: The pandemic put a bright light on the problems that plague us with fee for service. When the nation counted on providers like never before, they were punished financially like never before. Already operating on razor thin margins, they saw 4-10% of revenue evaporate in a moment.

Yet, simultaneously, payers were recognizing record profits.

With that, it should come as no surprise that many of our members are even more interested in exploring alternative payment models like capitation or per member, per month fees that share savings. Models that provide predictable monthly income, and a way to capture some of the savings from delayed elective care.

Again, we find that tech enablement is the key to successful execution. Providers need better data to broaden perspective, looking not just at their clinicians’ individual contributions to outcomes, but across entire episodes, service lines, practices and time horizons. They also need better access to the evidence to eliminate low-value decisions and develop better, more consistent measures of performance.

This enables providers to keep pace in local markets, while also serving as the gateway to new revenue streams. An enabling engine for health systems to bypass traditional, third-party payers, going directly to employers to manage their employee populations.

Contigo Health connects employers with a network of Premier members who we know are delivering top quality outcomes because they are using our quality improvement and clinical decision support technologies.

ROH: What kind of benefits do these direct-to-employer relationships yield?

MA: Participating employers typically cut the number of surgical procedures their employees require in half by working with the Premier network. These savings can’t be understated. Of the surgeries performed, more employees bypass skilled nursing to go straight home, returning to work faster.

On the provider side, it can connect them to a coalition of willing customers, allowing them to gain access to new patient populations that may be beyond the typical catchment area. And it can help ensure they have the technology enablement to deliver the results that self-insured employers require.

For example, Premier members like Geisinger, University Hospitals and Virginia Mason all benefit from non-local referrals that increase visits year-over-year, subsequently increasing net new revenues. Most of these members were able to retain nearly all their volumes over the past year due to referrals, even accounting for travel and elective procedure stoppages in the spring.

ROH: We’d be remiss if we didn’t spend a bit of time talking about the state of the supply chain. How does your work on the technology side of the business impact the supply chain?

MA: Premier is leveraging our data to create healthy, resilient markets – guiding our partnerships with companies to drive stable, diverse sources of supply, alleviate risk and allow our members (both acute and non-acute) to better weather times of disruption.

As a country, we were caught flat-footed on understanding where vital supplies were coming from and where they were needed when COVID-19 began. During the pandemic, Premier conducted nearly a dozen member surveys on supply chain, payment and more to get a jump on these indicators.

Our primary research helped us understand early gaps, advocate for favorable policy, guide providers’ decision-making and innovate solutions. The information from these surveys kept governments informed in real time of the on-the-ground situation, and ultimately led to the creation of private sector initiatives that accelerated product delivery to providers with the greatest need.

The depth and breadth of our integrated data and analytics allows us to contract in new and creative ways, engaging in exclusive supplier partnerships to ensure clinicians have access to high-quality products at the right time and at the right price.

We are also able to deploy industry-leading technology to build a smarter, end-to-end supply chain from procurement to payment, giving providers the visibility, operational efficiency and superior savings necessary to thrive today – and to sustain those gains for the long term.

We also believe that just like Eisenhower built the highway system to connect the country, we need to see development of our IT infrastructure.

We need to build out an infrastructure that helps us understand and predict surge demand for supplies. We also need to understand the risks associated with geographic concentration of suppliers – from raw goods to packaging of finished product, and everything in between.

ROH: Can you speak to the supply chain work that Premier did during the pandemic and its work today to ensure a healthier supply chain in the future?

MA: I’m so proud of our team’s work and what we were able to do to help front-line caregivers during this crisis.

At the onset of the pandemic there was a singular focus: source needed supplies and therapeutics, and diversify production so that shortages become a thing of the past. Premier has been encouraging the sourcing of supplies and raw materials from multiple regions as well as domestic partners for years. This has come to life through our drug shortage program, ProvideGx, for example.

During the pandemic we took this a step further, working in collaboration with our members to acquire a minority stake in Prestige Ameritech, the nation’s largest domestic producer of face masks, to offer new capacity for members. We then launched a joint venture with DeRoyal Industries to expand domestic production of isolation gowns at a facility in Tennessee. And most recently we did this for gloves with Honeywell.

We will continue to look at ways to ensure our members have access to the supplies they need either through innovative partnerships or encouraging those in Washington to consider thoughtful strategies to foster a resilient supply chain.

Not surprisingly, we believe a critical component of the supply chain of the future involves tech enablement to ensure transparency and better visibility. Without upstream and downstream visibility into the supply chain for goods like PPE and pharmaceuticals, we remain vulnerable to supply disruptions. To strengthen the U.S. supply chain, we must have a better handle on our exposure to foreign manufacturing. We also need better visibility into supply sources, raw materials and ancillary products, including specific data on volumes produced in each geography.

Premier and its members have been advocating for geographic diversity in our supply chain, including more domestic production, for more than a decade. Our hope is that the pandemic is finally helping open people’s eyes to why we need domestic capacity and geographic diversity for critical medical supplies and pharmaceuticals. We have called for a thoughtful, balanced approach, ensuring that supplies come from diverse regions, countries and continents.

Technology will also play an increasingly important role in the purchased services space. We are seeing this prove out through the work that Conductiv does to power supply chains by integrating AI-driven analytics, marketplace insights and express contracting negotiation strategies. Sourcing automation enables our members to engage with their own spend data and then determine the competitiveness of their contracts.

ROH: Was there an investment that you made prior to the pandemic that had an outsize impact on the healthcare ecosystem?

MA: We’ve talked about the predictive modeling we were able to do during the pandemic. Much of that work was based on acquisitions we’d made in years past of companies focused on clinical surveillance, clinical decision support and enterprise resource planning (which helps with demand forecasting and burn rates).

Similarly, in the years leading up the pandemic we’d heard from members that diversifying their supply chain channels was top of mind. There was an unmet need for an e-commerce healthcare platform that offered a transparency, protections, fair pricing, vetted products and reputable items. This shaped the formation of stockd., an online marketplace that we launched in a pre-COVID 2019.

We are proud that stockd. maintained its standards and offered supply throughout the pandemic, especially for facilities like nursing homes that were prevented from accessing PPE through traditional channels because of allocation. And with our vetted suppliers members were able to avoid any of the price gouging and counterfeits that plagued so many others looking for supply.

We anticipate that e-commerce for healthcare supplies will only become a larger element of providers’ supply chain strategies going forward, particularly for non-acute providers as well as adjacent sectors like education and construction.

ROH: What do you see on the horizon for healthcare transformation over the next five to ten years that maybe is not getting as much attention right now? How is Premier positioned to make an impact?

MA: Beyond what we have already discussed, I really see the value of real world evidence coming to life in a meaningful way.

As new therapeutics and innovations come to market, it is going to be more critical than ever before to understand how they are being leveraged and the impact they are having on patient lives.

Premier Applied Sciences® (PAS), the research and analytics division of Premier, is well positioned to enable providers and life science companies with the insights they need in this space.

PAS partners with industry leaders to develop, teach, test and research care delivery practices and real-world interventions to improve quality, decrease costs and ensure patient safety. This includes:

• Applied research and analytics
• Science implementation
• Prospective research and clinical trials

Underpinning PAS’s healthcare improvement work is the Premier Healthcare Database (PHD), comprised of real-world data from more than 1 billion patient encounters.