Remarkable Leadership: Jim Benedict, President, Allegheny Health Network

• By:  Bill Toland
• Posted:  June 7, 2024
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It's been a year since Jim Benedict (JD, CPA, MAFIS, FACHE) was named Allegheny Health Network's president. In that time, AHN has made some big moves and bold plays — announcing the planned construction of a new hospital in Canonsburg, the development of a new Neuroscience Institute hub in Pittsburgh, the opening of a new sports medicine campus in Erie, and the biggest move of all, a dramatic $1 billion expansion of Allegheny General Hospital, its flagship medical center.

By comparison, AHN's shift to a shared-risk reimbursement model with Highmark Inc. may not seem quite so bold. But make no mistake, it's a significant evolution in how AHN and Highmark's health plans do business with each other, and it’s believed to be the largest risk-based payment arrangement between a single insurer and a care provider in the nation, with about 350,000 people covered under the new model.

How is the new model different? For decades, caregivers and hospitals were reimbursed on a "fee-for-service" basis, paid by insurers for every service or unit of care. Over the years, insurers began adding "carrot" incentives into the reimbursement model in hopes of moving the whole system toward better outcomes and better value. For example, an insurer might offer payment incentives for meeting population-level quality or cost benchmarks.

Risk-based models have both a carrot and stick. If a provider meets quality benchmarks and generates savings compared to the anticipated cost of care, they retain a chunk of the surplus. But if care costs more than it should, the provider will have to eat part of the deficit. There's more financial risk to the provider, but also more incentive to meet quality and value targets.

While the risk element is still somewhat novel, particularly at this scale, Benedict emphasizes that the novelty doesn't mean much unless it delivers better outcomes and higher value.

Risk is "really an administrative term," he says. The end goal of building more risk into reimbursement contracts is "evolving the practice of medicine and improving the quality of the services we provide." Without that, risk is just "an economic construct…and we're not going to win the minds and hearts of people and actually get them engaged."

In the following video and Q&A interviews, Benedict discusses the shift to shared risk, how AHN is working to become a "destination for practice," and other topics.

A sea change

Bill Toland: Why is the shift to a risk-based model such a big deal?

Jim Benedict: This is a fundamental change in how we are coming together collectively to address affordability in health care — and the way that health care is delivered. How do we reduce variability? How do we get our clinicians, our physicians, together to talk about how we deliver care more appropriately? How do we deliver the best outcomes clinically? How do we make sure they're consistent with the goals we're setting for equity access, affordability and experience?

It is clear in the literature that we have to fundamentally change the way that we are approaching health care. The move to risk, quite frankly, is an evolution of the path AHN has been on since its formation as a regional health care network in 2013.

Bill Toland: How do you get the physicians, the practices, the hospital leaders on board with the change? It’s one thing to say, "Hey, we're going to reduce variability and waste and improve medicine." But it's another thing to hold providers accountable for meeting cost expectations.

Jim Benedict: In some ways, this is a sea change for us. But it's really important to stress that this is also an evolution forward. This is where the industry has been shifting for 30 years — a serious move to value. Medicare is driving toward it. The payers are driving toward it. For us, this is all part of the Living Health strategy, which continues to drive the clinical model. So while it's a big deal, "risk" isn't a single event — it is a continual journey.

But to answer your question, in order to have aligned teams, you have to have aligned incentives, you have to trust working together. This isn't a model designed to benefit one party or another, or to ration care. This is about the clinical team, the insurance team, the leadership team, coming together on the objectives we're setting in order to best serve the people of western Pennsylvania.

This is a team sport. Risk creates the environment for success, but we still have to execute on it. If we don't do that, this will fail. So it's really not just about our risk model — it's about transforming care to make sure it's evidence-based, experience-based, tied into the quintuple aim, and drives our objectives.

Bill Toland: When you say team sport, what does that mean to you?

Jim Benedict: It means that the work we're doing in Grove City and the Erie region is tied implicitly to what we're doing in the Medicine Institute, which is tied to how the insurance team is building pricing models, which is tied to how Dr. Bruce Meyer is setting care and coverage objectives for the entire western Pennsylvania footprint. It's all intertwined.

A destination for practice

Bill Toland: You’ve been AHN president for just over a year, after serving for several years as its chief operating officer. What has surprised you the most about the role or the transition?

Jim Benedict: The way the industry has shifted over the last few years, since the pandemic, is remarkable. At AHN, the volume has recovered — we are so busy, yet we continue as an industry to have financial challenges. I wouldn't have expected the industry to have required such a deep financial transformation given the amount of work that is being done at the bedside today.

Bill Toland: Normally more volume translates into a better financial position for providers. But the industry has really been turned on its head in the last four or five years.

Jim Benedict: Yeah, that's correct. A lot of the industry has moved to governmental payers, and when providers look at how our revenue yields are generated, government reimbursements are challenging. Historically, the model has been that the commercial payers actually subsidize the governmental payers. But as we move more toward governmental payers, the financial challenges become more real. So we have to change our model in response.

Bill Toland: The compensation models have changed as well, right? For nurses and everyone else?

Jim Benedict: The health care employment shortages we're seeing nationally, regionally and locally — they're real. They impact the bedside. One thing we're trying to do is make sure that people are working at the top of their license. That means ensuring that people are able to exercise their vocations in a way that allows them to have joy in practice in the profession they chose.

But we also have to ensure that we are market-relevant in terms of our compensation and reward systems, and that we continually evaluate that against the competitive environment. And honestly, it's evolved. You know, it used to be very localized, but quite frankly, we're competing nationally now with the traveling nurse groups that have been needed to augment staffing.

Finally, there's a national shortage of physicians, in various key disciplines. So the work that we're trying to do is understand the state of the environment — how do we ensure that we're getting people into our system, paying them the right way, ensuring that there's joy in the work that they're doing?

If we can accomplish all that, we become a destination for practice.

Bill Toland: When you talk about practicing at the top of license, where does the industry fall short?

Jim Benedict: We need to make work easier for our clinicians. How do we leverage technology? Digital nursing is a good example. Our ability to leverage technology to take some of the administrative burden off of our nurses, particularly at the bedside or in the exam rooms, is really important. Over time, they've become scribes to the work that they've done, as opposed to just doing the work of treating patients. Delivering care should be their primary objective, not recordkeeping.

Equitable care, equitable access

Bill Toland: The emergency department is the gateway to the health system for many patients. How do we make sure patients are using the ED appropriately?

Jim Benedict: We are currently having conversations right now with our ED physicians about ED utilization. Historically, for hospitals, the front door to its profitability sits in its emergency department. It is where the primary throughput starts for most significant patient encounters. But profitability for the provider means cost for the payer. And when you're aligned with a payer, as AHN is, we can afford to look at that front door to make certain it's the right entryway for our patients in order to best care for the whole person.

That means a lot of work with our primary care teams to manage patients more effectively, to get patients to the right specialists and the right diagnostic centers, the right inpatient settings.

None of this is possible without the synergistic culture between AHN and Highmark Health. We are in a very unique position, in that we have a payer and provider working together on the economic model to be able to deliver the care more effectively than standalone provider systems.

Bill Toland: You've seen that synergy from a variety of angles — first with AHN, then from the Highmark Health vantage point, and now back at AHN. What's the value of that synergy for AHN?

Jim Benedict: For one, by partnering, we have the ability to weather the storm. Another big one is that we have the ability to innovate — to be able to take ideas and try to put them into practice, to do it in an informed way. It’s OK if we fail, but if we do, fail fast.

Most provider systems don't have the luxury of financing innovation, or the luxury of failure. It's only possible here because AHN and Highmark Health are together in this journey. Other systems do not have that.

Bill Toland: Getting back to moving care out of the ED and other expensive care settings when clinically appropriate — what role does patient education play in this process?

Jim Benedict: It's a significant component — education, empowerment, clinical appropriateness. We're working now on determining the best criteria to use. If you're having chest pain, we don't want you thinking about whether or not you need to go to the ED. Just go.

But in order to educate and divert, we also need to make sure our other access avenues are prepared. That means ensuring adequate primary care networks, and educating around the alternative sites to the ED — virtual urgent care, virtual ED, video visits, same-day appointments, and so on.

Bill Toland: If we're going to drive people to the primary care space, doesn't that presuppose they have a PCP relationship?

Jim Benedict: The connection between patients and a PCP is really important as we start to deliver value. And there's a couple of things that we're working on to ensure that this connection is made. First, do we have the capacity to take on more people? We do.

The other piece is to educate people on why a PCP relationship is important — having someone who understands your whole care as a person — socially, financially, behaviorally, clinically.

When you're 25 and you're healthy, that might not necessarily be at the forefront of your mind. My son is a good example — he is 28 years old, and quite frankly, he could care less whether he has a PCP or not. He's very comfortable engaging in a virtual visit with a physician he doesn't know. He's very comfortable figuring out, hey, I probably don't need to go to the doctor.

So we've got to figure out ways to begin to educate that population, because the decisions you make when you're young may have implications on your health outcomes when you’re older.

Bill Toland: Innovation is so important, especially on the care side, but how do we ensure that everyone has equal access to those innovations?

Jim Benedict: That's one of the biggest changes I've seen in my 30 years — the rigor with which we are addressing matters of equity and access, and that we are reaching out proactively to the communities that historically have been underserved in order to drive better outcomes.

Bill Toland: Speaking of access, let's talk about the new Canonsburg Hospital.

Jim Benedict: We've been developing our approach to AHN's southern market for a decade. And of course, Canonsburg Hospital has been a big piece of that discussion. It's an older facility, but it's an important facility for us if we want to continue to serve that market effectively.

So we decided now was the time to invest in a new facility that would bring Canonsburg up to today's standards. For us, our standard is AHN Wexford Hospital. That is the experiential model, the architectural model, the clinical model and operational model we're trying to create throughout AHN as we build out the Living Health strategy.

This is the right thing to do. It's the right time to do it. And we're excited about the opportunity to create jobs and to deliver a first-in-its-class, value-based hospital that will serve the communities of Washington County for years to come.