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Following a SPAC merger that valued the company at about $4.4 billion, Cano Health is expanding — and its CEO and founder, Dr. Marlow Hernandez, sees great potential for senior living partnerships.
“We have several clinics, I estimate a half-dozen or so, that are already embedded within these senior living communities and bring that increased accessibility to its residents for integrated value-based model of care. I think it’s incredibly helpful and super popular among residents,” Hernandez said during a recent SHN+ TALKS appearance.
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
— Cano Health’s model for bringing integrated care to older adults, through a blend of coordinated services and technology
— Cano’s existing partnerships with Century Village active adult communities and how other senior living partnerships might function
— The potential for Cano to work in creative ways with senior living communities to offer services such as meals to older adults in the surrounding market area
— What the rise of Cano and similar companies such as Oak Street Health mean for the future of senior care, and senior housing
The following has been edited for clarity.
[00:02:11] Tim: Can you briefly tell the story of Cano Health, the when and why of starting the company and how it got to where it is today?
[00:02:26] Dr. Hernandez: The team and I grew Cano Health from just one traditional medical office. I’m an internal medicine practitioner who just wanted to build something that my friends, family could be proud of, and serve my community. There were so many patients that were losing their livelihoods during the Great Recession in 2009 when I founded the company.
It compelled me to create a model that could serve them and the broader public. We have grown that now to nearly 200,000 patients that we serve, 106-plus medical centers throughout the country. Not just Florida, we’re in Texas and Nevada and Puerto Rico. We have active expansion plans, but I recognized very early that people in underserved communities needed more.
The system needed reform and that needed to come predominantly from the market. We have great institutions, great hospitals, but the coordination of care, the access to care, that really needed to be improved. That’s what I focused on. Today, approximately half of our members are eligible for both Medicare and Medicaid. More than 80% are minorities, predominantly Latinos and African Americans.
We are actively improving the platform to measurably continue to improve clinical outcomes while reducing costs and reaching more people throughout the country. That’s ultimately the vision to become America’s primary care, but we are starting from the standpoint of helping those who need us most today. Those who are predominantly underserved communities, highly densely populated, urban, suburban areas, et cetera, tend to over-index minorities because the access to care as a result of the current reimbursement model is just simply not there.
That is not just affecting the health of patients, but it’s affecting us economically as a society. Thus, we have a broader mission and vision than just health care as I believe that basic health care is a right and not a privilege. Then how do you go about providing that? Actually, in our country we have the ways and means to do it from the market standpoint, but we need to think differently. That’s what Cano Health was initially, serving the underserved at a capitation per member, per month, flat fee that was affordable. That’s what it is today through a variety of peer partners.
[00:05:38] Tim: Can you walk me through what that process is like for me? How do I learn about it? How do I become a member? Then once I’m a member, what is my experience?
[00:05:56] Dr. Hernandez: If you’re an older adult, there’s probably nothing more important than quality health care. For those of us not yet at that age or stage in life, we have other priorities. I’m taking it aside that everybody values family first and foremost and their specific passions and interests. Beyond that, what older adults need and want is to make sure that they get the opportunity to live that longer, fuller life, take that retirement to its full potential, and thus find that great primary care establishment.
What they would typically look for, recommendations, go to Google, the phone book, what’s expedient. What’s available to them is generally a much more limited primary care institution, typically with one or a few practitioners or ones that are associated with a hospital. In this kind of episodic, transactional care model in which you go in, maybe get an EKG, get some labs.
If you need referrals, well, good luck to you. If you can’t come to the office, pretty sure, they’re not going to be able to help you there with transportation and what happens in terms of your ability to afford medicines, et cetera. There’s not much advertising or other ways that a senior goes about searching and finding that right practitioner. There’s no, typically, data on clinical outcomes of that practitioner, or the different specific services of that practitioner that will help you live that long and full life.
At Cano, in the communities that we serve, more than a dozen different markets are expanding rapidly. They’ll hear about it through different media, traditional, social. Of course, patients are our biggest source of referrals. Two-thirds of our patients come from organic means. What they’ll find at Cano is that we have published clinical outcomes. We have not only increased our star rating relative to the market but lower mortality.
We’ve been able to do that for four years, including the midst of the greatest public health challenge in 100 years. If you go to The American Journal of Managed Care, you will find published outcomes backed by two universities and hospital groups that looked at our data, analyzed it. We’re impressed by what they found. More than 60% lower mortality for Covid cases, more than 60% lower mortality overall is what we have published out there for years.
We’re doing it while increasing access to care. Patients are actually getting more services but more cost-effectively because we are reducing the need for hospitalizations. We are reducing complications. That’s ultimately what’s important in differentiating what are your outcomes. How do we do it? Well, we provide better access, transportation, 24/7 urgency line Cano At Home services. We do better quality. We have different models and programs for different disease states so that we can predict and prevent disease.
Of course, we’ll do all your preventive screenings and we have specialized teams. Then we have more wellness-type services, physiotherapy, laughter yoga, acupuncture, different classes, nutrition, and otherwise. Here’s the thing, Tim. For exactly the same price and, actually, compared to traditional Medicare, typically 15% to 20% below what the patient would have otherwise paid. A lot more, measurably more, and that community that we’re building at our centers for the same or less.
[00:10:34] Tim: Do you have a sense of roughly how many of Cano’s patients reside in some sort of communal senior housing?
[00:10:44] Dr. Hernandez: It is a relatively small percentage. I don’t have the exact number. I would say in the 10% to 20% neighborhood, most of our patients live in multigenerational households. If you look at the underserved community, hard-to-afford, dedicated-only senior living. Of course, there are some government programs like Section 8 in Florida and many others across the country that help seniors.
For cultural and economic reasons, just personal preferences, they live generally with their families. They particularly enjoy – in some cases require – that component of continuing to take care of their families and being a resource to allow their children and grandchildren to pursue their own careers and other passions. Well, I don’t have a specific number for you. We do have a fair amount of patients out of 200,000, so there’s still a fair amount that live within this community. I think this community is great. The majority do not.
[00:12:15] Tim: As you look forward and how Cano is thinking about growing, do you see potential to work more closely with senior living providers?
[00:13:25] Dr. Hernandez: I do think there’s room for partnerships with senior living providers. In fact, we have several clinics, estimates of half-dozen or so that are already embedded within these senior living communities and bring that increased accessibility to its residents or integrated value-based model of care. I think it’s incredibly helpful and super popular among residents.
It is a convenience. It’s all these value-add services that they can walk or take your golf cart to. I do think that there’s a great benefit to the residents. It’s not just limited to low income. Century Village comes to mind and a few of those. I do think in middle-income, middle-upper, there is certainly interest and active partnership availability from our standpoint.
I think there’s a particular need and interest in the lower-income and working in different communities or government organizations that provide different subsidies. As you probably know, in some big cities with gentrification, that is not as easy to attain but very much necessary for those who choose that kind of living environment. Short answer is yes. There is room for partnership there.
I do think that there is economic opportunity and social need in the middle lower-income groups and definitely having a Cano center there would be a great benefit to the patients. If we’re improving the lives of patients, we are actually doing well ourselves because that’s our business model. The better patients do, the better we do. We don’t get paid a fee for service. That traditional transactional model is if you’re sick, the more you come, the more we make. In our model, we get a flat fee per member per month or a capitation.
Our incentive is to keep you healthy. 98% or so of our revenues are in that model. Of course, we have a traditional model too because there are some patients that are just not in these kinds of value-based arrangements. The beautiful thing about our model is if a developer, a partner has a population and we believe we can measurably improve that population, we will go in there and everybody wins.
[00:16:25] Tim: Can you just describe for people who don’t know what Century Village is and a little bit of the backstory of how you got involved there and what that looks like on the ground?
[00:16:46] Dr. Hernandez: Century Village is senior community independent houses and generally a few hundred. Some are rather large so or more, and they build out what you typically see in those community centers, and then allow for specific services to be available. Of course, health care being so important, that is one that they very much like to see. We have a number of them.
We have medical centers that predominantly serve the residents of that community. As I mentioned before, when patients win, so do we and, thus, that kind of model and partnership, we are very much interested in. The predominant number of clinics of 106 and counting that we have are generally in retail settings because we want to do everything we can to increase access. If we’re in a senior living community, well, great. That is increasing access.
That’s why we provide transportation. That’s why we provide a 24/7 urgency line Cano At Home. I do think that, again, there is an opportunity there for those developers or community managers who also believe that the patients could get markedly better service or there’s significant demand due to access or other issues, or even when there is access availability, but you’re not getting the quality that the residents need. Our model and certainly our brand would be a great value-add.
[00:18:57] Tim: We talked about the demographics. Can you talk a little bit about as members age and their needs increase? Even if they have dementia, do you have people who you serve with those types of conditions? Is that kind of model still helpful for that?
[00:19:29] Dr. Hernandez: If you look at the average count of patients, and this is public information, you’ll see when you compare chronic disease, hypertension, CKD, CHF, diabetes, heart disease, kidney disease, lung disease, diabetes, et cetera, we over-index. We’re in those generally underserved communities and so the population tends to be older, sicker, and poor.
However, within that space, there’s going to be a few percentage points of those that need to be in a skilled nursing facility or in an LTACH or in a specialized facility that calls for dementia. While we welcome all patients, those are not the patients that would get the most benefit from us because we don’t have those specialized services. We do not provide skilled nursing.
We don’t, today, have a PACE program, for example. We do not have inpatient specialists. We are a comprehensive, outpatient, soup-to-nuts, geriatric-focused service. We serve the entire family, but, of course, the overwhelming majority are senior patients. Those senior patients, compared to the general population, are, again, older and sicker, but then you have a rather small subset of senior patients that require these specialized and some require university-setting level of services.
Whether it is for very complex, multi-organ type of conditions, there are hard palms or they have particular rare diseases, et cetera, that’s not what we report for them. We have those tertiary care institutions for that. We have proven our superior clinical results over and over again. We have this proactive and integrated model, but it’s going to be for the great majority, overwhelming majority, 90% plus of seniors, not for all seniors.
When you think of senior housing too or some of these specialized, I think you probably over-index that in 5% or so. That would not be your average senior by any stretch of imagination. When you take care of that 90% plus of the population and you keep them healthy to prevent complications, that is predominantly what is going to get us better quality outcomes compared to other comparable nations. What’s going to ultimately make a dent in the rising healthcare costs that is strangling the economy.
[00:22:41] Tim: How would you say that Cano is differentiated from those other competitors?
[00:23:31] Dr. Hernandez: The Cano model of this one-stop-shop access, quality, and wellness is certainly not unique to us. There are other colleagues in the space such as the ones that you mentioned, but it’s still relatively rare across the country. You put us all together, you’d be hard-pressed to get more than 10% market share across the country. All of us. In fact, it would be hard-pressed to get 5% on a strict definition of exactly what we do.
We need more of it. We need to cover more ground together. Our patients, our community, our country absolutely needs it. I applaud the colleagues we have in this rising field. We can no longer afford this transactional, episodic care where nobody ultimately takes responsibility for the clinical and financial outcomes of patients. We need to continue this paradigm shift and it is accelerating.
I think that for those few percentage points of market share, there’s not that much difference between us candidly speaking. The wellness services, the care coordination, the primary care type of offerings, I think all of that is relatively similar. Where there are differences in the specific clinical protocols, the technology stack and we all have it, and so we’re all going to be a bit different there.
There’s going to be some differences in our published outcomes that there are certainly some differences in geography just because of where we started. There are differences in how we grow and what are those avenues that we’ve got full competence in whether we build centers or manage centers or we integrate other centers by buying them and so forth. There are differences in the periphery of the model and then how you grow the model and ultimately are able to reach that bottom line for investors and the continued growth of the business.
As you can probably guess, I’m biased. I believe that we have quite a differentiated and attractive model that multi-year, multi-geography has been profitable and has industry-leading outcomes. There are certainly multiple ways of doing the same thing. From a business model perspective, those who are aligned with patients and take responsibility for clinical and financial outcomes, I think, are on the right track and I hope there’s more of them.
[00:26:56] Tim: An increasingly large number of older adults are living in their own single-family homes or multi-family apartments, and you allow them to age in place in those settings for longer periods of time, then they defer or move into maybe a communal senior living or assisted living community when, in the past, they would have made that move. What’s your reaction to those fears you think is a well-founded concern on the part of the senior living industry or would you think about it differently?
[00:27:52] Dr. Hernandez: We have an incredible amount of aging baby boomers. There is so much demand for a wide array of services. I think that there will always be broad choices and demand for those specific choices or options for seniors on how and where they choose to age. I would ask you the question, Tim. How would you like to age and would you like to have the option of aging with your family in your home if you had that, or would you want to live independently of your family in a senior living community?
Would you like to be in a nursing home facility? I can guess where you would lean, but that availability of choices is, I think, very good. I don’t think the market will dry up as we have an aging population. We continue to push life expectancy. For those who retire, there’s a bit of a misconception that we’ve got life expectancy in the mid-70s. You probably know that if you reach 65, you likely live into your 80s or more. Life expectancy is calculated for the whole population. You get bimodal effects of the really young and what happens.
Then you’ve got one-time types of events like the pandemic. That has unfortunately decreased life expectancy in general for a baby being born today but that’s not for a senior. We are living longer. There’s always going to be a need for a wide array of options and we just talked about it. Specific conditions, specific preferences, stage in life, family type of concerns, all of these things, our job is to provide seniors with the best that primary care, care coordination, population health has to offer so that they can live that longer and fuller life, and then they can decide where they want to live it.
[00:30:15] Tim: Can you talk a little bit about Cano’s Covid-19 response: Did you have to shift the model in the last year because people couldn’t come into the centers? Did you add telehealth? Any adjustments that have been made?
[00:30:32] Dr. Hernandez: We actually had been doing telehealth before the– It just makes sense, part of access, wellness, and quality that I’ve been talking about. It’s our platform model. We already had very well-developed care management, population health systems. Cano At Home, the 24/7 urgency line. All we did is just increase that as we could have less in-person care in the medical centers.
At one point, it was 90% telehealth during the height of the initial pandemic. We’re very much still in the pandemic by the way and still dealing with that. Now, it’s more like 80% in-person and about 20% telehealth. The model didn’t change, but it was further validated by the pandemic as our patients measurably had less mortality than the comparable population.
Our business model, because our finances are tied to patient health, actually did better than our fee-for-service comparables. We showed once again that it’s not the individual tactics or services or devices that you now put into the market to try to milk out more money. It’s what innovation do you do within the funding that we have today that measurably improves health care?
We had already done that. We didn’t need a pandemic to tell us, “You need to provide some care at home or you need to do telehealth or you need to do prescription home delivery.” We were doing that already and just accelerated or increased the services that, before, were not as prominent because there wasn’t as much demand for those as there was and there was during the pandemic.
[00:32:44] Tim: Is Cano At Home service a private-duty caregiving service?
[00:32:53] Dr. Hernandez: It’s urgency. Patients have access to a 24/7 urgency line after being screened by a clinician. In some cases, we do send clinicians to their home. Thousands and thousands of visits on a yearly basis that we go. Beyond taking vitals, we may do IVs for hydration, do antibiotics, anti-inflammatory, nebulizer treatments, et cetera.
Whatever is necessary, fully placements to minor procedures, all those things can be done depending on the urgency level, depending on the mobility of the patient. We’ve also used it for Covid testing. We’ve used it for Covid
vaccines, of course, but it’s not meant to be a home health, chronic type service but rather an extension of our primary care model.
[00:33:49] Tim: I’m theoretically thinking about how you might work with a senior living provider across their portfolio, since they provide a lot of those companion care activities of daily living-type services.
[00:34:13] Dr. Hernandez: That would be a great partnership because we don’t do any of those services.
[00:34:16] Tim: But if one of those residents has an urgent health thing, then Cano could actually come to the community, preventing a hospitalization?
[00:34:25] Dr. Hernandez: That’s exactly right.
[00:34:29] Tim: Have you been approached by any real estate entities to do anything programmatic for their various operators across their portfolio or have you thought about reaching out to those entities to create a partnership on that real estate level?
[00:35:00] Dr. Hernandez: Well, as I mentioned, the overwhelming majority of our clinics are in retail environments where we reach the great majority of our patients outside of these environments. Thus, it’s not been a focus of ours. We’ve gotten the call here and there. As I mentioned, we’re in a few, and thus open to discussing whether it makes sense for us to have a clinic.
If you have enough population that would benefit from our services, then, of course, we’ll do it. It’s all on our costs. We take full responsibility for the care and the financials associated with it. It is something that we have not only explored but we have done, but it’s not our primary source by any stretch of imagination of growth, given that, again, we focused on the more general market, which does not tend to live in these facilities.
[00:36:13] Tim: What are the growth plans for Cano, especially coming out of this big SPAC deal? What’s the pace in terms of adding new centers? Are you looking at specific geographies that you want to grow into, things like that?
[00:36:28] Dr. Hernandez: We have come a very long way in a short period of time, but I’m confident that our best days are ahead. We’ve got a very long runway. We have projected growth revenues through 2023 of 55% compound annual. Our share in our existing markets is very small. Even in Florida, our single biggest market, we’re arguably the biggest provider of primary care procedures in the state.
We have less than 2% share of the Medicare market for the value-based contracts. We also believe we have very favorable tailwinds in the marketplace within the population that is aging, that the rapid growth of Medicare Advantage continued the shift from fee-for-service. We’re growing through different ways. We build medical centers and we’ve announced that we’re opening 54 to 59 medical centers next year.
We also manage affiliates and other medical centers. We manage hundreds of affiliates in multiple states in a dozen-plus markets. Then we acquire and integrate with great proficiency and we’ve done well north of 20 deals in the last four years alone. Given our three-pronged growth approach, our multi-year, multi-market track record has every confidence in health search.
[00:38:12] Tim: Can you talk a little bit about the technology platform that’s underlying that growth and are you, either today or in the future, trying to leverage data analytics to provide more proactive care to manage that patient population?
[00:38:32] Dr. Hernandez: We’re doing it today. Our tech stack is called Panorama. This is our prop health platform: 20-plus modules, 300-plus unique reports, thousands of bridges and algorithms and templates that we have worked on for our purposes over the course of years and have always leveraged all of that data, that interconnectivity, that proactive approach to a single member’s health, but also to an entire community.
Through its use, for example, in Covid-19, we were able to identify really quickly where, how many, who are the high-risk patients, and thus get them tested and eventually vaccinated with additional medicines for acute exacerbation and so forth. When we publish a number like 60% lower mortality, there’s not a silver bullet. We didn’t have a cure for Covid-19. We didn’t have vaccines earlier on. What did we have?
We have a technology platform within a value-based model that is able to, in a very proactive and comprehensive way, ensure that we optimize chronic conditions like hypertension, diabetes, and so forth, that we treat acute exacerbations like, for example, heart failure, and when they’re getting filled up in their lungs, pulmonary edema, et cetera, or when they’re just getting a run-of-the-mill infection. That by itself can throw them into a tailspin, particularly the sickest, the most frail patients. When you do that well, great things happen.
Technology is an enabler of that, but when you’re not performing under the right model or you don’t have the right expertise, it’s useless. Technology is just going to enhance what you already do and our model of care for this highly engaging, immersive experience of access, quality, and wellness that all patients get, and then technology is just making it much more efficient, much more proactive, then that’s where the biggest benefits are.
[00:41:19] Tim: As you’re looking at the future and you see this big runway for growth, where do you think the potholes might be?
[00:41:34] Dr. Hernandez: Well, frankly, the only thing that keeps me up at night is not growing fast enough.
[00:41:42] Dr. Hernandez: We have such a unique platform. Our model is so rare and, as I described, so little market share for all kinds of companies. I think patients need it now more than ever. For many reasons, public health, social and economic, we just need to grow faster. That’s what I spend all my time thinking about and executing.
[00:42:16] Tim: There’s a big staffing crisis in the senior living space and I think in other healthcare settings. How is it for you at the moment just getting the clinicians you need and the other types of staff you need to open a new location?
[00:42:30] Dr. Hernandez: We’ve done fine there because our model of care is one in which given all the savings we get from all the unnecessary utilization, all the unnecessary hospitalizations and duplicate tasks and brand name or generic. All of that, we put it right back into our primary care centers. Thus, our clinicians or staff, in general, tend to earn more. They have more benefits than what typically is out there for that local market. Thus, demand for our positions is quite high relative to the market. While there could be a spot here and there because of macro environments that could have a short-term type of impact for the platform as a whole and for anything that’s material, we don’t see an issue.
[00:43:34] Tim: I’m curious about other types of healthcare providers, [such as] a private duty home care company. Are you working at all with any of those types of companies to provide services to their patient populations?
[00:43:58] Dr. Hernandez: We’re certainly contract with them as part of our global arrangements that we do, either directly from CMS. We’re one of the few entities that are directly contracted with CMS from called DCE or through our payer partners, the different HMOs. We generally use their network and then negotiate contracts and do the care coordination.
We work with them, but we do not do any specific services for those entities. As I mentioned, they perform services that we generally don’t. We are this focused, integrated primary care platform. Not going to do that long-term care or dedicated home-based care. That is a different model for specific populations. While very necessary, we’ll work with them. That’s not what we specialize in from a core perspective.
[00:45:07] Tim: I didn’t realize you were a DCE. I’m not super familiar with this program. Am I correct that this is a relatively new option. Can you describe what that is?
[00:45:21] Dr. Hernandez: Before last year, the only way to serve primary care or Medicare patients in a primary care environment within a globally kept structure, meaning that rather than just getting paid fee-for-service or participating in shared savings, you’re getting the entire premium directly from CMS, Centers for Medicare and Medicaid Services, was to go through an MCO or a managed care organization like the payers and your audience is familiar with.
Anthem, United, Humana, they bid for a contract, they’re getting that premium, and then they will delegate it down to you in different contractual arrangements. Last year, CMS laid out a program that for patients not in Medicare Advantage, which is where the Uniteds and Humanas and Anthems come in, for the traditional fee-for-service Medicare members, they will directly contract with you because they’re not contracting with that other market base payer.
They have a vested interest in ensuring that those costs are controlled while the quality is there while, hopefully, quality is increased. Otherwise, you have a perpetuation of– You don’t see it as much in Medicare, but you do see price increases for sure that you see in a private way. Double-digit sometimes increases year-over-year because every year, you have more utilization. You’re paying for that utilization and you’re going to pass it right on to consumers or taxpayers.
In the case of Medicare, they say, ‘Well, I can fix my costs and I’m going to directly contract it with you.’ At Cano Health, you’re now going to be at risk for those healthcare dollars, but I’m going to put in parameters. You’re going to have to do X, Y, and Z for the patients that you’re going to deliver these outcomes and so forth. That’s the right way to do it. When we as a country get comfortable that basic health care is a right and not a privilege– and I’m not talking about a Cano-like plan. I’m not talking about cosmetics.
I’m talking about basic health care because if you are not healthy, you can’t work. You can’t participate in the free market. I’m a free-market capitalist. I am a lover of freedom and capitalism. I was born in Cuba and a huge critic of socialism and communism. True free markets require people to have equal opportunity. Not outcomes, opportunity. You tell me how you can have equal opportunity if you cannot get your insulin when you’re a Type 1 diabetic, if you’re not getting your vaccines as a kid, and so forth.
You need basic health care to be healthy enough to compete in the marketplace or take care of your family or not be a burden to your family, etc. Then the second thing that we need to, as a country, get comfortable with is that the market mechanisms are the solution to ensuring the quality and cost outcomes that we want to get for our country. It’s not about throwing more into a government bureaucracy. No, it’s not about just having it completely unregulated in the marketplace.
If we have funding that we’ve all decided is important as taxpayers, and, obviously, I’m a big proponent of Medicare and Medicaid, then that should be administered by companies that are going to have skin in the game, that are going to say, “I want to produce a certain amount of quality,” and no more than that because, otherwise, I’ve got to pay for it. That is relatively easy, but I suppose easier said than done. We are getting there.
[00:49:28] Tim: In that DCE model, has that started already that you’re getting those payments?
[00:49:35] Dr. Hernandez: Yes, it started this April, actually. We’ve got one of the largest DCEs in the country.
[00:49:43] Tim: How’s it going so far?
[00:49:45] Dr. Hernandez: Well, too early to tell.
[00:49:49] Dr. Hernandez: There’ll be about a few thousand members there and we’re getting data. It’s going to take a few quarters at least in order for us to have an educated understanding of its performance.
[00:50:05] Tim: You mentioned that as part of that program, CMS has certain expectations for what you provide those members. Are there also flexibilities that you can do things that maybe provide things for them they wouldn’t get?
[00:50:18] Dr. Hernandez: That’s the very exciting thing. CMS is not concerned about how much you’re going to bill, which is generally all the guardrails, in addition to the professional types of concerns to make sure that you are doing things according to your license and evidence-based practice of medicine, and so forth. A lot of the rules and regs around CMS is just how you do not overbuild them.
Correctly so because when your incentive is to bill and that is your revenue cycle, that’s your business model, then you’ve got to put all those protections in place. In this case, since CMS is giving you the funding and has no risk for that funding no matter what you do, it’s going to just ensure that you’re bringing them up to quality, that you are providing the access and other services necessary so that patients would choose to be aligned with you.
Thus, you’re going to get that funding, are getting measurably better health care, and because you’re at risk as the provider. You have more flexibility because you have a patient at home that otherwise cannot come to the medical center. CMS in the past would have bought a bit in terms of transportation. Is that a cost that they’re going to get bill for or is that inducement for the patient to come and get services so that you’re going to overbill? They’re less concerned about that and that makes sense. You need to provide a meal to somebody that otherwise would starve.
Get them the meal and the vitamins, et cetera. It’s actually making things much more simpler and streamlined also at the CMS in a bureaucratic level. I think CMS Medicare has been one of the great successes of our country. It’s popular for a reason. We couldn’t see a United States without that critical social safety net of Medicare, Medicaid, social security at the federal and state level, and then it’s just a matter of how we continue to refine it, but we cannot continue to invest in it without limits. We’re at 20% plus of GDP in terms of our healthcare expenditure.
How much of our economy are we going to put into health care rather than into other really important things such as housing or education or just continuing to innovating and compete in the international marketplace, provide for our protection and the increased livelihoods of our people, the standards of living that we need to continue to lead in and be an example of? There is a very important conversation to be had as to where we draw lines. If we start with the premise that basic health care needs to be provided for and that providers need to be held clinically and financially responsible, I think that it’s a rather easy discussion because we can do it for a lot less than what we’re paying today.
[00:54:19] Tim: How does that work actually on the ground? Is that something like through care coordination, you’re paying your staff to connect them with social services that can provide them with meals?
[00:54:42] Dr. Hernandez: We use available services. When we run into issues, we provide it ourselves. It’s that simple. We delivered hundreds of thousands of meals during the pandemic alone when patients could not go to the grocery store or couldn’t afford it, et cetera. On a regular basis, we still provide healthy snacks and so forth. There are some patients and we have different processes and programs available in which we can provide these and others meals. Walkers, wheelchairs, you name it.
We will go above and beyond for the patient first because the patient is number one for us and that’s our ethos. Second, because, again, the better they do, the better we do, and the more they recommend friends and family and two-thirds of our new patients come. It ethically is a requirement for us and is the right thing to do, but in this environment within this model, it also makes business sense. When you have that alignment, that’s where you want to be. That’s where great things happen.
[00:56:00] Tim: Do you see room for outside-of-the-box creative partnerships like if you’re providing meals to older adults and senior living communities have commercial kitchens and they’re serving three meals or more a day. Is that something that you could see, “Hey, we’ve got X number of people who are providing meals too. We can transport them to your community. We’ll pay you X dollars. They get a social interaction while they eat”? Do you see flexibility to do things even like that in the future?
[00:56:36] Dr. Hernandez: I do. We work with community providers all the time. We subcontract vendors for this and other related purposes. Yes, absolutely. We’re not in the restaurant or meal-delivering business. We are improving quality outcomes for patients and building lifelong bonds. I’m biased, but what we do better than anybody is high-quality, comprehensive primary care. We specialize particularly for the underserved community. When it comes to these other services, which are not core services of ours, we will use community vendors. Most of the time, we do.
[00:57:24] Tim: Is there anything we haven’t talked about that you wanted to share or just any last words for our audience?
[00:58:15] Dr. Hernandez: We need to continue to think outside the box and innovate. Ideas for partnerships with primary care companies like ours, government entities or all other social resources, necessary types of services for seniors, we can’t do enough. These are our parents and grandparents. They deserve the best return.