The Edge of Healthcare: The Numbers Game: Calculating the Future of Healthcare

Martin Cody: Welcome to the Edge of Healthcare, where the pulse of innovation meets the heartbeat of leadership. I’m Martin Cody, your guide through riveting conversations with the trailblazers of healthcare. Tune in to gain exclusive access to strategies, experiences, and groundbreaking solutions from influential payer and health system leaders. This isn’t just a podcast, it’s your VIP ticket to the minds shaping the future of healthcare right now. Buckle up, subscribe, and get ready to ride to the Edge of Healthcare, where lessons from leaders are ready for you to use today.

Martin Cody: Hello again everyone, and welcome to another episode of The Edge of Healthcare: Lessons from Leaders to Use Today. I’m delighted with this week’s guest, Stanley Nachimson of Nachimson Advisors, who has an extensive career in healthcare. Now, previous episodes, we’ve talked with clinicians, we’ve talked with CEOs, we’ve talked with advisers, and this time we’re going to talk with a professional adviser who has been instrumental in designing and implementing some of the regulatory policies, languages, transactions that we all have to adhere to in healthcare. Ladies and gentlemen, Stanley Nachimson.

Stanley Nachimson: Hello, everyone. It’s a pleasure to be here. Thanks for having me.

Martin Cody: You are very welcome. It’s our pleasure because I love learning from folks that have charted the path before. And you’ve been doing this a long time. I know I read 30-plus years with HHS. That is a lifetime. But I want to go further back before then and talk about where did you grow up in the US, and then how did you determine that at some point in time healthcare was for you?

Stanley Nachimson: I was born and grew up in Paterson, New Jersey. Was actually founded by Alexander Hamilton because the second-highest waterfalls in the eastern part of the United States, the Passaic Falls, is there, and he thought it would be a great place for an industrial city. And Paterson for quite a number of years was known as the Silk City because silk mills were built there. And then that’s how the town really grew and blossomed. Fell off a bit after nylon and the other sort of non-natural fabrics were invented. The city has a couple of other attributes. Some familiar parts. Lou Costello is from there. Allen Ginsberg, the beat poet, was from there. And also there was a movie with Morgan Freeman where he was the principal of a high school. I believe it was called Lean on Me. I think that was the name of it. That was actually my high school a few years after I graduated. I’m associated with an interesting town. Let’s leave it at that.

Martin Cody: And where did you go to college?

Stanley Nachimson: Carnegie Mellon University in Pittsburgh. I was interested in math and computers. Took on that interest in high school. It was almost the beginning of the computer age and decided I wanted to pursue a technical career and went to Carnegie Mellon. It used to be Carnegie Tech. And got my degree in math and then had the recognition that I didn’t want to really be a technologist. I wanted to figure out a way to apply technology. I started out pursuing an economics degree, but gave that up and actually had a summer job with the federal government in the department of, and my career then started from there. It was not a conscious choice to go into healthcare. It was almost a random. The federal government had a summer program between years of colleges. I got into that and then took that on as a full-time job, first in the statistical area, and then again, it’s almost random. I was in the statistical area and a number of positions, and then there were some reorganizations, and I ended up in, what’s now, CMS, the Center for Medicare and Medicaid Services. So I was thrust into the Medicare and Medicaid programs.

Martin Cody: And what about the math component captured your attention?

Stanley Nachimson: I think it was the logic and the specificity of it. Although there have been some questions about that lately. Two plus two is always four. And there were rules to follow and some of them were already developed. Some you could even come up with or discover some new ones. But there were properties that were always intact, and it was a way to help understand the world, but follow a path where you didn’t have to worry about gray areas. And that’s something that really appealed to me. Even today, I get accused of looking at too many things as black and white instead of gray. But I think that’s where I really fell towards in what I studied and what I pursued.

Martin Cody: And I think it’s interesting because you’re right, sometimes when it is black and white, it’s almost calming where it has to be this or that, especially in math, where you can work the theorems and work the equations and the formulas and get to a conclusion based upon some predetermined fundamental laws, if you will, of mathematics, and then apply them to different areas. And I’m curious; that summer internship with the federal government: how does one find out about internships with the federal government?

Stanley Nachimson: It was, I think, something I probably found out through the college employment office or something like that. And there’s a central site where you can apply for a federal internship, a summer internship. I frankly don’t know if they still have that program. I don’t remember it being there in my last few years of working for the federal government. Perhaps they’ve done away with it.

Martin Cody: And what did you start doing when you were working in the very early stages of CMS?

Stanley Nachimson: I was in, what they called, the quality control area, where we looked at how well the programs were operating. For example, in the Medicaid area, how accurate were state eligibility determinations, how accurate were the payments that they made? So we actually took samples of Medicaid eligibility determinations, cases, and things like that, and had auditors come in and say, All right, out of these 500 cases, which ones were done correctly? Which ones were done incorrectly? How about the claims? Were they processed correctly? Things like that. And we built systems to collect that data and measure the accuracy of some of those state actions. And there were actually penalties involved if states did not fall below a certain threshold of penalties. But it was pretty important to collect that information, collect it accurately, and compute the necessary measures so that you could either praise the state or, let’s say, punish the state and take the penalty for inaccurate spending. I moved around in that area, first in Medicaid and then in Medicare, working again in trying to come up with measuring the accuracy of payments. And then moved into some of the policy areas and in some of the research areas. And this was all relatively random, to tell you the truth. Opportunities came up. I might have applied for a job, or somebody asked me to do a certain kind of work, and I ended up working on some Medicaid data collection. The story is a little strange that I was working on a project that’s still in existence today, where they collect the statistics on Medicaid services and spending from each of the states and put it together in a big database, and they’re able to make some national computations and projections. And this system was just about ready to go operational. We were finishing up some of the pilot testing, and my boss brought me into his office and said, This happened to be 1996. Boss brought me into his office and said, I want you to stop working on this project. I’m going to put you on this other task force that has something to do with this law called HIPAA, which I had never heard of, and you’re going to be working on that from now on. And I stamped my feet going back to this conversation we had about not doing or doing what people told you to do. I stamped my feet and said, Oh, I don’t want to do this. I’m getting ready to get this thing working and operating. It’s all going well. It’s all going to work out great. And he basically, as most bosses will tend to do, told me, I don’t care what you think. You’re going to work on this particular project. And that’s how I started in the HIPAA, the standards, the health care standards world and have since 1996 worked on that for 20 odd years at CMS, as things grew and there were more and more electronic transactions in health care and more and more data exchange.

Martin Cody: I want to pull on a couple threads there. I’ll go back to a comment that you mentioned earlier with regards to working on the Medicaid aspect and determining penalties. And one of the things that I think the federal government has done a great job in some areas, and in my opinion, a not-so-great job in other areas, is the assessment or the implementation of penalties and or incentives. And this is part and parcel to what we see today with an explosion of regulatory compliance, whether it’s the new transactions, the No Surprises Act; all of these different things. But in your 30-plus years, what have you seen as it relates to incentives and penalties that seems to be an effective mix to alter behavior towards an end goal that is deemed what is appropriate and what is desired?

Stanley Nachimson: Yeah, and that’s an excellent question. I don’t think penalties have worked that well because first there’s always a fight about penalties and sometimes it’s difficult. Let’s take Medicaid. What’s the purpose of the Medicaid program? It’s to provide funding for the underserved, the needy, aged, blind, disabled, and needy folks giving them access to health care services where they normally would not be able to get that. How do you take money away from a program like that? How do you say to the state, Oh, we’re taking back 3% of your money because you made mistakes? The state says you can’t do that. There’s lots of fighting. How dare you take money away from a program like that? I think incentives are a better idea, to tell you the truth. And I think, though, one of the things, when we took and published the first set of HIPAA regulations for these standard transactions, even though there were penalties involved and such, what we said was, Listen, we picked these standards because we thought these were the best standards and they would achieve the goals of the program, making things easier, saving money, etc.. If the market, the move towards these standards should really tell us whether we were correct. If there’s a lot of fight against them, we made a mistake. We chose the wrong standards. We didn’t implement this program correctly. Your penalties are or not. You really hope that what the design of the program is, achieves what you want to achieve. Not so much the penalties or the incentives. Now, in terms of electronic health records, incentives seem to have worked giving providers money to do what they perhaps should have been doing or to move them towards electronic health records, but it didn’t necessarily achieve the goals of getting them to do electronic health records that would help them in their practices. They bought electronic health records. But you’ve seen, at least in the beginning, a lot of docs that said, These are horrible. These made things worse, not better for us. Yeah, we did it because you told us to. And you’re giving us money. And there’s some incentives for continuing to have a certified electronic health record. But it didn’t achieve really what we, what the program hoped to achieve in automating some of the processes and making things better. It’s really a mixed bag. It really has to do with making sure the program achieves what you want it to achieve. The incentives and the penalties, I think, are just a very small part of it.

Martin Cody: But I think it’s interesting too, because getting the program to achieve what you want it to achieve often comes at the expense of the CEO of a publicly traded health healthcare organization whose leading mission is to generate profit for shareholders, not necessarily to comply with the program. So from a design element perspective, that seems to be an incalculable challenge that you’re always up against trying to, I don’t know, appease all stakeholders, if you will. And I’m curious how often, if ever, does that enter into the conversations when you’re designing these policies and programs?

Stanley Nachimson: Every regulation has, is supposed to have a cost-benefit analysis with it. And the idea, for the most part, is to make sure that the regulation, if it can, has a positive cost-benefit analysis. And there are some winners and losers, but you want to design the regulation so it achieves the purpose at the least possible cost and the best possible return. People pay attention to that. Now sometimes there’s a law and I talk about regulations, but most regulations don’t come because somebody’s sitting in the Department of HHS thinks something is a good idea, generally based on laws that were passed in Congress. Congress has its own set of priorities and things that push them to do one thing or the other. Sometimes the goals are admirable, but the execution of the law is not quite what it should be. For example, the No Surprises Act. We’ll take that now. There was the part about making sure you don’t get billed for out-of-network services, and those are great. But then there was this whole other part with good faith estimates and advanced explanation of benefits, and giving people some good idea of what things are going to cost beforehand. An admirable goal, no question about it. It’d be great to have an estimate of what something’s going to cost when you’re shopping around for something for it. But the way they designed this puts a tremendous burden on providers and patients and health plans that it sets them up in a space where they never really were before and is causing a lot of new systems, new rules, new job titles that may or may not be worthwhile. So sometimes it’s just tough to do that. Now CEOs, a lot of times I hear back, the CEO says, We’ll do what we have to do to comply. We’ll do the absolute minimum to comply. That’s not necessarily what you want to hear. And some of the things that I try and do, not necessarily at the CEO level, but perhaps at the operating level is, Hey, here’s what you have to do. Here’s what the reg says. But if, by the way, but if you do this and add one thing here and one thing there, you’ll make your business better. And why don’t you think about doing that because you can streamline your software? You can eliminate some paperwork-type jobs and have those people do something to better their business, rather than just maybe.

Martin Cody: Maybe a revenue generator as opposed to a cost center or something?

Stanley Nachimson: Yes, exactly. So that’s some of the things that I try to impart to customers, to organizations, to even the associations that I help advise in how do you deal with regulations that are already out there?

Martin Cody: I’ll go back a couple of minutes to something else I wanted to pull on. You worked on this project and we’re getting ready to launch nationally. And then the boss comes out in 1996 and says, I want you to work on this. So table that, forget all the energy, time, effort, research you did into that, and I need you to switch on a 180. And we talk often about overcoming obstacles, overcoming internal things. That had to have been a little bit disheartening from that standpoint of putting forth all of the blood sweat equity. What did you draw upon or who did you consult with to help mitigate the sting of that?

Stanley Nachimson: That’s an interesting question. First of all, I, for the most part, I said I got to do what the boss says, after I threw a few things around the room or in private. You got to do what the boss says. I said, All right, let me give it a shot and see what this is like. I talked to some people in the agency and some other people that we worked with to learn a little bit about what HIPAA was intending to do, and I was part of a committee, a multi-agency committee, to work on the implementation of HIPAA and the development of regulations. And I learned a lot from the people that were on that committee. So that was good. And it was, and I realized it was an opportunity to start at the almost the ground level to build this thing up and work on all the things that we had to. It was one of the few times where you could go in and say, All right, let’s set out the guiding principles for what we wanted to do. That was almost the first step. What are the guiding principles of these regulations? And I had been involved in total quality management in some of those efforts back before then. And a lot of that had to do with let’s figure out the vision and the mission. And that was very cool to be able to do in a brand new project with some brand new people who knew some things that I didn’t know that I was able to learn from. So I got over it pretty quickly to tell you the truth. And then I realized it was an opportunity.

Martin Cody: I think that’s an important element there from learning: to being able to flip the switch essentially from rejection, disgruntled anger, frustration, personalizing that sort of stuff to be able to say, Okay, how fast can I flip the switch to determine that? Here’s a new opportunity. What can I learn from this? How do I rise up above this adversity and push the envelope, if you will, from a learning experience? And I think oftentimes in this, everyone gets a trophy society, so to speak. That ability to rise up and face adversity is often missed. And I’m curious, I don’t have the math, if you will, or the longitudinal studies to determine the impact of this from an anthropological perspective. But I think it’s fascinating how individuals across industries of certain eras respond to adversity. And I’m curious if there was anybody. Did you have an older brother? Did you have parents? Did you have anybody that they said, Hey, Stanley, buckle up? This is, life is tough. You’re going to get knocked down. Did anybody pull you up by the bootstraps, so to speak, and help guide you in this? Or was this something that you just learned internally?

Stanley Nachimson: Probably talking to some colleagues and friends in the agency about this and what that meant, and leaning on my family, my wife, among others. And people say, first, I was still very fortunate to have a job. Let’s step back and say, I still had a job. It still was an office-based job. I still went to the same place. I was not uprooted. I still had the same hours. I was working with some different people. But so what? I didn’t have to change where I moved. I didn’t have to change offices. There were a whole bunch of things that stayed the same. So I’m fortunate in that event. And it was not a cut in salary. I still had the same level, and as it turned out, it was an opportunity to even grow further. But I still had the same level and such. So was it that bad? No, it really wasn’t that bad. I didn’t know that much about electronic data interchange, but I learned quickly, and again, it was an opportunity as I came to realize.

Martin Cody: I appreciate that. And you just mentioned EDI and you’ve been involved with and are currently involved with many of the governing bodies or agencies that work on the development and implementation and policy writing for electronic transactions. I know you have done work with HIMSS, obviously full transparency, Stanley and I met because of our activities in the WEDI organization. You’ve been involved in X12, you’ve been. I’d be curious, in your opinion, based upon your years of this type of work, what do these organizations get right? And then what still do you struggle with that they get wrong?

Stanley Nachimson: You don’t have to stop emphasizing the years of. But anyway, there are great subject matter experts in each of these organizations. There are a tremendous number of dedicated people that really want to get things right, and that believe they’re doing the work to further the advance of health information technology. That’s, I think, one of the things that they seem to get right is attracting those people and having them really dedicated to the organization. What do they get wrong? I think there’s still a little bit of competition. It’s whether you want to talk about market competition that sometimes they don’t work as well together as they should, right? Sometimes somebody is trying to muscle into that area or make a statement or choose not to cooperate with somebody. I think they’re all aiming pretty much towards the same goals, and they’re generally pretty good at staying in their lanes and working things out. The standards organizations work more on the technology, the standards, how is data exchange; groups like WEDI and HIMSS are a little bit more business process oriented. So they help the industry say, All right, these are the standards. But here’s the way that it has to work in a health plan or in a provider’s office. Here’s the business flow that you need to think about. And here’s how you combine security and privacy and standards and put this all together in a package. I think the educational work that they do, not only the suggestions to the government and help advise the government on things to do, but the educational work that they do for providers and health plans and others are great; some of the conferences and such. Maybe there’s, in the industry as a whole, there’s probably too many conferences, but there’s generally a good assortment of educational opportunities that you can really take advantage of and further yourself in your career.

Martin Cody: In looking back on your five years in the industry, what would you advise a younger Stanley coming out of Carnegie Mellon, knowing what you know today that you didn’t know then?

Stanley Nachimson: I think some of the things are that it’s not always a smooth path. Things are going to happen that you have no control over, whether they happen to you or to somebody else. You’re going to be facing disappointments. You’re not going to get a certain promotion or you’re not going to get a job. And I think, as you alluded to before, you have to learn to handle that. You got to go on and there are resources to help you. And don’t be afraid to lean on some of those resources.

Martin Cody: Oh, that’s awesome guidance. Don’t be afraid to ask for help.

Stanley Nachimson: Yes. That’s important. The other thing that, and I use this even in advising younger people when they talk about what career to go in. Whatever you choose, make sure it’s something that you feel good about, you enjoy doing because it is absolutely miserable to wake up in the morning and have to go to a job that you hate. There is probably nothing worse than that. I’ve seen friends, colleagues really have both physical and mental breakdowns because they’ve had to do that. You just can’t do that. If something’s not working out, figure out why it’s not working out, what you can do to help it work out. And if it means changing jobs, change jobs. If it means quitting and being on your own for a couple of months, sometimes you just have to do that. And look, there’s going to be days where things don’t go well. That’s okay, we’ll deal with those. But on a longer-term basis, you got to make sure you’re enjoying what you’re doing.

Martin Cody: I think that’s a perfect guidance and wisdom. And it’s not just for a career in healthcare, but any career.

Stanley Nachimson: Absolutely.

Martin Cody: If in fact you don’t enjoy it, then probably two places to look internally and externally. And sometimes it could all be external and we may never be happy anywhere, then that would lead to an internal discussion. But you’re right, you have to pursue something you love. You have to enjoy doing it. And there’s an age-old axiom that if you love what you’re doing, it’s not work. They don’t call it work. So I think that holds true. It may take some time to find that which is okay. You don’t have to beat yourself up in that capacity. But that’s I think that’s great guidance, especially if you’re getting into healthcare. Make certain that’s something you love.

Stanley Nachimson: And sometimes it’s random. Sometimes your boss just tells you to go do something that you have no idea what it’s going to turn into. And so it’s now 2024. So we’re talking about 28 years been doing something that I never thought I really would be doing, and working in an area that I didn’t think I would be working in. But, and that’s a long time. And I retired from CMS a number of years ago, and I’ve been consulting ever since and continue to enjoy doing that; helping people understand the inner workings of government. What happens? How do you, how does a regulation become a regulation? How do you influence the government? How do you read regulations? All those kinds of things, and how to work well with the federal government and state governments, for that matter, to achieve something good for your business?

Martin Cody: And if you’re a healthcare organization and I’ll even throw health care system, hospital, community hospital, provider group, payer organization, I definitely think from a consulting standpoint, you could be calling on Stanley to help your organization adapt, implement, deal with, comply with, mitigate exposure to. There’s a lot of things that Stanley can leverage from his years of experience to help your organization, so definitely get in touch with them. You also just talked about something that we’re going to switch gears now, and I’m going to incorporate into the word association speed round. I’m going to say some things that might be a sentence. They might be a word. And I want you to tell us in the audience the first thing that pops into your head. Healthcare lobbyists.

Stanley Nachimson: Valuable but tricky.

Martin Cody: Well stated. Interoperability.

Stanley Nachimson: An admirable goal, but we’re still not sure what it should be used for. It was the same thing with when we said doctors should have electronic health record. Why? Because it’s a good idea. Because they should. We should have healthcare interoperability. Why? Because you should. It’s a great idea. Yeah, it’s a great idea. We poured a lot of money into it, but when we did electronic health records, we didn’t realize that we should have interoperability. Now that we’re getting interoperability, I’m wondering what the next step we need to take in order to make interoperability work. I’m not sure what that is, but that’s what the industry is working on. Great idea. Admirable goal. But what’s the cost-benefit?

Martin Cody: And to pull on that and elaborate further, we still seem to be having some of the same interoperability discussions that we had 20 years ago. So from a cost-benefit analysis, I’m curious where that’s currently falling. Next one, in your opinion, what is the most broken thing in healthcare? And you can’t say interoperability.

Stanley Nachimson: I think it’s patient knowledge.

Martin Cody: Expand on that.

Stanley Nachimson: Yeah, it works two ways. Yeah, we do depend on doctors and hospitals to treat us, to make us better. But there are so many things that we should know we could read to help keep ourselves better. I think when we talk about our insurance plans, we should know what’s covered, what’s not covered; not depend on the doctor’s office to tell us, Oh, yeah, your insurance company is or is not going to pay for that. I think, now there are folks that may not understand it, and I understand they need assistance, but I think we need to do a better job of understanding what keeps us healthy as well as all of these things that we can draw on and that are involved in health care.

Martin Cody: I think that makes sense. You have to educate yourself and not be so reliant on the system to educate your, or to provide your education. Go ahead, there’s plenty of ways to get information.

Stanley Nachimson: Or just make sure you have somebody you can depend on that you can trust to get you that right information.

Martin Cody: Your former boss at HHS taps you on the shoulder and wants you to now lead HHS. What is the first thing you’re doing?

Stanley Nachimson: Oh, that’s a little unfair to talk about this week, but the first thing that I’m doing, I would probably want to try and install more of a patient-focused culture.

Martin Cody: I like it.

Stanley Nachimson: There’s a lot of workings in HHS. Don’t get me wrong. There’s the research at NIH. There’s the FDA and keeping us safe. There’s a centers for disease control, monitoring public health. There’s CMS as well. But I would try and focus a little bit more, at least in healthcare, on the patient side. Make it work almost for the customer to go back to some old adages, The customer is always right.

Martin Cody: Right.

Stanley Nachimson: What can we do to make the health care system and patients feel better about the health care system?

Martin Cody: I think it’s a noble endeavor, I like it. Last question. Over your career or just through access to individuals, living or dead, who would you like to sit down with and have an adult beverage? Who is this person and what are you drinking?

Stanley Nachimson: Thinking about it. I’d like to sit down with Hippocrates, and that oath: Do no harm; I would really like to figure out what went into that. What does he really mean by that in terms of explaining the whole healthcare system we have today? And how does that fit into today’s health care system? And are we doing harm or are we doing good for our patients? The drink: I don’t like to drink too much alcohol when I’m involved in such a great conversation.

Martin Cody: Such a heavy conversation?

Stanley Nachimson: Yeah, it’s a heavy conversation or even a fun conversation. I like to keep my wits about me, and I hope Hippocrates would keep his wits about them. I like some of those golden ales or summer ales that people drink and sip and enjoy. But it was a summer, I think it was a nice summer ale.

Martin Cody: I like that. A golden ale with Hippocrates.

Stanley Nachimson: Yes. Hopefully, nobody else is, I don’t know if anybody else has picked him, but.

Martin Cody: No, I like it. And it makes perfect sense too. The origin story of the origin story of Hippocrates. It’s perfect. Stanley, thank you so much for sharing some of the wisdom and insight that you’ve gained over the years that you’ve been involved in this industry. It’s great to learn from and I know it’s going to be beneficial to others. And as I mentioned, healthcare systems, payers plans, ACOs; if you want some expert guidance, please reach out to Stanley Nachimson. He can actually help you. Thank you so much for tuning in to the Edge of Healthcare. Stanley, you rocked it. Thank you, sir.

Stanley Nachimson: Thank you for having me, Martin. I hope you have a great rest of the week and rest of the year, and I look forward to seeing you at the next WEDI event.

Martin Cody: You got it. Take care, my friend. Cheers.

Martin Cody: Thanks for diving into the Edge of Healthcare with us today. I hope these insights will fuel your journey in healthcare leadership. For more details, show notes, and ways to stay plugged into the conversation, head over to MadaketHealth.com. Until next time, stay ahead of the curve with the Edge of Healthcare, where lessons from leaders are always within reach. Take care of yourselves and keep pushing the boundaries of healthcare innovation.