Q&A with Seth Blackley, President, Evolent Health

Oxeon co-founder and Senior Associate Schuyler Yost recently sat down to talk with Seth Blackley, who alongside Frank Williams and Tom Peterson has led Evolent Health from its inception in 2011 as the joint venture between The Advisory Board Company and UPMC Health Plan. Together with Oxeon’s Managing Partner Trevor Price, Schuyler has led the majority of our firm’s projects throughout our partnership with Evolent, working closely with Seth over the past couple of years. You can find the complete interview on our website. [dropcap]Q:[/dropcap] What was the inspiration behind launching Evolent Health and how did the company get its start?

[dropcap]A:[/dropcap] It really started with an effort that Frank and I led when we were at The Advisory Board. Frank and I—and eventually Tom Peterson—spent significant time with health systems executives around their future approach to how they were going to grow and manage their delivery systems. It was very clear, given everything going on in the market, that there was a push toward the value-based approach to health care and that the leading systems were going to need to evolve to look like UPMC (University of Pittsburgh Medical Center), Kaiser and other delivery systems that successfully integrate care both clinically and financially. That’s where value is created in healthcare—when you get the alignment right.

We studied existing approaches and what payers were doing and got the sense that while there was a great deal of administrative complexity, it wasn’t creating a great deal of benefit. Instead, what was needed was for providers to have real incentive to manage healthcare costs; to decidedly ask, “If this were your money, if you were in control—how would you do this differently?” We think that physicians and clinical teams within provider organizations are best positioned to figure out how to create the most clinical value, in a way that makes financial sense. It’s just that, historically, they had not been asked or granted the resources and the accountability to make it happen.

That was really the guiding light behind how we set the company up.  Other organizations were doing things in this area too, but we really feel like the provider-led approach to doing this was the big insight. That brought us to the UPMC Health Plan partnership. UPMC stepped forward as an innovative organization that knew how to do this work but who also shared our vision for an independently-run organization. This was important—for health systems to know they had a company solely dedicated to this effort, with the capital to attract the right talent to execute on this big idea. That was really the genesis of how it started.

I think each of us—Tom, Frank and I—all have personal experiences as well that help validate this. We’ve all experienced health crises in our immediate families and seen how much better it can work when health is managed effectively, and how it doesn’t work when it’s not managed effectively.

[dropcap]Q:[/dropcap] How has human capital played a role in the company’s success? How do you manage to maintain your company culture in the midst of rapid growth?

[dropcap]A:[/dropcap] We have several strategic pillars that make our company what it is. Human capital is at the forefront. A lot of players in the population health world are selling technology that falls short of offering a true solution. We really feel that the talent piece is a big part, if not the biggest, of what makes or breaks a locally deployed organization.

In terms of culture, having enough volume to see enough candidates, to have the right pool to pick from, is really important. Having a vision and mission you can articulate in the screening process, both by Oxeon and by our team, which becomes further clear when they come in for the interview—this is really important. We want to attract people who are attracted to the mission. We’re not trying to sell a role or a job description as much as we are trying to identify someone who is trying to be part of changing health and health care. Selecting the right people is key. And then making sure we’re reinforcing that culture and who’s creating value with recognition, including competitive compensation.

[dropcap]Q:[/dropcap] Two years ago, there seemed to be a great deal of uncertainty around the Affordable Care Act and the migration to value-based care. Do you find now that things have quieted down or are providers still hesitant to move away from fee-for-service models of care in favor of value-based models?

[dropcap]A:[/dropcap] Two years ago, it was almost a fringe issue exclusive to health systems that either were very innovative or in a unique position. Last summer, when the Supreme Court decision came down, it became a more mainstream issue with systems generally supportive but not necessarily eager to take aggressive action. And now, for almost every system we spend time with, it has become, or soon will be, a core part of their strategy. System executives increasingly understand it’s a holistic undertaking—you can’t make it work as merely a piece of your health system, off to the side. It’s actually the core of your growth strategy. This has been a huge evolution in the market.

From an Evolent standpoint, we always felt that there was enough of a market and an opportunity. That even if the Affordable Care Act was, that there would remain enough innovative, smart systems, like UPMC, that understand there’s a business opportunity to provide more value to the end consumers of health care. So it has changed, both a year ago and in the last three to six months it continues to accelerate, but I also think this is a timeless issue apart from reform.

[dropcap]Q:[/dropcap] How does migrating to value-based care impact how systems work with payers? How does Evolent partner with providers and payers to ensure incentives and payments are aligned with value-based care objectives?

[dropcap]A:[/dropcap] Our view is that ultimately providers are best positioned to offer high-quality and low-cost care. That essentially is their product expertise—they’re manufacturing high-quality, low-cost care. The more that providers have incentives and tools and competencies to manufacture lower cost, higher quality product, the better off everyone is. Essentially, once you figure out how to manufacture that product for the benefit of patients and communities, you have to figure out how to distribute it.

We think a majority of the market will likely elect to distribute through traditional insurance companies, and an innovative partnership with an insurance company can be a real win-win. We support our providers in examining how to evolve or set up a relationship with a payer to distribute that higher value product. Under a certain set of circumstances it might make sense for the provider to launch their own plan—like UPMC—either for their employees or commercially. In those instances, we also offer robust support and infrastructure to make this happen.

I think it’s partly about designing the right contracting model and partly about having the right approach to managing under that contractual model, both clinically and administratively. It’s absolutely something we believe is the foundation for success, and something we’re actively supporting across the country. Our role is to help providers distribute maximal clinical value through the most financially sustainable means possible.

[dropcap]Q:[/dropcap] What has been the biggest unforeseen challenge that you’ve faced as the President of the company?

[dropcap]A:[/dropcap] How long do you have? Let me answer for Frank, Tom and myself together. For us as well as the entire executive team, I would say the biggest unforeseen challenge is just working with our health system partners to help them understand the magnitude of change and the magnitude of investment required to be successful with this strategy. And that the population health effort is not a service line, it’s not an initiative or a pilot program. It’s actually at the center of the entire health system’s growth and sustainability strategy.

Whether you’re a for-profit or non-profit health system, it’s core to your mission. It’s core to the value you deliver to the patients as individuals, to the community you serve. It’s core to how you work with your physicians so they are able to practice medicine the way they want to practice medicine—where they are not just part of the value-based care movement but leaders of it. Making sure not only the breadth of the opportunity, but also the breadth of the change required, are understood is probably the biggest challenge. It’s exciting and it reflects a huge opportunity for our systems and for Evolent, but it’s also a monumental undertaking.

[dropcap]Q:[/dropcap] Where do you think the company will be in five years and what would you say are the biggest threats to the company’s success?

[dropcap]A:[/dropcap] In five years our goal is to be partnered with systems in 40 markets around the country and providing the people, the process and technology that enable these partners to be highly successful with their value-based care strategies. This has all kinds of metrics you can wrap around it, but most importantly with presence in these 40 markets we’ll be able to positively impact care for the majority of Americans. This is our mission.

The biggest obstacle would probably be the consistency of leadership within these systems. These systems really hold the cards as to whether they’ll continue to pursue this strategy in a sustained fashion. That’s the biggest threat.

As far as challenges, it’s what I said earlier. Ensuring that the systems are willing to make the hard choices, and are appreciative of the magnitude of the effort. This is also the opportunity.

[dropcap]Q:[/dropcap] What aspect of Evolent are you most proud of? What are some of the milestone achievements thus far that have defined the company’s success?

[dropcap]A:[/dropcap] Delivering on our promises and keeping our commitments—that’s probably the thing I’m most proud of, and of course, our team that makes it happen every day. For our health system partners, like MedStar, it’s doing what we told them we were going to do in terms of achieving savings, and investing in their success long term. If you’re Piedmont-Wellstar, same thing—and so on down the line. For each and every health system we work with, we’ve earned their trust to deliver on our commitments and we take great care to honor that trust in everything we do. For our team members, we strive to deliver on our commitment from a professional and career growth standpoint. If you’re a patient in need of higher value care, or a physician who’s looking to practice common sense medicine, we are similarly dedicated. That’s how I frame it—delivering on our promises on the smallest and grandest of scales.

[dropcap]Q:[/dropcap] When you started Evolent two years ago, what did you envision the growth trajectory of the company to look like, and how has it done relative to your expectations?

[dropcap]A:[/dropcap] We set a high bar, yet have succeeded in achieving beyond what we originally envisioned—in terms of number of systems, number of employees—across the board. We had projected a big opportunity and the market has moved more quickly than even we thought it might. We’re ahead and our big challenge and opportunity is to continue to get the right people to join the mission—people who want to be part of it so we can stay ahead. We’re probably more constrained by the right talent and the right people than we are constrained by the opportunity in the market. That’s actually a commercial for Oxeon. In all seriousness, I’m proud of what you have done. Oxeon has been an important part of Evolent and its impact on health and health care.