From Lazy PPO Networks to Smart Collaboration — A Roadmap for Direct-to-Employer Specialty Care

One Madison hospital charges $219,000 for a surgery that Johns Hopkins — one of the best cardiac programs on earth — does for $80,000 door to door. That's Centers of Excellence 1.0. The question this episode tackles is what comes next, and how to get there without adding another layer to a road that's already too crowded.

In this episode, Stacey Richter speaks with Adam Stavisky, who managed benefits for Walmart and now consults with innovative purchasers; Dr. Leo Spector, MD, MBA, surgeon and CEO of OrthoCarolina; and Ryan Wells, founder and CEO of Health Here, about why self-insured employers and specialists are still two ships passing in the night — and what it will take to bring the two ends of the road together.

WHAT YOU'LL LEARN

✅ Why lazy carrier networks are structurally immune to quality competition: all major plans carry essentially the same provider networks and compete only on discounts — meaning clinicians performing C-sections at 50 to 90% rates on healthy patients remain in network across every plan because removing them would cause "disruption"

✅ Pitfall 1 — Defining and measuring quality: claims data can identify outliers but lacks patient-reported outcome measures (PROMs), and using utilization rates alone to assess appropriateness can produce exactly backwards results — Adam Stavisky's analysis found the bottom 15% of physicians practicing medicine standard deviations differently from the median in their own market

✅ Pitfall 2 — Achieving scale: even a committed plan sponsor can find one Leo Spector in Charlotte but then needs Leo in Topeka, Leo in Detroit, and Leo across every specialty — which is why OrthoForum's national Value Network of large independent orthopedic groups represents one emerging infrastructure response to this problem

✅ Pitfall 3 — Benefit design: you can build it and they will not come — when patients owe a full deductible upfront for a bundled joint replacement that saves the plan money, the out-of-pocket cost kills participation; benefit design and value-based care are, as Dr. Mark Fendrick says, peanut butter and jelly

✅ The Centers of Excellence evolution from 1.0 (travel to a brand-name hospital, required participation) to 2.0 (curated local networks, administratively manual, still on fee-for-service rails) to 3.0 (quality and outcomes factored into curation, new payment and communication infrastructure, compressing the road rather than adding a layer)

✅ Why roughly 30% of healthcare spend in administrative waste — prior authorization, claim denial rework, intermediary friction — lives in the layers that direct contracting can begin to disintermediate, and why OrthoCarolina's 500,000 annual encounters in a $350 billion orthopedic market shows the scale of the opportunity

WHY THIS MATTERS

The enemy of good is better. If plan sponsors and specialists wait for perfect quality measures, perfect scale, and perfect benefit design, they will wait at the expense of patient health and plan economics. The infrastructure is not fully there yet, but it is being built. The point, as Stacey frames it, is that collaboration is the next breakthrough innovation — and it starts by getting the beginning and end of the road to actually talk to each other.

=== LINKS ===

🔗  Show Notes with all mentioned links:  
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00:00 Introduction.

00:32 Collaboration as the next breakthrough innovation.

02:24 A summary of the upcoming conversation.

05:45 A summary of where we are and what the future looks like.

06:24 A relevant post from Jonathan Baran.

08:12 The conversation with Ryan Wells, Dr. Leo Spector, and Adam Stavisky: collaboration from the standpoint of a specialist.

12:22 The pitfalls of data accuracy and defining what quality means from the POV of a self-insured employer.

15:36 Defining quality and data accuracy from the POV of a physician.

15:57 How do you measure outcomes when assessing quality and looking at the available data?

21:45 EP294 with Steve Schutzer, MD.

22:06 Scale and operationalization: How do we do it?

27:00 Shout-out to OrthoForum.

29:58 Take Two: EP398 with Jacob Asher, MD.

30:13 EP501 with Ivana Krajcinovic, PhD.

30:30 How things could be better.

33:29 One last complication and how to structure benefit design to align incentives.

35:33 What an "anti-cricket" program looks like.

37:24 EP308 with Mark Fendrick, MD.

37:34 How do we operationalize benefit design and aligned incentives?

39:39 What we're seeing today in Centers of Excellence 2.0.

41:47 What Adam wants to make clear in all of this.