Mike Johnson (Host): Hello, podcast listeners. Welcome to Crushing Healthcare in our second installment of a series talking about healthcare policy in Connecticut. I'm your host, Michael Johnson, President of Accounts and Services at Sullivan & LeShane, which is a government relations firm based in Hartford.

We're pleased to have Lisa Trumble, President and CEO of SoNE Health rejoin us for this series. And we'll also have Layne Gakos, who is the Connecticut State Medical Society Executive Director joining us as well. Just as a reminder, Lisa is the President and CEO of SoNE Health, a physician-owned network in Connecticut and Massachusetts. She has extensive experience in healthcare management, having previously held leadership roles at Cambridge Health Alliance and Berkshire Health Systems. Lisa is known for advocacy on value-based care in medicine, and is a thought leader in the space as the state tries to expand in their incentive policies to incorporate more providers in the space. Since taking on this role in January in 2020, she's been instrumental in implementing these practices, aiming to transform healthcare systems by prioritizing population clinically and on the health integration side in Connecticut.

And Layne's background as executive director of the Connecticut State Medical Society is a position that she's held for the past four years. She was previously an attorney with UnitedHealth Group and has held positions at Oxford Health Plans and Murtha Cullina. Pleased and privileged that I've worked with Layne extensively over the last 12 years and just one of the best and brightest that we can have on the ground here to kind of outline the legislative landscape on both these issues today.

So welcome, to you both. And I'm really excited and wanted to see if you had any first thoughts that you wanted to enter into today.

Lisa Trumble: Thanks for having us, Mike, and looking forward to the conversation. And Layne, it's going to be a good conversation. So, I think I'll just hand it over to you, Mike, to lead us off.

Layne Gakos: Thanks for having me, Mike. Really appreciate it. I agree it should be a great conversation.

Host: And the beginning of this conversation is going to be something that the both of you probably encounter on a regular basis in terms of what the landscape looks like for regulation of the expansion of providers. The governor this year, in his election year, has made healthcare one of his top three priorities. But beyond the Connecticut option, which is something that we talked about briefly in our last podcast, the Certificate of Need—or CON for short—program reform House Bill 5045 is something that he's been championing for new initiatives for those that are looking to modify and reform what some would consider to be an archaic system while others consider to be an important safeguard. So, there's always this paradigm of that debate as to how far a Certificate of Need Program should go.

We've had this program in place in Connecticut for the past 50 years. And in Connecticut we've seen some modernization efforts from previous governors mostly fall short just because of the controversial nature of who gets to expand and who doesn't? And the types of equipment that are contained in those facilities and the types of providers, quite frankly, on both the nursing home level, on institutional care, outpatient care, physician-owned practices. This is something that everyone has some skin in the game on.

So, I figured that we would kind of start, Layne, with you if that's okay with just some of your understanding of the bill and the regulatory landscape on what you think this might be trying to accomplish and what physicians specifically might need to take away from this this year.

Layne Gakos: Sure. So, I think that we just need to start understanding that the bill is kind of twofold. There's procedural changes and also substantive changes to the Certificate of Need process. So from a procedural standpoint, the governor is proposing transferring the Certificate of Need program from its current home in the Office of Health Strategy to a new home in the Department of Public Health. And within DPH, he's suggesting some structural changes regarding who decides the Certificate of Need. Rather than a single decision-maker, it would be decided through a three-person panel and there would be some changes to the timeline and some of the requirements and the filings for the Certificate of Need.

From a physician perspective, the current law requires a Certificate of Need for mergers and acquisitions of physician group practices, which are defined as eight or more physicians. But there's significant exceptions to this. And as I understand it, there's only been one actual Certificate of Need in the last few years regarding physician practice mergers and acquisitions. The 5045 introduces some pretty substantive changes to that in that it proposes a Certificate of Need for a change of ownership or control of a group practice that has at least two physicians and annual revenues of at least $10 million, or that would include a private equity entity.

And this is a very big change from the physician practice landscape. And theoretically, it would bring many more physician practices under the umbrella of Certificate of Need. And from the physician perspective, while we understand what the governor is trying to capture in terms of healthcare and the changing landscape of the healthcare delivery systems, our concern is preserving physician autonomy and preserving physician practices in the community. And we are concerned that perhaps an overburdensome regulatory environment will discourage physicians from coming to Connecticut, from staying in Connecticut and from being able to really run their practice in the way that they best see fit to keep care in the community and to serve the patients that they want to serve. So, we do have some concerns with the languages drafted and hope to come to a resolution on the language that would be beneficial for the physicians of Connecticut.

Host: Thank you, Layne, for that overview. And I think that you framed it really well that the CON process, while it has many pieces that are supposed to be intended to be safeguards for both the patient and the provider, there has been physician autonomy including in laws that are passed as recent as 10 years ago regarding the corporate practice of medicine, that that physician autonomy for eight physicians and higher groups would remain intact for that reason, because physician offices are struggling more than ever to stay open, just given the amount of administrative burden to, you know, chase insurance carriers for reimbursements, to pay for your medical malpractice insurance, and all these other competing factors to try to remain in practice in Connecticut. This is a very, very important step for physicians specifically to maintain that autonomy as you mentioned, but also trying to safeguard that with the patients that need direct access to specific specialties and expansion, which is what the governor we know is very well intended in trying to propose.

Lisa, I wanted to hand it over to you because I know and understand, you know, the physician recruitment process for a company like SoNE Health, it must be just very complex with a myriad of issues that come up from the providers and physicians that specifically we're trying to recruit. Is this something that you would consider to be top of mind in terms of what the CON landscape looks like? And are there other things that you think that they should be considering in this legislation kind of moving forward?

Lisa Trumble: Yeah. Mike, that's a great question. And Layne is spot on with her summary here. I look at this and I say, "What are we trying to accomplish with the changes in this bill?" If we want to continue to have a innovative healthcare environment here in Connecticut, the last thing we need is more onerous regulations around how to do business.

if we want to protect ourselves from bad actors, which is what I see the principal issue being with the legislature at the moment and especially on the heels of the prospects situation, the bad actors part of this, there's plenty of regulations outside of the CON process that allows our state entities to step in when things are not working right. There's good private equity, there's bad private equity, there's good hospitals, there's bad hospitals, there's good and bad actors in every segment of the business. And if we're going to try to regulate every aspect of it, what we're going to do is we're going to stifle innovation. We're going to force practices out of business, or we're going to force more providers out of Connecticut, which in my opinion, is the worst of all situations given the lack of providers that we have in the state today. And the need we have in particular for primary care.

And when it comes time to recruit providers, we have a very, very small portion of our providers that are still independent. And part of our cost issue is the fact that many providers have been gobbled up, for lack of a better word, by hospital systems, payer systems and, yes, private equity in the state. And that has, to a certain extent, reduced their autonomy, but they've done it out of necessity. They've done it because it's very difficult to manage an independent practice in the state of Connecticut. And if we're going to look to put in place more CON rules and regulations on what are really small businesses and small practices, it is just going to make it more onerous, more complicated, and more costly to operate an independent practice and will therefore force more consolidation.

I think that what we should be looking at is how do we leave the space open enough to have innovation allow for the growth of independent practices. And in order to grow, they need some ability to fund themselves. And sometimes the way to do that is through private equity and other relationships. And if we turn off that spigot, it is just going to put them into more costly structures, and I think influence their independence in their medical decision-making in a way that, quite honestly, the corporate practice of medicine intends to try to stop.

So, I think that there are other ways to look at this and the concerns that we have are the fact that, you know, we're looking at two MDs. That's such a small sample size to be worrying about two MDs, and what they might be doing with their business. I think there are much larger organizations and entities that we probably need to focus on and have more concerns about from a CON perspective than small practices—two to eight, or 10 even.

Host: I really love, Lisa, the link that you just created between this legislation and what the framework for private equity investment could look like in Connecticut. I know that it is the hot buzz term for this legislative session in Hartford. I believe there's five different pieces of legislation that have been filed in five different general industries outside of healthcare that try to regulate private equity, ownership, and real estate holdings in Connecticut. And this does largely stem from Prospect Medical Holding's mismanagement of the piece that we just solved in the last special session in November regarding Yukon Health jumping into the market—and so, the Waterbury Hospital piece first and then two additional hospitals afterwards, likely.

So, there are a lot of people that are wondering, will the CON process disincentivize the exact issue that you both have done a really nice job outlining, which is how do we get more providers into the state that are going to help with recruitment, that are going to help with the existing infrastructure for those that are looking to expand?

One thing I would be curious from you both—I don't know who would like to answer this—is, as private equity starts to evaluate what their brewing footprint looks like in Connecticut, you know, how do existing providers respond to that in the sense of trying to utilize that as sort of a market share that is really untapped, if you will.

Lisa Trumble: I think the private equity space, I happened to sit through, a recent seminar on private equity that had a number of our legislatures. It was put on by Quinnipiac. And I think that there's a recognition by most parties that some level of private equity is good. It allows for growth and investment in practices and expanded access, which is what we need in Connecticut. And if it's with the right structure, the right entity and the investments are made in the clinical infrastructure and there isn't an intention to push physicians and others to make medical decisions that are not in the best interest of the patients, then, you know, that to me is a win.

We're looking to stop all investment, which is what the CON process would effectively do, would force every level of investment, for small businesses to be reviewed by a subset of people that may or may not have deep understanding in how this works to pass a decision on what's going to happen with their business, then I think we're going to see the exits out of the market because it won't be a sustainable model here in Connecticut and we need that investment. Connecticut just got accepted in the ahead model, in the rural health model. And we need to make investments in rural areas, and we need to make investments in primary care and further ambulatory assets. You know, that doesn't happen on the backs of a small independent practice or a small health system without some access to capital. And what we're looking for is access to capital to provide further innovation in the market.

Layne Gakos: Yeah. And just to build on what Lisa said, and I think what you really hit on was the clinical care component of private equity, we struggle to define private equity in every bill that comes through the legislature. And while we can put an umbrella term on private equity, I think the question is really what type of private equity needs to be regulated, and that's where we look at possibly that clinical lever as the button on that. Is that where we draw the line? If private equity is involved in clinical care, do we say yes? There maybe needs to be some sort of regulation on that. So, we don't come up with a prospect situation. So, we don't have practices that are being closed by their private equity investors and turning off the access to care in that community.

But again, there's so many different types of private equity investments. There are MSOs, which help provide that back office structure to medical offices. And that's really important for small practices that don't necessarily have the staffing or the ability to hire more staffing to be able to make that investment in a firm that delivers that back office support may be really vital to their survival in the community.

And so, I think that this is a topic that we really need to delve into more from a legislative perspective and really greater education and understanding of all the different types of private equities that are out there and, really what impacts clinical care and what doesn't. And that's why my concern with this just blanket Certificate of Need for every type of private equity is that it's over broad. It's going to encompass things that don't need to go through a Certificate of Need or don't really need any type of regulation. And it's really going to stifle practice investment and I think it's going to push more consolidation on practices and more closure, which is probably the opposite effect of what the state of Connecticut is looking for. So, I think there's a lot of unintended consequences to just lumping all of private equity into the CON process.

Host: And I think that's a great transition into the next topic that we wanted to cover today, which is Senate Bill 93, which is the expansion and transformation of the Rural Health Grant. This is something that's come out federally, and I think touches on that exact point, Layne, that you were just mentioning, which is knowing that the state received $154 million at the start of this year to work on the first phase of expansion through the rural health grant, and that there's likely a much more significant investment coming down the pike in the billions range of what could be expanded into underserved pockets of the state.

How can we shape and utilize this to balance what this landscape looks like? And I think that's an important question with how 5045 and Senate Bill 93 mirror each other with very different agendas, that you have a CON process that's been in place for a long period of time, which does have, you know, significant merit in trying to regulate what could be a very crowded market if you don't have any process there.

But also, for Senate Bill 93, acknowledging that there are extremely underserved areas for expansion into technology, into robotic medicine, into other pieces of reform that should be expanded on and incentivized through underserved areas of the state. So, I just wanted to kind of elaborate on that further with you both and see if you had any additional feedback in terms of how the Rural Health Grant is going. Maybe, Layne, I know you've been on the ground a lot more with kind of the pieces that we've seen here. If you had any comments just on how the first start of the rollout's been going and kind of where you see the legislation moving this year.

Layne Gakos: I think we're in the infancy stage of this project. You know, Connecticut was awarded the funding, and they are ramping up staffing right now to implement that funding. And I think there has to be a very quick on-road, because really there's not a lot of time to spend down this money. And so, from a rural health perspective, I think there's a tremendous opportunity to improve access and coordination in the rural practices.

I think the funding is able to support technology upgrades, telehealth, care coordination, and to some degree some of the practice infrastructure. So, I think the state has a real opportunity to bolster its physician workforce in the rural health and really improve access to care for the residents in the rural parts of the state.

 You don't see physician practices generally jumping up and down and excited about practicing in the rural areas. But I think with the support, we may be able to not only support the practices that are out there, but perhaps draw more physicians to those rural areas where care is desperately needed.

From the state of Connecticut standpoint, I think they're doing a great job of putting staff in the right places and getting the blueprints ready to enact to this. And I'm really excited to see what comes from this. In the next probably 12 months, I think we'll have a much greater idea of how the project is going and really be able to see some results from those investments in care.

Lisa Trumble: I want to make a connection between the two topics here. In one breath, we're saying we want to make it more onerous to make investments in the state through a rigorous or more stringent CON process. And on the other hand, we're looking to expand and put in innovative programs to be able to provide access to care in rural health markets that really need it, and to make that access to care sustainable in the long run. You can't do that without some other level of investment. And yes, the rural health grant will make investments, but the investments aren't intended to support the long-term sustainability of the model. If you look at the budget, there is a segment that allows for access to dollars for technology for expanded access and the like. And a lot of those companies are backed by private equity and have very innovative tools that could be used to expand access in rural healthcare markets without necessarily having to place providers boots on the ground in those particular markets, because it may not be economical to do so.

But if we're not going to allow the practices to make investments or to have investments in their infrastructure in a way that comes from a different type of entity, like private equity, we're going to in one breath with a regulation wipe out our ability to be innovative on the other side.

So, I think we need to figure out how to do this in a way that allows the market to innovate, and yet protect the citizens from the bad actors. I don't think it's the CON process that does the protection. It was the responsibility of Office of Health Strategies, of Public Health, of all the various departments we have in our state, that should be watching out for these bad actors. And the rural health grant for us is really important. It's really important that we get this right, that we find a way to spend the funds, that are going to give us the biggest bang for our buck in terms of creating greater access in a more sustainable model in rural healthcare, and yet allow for further innovation, which may require other types of entities that we probably can't even envision at the moment.

Layne Gakos: Regarding the rural health grant, a key component of that grant is workforce recruitment. And I think that the state has a real opportunity from a physician perspective to invest those funds in physician recruitment. We are one of a few states that doesn't have a lot of loan forgiveness or other mechanisms to really try and recruit and keep physicians in our state. And I think the funding presents an opportunity to do that and an ability for the state to say, "Hey, we care about the physician workforce. And we want to do something in this state to really keep you here and make this an attractive place for physicians to practice." Because obviously, the more physicians we have in our state, the better the care delivery system is. So, again, I really think that workforce is a key component of this grant, and I hope that the state really takes advantage of that.

Host: And, you know, I can follow up and conclude with Connecticut has really set the stakes very high on healthcare policy this year. And if anything, we're appreciative that the state has taken it seriously enough that there are a number of different proposals from what we talked about in the last podcast, what we've talked about today, to say that the framework of Connecticut has really been spot-lit by both the legislature and the governor.

So, we thank our leaders for giving it enough time and attention for helping physicians specifically that are listening today and that are participating with SoNE Health and the Connecticut State Medical Society. And thank you both for really the great candid conversation with how you think the framework of what's been proposed could be changed, but also how there's enough time before the end of session on May 6th, to jump back into that fray as we're about to see the end of that very long process into an election year. So, you know, we appreciate all those listeners out there today. We should have one more recap podcast after the legislative session to go through the highs and the lows of what was taken up and what wasn't. We appreciate everyone's involvement as always. And thank you again for listening to Crushing Healthcare. And thank you both. We really appreciate it today.

Lisa Trumble: Thanks, Mike.

Layne Gakos: Thanks, Mike.