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The Business of Medicine

Author: Karen Hart
March, 2014 Issue

How Meritage Medical Network’s CEO, Joel Criste, is affecting change in health care and why the Affordable Care Act is a step in the right direction for Americans.

 
 
 
It goes without saying that health care is undergoing a paradigm shift in the United States. What you may not know, however, is that Joel Criste, CEO of Meritage Medical Network, based in Novato and serving the North Bay, is one of those leading the way to change. But Criste never planned for a career in health care. When he was younger, he had other dreams. Plan A was to play quarterback for the Oakland Raiders. Plan B was to work in San Francisco’s financial district. When it became apparent that his dream of football stardom wasn’t in the cards, Criste attended San Diego State University (SDSU), studied finance and interned for a defense contractor.
 
While at SDSU, he completed two summer internships with Kaiser Permanente in Oakland. Additionally, since both his parents’ employers had offered Kaiser Permanente health insurance during his childhood, Criste was familiar with the private health care system, especially as a result of his annual trips through its emergency room as a child (as a boy, he says, his inclination was to “play rough,” resulting in multiple visits to the ER for broken bones, stitches and the like). Still, health care wasn’t a particular interest.
 
Following graduation from SDSU, Criste was on a camping trip with family to the Sierra Foothills when a chance meeting with the administrator for Marin Individual Practice Association (then known as the Marin IPA) set the course for his career. Criste mentioned he was looking for work, the administrator arranged an interview and, one month later, Criste was hired.
 
It was 1991, and Marin IPA was an organization in its infancy. Criste was the fifth employee hired, and it was his job to handle bookkeeping. At that time, the company was located in an office on Fifth Avenue in San Rafael. First day on the job, Criste found he’d be working in a dingy, basement office with little light and worn furnishings. “I walked in and thought: ‘I won’t be here very long.’ It turns out I was wrong about that,” he says.
 
Criste never made it to the financial district, And though it wasn’t the most auspicious start, those early days in the basement office were the beginning of a profession that would span more than two decades and eventually fuel his passion for health care and land him in a position to lead two companies.
 

The expansion of HMOs

During the 1990s, health maintenance organizations (HMOs) proliferated. (An HMO is a health insurance organization in which subscribers pay a predetermined fee in return for a range of individual services from physicians and health care workers registered with the organization.) Suddenly, HMOs moved the risk from insurance companies to hospitals and physicians. Instead of an insurance company paying Marin IPA physicians for each service, the organization was allotted a percentage of the health care premium and the physicians provided the services for that amount whether it was enough money to cover their services or not.
 
“That was attractive to insurance companies—to unload insurance risk—and [the HMO structure] had the potential to reward physicians and hospitals that were willing to take those risks,” says Criste.
 
Like other HMOs, Marin IPA skyrocketed during the ’90s, and Criste’s ever-expanding responsibilities kept pace with the business. He moved beyond finance and accounting to implementing a new information system and managing medical claims processing. Soon he began managing physician compensation and budgeting by medical specialties. The growing team moved out of the office on Fifth Avenue to other facilities and eventually had about 50 employees on staff. By the end of the decade, the company had grown from $2 million in annual revenues to $40 million, and Criste was appointed chief financial officer.
 

Changing of the guards and culture

At the turn of the century, Charles T. Fischer, M.D., who had been spearheading the company, retired. He was replaced by a former physician, from outside the state, who only lasted a year in the position. Believing the position should be filled by someone with a medical degree, the board of directors at Marin IPA reluctantly appointed Criste as the interim CEO. It still had hopes for hiring a physician to fill the position but was frustrated with the long hiring process.
 
Meanwhile, Criste acted as both CFO and CEO and relied on his business acumen and instincts to make further progress for the company. He made three key changes. First, he reduced the amount of paperwork physicians were required to complete. Second, he renegotiated health care contracts that were more favorable to Marin IPA physicians. And finally, he changed the culture of the organization by becoming an advocate for physicians rather than a health plan intermediary. The doctors who were part of the organization were now viewed as a physician group, and Marin IPA was their advocate.
 
In 2002, the board of directors had a change of heart about needing a CEO with a medical degree and made his interim CEO responsibilities permanent. Criste went to night school at St. Mary’s College and earned a master of business administration (MBA) degree in 2003. In the years that followed, Marin IPA began to slowly expand into Sonoma County. In 2009, it became known for a while as Marin-Sonoma IPA, but the name no longer fit the company. “We were also expanding to Napa County and the balance of Sonoma County, and Marin/Napa/Sonoma IPA just wasn’t acceptable,” he says. A new name was clearly needed, and in 2012 the Marin/Sonoma IPA group became Meritage Medical Network. The objective of the new name was to relinquish geographic specificity and to reflect its expansion into Wine Country.
 
Today, Meritage Medical Network is a health care network representing more than 700 local physicians, providing health services in eight area hospitals including: Healdsburg District Hospital, Marin General Hospital, Novato Community Hospital, Palm Drive Hospital, Petaluma Valley Hospital, Santa Rosa Memorial Hospital, Queen of the Valley Hospital and Sonoma Valley Hospital. The company provides health care and administers benefits for HMO members in Marin, Napa and Sonoma counties.
 

Accountable health care

Last year, Meritage Medical Network was approved as an Accountable Care Organization (ACO) under a Medicare initiative stemming from the Affordable Care Act (also known as Obamacare). The Affordable Care Act (ACA) is designed to make health insurance affordable for Americans with low and moderate incomes, and requires all Americans to have health insurance starting this year—or pay a penalty. Officially known statewide as “Covered California,” the ACA has both supporters and critics.
 
Meritage Medical Network was the first provider in the North Bay to receive ACO approval. Currently, the company is one of more than 100 health care organizations across the country approved as an ACO. The goal of an ACO is to provide better coordination with insurers and providers to produce better patient outcomes.
 
“The ACO concept came out of the federal government’s Medicare Payment Advisory Commission and was designed to reward local systems of health care for achieving high-quality service at a low cost,” explains Criste. “ACOs focus on improving systems of care, which improve quality and, in turn, lower costs,” says Criste. A major challenge today, he says, is that, in the current system, health care is provided in a piecemeal fashion rather than in a coordinated way. “Providers of health care are working in silosthere are hospitals, physicians, specialists, skilled nursing staff and more working largely independent of each other, but trying to achieve the same goal. True coordination of care in our country is limited and presents challenges.”
 
At Meritage Medical Network, the goal is to improve coordination and collaboration. “When patients are discharged [from a hospital], they’re given instructions and advised to follow up with their primary care physicians. If a patient doesn’t make that appointment, then care may fall through the cracks,” says Criste. This can result in a continuation or exacerbation of a medical problem that requires additional care, or readmission to the hospital, which is partly what drives up health care costs.
 
In response to this challenge, last year, Meritage Medical Network added registered nursesknown at the company as “care managers"—to its staff to coordinate care. As a result, now when a patient is discharged, a care manager schedules the appointment with the patient’s primary care physician and makes sure the patient understands how to take his or her medications and follows other physician instructions after a procedure or surgery. This creates a link between the hospital, physicians and nurses to improve communication and care.
 
According to Criste, this link is critical to minimizing hospital readmission, particularly for patients with chronic conditions such as heart or lung disease and diabetes. Nationwide, the readmission rate is between 15 to 18 percent, which compares to a 3 percent readmission rate for Meritage Medical Network members in care management since the company became an ACO.
 
There are three goals of an ACO, says Criste. The first is to improve care. Second, to improve the health of the population. And finally, to lower the total cost of care for the system. “We support these goals,” says Criste. “By improving systems of care and giving patients access to a care manager, the cost savings is sure to follow. And that’s paramount.”
 
In the future, Meritage Medical Network plans to further develop the ACO and continue to expand further into Sonoma and Napa counties. In addition to working with the majority of HMO insurers, the company is now partnering with Western Health Advantage, a network of 3,200 providers and 14 hospitals and medical centers, which is a network offered to individuals, small employers and Covered California policyholders. It will also be offering two new Medicare plans, Scan Health Plan and Health Net.
 
In the last four years, Meritage Medical Network has grown from 300 to more than 700 physicians. Some of the larger medical practices that are part of Meritage include Northern California Medical Associates, Napa Valley Family Medical Group, Redwood Regional Medical Group, Prima Medical Group and Annadel Medical Group.
 
What does the future hold for Meritage Medical Network? “We’ll continue to add physicians, especially in Sonoma and Napa counties,” says Criste. “We have 200 different medical practices and most every different specialty. Meritage is in three counties and that’s a nice footprint and an efficient size. In 10 years, the efficient size may be the entire Bay Area.”
 

Recruiting and retaining physicians

Recruiting and retaining primary care physicians in areas with a high cost of living is a problem nationwide. In the North Bay, Marin County is one of those areas. “Compensation is often not adjusted geographically,” says Criste. Oftentimes, the specialties related to primary care physicians receive lower compensation, yet they’re required to produce a higher amount of paperwork, clinical review and documentation. “Being a primary care physician is a challenging specialty because of the broad scope of knowledge needed to keep up and the higher demand for documentation and follow-up,” says Criste.
 
What’s more, when it comes to the business side of health care, it’s often challenging for physicians to successfully run both a private clinical practice and an administrative business simultaneously. “Better for physicians to do what they know best: operate a clinical practice,” says Criste.
 
Criste also identified two other troubling trends. “We recognized the aging of our physician population and the limited number of medical students graduating in specialties of pediatrics, internal medicine and family practice,” says Criste.
 
“Marin is a desirable area for physicians to practice. We have a first rate hospital in the county, and having the access to San Francisco for tertiary care is ideal,” adds Joseph Habis, M.D., of San Rafael. “However, we need to make sure that physicians can be successful. Joel understands the issues of medical economics.”
 
Meritage Medical Network’s response was to develop its own physician network. With input from Habis, the goal was to recruit and retain primary care physicians, specifically in Marin County. In 2005, the new network, named Prima Medical Group, began with one primary care physician, Habis, whose specialty was internal medicine. Today, there are about 100 physicians associated with Prima Medical Group and about 60 physicians who are employed with the company.
 
“Prima was born out of the idea that we can bring in doctors with unique styles and diversity in their own way. When physicians are happy, it ensures they can practice as they always have and make it successful,” says Habis, now medical director of Prima Medical Group (Criste is CEO). “The model works effectively and we’ve been the perfect alternative for many private practice physicians.”
 

The new age of health care

With the advent of the ACA, people across the nation are waiting to see what health care in America will look like in the future. Last year, 48 million Americans were uninsured, according to a report released by the Census Bureau. Decreasing the number of Americans without health insurance is the key goal of the ACA. Is the United States headed toward a more socialized medical system?
 
“Truly, the best health care is local, and our local systems and physicians will achieve the best results,” says Criste. “Any interference from the government will debilitate local initiatives.
 
“That said, if we can’t perform locally on quality, service and cost, we probably deserve what the government gives us. The ACA heavily endorsed the ACO concept, which is improving care at a local level. The ACA is extremely positive and a major step forward. Is it perfect? Of course not, but it’s a major step. The ACA is intentionally designed to avoid the step of nationalizing health care.”
 
So what does the future hold for Joel Criste? “I’m proud to be in an industry that serves the community and has a high level of integrity and interest in people. My personal passion is driven by supporting my colleagues and the physicians and employees with whom I work. I have a high level of respect for what they do for patient care. And while I can’t [personally] deliver health care, I can support the physicians and staff who do. I feel good about that.”
 
 
 

The Name Game

How did the name Meritage originally come about? According to an online search, no major dictionary had an entry for the term as of 2003. However, in 1988, California winemakers sponsored an international contest to create an upscale term for a table wine blended from two or more Bordeaux varietals grown in the United States. A California grocery store wine buyer won the contest with “Meritage,” by combining the word “merit” with “heritage.” Wine enthusiasts often mistakenly give the name a Frenchified pronunciation (mare-i-TAHZH), an enunciation that’s become widespread, much to the regret of the wine industry. To keep prices from getting out of hand, those in the industry insist on the original, less unpretentious intonation.
 
Like the wine industry, Meritage Medical Network prefers the pronunciation rhyming with “heritage,” though Criste will tell you they’re happy to respond to both pronunciations. And just as the wine industry wants to keep Meritage a quality product, Meritage Medical Network’s goal is the same.
 
“As a blend of high-quality grapes produces a superior wine, Meritage Medical Network is blending high-quality physicians to produce superior health care,” Criste says.

 

 

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