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Current Practice Alignment Strategies to Ensure Long-Term Survival 2013 MGMA Annual Conference October 7, 2013 John A. Lutz, FACMPE, Managing Director,

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Presentation on theme: "Current Practice Alignment Strategies to Ensure Long-Term Survival 2013 MGMA Annual Conference October 7, 2013 John A. Lutz, FACMPE, Managing Director,"— Presentation transcript:

1 Current Practice Alignment Strategies to Ensure Long-Term Survival 2013 MGMA Annual Conference October 7, 2013 John A. Lutz, FACMPE, Managing Director, Huron Healthcare

2 Agenda © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.2 I.Pressures Driving Transformation Initiatives II.Alignment Models for Long-Term Success III.Examples IV.Competencies Needed V.Q & A

3 Learning Objectives  Examine real-world examples to glean best practice alignment techniques.  Evaluate alignment practices to meet your practice’s needs.  Understand that alignment has three core aspects: Clinical Alignment Economic Alignment Market Alignment  Examine how alignment is tied to transformation. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 3

4 Pressures Driving Transformation

5 Industry Pressures Driving Clinical Transformation Initiatives THE VOLUME TO VALUE TRANSITION AND PAYMENT REFORM REQUIRES:  Making operational and care delivery transitions from volume-based to value-based payment models  Taking on risk for clinical outcomes  Building population health management capabilities  Moving from a “consolidated practice” status to a “clinically integrated” status THE EMPHASIS ON QUALITY IMPROVEMENTS REQUIRES:  Responding to regulatory, payer, and consumer pressures to improve quality while simultaneously decreasing the cost of care  Achieving physician and clinician alignment with hospital’s goals for care quality  Lowering readmissions and reducing medically unnecessary care variation THRIVING UNDER LOWER REIMBURSEMENT FROM ALL PAYERS REQUIRES:  Lowering the cost of delivering care  Pursuing partnerships to achieve scale and integration  Re-evaluating the most cost-effective care settings and care providers © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.5

6 MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. New Path to Success 6 High VolumeGreat Outcomes High CompensationGreat Compensation High IndependenceGreat Partnerships

7 MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. DESTABILIZATION Rising costs Shrinking reimbursement Transition to value-based arrangements DESTABILIZATION Rising costs Shrinking reimbursement Transition to value-based arrangements ADAPT TO NEW NORMAL Management structures Operations Skill mix Compensation Affiliations ADAPT TO NEW NORMAL Management structures Operations Skill mix Compensation Affiliations CREATE NEW STABILITY Tighten alignment with partners Strengthen management Restructure compensation Strengthen clinical integration Maintain high member engagement CREATE NEW STABILITY Tighten alignment with partners Strengthen management Restructure compensation Strengthen clinical integration Maintain high member engagement New Path to Success 7

8 Prioritizing Transformation CLINICAL INTEGRATION & TRANSFORMATION STAGES © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 8 Comprehensive, coordinated, primary care Team-based, all practicing at top of license Proactive care management to avoid admission ACCOUNTABLE CARE CLINICAL INTEGRATION PCMH Formalized structure across the continuum Governance structure to support population health Economic model/plan design Integrate ACO-like competencies Population health management New relationships with physicians, payers, employers Membership & narrow networks Financial and clinical outcome controls Complexity Sophistication Clinical & Financial ROI

9 Alignment Models

10 QUESTION: As you think about the future, which is most important in your practice? A.Independence B.Stability C.Steady or increased income D.Reduced hours, work/life balance

11 Physician – Hospital Alignment Strategies © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 11 Individual Contract, Structured Compensation Single Specialty Group Regional Model Groups Multispecialty Groups MD Councils Clinical Operations Committee Direct Physician Leadership (Board, CEO, etc.) ED & Other Call Pay APP & Hospitalist Coverage Medical Directorships Co-Management & PSA Agreements Joint Ventures Management Service Organization Clinically Integrated Physician Networks Information Infrastructure Practice Lease Arrangements Business Services Contracts Employment Structured Engagement

12 Alignment Models PROFESSIONAL SERVICE AGREEMENTS  Definition: PSAs provide a viable alternative to physician employment by establishing an independent contractor type of relationship between the hospital and physician, whereby the physician can be paid compensation to provide physician’s services that are beneficial to the hospital. Examples: Medical Director Agreements Coverage Agreements Hospital-Based Service Agreements Leased Employee Agreements Foundation Model Arrangements  Advantages : PSA preserves a modicum of practice independence and future strategic options for physicians  Disadvantages: Potential conflicts around locations of practice © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.12

13 Alignment Models CO-MANAGEMENT  Definition: A co-management agreement is different from hospital employment of a physician because it's with a group of physicians and focused on a team-based approach to managing specific aspects of patient care delivery. What makes these agreements unique is that compensation can be structured so that a portion is "at-risk" and based on the achievement of predetermined outcomes and a second portion is for administrative duties. If the outcome goals are achieved, physicians receive the associated compensation. If they are not achieved, they do not receive the compensation.  Advantages: Aligns on services and doesn’t require direct employment. Allocates effort and reward between groups.  Disadvantages: Leverages revenue and income on two parties directly. Is not “permanent” like an employment arrangement. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.13

14 Alignment Models © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.14 EMPLOYMENT Includes variations of strategies that meet the legal definition of employment. Can be applied in a variety of ways and often incorporates many of the other strategies as part of the employment agreement. Examples include: Individual employment agreements, Large single specialty group employment, Formation of multispecialty groups and foundations.  Advantage for hospitals : Large primary care network provides key to ACOs, defense against competition.  Advantage for physicians : Salary guarantees, better work-life balance, avoids administrative burden of an independent practice.  Disadvantages: Perception of loss of control, “anchoring” on one health system partner.

15 Employment Option “Wrinkle” Are You In a “Corporate Practice” State?  In California, Colorado, Iowa, Ohio, and Texas, hospitals are generally prohibited from employing physicians, although certain types of providers and hospitals are exempt from these prohibitions. In some other states, there is uncertainty whether hospital employment is precluded.  However, hospitals in these states have developed alternative means, such as the formation of medical foundations in California, to manage practices, including acquiring the practice’s assets. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.15

16 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.16 Professional Service Agreement Example PSA & wRVU $ License Operations APP’s Supplies Staffing & Mgmt. Note: Stark - Under arrangements prohibition: cannot have investment interest in entity (including own medical group) that performs the DHS service Fair Mkt. Value requirements There are other legal considerations so consult an attorney. Center of Excellence Payer Medical Group Hospital or Health System

17 Co-Management Example © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 17 Designees Co-management & Profit/Loss Operations Payer Service Line Operating Committee Note: No Steering or Cherry Picking! Fair Market Value Applies Medical Group Hospital or Health System

18 18 Employed Physician Enterprise Example © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential18 Health System Medical Group(s)Health System HospitalsHealth System Joint Strategy and Oversight Committee MSO Core Functions Finance/Accounting Operations/Patient Access Performance Analytics Performance Improvement Revenue Cycle Human Resources Information Technology Executive Director Physician Executive Primary Care Physician Practices Specialty Physician Practices Practice Support Services (MSO) Affiliated Group (Independent Physicians) Health System

19 Competencies Needed

20 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. Management & Financial Platform System Alignment & Compensation Demand & Capacity Management Clinical Integration Competence Core Competencies “Physicians and hospitals are going to be working much more closely together as they move toward value: We are seeing a lot of integration—both consolidation with hospitals and integration with physician practices— and expect to see much more blurring of the lines between hospitals and clinics.” HFMA May 2013 issue 20

21 Accountable Care Competencies The model of essential competencies for an Accountable Care Organization is patient-centered and includes new clinical and management competencies. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 21 Management Competencies Clinical Integration Management Provider Network Design Care Delivery Roles / Team Management & Development Information Technology & Data Analytics Measurement & Performance Management Revenue Cycle & Financial Structure Clinical Competencies Patient-Centered Medical Home Population Management Transition / Readmission Management Care Variation & Quality Management Patient Lifelong Health Management Clinic / Outpatient Hospital Post-Acute Care Home / Community

22 Healthcare Transformation – Alignment Opportunity ACOs, for the foreseeable future, will not conform to a single model, but rather multiple models will exist: ACO StructureCurrent Examples Provider-led health plan NSLIJ Payer-led provider networks Highmark/West Penn UHC/Monarch (Los Angeles) Co-branded ACO Banner/Aetna Primecare (Los Angeles)/Aetna Pluralistic provider-led ACO’s Shared risk contracts Capitated & bundled payment Blended: FFS, PMPM, gain/risk sharing Sharp (Wellpoint, Aetna, Blue Shield) Carilion Clinic (Aetna, UHC, CMS) PeaceHealth Dignity CMS ACO Many Direct provider to employer Futuristic – Aurora Health Decision point: Determine commonality and market focus (all or subset). 22 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

23 Healthcare Transformation Competencies Organizational and Operational Variables  Organizational effectiveness and change leadership are critical success factors in the shift to a volume/value-based payment system.  Physician governance methodology  Organizational structure strategy and alignment  Efficient operational processes to predict and manage toward cost reduction and quality improvement  Patient engagement methods  M&A and more – design  Legal and Regulatory © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.23

24 Accountable Care Competencies CLINICAL COMPETENCIES Healthcare organizations need the following clinical competencies to provide value-based care that optimizes cost and quality outcomes across the care continuum:  Patient-Centered Medical Home: Patients are cared for in a medical home by a multi-disciplinary team (e.g., health coach, physician, dietician, social worker, etc.). A Navigator or Health Coach works with the patient to assess health risks and develop a customized health plan. Tools (e.g., free phone access to caregivers 24x7) are provided to patients to support them in proactively managing their own health. Benefit designs (e.g., no office co-pays) promote preventative care.  Population Management: The patient base is aggregated into population segments based on analysis of EMR and administrative data. Each population segment has specific care programs to address their needs and optimize outcomes. Population segments may include healthy patients, acute patients, chronic disease patients (e.g., diabetes, heart failure), and end-of-life patients.  Transition/Readmission Management: Care is coordinated as a patient moves between care settings to ensure smooth transitions. In the short-term, organizations typically need to focus on managing readmissions to the high- cost hospital setting.  Care Variation & Quality Management: Medical, nursing, and ancillary practices are integrated across the care continuum, decreasing physician, nursing, and ancillary process variation, and ensuring care is clinically appropriate and delivered efficiently according to evidence-based standards. This competency includes an institutionalized process for the development, adoption, and monitoring of evidence-based care (e.g., cross-continuum pathways, guidelines, order sets). © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 24

25 Characteristics of Success  Full physician engagement & alignment  An unwavering focus on patient-centered care  Ability to establish, operationalize, and enforce a standard of care across the health system  Ability to rationalize care across the system to gain the best results  Ability to manage care across the continuum  Clear roles and accountability for physicians in management positions among otherwise independent physicians Organizations that are positioned to successfully manage value-based contracts have the following characteristics: © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

26 Today’s Presenter © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. John A. Lutz, FACHE, FACMPE Managing Director Huron Healthcare

27 Q & A

28

29 Appendix: From HMOs to ACOs

30 Where We’ve Been HMOs:  The rush of acquisition and employment of medical groups and physicians by hospitals and health systems reminds some of the surge of HMOs in the 1990s.  HMO enrollment exploded from 3 million in 1970 to over 80 million in  Employers converted to HMO insurance as the lower cost alternative. ‎ © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.30

31 Where We’ve Been ACOs Are Different from HMOs:  Capitation was a financial transaction.  Population management is a health care transaction.  HMOs were good at measuring costs but paid little attention to measuring effects. They failed to look at outcomes.  HMOs cut costs by deciding what care would and would not be reimbursed, pitting the insurer against the doctor.  People objected to being told they couldn’t get all the care they want. ‎ © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.31

32 Where We’ve Been How ACOs Are Different:  In ACOs, there is an economic incentive to improve quality and reduce costs.  Doctors and hospitals share in the savings when patients stay healthy and use less medical care. ‎ © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.32

33 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.33 In the evolving payment model, organizations providing increased value through population health management excellence will be rewarded by the market with increased population volume, enabling economies of scale and driving down average cost/patient. The ability to capitalize on the shift from volume to “value to volume” will be a competitive advantage. American Hospital Association. “Hospitals and Care Systems of the Future.” September p.9 Changes in the Payment Model Value-Based Second Curve Payment rewards population value: quality and efficiency Quality impacts reimbursement Partnerships with shared risk Increased patient severity IT utilization essential for population health management Scale increases in importance Realigned incentives, encouraged coordination THE GAP Volume-Based First Curve Fee-for-service reimbursement High quality not rewarded No shared financial risk Acute inpatient hospital focus IT investment incentives not seen by hospital Stand-alone care systems can thrive Regulatory actions impede hospital-physician collaboration

34 Patient-Centered Medical Home © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. Patients are cared for in a Medical Home by a multi disciplinary team. A Navigator or Health Coach engages the patient, assesses health risks, and develops a Health Plan. Self-care management is enabled through tools, processes, and benefit design. Medical Home Team: Multidisciplinary team including participants such as Health Coach, Primary Care Physician, Nurse Practitioners, Dietician, Social Worker (provides integrated behavioral health clinical services and linkage to other community- based services), Physical Therapist, etc. Care Manager: Supports Medical Home Team People Process Tools/Systems/Enablers Health Risk Assessment Tool: Used to identify health risks Patient Self-Care & Education Tools: Multiple vehicles such as 24x7 care line staffed by RNs, online/ interactive tools, social media such as Facebook, brochures (e.g., on Urgent Care Clinic availability),etc. Benefit designs that promote self-care: e.g., no co-pays for office visits Rewards for activities such as joining a smoking cessation program EMR / Personal Health Record (medical history, medications, recent hospitalizations, emergency or urgent care visits, health maintenance) Advance directives Patient registries, referral protocols, medication adherence guidelines Community resources Health Planning : Periodic assessment of a patient’s specific health risks and development of a customized Health Plan. The Health Plan incorporates age/sex-appropriate wellness monitoring and interventions (e.g., mammograms, immunizations). Health Management: Monitoring the patient’s health (e.g., hospitalizations), updating the Health Plan, monitoring compliance, and initiating reminders based on triggers to ensure patients stay on track with physician’s orders. Includes coordinating care across the continuum (e.g., referral specialists, emergency care, hospital admissions, therapeutic care, skilled nursing facilities, home care). Includes medication reconciliation. Self-care management is supported and patients are provided with tools to proactively manage their health. Health Education: Providing patient self-management information about managing existing health conditions as well as preventative care. 34

35 Patient Advanced Primary Care Under Patient-Centered Medical Home Medical Group Enterprise Level Activities Accountable Care Organization Hospitals Service Line Integration Medical Staff Alignment Incentives for Efficiency & Lean Six Sigma Quality (SCIP, Leapfrog) Safety Medical Groups Enterprise Level Activities PC-MH Functions Skilled Nursing Facilities SNFists On-site Case Management Efficiency Rating Systems “Preferred Facilities” Ancillary Services Free-Standing ASC & Diagnostic Testing Centers Home Care Home Safety Visits Post Discharge Visits Home Health Coordinator of Services Hospice Transitions (CHF, COPD, Frailty Syndrome, Dementia) PCP/SCP Incentives & Clinical Guidelines Pay for Performance Initiatives Hospitalists, Post Discharge Follow-Up Programs DME Integration & Oversight with Care Management Outcomes & Evidence Based Medicine Call Coverage Consult Services (Stroke, STEMI) ER Avoidance Programs Urgent Care End of Life (Palliative Care) Patient Satisfaction & Loyalty Personal Health Record Patient Portal Health Risk Assessment Patient Engagement & Activation Prevention & Wellness Point of Care Analytics & Clinical Decision Support Gaps in Care Population Management & Chronic Care Registries Home Visiting Teams Generic Prescribing Program Cost Effective Medical Management & Utilization of Services (SCP, Ancillary) Access, Same Day Appointments, e-Visits Patient Satisfaction & Loyalty Provider & Office Staff Satisfaction Care management (Acute, Chronic, Inpatient, SNF) Health Coaching (Shared Decision Making) Transition of Care Provider Satisfaction Behavioral & Mental Health 35 SCMG: PCMH to ACO Progression ACO Used with Permission: Dr. John Jenrette, CEO Sharp Community Medical Group (2010) CLINICAL OPERATIONS AND SYSTEMS © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

36 Healthcare Transformation Competencies  Healthcare Transformation Processes for Clinical Integration & Population Health Management Patient identification and enrollment management system Patient engagement process management Care team roles, responsibilities, and care management processes for panel/population health management Compliance with evidence based guidelines (care variation)  Financial Controls Bundled collection and distribution Compensation and contract management with employed and non-employed physicians [HR, Non Labor] Re-casting productivity measurement Healthplan and PBM design and contracting Charge Structure –Core fee structure (FFS) –Care management fee (not always applicable) –Gain/risk sharing –Bundled payment  Physician/ACO governance © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.36

37 Other ACO Competencies and Considerations  Population care management competencies Enrollment in ACO (patient selection and engagement) Risk identification and management (at risk and high risk) Case and referral management Medication management (MTM) and compliance Patient engagement  Analytic capabilities Disease registries (foundation for all else) Risk stratification Basic comparative effectiveness analysis and predictive modeling Content analytics to effectively mine vast quantities of clinical notes to implement and manage core measures, readmission risk detection  Patient referral analysis/steerage – where should I refer the patient to get the best outcome?  Under and overutilization of care Patients at risk for a spike in utilization due to underutilization of clinical services Patients who over-utilize clinical services © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.37

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