Presentation on theme: "President/CEO, Coker Group"— Presentation transcript:
1President/CEO, Coker Group Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care EraSteve HudsonDirector of Strategic and Physician Development, Northside Hospital-CherokeeMax Reiboldt, CPAPresident/CEO, Coker Group
2DisclaimerCoker Group and Northside Hospital have produced this material as an informational reference for conference attendees. The contents of this presentation represent the views of the authors and presenters and do not necessarily reflect the views of Becker’s Hospital Review.
3Contents Current Industry Trends Stage I: Strategic Alignment Physician-to-Hospital ModelsJoint VenturesClinical Co-Management AgreementsProfessional Services AgreementsCollaborativesStage II: Clinical IntegrationThe Overall Integration/Accountable Care Strategy for Private PhysiciansQ & AGlossary of TermsAppendix: Strategic Alignment Case Studies
5Comparative Look at 2013 and 2014 2013 Trends2014 ProjectionsPreparatory year for ACA’s “Full Implementation Year”Increasing efforts toward alignment and integrationShift in reimbursement methodologies (from volume to value)*Care process delivery transformation initiatives*Progress within ACO/CIN development/population health management (“PHM”) effortsPrimary care development efforts to combat workforce shortagesMajor ACA provisions rolled out January 1, 2014Individual mandateComprehensive insurance plans/coverageMedicaid expansionMeaningful Use Stage IIAccelerated movement within 2013 trendsBig year for information technology (“IT”)ICD – 10 (potential 2015 implementation)PHM solutionsOn-premise to cloud-based systemsGrowth of clinically integrated networks*Processes furthered during the year; still early-on in development
6Hospital Provider Concerns in 2013 Please rate the following factors in regard to the strategic concerns of your facility.Reimbursement and alignment rated as the top two most important concerns of a health systemAlignment is still considered a primary strategic response to the continuing financial challengesAlignment is also Stage I of an organization’s accountable care strategy (without alignment, clinical integration is highly unlikely)Source: Merritt Hawkins and Trinity University Department of Healthcare Administration, “2013 Survey of Alumni Satisfaction and Health System Trends”
7Provider Concerns in 2013 (cont’d) 10 Most Pressing Career Concerns for Physicians1. Compensation and/or reimbursement — 53.9 percent 2. Work/life balance — 45.2 percent 3. Work-related burnout and stress — 22.1 percent 4. Impact of healthcare reform — 16.6 percent* 5. Lack of autonomy or control in my practice — 11.8 percent 6. Quality of healthcare — 10.8 percent* 7. Finding a new practice opportunity — 7.3 percent 8. Malpractice issues — 6.7 percent 9. Patient-physician relationships — 5.2 percent 10. Implementing electronic medical records — 5 percent**Likely to significantly rise in priority within 2014Source: Becker’s Hospital Review, “10 Most Pressing Career Concerns for Physicians,” July 12, 2013
8Provider Concerns in 2013 (cont’d) Five Alignment Trends of 2014As 2014 is a mid-term election year, we can expect more debate on the PPACA and potential political fallout."Alignment" in advanced stages of accountable care structures will continue, analogous to what we have termed as “Stage II”.Compensation and pay plans for physicians within alignment structures will be continuing to move away from fee-for-volume to fee-for-value.Bundling and shared savings programs will continue to increase; thus, measuring values among participating providers will become a greater issue.More of the same regarding physician-hospital alignment will continue with the number of transactions consummated increasing within As a result, physician-hospital alignment will be one of the most prominent initiatives on all providers' "to-do" lists for years to come.Source: Becker’s Hospital Review, “Physician-Hospital Alignment in 2013: 17 Trends,” August 30, 2013
9Driving Forces for Change: Paradigm Shifts Integrated care management focusing on preventative careCoordinated delivery of care rendering appropriate services at appropriate place and timePerformance (value); Quality/cost control; bundled payments; capitation; risk-basedCollaboratives: ACOs/CINs/PCMHs/ QCsAccountable care era health care deliveryTraditional healthcare delivery modelFragmented care management treating primarily sick peopleEpisodes of care; utilization managementProduction (volume)/Fee-for-service paymentsDisjointed provider base
10Value-based Purchasing Driving Forces for Change: Evolving Payment ModelsProviders paid a specified amount for each service providedFee-for-ServiceIncentives for higher quality measured by evidence-based standardsPay-for-PerformancePercentage reimbursement at risk, earned back by high quality outcomesValue-based PurchasingSingle payment for episodes of treatment, shared by hospital and physiciansBundled PaymentsPercentage of savings from reduced cost of care shared with hospitals and physiciansShared SavingsAll services compensated in one payment that manages the patient across the delivery systemGlobal PaymentsIncreasing Provider Risk
11It All Culminates to Value… Quality Enhancement (Outcomes)Develop quality initiatives for safety, outcome and satisfactionEngage physicians in metric development processProcess and true outcomes measuresPractice evidence-based medicineEstablish protocols and best practicesPatient-centered at all timesUtilize a population-health mindsetAccurately measured and attributedYou can’t change what you can’t measureHigher Value=Cost ReductionTrue costs, not proxies (e.g. ratio of costs to charges)Activity-based costs of providing care for common clinical conditions (e.g. heart failure)Proactive tracking of medical/personnel utilizationYou can’t change what you can’t measure
12The Ultimate Provider Challenge High quality clinical care deliveryCost efficient clinical care deliveryPopulation health management-Providers must do all simultaneouslyto deliver value ( Outcomes / Cost )all with limited funds
13Using Alignment to Further Integration* Stage I: AlignmentCommon goals and objectivesMore structural than functionalMedical staff membershipCCMAPSAEmploymentTied together by legal and economic connectionsStage II: (Clinical) IntegrationMerged clinical and business modelsMore functional than structuralPCMHACOQuality collaborativeCINTied together by clinical and cultural connections*Can be via both physician-hospital and physician-physician strategies
14II. Stage I: Strategic Alignment Two Tracks: Physician-Hospital or Physician-Physician Alignment
15Spectrum of Alignment Models Models that Fall Short of EmploymentManaged care networksMedical directorshipsClinical co-management agreementsRecruitmentIndependent practice associationsJoint venturesService line managementProfessional services agreementsQuality CollaborativesACOs/CINsIndependencePrivate Practice Alignment Model OptionsHospital EmploymentIncreasing IntegrationEmployment is not the only viable option but some form of alignment with a hospital is essential!
16Traditional Alignment Model Descriptions Limited IntegrationModerate IntegrationFull IntegrationManaged Care Networks (Independent Practice Associations, Physician Hospital Organizations): Loose alliances for contracting purposesService Line Management: Management of all specialty services within the hospitalACO/CIN/QC: Participation in an organization focused on improving quality/cost of care for governmental or non-governmental payers; may be driven by practices or hospital/groupsMSO/ISO: Ties hospitals to physician’s businessRecruitment/Incubation: Economic assistance for new physiciansEmployment “Lite”: Professional services agreements (PSAs) and other similar models (such as the practice management arrangement) through which hospital engages physicians as contractorsClinical Co-Management: Physicians become actively engaged in clinical operations and oversight of applicable service line at the hospitalGroup (Legal-Only) Merger: Unites parties under common legal entity without an operational mergerEquity Group Assimilation: Ties entities via legal agreement; joint practice ownershipCall Coverage Stipends: Pay for unassigned ED callEmployment*: Strongest alignment; minimizes economic risk for physicians;Medical Directorships: Specific clinical oversight dutiesGroup (Legal and Operational) Merger: Unites parties under common legal entity with full integration of operationsJoint Ventures: Unites parties under common enterprise; difficult to structure; legal hurdlesTypically Physician-to-PhysicianTypically Physician-to-HospitalEither Physician-Physician or Physician-Hospital*Includes the Physician Enterprise Model (PEM) and the Group Practice Subsidiary (GPS) model both of which allow the practice entity to remain intact even after employment of the physicians by the hospital.
18Joint Ventures Structures* “Laws” to Consider Specialty Hospitals Management Services ArrangementsUnder-Arrangement ArrangementsFreestanding CentersPay for PerformanceBlock LeasesMedical Directorships“Laws” to ConsiderStarkAnti-KickbackReimbursementTax ImplicationsState Law*Physician-to-physician (as well as physician-to-third party investor) joint ventures are also possible and subject to similar laws. These types of transactions are usually project-driven and intended for the development of new capital structures (e.g., a new building).Source: Healthcare Financial Management Association
19Joint Ventures (cont’d) Legally permissible if one of the following is met:Physicians must contribute financial capitalPhysicians must provide business expertisePhysicians must have a business risk
20Joint Ventures (cont’d) Increasingly complex regulatory landscape are creating significant challenges for those providers considering Hospital-Physician JVsMay be JVs with surgery centers or equipmentASC ventures have specific requirements for physicians1/3 of physician’s medical practice income from all sources for previous fiscal/12 month period must be derived from performance of Medicare list of ASC covered procedures1/3 of procedures performed by each physician for previous fiscal/12 month period must be performed at ASCVarious fair market value considerations, including but not limited to such things as:Returns to investors must be commensurate with their level(s) of risk assumed (i.e., amount of capital invested)Payment (cash and non-cash) cannot be based on volume of referrals (Stark and Anti-Kickback laws)As hospital-physician transactions increase in the market, federal regulators are increasing their scrutiny for compliance purposesSource: Dixon Hughes
22CCMA Description CCMA Logistics Structure Service Line Arrangement 4/13/2017CCMA DescriptionCCMA LogisticsStructureClinical co-management agreements offer an alternative to employment or a professional services agreement (i.e. employment “lite”) relationship, but still serve as a form of moderate alignment between two partiesCCMAs offer a way for hospitals to align with providers within its service lineCCMAs can also be in conjunction with a full alignment transaction in the form of a “wraparound”Service Line ArrangementThe purpose of the arrangement is to reward physicians for their efforts in developing, managing and improving the quality and efficiency of the hospital’s service lineA contractual relationship between the hospital and the management entity resultsCompensation is in part performance-based, tied to achievement of specific quality objectivesSome shared cost savings initiatives may also be included
23CCMA Example: Gastroenterology Service Line* 4/13/2017CCMA Example: Gastroenterology Service Line*ERCPBronchoscopyColonoscopySurgeryClinicalCo-Management Agreement for Oversight of GI ServicesPracticeHospitalFixed FeeContingent FeeManagement Committee Representativesand Medical DirectorManagement Committee Representatives*Each service line/specialty can have its own CCMA, which can be included as a singular alignment strategy or as a “wraparound” (i.e., add-on) to another, major alignment strategy
24CCMA Takeaways Size Wraparound Flexibility Stability and Improvement All providers within each applicable service line can participate in the CCMAMultiple CCMAs may occur simultaneouslyWraparound“Add-on” services such as medical directorships, management services agreements, etc. may be incorporated into the CCMA structureFlexibilityCan be implemented with or without additional alignment strategies and can be executed via a number of modelsStability and ImprovementProviders are incentivized and rewarded for driving the value proposition (outcomes/cost)CompensationPractice will be paid a base management fee for providing administrative services as well as value-centric incentives for the achievement of defined performance goals and measures
26Professional Services Agreements - Overview PURPOSEAchieve clinical and financial integration without employmentContracted services, multiple optionsClinical (Professional) ServicesWraparounds (administrative, call, quality, etc.)Typically paid on a top-line basis per wRVU. Wraparounds can take other forms of payment for services, if included.RELATIONSHIPSERVICESREMUNERATION
27Four Popular PSA Models Four Possible Scenarios of PSA ModelPSA OfferingsTraditional PSA: Hospital contracts with physicians for professional services; Hospital employs staff and “owns” administrative structureGlobal Payment PSA: Hospital contracts with practice for Global Payment; practice retains all management responsibilitiesPractice Management Arrangement: Practice entity retained and contracts with Hospital; administrative management and staff not employed by Hospital, but physicians are employedHybrid Model: Hospital employs/contracts with physicians; practice entity spun-off into a jointly-owned MSO/ISOFlexibility in structureOpportunity to increase and enhance bottom-line for both Hospital and the PracticeStability in relationship with HospitalBonus opportunities for exceptional performanceOpportunities to expand services together without being fully aligned (i.e., employment and/or clinical integration)Easier segue to full employment for physicians and staff
281. PSA – Traditional Model Hospital/Health SystemAssumes responsibility for Practice’s management and operations (includes lease/depreciation expense and other operating expenses)Deducted from professional service revenue to be paid to PracticePays the Practice’s real estate leaseLease expense deducted from professional service revenue to be paid to PracticePurchases or leases ancillary services; bills HOPD ratesFixed payment (upfront or annually) to the Practice, set in advanceEmploys Practice staff (both ancillary and non-ancillary staff)Fully loaded expense deducted from professional service revenue to be paid to PracticeContracts directly with payers for professional and technical feesPRACTICEContracted by Hospital to provide professional servicesPractice providers (but not support staff) remain employees of the PracticePayment to Practice for professional services equal to net collections less direct costs paid by Hospital (and any fixed payments for ancillaries) or a rate per wRVU for production by Practice providersIndependent Contractor
292. PSA – Global Payment Model* Hospital(Integrated with Physician Division Infrastructure)Global Fee:Fixed OverheadVariable OverheadRate per wRVUProfessional Services**& Non-compete AgreementAsset Ownership/LeasePayer ContractingA/R OwnedBilling***Establishes fee structureApproves Strategy/FinancesOversees Operations/Business PlanningEstablishes Compensation PrinciplesAchieves Value-Exchange ObjectivesIs Typically Split 50/50 Between Hospital and Medical GroupGroup GovernancePhysician Hiring/TerminationIncome DistributionClinical Practice/QualityMalpracticeManagement and StaffingIT SupportPhysicians and staff remain employed by PracticeMembershipCompensationHospital BoardPractice BoardPSA Management CommitteePractice(For-Profit Entity)PSA*Could be a portion of the Practice**Services to be provided can include: diagnostic and procedural services; clinical management and coordination; administrative, supervisory teaching and research functions; complete service line and clinical co-management; cost savings; quality incentives, etc.***Billing could be performed by the Practice as a third-party agent.
302. PSA – Global Payment Model: Economic Components* *Totals represent annual figuresExample – For Illustration Purposes OnlyGlobal PaymentPSAPractice Overhead:Covers Practice’s prof. expensesPass-through from HospitalBased on budgeted expensesVariable expenses per wRVUExclusive of phys comp & benefitsOnly for professional component(not technical component, if appl.)PracticeOverheadPhysicianCompensation and BenefitsExampleFixed Overhead: $6.0MVariable Overhead: $6/wRVUExample$50/wRVUPhysician Compensation and Benefits:Covers physicians’ compensation/benefitsBased on rate per wRVUBased on historical comp & FMVCompared against past comp/wRVURoom for annual increases includedSame as employment modelComp payments made to practice(can distribute how MD’s choose)based on wRVU poolconverted to DollarsPSA Rates per wRVUExampleTotal Practice wRVUs = 120,000Fixed Overhead Portion = $6,000,000Variable Overhead Portion = $720,000Phys Comp/Ben Portion = $6,000,000GLOBAL PSA FEE = $12,720,000
313. PSA – Practice Management Arrangement InfrastructureOwnershipPractice PhysiciansHospitalEmploymentPractice ManagementBilling/CollectionsCompensationBenefitsPhysicians retain ownership of their Practice infrastructurePhysicians operate as the managers of the Practice, providing all administrative services, space, equipment, and support staffThe Hospital contracts with the Practice entity for these services and pays a fair market value (FMV) feeThe compensation structure for the employed physicians is a productivity-based systemThe arrangement can be easily dissolved, as the Practice entity stays outside the Hospital control structure
32Practice Management Arrangement PSA – Model ComparisonGlobal PaymentPSAPractice Management ArrangementTraditionalPhysicians Employed by HospitalXPhysicians Employed by PracticeStaff Employed by HospitalStaff Employed by PracticeReal Estate Owned by Hospital*Real Estate Owned by PracticeNon-Ancillary Medical Equipment Owned by HospitalNon-Ancillary Medical Equipment Owned by PracticeAncillary Medical Equipment Owned by Hospital *Ancillary Medical Equipment Owned by PracticeHospital/Hospital Affiliate Physician Benefit Plans Utilized XPractice Physician Benefit Plans UtilizedHospital/Hospital Affiliate Billing Tax ID UsedPractice Billing Tax ID UsedHospital/Hospital Affiliate Retains A/R (post-alignment)Practice Retains A/R (post-alignment)Managed Care Contracting Negotiations Completed by HospitalManaged Care Contracting Negotiations Completed by Practice*Depends on negotiated agreement**Could be structured as a jointly owned venture
33Employment vs. Employment “Lite” Comparison Employment “Lite”: PSAHospital purchases all Practice assets including all ancillariesPractice entity dissolves; Practice becomes subsidiary of the HospitalAll Practice providers and staff become employees of the HospitalPractice physicians achieve the highest level of integration with the Hospital and ensure stability but lose a significant amount of independence and autonomyEasy segue to clinical integration and Hospital’s accountable care era strategyComprehensive alignment strategy requiring less integration than employmentMultiple options (including hybrid models) which allow for a greater level of customizationPractice entity retains its structureHospital strengthens its service line while the Practice realizes some financial benefitsPractice physicians remain independentEasier segue to clinical integration and deployment of accountable care era strategy
35Accountable Care Era: Private Practice Decision With rising financial pressures, some independent physicians are seeking shelter through employment or integration with large hospital/healthcare systemsOther physician innovators and entrepreneurs are becoming “trailblazers” by using the current challenges as an opportunity to improve patient care and the practice environment for themselvesDesign of highly reliable, cost efficient, evidence based, patient-centric processes of careMeasurement systems to monitor above processes of care (true outcomes & true costs = VALUE)Use of data metrics to drive continuous value improvement and creation of a true learning organizationCreation of a self-governing system of accountability that holds all participants to the physician-determined standards of careUsing the care processes to drive pricing, which will accurately reflect true costs of care delivery
36This Could Be the “Look” for an IPA Entity The IPA ModelExample – For Illustration Purposes OnlyThis Could Be the “Look” for an IPA EntityCMSPAYERSMulti-Specialty IPA (Joint Contracting Entity)*Contracted PCPsContracted SpecialistsOffice-Based Practice #1Office-Based Practice #2Office-Based Practice #3*Can consist of as many private practices as desired by the participating parties; must be clinically integrated.The IPA is increasingly serving as the foundation for providers to work toward growth and clinical integration
37Collaborative Structure CIN/ACOCMSPAYERSPHO/IPAHosp/SystemsContracted PCPs*Contracted Specialists*As provider-based QCs/CINs continue to develop, the future of hospital-provider relationships could potentially “look” like this:Multiple alignment and integration strategies co-existing and interacting with each otherMultiple provider types partnering/affiliating with each otherThe hospital-physician dynamic is shiftingHosp/SystemsHosp/SystemsHosp/Systems* Physicians could be owners of the QC plus some contracted
39Clinically Integrated Models StrategyBasic ConceptCompensation FrameworkPatient-Centered Medical HomesTeam of providers and medical individuals collaborating to provide patient-centric care in a focused ambulatory care environment; can be part of ACO/CIN modelVarying incentives based on contractual relationships with payersQuality CollaborativesConsortium of providers focused on furthering the quality outcomes for a defined populationInternal or external funding sources determine scope and structure of available fundsClinically Integrated NetworksInterdependent healthcare facilities form a network with providers that collaboratively develop and sustain clinical initiativesIncentive (i.e. at-risk) compensation based on achievement of pre-determined measuresAccountable Care OrganizationsParticipating hospitals, providers, and other healthcare professionals collaborating to deliver quality and cost effective care to Medicare (and other) patient populationsIncentive (and punitive) financial impacts based on cost savings and quality
40Goal of Clinical Integration: Population Health Management Effective clinically integrated facilities meet the goals of the Institute for Healthcare Improvement’s Triple Aim:Enhance the patient experience of care (including quality, access and reliability)Improve the health of the populationReduce (or control) the per capita cost of care
41Clinically Integrating to Deliver Value Clinical integration (CI) is a term used to describe a collaborative and coordinated approach to healthcare deliveryCI’s focus is on reliably producing high quality clinical outcomes in the most cost efficient manner possibleIf value is defined as quality per unit of cost (V = Q/C), then CI is, quite simply, a method of providing healthcare services that produce measurably higher value (i.e. a high quality to cost ratio)CI is especially important in the US healthcare industry, where the two overarching imperatives behind the recent reform efforts are also related to the variables in the value equation
42A Clinically Integrated Care Delivery Model Primary focus of a CIN/CIO is to create a high degree of interdependence among participating providers through care coordination and data transfer/sharing/applicationNetwork of interdependent healthcare facilities and providers that collaboratively develop and sustain clinical initiatives and performance metrics/goals on an ongoing basis through a centralized, coordinated strategyPatient-centricStructures may vary from provider to providerHeavily reliant on robust IT infrastructureCentralized contracting is an essential element of a CIN programTypical Hospital-Based CIN StructureAligned Network of ProvidersCare Practitioners; Provider GroupsCare Process TransformationHospital/Health SystemPayers
43Future Directions: The Business of Healthcare We are in the midst of a significant cultural shiftThe business of healthcare is rapidly becoming the business of population health managementThe engagement of physicians will help lead the way to change for hospitals and health systems:Significant clinical buy-in will be necessary to re-tool a care delivery processPhysicians are arguably the most equipped to influence change amongst medical staff, physician and non-physician caregiversStable and sustainable provider bases will facilitate the overall integration processDespite the structural model, new delivery systems will necessitate HEAVY buy-in from participating providers in order to be functional
44IV. The Overall Integration/Accountable Care Strategy for Providers
45The Alignment and (Clinical) Integration Strategy Alignment is Stage One and (Clinical) Integration (with a care delivery system development process) is Stage TwoForming a clinically integrated/accountable care organization will require significant collaboration amongst many different stakeholders, and often times among competitorsA go-forward alignment strategy is ultimately the best way to ensure successful integration for collaborative models, particularly between distinct private groupsWhether amongst medical groups or with a hospital partner, without sufficient alignment, quality of care and population health management are likely to sufferWhile clinical integration and care delivery transformation are the “end game” goals, initial alignment is its primary vehicleFosters an organizational culture that supports teamworkPromotes an attitude for success and remaining positive, especially considering the uncertainties and likely flexibility requestedAlleviates many of the risks/challenges often associated with ACO/CIN developmentSets a strong foundation for partnering with local hospitals/health systems
46The Alignment and (Clinical) Integration Strategy (cont’d) Stage I: Alignment & Integration*Initial alignment deals assessedConsider/pursue a range of alternative alignment models (limited to moderate to full)Potential expansion of outpatient accessOngoing alignment transactions being considered and concludedDevelopment of an aligned entity via legal incorporation (or effectuation of a legally binding contract)Medicare ACO (or commercial payer CIN) participationInteroperable IT solutions providing communications across all providers and facilitiesPossible expansion of network as the consolidated/aligned organization pursues new alignment deals with high-performing physicians and/or outpatient facilitiesOperational integration, including revenue cycle mgmt, personnel, compliance, financial mgmt, etc.Official recognition from federal government as a CINContinued focus on solidifying market share within primary market; not competing outsideEngaging in payer contracting/reimbursement as a CIN based upon a combination of FFS, management assistance and at-risk (i.e., shared savings, etc.) reimbursement methodologiesStage II: “Accountable Care Era” Strategies & Implementation**A staged approach has proven an effective strategy for numerous health systems and private consortiums’ clinical integration and ACO/CIN ventures; Stages I and II typically run concurrently after the initial period (i.e., 1-3 years) of successful alignment transactions
47The Alignment and (Clinical) Integration Strategy (cont’d) Next Steps and Future StrategiesContinue to address Stage I alignment efforts to grow the physician networkContinue to address and improve infrastructure (either independently or through alignment initiatives)Continue refining/developing an internal distribution methodology that includes payment for services at more than FFS (but still a lot of the total at FFS) plus bundled reimbursementConsider the development of a care process design system (i.e., a system that offers the ability to systematically design, monitor, adjust and produce high value care delivery on an on-going basis)
48In Conclusion…Accountable care era is ushering in a wave of changes, all of which pose unique challenges for private practice physiciansPrivate practices can lack the infrastructure/resources (IT, primary care base, etc.) necessary to respond optimally to these changes, which will drive more hospital-physician alignment transactionsWhile risks/challenges exist, doing nothing will have detrimental impacts for hospitals/health systems – traditional care delivery will prove to be more costly and unsustainableFederal and commercial payers have begun supporting ACO/CIN development via programs/incentives/penaltiesALL PROVIDERS MUST DEVELOP STRATEGIC PLAN FOR RESPONDING TO ACCOUNTABLE CARE
52Glossary of Termsaccountable care organization (ACO)—a group of coordinated health care providers that care for all or some of the health care needs of a defined Medicare patient population. This business model generally focuses on moving away from fee-for-service by creating payment and delivery reforms that tie provider reimbursements to quality metrics, reductions in the total cost of care, and patient satisfaction.Affordable Care Act (ACA) –a US federal statute, also known as the Patient Protection and Affordable Care Act (PPACA) and/or "Obamacare,“ signed into law by President Barack Obama on March 23, 2010 with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government.Alignment –a form of (contractual) affiliation between two parties that entails some form of economic and legal ties intended to develop a certain level of partnership via common goals and objectives.bundled payments—a payment methodology where a provider agrees to manage a defined group of services for a specified price. Already common within hospital payment as a DRG, current bundle payment initiatives are looking to expand services to additional hospital services and post-acute for an episode of care as a means of driving improved clinical integration and transitions management. Care process delivery system –a care delivery system that methodically designs, monitors, adjusts and produces high value care delivery on an on-going basis
53Glossary of TermsClinical Co-Management Agreement (CCMA) –a moderate form of alignment between a hospital and physicians that compensate the providers for their management oversight of another entity and/or a service line with economic incentives/rewards for quality improvement and cost reduction effortsClinical Integration (CI)–a type of operational integration that enables patients to receive a variety of health services from the same organization or entity, which streamlines administrative processes and increases the potential for the delivery of high-quality healthcare.Clinically Integrated Network (CIN) –a group of coordinated health care providers that care for all or some of the health care needs of a defined patient population through the meaningful use of information technology, data sharing and reporting. CINs typically entail commercial payer sponsorship.coordinated care—a care model approach that emphasizes a patient-centered, team-based strategy for delivering coordinated health care services.electronic health record / electronic medical record (EHR/EMR)—an electronic record of patient health information that may be stored on a computer or in the cloud, and can be retrieved by anyone who has access to the system. They are a critical component in building the integration needed to operate an ACO.
54Glossary of Termsevidence-based medicine (EBM)—aims to apply the best available evidence gained from the scientific method to clinical decision making. It seeks to assess the strength of evidence of the risks and benefits of treatments (including lack of treatment) and diagnostic tests. EBM is identified through published best practices, clinical standards, and claims data to help clinicians learn whether or not any treatment will do more good than harm. When a community is connected within an ACO, this can be a powerful tool.health information exchange (HIE)—the mobilization of health care information electronically across organizations within a region, community, or hospital system. HIE provides the capability to electronically move clinical information among disparate health care information systems while maintaining the meaning of the information being exchanged. An HIE is a foundational piece of the ACO because it provides a way for EMRs to exchange information across different types of medical records.Independent Practice Association (IPA) -an association of independent physicians, or other organizations that contract with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basispatient-centered medical home (PCMH)—an approach to providing comprehensive primary care for patients by facilitating partnerships between patients and their primary care provider (PCPs). It is designed to encourage the PCP to coordinate, but not necessarily directly provide, all aspects of a patient’s care, including emergency room and post-discharge care.
55Glossary of TermsPhysician Hospital Organization (PHO) - legal (or perhaps informal) organizations that bond hospitals and their attending medical staff via joint ownership of a new legal entity. PHOs are frequently developed for the purpose of contracting with managed care plansPioneer ACO— a CMMI initiative designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. This model is designed to allow these providers to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP. There are currently 32 systems that have been chosen to participate as Pioneer ACOs across the nation, and these systems will have a portion of their compensation tied to quality measures and their ability to manage per member per month.population health management (PHM)—the health of a defined population which includes not only the amount of services they receive, but the general well-being of that group.
56Glossary of TermsProfessional Services Agreement (PSA) – a full integration strategic alignment model that does not entail employment.Traditional PSA – Hospital contracts with physicians for professional services; hospital employs the practice’s support staff and “owns” the practice’s administrative structureGlobal Payment PSA - Hospital contracts with physicians for professional services and compensates the practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilitiesPractice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employeesHybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.Quality Collaborative – another form of an integrated delivery network that functions similarly to a CIN (i.e., same goals, IT requirements, etc.) made up of a group of interdependent providers working toward the improvement of the quality of care.triple aim —CMS and The Institute for Healthcare Improvement (IHI) devised goals for improving the health care system by delivering care more efficiently. The three critical objectives include: improve the health of the population; enhance the patient experience of care (including quality, access, and reliability); and reduce, or at least control, the per capita cost of care.
57Glossary of TermsPioneer ACO— a CMMI initiative designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. This model is designed to allow these providers to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP. There are currently 32 systems that have been chosen to participate as Pioneer ACOs across the nation, and these systems will have a portion of their compensation tied to quality measures and their ability to manage per member per month.population health management (PHM)—the health of a defined population which includes not only the amount of services they receive, but the general well-being of that group.Professional Services Agreement (PSA) – a full integration strategic alignment model that does not entail employment.Traditional PSA – Hospital contracts with physicians for professional services; hospital employs the practice’s support staff and “owns” the practice’s administrative structureGlobal Payment PSA - Hospital contracts with physicians for professional services and compensates the practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilitiesPractice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employeesHybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.
58Strategic Alignment Case Studies VII. AppendixStrategic Alignment Case Studies
60CCMA Case Study: The Organization A small (<10 providers) orthopedic surgery private practice in the Midwest (“Organization A”)Offers comprehensive orthopedic services with no ancillariesHas two main hospital affiliations:Hospital #1 is the region’s major health system with numerous orthopedic service line alignment/integration initiatives underwayIts employed orthopedic group is the only other large single group in the area aside from Organization AHospital #2 is a smaller health systemA major competitor of Hospital #1 but with fewer alignment/integration initiatives
61CCMA Case Study: The Impetus Organization A, desiring to remain independent but improve its financial health over the long-term, decided to discuss alignment options with its hospital affiliatesAs Hospital #1 continued to develop its alignment/integration strategies, it approached Organization A with the potential to moderately align via a CCMAPrimary motivations for Organization A’s decision to accept Hospital #1’s offer:Opportunity to realize an additional stream of revenue from Hospital #1’s quality/cost control initiatives that are inherent to the CCMAAbility to segue more easily into a more full form of alignment/integration (i.e., a professional services agreement, clinical integration or even employment) with Hospital #1, if so desiredAbility to continue providing services at Hospital #2
62CCMA Case Study: What Took Place? Key physician and administrative leaders from both Hospital #1 and Organization A met via a series of Working Group meetings to discuss CCMA models and corresponding performance metricsParties also discussed prospective cost reduction initiatives (including a surgical implant standardization effort)Hospital #1 included Organization A’s physicians into the overall Management Services Agreement that memorializes the CCMA’s key terms and conditionsOrganization A’s physicians and Hospital #1’s orthopedic surgeons collaborating to improve the value proposition for Hospital #1’s orthopedic service line*Coker’s role was to serve as the lead transaction advisor to Hospital #1, which included facilitating the working group meetings, structuring the CCMA and the appropriate performance metrics/rewards, conducting the due diligence and financial analyses related to the deal, collaborating with legal counsel to develop definitive agreements and overall management of the transaction’s processes.
64PSA Case Study: The Organization A large (>10 providers) primary care private practice in the South (“Organization B”)Represents the region’s largest and chief primary care facility with multiple ancillary services including an acute care centerHas two main hospital affiliations:Hospital #1 is the region’s major health system with an established CIN and substantially more wherewithal than Hospital #2Hospital #2 is a smaller health system engaging in several alignment/clinical integration effortsDue to its long-standing reputation in the community as well as its strong primary care nature, Organization B is a highly coveted private practice partner for both Hospitals (and for their CINs, in particular)
65PSA Case Study: The Impetus Organization B, desiring to remain independent but improve its financial health over the long-term, decided to discuss alignment options with its hospital affiliatesOrganization B approached both Hospitals #1 and #2 with the potential for a GPPSA wherein the Hospitals contract for the practice’s professional services in exchange for a global payment rateThe Practice entity remains intactThe Practice physicians and support staff remain employed by the PracticePrimary motivations for Organization B’s decision to pursue the PSA:Opportunity to significantly improve its bottom line without being employedOff-loading of administrative burdens (i.e., real estate lease, overhead costs, etc.) to Hospital (and thereby, realizing a reduction in its cost structure)Ability to return to unaligned private practice or segue more easily into a more full form of alignment/integration (i.e., clinical integration or even employment) with the Hospital, if so desired
66PSA Case Study: What Took Place?* Organization B presented the GPPSA model to both Hospitals #1 and #2, both of which expressed great interestDuring negotiations, Hospital #2 was given exclusivity over Hospital #1 (with the ability to resume discussions with Hospital #1) due to its better reputation amongst the physician community as well as its slightly better offerDuring the exclusive negotiations, Hospital #2 counteroffered with the Traditional PSA (the main difference being the employment of the Practice support staff)Organization B accepted this change primarily because of Hospital #2’s better employment benefits packageOrganization B would be able to re-hire these individuals upon PSA terminationHospital #2 purchased all of Organization B’s ancillary services (under the condition that the Practice will be able to repurchase them at the then current fair market value upon PSA termination)*Coker’s role was to serve as the lead transaction advisor to Organization B, which included structuring the deal(s), conducting the due diligence and financial analyses related to the deal(s), negotiating the transactions and overall management of the transaction’s processes.