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Evaluating physician affiliation & network integration: a conversation for boards & administration Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen.

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Presentation on theme: "Evaluating physician affiliation & network integration: a conversation for boards & administration Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen."— Presentation transcript:

1 evaluating physician affiliation & network integration: a conversation for boards & administration Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen Pruet Matthew Roberts / Nexsen Pruet


3 agenda  Drivers  Models  Lessons Learned  What hasn’t worked?  What’s working now?  Action Planning

4 drivers  Market Dynamics  Regulatory and Payment Reform  Continuum of Care

5 market dynamics More Care (32M uninsured, Baby Boomers, Chronic Disease) Higher Quality (P4P, Shared Savings, Core Measures) Less Money ($240B Cuts, $90B Penalties) “Bottom line, if you attempt to use the same care delivery model moving forward, faced with the magnitude of reductions in forecasted revenue, you will go out of business.” ~ Michael Sachs, Sg2 accelerating physician affiliation and network integration

6 Independent Integration Alignment Accountability All Providers Payers payment reform Source: PricewaterhouseCoopers Bundled Payments Value-Based Purchasing Global Payments / Capitation Pay-for- Performance Shared Savings Fee for Service accelerating physician affiliation and network integration

7 continuum of care Source: Sg2 accelerating physician affiliation and network integration

8 potential models for physician integration  Employment  Direct  Through wholly owned subsidiary or affiliate entity  Exclusive Contracts/Independent Contractor Agreements  Co-Management/Medical Director Agreements  Clinically Integrated Networks

9 one size does not fit all…  Situational strategies must be developed.  Hospital and physicians must understand the collective strategic objective and the type of integration must incentivize attempts to achieve that objective.  Lower cost/improved quality are objectives that are supported by the federal government and private payors.

10 broad spectrum of models to consider Degree of Alignment System Resources Required High Low IndependentStrategic AllianceIntegration Paying for Call Voluntary Medical Staff Venture Arrangement Relocation Support/Income Guarantee Gainsharing Directorships Co-Marketing Co-Management PCMH CIN or IPN HEP ACO Employed Physician Enterprise Source: Sg2

11 Primary Care Physicians Primary Care Physicians Specialists Acute Care Hospital Post-Acute Care PCMH CIN Patient Centered Medical Home (PCMH): Primary care approach that supports comprehensive, team based care, improved patient access and engagement; serves as “hub” of care coordination; focuses on chronic disease management Clinically Integrated Network (CIN): Acute care hospital, multispecialty physician network and other providers committed to quality and cost improvement, with support from joint negotiated commercial contracts Accountable Care Organization (ACO): Model to promote accountability for a patient population by improving care coordination, encouraging investment in infrastructure, and redesigning the care continuum around quality Readmission Risk/Penalties Proposed Bundled Payment Initiatives $ Proposed ACO Structure $ Other Providers clinically integrated models are accelerating Co-Management: Model to align physician incentives around quality, cost and satisfaction with fair market compensation Co-Management Source: The Advisory Board | Dixon Hughes Goodman

12 what hasn’t worked?  Make physicians an offer they can’t refuse  One-sided arrangements  Command control management style  Lack of physician participation in strategic planning process  Lack of physician engagement and/or leadership  Failure to educate physician on compliance and business objectives  Failure to define and measure quality improvements or cost reductions

13 what’s working now?  Include physician in governance and management  Transparency in affiliation and integration  Continuing education of physicians of what hospitals can and will do vs can’t and won’t do  Joint strategic plan which physicians buy into, understand, and are responsible for implementing

14 what’s working now?  Cultural integration  Clear definition of goals, metrics and expectations  IT systems to track, measure and report performance  Clinical/financial accountability  Customizing/aligning compensation to organizational goals  Developing physician leadership

15 co-management model Committee Involvement Day-to-Day Management Strategic Plan Development Clinical Care Management Quality Improvement Staff Oversight Materials Management Budget Development Clinical Outcomes Patient Safety Satisfaction Operational Processes Financial Performance Physician LLC Equipment* Staffing* Supplies Hospital FMV Compensation Management Services Management Fee Distributions Investment Performance Metrics Fixed Duties Governance Committees Physicians *Only one of two may be included Source: Dixon Hughes Goodman

16 clinically integrated network (CIN) Health System Ambulatory Facilities Hospital CIN ONE Network that can Demonstrate Value Private Practice Physicians Payers and Employers Employed Medical Group Employee Health Plan

17 clinically integrated network (CIN)  Clinically Integrated Network (CIN) is commonly defined as a health network working together, using proven protocols and measures, to improve patient care, decrease costs and demonstrate value to the market  Generally, the FTC considers a program to be clinically integrated if it performs the following:  Establishes mechanisms to reduce cost and improve quality (enhance value) of healthcare services  Selectively chooses network physicians who are likely to further the value objectives  Invests human and financial capital to accomplish defined objectives

18 CIN key components Legal Structure & Governance Flow of Funds Contracting Information Technology Physician Leadership Infrastructure Participation Criteria Performance Objectives Clinically Integrated Network

19 Health SystemPhysicians Payers Quality MembershipContracting Information Technology Care Redesign Clinical Integration (CI) Network Health SystemPatients & Communities Physicians Enhanced reimbursement for demonstrated quality Transformational care redesign Co-leadership with physicians Reduction in operating costs and waste Demonstrated quality Improved coordination of care Higher patient satisfaction Improved quality and outcomes Enhanced cost efficiency Enhanced reimbursement for demonstrated quality Long-term viability of private practice Role in leadership and governance Improved network coordination Enhanced patient care and satisfaction The Value of Clinical Integration to… CIN value proposition Source: DHG

20 managing risk  Parties must discuss business risk  To hospital  To physician  Parties must discuss legal/compliance  Risk is equally shared

21 forecasting future developments  Role of medical staff  Employed versus independent physicians  Changes in laws to make integration easier  New reimbursement methodologies  New and integrated alignment models

22 action planning for your leadership team  Strategic, cultural, and economic assessment of your market  Clear definition of objectives and win-win criteria  Thoughtful consideration of alternative models  Disciplined plan and process for integration

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