1. Capitalizing on Change: Improving Value and Community Health HFMA HSCRC Workshop January 31, 2014

2. Who We Are 275-bed hospital located in Western Maryland opened in 2009 Consolidated two campuses into a new “greenfield” site Western Maryland Health System Cumberland, MD

3. Located in one of the poorest counties in one of the nation’s richest states Skilled nursing facility with 88 beds Region’s largest employer with 2,200 employees 250 physicians on staff 1of 9 Trauma Centers in Maryland and the only Open Heart Surgery program west of Baltimore Part of a newly formed three health system group in Western Maryland called Alliance Health Medicar e 56% Medicaid 13% Self- Pay 5% Commercial 12% Other 14% Payor Mix

4. Facts About WMHS $330 Million in operating revenues 14,000 admissions per year (projecting an ½ % increase over last year) 50,000 ED visits per year 1,100 deliveries per year Over $300 million economic impact on the region annually Community Benefit of $48 for FY2013

5. Service Area

6. What is Total Patient Revenue  Originally one of 10 Maryland hospitals as part of a demonstration project  A shift from volume-based care delivery to value based  Encourages wellness and cost effective delivery of care instead of caring for the ill and maximizing volumes  Revenue is 100% fixed; no change based on fluctuations in volume or changes in service  Providing care in the most appropriate setting/location  Previous competitors become partners with aligned objectives

7. Transitioning to TPR Aging and declining population in our region Volume changes Payment cuts Economic incentives offered by the HSCRC Opportunity to jump on the learning curve Triple aim of health care reform Future of health care delivery

10. How Has the Focus of Planning Changed? Typical Strategic Plan FOCUS: Fee for service- More is Better Grow Revenue Grow Market Share Increase Volumes –Sell More –Do More Improve Quality WMHS Strategic Plan FOCUS: Deliver Care Differently Care Delivery Physician Collaboration Patient Engagement Business Model –Cost Management –Partnerships –Unregulated Services

11. What Do We Need to Do to Be Successful? Success Think Innovatively Redesign Care Focus on Market Competition Align the Hospital and Physicians Collaborate with TPR Hospitals Reduce Costs

12. Managing Under TPR Shift emphasis from volume to value Reduce admissions & re- admissions Provide care in the most appropriate location Create stronger patient engagement Reduce variation in quality Improve payment alignment with physicians Re-invest savings Work collaboratively with community partners Focus on better community access Increase health & wellness activities on a regional basis Reduce utilization rates in ED, inpatient, observation and ancillary Improve chronic care delivery Keys to Success

13. Our Challenge Reorganizing the delivery system “ Reorganizing the delivery system is unbelievably resource intensive and fraught with unintended consequences.” Dr. Robert Galvin, Blackstone Consulting (former Chief Medical Officer for General Electric)

14. TPR Collaborative The 10 hospitals under TPR formed a Collaborative in year one of our agreement Opportunity to exchange ideas & learn from each other by sharing best practices CEOs, CFOs, COOs meet monthly along with CMOs and Care Coordinators Engaged consultants to assist with development of data & scorecards to track progress, show the differences between fee for service & TPR and creating keys to success Negotiated the next agreement as a Collaborative and not individually as was done the first time around

15. TPR Collaborative Hospitals

16. Reimbursement in Maryland Quality Based Reimbursement – based on improving patient satisfaction and core measure results (1% of revenue at risk) Pay for Performance – based on reducing potentially preventable conditions (3% of revenue is at risk) Increased focus on hospital-acquired conditions Reducing re-admissions – yet to come but an important component of TPR Quality Indicators Affect Reimbursement

17. QBR for FY 12 Core Measures -$547,635 Potentially Preventable Conditions -$430,285 Patient Satisfaction -$234,701 PotentiallyPreventableReadmissions Impact coming Total Lost Revenue: $1.2 Million

18. QBR for FY 13 Core Measures $56,064 Potentially Preventable Conditions $129,954 Patient Satisfaction $24,028 PotentiallyPreventableReadmissions Impact Coming Positive Swing of $1,422,667

19. Engaging Physicians Created the President’s Clinical Quality Council - Twelve Physician Leaders/Early Adopters Improved the coordination of care, both internally and externally Enhanced the quality of care provided Created a Pay-for-Performance initiative Used data to improve care Focused on issues such as denials, LOS, PPCs, readmissions and use rates Addressed unnecessary inpatient care

20. Operational Challenges Under TPR Address high utilizers with multiple co-morbidities - 1972 patients accounted for $140 million of annual cost Maintain market share while reducing admissions Expand primary care access Focus on unnecessary utilization & appropriateness of Admissions Decide what to do with volume growth programs Educate the internal stakeholders on the changes in care delivery Meet the challenge of health care change by reshaping the community’s approach to seeking care

21. Successful Strategies Under TPR Added primary care practices where our most vulnerable patients reside Created the Center for Clinical Resources consisting of a multi-disciplinary team of NPs, RNs, Dieticians, Pharmacists, Respiratory Therapists & Care Coordinators Partnered with newly opened urgent care centers as well as previous competitors Focused on keeping independent physicians who no longer admit engaged with the health system Pre-Acute Care Focused

22. Successful Strategies Under TPR Targeted high utilizers of services - 1,972 patients Focused on appropriateness of admissions versus the number of admissions Reviewed daily every readmission within 30 days to determine the reasons for the readmission Formed team of clinicians to round daily on patients with a LOS of 3 days or longer Moved to nurses rounding hourly on every patient & performing shift report at the patient’s bedside Acute Care Focused

23. Successful Strategies Under TPR Developed team of physicians & nurses to work with non-compliant physicians related to readmissions, use rates, denials, LOS & potentially preventable conditions Revamped our patient education program Assigned Pharmacy staff to the ED & inpatient units for medication reconciliation & rounding on patients Created a dedicated care coordinator for Behavioral Health Acute Care Focused

24. Successful Strategies Under TPR Implemented Clinical Documentation Improvement program to ensure accurate documentation of POA conditions Started quarterly Hot Topics sessions for physicians and advanced practice professionals where focused education is needed and/or required Changed discharge planning process to cover patients until they see their primary care provider Began discharging patients with their medications Acute Care Focused

25. Successful Strategies Under TPR Established a Care Link Coordination Team that follows up with all discharged patients with a focus on frequent utilizers & those over age 62 Expanded Home Care resources to address a 35% increase in visits Created a team of Community Health Care Workers Created Transition Care Coordinators within our own skilled nursing facility & SNF community partners Connected patients to services they will need post discharge Post-Acute Care Focused

26. Outcomes Under TPR & QBR Improved coding accuracy through use of software programs Now perform a urinalysis on every patient to identify UTIs present on admission Better connection of patients to services they need post discharge Expanded Care Coordination 24/7 System wide w/ concentration in the ED Created more partnerships with our physicians Center for Clinical Resources staff visit high risk inpatients prior to discharge Much greater accountability on the part of staff in driving quality & reducing cost Process Improvements

27. Outcomes Under TPR & QBR Decreased tobacco use during pregnancy Reduced the rate of Behavioral Health admissions Improved the infant mortality rate Experienced improvement in cancer mortality rate Reduced the rate of ED visits for Asthma Improved Community Health

28. Bottom Line We have moved from a care delivery standard that emphasized convenience for us to the gold standard where care is delivered as we would want it provided to us and every member of our family.

29. Results So Far Inpatient Admissions 32% over 4 years Readmissions to 9% in FY13 from high of 16.68% in FY11 SNF Readmissions by 38% Inpatient Behavioral Readmissions 9% = $470K Savings ED Use Rates 3% and ED Admissions 6% Observation Patients 10% Diabetic Readmissions 22 % and Diabetic ED Visits 29 % CHF Readmissions 18% and ED Visits 8% = $383K Savings

30. Results So Far Net Revenue Over Expenses Expenses In FY13 In FY13 $15.1 Million $15.1 Million or or 5% Operating Margin YTD for FY 14 is $12.1 Million or 8% operating margin

31. What’s Next Adding community care coordination in primary care clinics and physician offices Using home monitoring technology linked to Meditech Expanding SNF Care Transition Coordinator to a SNFist (Phy/NP) and taking the program to other SNF’s in the region Creating a dedicated Palliative Care program Forming a Clinically Integrative Network with our physicians and other partners, then establishing an ACO with our Alliance partners Expanding the Center for Clinical Resources to include medication management & high-risk renal patients Creating More Value

32. What’s Next Continue to work on Community Health needs:  Reducing ED visits for hypertension  Lowering obesity rates for children and adults  Decreasing tobacco use by adults  Reducing drug-induced deaths Improving Community Health

33. Successor TPR Agreement Continue to control cost; improve quality; create greater alignment with physicians; monitor utilization & strengthen our care coordination process Continued focus on reducing all-cause readmissions Get unnecessary cost out of the system / elimination of waste Improve the health status of the patients we serve Develop a scorecard for TPR hospitals Continue to re-invest the savings under TPR Expect to share savings with the State Began as of July 1, 2013

34. Ongoing Challenges Use rates are still too high LOS has crept back up More work needs to be done on PPCs/Hospital-Acquired Conditions Misaligned incentives with physicians 30% rate of “no shows” for follow up appointments in the Center for Clinical Resources Although improvements have occurred in the overall health of our population, work still needs to be done there, as well in areas such as social & economic needs Many social issues exist among our residents and patients; WMHS has become the safety net for the region

35. Concluding Thought In the last three plus years, WMHS has become a very different organization by focusing on a value- based care delivery system and one that has been able to embrace the components of the triple aim of health care reform. It wasn’t easy in the beginning, but we are now much better positioned for a challenging health care future.

36. Questions?