1. PHYSICIAN- HOSPITAL ECONOMIC ALIGNMENT Becker’s Hospital Review Annual MeetingMay 17, 2014

2. AGENDA: THREE COMPONENTS Goal is to Improve Quality, Process, Costs Hospital-Physician Alignment Opportunities for Care Coordination, Waste Reduction Clinical Re-Design Documenting the Outcomes of the Relationship Manage, Measure, Compliance 2

3. 3 MODELS AND STRATEGY

4. TRADITIONAL HOSPITAL-PHYSICIAN RELATIONSHIP 4 Physician clinical decisions Independent Delivered Patient Care Hospital Pays for Care Independent decisions No relationship to quality, cost, or defined process Inefficient & Uncoordinated Care No concern for how Products & Services are used

5. HOSPITAL-PHYSICIAN ECONOMIC RELATIONSHIP 5 Physician clinical decisions Coordinated Patient Care Hospital Pays for Better Outcomes & Less Utilization Information Driven Decisions MD concerned about quality, cost, utilization & process

6. MANY TYPES OF HOSPITAL-PHYSICIAN ALIGNMENT Bundled Payments Risk Arrangements Gainsharing Type Model s Clinical & Cost Reduction Co-Mgt Medical Director Clinical Improvement 6

7. NUMEROUS HOSPITAL-PHYSICIAN ECONOMIC MODELS Co- Management Service Line Specific General Medicine, Cardiac, Ortho, etc.. Pre-Set Payment Amount Divided Evenly Bundled Payments CMS: Hospital Post Acute: Medical & Surgical MSDRG. Gainsharing: 50% professional fees Commercial efforts Procedures & OB. Gainsharing opportunities OIG Approved Gainsharing 14 approved OIG Cardiac, Ortho, Spine & Anesthesia Gainsharing:: 50% of identified savings. 7 Three examples

8. THE OPPORTUNITY Point A Point B Process Analysis Reduce Complications Learn costs Manage with Hospital Invent New Processes INFINITE WAYS TO DELIVER CARE TO SAME PATIENT TYPE RE-ENGINEER CARE

9. 9 Average Suture Cost $622

10. 10 Benchmark Average Cost $118

11. THE UNTAPPED POWER OF PHYSICIANS  10% Discount on Suture  Cost/case: $622  Current annual suture cost: $311,000 Annual Savings: $31,000  Obtaining Benchmark Level Utilization  Best in class Benchmark: $118  Annual Cost: $59,000 Annual Savings: $252,000 11 PRICE UTILIZATION

12. 12 Appreciation to the staff of Chicago Health System, a part of Tenet Health CLINICAL RE-DESIGN

13. 13 HIGH COST/HIGH RISK PATIENTS No single good predictive model ACO: HCC Frequent ED Frequent admits Doctor referral HMOI: Verisk model Bundle: Care Team Connect

14. AMBULATORY Identify gaps in care Get data into docs hands Help with process of outreach and coordination Help with office re- design Diabetes, COPD/Asthma, CHF Reduce ED visits OBS vs. admits 14 STEPS FOR CHANGE BIGGEST BANG FOR THE BUCK

15. COMPLEX CASE MANAGEMENT Identify high risk Reach out to patient with participation of PCP Work with patient on coordination, self care & investment in their health 15

16. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 16 Complex Case Management Utilization by Program Duration Visible trends in both charts, yet neither show statistical significance Sharp trends driven by a few high utilizers in a relatively small pool of members

17. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 17 Complex Case Management Utilization vs. Baseline

18. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 18 Complex Case Management Total Medical Expense and Member Months July – September post significantly lower than pre

19.  Hospital notification about ED and admissions for Bundles/ACO patients  Early assessment/enrollment into CCM 19 HOSPITAL Hospitalist LOS management Care re-design for bundles

20. 20 POST ACUTE STRATEGY

21. POST ACUTE PLATFORM ACROSS ALL STRATEGIES ACO Patients BP Patients CCE CHS Others Service requirements Metrics & Outcomes PCP Connections CHS Central Tracking Financial Performance Quality Metrics Patient Experience Growth Preferred Provider Network

22.  Used generally available quality criteria  Some additional work  Now push back on LOS for bundles 22 POST ACUTE PROVIDERS History:  Started with 140 SNF/rehab and 30 HH partners  Narrowed down to 5 HH and 30 SNF/Rehab  They all agreed to play nice in the sandbox

23. CRITERIA FOR POST ACUTE PROVIDERS 23 24/7 Geographic coverage EMR Visit frequency Employed RN Employed therapists JCO/CHAP certified Medicare Medicaid Managed care Psych Wound Care

24. 24 MonthlyJanFebMarAprMayJunJulAugSep % of falls with injury % pressure ulcers (facility acquired, non hospice) % of UTI (facility acquired) % residents receiving flu vaccine % residents receiving pneumonia vaccine % restraint use % using in dwelling catheter (excluding present on admission for short term use) % residents with significant weight loss % residents receiving Hospice Services % residents receiving Palliative Consultation Services 30 day readmission rate all causes 30 day readmission rate CHF, AMI, PN MONTHLY SNF QUALITY REPORTING

25. 25 MANAGE, MEASURE, COMPLIANCE

26. 26 ELEMENTS OF SAFE HARBOR  Term of at least one year  In writing by both parties  Specify aggregate payment and set in advance  Payment is reasonable and fair market value  Compensation not related to volume or value of business  Exact services to be performed must be outlined  Services are commercially reasonable

27. 27 THE CHALLENGE IS EXECUTION LEGAL CONTRACT MGMT DUTIES FAIR MARKET VALUE TERMS

28. 28 TRACKING IS A MANUAL PROCESS ROOM FOR ERROR FRUSTRATING FOR PHYSICIANS COMPLIANCE RISKS EXPENSIVE MISTAKES Paper process

29. 29 DON’T BE THE NEXT HEADLINE

30. 30 CONTRACT INTEGRITY AND PHYSICIAN ENGAGEMENT Time Log Automation Financial Reporting

31. 31 PHYSICIAN PAYMENTS – RISK CONTRACTS Quality Measures Met ? Did physician reach the threshold for payment, if yes Cost Measures Met ? Did physician stay within cost expectation for DRG Physician Monthly Payment Made

32. 32 ADJUDICATE AND ANALYZE

33. 33 BEST PRACTICE  Payments to physicians should be made only with proper documentation  Check against agreement terms  Invest in technology that prevents errors and respects physician time  Audit time log duties  Adjudicate payments monthly and review all agreements annually

34. 34 CONTACT INFORMATION Joane Goodroe, jgoodroe@jgoodroe.comjgoodroe@jgoodroe.com Gary Wainer, DO, gwainer@cadence.orggwainer@cadence.org Gail Peace, gail@ludiinc.comgail@ludiinc.com