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Success in the New Healthcare Market. Executive Leadership Summit. South Carolina Hospital Association. July 23, 2014. Agenda. Healthcare Today: Complex , Confounding, Challenging…Changing. Private Equity. GOVERNANCE. Quality. Market Share. Medicare. Supply Chain. - PowerPoint PPT Presentation
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Success in the New Healthcare Market
Executive Leadership SummitSouth Carolina Hospital AssociationJuly 23, 2014
THE CAMDEN GROUP | 7/23/2014 2
Topic
C-Suite Survey
Emerging Working Relationships with Physicians
Gears of Change
Physician Change and Communication
Discussion/Questions and Answers
Agenda
THE CAMDEN GROUP | 7/23/2014 3
Healthcare Today: Complex, Confounding, Challenging…Changing
Payment Reform
Health ReformAccountable Care Organization
Bundled PaymentMedical Home
Service Line Management
Primary Care
Netw
ork
s
Merg
ers
CompetitionFr
au
d &
Ab
use
Telemedicine
Transparency
People
Ambulatory Centers
Physician Employment
Bon
d
Rati
ng
Joint Ventures
Clinical Integration
Quality Patie
nt
Safe
ty
Supply Chain
Revenue Cycle
PATIENTSATISFACTION
MedicalEducation
Leadership
GOVERNANCE
Evidence Based Medicine
Readmissions
GroupPractice
EMR
CPOE
PHO
MSO
Gainsharing
ManagedCare
P4P
Volume
Market Share
Physician Extenders
Regional Health Information Organizations
Industry Consolidation Networks
Private Equity
Centers of Excellence
Comparative Effectiveness Research
Health Navigators
IT
AC
OH
ealth Insurance Exchanges
Care RedesignCAPITAL
Population Health Management
Medicare
Capitation
Medicaid
THE CAMDEN GROUP | 7/23/2014 4
The Triple AimTM set forth by the Institute for Healthcare Improvement: Optimal care delivery within
and across the continuum Focused on improving the
health of the population and cost of care
Right care, Right place, Right time
Institute for Healthcare Improvement: The Triple AimTM
Source: http://www.ihi.org/IHI/Programs/StrategicInitiatives/TripleAim.htm
Triple AimTM
PopulationHealth
Experienceof Care
Per CapitaCosts
THE CAMDEN GROUP | 7/23/2014 5
Does your organization consider each of the following to be a threat or an opportunity?
Chief Executive Officer: Threat or Opportunity?
Issue
Healthcare reform, overall
Health information exchanges
Health insurance exchanges
Reduced reimbursements
Industry consolidation
Shared-risk, shared-reward payments
Primary care redesign
Care continuum relationships, clinical
Care continuum relationships, financial
Retail healthcare (e.g., clinics, pharmacies)
Population health management
Threat
36%
7%
20%
91%
37%
20%
9%
4%
13%
30%
8%
Opportunity
52%
76%
53%
5%
44%
62%
74%
89%
66%
43%
75%
Source: HealthLeaders, January/February 2014
THE CAMDEN GROUP | 7/23/2014 6
Do you believe the healthcare industry will
make the switch from volume to
value?
Chief Executive Officer’s: Switching from Volume to Value
YES72%
NO
28%
Source: HealthLeaders, January/February 2014
THE CAMDEN GROUP | 7/23/2014 7
Which are the top 3 areas your organization must improve or address in order to reach your financial targets in the 3-year timeframe?
Top Three Areas to Improve or Address
Source: HealthLeaders ,January/February 2014
Physician-hospital alignment
Cost reduction
Care model (e.g., population health, medical home)
Strategic partnerships with providers
THE CAMDEN GROUP | 7/23/2014 8
What are the top 3 areas you will focus on next to control costs?
Chief Executive Officers’ Cost-cutting Focus
Source: HealthLeaders, January/February 2014
Expense reduction via process improvement
Labor efficiencies
Expense reduction via supply-chain efficiencies
Capacity management
THE CAMDEN GROUP | 7/23/2014 9
Hospital and Health System Pressures
Sequestration
SGR(Reimbursement
Reduction)
Credit RatingRequirements
EmployedPhysicianLossesThroughput
VolumeDeclines
OperatingCosts
CapitalRequirements
HealthInsuranceExchange
Hospital Health
Systems
THE CAMDEN GROUP | 7/23/2014 11
Hospital Employment of Physicians
Factors driving physicians to seek employment include: Desire for economic stability/
security Changes in government
payments to doctors Rising operating expenses The growing emphasis on patient
safety and quality Lifestyle (e.g., predictable hours,
less calls) Inability to recruit new physicians
We Have All Seen the Trends…
Increasing Regulation
Rising Expenses
Merritt Hawkins suggests that the industry will see 75 percent of the nation's physicians employed by hospitals in 2014.
Flat Revenue
THE CAMDEN GROUP | 7/23/2014 12
Round 1: 1990’s
We heard healthcare financial models changes were coming
The first groups to be employed were physicians in the middle or near the end of their practice cycles
Contracts were often salary-based Practice assets were financially
evaluated (including goodwill) and paid for
No to minimal discussions regarding quality of care, patient satisfaction, or cultural change was discussed
Healthcare financial reimbursement and payment models did not change significantly
Salaried physicians did not produce to cover costs
Over practice management developed
Hospitals stained losses on operational balance sheets
Many contracts and relationships disintegrated
Why What Happened
THE CAMDEN GROUP | 7/23/2014 13
Round 2: Mid to Late 2000’s
We heard healthcare financial models changes were coming
The new physicians had substantial educational debts
Entering private practice had increased financial cost and risk
New physicians wanted work/life balance
New physicians did not require practice asset acquisition
Some discussions regarding quality of care, patient satisfaction
No-to-minimal cultural change was discussed
Healthcare financial reimbursement and payment models did not change significantly
Salaried physicians did not produce to cover costs
Over practice management developed
Hospitals sustained losses on operational balance sheets
Many contracts and relationships disintegrated
Why What Happened
THE CAMDEN GROUP | 7/23/2014 14
Round 3: Current and Together Again (“Divorces”)
Healthcare financial models changes are here
Variable based on region and size of system
New physicians have substantial educational debts
Average of $170,000 Entering private practice is not a viable
option in many parts of the country New physicians demand work/life
balance Discussions regarding quality of care,
patient satisfaction are occurring Culture change is starting to be
discussed
Healthcare financial reimbursement and payment models are changing
Providers are leading the charge Salaried physicians may not produce to
cover costs on a pure relative value units (“RVU”) metric
New compensation models New and improved practice
management is being developed Maybe
Hospitals reevaluating physician “losses” on balance sheets
Investments Many contracts and relationships are
still at risk Longevity bonuses are more common
Why What Happened
THE CAMDEN GROUP | 7/23/2014 15
Pyramid of Success
Defined Population
Commercial CMS Dual Eligibles Medicaid
HMO PPO Direct to Employers Insurance Exchange Bundled Payment
ACO-MSSP Pioneer ACO Medicare Advantage Bundled Payment
HMO HMO Fee-for-Service
Community Hospital
Access Points(UCC, FQHCs, ED, Health Plans, Physician Offices, Retails Clinics, etc.)
THE CAMDEN GROUP | 7/23/2014 16
Physician-Hospital Integration: Driving the Value Proposition
IntegrationLimited Full
Low
High
COE/SpecialtyInstitutes
SpecialtyCo-management
Managed CareShared Risk
Clinical Integration
Medical FoundationPhysician EmploymentRHC, FQHC, Community Clinics
AccountableCare
IDN/Health Plan
Medical Home
Bundled Payments
THE CAMDEN GROUP | 7/23/2014 17
Evolving From To
From
Pay for procedures
Fee-for-Service
More facilities/capacity
Physicians/Hospitals acting independently
Physicians and hospitals working in parallel
Hospital-centric
Treat disease/episode of care
To
Pay for value
Case rates/budgets/capitation
Better access to appropriate settings
Physicians/Hospitals collaboration: global risk
Physicians and hospitals working in a highly integrated manner
Continuum of care (population-centric)
Maintain health
THE CAMDEN GROUP | 7/23/2014 18
Employment Co-Management/Bundled Payment Accountable Care Organizations Clinically Integrated Organizations Network Population Health Management Plan-to-Plan
Emerging Physician Relationships
THE CAMDEN GROUP | 7/23/2014 19
The Traditional Primary Care Practice Model Is Changing
Single or small group practice primary care clinic no longer economically sustainable.
Patient Centered Medical Home
Past
Future
THE CAMDEN GROUP | 7/23/2014 20
Hospital contracts with a physician organization, under which the physicians are granted input and managerial authority to design and enforce clinical and operational standards. Generally, the physicians provide only their time and no other personnel or items.
Co-Management Structure
PhysicianGroup/Venture
HospitalCo-Management Service Agreement (“Co-MSA”)
ExecutivePhysician
Director and Physicians
Service Line/Department
Director
Service LineCo-Management
Committee
THE CAMDEN GROUP | 7/23/2014 21
Physicians Are Involved In Each Aspect of Operations
Possible Co-management Responsibilities
Co-management company governance structure includes various committees for managing all aspects of planning and care delivery (i.e., Quality Care Committee, Technology Committee, Operations Committee, Finance Committee, Research
Committee)
Hospital
Physicians
Financial and Operations Management oversight of staffing Negotiation of service arrangements Operating and capital budgets Length-of-stay management and patient throughput
Planning and Business Development Strategic plan development Technology planning Marketing strategies Clinical research plan
Quality of Care Development of care protocols Quality management and improvement policies Quality outcomes Patient experience
THE CAMDEN GROUP | 7/23/2014 22
ACO responsible for: Clinical care management (clinical integration) Capture data for continuum of care Measure and monitor costs and quality
ACO StructureInfrastructure
(Provided or Contracted ACO Operations)
Information TechnologyEMR, CPOE, PACSData warehouseReportingHIEWeb portal
Care ManagementHospitalists and
IntensivistsCMODisease managementClinical protocolsAdvanced analytics and
modelingCall centerUtilization managementKnowledge
management
Health NetworkDelivery network
Financial/Payment Systems
THE CAMDEN GROUP | 7/23/2014 23
Oregon NetworkIDN/ACO
Network Population Health Management
Partnerships Drive Success and Sustainability
NW NetworkIDN/ACO
Columbia NetworkIDN/ACO
Accountable Care
Infrastructure
IDN/ACO
Umbrella Network IDN/ACO
Physicians Physicians Physicians
THE CAMDEN GROUP | 7/23/2014 24
Goal is Balance
HE
AL
TH
PL
AN F
ACILITIES
CL
INIC
IAN
AL
IGN
ME
NT
Clinically Integrated Network
THE CAMDEN GROUP | 7/23/2014 25
Plan to Plan/Health Plan
Health Plan(BC, BS, Aetna,
United, etc.)
Your Health Plan
Retain 15 - 20%
Post-Acute Services
HospitalsAmbulatory
ServicesPhysicians Pharmacy
Facilities
THE CAMDEN GROUP | 7/23/2014 26
Getting the Gears of Change Aligned
Cultural Change
Care Model
Change
Payment Change
THE CAMDEN GROUP | 7/23/2014 27
Change: What’s In It For…Hospitals?
Participate in new models of care
Enhance quality improvement results
Improve patient care and satisfaction
Transition to new payment models
Improve connectivity and relationships with
physicians
THE CAMDEN GROUP | 7/23/2014 28
Change: What’s In It For…Physicians?
Care Management Support
Participate in new models of care
Financial Rewards
Enhance Connectivity with Colleagues
Improve Patient Health and Satisfaction
THE CAMDEN GROUP | 7/23/2014 29
What Incentives Are the Right Incentives?
Strategic Focus or GoalMeasures for Variable
Compensation/Incentives
Patient Outcomes
Patient Satisfaction
Group Profitability/Performance360O Reviews“Citizenship”
Group Profitability Overall
Financial Performance
Quality
Service
Teamwork
New Services/Growth
Productivity: Panel size, wRVU, Collections
Expense management Profit/Loss by site
THE CAMDEN GROUP | 7/23/2014 30
Incentives must be large enough to motivate behavior Pay at risk component is influenced by the interplay of 2
variables: Physician’s ability to impact the variable Value to the physician
Bonuses measured/paid more frequently reinforce desired behaviors
Incentive-Based Models
Pay at Risk Physician Ability to Impact Value
10% Small Low
15% Key Items Nice Reminder
20% Moderate Motivational
25% Significant High
>30% Driving Behavior Very High
THE CAMDEN GROUP | 7/23/2014 31
Performance Measures Panel Size Charges RVUs Encounters Net revenue
Staff review Participation in
Group activities Protocol
compliance Availability Medical records
audits Coding compliance
Patient satisfaction Open panel Grievances Peer review Clinical quality Functional status
Visits PMPM Pharmacy utilization Specialty/Ancillary
utilization ED utilization Charges/Case or
Visit
Productivity
Service/Quality
ResourceUtilization
Citizenship
DesiredPerformance
THE CAMDEN GROUP | 7/23/2014 32
A Challenging Time For Change
Many do not believe there is a need to change Transition during a schizophrenic time of payment models Loss of autonomy
Lose Control Office Patients NPs/PAs/Others
Reimbursement continues to decrease Expenses continue to increases Expanding knowledge-base
Multiple Factors
THE CAMDEN GROUP | 7/23/2014 36
Make a Case for Change
Create need for change based on data and information Quality metrics Outcomes New financial metrics and payment models Industry market trends
Address new emotional dynamics that may arise Implement change by supporting the processes needed for
the change Sustain change by sharing results of success
Quality Financial
Why, How, What
THE CAMDEN GROUP | 7/23/2014 37
Identify the “right” people Formal and informal leaders Need some with positions and power to get things done Expertise and credibility to influence others
Start with a small number of clear goals Develop an environment of trust and commitment within the
team
Group Dynamics for Change
THE CAMDEN GROUP | 7/23/2014 38
Create an “Integrated” Culture
Transparency
Patient-Centered
ContinuousImprovement
Partnership/Collaboration/
Trust
Accountability
THE CAMDEN GROUP | 7/23/2014 39
Communicate Progress of What is Being Changed
Start with Sharing the Vision
Education OngoingFocused as needed
A Constant and Continuous
Communication PlanMultimedia
Address NaysayersPrivatelyPublically
Engage Grassroots Share Successful
Results
Non-Physician Staff is Just as Important!
THE CAMDEN GROUP | 7/23/2014 40
Supply training, support, and opportunities for success (i.e., make life easier)
Remove identified barriers that impede progress to the goals and vision
Encourage and value (monetary) involvement Organization must commit the time and necessary resources
Enable Implementation of Change
THE CAMDEN GROUP | 7/23/2014 41
Target a few agreed upon metrics of success that resonate with providers and the population
Secure broad acceptance through communication and education
Communicate success enthusiastically Include and learning that led to success into the plan Engage others that want to improve
Target Short-Term Wins (Walk Before Run)
THE CAMDEN GROUP | 7/23/2014 42
Build and Expand On Success
Any small short-term win can lead to bigger longer term wins Build on what works, change what does not See what works and continue to improve on it Continue monitoring metrics an reporting results – good and
bad Achieving tangible results as quickly as possible Build infrastructure that expands, and emphasizes new
behaviors Continue to align financial rewards to behavior change Add new metrics, models, processes, and programs
THE CAMDEN GROUP | 7/23/2014 43
Cultural Transformation
Start With A Vision
Plan for implementation
Resources and budget
Technology Metrics for
success
Short-term wins, long-term sustainability
Reassess, revise, revisit
Gap assessment
Integrated model design
Rationale Empowerment
and accountability
Interviews Committee
Meetings Vision
THE CAMDEN GROUP | 7/23/2014 45
Understanding risks and rewards Determining individual and organizational expectations Full transparency and confidentiality The legal certainty and business reality mismatch
Keys To Hospital-Physician Alignment Strategies
THE CAMDEN GROUP | 7/23/2014 46
Not all physicians are the same Employed vs. independent Primary care vs. specialists Exclusive medical staff privileges vs. “splitters” New recruits vs. veterans
Not all terminology has universal or standardized meaning Each model has pros and cons; none is perfect The engagement process is often more important than the
employment model selected
The Fundamentals
THE CAMDEN GROUP | 7/23/2014 47
Physicians have unrealistic expectations about the value of their practices or their services
Physicians expect hospitals to be the “deep pockets” while reimbursement catches up with the new risk/reward continuum
The compensation methodology is not adequately tied to performance improvement and behavior change
Management of physician practices different than hospitals or departments
Challenges
THE CAMDEN GROUP | 7/23/2014 48
Driving Issues
Hospital’s and health system’s ability to manage employed physicians and physician practices Billing (if employed) Efficiencies Staff
Physicians lose autonomy “Bosses” Perceived lack of respect
Behavior change Culture
Not Addressed in Contracts - Maybe They Should Be
THE CAMDEN GROUP | 7/23/2014 49
Failing to address the hospital’s shortcomings up front: Hospital management is not comfortable sharing power and
control with physicians Weak practice management system Hospital is unsure how physicians actually impact hospital
finances Failing to address leadership issues:
Medical directors and physician leadership cannot or will not adjust
Physicians are given inadequate accountability/responsibility Lack of appropriate governance roles for physicians
Common Mistakes
THE CAMDEN GROUP | 7/23/2014 50
Treating a medical group as just another department of the hospital
Assuming that one approach will work for all medical groups/physicians
Blindly copying the competition’s model Failing to build flexibility into the model Choosing the wrong compensation model for a particular
medical specialty or service line Failing to do adequate due diligence Over-promising/Under-delivering Delivering an inconsistent message Refusing to deal with “the elephant in the room”
Common Mistakes
THE CAMDEN GROUP | 7/23/2014 51
Develop strategic plan to address the need for uniform compensation model vs. potential deviation for regional assets or hard to recruit specialists Do not sacrifice model for individual physician or group - most
likely, physician will not be a long-term partner Twenty percent of compensation needs to be at risk for behavior
modification Define compensation parameters that apply to all - avoid “car
negotiation” mentality
Lessons Learned
THE CAMDEN GROUP | 7/23/2014 52
Break down silo mentality to avoid federation of providers and develop true group culture
Do not prioritize growth over cultural compatibility Elevate physicians into leadership positions and create
physician-led committees and/or Clinical Governing Council Engage physicians in selection process for electronic medical
records and other IT systems to allow for effective information management to achieve strategic goals
Beware of insurance companies as the new competitor to your physician-base
Develop metrics to justify employed physician subsidy
Lessons Learned
THE CAMDEN GROUP | 7/23/2014 53
Understand that divorce is hard and develop strong front-end due diligence process (e.g., including coding and compliance review) including values alignment
Evolve compensation model from production-based to mirror change in reimbursement system to value-based/bundled payment
Lessons Learned
THE CAMDEN GROUP | 7/23/2014 54
Increasing need to be at or above market due to competition and shortages in key specialties
Still focused on productivity, but quality, utilization, and behavior measures increasingly important due to new payment models
Efficiency (cost of care) of the overall group and care team (members practicing at “top of license”) critical in “new” models
Benefits and intangibles (work/life balance, no politics, etc.) becoming more important to attract physicians
Strategies for engaging part-time physicians More frequent adjustment of compensation design to respond
to changing market conditions and payment models
Trends in Compensation
THE CAMDEN GROUP | 7/23/2014 55
Recognition of new specialized roles for primary care physicians in particular – patient-centered medical home team leader, manager of post-acute care, chronic disease manager
Longevity bonuses starting to become more frequent
Trends in Compensation
THE CAMDEN GROUP | 7/23/2014 57
But If We Refuse to Change
Choluteca Bridge After Hurricane Mitch
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