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Health Care Advisory Board
Transformation Lessons and Issues
Hospital and System Experiences with Medical Homes— Pathways to ACOs?
Lisa Bielamowicz, MDManaging Director
The Advisory Board [email protected]
Road Map
2
3
1
3
Medical Home Investment Imperatives
Revisiting the Value Proposition
The Care Management Mandate
Changing Role of Primary Care for Health Systems
4
Evolution of Primary Care Investment Strategy
Viewing Primary Care in a New Light
Source: Innovations Center interviews and analysis.
Today Transition Potential Future
Primary Care as Referral Feeder, Mission Extension
Primary Care as Financially Sustainable Portfolio Entity, Future Payment Risk Buffer
Primary Care as Vehicle for Care Continuum Integration, Population Health Improvement
Decelerating Price Growth
Continuing Cost Pressure
Shifting Payer Mix
Deteriorating Case Mix
• Medical demand from aging population threatens to crowd out profitable procedures
• Incidence of chronic disease, multiple comorbidities rising
• No sign of slower cost growth ahead• Drivers of new cost growth largely
non-accretive
• Baby Boomers entering Medicare rolls• Coverage expansion boosting
Medicaid eligibility• Most demand growth over the next
decade comes from publicly insured patients
• Federal, state budget pressures constraining public payer price growth
• Payments subject to quality, cost-based risks
• Commercial cost shifting stretched to the limit
Four Forces Shaping Future Margins
5
Financial, Clinical Profiles Shifting Dramatically
Today’s Reality
Source: Health Care Advisory Board interviews and analysis.
Moving Ever Closer to Single Payer
6
Medicare to Constitute Majority of Discharges by 2021
Source: Health Care Advisory Board interviews and analysis.
Inpatient Volume by Payer Class
Medicaid
Commercial
Self Pay
Medicare
0.3%
Medicaid
Commercial
Self Pay
Medicare
2011 2021
Shifting payer mix
More Medicine On the Horizon
7
Public Payer Volumes Composed of Predominantly Medical Cases
Source: Health Care Advisory Board interviews and analysis.
Medical and Surgical Shares of Volume, by Payer
Medical Medical Medical
Surgical Surgical Surgical
Commercial Medicare Medicaid
Deteriorating Case Mix
Patient Mix Problem Bigger than Payer Mix Problem
8
All Else Equal, Case Mix Deterioration Hurts More than Payer Shift
Source: Health Care Advisory Board interviews and analysis.1) Based on five percentage point reduction in surgical share of inpatient volume.
Margin Impact of Potential Payer Mix ShiftTypical 300-bed Hospital
Margin Impact of Potential Case Mix Shift1
Typical 300-bed Hospital
Key Characteristics
Welcome to Pleasantville
9
Average Care for Average People
Source: Health Care Advisory Board interviews and analysis.
Case in Brief: Pleasantville Hospital
• Health Care Advisory Board model hospital
• Revenue, cost, and operational inputs based on national averages
• Inputs adjusted to forecast impact on future financial performance
• Offers insight into relative opportunity of pulling various margin improvement levers
300Number of beds
2.2%Operating
margin
73%Medical share
of case mix
2021 Not So Pleasant
10
Future State Untenable Without Major Improvement
Source: Health Care Advisory Board interviews and analysis.
Overall Impact of Market Forces at Pleasantville
2021
Current Margin
Projected Operating
Margin
Goal
Includes effects of:•Price growth trends•Cost growth trends•Payer mix shift•Case mix deterioration
20.9%:Total Gap to Goal
• Significant long-term capital needs across the board
• Tax-exempt debt unsuitable for financing IT, physician integration investments
• Retained earnings required to fund greater portion of capital
• Financial volatility demands higher margin to compensate for increased risk
The 4.0% Margin Imperative
Case Mix Management Closing the Gap
11
Restoring Profitability with Aggressive Medical Management
Source: Health Care Advisory Board interviews and analysis.
Impact of Case Mix Improvement at Pleasantville
Case Mix Management
•Less profitable medical admissions prevented •Care management boosts outpatient volume•Inpatient space backfilled with high- value surgeries•New medical share of inpatient volume: 55%
Establishing the Medical Perimeter
12
Extensive Ambulatory Care Network Addresses Medical Demand
Source: Health Care Advisory Board interviews and analysis.
Medical Management Investments
Health Information Exchanges
Electronic Medical Records
Medical Home Infrastructure
Primary Care Access Population
Health Analytics
Patient Activation
Post-Acute Alignment
Disease Management
Programs
Road Map
2
3
1
13
Medical Home Investment Imperatives
Revisiting the Value Proposition
The Care Management Mandate
A Growing Mandate
14
Primary Care at the Top of Health System Executives’ Concerns
CEO/President (N=60)
Transforming Primary Care to Drive
Growth and Improve Patient
Outcomes 3.68Supporting Sustainable Cost
Restructuring 3.67Transitioning from Volume‐Based to
Value‐Based Business Models 3.63Maximizing Revenues in a Slow‐
Growth Environment 3.63
Competing on Affordability and Value 3.56
C-Suite (N=230)
Transforming Primary Care to Drive
Growth and Improve Patient
Outcomes 3.65Supporting Sustainable Cost
Restructuring 3.62Transitioning from Volume‐Based to
Value‐Based Business Models 3.57Maximizing Revenues in a Slow‐
Growth Environment 3.54The Future of Profitable Growth in
the Acute Care Enterprise 3.45
Taking a Health System View of Transformation
15
Five Imperatives for Sustained Success
Source: Health Care Advisory Board interviews and analysis.
1 Expand high-performance PCP network
2 Define financially-sustainable transition path
3 Identify opportunities to scale resources across the network
4 Scale system assets around patient needs
5 Extend reach of health system boundaries
Shifting Ratio Toward Primary Care
16
Staff to Meet the Needs of Longitudinal Patient Management
Source: U.S. Bureau of Labor Statistics, “Physicians and Surgeons,” available at: http://www.bls.gov/, accessed: May 4, 2011.; Health Care Advisory Board interviews and analysis.
Expand high-performance PCP network
1) Includes internal medicine, family medicine, generalists.2) Health Care Advisory Board interviews and analysis.
Primary Care Physicians as a Percentage of All Physicians
Population Management Requires Different Workforce Mix“The medical home movement is going to have an impact on the volume of services sent to specialists. So I would not be surprised if we see a shift in the ratio from specialty-dominated services to primary-care dominated services as part of accountable care. That’s certainly going to affect a lot of specialists and specialty groups, and that is happening at Dean.” Craig Samitt, MD
CEO, Dean Health System
“United States, 2008 Health Systems Bearing Population Risk2
35%45%-60%
Making an Investment in Care Team Resources
17
Health Coaches Drive Medical Home Success
Building the Health Coach as Center of Care TeamMercy Clinics, Des Moines, IA
Estimated
$1MMercy Clinics Physicians Earning P4P Bonuses
95/96Total Bonus Payments Earned
• Disease Registry Management• Pre‐visit Chart Review• Patient Self‐Management Support• Care Coordination• Quality Improvement Support
Health Coach Role
Case in Brief: Mercy Clinics• 150-physician group employed by Mercy Medical Center
located in Des Moines, Iowa• Health coaches, mostly RNs, deployed to all primary care
clinics• Health coach activities improve compliance and
documentation for chronic care patients• Physicians more likely to achieve pay-for-performance
bonuses from private payers
Percentage of Recommended Preventative, Chronic Care Delivered
A Sustainable Pathway to Medical Home Development
18
Finding Nearly a 4:1 Return on Care Team Investment
Source: “Mercy Clinics: The Medical Home,” Group Practice Journal, April 2008; Health Care Advisory Board interviews and analysis.
Define financially-sustainable transition path
1) Revenue attributed to health coaches, does not include increases from focus on hypertension patients or increased referrals to additional preventive testing.
Revenue and Expenses at Mercy North Clinic, 200610 Physicians, 1.6 FTE Health Coaches
To help assess the financial ROI from adding a health coach to your PCP practice(s), please see the Medical Home Health Coach Practice Impact Calculator available at: www.advisory.com/hcab/medicalhome
Increased Diabetes Care,
Testing1
Pay-for- Performance
Bonuses1
Saved Physician,
Nurse Time1
Health Coach Staffing Costs
Increased Microalbumin
Cost
Increased HbA1c Cost
Net Contribution
$122 K
$114 K $15 K
($73 K) ($10 K) ($5 K)$163 K
Clinic makes profit on three out of four in- office diabetic tests
Overcoming Financial Barriers to Transition
19
Source: Health Care Advisory Board 2011 Medical Home Benchmarking Survey,
Sources of Health System Return on Investment
Owned Health Plan
Self-Insured Employee Plan
Allows creation of new incentives related to accountable care while reducing costs of covered lives
Provides opportunity to learn population management competencies, lower expenditures
Uninsured Population
Medicaid Population
Proactive care management may reduce bad debt potential of this population
Hospitals may find new ways to contain costs in partnership with states through innovative programs
Joint Contracting /P4PNegotiating hospital-level contracts with incentives linked to successful population management
GrowthPanel size expansion and increased practice productivity are opportunities to bring more patients into the system
Lack of payer support still a barrier
38% Health system-sponsored medical homes citing lack of payer support as most important issue to overcome for widespread
medical home adoption
Leveraging Health System Advantage
20
Aggregating Providers Allows Efficient Use of Medical Home Resources
Source: Health Care Advisory Board interviews and analysis.
3. Identify opportunities to scale resources across the network
Models of Team-Based Care Enabling Scaled Care
Characteristics In-Practice Care Team External Practice Resource
DescriptionHospital provides support that practices are able to access within their practice, at their discretion
Hospital provides external support for group of practices; may be network- wide outpatient center
Type of Resource Could include RN, dietitian, and/or chronic disease educator
Typically comprises RNs, NPs; may also include dietitians, trained educators, mental health providers
Applicability Resource may be permanently placed within practice
May be utilized by both employed and independent physicians
Creating the Health System Medical Neighborhood
21
Source: Health Care Advisory Board interviews and analysis.
Clinical Services to Consider Scaling Across Medical Home Practices
Health System Entities to Consider Involving in Medical Home Practices
Outpatient Diabetes Center
Outpatient Heart Failure Center
Wellness Center
Discharge Coordination Service
Home Health Agency
MedicalSpecialists
• Geriatrician• Ophthalmologist• Cardiologist• Pulmonologist• Podiatrist
Available at System Level
• Certified Diabetes Educator
• Dietician• Pharmacist• Behavioral
Health Specialist
Available at System Level
• Physician• Mid-level provider• RN/LVN• MA
Resources Needed
Expansion of Primary Care Team
Adopting a Patient-Centered Approach to Scale
22
Integrating Access Points, Full Continuum of Providers to Improve Care
Source: Health Care Advisory Board interviews and analysis.
Reevaluating the Health System Asset Portfolio
1) Federally Qualified Health Center.
Extending the Scope of the Organization to Meet Patients’ Needs
Medical Home
Retail Clinic
Post-Acute Care Providers
Affiliating Across the Care Continuum
FQHC1
Home Monitoring
Home Health
Hospital Network
Ongoing Care Management Acute Care Post-Acute Care
The Perfect Storm for Population Health
23
State Mandate Creates Sole Health Care Provider in Market
Source: Valenti K, “A Hospital-Owned, Facility-Based Medical Home: Lessons from Ellis Medicine,” presented at: The National Medical Home Summit, March 14, 2011, Philadelphia; Health Care Advisory Board interviews and analysis.
4. Scale system assets around patient needs
Three Competing Hospitals
Force of Change
Ellis Medicine: A True Community Provider
Berger Commission
Bellevue Women’s Hospital
Ellis: “Hospital on the Hill”
St. Clare’s: “The People’s Hospital” Ellis
Hospital
Medical Home
Women’s Center
All Under One Roof
25
Redeploying Inpatient Assets as Nexus of Comprehensive Care
1) Pre-admission Testing.
Ellis Health Medical Home (Former St. Clare’s Inpatient Facility)
Source: Valenti K, “A Hospital-Owned, Facility-Based Medical Home: Lessons from Ellis Medicine,” presented at: The National Medical Home Summit, March 14, 2011, Philadelphia; Health Care Advisory Board interviews and analysis.
Imaging
Family Health Center
Pediatric Health Center
Wound Care/ Infusion Therapy
Day Surgery
Dental Health Center
Emergency Services
Health Services Navigators
PAT1
Chapel
Auditorium
Lab
Conf. Room
Customer Services/ Patient Advocate
Schenectady City School District
Welcome Center
The Ultimate Reluctant Consumer
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Today’s Health System Not Part of a Person’s Daily Life
Source: Health Care Advisory Board interviews and analysis.
Sphere of Patient Activity and Interactions
Community Workforce Drives Neighborhood Health
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Block-by-Block Surfaces Patient Care Needs Before Acute Episode
Source: Block-By-Block Program, available at: www.block-by- block.org, accessed May 4, 2011.; Health Care Advisory Board interviews and analysis.
14%Type 2 diabetes risk for the 72-block Humboldt Park area
7% National risk for diabetes
Humboldt Park Community Profile
• Need for grassroots engagement• Strong community culture• Multilingual population
Block-by-Block Program Components
• Peer led door-to-door health screenings
• Building Diabetes Empowerment Center
5. Extend Health System Boundaries
Community Leaders Impact Individual Health Activation
29
Peers Promote Wellness in Local Neighborhood
Source: Block-By-Block Program, available at: www.block-by-block.org.; La Voz del Paseo Boricua, “Diabetes Empowerment Center opens its doors to the Humboldt Park Community,” available at: http://lavoz-prcc.org/2010/05/diabetes-empowerment-center-opens-its- doors-to-the-humboldt-park-community.; all accessed May 4, 2011.; Health Care Advisory Board interviews and analysis.
Block-by-Block Diabetes Program
1,000Residents have been connected
to a health care provider to discuss diabetes risk
Block Captains Trained Block Captains Deployed Diabetes Empowerment Center
• Four-week training program for Humboldt Park volunteers
• Engage neighbors in diabetes self-management activities
• Conduct door-to-door diabetes screenings
• Connect residents to a PCP and resources available at the Diabetes Empowerment Center
• Full time dietitian, test kitchen• Diabetes self-management,
education, exercise, wellness programs
• Nutritionist engages community eateries in menu planning
Extending Reach as Population Managers
30
Range of Potential Investments, Partnerships to Support Wellness
Source: Oakland Tribune, “Bringing Health Care to Fire Stations,” available at: http://www.insidebayarea.com/ci_1 7859788?source= most_emailed.; Celadon Trucking, available at: https://www.celadontrucking..com/drivers/drart icles.aspx?id=4148.; all accessed May 4, 2011.; Health Care Advisory Board interviews and analysis.
Creating a New Type of Health Care Footprint
Cayuga Medical Center is majority owner of health and fitness center, preparing for second site
Community Health Network and Celadon Trucking Services opened a truck stop medical clinic
Ellis Health medical home campus has satellite site for school enrollment
Alameda County Health Care Services is placing medical clinics in fire houses
Extended Reach of Health Organization
Baylor Diabetes and Wellness Institute holds farmers markets
Road Map
2
3
1
31
Medical Home Investment Imperatives
Revisiting the Value Proposition
The Care Management Mandate
How Far Can We Go?
32
Aurora’s Multipronged Approach to Panel Management
Source: Health Care Advisory Board interviews and analysis.
Patient Panel Size per PCP
Case in Brief: Aurora Health Care
• Fifteen-hospital system based in Milwaukee, Wisconsin
• Over 10 years, made a range of primary care network investments
• Currently piloting the medical home model, e-visits, and patient portals with its 700 employed primary care physicians
Planning 10 K Per MD?
“In the future, we may need patient panels as high as 10,000 per primary care providers…we have to start thinking how to prepare for that possibility.”
“
Bruce Van Cleave, MDCMO, Aurora Health Care
Expanded Hours, E-visits
Care Teams
Plans to roll out medical home model across all employed practices
2,500 Patients
Saturday, evening access at all Aurora employed PCP practices, e-visits being piloted
Urgent Care Centers
Retail Clinics
Network of 10 AuroraQuickCare retail clinics
10,000 Patients
Network of 18 Aurora urgent care centers
Potential Target
Harnessing the Potential of Primary Care
33
Medical Home’s Value Proposition for Hospitals and Health Systems
Revisiting the Value Proposition
Source: Innovations Center interviews and analysis.
Improved Clinical Quality Improved Economics
Improved Physician Satisfaction Improved Patient Satisfaction
• Better chronic disease, preventive care for patients
• Reduced readmission rate• Reduction of “preventable” chronic
disease admissions, ED visits• Improved care coordination due to better
communication among providers
• Stronger margins for employed primary care practices
• Increased network referral capture• Reduced hospital readmissions• Lower cost of care for health
system employees• Framework for participation in new
care delivery systems
• Greater retention, less feeling of burnout for employed PCPs
• Vehicle to access network of system support resources
• Improved employed practice, residency program recruitment
• Improved care coordination among providers, care settings
• Access to broad suite of health improvement resources
• Improved access to care team• Stronger identification with health system
as provider of all health care needs