Post-Acute Care & Beyond

1

How innovative care delivery models and tecHnologies are breaking tHe cycle of unnecessary Hospital admissions

Post-Acute Care & Beyond

uncommon clarity

Q4 / 2012

Industry Perpsective

TRIPLE-TREE.COM2

Founded in 1997, TripleTree provides independent, research-driven advisory

services on mergers and acquisitions, recapitalizations, divestitures and raising

growth capital for innovative companies in healthcare.

We are continuously engaged with decision makers across the sector including

best-in-class companies balancing competitive realities with shareholder objectives,

global companies seeking growth platforms, and financial sponsors assessing

innovation investments or first mover opportunities.

Tabl

e of

Con

tent

s

20 / SKILLED NURSING / REHABILITATION

22 / HOME HEALTH

24 / DME / HME / INFUSION

25 / HOSPICE

29 / TREATMENT IN PLACE – The Most

Impactful Mode Of Care For Reducing

Unnecessary Admissions

31 / SUPPORTING TECHNOLOGY PROVIDERS

34 / INTEGRATED CARE & CARE COORDINATION

39 / LOOKING AHEAD

Q4industry perspective

05 / MAJOR TRENDS AND MARKET FORCES

6 / A PERFECT STORM IS LOOMING

13 / UNDERSTANDING READMISSIONS

16 / A CALL TO ACTION

17 / PAYERS

17 / PROVIDERS

18 / CONSUMERS

19 / POST-ACUTE CARE – Solutions To Organize

Care, Engage Consumers / Patients / Members,

And Reduce Unnecessary Inpatient Utilization

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EXECUTIVE SUMMARY

Health reform is still taking shape as 30 million additional

Americans enter the U.S. healthcare system. Beyond

improving access, a paramount objective of the “Patient

Protection and Affordable Care Act” (PPACA) is to create

integrated care and payment models that demand higher

degrees of accountability and drive improved health outcomes.

Today, care delivery in the U.S. is highly fragmented and

plagued with little coordination and communication across

the healthcare system. Physicians are encouraged to narrow

their focus and are trained to become experts in very specific

medical disciplines, and many healthcare strategists argue

that delivery models with greater focus and more repetitions

(commonly referred to as “focused factories”) improve

outcomes. While this “practice makes perfect” model has

shown signs of success within each silo, it undermines the

importance and value of care coordination between them.

Unnecessary hospital admissions account for more than $26

billion 1 in excess cost, burdening the healthcare system today,

a number that is poised to escalate as more Americans access

our disjointed care delivery system.

One in every ten hospital admissions could have been

avoided with 6% coming from avoiding chronic condition-

related admissions and 4% from preventable acute

conditions. 2

Nearly one-fifth of Medicare beneficiaries in traditional fee-

for-service (FFS) are re-admitted to a hospital within

20 days of their original discharge. 3

It is increasingly clear that a tremendous opportunity exists

for innovative solutions that strengthen the seams between

healthcare settings and promote a more holistic, integrated

care system. Delivery models and supporting technologies that

can help patients navigate our rapidly transforming healthcare

system and eliminate waste in a $63.5 4 billion post-acute

care marketplace are not only integral to the sustainability of

the U.S. healthcare system, but will also garner significant

interest from both the strategic acquirer and financial sponsor

communities.

This report will analyze the market dynamics and trends that

are driving demand for improved post-acute care coordination.

It will also explore forward-thinking companies that are

developing post-acute care delivery strategies to break the

cycle of unnecessary patient admissions and re-admissions.

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INDUSTRY PERSPECTIVE Q4 / 2012 5

MAJOR TRENDS AND MARKET FORCES

There is no need to read the 2,200 pages of the healthcare reform

legislation to conclude that one of the primary aims of PPACA is

to manage the chronically ill, high cost patients responsible for a

vast majority of healthcare spending in the United States. Today’s

specialist-based, hospital-centric delivery system requires little

accountability for cost and quality and provides limited incentives

for care coordination services. Without holistic, integrated care

coordination models, patients repeatedly bounce between multiple

sites of care (hospital, emergency room, home, etc.) leaving them with

hefty medical bills and suboptimal care plans designed to promote a

full recovery.

The post-acute care market, as shown in Figure 1 (next page),

represents a significant share of the care continuum and is an

area of particular focus within the reform legislation. The care

delivered following a patient’s discharge from the hospital, is highly

fragmented and uncoordinated and typically crosses multiple sites,

including skilled nursing, rehabilitation, home health and hospice.

Fragmentation and poor communication are causing over $26 billion

in unnecessary hospital admissions – a top priority for policy makers,

payers and providers.

MAJOR TRENDS AND MARKET FORCES //

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A Perfect Storm is Looming Historically, post-acute care has been primarily viewed as an “add-

on” to our nation’s healthcare system. However, healthcare cost

and outcomes data have reversed this trend as a growing number

of patients are requiring continued and coordinated care to achieve

a full recovery. This is especially true as an explosion of high-risk

individuals with multiple chronic illnesses is poised to occur in our

disjointed healthcare system in 2014. According to CMS, PPACA

will expand access to coverage to over 30 million Americans across

the Medicaid and individual markets. While the volume of entrants is

certainly notable, the risk profile (i.e. utilization rate, lack of adherence,

health status, etc.) and the impact that these newly insured individuals

will have on our healthcare system cannot be overstated. A perfect

storm is looming, creating a pressing demand for new services that

promote coordinated, cost effective and high quality care.

Medicaid: Insurance coverage expansion is the centerpiece of the

healthcare reform law. What is less commonly known is the fact

that over 75 percent of the 30 million Americans expected to gain

insurance in 2014 will be covered under state-administered Medicaid

programs. According to CMS, PPACA will result in 23 million new

Medicaid enrollees in 2014 as the new healthcare reform law expands

coverage to all adults under age 65 with incomes below 133% of the

Federal Poverty Level. This expansion is problematic in many ways.

Compared to the low-income privately-insured population, Medicaid

beneficiaries are more likely to be in fair or poor health. As illustrated

in Figure 3, 33 percent of non-disabled, childless adults are in fair

or poor health compared to 12 percent of those individuals covered

by private insurance. Similarly, roughly 44 percent of non-disabled

Medicaid enrollees have two or more chronic conditions compared

to 28 percent of the privately insured. These comparisons highlight

many of the common behavior patterns we see across the Medicaid

population:

Figure 1: Fragmented Post-Acute Care Delivery System (Representative Constituents)

HospitalSkilled Nursing /

RehabilitationHome Health Hospice


Figure 2: A Perfect Storm is Looming

Limited to no engagement with a primary care physician

High utilization of certain services, such as pharmacy, inpatient

hospital and emergency room services. Medicaid enrollees

access care through the emergency room at twice the rate of the

uninsured and privately covered populations[5]

Poor adherence to treatment plans

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. . . An explosion of high-risk individuals with multiple chronic illnesses is posed to occur in our disjointed healthcare system in 2014.

HospitalSkilled Nursing /

RehabilitationHome Health Hospice

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Figure 3: Health Status of the Privately Insured Versus the Medicaid Population

The Congressional Budget Office (CBO) estimates that PPACA’s

Medicaid expansion will cost the federal government $434 billion

over the next decade, accounting for more than 40 percent of the

healthcare law’s total expenditures. In addition to increasing the

federal deficit, the expansion will have a significant impact of

state budgets, healthcare provider budgets, and patients’ ability to

access care.

Individual: As a result of the individual mandate, CMS estimates

that an additional 10 million individuals will receive coverage either

through insurance exchanges or directly from a private insurer.

Many of the provisions in the healthcare reform law, however, will

drive increased adverse selection, thereby creating a risk pool

that cannot be overlooked. The following are a few of the most

impactful provisions:

INDUSTRY PERSPECTIVE Q4 / 2012 9MAJOR TRENDS AND MARKET FORCES //

Community Rating. Prevents insurers from varying premiums

on the basis of a policyholder’s age, gender, or health status.

This provision will increase the cost of health insurance for the

healthy individual and reduce the costs for sicker individual.

Guaranteed Issue. Forces insurers to cover everyone with

pre-exiting conditions and therefore drives up premiums. If

an individual can buy insurance after getting sick, that person

has every incentive to drop out of the system until he or she is

actually ill.

Mandatory Benefits. Forces plans to cover certain services (e.g.

maternity care and substance abuse treatment). In other words,

it is a a good deal for a pregnant female or a couple planning to

have a child. Otherwise it’s another reason to drop coverage.

Tax Penalties. The magnitude of the penalty (roughly $100) for

not purchasing insurance will not compel healthy individuals to

purchase insurance.

Clearly, the incentives to purchase insurance are in favor of the high-

risk individuals.

Medicare: In 2011, the first wave of baby boomers turned 65; by

2030, it is projected that there will be 72 million elderly Americans

aging into Medicare – more than double the number from 2000. This

startling demographic change has tremendous implications for our

society, ranging from the availability and utilization of our healthcare

resources and economic costs to the fundamental principals that

shape our lives. As we develop new strategies for care in the post-

acute care market, it makes sense to focus first on the segment

of the population that accounts for the vast majority of overall

healthcare spending. It is well known that chronic conditions drive a

wildly disproportionate share of costs across all demographics, with

more than 84 percent of our total healthcare dollars consumed by

persons with one or more chronic diseases. This becomes even more

pronounced in the Medicare population, with more than 99 percent

of all Medicare expenditures associated with members who have

one or more chronic conditions. As a result, any successful effort to

moderate the cost of healthcare is highly dependent on effectively

managing chronic and/or multiple conditions in this segment of the

population.

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Dual EligiblesWhile the explosion in Medicaid and Medicare eligibles will have

a meaningful effect on the healthcare system, no segment of the

population captures this phenomenon better than the dual eligible

population. It is so important that our team at TripleTree is in the

midst of concluding a research report on dual eligibles.

Approximately nine million individuals are currently covered by

both the Medicaid and Medicare programs. These individuals are

commonly referred to in the health policy arena as dual eligibles

or “duals”. While this population represents just 15% of the total

Medicaid population, duals account for over 39% of total Medicaid

spending. Similarly, they represent 21% of Medicare enrollees, but

36% for total Medicare expenditures. With state budgets under

increasing pressure from the economic downturn and continued

sputtering of the U.S. economy, politicians and policy makers are

intensifying their focus on developing solutions to address the

growing spend burden of this demographic. Specifically, states are

looking to control costs by moving their dual eligible populations to

managed care contracts, shifting the responsibility to health plans

and exploring managed care approaches via care coordination

models. As a result, Medicaid and multi-line insurance carriers are

jockeying for a position to win contracts that in aggregate represents

more than a $300 billion market opportunity.

Duals are among the sickest and poorest individuals covered under

Medicaid or Medicare and therefore account for a disproportionate

percentage of healthcare costs. As illustrated in Figure 4, average

per capita Medicare spending for dual-eligible beneficiaries is more

than twice that of non-dual-eligible beneficiaries, which is reflective

of this population’s greater health needs and utilization of services

compared to other Medicare and Medicaid beneficiaries.

These expenditures have predominantly occurred in the traditional

fee-for-service (FFS) coverage setting, where many individuals

receive excellent care, but where there is no means of (or

accountability for) ensuring that duals’ considerable health needs are

being addressed in a high quality and cost-effective manner. Today,

coordinated care programs currently serve a modest proportion of the

nation’s dual eligibles with just one million duals receiving Medicaid

benefits through a managed care program in 2009. However, both

states and managed care organizations are clearly signaling that dual

eligibles are top priority, and therefore we should expect to see these

constituents make aggressive moves to serve this population. Thirty-

seven states and the District of Columbia have submitted letters of

interest to CMS to coordinate care for dual eligibles, and the Center for

Medicare and Medicaid has chosen 15 states to design new approaches

to coordinate care for this population.


Figure 4: The Cost of the Dual Eligible PopulationDifferences in spending and service use rate between dual-eligible beneficiaries and non-dual eligibles

Average Medicare Payments for all Beneficiaries Total Dual Hospitalizations

Service Benificiaries Variance

Dual-Eligible Non-Dual-Eligible

Inpatient Hospital 5,369$ 2,751$ 2,618$

Physician 2,884 2,294 590

Outpatient Hospital 1,647 886 761

Home Health 752 379 373

Skilled Nursing Facility 1,160 484 676

Hospice 403 153 250

Prescirbed Medication 4,262 852 3410

Total Medicare Payments 16,477$ 7,799$ 8,678$

Source: MedPAC, CMS - need to confirm 60% / 40% split

Poten&ally Avoidable Admissions

40% Non-‐

Avoidable Admissions

60%

AVERAGE MEDICARE PAYMENTS FOR ALL BENEFICIARIESDifferences in spending and service use rate between dual-eligible beneficiaries and non-dual eligibles

Average Medicare Payments for all Beneficiaries Total Dual Hospitalizations

Service Benificiaries Variance

Dual-Eligible Non-Dual-Eligible

Inpatient Hospital 5,369$ 2,751$ 2,618$

Physician 2,884 2,294 590

Outpatient Hospital 1,647 886 761

Home Health 752 379 373

Skilled Nursing Facility 1,160 484 676

Hospice 403 153 250

Prescirbed Medication 4,262 852 3410

Total Medicare Payments 16,477$ 7,799$ 8,678$

Source: MedPAC, CMS - need to confirm 60% / 40% split

Poten&ally Avoidable Admissions

40% Non-‐

Avoidable Admissions

60%

Managed care organizations are also making bold strides to position

themselves as constituents in the dual eligible market. UnitedHealth’s

acquisition of XLHealth is an example of how managed care

organizations are looking to leverage their footprint in the Medicare

market to capture more shares of the Managed Medicaid / Dual

Eligible market.


Total Dual Hospitalizations

($ in actuals)

source: medpac, cms

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United’s Purchase of XL HealthIn February 2012, UnitedHealth Group purchased XL Health, a Baltimore-based Medicare Advantage plan that focuses primarily on Special

Needs Plans (SNPs), including members with chronic illnesses and dual-eligibles. XL Health serves over 113,000 Medicare Advantage

members and is one of a few Medicare Advantage plans that successfully serves the chronic disease population. The XL Health

acquisition solidifies United Healthcare’s (UHC) lead in managing the dual-eligible population, the largest reserve of untapped revenue for

the managed care industry, and an end-market where managed care can prove a superior ability to improve lives, lower medical expenses

and earn a profit by coordinating the care and payment of care for frail elderly, disabled and other duals.

Figure 5: Intensified Focus on the Dual Eligible Opportunity

buyer targetUnitedHealth Group XL Health

Inspiris

Humana Senior Brige

MetCare

Cigna HealthSpring

WellPoint CareMore

TA Associates Senior Whole Health

Oak Investment Partners Independent Living Systems

Univita All-Med Services


Understanding ReadmissionsEach year, nearly nine million people – 24,000 per day – are discharged from short-

term acute care hospitals and require some form of post-acute care. The most

common settings include but are not limited to sub-acute and post-acute nursing

facilities, the patient’s home, primary and specialty care offices, rehabilitation

facilities, home health, hospice, long-term care facilities and other institutional,

ambulatory and ancillary care providers. Patients receiving post-acute care

typically see multiple physicians in as many settings, often creating a confusing

and a hard-to-follow regimen of medications and treatments. For the patient,

their caregivers and family members, it is not surprising that communication

problems and other errors proliferate as patients transition between settings.

Adverse events often occur during care transitions and are concentrated

among individuals with complex and chronic conditions. Accordingly, a failure

to communicate critical information related to a patient’s medical care, support

services, safety, medications, and other matters can compound the situation.

These adverse events result in a substantial number of unnecessary hospital

admissions. According to Medpac, among Medicare patients:

• 20 percent are rehospitalized within 30 days, and more than one-third are

rehospitalized in 90 days.

• More than 76 percent of these rehospitalizations are said to be avoidable

and cost our healthcare system more than $26 billion per year.

Communication. An inadequate relay

of information by hospital discharge

planners to patients, caregivers, and post-

acute care providers, to ensure the patient

understands to the treatment plan

Compliance. Poor patient compliance

with care instructions, medication

therapy, etc. primarily as a result of the

patient receiving little or no information

on how to achieve a successful recovery

Follow-up. Inadequate follow-up care

from post-acute and long-term care

providers or failure by the patient to

schedule a follow-up appointment with

their physician

Support. Family members or caregivers

are often uninformed or unable to provide

the necessary care and support for

transitioning the patient from the hospital

to the home

primary causes of readmissions

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Figure 6: Care Trends Post Discharge

The causes of unnecessary hospital admissions are complex, multi-

faceted and interrelated. The most common variables include severity

of illness, communication with patients and families, medication

errors and compliance, and coordination with community clinicians,

caregivers and family members. Each of these factors can play a

role, but the relative importance is difficult to measure and therefore

poorly understood. What is clearer, however, is that despite the fact

that the problems of high readmissions rates and poor coordination

have been known for many years, little to no improvement has been

made in our healthcare system in our very recent history.


Figure 7: Change in 30-Day Readmission Rates Following Discharge

As illustrated in the Figure 7, the rate of readmissions increased from 2004 to 2009

for five of the six causes of hospitalizations studied. Only readmission rates for acute

myocardial infractions (heart attack) improved only slightly, decreasing from 19.4% to

18.5% - a positive development, but not enough for a healthcare system that needs to

do more. So what does this tell us?

In a new world of ACOs, bundled payments, value based purchasing, STAR ratings

and consumerism, the opportunities for new service models and technology providers

to improve the cost and quality of care in the post-acute care market through more

holistic and integrated care delivery models is tremendous.


Created by Select Medical and

Universal American and backed

by Welsh Carson, NaviHealth

partners with health plans, health

systems and post-acute providers

to manage the entire continuum

of post-acute care. In February

2012, NaviHealth purchased

SeniorMetrix, which utilizes a

decision-support technology to

project therapy regimens, most

appropriate care settings and

timing of expected outcomes.

company profileCondition % Readmissions % Change

2004 2009

Medical 15.9% 16.1% 1.2%

CHF 20.9% 21.2% 1.4%

AMI 19.4% 18.5% -4.6%

Pneumonia 15.1% 15.3% 1.7%

Hip Fracture 14.3% 14.5% 1.4%

Surgical 12.7% 12.7% 0.0%

Source: The Dartmouth Institute for Health Policy & Clinical Practice

TRIPLE-TREE.COM16

Figure 8: A Call to Action for Payers, Hospitals / Health Systems, and Consumers

A CALL TO ACTION The post-acute care market is estimated to be a $63.5 billion market[6]. Aside from its sheer size, there are a number of factors that are

contributing to the increased attention the post-acute care market is receiving. Figure 8 provides a brief overview of the key factors driving a

focus on the post-acute care market for payers, providers and consumers.


PayersSeveral of the factors listed in Figure 8 are impacting the ways in which health

plans view post-acute care. HEDIS measures, Star Ratings and ACOs have payers

increasingly accountable for their performance across several important dimensions

of care and service. With more plan members (many of whom are among the

sickest) accessing the post-acute care market for the range of reasons mentioned

heretofore, improving the post-discharge coordination of care, patient experience

and outcomes is a priority. Payers, both public and private, are aggressively seeking

lower cost alternatives to hospital admissions / readmissions and improved care

coordination across the continuum of care to eliminate waste.

ProvidersIn a post reform world of value-based purchasing and bundled payments, providers

are held more accountable, primarily through financial penalties, for the care

they provide. In October 2012, Medicare started penalizing hospitals with high

readmissions rates – defined as patients being readmitted within one month of

discharge – by reducing reimbursement by as much as one percent. The maximum

penalty increases to two percent the following year and three percent in 2014.

These penalties are one of the Affordable Care Act’s efforts to reward hospitals for

the quality of care they deliver instead of the quantity of services. With hospitals

facing penalties, theoretically they will take ownership of following-up with

discharged patients. According to the Kaiser Family Foundation, Medicare evaluated

readmissions rates at 3,367 of the nation’s hospitals and imposed penalties on 2,200

in October 2012 with 278 hospitals receiving the maximum penalty of one percent.[7]

A CALL TO ACTION //

Recapitalized by Summit Partners in

September 2011, Carecentrix, Inc.

is a provider of home health benefits

management services that recently

launched a Care Transitions program

designed to reduce avoidable hospital

admissions and other adverse medical

events. Carecentrix’s HomeSTAR

(“Successful Transition and Recovery”)

program was designed to help

health plans and providers decrease

avoidable hospital readmissions and

other adverse medical events while

improving patient satisfaction in

their care. Through this program,

Carecentrix identifies members at risk

for an adverse event, stratifies the

risk, and mitigates the risk by enrolling

them into structured care plans

delivered face-to-face in the home.

company profile

TRIPLE-TREE.COM18

While the reimbursement risk associated with this program may seem insignificant,

many providers operate under single digit margins, making even a 1% reduction in

Medicare reimbursement meaningful. For example, if a hospital’s total inpatient

operating payments for FY 2012 were $25 million, that hospital will have $250,000

at risk for reimbursement reduction in this program. With the maximum penalty

increasing 1% per year until FY 2015, the penalty and dollars at risk will undoubtedly

heighten providers’ focus on their readmission rates.

ConsumersWith consumers increasingly on the hook for the cost of care, individuals are no

longer standing on the sidelines and are instead demanding more transparency,

information and a greater role in managing their own health. With that comes an

ever-increasing financial and administrative challenge, and as our healthcare system

is inundated with an aging population and new Medicaid members, demands from

the post-acute care market will include tools to help them navigate their journey

post discharge.

Hospitals, health systems, managed care organizations, and post-acute providers

are all keenly aware of and engaged in discovering innovative delivery and payment

models, technologies and services to transform the post-acute care market. Success

however, will require trust, collaboration, cooperation and aligned incentives

between providers, payers, consumers and policy makers.

Established consumer engagement

platforms are increasingly

exploring additional capabilities

to address market demand for

payer / provider / consumer

collaboration as healthcare

reform drives convergence.

MEDSEEK is a provider of

online strategic engagement

and analytics solutions. The

company’s software platform helps

healthcare organizations attract

and retain patients and improves

patient experience and care

through enhanced patient-doctor

communication and information

accessibility.

company profile


POST-ACUTE CARE

Solutions To Organize Care, Engage Consumers / Patients / Members,

And Reduce Unnecessary Inpatient Utilization

A number of solutions are solely

focused on care coordination services

and technologies, but a comprehensive

review of the market place should

include various providers across the

post-acute care continuum. While skilled

nursing, rehabilitation and home health

providers may not have dedicated

programs to improve care coordination

per se, they do play a very important

role in the post discharge care

experience for patients. The integrated

care delivery / care coordination

providers and supporting technology

providers identified in Figure 9

support the post-acute care providers

and patient as they transition from

setting to setting.

Figure 9: The Post-Acute Care Market Landscape

POST-ACUTE CARE //

TRIPLE-TREE.COM20

Skilled Nursing / RehabilitationThe $200 billion skilled nursing and rehabilitation market is in

the midst of a transformation, and in a new world of ACOs and

readmission penalties, these providers will play a significant role in

helping hospitals reduce readmissions and providing patients with

coordinated and professional care in a sub-acute environment.

In March 2012, the Medicare-Medicaid Coordination Office and the

Center for Medicare and Medicaid Innovation announced the Initiative

to Reduce Avoidable Hospitalization among Nursing Facility Residents.

Through this initiative, CMS is partnering with seven organizations

to implement strategies to reduce avoidable hospitalization for dual

eligibles who are typically long-stay residents at nursing facilities.

Each participant in the initiative is required to partner with a

minimum of 15 dual eligible certified nursing facilities in the same

state where the intervention will be implemented. The goal of the

initiative is to:

• Reduce the number of and frequency of avoidable hospital

admissions and readmissions;

• Improve beneficiary health outcomes;

• Provide better transition of care for beneficiaries between

inpatient hospital and nursing facilities; and

• Promote better care at lower costs while preserving access to

beneficiary care and providers

CMS’ initiative in addition to the Hospital Readmissions Reduction

Program is forcing skilled nursing care facilities to reevaluate their

current delivery models. As hospitals face Medicare reimbursement

reductions for unnecessary readmissions, they will seek to partner

with facilities that actively play a role in reducing those readmissions.

There are many programs currently being developed to focus on

this issue, but one that seems to have gained acceptance in the

marketplace is the INTERACT II (Interventions to Reduce Acute

Care Transfers Version II) program, designed to improve the early

identification, assessment, documentation, and communication about

changes in the status of residents in skilled nursing facilities. This

program includes specific tools around communication, advanced

care planning, quality improvement, and care paths that were refined

and tested in a six-month collaborative improvement project with 25

nursing homes in three states.

In addition to implementing INTERACT II, Life Care Centers of America

(LCCA), one of the nation’s largest skilled nursing providers, is

making some waves in the industry through its success in reducing

rehospitalizations. Beginning in 2010, LLCA began placing a full-time

doctor in some of its facilities. While this move does not seem to be

an earth shattering idea, the impact was certainly noteworthy - in just

one year, LCCA reduced re-hospitalization at its facilities with a full-

time physician to 15% from 40%. In addition to a dramatically reduced

INDUSTRY PERSPECTIVE Q4 / 2012 21POST-ACUTE CARE //

readmissions rate among those participating facilities, LLCA also

experienced reduce staff turnover and improved clinical outcomes.

Genesis Healthcare is another example of a skilled nursing provider

leading the initiative to reduce hospital readmissions. Genesis, a

leading provider of short-term post-acute, rehabilitation and skilled

nursing care services, launched a new discharge product called

PowerBack Rehabilitation aimed to reduce post-discharge setbacks

and transition patients back to their homes as quickly as medically

possible, rather than a nursing home that lumps all patients together,

regardless of specific needs or acuity level.

Genesis’s Brightwood campus is the first of its kind to offer the

innovated model of care (PowerBack) which features:

Expanded clinical capabilities to include cardiac,

orthopedic and pulmonary specialized care;

Two full-time physicians and three full-time nurse

practitioners on campus;

State-of-the art therapy technologies;

Therapy pool;

A 4,000 square foot therapy gym open 12 hours a day;

Added care planning and daily schedules to be directed

by the patient;

Enhanced Guest Services team and training to ensure an

outstanding experience;

Expanded dining services in multiple locations, including cafes,

dining rooms and room service.

Although reducing rehospitalizations may negatively impact skilled

nursing facilities revenue in the short-term (e.g. fewer Part A SNF

days), long-term care providers are increasingly pursuing this

goal anyway, believing that higher quality care will enhance

referrals in the long-run. LLCA is certainly experiencing

increased referrals as a result of its recent successes and we

anticipate other innovators like Genesis and Extendicare to see

referral gains in the near future as well.

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Home HealthIn recent years, the home health industry has been battered by a

challenging reimbursement environment and increased regulatory

scrutiny into the Medicare reimbursement practices at many of

the industry’s largest players. In the longer-term however, we

view the home health industry as an attractive market for growth

and consolidation as ACO tailwinds intensify and the appropriate

incentives are implemented to reduce overall healthcare costs.

As illustrated by the cost and length of stay statistics publish by

MedPac in Figure 10, home health represents a very compelling care

delivery option for payers, providers and most importantly, patients

post discharge. The key question is how home health providers in

the older world of fee-for-service payment models and generally

limited collaboration with hospitals are now redefining their value

proposition and developing new models of care to meet cost and

quality requirements under healthcare reform.

Figure 10: Home Health Versus Other Post-Acute Care Options

Hospital LTAC IRF SNF Hospice Home Health

Avg. Cost of Stay $10,043 $38,582 $17,582 $10,833 $11,217 $5,706

Avg. Length of Stay 5 days 27 days 13 days 27 days 86 days 120 days

Avg. per Diem Cost $1,853 $1,450 $1,304 $400 $130 $48

Source: US Census Bureau and MedPac March 2012 Report


Amedisys, one of the largest publicly-traded home health and hospice

providers, is one company taking a leading position in demonstrating

the value proposition that home healthcare providers can provide in

a new world of accountability. Designed to deliver care to the most

complex, chronic and costly patients in the comfort of their homes,

Amedisys’s Comprehensive Continuous Chronic Care Management in

the Home or C4M, combines existing home care infrastructure with

technology and clinical capabilities to provide intensive continuous

home-based health care.

Figure 11: Amedisys C4M

POST-ACUTE CARE //

External Benchmarks

< 30 days: 4.7% - 6.2%

31-60 days: 8.1% - 10.7%

61-90 days: 6.5% - 12.8%

91+ days: 8.2% - 14.1%

1. Department of Health and Human Services-Offices of Inspector General 2000, 2002, 2004, 2005

2. 2002 NHS Trust Plan and Report

3. 2004 Institute for Healthcare Improvement

4. Healthcare Cost Containment Council 2005

Amedisys Benchmarks

< 30 days: 1.48% - 1.60%

31-60 days: 1.17% - 1.76%

61-90 days: 0.62% - 1.32%

91+ days: 0.70% - 0.90%

1. Post episodic DM call center results

2. 14,313 patients tracked over a 6 month period

READMISSION RATES

TRIPLE-TREE.COM24

As the value that home health can provide to our healthcare system

is demonstrated by innovators like Amedisys, TripleTree anticipates

significant private equity investment and consolidation in the years

to come. Growth, via acquisition, is very common in the home health

industry as the market remains highly fragmented with over 11,500

home health agencies in the U.S. The four largest, publicly-traded

players (Amedisys, LHC Group, Almost Family, and Gentiva) account

for 15% of the market. After several years of robust M&A volume,

2011 experienced a meaningful dip as a result of reimbursement cuts,

increased audits and investigations and talks of sequestration.

In addition to the traditional strategic buyers in the space (i.e. the

large publicly-traded home health and hospice organizations),

the compelling fundamentals of the home health industry are

also attracting some out-of-the box buyers as exhibited by The

Washington Post Company (NYSE: WPO), a diversified education and

media company, purchasing a majority stake in Celtic Healthcare,

a provider of skilled home health-care and hospice services the

northeastern and mid-Atlantic regions.

DME / HME / InfusionThe $27 billion durable medical equipment (DME) industry is at an

important inflection point. While margins are being squeezed as a

result of CMS’s Competitive Bidding Program, DME companies are

also being confronted with new opportunities to play a greater role

in the post-acute care continuum. DME companies already have

an established position in the home, which ideally positions them

to expand their services and create a more holistic home health

approach. Some industry players have attempted this in the past

with little avail, as the incentives for hospitals and other providers

to leverage these expanded services were limited. Today, penalties

for readmissions and other incentives are changing the game for the

DME industry. This influence of penalties and incentives has DME

vendors relying on partner organizations for automated solutions.

Once such firm is Brightree, who offers a cloud based billing and

business management platform for a range of provider settings.

Univita Health provides a clear example of how a once traditional

DME provider is transforming itself to become a comprehensive care

delivery and coordination provider in the home. Over the last three

years, Univita Health has purchased segments of the home health

care industry and combined them to deliver holistic services in a

new, coordinated way to become a one-stop shop for managed care

and employers to manage their chronically ill and elderly patients.


• March 2012: Acquired All-Med Services of Florida, a DME/HME

home and hospital delivery company.

• January 2010: Acquired Atenda Healthcare Solutions and its

affiliated companies, including Florida Home Medical Equipment.

• December 2009: Acquired Enurgi, a web-based service for

caregiving and family support.

By integrating these disparate services into its existing operations

and creating a broader suite of services, Univita Health is creating

significant value for its managed care and employer customers.

Univita Health has inked deals with large managed care companies

to manage their chronically ill members in the home on a capitated

basis. By offering an integrated, single source solution for home

care, Univita is transforming how care is delivered in the home while

driving accountability and outcomes and reducing readmissions

healthcare costs.

HospiceThe hospice market has seen consistently strong growth over the

last several years. Since 2004, the hospice market has grown 12%

per annum as a result of favorable demographic trends, strong political

support, favorable reimbursement trends and increased realization of

the value proposition hospice services provide. Despite an acceleration

of M&A volume over the last four years, the hospice market remains

incredibly fragmented with the top players (Chemed (Vitas), Gentiva,

Amedisys, and LHC Group) owning just 15% of the market[8]. The

remainder of the market is dominated by both non-profit and private

non-profit single state and regional players. M&A has been a common

growth avenue for the industry’s largest players and TripleTree expects

this activity to continue as hospice continues to play a greater role

in integrated care delivery and coordination. Both home health and

hospice have been targeted areas for aggressive expansion for Kindred

Healthcare, which purchased IntegraCare Holdings, Inc., a provider

of home health, hospice and community services, from private equity

firm, Flexpoint Ford, for $75 million in total consideration. In order

to support a continuum of care within an ACO or bundled payment

environment, Kindred is seeking opportunities to provide integrated

and coordinated care throughout a post-acute episode. As illustrated

by Kindred’s acquisition of IntegraCare, home health and hospice are

a key component of the company’s strategy to provide high quality,

patient-centered integrated care.

POST-ACUTE CARE //

TRIPLE-TREE.COM26

It is no secret that the ACO movement will have a profound impact on

provider approaches towards care coordination, provider-to-provider

collaboration, and patient engagement. An important component

in the formation and success of ACOs will be the introduction of

value-based reimbursement where providers will be placed at “risk”,

making them responsible for overspending and rewarding them

across certain quality measures. In this new payment environment,

it will be imperative for ACOs to create an integrated system of care

coordination among providers and partners that includes initiatives to

aggressively monitor member patient health and drive care outside of

inpatient settings. In doing so, the primary focus will be:

Avoiding high-cost care episodes resulting from poor risk

identification and member health monitoring.

Delivering routine care and preventive services in low-cost,

efficient settings.

While post-acute providers are unlikely to serve as an organizing

partner of an ACO, they provide a tremendous value-add to ACOs

by enabling chronic care management, extending care coordination

efforts, and facilitating the provision of care in lower-cost settings

(through home health or hospice services).

The most likely ACO / post-acute provider strategies that will emerge

in the evolving ACO environment will resemble the following:

ACO / Provider Partnership to Provide Services to Entire

Population – similar to an exclusive or preferred partnership in

which an ACO contracts with a provider (or multiple providers) to

provide post-acute services to the entire member base.

ACO / Provider Partnership to Address Specific Concerns or

Cost Drivers – An ACO contracts with provider to provide specific

post-acute services to address key concerns and / or cost drivers

(i.e., readmissions, drug adherence, and emergency department

utilization).

ACO / Provider Partnership to Treat Specific Members – An ACO

contracts with a provider to provide targeted post-acute services to

a specific subset of members. For example, an ACO many contract

with a home health provider to provide standard care / monitoring

services to members with diabetes.

The playbook for ACOs is relatively the same regardless of the partnership

arrangement; all scenarios involve a heavy emphasis on providing the

necessary preventive and follow-up care in lower cost settings in order to

control costs as well as to minimize the impact high-cost care episodes.

Post-Acute Providers (e.g. Hospice): A Foundational Element of Accountable Care

•

•

•

•

•


A recent example of how these emerging ACO / post-acute provider

relationships might unfold is through CMS’ Pioneer ACO Program,

an initiative designed to test the impact of different payment

arrangements on organizations operating as ACOs or similar

arrangements in controlling Medicare spending. Michigan Pioneer

ACO (Michigan ACO) is a partnership between the Detroit Medical

Center (DMC) and its physicians and was selected to introduce

a specialized case manager pilot program identifying terminally

ill patients that require customized care at home. To operate the

program, the Michigan ACO signed a three-year contract with

Hospice of Michigan, where through its HOMe subsidiary, terminally

ill patients are provided with comprehensive home medical services.

The goal of this pilot program is to reduce unnecessary costs

associated with end-stage illness (HOMe also has contracts with

several other leading Michigan payers, including Blue Care Network,

Priority Health and United Healthcare, to provide similar services).

The Michigan ACO example highlights the growing payer / ACO

acceptance of the vital role that post-acute providers play in

controlling healthcare costs (as well as their willingness to form

partnerships in order to distribute these services effectively). In

the case of the Michigan ACO, where efforts were directed towards

controlling end-of-life spending through hospice care, the program is

especially significant given that studies have shown that end-of life-

services account for 10 percent of the nation’s $2.6 trillion healthcare

budget. Furthermore, for those aged 65 and older, the last 12 months

of life account for 27 percent of total costs. Given the potential

spending burden that these types of conditions create and the

resultant pressures that would be placed on an ACO, it is no secret

that the post-acute space will be a critical focus area for ACOs and

similar risk-bearing entities.

As the ACO movement continues to take shape and build momentum

over the next few years, it is likely that subsequent ACO / post-acute

provider partnerships will emerge as these providers address a

critical (and costly) part of the care continuum.

POST-ACUTE CARE //

TRIPLE-TREE.COM28

Figure 12: Case Study Snapshot – Michigan Pioneer ACO

Michigan Pioneer ACODetroit Medical Center

Hospice of Michigan


Treatment in Place – The Most Impactful Model of Care for Reducing Unnecessary Admissions Both Evercare, a business unit within UnitedHealth Group’s Optum

platform, and Bluestone Physicians Services are examples of

innovative care delivery models that are having a significant impact

on reducing cost and significantly improving the quality of care for

our systems most frail and expensive patients. The construct of these

models are similar and therefore accomplish a common goal – deliver

holistic and integrated care to the patient in their home to improve

clinical quality and reduce unnecessary utilization, resulting in fewer

ER visits, acute admits and re-admits.

Evercare Evercare deploys a patient-centered approach to providing primary

care to the systems sickest and most costly members. Through

partnerships among individual patients, their healthcare providers,

and the patient’s family, Evercare cares for seniors, individuals with

long-term or advanced illness, and members with complex needs.

Evercare’s roots can be traced to the nursing facility environment

where the nurse practitioner (NP) is the central component of this

model and provides routine and more intensive primary care while

working in collaboration with nursing home staff and primary care

physicians. The primary objectives of the model are (i) to establish

and adhere to a plan of care for each individual patient, (ii) monthly

NP visits with daily monitoring by the NP and SNF staff, (iii)

escalation to the NP upon identification of a change in condition

with the patient, and (iv) implementation of a care plan that avoids

the unnecessary hospital admission by treating the patient in their

home. The value proposition that this model (and Bluestone Physician

Services’) delivers to each constituent is tremendous:

Members. Better health outcomes and reduced hospital admissions;

more benefits and services than FFS Medicare, including

coordinated care focused on individual needs of the enrollee;

Facilities. Increased revenue through more skilled nursing days

in the facility, rather than admitting the member to the hospital;

members receive better care; improved clinical and health

outcomes; increased member and family satisfaction;

Providers. Comparable reimbursement as Medicare; improved

clinical outcomes and additional support for patient through the NP;

CMS / States. Lower costs of care.

For more than 20 years, Evercare has achieved strong results,

including improved medication adherence and utilization

management, decreased hospital admissions by 50%, and industry

leading member and family satisfaction ratings.

•

•

•

•

POST-ACUTE CARE //

TRIPLE-TREE.COM30

Bluestone Physician Services Through an interdisciplinary team of physicians, nurse practitioners

and physicians assistants, Bluestone Physician Services (Bluestone)

provides on-site primary care services to complex, frail and special

needs patients in assisted living, memory care and group home

communities. The company’s delivery model is supported by a

robust communications portal and EHR that allows the nursing staff,

homecare and hospice nurses, and family members to reach the care

team (as opposed to dialing 911) when a change in condition occurs

and deliver high quality, coordinated care. Bluestone’s care plans are

customized with the family for each patient to assure appropriate

end-of-life care, further reducing costs and improving care quality.

Each patient visit includes the review of current medical concerns

and medications, as well as preventative care, foot care, skin care,

chronic disease management and arrangement of specialty care

when needed. This type of ongoing preventative care has proven to

not only reduce the need for emergency care and trips to the hospital,

but also significantly improve overall health.

Bluestone’s care model has transformed how care is delivered to

the assisted living and group home populations in the Twin Cities

area of Minnesota. The company has contracted with several local

health plans to serve over 3,000 patients in more than 130 assisted

living communities. Today, Bluestone is sharing its model with

other geriatric care providers and developing even more enhanced

care coordination strategies to further drive change across our

healthcare system.

These two models exemplify what healthcare reform is all about – improved quality, improved outcomes and greater affordability.


Supporting Technology Providers Supporting technology providers can play a pivotal role in care coordination post

discharge. When a patient leaves a hospital they and their caregivers require all, but

not limited to the following: (i) information about their treatment plan, (ii) education

about their medications and other equipment, (iii) reminders about medications

and follow-up appointments, and (iv) proper transition of patient information and

medical records between hospital physicians and ambulatory-care physicians. The

common thread amongst all of these requirements is communication and patient /

caregiver engagement.

From both a research and advisory perspective, TripleTree is well versed in the

dynamics surrounding the explosion of interest in healthcare consumerism. Shifting

retail-based models and engaging the consumer are some of the motivations behind

market consolidation and ‘net new’ approaches between and amongst providers,

payers and consumers.

While ACOs, value-based purchasing, and other incentives / penalties for increased

accountability are taking hold, so too have the strategies of consumer engagement

platforms to address the growing market demands for payer / provider collaboration

and improved care coordination.

Figure 13 highlights some of the most notable investments, product launches

and acquisitions in the consumer engagement space that illustrate the need and

opportunity for consumer engagement solutions to drive improve outcomes at a

lower cost.

Homecare Homebase is a healthcare

software company serving the

technology needs of the home health

and hospice industries. The company

offers a comprehensive integrated web-

based software solution to improve

the clinical, operational and financial

success of home health and hospice

agencies. Homecare Homebase’s

software connects nurses and workers

in the field to central offices, capturing

billing, patient and care information,

eliminating paper-based administrative

tasks and ensuring compliance with

Medicare standards. It can be used

on a variety of different platforms,

including smartphones. The web-based

software can be updated immediately

in response to new regulations without

users having to upgrade to a different

version.

company profile

POST-ACUTE CARE //

TRIPLE-TREE.COM32

Figure 13: Consumer Engagement Activity Continues to Accelerate

CO N F I D E N T I A L Property of TripleTree, LLC. Not For Distribution. 8

2011

•  Eliza recapitalized by Parthenon

•  Xerox partners with Medco Health Solutions on new communications system

•  Varolii raises $8 million from various investors

•  Aetna acquires PayFlex •  Optum Health acquires

Connextions

January 2012

•  RedBrick Health launches mobile platform for consumer health and wellness engagement

•  change:healthcare announces $10 million equity raise

February 2012

•  Through Q2 2012, HCSC has invested $100 million in re-platforming MEDecision with enhanced patient engagement solutions

March 2012

•  Precision Health Media raises venture funding and expands leadership team

May 2012

•  Castlight announces $100 million raise •  SolutionReach announces growth equity

investment from Summit Partners •  MEDSEEK announces buyout with Silver

Lake Sumeru and Essex Woodlands

•  Healthline launches Consumer Engagement Platform

•  Towers Watson acquires Extend Health for nearly 7x revenue

Q1 2012 Q2 2012 Today Q3 2012

June 2012

•  Altegra Health acquires patient communications company Warm Health •  Getinsured.com partners with Accenture for the implementation of a

statewide California Health Exchange •  Aon Hewitt invests $40 million on internal development of exchange

platform

April 2012

•  Liazon Corporation raises $18 million from various investors, including Bessemer Ventures, Bain Capital, and Beacon Bioventures

August 2012

•  Change Healthcare announces new leadership after partnership and capital raise from BCBS

•  Connecture raises $20 million in a recapitalization lead by Great Point Partners


Multi-model consumer engagement has become a top priority across payer, provider

and PBM with the realization that the healthcare industry is amidst a transition from

a business-to-business (B2B) to a business-to-consumer (B2C) model. Technologies

and services to communicate at the right time, with the right message, through the

desired mode, have proven to drive increased actions individuals must take to obtain

the greatest benefit from the healthcare services available to them.

Amongst a myriad of evolving technology solutions, Phytel is taking a leading role in

providing innovative solutions that automate care coordination and health management

programs to improve outcomes and reduce cost in the post-acute market. Phytel has

a deep product suite of automated patient engagement, population reporting, care

coordination, discharge follow-up and patient self-management tools. In particular,

Phytel Transition provides a comprehensive toolkit that closes provider communication

loops and empowers patients and their providers to improve outcomes by: (i) identifying

high-risk patients, (ii) communicating post-discharge instructions and educating the

consumer, and (iii) gauging the patient experience.

A wide range of technologies have the potential to support post-acute care transitions.

The following table provides an overview of these technologies, their applications and

their potential outcomes.

Founded in 1999, Curaspan Health

Group, Inc. is connecting providers

hospitals, post-acute care providers,

payers and transportation companies

via secure electronic patient-transition

networks to improve outcomes as

patients transition between sites and

levels of care. With a customer base of

over 400 hospitals and 4,000 post-

acute care providers, the company’s

SaaS-based Synchronized Patient

Management Solution is catching the

eye of our nation’s largest providers

and payers by enabling these parties

to communicate and securely share

real-time, clinical information, access

patient data in any setting and use that

data to drive better clinical outcomes.

company profile

POST-ACUTE CARE //

TRIPLE-TREE.COM34

Figure 14: The Potential Impact of Supporting Technologies

Integrated Care & Care Coordination Providers – Emerging Care Delivery Models Despite the fact that the need for care coordination services has

been apparent for some time, the industry is still in its infancy

with regards to design and implementing programs that show

measureable results. One only needs to consider Medicare

spending and its unsustainable path, which will only worsen as the

baby boomers continue to age. Drastic changes are underway for

the Medicare program to ensure its long-term sustainability and

while Medicare Advantage is a part of the solution, government

policy will impact the profitability of commercial insurers. How

these insurers manage care across a variety of post-discharge

settings is a massive lever for cost management. The companies

profiled below are a few of the industry players that have developed

or currently provide solutions to support emerging care delivery

models that are poised to have a significant impact on care

coordination and costs within our healthcare system.

The trend of vertical integration and aligning physician pay to

quality became ever more apparent when Humana announced

on November 5th its agreement to purchase Metropolitan Health

Networks (MHN), a provider of coordinated and accountable to care

to over 87,500 MA, Medicaid and other customers. Over 80% of

MHN’s revenues were generated through contracts with Humana

to manage the care of its members in Florida on a capitated-

basis, whereby MHN assumes the risk for all of its patients’ cost.

TECHNOLOGY APPLICATIONS

• Patient Education

• Medication adherence & reconciliation

• Remote patient monitoring

• Personal health information

• Social support

• Remote training an supervision

EXAMPLE TECHNOLOGIES

• Automated patient communication• Medication reminders and dispenser• Medication list software• In-home diagnostic devices• Problem detection algorithms• Videoconferencing• Social networks

POTENTIAL OUTCOMES

• Reduced hospitalizations

• Increased patient satisfaction

• Reduced costs

• Improved health

• Increased quality of life


Through the company’s newly formed subsidiary, Symphony Health

Partners, Inc., MHN has struck a graduating risk arrangement with

Humana to manage the provision of healthcare services to nearly

one million Humana Medicare Advantage members in Cincinnati,

Northern Kentucky, and Indianapolis service areas. After the first

two years of the contract, during which Symphony will receive a

base administrative fee, the arrangement shifts to a limited risk basis

beginning in 2014, followed by full-risk in 2015. MHN’s provider-

centric model is becoming increasingly popular, as it helps lower

costs and increase quality by giving physicians additional financial

incentives to keep patients out of the hospital. The company’s model

of care, which includes a physician network of 33 owned primary

care practices and 450 contracted independent primary care

practices, has achieved proven results (Figure 15) of high quality

care, lower costs and improve patient satisfaction and providers

across the U.S.

The purchase of MHN is Humana’s latest foray into providing medical

services, as the insurer seeks more levers to control rising costs

in Medicare. We expect further vertical integration as medical cost

management has become a critical focus for this country, given

skyrocketing healthcare costs and ballooning deficits. Regardless,

MHN’s patient-centric approach to care coordination has driven results

that should be the envy of payers and providers across the U.S.

POST-ACUTE CARE //

Figure 15: MHN’s Utilization Results

Utilization Metric

Admission / 1,000

Hospital Days / 1,000

Average Length of Stay

Acute Readmissions

Generic Dispensing Rate

Source: Metropolitan Health Network Q2 2012 Investor Presentation

Medicare Population

335

1,968

6.2

21%

60%

Metropolitan Health Networks

317

1,412

4.23

9%

84%

Results

Down 5%

Down 28%

Down 32%

Down 12 ppt

Down 24 ppt

TRIPLE-TREE.COM36

Independent Living Systems (ILS) provides an integrated suite of care management solutions focused on long term managed care, nutritional support services, complex care

management, care transition services, and a range of other member management related services. As shown in Figure 16, these synergistic

services create a patient-centered, holistic approach to long-term care that enables strong partnerships among individual patients, caregivers,

payers and the care delivery system. Today, ILS serves over 2.5 million lives on behalf of its health plan clients and is gaining significant traction

as its value proposition to the major healthcare constituents continues to proliferate.

Figure 16: ILS’ Integrated Suite of Care Management Solutions

MANAGED LONG-TERM CARE

Holistic care and support services provided in the home of Medicare, Medicaid and Duel Eligibles

“High-touch”, “low-cost” services that address daily living and innovate systems that monitor, measure and report care

Reduces financial burden for consumers, payers and providers

NUTRITIONAL SUPPORT SERVICES

Provides means and nutrition services to members to help them regain and maintain their health

Post discharge meals: meals are delivered to the patients home immediately upon discharge

Chronic Care & Disease Management Meals. Nutritional plans for those with chronic diseases,

Meals for sustained health living. Ensure members have access to health meals, particularly when they are unable to shop for or prepare themselves

COMPLEX CARE MANAGEMENT

Patient-centric communication that facilitates access to community based services and expert care coordination for the elderly, those with special needs, and dual-eligible populations and their families

Following a telephonic assessment, A group of highly trained nurses, social workers, and care coordinators work as a team to manage the care and services identified on a member’s individualized care plan

To optimize the utility of the service, ILS has developed a proprietary cloud-based care management tool that integrates member data with metrics relevant to health plans’ needs

CARE TRANSITION SERVICES

A holistic approach to transition services to provide critical support, care coordination and guidance to patients post discharge to facilitate a successful recovery at home for elderly and at-risk populations

Individualized counseling. Coach meet with patients in hospital prior to discharge, follow-up with a home visit in 72 hours and maintain contact telephonically during transition (up to 60 days)

Comprehensive home visit. Assessment of the patient’s needs and lifestyle through a home visit

Specialized technology. Identifies institutionalized members and manages cases through a web-based portal, which can be integrated into a health plan’s existing medical management and operational processes


The Power of Surveillance in Population

Health ManagementManaging the care of a health plan’s installed membership base

requires superior surveillance capabilities to identify the individuals

that need the most support from the healthcare system. Establishing

a plan of action and closing each patient’s unique gaps in care,

improves outcomes, quality and patient satisfaction. On the backs of

traditional HEDIS and Medicare Advantage risk adjustment audits

and more recently the Affordable Care Act, a new category of clinical

auditing solutions are emerging that cut across cost, care and quality

management. One company that is at the forefront in changing how

individuals are cared for in the healthcare system is Outcomes Health

Information Solutions (Outcomes). Outcomes is a leading provider

of end-to-end solutions for healthcare data acquisition, auditing

and analytics for use in payment integrity, compliance and quality

reporting in the healthcare industry. More specifically, the company

provides a “preemptive” suite of services that allows Medicare

Advantage plans to measure and influence results by closing gaps in

care and quality. The company’s unique surveillance technology allows

it to organize disparate data to efficiently listen to data and create

actionable intelligence. The company extracts meaning from volumes of

diverse data to pinpoint patient care needs and address discrepancies,

facilitating the right care at the right time for each specific patient.

Additionally, the company’s senior care services identifies high-risk

patients and gaps in care via risk scores, prior admissions, number

of medications, chronic conditions and other indicators and assigns a

personal health concierge to these members to lower medical expenses

by facilitating effective care, increased patient satisfaction and improved

quality scores (HEDIS and STAR ratings).

While the health plan marketplace must continue to invest to automate

its legacy medical management competencies, the industry is most

focused on innovation and collaboration. However, legacy care

management / population health management platforms are woefully

inadequate to address today’s and tomorrow’s market needs:

Need to Look Forward, Not Backward – Systematic shift away

from retrospective care management towards real-time /

prospective population management

Need to Empower Clinicians With Actionable Data at the Point of

Care – Alert-driven workflow and analytics must be woven into

the day-to-day actions of providers

Need for Payers to “Cross the Chasm” and Become More

Provider Relevant – Payer-based technology vendors must help

obtain connectivity inside the four walls of the provider office

Need to Help Enable Providers to Take on Payer-based Activities

– Providers will be taking on more payer-driven activities and will

be as focused on quality measure as well as HCC-risk scoring for

their MA members

•

•

•

•

POST-ACUTE CARE //

TRIPLE-TREE.COM38

ZeOmegaZeOmega, a provider of web-enabled and rules-driven workflow

software for integrated care management, is taking a leading role in

fulfilling these industry needs. The company’s solutions enable the

integration of workflows across the care management continuum,

automate workflows intelligently based on client business rules and

facilitate collaboration between payers, providers and members,

thereby transforming traditional episodic-based care management

into a proactive and collaborative population management paradigm.

With an installed base across health plans, TPAs, care and disease

management organizations who collectively manage over 23 million

members, ZeOmega is placing actionable intelligence in the hands of

payers and providers to drive better outcomes, improved efficiencies

and increased collaboration among all the major constituents in the

healthcare ecosystem.

INDUSTRY PERSPECTIVE Q4 / 2012 39POST-ACUTE CARE //

LOOKING AHEAD As we await the influx of new enrollees in the healthcare system in

2014, a perfect storm is looming for which the healthcare system

could be grossly unprepared. While it is unlikely that one player in

the post-acute care market can solve the problem of unnecessary

hospital admissions, we do believe that increased collaboration

between the providers, payers and consumers can make significant

strides in eliminating this waste in the system. The incentives for

these constituents to work together are beginning take hold and

innovators across the care continuum are making investments and

developing new strategies to prepare for the explosion of high-risk

individuals into our currently disjointed healthcare system in 2014.

For a growing number of market participants, the post-acute care

market represents an outstanding opportunity for growth and value

enhancement. Entering 2013, we believe there is an increased

demand for products, services and solutions in this category,

resulting in continued strong growth, robust M&A activity and an

increased focus from the professional investment community.

TripleTree is dedicated to the Healthcare Services (Acute Care,

Alternative Site Delivery, Care Coordination and Collaboration,

Community-Based Care Delivery, DME Distribution, Home Care,

Hospice, Infusion Therapy, Managed Care, and On-site Healthcare

Delivery / Urgent Care) and looks forward to helping business

owners, investors and others interested in this important arena

within healthcare to understand and capitalize on the opportunities

that undoubtedly exist.

TRIPLE-TREE.COM40

END NOTES

Agency for Healthcare and Quality, National Healthcare Quality Report, 2011.

Agency for Healthcare Research and Quality, Potentially Preventable Hospitalizations for Acute Chronic Conditions, November 2010.

AHIP, Innovations in Reducing Preventable Hospital Admissions, Readmissions, and Emergency Room Use, June 2010.

MedPac, Health Care Spending and the Medicare Program, June 2012.

American Action Forum, Healthcare Reform and Medicaid: Patient Access, Emergency Department Use, and Financial Implications for

States and Hospitals, September 2010.

Represents Medicare spending

http://www.foxnews.com/politics/2012/08/23/more-than-2200-hospitals-face-penalties-for-high-readmissions/

June 2012 Amedisys Investor Presentation

1

2

3

4

5

6

7

8

triple-tree.com

TRIPLE-TREE.COM42

no part of tHis publication may be produced or transmitted in any form or by any means, electronic or mecHanical, witHout permission in writing from tripletree. tHe information contained Herein Has been obtained from sources believed to be reliable, but tHe accuracy and completeness of tHe information, and tHat of tHe opinions based tHeron, are not guaranteed. as an independent firm, tripletree may perform or seek to perform investment banking services for tHe companies references in tHis document.

copyrigHt © 2012 triple tree, llc. all rigHts reserved.

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Health & Medicine

Post-Acute Care & Beyond