DonMcDaniel

Presentedat:NACHCConferenceFOM/ITOctober28,2015

TheHigh-PerformingFQHCofTomorrow:ExpandingtheMissionThroughMargin

Agenda

 Megatrends MarketForces  Implica4ons

1

Backdrop

  FQHCshavebeenprotected—Marketforcesaredrawingthemintohealthcareeconomy Market—TidalWavethatAffectsFQHCs  Howisthehigh-performingFQHCtorespond?

2

Megatrend1:PublicSectorChallenges

131%

191%

72%

127%

212%

17%

38%54%

13% 28%43%

0%

50%

100%

150%

200%

250%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

HealthInsurancePremiumsWorkers'ContribuIontoPremiumsWorkers'EarningsOverallInflaIon

SOURCE:Kaiser/HRETSurveyofEmployer-SponsoredHealthBenefits,1999-2014.BureauofLaborStaOsOcs,ConsumerPriceIndex,U.S.CityAverageofAnnualInflaOon(ApriltoApril),1999-2014;BureauofLaborStaOsOcs,SeasonallyAdjustedDatafromtheCurrentEmploymentStaOsOcsSurvey,1999-2014(ApriltoApril).

AND

3

Megatrend2:VolumetoValue

Payer Value-Based Portfolio

PorterResearchStudy2013

4

Megatrend3:AggressiveAcceleraIonofFFV

5

MarketLandscape

6

TheTwoCanoesHaveCollided!

30%

85%

50%

90%

AllMedicareFFSAllMedicareFFS

AllMedicareFFS(Categories1-4)FFSlinkedtoquality(Categories2-4)AlternaIvepaymentmodels(Categories3-4)

20182016

TargetpercentageofMedicareFFSpaymentslinkedtoqualityandAlternaIvepaymentmodelsin2016and2018

PaymentCategories

Category1:FFSwithnolinktoqualityCategory2:FFSlinktoqualityCategory3:AlternaOvepaymentmodelsbuildonFFSpaymentarchitecture(upsideortow-sidedrisk)Category4:PopulaOon-basedpayment

Source:hHp://www.cms.gov/Newsroon/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26-3.html

7

EXPANDING COVERAGE

FOR LOW-INCOME RESIDENTS

Expanding

Coverage ........28

Considering

Expansion..........4

Not Expanding

Coverage at

This Time.........19

MedicaidReform

State ElementsofMAReform

Oregon 16CoordinatedCareOrganizaOonsGlobalPaymentswith2%withholdpaidonqualitymetrics11of15receivedfullpaymentsin2013

Arkansas PurchasingsilverlevelcoverageontheexchangesforMedicaidrecipients,puengtheriskonthecommercialinsurersratherthantheState

Vermont Medicalhomesandaccountablecareareintegral80%ofVermont’sprimarycarepracOcesareNCQAPCMHcerOfied.Stateorganizescarecoordinategroupswithinthecommunity

NewYork DSRIPApproachtoMedicaidreform;expects$6billioninincenOvepaymentsMontefiore’sCareManagementprogramsareviewedasmodel

WheretheStatesStandonMedicaidExpansion27States,DC,ExpandingCoverage–December17,2014

Notes:Basedonliteraturereviewasof12/17/14.AllpoliciessubjecttochangewithoutnoOce.HHshasannouncedthatstatescanobtainawaivertousefederalfundstoshimMedicaid-eligibleresidentsintoprivatehealthplans.TheDistrictofColumbiaplanstoparOcipateinMedicaidexpansionandwilloperateitsownexchange.

LearnmoreaboutACAimplementaOonatadvisory.com/daily-briefing©TheAdvisoryBoardCompany

8

EmergingHyper-CompeIIveMarket

9

FighIngOvertheSameTurf:TheHospitalIsNotYourFriend!!

33.431.2 30.9

33.1 35.2 35.1

218.7301.3

414.3

521.4585.4

651.4

1985 1990 1995 2000 2005 2010 1985 1990 1995 2000 2005 2010

AlthoughinpaOentvolumeshaverecoveredsincedippingInthe1980ssomeexpertsexpectadmissionstostagnateasthedeliverysystemshimstowardsoutpaOentcare

ADMISSIONSInmillions

OUTPATIENTVISITSInmillions

Source:AmericanHospitalAssocia4onHospitalSta4s4cs MODERNHEALTHCAREGRAPHIC

10

FQHCEqualsTripleAim

93%99%

84%91%

86%90%

47%59%

44%57%

37%51%

0% 20% 40% 60% 80% 100%

HealthCentersPerformBeoeronAmbulatoryCareQualityMeasuresthanPrivatePracOce

PhysiciansPrivatePracOcePhysicians HealthCenters

Noelectrocardiogramscreeninginlow-riskpaOents

Nouseofbenzodiazepinesindepression

Bloodpressurescreening

ß-Blockeruseincoronaryarterydisease

Aspirinuseincoronaryarterydisease

AceinhibitoruseincongesOveheartfailure

Note:StaOsOcallySignificantat0.05level.Basedon2006-2008NaOonalAmbulatoryMedicalCareSurvey(NAMCS)Source:Goldman,L.E.,Chu,P.W.,Tran,H.,Stafford,R.S.2012.FederallyQualifiedHealthCentersandprivatepracOceperformanceonambulatoryCaremeasures.AmericanJournalofPrevenOveMedicine,43(2):142-149.

11

  In2015,HRSAbegangivingincen4vestoFQHCsforrankingwellonclinicalmeasurescomparedtootherFQHCsinstateandinna4on

  HRSA/CMSaresisterorganiza4onsinHHS

  CMShasestablishedvalue-basedpaymentgoalsof50%for2016and80%for2018foritsprograms

HRSAandCMSShowMovestoValue

12

1805ColumbiaRd,NWWashington,DC20009

1660ColumbiaRd,NWWashington,DC20009

Allsiteswithin1/3ofamile

2333OntarioRd,NWWashington,DC20009

283115thSt,NWWashington,DC

WhoAreYourCompeItorsNow?HealthSystemand3FQHCSin1/3Mile

13

OpportuniIesareEndless

14

Example#1–FQHCaspartofACO

  HealthSystem’spointofview- Reducereadmissions- EDdiversionprograms- Can’townFQHCsoincludeFQHCasACOmember

  DelawareValleyCommunityHealth(FQHC)ismemberofDelawareValleyACO(DV-ACO) MilwaukeeHealthServices,Inc.ispartofIPN’sACO

15

Example#2–MedicaidFQHCACO

FQHCUrbanHealthNetwork(FUHN)–TwinCiVes,2013

  10of12FQHCsinTwinCi4esenteredACO  40sites,150kpa4ents  BelievedfailureofFQHCcoali4oncouldresultinabsorp4onbylargerhealthsystemORmarginaliza4on—movedfrom“defaultprovidertopreferredprovider”

16

Example#3–MedicareFQHCACO

FamilyHealthACO—Founded2014  3FQHCsinHudsonValley,NYwith300+providers Managesdiversepopula4onofMedicaidanddually-eligiblebeneficiaries—MedicareACOunusualforFQHCs  Stemmedfromini4alcollabora4onin2008withHudsonInforma4onTechnologyforCommunityHealth(HITCH)topoolresourcesoncancerscreeninganddiabetescollabora4ves  StrongleaderwhoispioneerinNYCITcircleandUSHealthITPolicy,NYSHIE

17

Pros  Favorablecontracttermswithonepayer  Poten4altokeepcurrentiden4ty  Poten4altotapintosophis4catedbackofficeresources

Cons  Lossoffocusonmission  Becomingcompe4torsofformerpartners  Poten4allylimi4ngtheclientbase,dependingonwhichpayersareaccepted

Example#4–StrategicAlignmentwithPayer

18

DynamicPayerEnvironment:CareFirst—HealthPlanorACO?

19

Benchmarks

20

NewWorldBenchmarks

  Addnewbenchmarksaroundglobalpaymenttotradi4onalbenchmarks

  “Nooutcome,noincome”  FundamentalshiioffocusfromEncountertoCoveredLives

21

NewWorldBenchmarks—FFSvsFFV

Metric CHCNat’lMedian(2013)

YourFQHCMeasures…

YourCompeItorsMeasure…

OperaOngMargin 1.2%1 Yes Yes

DaysCashonHand 471 Yes Yes

CurrentRaOo 1.81 Yes Yes

CostperpaOent $7212 Yes Yes

RevenueperpaOent $7663 ? Yes

Expensebydiseasecohort ? ? Yes

PtsaOsfacOonbyteam/department ? ? Yes

Expenseperptbyteam ? ? Yes

ExpensebypaOent(highestuOlizers) ? ? Yes

Sources:1T.Skapinsky,CapitalLink.June2015.MPCAFinance&BillingNetworks:FQHCFinancial&OperaOonalBenchmarking.2HRSA,UDS.AccessedOct.20153Calculatedfrom:P.Shin,J.Sharac,Z.Barber,S.Rosenbaum,J.Paradise.KaiserFamilyFoundaOon,Mar.2015.CommunityHealthCenters:A2013ProfileandProspectsasACAImplementaOonProceeds.

Value-Ba

sed

22

SoWhatDoesAllofThisMean?

23

ImplicaIonsforFQHCs

  Opportuni4esareEndless

  ThinklikeaHealthPlan

  DriveBusinessModelTransforma4on

  EmbraceTransparencyandDriveCommunica4on

  SeekourVBCPaymentOpportuni4esandac4velymanagecohortpopula4ons

  NeverbeenaBeHerTimeto“DoGoodandDoWell”

24

Panelists

VernitaToddCEOHeartCityHealthCenterElkhart,Indiana

RichardLarisonCEOChaseBrextonHealthServicesBal4more,Maryland

BenGlisanCFOLegacyCommunityHealthServicesHouston,Texas

25

Contact:DonMcDanielSageGrowthPartners3500BostonStreet,Suite435Bal4more,Maryland21224410.534.1161www.sage-growth.com