2014 hce annual conference moving forward: embracing change and innovation california endowment ...

2014 HCE Annual ConferenceMoving Forward:

Embracing Change and Innovation

California Endowment November 20, 2014

Learning From ExperienceStrategize Like a Consultant

Strategic Planning and Case Study

HealthCare Executives of Southern CaliforniaLa Canada, CaliforniaNovember 20, 2014

THE CAMDEN GROUP | 11/20/2014 4

Year founded: 1970 Number of clients: More

than 2,000 nationwide Ranked in Top 20 largest

consulting firms serving the U.S. by Modern Healthcare

Office locations: Los Angeles, California Costa Mesa, California Chicago, Illinois Rochester, New York Boston, Massachusetts

The Camden Group Overview

Case Study


County-owned and -managed medical center with limited services

ABC Medical Center (“ABC”) clinics: specialty focused, 1 primary care, all provider based

7 Health Department (“HD”) clinics; all primary care with some specialty services

Safety net provider (high Medi-Cal, little managed care) 2 other hospitals (“Competitor A and Competitor B”) in the area Constrained emergency department (“ED”) capacity Organized labor presence Slow decision making Strong current cash position, uncertain future Needed strategic planning assistance to position them for

success

ABC Medical Center – Background


Strategic Planning Approach

Step 1Engagement Kick-Off Meeting

Step 2Situation Assessment (Internal and External

Analyses)

Step 3Conduct Interviews

Step 4Summarize and Present Findings

Step 5Conduct Planning Retreat

Step 6Prepare and Review Draft Strategic Plan

Step 7Finalize Strategic Plan

Meetings/Site Visits

Weeks 2-5

Weeks 4-5 On-site Interviews

Weeks 6-7

Week 8

Weeks 9-10

Weeks 11-12

Conference Call

Steering Committee

On-site

Steering Committee

Steering Committee and Board

Week 1

Timeframe

Internal Situation Assessment


Trended UtilizationNatividad Medical Center

Acute Care Utilization Statistics

Fiscal Year 2010 to Annualized 2013 (1)

Indicator/Service 2010 2011 2012

Annualized

2013 (1)

2010 to 2013

Percent Change

Licensed beds

General Acute (2) 150 150 150 150 0.0%

Acute Psychiatric 22 22 22 22 0.0%

Total 172 172 172 172 0.0%

Total Staffed Acute Care Beds 118 118 118 118 0.0%

Volume Indicators (excluding newborn nursery)

Discharges 7,781 7,911 8,401 8,450 8.6%

Patient Days 33,786 33,779 34,289 34,130 1.0%

ALOS 4.3 4.3 4.1 4.0 -7.0%

ADC 92.6 92.5 93.6 93.5 1.0%

Occupancy Rate (3) 53.8% 53.8% 54.4% 54.4% 1.0%

Outpatient Visits

Emergency Room

Visits 45,096 44,836 45,564 47,021 4.3%

Stations (2) 20 20 19 19 -5.0%

Visits/Station 2,255 2,242 2,398 2,475 9.8%

Clinics 30,252 31,087 33,364 30,305 0.2%

Surgeries 2,579 2,613 2,795 2,921 13.3%

Deliveries (5) 2,724 2,735 2,812 N/A 3.2%

Medicare Case Mix Index 1.210 1.213 1.234 DNA 2.0% (4)

Note: Fiscal year represents July - June

N/A indicates Not Applicable

DNA indicates Data Not Available

(1) Annualized based on f ive months of actual data

(2) Represents calendar year information gathered from OSHPD ALIRTS Annual Utilization Reports; 2012 and 2013 stations have 19 ED beds;

14 of w hich are acute (11 general acute and 3 psych) and the remaining 5 are Rapid Medical Evaluation ("RME")

2010 and 2011 stations had 20 ED beds; assumed 15 of w hich are acute (12 general acute and 3 psych) and the remaining 5 are RME

(3) Calculated as ADC/Total Licensed Acute Care Beds

(4) Represents the percent change betw een FY 2010 - FY 2012

(5) Represents CY 2009 - CY 2011 data

Fiscal Year

Source: Natividad Medical Center Audited Financial Statements, Statistical Report as of November 30, 2012 and OSHPD ALIRTS Annual Utilization Reports


ABC is exposed to financial risk with expected declining government reimbursement and the sun-setting of disproportionate share hospital (“DSH”) and other supplemental funding.

Payer Mix

Natividad Medical Center Natividad Medical Center

Acute Care Payer Mix Trends Acute Care Utilization Statistics

Fiscal Year 2009 to 2012 FY 2010 - 2012

Payer Category 2009 2010 2011 2012

2009 to 2012

Percent Change

Medi-Cal 26.6% 23.4% 21.9% 21.1% -5.5%

Medi-Cal Managed Care 23.5% 27.1% 29.0% 30.4% 6.9%

Medicare 18.0% 17.3% 17.4% 17.2% -0.8%

Managed Care 16.8% 17.3% 17.3% 16.5% -0.3%

MIA 4.6% 4.9% 5.3% 5.2% 0.6%

Self-Pay 7.2% 8.4% 7.6% 7.7% 0.5%

Short Doyle 3.3% 1.6% 1.6% 1.9% -1.4%Total 100.0% 100.0% 100.0% 100.0%

Source: Natividad Medical Center

Notes: Fiscal year represents July - June

Fiscal Year

MIA represents a Medically Indigent Adult

Short Doyle health plan is for mental health coverage for Medi-Cal eligible individuals.


ABC Historical Financial Performance

Natividad Medical CenterFinancial Performance

Fiscal Year 2009 to 2012

2009 (1) 2010 (2) 2011 (2) 2012 (2)

Operating EBITDA(1) (In $000s) $14,911 $25,358 $39,270 $18,726

Operating income (In $000s) $4,161 $14,482 $27,816 $5,854

Excess of revenues over expenses (In $000s) $7,892 $13,792 $32,330 $4,989

LiquidityCash and unrestricted investments (In $000s) $52,409 $45,625 $62,503 $70,673Days cash on hand 136.8 113.2 144.4 156.3Unrestricted cash to debt 69.8% 62.5% 72.7% 88.4%

ProfitabilityOperating margin 2.8% 8.6% 14.4% 3.2%Profit margin 5.1% 8.2% 16.3% 2.8%Operating EBITDA Margin 9.9% 15.0% 20.3% 10.4%

Capital structure and cash flowDebt to capitalization 48.5% 62.4% 50.6% 54.0%

Clients/Natividad_Medical_Center/Strategic_Plan_2013/Client Data/[Financial_Capacity Natividad - RQ 1-24-13.xlsx]Historical_Trends

(1) OSHPD audited financial statements(2) Audited f inancial statements(3) Operating EBITDA calculated by adding the follow ing items to operating income: depreciation and amortization; interest

Fiscal Year


ABC has generated positive operating income over the past 4 years; however, there has been a significant decrease in fiscal year 2012, caused in part by lower provider fees and contracted rates.

With pending changes in Medi-Cal and DSH, operating income is likely to further erode.

Debt service coverage concerns could arise if margins are below annual debt requirements.

ABC Historical Financial Performance


Improving quality scores (utilizing core measures) in the areas of heart failure, immunization, perinatal care (baby), pneumonia, surgical care improvement process, and stroke is critical in helping ABC become a “provider of choice” for patients and help to attract physicians.

Quality Summary – Perfect Care Scores (Core Measures)Natividad Medical Center

Perfect Care ScoresCalendar Year 2010 to 2012

Quality Metric 2010 2011 2012

Calendar Year 2012 Truven

Health Analytics

Benchmark (1)

Perfect Care - Acute Myocardial Infarction ("AMI") 100.0% 89.5% 95.8% 94.5%Total Number of Respondents 19 28 17

Perfect Care - Heart Failure ("HF") 74.6% 70.6% 62.9% 91.6%Total Number of Respondents 82 82 72

Perfect Care - Immunization (2) DNA DNA 66.2% 87.1%Total Number of Respondents DNA DNA 344

Perfect Care - Perinatal Care ("PC") Baby (2) 38.7% 40.2% 44.8% 52.0%Total Number of Respondents 397 519 392

Perfect Care - Perinatal Care ("PC") Mom (2) 78.1% 82.9% 85.6% 77.4%Total Number of Respondents 150 235 132

Perfect Care - Pneumonia ("PN") 68.0% 80.9% 80.6% 94.4%Total Number of Respondents 141 130 72

Perfect Care - Surgical Care Improvement Process ("SCIP") 78.5% 74.5% 70.7% 89.5%Total Number of Respondents 170 213 130

Perfect Care - Stroke ("STK") (2) DNA 38.3% 29.2% 73.5%Total Number of Respondents DNA 30 21

Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/[Natividad_Additional_Analysis.xlsx]Perfect Care Scores

Notes: DNA represents Data Not Available

Sources: Natividad Medical Center

(1) This score is a compiled score based on hospitals w ho utilize Truven Health Analytics (formerly Thompson Reuters) for their Core Measure Service, and elect to include the core measures as part of their reporting.(2) Detail comparisons to local competitors not available on Hospital Compare

Calendary Year

Green highlights represent metrics that are greater than or equal to the Truven Health Analytics Benchmark

Yellow highlights represent metrics that are w ithin one percentage point below the Truven Health Analytics Benchmark

Red highlights represent metrics that are more than one percentage point below the Truven Health Analytics Benchmark


Medical Staff ProfileNatividad Medical Center

Medical Staff Profile (1)

Calendar Year 2012

Physicians Physicians Age 60 +

Specialty

Total Physicians

on Staff

Number of Discharging Physicians

With Ten or More

DischargesAverage

Age

Number of Total

Discharges (2)Percent of

Total


Number of Total

DischargesPercent of Specialty

Primary Care

Family Medicine 32 31 28 43.7 3,092 44.1% - - 0.0%

Internal Medicine 5 5 5 48.4 664 9.5% 1 76 11.4%

Pediatrics 5 4 2 50.4 224 3.2% 1 1 0.4%

Subtotal(3) 42 40 35 3,980 56.8% 2 77 1.9%

Medical

Allergy and Immunology - - - - - 0.0% - - 0.0%

Cardiology 10 1 - 61.8 2 0.0% 1 2 100.0%

Dermatology 2 - - 36.0 - 0.0% - - 0.0%

Endocrinology - - - - - 0.0% - - 0.0%

Gastroenterology 6 1 - 47.3 1 0.0% - - 0.0%

Hematology and Oncology 4 - - 50.0 - 0.0% - - 0.0%

Infectious Disease 1 - - 51.0 - 0.0% - - 0.0%

Neonatology 2 2 2 58.0 79 1.1% 1 39 49.4%

Nephrology 5 - - 52.4 - 0.0% - - 0.0%

Neurology 3 - - 53.7 - 0.0% - - 0.0%

Physical Medicine and Rehab 1 1 1 49.0 255 3.6% - - 0.0%

Psychiatry 5 4 4 57.8 682 9.7% 2 56 8.2%

Pulmonary Disease 6 6 2 41.8 70 1.0% - - 0.0%

Radiation Oncology 1 - - 54.0 - 0.0% - - 0.0%

Rheumatology - - - - - 0.0% - - 0.0%

Subtotal 46 15 9 1,089 15.5% 4 97 8.9%

Source: Natividad Medical CenterIndicates that more than 25.0 percent of specialty is admitted by a physician over age 60, the Hospital has three or few er discharging physicians on active or provisional staff, or the average

age of physicians on staff is over 60.

Notes: Excludes normal new borns; Excludes physicians w ith hospital-based specialties; Medical staff roster represents active and provisional physicians as of January 2013

(1) Includes physicians w ith active or provisional status only.

(2) Represents CY 2012 discharges(3) Number of primary care discharging physicians overstates NMC Primary Care FTEs. Select physicians primarily practice at Clinica de Salud and share call time w ith NMC. In addition, faculty for the Family Practice residency spend time teaching and doi


Medical Staff ProfileNatividad Medical Center

Medical Staff Profile (1)

Calendar Year 2012

Physicians Physicians Age 60 +

Total Physicians

on Staff


With Ten or More

DischargesAverage

Age

Number of Total

Discharges (2)Percent of

Total


Number of Total

DischargesPercent of Specialty

Surgical

General Surgery 5 3 3 54.2 379 5.4% 1 44 11.6%

Neurosurgery - - - - - 0.0% - - 0.0%

Obstetrics & Gynecology 11 10 9 53.5 1,405 20.1% 3 673 47.9%

Oral & Maxillofacial Surgery - - - - - 0.0% - - 0.0%

Orthopedics 14 11 5 53.8 96 1.4% 2 3 3.1%

Otolaryngology 5 4 1 44.2 22 0.3% - - 0.0%

Ophthalmology 2 1 - 54.0 1 0.0% 1 1 100.0%

Plastic Surgery 2 2 - 44.0 9 0.1% - - 0.0%

Thoracic Surgery 1 1 1 64.0 14 0.2% 1 14 100.0%

Urology 2 2 - 40.5 9 0.1% - - 0.0%

Subtotal 42 34 19 1,935 27.6% 8 735 38.0%

Other Specialties (3) 6 - - 50.2 - 0.0% - - 0.0%

Total 136 89 63 49.6 7,004 100.0% 14 909 13.0%

Source: Natividad Medical CenterIndicates that more than 25.0 percent of specialty is admitted by a physician over age 60, the Hospital has three or few er discharging physicians on active or provisional staff, or the average

age of physicians on staff is over 60.

Notes: Excludes normal new borns; Excludes physicians w ith hospital-based specialties; Medical staff roster represents active and provisional physicians as of January 2013

(1) Includes physicians w ith active or provisional status only.

(2) Represents CY 2012 discharges.

(3) Other Specialty includes Podiatry, Pain Management, and Pediatric Dentistry.


ABC’s vulnerability in cardiology and thoracic surgery is high due to 3 or less discharging physicians in these specialties and that all of the discharges are from physicians age 60 years or older; total volumes are low.

ABC is also vulnerable in the following 7 additional specialties (due to 3 or fewer discharging physicians): Gastroenterology Neonatology Physical Medicine/Rehabilitation General Surgery Ophthalmology Plastic Surgery Urology

Medical Staff Profile

External Situation Assessment


Health Professional Shortage Area Portions of the county designated as a health professional

shortage area represent potential target areas for ABC to collaborate with federally qualified health centers (“FQHCs”)/rural health centers (“RHCs”) to establish patient entry and referral relationships.


County PopulationNatividad Medical Center

Monterey County vs. the State of California - Population by Age Cohort

Calendar Year 2013 and 2018

Estimated 2013 Projected 2018

Age Cohort (Years) CAGR(1) NumberPercent of

Total NumberPercent of

Total

Monterey County

0 - 14 1.3% 95,936 22.4% 102,342 22.7% 6.7%

15 - 44 0.5% 185,007 43.1% 189,380 42.0% 2.4%

45 - 64 0.7% 99,393 23.2% 103,045 22.8% 3.7%

65 + 3.1% 48,508 11.3% 56,622 12.5% 16.7%Total 1.0% 428,844 100.0% 451,389 100.0% 5.3%

Women 15 - 44 0.5% 85,853 20.0% 87,940 19.5% 2.4%

Median Age 0.4% 33.5 34.2 2.1%

California

0 - 14 0.6% 7,723,833 20.2% 7,967,126 20.0% 3.1%

15 - 44 0.1% 16,168,924 42.3% 16,261,445 40.8% 0.6%

45 - 64 1.0% 9,666,754 25.3% 10,158,608 25.5% 5.1%

65 + 3.3% 4,640,320 12.1% 5,449,584 13.7% 17.4%Total 0.8% 38,199,831 100.0% 39,836,763 100.0% 4.3%

Women 15 - 44 0.0% 7,901,632 20.7% 7,918,572 19.9% 0.2%

Median Age 0.6% 35.8 36.9 3.1%

Source: Claritas, Inc.

(1) CAGR is the compound annual grow th rate, or the percent change in each year

https://sharepoint.thecamdengroup.com/Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/Claritas/[Natividad_Pop_by_Age_and_Sex.xlsx]Pop Table

Percent Change2013 to

2018


Given the slow annual rate of population growth, in order to build volume ABC will need to capture market share from its competitors.

There is little growth in women ages 15 to 44, which implies little growth in OB and NICU future services.

The largest population cohort (ages 14 to 55) has a low use of hospital services.

The population cohort that is typically the heaviest users of hospital services (ages 65 +) is small in size.

County Population


Ethnic ProfileNatividad Medical Center

Monterey County vs. the State of California - Ethnic Profile

Calendar Year 2013 and 2018

Projected 2013 Projected 2018

Ethnicity CAGR(1) NumberPercent of

Total NumberPercent of

Total

Monterey CountyHispanics 2.1% 246,580 57.5% 273,595 60.6%

Non-HispanicsWhite -0.7% 133,469 31.1% 129,032 28.6%Black -1.9% 10,786 2.5% 9,823 2.2%American Indian/Alaskan/Aleutian -2.4% 1,284 0.3% 1,137 0.3%Asian/Hawaiian/Pacific Islander 0.8% 26,374 6.2% 27,406 6.1%Other 0.1% 10,351 2.4% 10,396 2.3%

Non-Hispanics -0.5% 182,264 42.5% 177,794 39.4%

Total 1.0% 428,844 100.0% 451,389 100.0%

CaliforniaHispanics 1.7% 14,848,498 38.9% 16,188,844 40.6%

Non-HispanicsWhite -0.4% 14,724,160 38.5% 14,448,357 36.3%Black 0.0% 2,156,173 5.6% 2,151,524 5.4%American Indian/Alaskan/Aleutian -1.5% 156,074 0.4% 145,031 0.4%Asian/Hawaiian/Pacific Islander 2.0% 5,237,011 13.7% 5,789,519 14.5%Other 0.7% 1,077,915 2.8% 1,113,488 2.8%

Non-Hispanics 0.3% 23,351,333 61.1% 23,647,919 59.4%

Total 0.8% 38,199,831 100.0% 39,836,763 100.0%

https://sharepoint.thecamdengroup.com/Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/Claritas/[Natividad_Ethnicity_Profile.xlsx]Ethnicity Table

Source: Claritas, Inc.

(1) CAGR is the compound annual grow th rate, or the percent change in each year


ABC has already responded to an increasingly high concentration of diverse populations and has developed programs to meet the language and cultural needs of its patient population i.e., the interpreter program.

As ABC conducts future physician recruitment it should continue to focus on meeting language and cultural needs of its patient population.

Ethnic Profile


Health StatusNatividad Medical Center

Health Status Indicators - Monterey County versus the State of CaliforniaAverages for 2008 to 2010

Health Status Indicator Year of DataState of

California

Monterey County vs the

State of California

Mortality (per 100,000 population) Deaths Death Rate (1) Death Rate (1)

All Cancers 2008 - 2010 Average 520 129.9 151.7 Better

Diabetes Mellitus 2008 - 2010 Average 64 16.0 19.5 Better

Alzheimer's Disease 2008 - 2010 Average 65 15.8 28.2 Better

Coronary Heart Disease 2008 - 2010 Average 386 93.4 121.6 Better

Unintentional Injuries 2008 - 2010 Average 118 28.5 27.1 Worse

Stroke 2008 - 2010 Average 141 34.5 37.4 Better

Morbidity (per 100,000 population) CasesCrude Case

RateCrude Case

Rate

AIDS Incidence (Age 13 And Over) 2008 - 2010 Average 15 4.4 9.4 Better

Tuberculosis Incidence 2008 - 2010 Average 20 4.7 6.5 Better

Chlamydia Incidence 2008 - 2010 Average 1,370 318.4 389.6 Better

Gonorrhea Incidence 2008 - 2010 Average 103 24.0 65.8 Better

Infant Mortality (per 1,000 live births) Infant DeathsCrude Death

RateCrude Death

Rate

Infant Mortality: All Races 2007 - 2009 Average 35 4.7 5.2 Better

Natality (per 100 live births) Live Births Percent Percent

Low Birthweight Infants 2008 - 2010 Average 7,088 5.8% 6.8% Better

Late or No Prenatal Care Utilization 2008 - 2010 Average 1,772 25.4% 17.1% Worse

Natality (per 1,000 female population) Live BirthsAge-Specific

Birth RateAge-Specific

Birth Rate

Births To Mothers Aged 15-19 2009 804 55.5 36.6 Worse

Census Population Percent/Ratio Percent/Ratio

Diabetes Mellitus 2010 15,506 5.1% 8.5% Better

Obesity 2010 74,491 24.5% 18.7% Worse

Population to Mental Health Provider Ratio 2010 2,778:1 1,853:1 Worse

Monterey County

Source: County Health Status Profiles, 2012, Monterey County Health Department, County Health Rankings, and Health Indicators Warehouse

(1) Death rate is age-adjusted

(2) Percent of population is age-adjusted

https://sharepoint.thecamdengroup.com/Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/[Monterey_County_Health_Status_ Indicators.xls]Table


The County’s health status is worse than the state for unintentional injuries. This implies support for a trauma program in ABC’s service area.

ABC has an opportunity to: Reduce teen births and enhance prenatal care (i.e., increased

patient outreach and patient education) Enhance population health management and education as it

relates to obesity and mental health

Health Status


Market Share by Service Line - 2011Natividad Medical Center

Monterey County Market Share by Service Line

Calendar Year 2011

Total Inpatient Discharges

Service Line VolumePercent of

Total Outmigration (1)

Cardiology - Diagnostic/Interventional 842 2.3% 0.0% 40.6% 45.8% 0.0% 13.5%

Cardiology - Medical 2,121 5.9% 25.4% 32.4% 31.3% 3.9% 7.0%

Cardiology - Surgery 298 0.8% 0.0% 40.6% 40.3% 0.0% 19.1%

Chemical Dependency 383 1.1% 24.3% 54.8% 8.9% 0.8% 11.2%

Endocrine 908 2.5% 17.3% 29.6% 35.4% 6.1% 11.7%

ENT 345 1.0% 14.5% 26.1% 32.5% 1.4% 25.5%

Gastroenterology 2,687 7.5% 20.2% 33.5% 31.0% 3.9% 11.4%

General Medicine 2,587 7.2% 15.4% 36.9% 31.1% 4.4% 12.2%

General Surgery 2,695 7.5% 14.1% 34.7% 33.1% 4.4% 13.7%

Gynecology 712 2.0% 13.6% 24.6% 43.7% 4.2% 13.9%

Neonatal Intensive Care 2,228 6.2% 53.4% 17.2% 14.6% 5.7% 9.1%

Neurology 1,437 4.0% 13.0% 34.1% 31.1% 3.8% 18.0%

Neurosurgery 468 1.3% 1.9% 33.1% 25.4% 0.0% 39.5%

Obstetrics & Deliveries 7,239 20.2% 42.2% 18.5% 25.6% 7.8% 6.0%

Oncology 1,194 3.3% 8.5% 30.7% 28.0% 1.7% 31.2%

Ophthalmology 53 0.1% 30.2% 18.9% 17.0% 0.0% 34.0%

Orthopedics 2,452 6.8% 8.1% 40.6% 27.2% 2.9% 21.2%

Plastic Surgery 217 0.6% 12.0% 30.4% 32.3% 2.3% 23.0%

Psychiatry 1,404 3.9% 32.8% 50.2% 1.4% 0.5% 15.0%

Pulmonary Medicine 2,661 7.4% 19.4% 34.8% 30.7% 5.9% 9.2%

Rehabilitation 514 1.4% 71.0% 0.0% 0.0% 13.4% 15.6%

Spine Surgery 544 1.5% 2.9% 48.5% 30.3% 0.0% 18.2%

Thoracic & Vascular Surgery 485 1.4% 3.5% 41.0% 32.4% 0.0% 23.1%

Transplant (2) 33 0.1% 0.0% 0.0% 0.0% 0.0% 100.0%

Ungroupable 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Urology 1,385 3.9% 17.1% 28.7% 31.5% 6.1% 16.5%

Total 35,892 100.0% 24.1% 30.6% 27.6% 4.7% 13.1%

N = 8,647 10,980 9,896 1,672 4,697

Source: OSHPD Inpatient Discharge Database, 2011. Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/[Natividad_Market_Share_and_Payer_Mix_Tables.xlsx]2011 Mkt Shr outmig

Notes: Excludes normal new borns (MS-DRG 795); Includes all types of care.

Indicates market share leader

(1) Includes all hospitals not located w ithin Monterey County. Each of these individual Hospitals have less than 2.5 percent market share.

(2) UCSF Medical Center leads the market w ith 63.6 percent of the transplant service line.

Natividad Medical Center

Community Hospital Monterey Peninsula

Salinas Valley

Memorial Hospital

George L. Mee

Memorial Hospital

ABC Competitor A

Competitor B

Competitor C


Medi-Cal Market Share by Service Line - 2011 Natividad Medical Center

Monterey County Medi- Cal Market Share by Service Line

Calendar Year 2011

Total Inpatient Discharges

Service Line VolumePercent of

Total Outmigration (1)

Cardiology - Diagnostic/Interventional 50 0.5% 0.0% 20.0% 54.0% 0.0% 26.0%

Cardiology - Medical 230 2.2% 55.2% 8.7% 21.7% 0.4% 13.9%

Cardiology - Surgery 33 0.3% 0.0% 15.2% 45.5% 0.0% 39.4%

Chemical Dependency 41 0.4% 43.9% 46.3% 9.8% 0.0% 0.0%

Endocrine 179 1.8% 27.9% 14.0% 35.2% 2.8% 20.1%

ENT 137 1.3% 26.3% 8.8% 30.7% 1.5% 32.8%

Gastroenterology 499 4.9% 41.1% 17.4% 24.6% 1.0% 15.8%

General Medicine 421 4.1% 36.8% 16.4% 28.5% 1.9% 16.4%

General Surgery 539 5.3% 31.2% 18.9% 28.2% 4.1% 17.6%

Gynecology 123 1.2% 38.2% 8.1% 40.7% 3.3% 9.8%

Neonatal Intensive Care 1,476 14.4% 73.6% 4.7% 10.2% 4.5% 6.9%

Neurology 218 2.1% 32.6% 14.2% 23.4% 0.5% 29.4%

Neurosurgery 58 0.6% 8.6% 17.2% 6.9% 0.0% 67.2%

Obstetrics & Deliveries 4,400 43.0% 63.2% 5.1% 19.9% 7.2% 4.6%

Oncology 252 2.5% 14.3% 10.3% 22.2% 0.8% 52.4%

Ophthalmology 25 0.2% 36.0% 4.0% 12.0% 0.0% 48.0%

Orthopedics 214 2.1% 34.1% 17.8% 18.2% 1.9% 28.0%

Plastic Surgery 35 0.3% 28.6% 17.1% 40.0% 0.0% 14.3%

Psychiatry 267 2.6% 50.6% 31.1% 0.0% 0.0% 18.4%

Pulmonary Medicine 649 6.3% 41.0% 19.6% 26.3% 1.2% 11.9%

Rehabilitation 79 0.8% 84.8% 0.0% 0.0% 1.3% 13.9%

Spine Surgery 30 0.3% 36.7% 20.0% 0.0% 0.0% 43.3%

Thoracic & Vascular Surgery 44 0.4% 11.4% 15.9% 25.0% 0.0% 47.7%

Transplant(2) 3 0.0% 0.0% 0.0% 0.0% 0.0% 100.0%

Ungroupable 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Urology 224 2.2% 42.4% 11.2% 25.9% 1.3% 19.2%

Total 10,226 100.0% 53.4% 9.9% 20.3% 4.4% 12.0%

N = 5,458 1,011 2,079 450 1,228

Source: OSHPD Inpatient Discharge Database, 2011 Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/[Natividad_Market_Share_and_Payer_Mix_Tables.xlsx]2011 MediCal MS



(1) Includes all hospitals not located w ithin Monterey County. Each of these individual Hospitals have less than 2.5 percent market share.

(2) UCSF Medical Center leads the market w ith 100.0 percent of the transplant service line.

Natividad Medical Center

Community Hospital Monterey Peninsula

Salinas Valley

Memorial Hospital

George L. Mee

Memorial Hospital

Competitor A

Competitor B

Competitor C

ABC Medical Center


In order to grow its Medi-Cal market share, ABC must differentiate itself from Competitor B and it must resolve access barriers present in its clinics.

As the safety net hospital, ABC leads the market in 14 service lines for Medi-Cal payers.

Competitor B leads the Medi-Cal market share in: Interventional Cardiology Cardiac Surgery Endocrine ENT Gynecology Plastic Surgery Thoracic and Vascular Surgery

Medi-Cal Market Share by Service Line - 2011


Market Share by Payer Mix – 2011Natividad Medical Center

Monterey County Market Share by Payer Mix

Calendar Year 2011

Total Inpatient Discharges Medicare Medi-Cal Private Coverage

Hospital VolumePercent of

TotalManaged

Care FFS TotalManaged

Care FFS Total HMO PPO FFS Total

Natividad Medical Center 8,647 24.1% 0.0% 9.6% 9.4% 42.9% 66.1% 53.4% 0.4% 10.7% 8.2% 8.3% 29.4%

Community Hospital Monterey Peninsula 10,980 30.6% 30.4% 44.1% 43.9% 12.6% 6.6% 9.9% 43.6% 28.3% 24.1% 30.7% 42.5%

Salinas Valley Memorial Hospital 9,896 27.6% 44.6% 34.7% 34.8% 29.9% 8.8% 20.3% 0.4% 41.6% 44.5% 33.8% 11.3%

George L. Mee Memorial Hospital 1,672 4.7% 0.0% 3.3% 3.2% 0.4% 9.2% 4.4% 31.9% 0.0% 9.9% 7.7% 2.7%

Subtotal 31,195 86.9% 75.0% 91.7% 91.4% 85.7% 90.7% 88.0% 76.3% 80.5% 86.7% 80.5% 85.9%

Outmigration (2) 4,697 13.1% 25.0% 8.3% 8.6% 14.3% 9.3% 12.0% 23.7% 19.5% 13.3% 19.5% 14.1%

Total 35,892 100.0% 0.6% 32.6% 33.2% 15.6% 12.9% 28.5% 5.2% 17.3% 3.6% 26.1% 12.2%

N = 224 11,693 11,917 5,596 4,630 10,226 1,855 6,208 1,305 9,368 4,381

Source: OSHPD Inpatient Discharge Database, 2011. Clients/Natividad_Medical_Center/Strategic_Plan_2013/Planning/[Natividad_Market_Share_and_Payer_Mix_Tables.xlsx]2011 Pyr Mix outmig



(1) Includes county indigent, other indigent, other government, other payers, w orkers compensation, and self-pay.

(2) Includes all hospitals not located w ithin Monterey County. Each of these individual Hospital has less than 2.5 percent market share.

All Other

Payers (1)

ABC Medical CenterCompetitor ACompetitor BCompetitor C

Interview Themes


Strengths, Weaknesses, Opportunities, and Threats

Academic medical center affiliated family medicine residency program

Only certified level III NICU, high-risk obstetrics Strong acute rehab and inpatient psych programs Directly employs physicians Overall younger medical staff Effective hospitalist program in place Meaningful Use Stage 1 completion in 2013 Facility is seismically compliant and campus has physical

space to expand Several sources of government funding Strong cash position

Strengths



Lower costs per discharge due to low case mix index Low time to triage in the ED

Weaknesses Governance structure inhibits timely decision making and

execution (impedes retention of quality managers, improvement of quality processes, and realization of operational efficiencies)

County policies as they relate to ABC are cumbersome and slow

Limited access points (limited hours of operation in HD clinics, lack of geographic distribution, lack of affiliations with FQHCs, RHCs, and lack of health plan contracts)

Constrained ED capacity

Strengths (Cont’d)


Weaknesses (Cont’d)


Delayed admission from ED Relatively low quality and patient satisfaction

Physicians and the community have a negative perception of ABC Lack of risk management experience No use of new care models Lack of pay-for-performance (“P4P”) incentives Continuum of care gaps (acute and post acute) Significantly underfunded capital expenditures

Opportunities Form strategic partnerships/affiliations and restructure to

enhance clinical services, physician recruitment, improve quality, facilitate rapid information technology (“IT”) initiative implementation, and enable faster decision-making


Opportunities (Cont’d)


Establish a physician organization (i.e. independent practice association [“IPA”] ) to facilitate recruitment, care management, and alignment with ABC

Participate in contracted risk health plans through the IPA to facilitate alignment across the continuum of care

Offer a narrow network health plan/benefits for county and non county employees

Add a trauma program Expand HD clinic hours of operation Expand ED capacity Evaluate ABC inpatient capacity Affiliate with FQHCs and RHCs to expand geographic

reach/access


Threats


Financial risk with declining reimbursement (Medicare, Medi-Cal, disproportionate share hospital payments, provider fee supplement)

Financial impact of refinancing the existing debt (additional costs, higher interest rates)

Covered California will increase the ED use (currently above functional capacity)

Continued low quality and patient satisfaction scores will reduce reimbursement

As managed care products enter the market, likely loss of profitability


Critical Issues to be Addressed in the Strategic Plan

Key Findings/Gaps

Existing governance structure and leadership inhibits timely decision making and execution

Constrained ED capacity (operating above functional capacity) Limited access points Lack of clinical management expertise Lack of IT infrastructure to support integrated care and

movement towards population management Fragmented continuum of care Lack of sustainable financial performance Backlog of capital needs (equipment, facility, and IT);

approximately $25 million to $30 million Lack of physician alignment with physicians at other entities

Mission and Vision


Mission and Vision

To continually monitor and improve the health of the people, including the vulnerable, in the County through coordinated, affordable, high quality healthcare.

Vision

To be a healthcare delivery system that collaborates with other providers to offer accessible, high quality and high value healthcare services in a financially stable manner.

Mission

Goals and Sample Strategies


Goal: Increase Patient Access

Sample Strategies

Priority Strategy Timing

In Process Evaluate and expand ED capacity (i.e., triage processes) Expand ED facility Add extended hour primary care center

Ongoing - June 30, 2015Ongoing - June 30, 2014

In Process Add the County’s only trauma program* Ongoing - December 31, 2013

1B Create a narrow network and contract with health plans for large employers (e.g., agriculture, hospitality)* Explore feasibility of a risk bearing health plan

through a Knox-Keene license

June 1, 2013 - December 31, 2013

1D Affiliate or collaborate with FQHCs to expand geographic reach and referral base*

July 1, 2013 (signed LOI) - June 30, 2014 (signed affiliation agreement)

1F Increase the PCP base via physician recruitment and/or affiliation with another entity: Physician organization*, participation in county-wide

IPA, and/or creation of a separate IPA Implement P4P incentives through health plan

contracts and self funded employers*

July 1, 2013 - June 30, 2016

* Execution work plan currently in development 1A-H High 2A-F Medium 3A-C Low


Goal: Increase Physician Integration and Alignment

Sample Strategies


In Process Integrate leadership of ABC and the Clinics; explore and evaluate the formation of a physician hospital organization*

Ongoing - December 31, 2013



Goal: Move Towards Population Health Management

Sample Strategies


In Process Acquire the IT infrastructure (CPOE, HIE, meaningful use, EDW, web-based portals, care management tools, claims processing, etc.) to support medical management

Ongoing - June 30, 2015

In Process Continue to utilize patient centered medical home (“PCMH”) for population health management in HD clinics Negotiate enhanced/additional payment for PCMH

services




Goals: Attain Financial Stability/Separate from the County

Sample Strategies


1A Form affiliations/partnerships/relationships with provider networks: Consolidate shared services to reduce costs Enhance clinical services across the continuum to

increase quality and market share capture Lower cost of capital (debt) Diversify payer mix through expanded PCP base and

health plan contracts Consider the universe of opportunities based on

the Hospital’s needs (i.e., local providers, AMCs, and health systems)

June 1, 2013 - March 31, 2014



Goal: Fund Capital Needs

Sample Strategies


1A Form partnerships/relationships with provider networks: Use increased savings to fund capital expenditures

June 1, 2013 - March 31, 2014



Sample Strategies

Goal: Improve Quality and Increase Patient SatisfactionPriority Strategy Timing

In Process Implement process changes to improve quality core measure and patient satisfaction scores Target top quartile (in 3 years) Target top decile (in 5 years) Target HCAPHS performance metrics/scores Implement the quality improvement plan (core

measures) Use IT tools to improve quality Follow care protocols Benchmark performance Change own culture to improve the quality of care

Ongoing - June 30, 2015



Goal: Improve Staff Recruitment/Retention

Sample Strategies


In Process Ensure employee compensation and benefits are competitive (via new policies) Incentive programs to meet specific metrics that ABC

is measured on*


2A Exceed the “standard of care” criteria as a philosophy and culture Optimize rewards and payment for employee

credentials Enhance employee training to specific metrics Review and revise job descriptions (including

standard of care/practice) for health system positions

October 1, 2013 - September 30, 2014



Goal: Improve Patient Centered Care

Sample Strategies


In Process Implement a PCMH in addition to HD Clinics Follow NCQA criteria and guidelines Seek enhanced payment


1B Contract with health plans, self funded employers, and the County (employees, dependents, and retirees) to offer a tiered benefit plan that includes cost savings incentives*

June 1, 2013 - December 31, 2014


2014 HCE Annual ConferenceMoving Forward:

Embracing Change and Innovation

California Endowment November 20, 2014

2014 hce annual conference moving forward: embracing change and innovation california endowment ...

Documents

camden group overview

timeframe slide

consultant slide

case study slide

medical staff profile

trended utilization

payer mix slide

primary care