current practice alignment strategies to ensure long term survival

Current Practice Alignment Strategies to Ensure

Long-Term Survival

2013 MGMA Annual Conference

October 7, 2013

John A. Lutz, FACMPE, Managing Director, Huron Healthcare

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Agenda

© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

I. Pressures Driving Transformation Initiatives

II. Alignment Models for Long-Term Success

III. Examples

IV. Competencies Needed

V. Q & A

Learning Objectives

Examine real-world examples to glean best practice alignment techniques.

Evaluate alignment practices to meet your practice’s needs. Understand that alignment has three core aspects:

• Clinical Alignment• Economic Alignment• Market Alignment

Examine how alignment is tied to transformation.

© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 3

Pressures Driving Transformation

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Industry Pressures Driving Clinical Transformation Initiatives

THE VOLUME TO VALUE TRANSITION AND PAYMENT REFORM REQUIRES: Making operational and care delivery transitions from volume-based to value-based payment

models Taking on risk for clinical outcomes Building population health management capabilities Moving from a “consolidated practice” status to a “clinically integrated” status

THE EMPHASIS ON QUALITY IMPROVEMENTS REQUIRES: Responding to regulatory, payer, and consumer pressures to improve quality while

simultaneously decreasing the cost of care Achieving physician and clinician alignment with hospital’s goals for care quality Lowering readmissions and reducing medically unnecessary care variation

THRIVING UNDER LOWER REIMBURSEMENT FROM ALL PAYERS REQUIRES: Lowering the cost of delivering care Pursuing partnerships to achieve scale and integration Re-evaluating the most cost-effective care settings and care providers


MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL


New Path to Success

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High Volume Great Outcomes

High Compensation Great Compensation

High Independence Great Partnerships

MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL


DESTABILIZATION

• Rising costs

• Shrinking reimbursement

• Transition to value-based arrangements

ADAPT TO NEW NORMAL

• Management structures

• Operations

• Skill mix

• Compensation

• Affiliations

CREATE NEW STABILITY

• Tighten alignment with partners

• Strengthen management

• Restructure compensation

• Strengthen clinical integration

• Maintain high member engagement

New Path to Success

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Prioritizing TransformationCLINICAL INTEGRATION & TRANSFORMATION STAGES


• Comprehensive, coordinated, primary care

• Team-based, all practicing at top of license

• Proactive care management to avoid admission

ACCOUNTABLE CARE

CLINICAL INTEGRATION

PCMH

• Formalized structure across the continuum

• Governance structure to support population health

• Economic model/plan design

• Integrate ACO-like competencies

• Population health management

• New relationships with physicians, payers, employers

• Membership & narrow networks

• Financial and clinical outcome controls

Complexity

Sophistication

Clinical & Financial ROI

Alignment Models

QUESTION:

As you think about the future, which is most important in your practice?

A. Independence

B. Stability

C. Steady or increased income

D. Reduced hours, work/life balance

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Physician – Hospital Alignment Strategies


• Management Service Organization

• Clinically Integrated Physician Networks

• Information Infrastructure

• Practice Lease Arrangements

• ED & Other Call Pay

• APP & Hospitalist Coverage

• Medical Directorships

• Co-Management & PSA

Agreements

• Joint Ventures

• Individual Contract, Structured Compensation

• Single Specialty Group• Regional Model Groups• Multispecialty Groups

• MD Councils

• Clinical Operations Committee

• Direct Physician Leadership (Board, CEO, etc.)

Business Services Contracts

EmploymentStructured Engagement

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Alignment Models

PROFESSIONAL SERVICE AGREEMENTS Definition: PSAs provide a viable alternative to physician employment by establishing

an independent contractor type of relationship between the hospital and physician, whereby the physician can be paid compensation to provide physician’s services that are beneficial to the hospital. Examples:• Medical Director Agreements • Coverage Agreements • Hospital-Based Service Agreements • Leased Employee Agreements • Foundation Model Arrangements

Advantages: PSA preserves a modicum of practice independence and future strategic options for physicians

Disadvantages: Potential conflicts around locations of practice


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Alignment Models

CO-MANAGEMENT Definition: A co-management agreement is different from hospital employment of a

physician because it's with a group of physicians and focused on a team-based approach to managing specific aspects of patient care delivery. What makes these agreements unique is that compensation can be structured so that a portion is "at-risk" and based on the achievement of predetermined outcomes and a second portion is for administrative duties. If the outcome goals are achieved, physicians receive the associated compensation. If they are not achieved, they do not receive the compensation.

Advantages: Aligns on services and doesn’t require direct employment. Allocates effort and reward between groups.

Disadvantages: Leverages revenue and income on two parties directly. Is not “permanent” like an employment arrangement.


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Alignment Models


EMPLOYMENTIncludes variations of strategies that meet the legal definition of employment. Can be applied in a variety of ways and often incorporates many of the other strategies as part of the employment agreement. Examples include:

• Individual employment agreements, • Large single specialty group employment, • Formation of multispecialty groups and foundations.

Advantage for hospitals: Large primary care network provides key to ACOs, defense against competition.

Advantage for physicians: Salary guarantees, better work-life balance, avoids administrative burden of an independent practice.

Disadvantages: Perception of loss of control, “anchoring” on one health system partner.

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Employment Option “Wrinkle”

Are You In a “Corporate Practice” State? In California, Colorado, Iowa, Ohio, and Texas, hospitals are generally prohibited from

employing physicians, although certain types of providers and hospitals are exempt from these prohibitions. In some other states, there is uncertainty whether hospital employment is precluded.

However, hospitals in these states have developed alternative means, such as the formation of medical foundations in California, to manage practices, including acquiring the practice’s assets.


16© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

Professional Service Agreement Example

PSA & wRVU $

License

Operations

APP’s

Supplies

Staffing &

Mgmt.

Note: Stark - Under arrangements prohibition:

cannot have investment interest in entity

(including own medical group) that performs the

DHS service

Fair Mkt. Value requirements

There are other legal considerations so consult an

attorney.

Center of

Excellence

Payer

Medical GroupHospital or Health System

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Co-Management Example

© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.

Designees

Designees

Co-management & Profit/Loss

Operations

Payer

Service Line

Operating Committee

Note:

No Steering or Cherry Picking!

Fair Market Value Applies

Medical Group

Hospital or Health System

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Employed Physician Enterprise Example

© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential

Health System Medical Group(s) Health System HospitalsHealth System Joint Strategy

and Oversight Committee

MSO Core Functions

Finance/Accounting

Operations/Patient Access

Performance Analytics

Performance Improvement

Revenue Cycle

Human Resources

Information Technology

Executive Director Physician Executive

Primary Care Physician Practices

Specialty Physician Practices

Practice Support Services (MSO)

Affiliated Group (Independent Physicians)

Health System

Competencies Needed


Management & Financial

Platform

System Alignment &

Compensation

Demand & Capacity

Management

Clinical Integration

Competence

Core Competencies

“Physicians and hospitals are going to be

working much more closely together as they

move toward value: We are seeing a lot of

integration—both consolidation with hospitals

and integration with physician practices—

and expect to see much more blurring of the

lines between hospitals and clinics.” HFMA

May 2013 issue

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Accountable Care Competencies

The model of essential competencies for an Accountable Care Organization is patient-centered and includes new clinical and management competencies.


Management Competencies

Clinical Integration Management

Provider Network Design

Care Delivery Roles / Team Management &

Development

Information Technology & Data Analytics

Measurement &

Performance Management

Revenue Cycle & Financial StructureClinical Competencies

Patient-Centered Medical Home

Population Management Transition / Readmission Management

Care Variation & Quality Management

Patient Lifelong Health Management

Clinic /

Outpatient

HospitalPost-Acute Care Home / Community

Healthcare Transformation – Alignment Opportunity

ACOs, for the foreseeable future, will not conform to a single model, but rather multiple models will exist:

ACO Structure Current Examples

Provider-led health plan • NSLIJ

Payer-led provider networks • Highmark/West Penn• UHC/Monarch (Los Angeles)

Co-branded ACO • Banner/Aetna• Primecare (Los Angeles)/Aetna

Pluralistic provider-led ACO’s• Shared risk contracts• Capitated & bundled payment• Blended: FFS, PMPM, gain/risk sharing

• Sharp (Wellpoint, Aetna, Blue Shield)• Carilion Clinic (Aetna, UHC, CMS)• PeaceHealth• Dignity

CMS ACO • Many

Direct provider to employer • Futuristic – Aurora Health

• Decision point: Determine commonality and market focus (all or subset).


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Healthcare Transformation Competencies

Organizational and Operational Variables Organizational effectiveness and change leadership are critical success factors in

the shift to a volume/value-based payment system. Physician governance methodology Organizational structure strategy and alignment Efficient operational processes to predict and manage toward cost reduction and

quality improvement Patient engagement methods M&A and more – design Legal and Regulatory


Accountable Care CompetenciesCLINICAL COMPETENCIES

Healthcare organizations need the following clinical competencies to provide value-based care that optimizes cost and quality outcomes across the care

continuum:

Patient-Centered Medical Home: Patients are cared for in a medical home by a multi-disciplinary team (e.g., health coach, physician, dietician, social worker, etc.). A Navigator or Health Coach works

with the patient to assess health risks and develop a customized health plan. Tools (e.g., free phone access to caregivers 24x7) are provided to patients to support them in proactively managing their

own health. Benefit designs (e.g., no office co-pays) promote preventative care.

Population Management: The patient base is aggregated into population segments based on analysis of EMR and administrative data. Each population segment has specific care programs to address

their needs and optimize outcomes. Population segments may include healthy patients, acute patients, chronic disease patients (e.g., diabetes, heart failure), and end-of-life patients.

Transition/Readmission Management: Care is coordinated as a patient moves between care settings to ensure smooth transitions. In the short-term, organizations typically need to focus on managing

readmissions to the high-cost hospital setting.

Care Variation & Quality Management: Medical, nursing, and ancillary practices are integrated across the care continuum, decreasing physician, nursing, and ancillary process variation, and ensuring

care is clinically appropriate and delivered efficiently according to evidence-based standards. This competency includes an institutionalized process for the development, adoption, and monitoring of

evidence-based care (e.g., cross-continuum pathways, guidelines, order sets).


Characteristics of Success

Full physician engagement & alignment

An unwavering focus on patient-centered care

Ability to establish, operationalize, and enforce a standard of care across the health system

Ability to rationalize care across the system to gain the best results

Ability to manage care across the continuum

Clear roles and accountability for physicians in management positions among otherwise independent physicians

Organizations that are positioned to successfully manage value-based contracts have the following characteristics:


Today’s Presenter


John A. Lutz, FACHE, FACMPE

Managing Director

Huron Healthcare

[email protected]

518-491-4267

mailto:[email protected]

Appendix: From HMOs to ACOs

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Where We’ve Been

HMOs: The rush of acquisition and employment of medical groups and physicians by hospitals

and health systems reminds some of the surge of HMOs in the 1990s. HMO enrollment exploded from 3 million in 1970 to over 80 million in 1999. Employers converted to HMO insurance as the lower cost alternative.

www.rand.org/pubs/rgs_dissertations/RGSD172/RGSD172.ch1.pdf


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Where We’ve Been

ACOs Are Different from HMOs: Capitation was a financial transaction. Population management is a health care transaction. HMOs were good at measuring costs but paid little attention to measuring effects. They

failed to look at outcomes. HMOs cut costs by deciding what care would and would not be reimbursed, pitting the

insurer against the doctor. People objected to being told they couldn’t get all the care they want.


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Where We’ve Been

How ACOs Are Different: In ACOs, there is an economic incentive to improve quality and reduce costs. Doctors and hospitals share in the savings when patients stay healthy and use less

medical care.



In the evolving payment model, organizations providing increased value through population health management excellence will be rewarded by the market with

increased population volume, enabling economies of scale and driving down average cost/patient. The ability to capitalize on the shift from volume to “value to volume”

will be a competitive advantage.

American Hospital Association. “Hospitals and Care Systems of the Future.” September

2011. p.9

Changes in the Payment Model

Value-Based Second Curve

Payment rewards population value: quality and

efficiency

Quality impacts reimbursement

Partnerships with shared risk

Increased patient severity

IT utilization essential for population health management

Scale increases in importance

Realigned incentives, encouraged coordination

THE GAP

Volume-Based First Curve

Fee-for-service reimbursement

High quality not rewarded

No shared financial risk

Acute inpatient hospital focus

IT investment incentives not seen by hospital

Stand-alone care systems can thrive

Regulatory actions impede

hospital-physician collaboration

Patient-Centered Medical Home


Patients are cared for in a Medical Home by a multi disciplinary team. A Navigator or Health Coach engages the patient, assesses health risks, and develops a Health Plan. Self-care

management is enabled through tools, processes, and benefit design.

• Medical Home Team: Multidisciplinary team including participants such as Health Coach, Primary Care Physician,

Nurse Practitioners, Dietician, Social Worker (provides integrated behavioral health clinical services and linkage to

other community-based services), Physical Therapist, etc.

• Care Manager: Supports Medical Home Team

People

Process

Tools/Systems/Enablers

• Health Risk Assessment Tool: Used to identify health risks

• Patient Self-Care & Education Tools: Multiple vehicles such as 24x7 care line staffed by RNs, online/ interactive tools,

social media such as Facebook, brochures (e.g., on Urgent Care Clinic availability),etc.

• Benefit designs that promote self-care: e.g., no co-pays for office visits

• Rewards for activities such as joining a smoking cessation program

• EMR / Personal Health Record (medical history, medications, recent hospitalizations, emergency or urgent care visits,

health maintenance)

• Advance directives

• Patient registries, referral protocols, medication adherence guidelines

• Community resources

• Health Planning: Periodic assessment of a patient’s specific health risks and development of a customized Health Plan. The Health Plan incorporates age/sex-appropriate wellness monitoring and interventions (e.g., mammograms, immunizations).

• Health Management: Monitoring the patient’s health (e.g., hospitalizations), updating the Health Plan, monitoring compliance, and initiating reminders based on triggers to ensure patients stay on track with physician’s orders. Includes coordinating care across

the continuum (e.g., referral specialists, emergency care, hospital admissions, therapeutic care, skilled nursing facilities, home care). Includes medication reconciliation. Self-care management is supported and patients are provided with tools to proactively

manage their health.

• Health Education: Providing patient self-management information about managing existing health conditions as well as preventative care.

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Patient

Advanced Primary Care

Under Patient-Centered Medical Home

Medical Group

Enterprise Level Activities

Accountable Care Organization

Hospitals•

Service Line Integration

•Medical Staff Alignment

•Incentives for Efficiency & Lean Six Sigma

•Quality (SCIP, Leapfrog)

•Safety

Medical Groups•

Enterprise Level Activities

•PC-MH Functions

Skilled Nursing Facilities•

SNFists

•On-site Case Management

•Efficiency Rating Systems “Preferred Facilities”

Ancillary Services•

Free-Standing ASC & Diagnostic

Testing Centers

Home Care•

Home Safety Visits

•Post Discharge Visits

•Home Health Coordinator of Services

Hospice

•Transitions (CHF, COPD,

Frailty Syndrome, Dementia)

•PCP/SCP Incentives & Clinical Guidelines

•Pay for Performance Initiatives

•Hospitalists, Post Discharge Follow-Up Programs DME

•Integration & Oversight with Care

Management

•Outcomes & Evidence Based Medicine

•Call Coverage

•Consult Services (Stroke, STEMI)

•ER Avoidance Programs

•Urgent Care

•End of Life (Palliative Care)

•Patient Satisfaction & Loyalty

•Personal Health Record

•Patient Portal

•Health Risk Assessment

•Patient Engagement & Activation

•Prevention & Wellness

•Point of Care Analytics & Clinical Decision Support

•Gaps in Care

•Population Management & Chronic Care Registries

•Home Visiting Teams

•Generic Prescribing

Program

•Cost Effective Medical Management & Utilization of

Services (SCP, Ancillary)

•Access, Same Day Appointments, e-Visits

•Patient Satisfaction & Loyalty

•Provider & Office Staff

Satisfaction

•Care management (Acute, Chronic, Inpatient, SNF)

•Health Coaching (Shared Decision Making)

•Transition of Care

•Provider Satisfaction

•Behavioral & Mental Health

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SCMG: PCMH to ACO Progression ACO

Used with Permission:

Dr. John Jenrette, CEO

Sharp Community Medical Group

(2010)

CLINICAL OPERATIONS AND SYSTEMS


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Healthcare Transformation Competencies

Healthcare Transformation Processes for Clinical Integration & Population Health Management• Patient identification and enrollment management system• Patient engagement process management• Care team roles, responsibilities, and care management processes for panel/population health

management• Compliance with evidence based guidelines (care variation)

Financial Controls• Bundled collection and distribution• Compensation and contract management with employed and non-employed physicians [HR, Non Labor]• Re-casting productivity measurement• Healthplan and PBM design and contracting• Charge Structure

– Core fee structure (FFS)– Care management fee (not always applicable)– Gain/risk sharing– Bundled payment

Physician/ACO governance


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Other ACO Competencies and Considerations

Population care management competencies• Enrollment in ACO (patient selection and engagement)• Risk identification and management (at risk and high risk)• Case and referral management• Medication management (MTM) and compliance• Patient engagement

Analytic capabilities• Disease registries (foundation for all else)• Risk stratification• Basic comparative effectiveness analysis and predictive modeling• Content analytics to effectively mine vast quantities of clinical notes to implement and manage core

measures, readmission risk detection

Patient referral analysis/steerage – where should I refer the patient to get the best outcome?

Under and overutilization of care• Patients at risk for a spike in utilization due to underutilization of clinical services• Patients who over-utilize clinical services
