Integrated Governance & Integrated Governance & Management:Management:

A Leadership Challenge!A Leadership Challenge!

Presented by:Presented by:

Marc D. Halley, MBAChairman and CEO

The Halley Consulting Group, Inc.

Percival Kane, MHASVP & Network AdministratorNorth Oaks Physician Group

Healthcare Financial Management AssociationRegion 5

February 20, 2015

Discussion Topics

I. Our Business Imperatives

II. The Physician Integration Continuum

III. The Critical Role of Governance

IV. Management Styles and Power Bases

V. Vertical Governance: The Council Model

VI. Horizontal Governance

VII.Q&A

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Our Business Imperatives

Strategic Imperatives – Organizations Must Do These Things

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The Concept of “Value”

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Clinical Process

Clinical Outcome

PatientExperience

Effective

CostPerUnit

Utilization Efficient

The Physician Integration Continuum

Common Integration Options(Multiple “Plugs”)

Inte

gra

tion

Sustainability/ Infrastructure

Medical Staff

PHO/IPA

Medical Directorships/

Co-management

Joint Venture

Independent

Contractor/ PSA/SBS

Employee

H

HLHalley, Marc D. 2011. Owning Medical Practices: Best Practices for Sustainable Results. Chicago, IL: AHA Press. 67. 7

Physician Integration Economics –

Fee for Service

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Capture &Retain

Market Share

Hospital Capital

Generator

Capital Preservation &

Investment

Market Manage

rPrim

ar

y Car

e

Subspecial

ty

Physicians

Potential Capital Loss

Potential Capital Drain

Potential Capital Drain

Referral Path

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© 2008 The Halley Consulting Group, LLC

Halley, Marc D. 2011. Owning Medical Practices: Best Practices for Sustainable Results. Chicago, IL: AHA Press. 10.

Physician Integration Economics –Risk Payment Model

Panel Size Access Time &

Materials

Hospital Risk Pool

Capital Potential

Capital Preservation &

Investment

Market Manage

rPrim

ar

y Car

e

Specialty

Physician

sPotential

Capital Loss

Potential Capital Drain

Potential Capital Drain

Referral Path

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© 2008 The Halley Consulting Group, LLC

Halley, Marc D. 2011. Owning Medical Practices: Best Practices for Sustainable Results. Chicago, IL: AHA Press. 10.

Moving Up the Integration Pyramid

• Population-centered care• Personal accountability for

healthy behaviors and lifestyle• Population health management• Chronic disease prevention &

management• Access and information = value• Risk-based payment

• Choreographed care (Accountability)

• Improving process and outcomes• Clinical quality commitments• Transparent flow of clinical

information across care continuum• Managing an episode of care or

chronic disease using clinical metrics

• Individual and joint accountability to live by established metrics

• Collaborative care (Trust)

• PCMH & “Choice” Initiatives

• Vital behaviors (“We”/“Our”)

• Service quality extension of referring provider’s office

• Information lubricates the Referral Path

• Referral management

• Coordinated care (Silos)

• Basic form of integration• Legal

structure/Organization chart

• Payroll silos (“Me”/“You”)

• Referral leakage

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© 2013 The Halley Consulting Group, Inc.

The Critical Role of Governance

Fiduciary and Operational Governance

• Select and evaluate the chief executive

• Enterprise vision & strategies

• Capital formation and allocation

• Mergers & acquisitions• Regulatory compliance• Enterprise financial &

quality oversight• Enterprise policy• Etc.

• Sponsor, direct & oversee implementation

• Operating policies, procedures

• Performance improvement tactics and timing

• Key stakeholder engagement

• Performance accountability

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Vertical Governance(Formal Authority or Authorization)

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OwnersOr

Fiduciaries

Employees

Management

Horizontal Governance(Common Consent)

(* Potential future members)

Service Line Council (SLC)

Clinical Process Teams (CPT)

(Functional Integration)

(Clinical Integration)

14© 2014 The Halley Consulting Group, Inc.

Management Styles and Power Bases

“Knowledge Workers…”

• Own the means of production – unique knowledge and practiced skill

• Highly mobile• Independent judgment (“professional”)• Need tools of production – capital

investment• Exceptional clinical opportunities =

loyalty• Compensation “hygiene” factor• Define their own level of contribution• “Cannot be supervised effectively”

Adapted from: Drucker, P. 1998. Peter Drucker on the Profession of Management. Boston: Harvard Business School Publishing. 122-124.

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Power Bases

• Legal Power: official authority & position

• Expert Power: knowledge, ability, information

• Reverent Power: respect, personality, charisma

• Reward Power: ability to give or withhold incentives, capital, etc.

• Punitive Power: impose penalties

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Gilson Leadership ScaleWays Leaders Make Decisions

• Tell: Identify the problem, discern the alternatives and make the decision

• Persuade: Add “sell” to above• Discuss: Identify the problem, discern the

alternatives, propose a tentative solution, gather input from those who will need to implement the solution, make the final decision

• Consult: Present the problem and background to the group, solicit alternative ideas and solutions from the group, leader makes the final decision

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Gilson Leadership Scale (Continued) Ways Leaders Make Decisions

• Join: Manager participates as a member of the group in identifying the problem and alternatives, while agreeing, in advance, to carry out the decision of the group

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Matching Leadership Styles and Power Bases

• Tell Legal, Expert, Punitive• Persuade Reverent, Reward• Discuss Reverent, Reward• Consult Expert, Reverent• Join Expert, Reverent

The Council Model: “Partnership” Led

Network Operations Council (NOC)

• Composition– Physician Chair– Physician representation from Primary Care Clinics, Medical

Specialty Clinics, Surgical Specialty Clinics & Hospital-based Services

– Executive Team representation: Executive VP/COO, SVP/Chief Legal Officer, SVP/CFO, SVP/CMO & SVP/Network Executive

• Purpose– Provide governance for overall physician network– Determine the strategic direction of the physician network– Make clinical/quality, operational, financial, strategic &

policy decisions globally for the physician network• Value

– Decision-making forum for the entire physician network that inherently has credibility & buy-in from other network providers

• Tools– Agenda comprised of standing reports from subcommittee

chairs & SVP/Network Executive, a review of monthly financial performance & new business.

– Supporting information: dashboards, Net 1, Net 2 Financials, action plans, policies, etc.

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Network Operations

Council

Practice Operations

Council

Practice Operations Council (POC)• Composition

– Physicians within the practice– Mid-level providers within the practice– Practice Leadership Team: Practice Manager, Supervisor,

Regional Director & SVP/Network Executive• Purpose

– Provide governance for the practice– Determine the strategic direction of the practice– Determine how to adopt & execute NOC-approved directives– Make clinical/quality, operational, financial & strategic

decisions for the practice• Value

– Provider engagement with decision-making for the operations of the practice

– Provider awareness: operations, policies, performance, initiatives, challenges, etc.

– Accountability• Tools

– Site-Specific Action Plans– Net 1, Net 2 Financials– Supporting materials: dashboards, policies, presentations,

etc.

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Network Operations

Council

Practice Operations

Council

Network Operations Council Subcommittees

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The Extension of the Physician Governance Model into General Operations

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North Oaks Physician GroupGovernance Structure

Horizontal Governance

The Limits of “Pay for Performance”

• Mind or heart?• When you pay for everything you

get, you get only what you pay for…

• From incentive to entitlement• Upping the ante…• Stifles innovation

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Horizontal Integration

• A common interest– Chronic disease– Episode of care– Referrals

• Clear and compelling vision– Common cause is the glue– “An offer too good to refuse”– Overcomes tactical disagreement

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Horizontal Integration

• Shared tenets (ground rules)– Clinical quality– Service quality– Productivity– Collaboration– Cost per unit– Process efficiency– Utilization– Financial viability

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Horizontal Integration

• Working together– Individual roles– Shared commitments*– Performance targets– Performance management– Individual accountability– Joint accountability– Appropriate incentives/rewards

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Shared Commitments…

• N,W,P’s– Needs (clinical)– Wants (preferences)– Priorities (constraints)

• Written Service Commitments– Extension of PCP– Referring physicians/providers/staff– “Their” patients

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Shared Commitments…

• Clinical integration– Chronic– Complex Chronic– Episode of Care

• Clinical protocols/processes– Clinical Management Teams– Care Management Teams– Standards of care– Best practices

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Shared Commitments…

– “Certification”

• Clinical outcomes– Effectiveness– Efficiency

• Critical nature of self-reporting

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Questions and Answers…

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