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
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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.
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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
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MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL
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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
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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
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• 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
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• 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
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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.
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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
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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
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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
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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.
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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
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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).
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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:
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Today’s Presenter
© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.
John A. Lutz, FACHE, FACMPE
Managing Director
Huron Healthcare
518-491-4267
Q & A
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.
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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
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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
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