How Providers Survive in a Cost Cutting Environment

Don Holloway, Ph.D.Co-founder of NIATxDon@Holloway.org

How Providers Survive in a Revenue Cutting Environment

Don Holloway, Ph.D.Co-founder of NIATxDon@Holloway.org

Better Title

Story: Mason City, IowaMason City Iowa The outpatient program at Prairie Ridge Addiction Treatment Services increased its outpatient revenue by $381,000 per year.

Historically, the agency received 60% of its outpatient revenue through a block grant capped at 1,100 clients. The agency averaged 42% over-utilization of block grant funds for 5 years, resulting in up to $462,000 of annual unreimbursed care for 540 clients.

After joining NIATx, the program focused on increasing the other 40% of revenue, (third party, Medicaid, and client fees). Within 2 years, it increased this revenue from $627,000 per year to $1,008,000, an increase of $381,000 per year. The block grant is now 48% of outpatient revenue, down from 60%.

Prairie Ridge’s Problem

540 clients served without payment of $462,000 Would require a 58% cut in cost to break even, from $855 to $356 per client

What would you do?Renegotiate contract? Reduce costs? Turn clients away? Make clients wait longer? Terminate contract for block grant? Change payer mix? “Cost-shift”?

Summary

PayerReferrer

Client

ProviderReduce Costs

Increase Revenue

What’s it like to be our client?Referral

!st Treatment Session

1st Contact

Assessment

Start Next Level of Care

4th Treatment Session

End This Level of Care

Reduce No-shows

Reduce Waiting Time

Increase Admissions

Increase Continuation Within One Level

Increase Continuation Between - Transition

NIATx Aims

Increase Any Admissions?Referral

!st Treatment Session

1st Contact

Assessment

Start Next Level

4th Treatment Session

End This Level of Care

Reduce No-shows

Reduce Waiting Time

Increase Admissions

Increase Continuation Within One Level

Increase Continuation Between Levels - Transition

Any Admissions?

NIATx Aims

Typical Payer-Provider-Referrer Relationship

PayerReferrer

Client

Provider

Strengthen The Payer-Provider-Referrer Relationship

PayerReferrer

Client

Provider

What’s it Like to Pay Us?

PayerReferrer

Client

Provider

Women’s AdultWomen with ChildrenBattered WomenMen’s Adult

Boy’s AdolescentGirl’s AdolescentParentsVeteransElderDual DiagnosisDepressionHIVProfessional: Pilots, Drs, Rns, Clergy

What’s it Like to Pay Us?

PayerReferrer

Client

Provider

Are we paid enough?FFS No CapFFS with Cap

Annual BudgetFee per Client per YearNo Contract/Source

Utilization Controls:Limit to 10 visitsPrior authorization

What’s it Like to Refer to Us?

PayerReferrer

Client

Provider

Referrals that startclients in addictiontreatment are made by:selfparentsfamily and friendsemployersUnionsschoolsyour staffother health care providerschild protection servicesjudges, lawyers, and probation officers

What’s it Like to Refer to Us?

PayerReferrer

Client

Provider

Transitions fromthe end of one levelof care to the start ofanother are made by:detoxresidentialinpatientpartial hospitalizationintensive outpatientoutpatient

Aim: Become Preferred Provider for Selected Referrers

PayerReferrer

Client

PreferredProvider

1. Identify Referrers2. Invite One Referrer to Join You3. Form a Joint Change Team4. Invite Referrer to Participate in a Walk

Through5. Agree on Aims6. Establish Baseline Data7. Identify Barriers and Opportunities8. Test Promising Practices9. Sustain Improvements10. Invite Another Referrer to Join You and

Repeat

How will we know we’re preferred?

PayerReferrer

Client

PreferredProvider

• # of referrals will increase• % of referrals admitted will increase• % of revenue from selected payers will increase

What changes can we test?Tailor brochure for referrertoo many referrers do not have written materials with directions and guidance for clients to use to contact addiction treatment

Assign each referrer one person to contact for all their referralstoo few referrals are made, and when they are, too few end in admission

Guide referrers to make appropriate referralstoo many referrers do not know when or how to make a referral

Encourage referrers to make 1st appointment while referrals are still in their officetoo many clients are not ready, willing or able to make initial contact or appointment on their own

Continue on next slide . . .

What changes can we test?Continued . . .

Acknowledge all referralsreferrers need to be reminded about your services – one way is to send a thank you note

Keep them informed about “their” clientto the extent confidentiality is not broken

Visit referrers periodically and ask “What’s it like to refer a client to us?”

Stay at top of referrer’s mindyou are easy to forget

Offer specialized services, e.g. elderlyfunding from current payer sources is saturated

How can we sustain our preferred status?

PayerReferrer

Client

Provider

Assign each referrer one person to contact for all their referralsVisit referrers periodically and ask “What’s it like to refer a client to us?

Summary

PayerReferrer

Client

Provider

Selectively contract - change payer mix

Reduce Costs

Selectively strengthen existing relationships and build new ones

Increase Revenue

Reduce Waiting TimeReduce No-showsIncrease Continuation