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Maintaining Independence through Interdependence –Alliances between AMCs and Community Hospitals
1.22.2015 | 3:00 – 4:15 pm EST1.23.2015 | 10:30-11:45 am EST
Faculty :
Daniel PetersThe University of Kansas [email protected]
Mark ThompsonSeigfreid Bingham, [email protected]
Jeff EllisPershing Yoakley & Associates, [email protected]
Dr. Robert MoserKansas Heart and Stroke [email protected]
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Pressure to Consolidate
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Barriers to Traditional Consolidation
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Another Way: Regional Collaboration
Merger?Acquisition?
Joint Venture?
Regional Hospital
Critical Access
Hospital
Community Hospital
AMC
Other Providers
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Regional Collaboratives
Characteristics• Two+ hospitals enter into formal relationship to share
resources and capabilities with an eye toward clinical integration
• Participants together define common interests to be advanced through the Collaborative
• Each participant’s individual interests are respected and protected through the Collaborative’s governance structure
• Participants make some financial commitment to support the Collaborative’s operations, but each remains economically independent
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Regional Collaboratives
Characteristics
• Participants retain management authority of their respective organizations
• Participants retain financial independence of their respective organizations
• Participants’ governance remains with their respective governing boards
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Getting Started:A Win/Win/Win Strategy
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Motivations
“Independence Through Interdependence”
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Motivations
• Achieve economies of scale through joint purchasing and similar strategies
• Leverage current and future information technology investments
• Sustain members as they learn to thrive under new care models
• Design continuums of care for specific types of patients
• Improve quality of care through common evidence-based clinical guidelines
• Develop narrow networks for contracting purposes
• Defend against competition from larger integrated delivery systems
• Test the waters for more “involved” relationships
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Cautions
• From the AMC perspective, communicate more than you think you need to
• Decide what you can accomplish and commit to starting there
• Make sure everyone is open and upfront about what their limitations are– Financial
– Governance
– Structural
• Be clear up front about geography
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Getting Started:What Brings Participants Together?
Geography
Political Pressure to
Support Rural Communities
Payer Initiatives
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Models and Resources
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Two Different Approaches
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Shared Services Operating Company
• Governance structure to support decision-making process
Independent providers form new company
• Group purchasing arrangements
• Combine administrative functions
• Coordinated IT solutions
• Share best practices
Leverage resources and
pursue economies of
scale
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Balanced Degree of Integration
• Extended group with similar interests or concerns who interacts and remains in informal contact for mutual assistance or support
Network
• Regularly interacting or interdependent group of items forming a unified whole
System
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SSOC vs CSOC
Stratus Healthcare (Georgia)Value Care Alliance (Connecticut)Trivergent Health Alliance (Maryland)
Illinois Rural Community Care Organization
Vanderbilt Health Affiliated Network University of Iowa Health Alliance Health Network of Missouri
Kansas Heart and Stroke Collaborative
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Five Stages of Collaborative Development
• Stage 1: Develop internal strategy
• Stage 2: Assess and engage potential partners
• Stage 3: Jointly establish terms of relationship
• Stage 4: Commence and maintaincollaborative
• Stage 5: Have an exit strategy
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Stage 1: Develop Internal Strategy
• Engage in level-setting education
• Define rationale and objectives for pursuing a collaborative
• Determine preferred scope (what you want in, what you want out)
• Examine feasibility
• Make go/no-go decision
• Commit to action
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Stage 2: Assess and EngagePotential Partners
• Develop selection criteria
• Identify and engage interested parties
• Execute confidentiality agreements
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Stage 3: Jointly Establish Termsof Relationship
• Define business aims and outcomes
• Identify and prioritize objectives
• Determine scope (what’s in, what’s out)
• Custom design and memorialize governance structure
• Develop preliminary business plan
• Commit financial and human resources
• Enter into letters of intent
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Stage 4: Commence andMaintain Collaborative
• Operationalize governance structure
• Engage in strategic and operational planning
• Refine business plan
• Secure information technology infrastructure
• Develop timelines and link resources
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Stage 5: Have an Exit Strategy
• Specify triggers
• Determine procedures to wind down formal organization
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Form Follows Function
Define Business Aims and Outcomes
(Function)
Identify and Prioritize
Objectives
(Function)
Determine Scope
(Function)
Custom Design and Memorialize Structure
(Form)
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Unique Governance Structures with Common Characteristics
Balanced time, energy, and economic investments by participants
Balanced voting rights and reserved powers for participants
Shared vision and goals while recognizing participants’ unique priorities
Formal but flexible and adaptable rules of operation
Fair opportunity for all participants to engage and be heard
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Health Network of Missouri
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Health Network of Missouri
Academic medical center + 4
community hospitals
2+ years as learning collaborative
Formed new entity in June 2014 to
develop clinically integrated network
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Health Network of Missouri
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Network Compacts
Covenants among all Members
Developed and operationalized by task forces comprised of Member representatives
Specific charges to task forces developed through Steering Committee planning process
Interactive and mutually supportive
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Member Contracts
Vehicle for arrangements between less than all Members
Allows Alliance to move expeditiously on matters of interest to individual Member groupings
Network Compact development takes priority, but can pursue Member Contracts at same time
Transparency between Members about work being done under Member Contracts
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Challenges to Overcome and What Works
Challenges to Overcome What Works
Learning Collaborative Focus• Fostered Dialogue• Created Frustration
• Need for Shared Strategy • Need for Discipline
800-Pound Gorilla• Desired Resources• Feared Power• Bureaucratic
• Independent Survey• Self-Awareness• Give Trust to Get Trust
Building Trust• Equality• Investment• Process
• Shared Governance• Equal Financial Investment• Leveraged Resources• Commitment to Process
Demonstrate Success• Quick Wins• Investment in Process
• Disciplined Process• Commitment of Resources• Shared Leadership• Compacts/Contracts
Sustainability• Demonstrated Progress• Small Successes• Continued Commitment
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Kansas Heart and Stroke Collaborative
The Kansas Heart and Stroke Collaborative is a care delivery and payment model to improve rural Kansans’ heart health and stroke outcomes and reduce total cost of care for that population.
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Kansas Heart and Stroke Collaborative
University of Kansas Hospital received $12.5 million Health Care Innovation Award
Develop rural clinically integrated network involving AMC, rural tertiary care center, 10
CAHs, FQHC, and providers at all facilities
Focus on regional systems of care for patients at risk of or who have suffered
heart attack or stroke
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IncentivesRewards for Teamwork and Field Work
• Direct payment for care management services
• Upward payment adjustments for participating rural physicians and mid-level providers
• Disease-specific shared savings program
Transitional payment model
• Build shared analytic infrastructure to identify and evaluate alternatives to cost-based reimbursement to preserve local access to care
Transformational payment model
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Goals vs Concerns of Collaborating•AMC
– Goals:» Meet mission of improving the health of citizens of service area and expand the reach of highly acute
cases
– Concerns:» Can we effectively address practice patterns and cultures several hundreds of miles apart?
•Regional Hospital– Goals:
» Take advantage of AMC reputation and relationships for scope and scale» Build relationships with other regional hospitals» Managed care strength and support
– Concerns: » Will the critical access hospitals be accepting of models and recommendations?» Does the regional hospital lose out in new payment models that keep patients at home?
•Critical Access Hospitals– Goals:
» Better access to consistent care models» Learning from provider and technology inconsistencies
– Concerns:» Fridays Night Lights Syndrome» Will I lose my healthcare providers?» We can’t afford it» We’re running as fast as we can .. . . .
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How Structure Facilitates Organization’s Function
Provides structured environment for discussion and
decision
Promotes trust and transparency
Balances power among diverse
participants
Protects individual rights and concerns
Facilitates joint decision making in
a safe environment
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Legal Issues
State Law
Antitrust
Others?
StarkAnti-
Kickback
CMPs
HIPAA
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Antitrust
The Sherman Act prohibits the unreasonable restraint of trade; and the FTC Act prohibits unfair methods of competition in or
affecting commerce.
Some restraints of trade are considered “per se” illegal – e.g., naked price fixing and market allocation agreements among competitors.
“Rule of reason” analysis applies to arrangements between competing healthcare providers that are financially and/or clinically
integrated where the arrangement is reasonably necessary to accomplish the pro-competitive benefits of integration.
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Factors Supporting Rule of Reason Analysis
Potential for Pro-Consumer Cost Savings or
Quality Improvement
Not Simply a Mechanism to
Create Leverage with Payers
Agreements Are Reasonably
Necessary to Achieve
Benefits of Collaboration
Bona Fide Integration
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Rule of Reason Analysis
Does the arrangement, on balance, benefit consumers? Or, is it likely to diminish quality, reduce output, or increase price?
Define the relevant product and geographic markets
Identify the market participants
Calculate market shares and concentration
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Rule of Reason Analysis (cont’d)
Consider the likelihood of expansion by existing players or entry by new players
Determine whether efficiencies will likely result
Consider whether the individual members may continue to compete independently
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Antitrust Safety Zones
• Exclusive Networks
• Non-Exclusive Networks
FTC/DOJ Guidelines
• Automatic Rule of Reason Analysis for MSSP ACOs
• Safety Zone for MSSP ACOs with PSA less than 30%
MSSP ACOs
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Certificate of Public Advantage (COPA)
State legislation intended to provide “state action” antitrust immunity under the state purpose doctrine to collaborations of healthcare providers who demonstrate that the benefits of the proposed arrangement outweigh the disadvantages resulting from reduced competition.
Disadvantages caused by any reduction in
competition
Benefits of proposed arrangement
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Civil Monetary Penalties
CMP Statute assesses civil penalties against hospitals for:
Knowingly paying a physician to induce the physician to reduce or limit services provided to a
Medicare or Medicaid patient
Offering or paying remuneration to Medicare or Medicaid beneficiaries to influence the
beneficiaries to order or receive an item or service from a particular provider, practitioner or supplier
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Civil Monetary Penalties:OIG Seeking Input
The OIG is seeking comments on how the CMP Statute’s implementing regulations should be
revised to promote hospital-physician alignment and to encourage beneficiaries to
engage in health behaviors.
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Anti-Kickback Statute (AKS)
AKS prohibits the knowing and willful offer, payment, solicitation, or receipt of remuneration as an inducement for referrals or for items or
services paid for by federal healthcare programs.
“Remuneration” includes anything of value
AKS is violated if “one purpose” of the remuneration is to induce referrals
Some states have anti-kickback statutes as well
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Common Themes for AKS Compliance
Written Agreement
Commercially Reasonable
Compensation Fair Market
Value
Compensation Set in Advance
Signed by the Parties
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Stark Law
The Stark Law prohibits referrals by a physician to an entity for the provision of “designated health services” if:
The entity has a direct or indirect financial relationship with the physician, and
The financial relationship does not satisfy a statutory or regulatory exception to the Stark Law. (Note: To avoid a
Stark violation, the arrangement must meet every requirement of the applicable exception.)
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Examples of Stark Law Exceptions
Academic Medical Center
Fair Market Value
Compensation
Indirect Compensation
Electronic Health
Records
Personal Services
Arrangements
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Federal Innovation Program Waivers
Waivers for CMP, AKS, and Stark may be available if the collaborative chooses to participate in a federal
innovation program.
ACO Pre-Participation Waiver
(no application required –
automatically applies if requirements are
met)
ACO Participation Waiver
(no application required –
automatically applies if requirements are
met)
Bundled Payment for Care Improvement
Initiative
(must request specific waiver in the BPCI
program participation application)
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Questions
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Daniel PetersIn-House General CounselThe University of Kansas [email protected]
Mark ThompsonShareholderSeigfreid Bingham, [email protected]
Jeff EllisPrincipalPershing Yoakley & Associates, [email protected]
Dr. Robert MoserExecutive DirectorKansas Heart and Stroke [email protected]
