Success in the New Healthcare Market Executive Leadership Summit South Carolina Hospital Association...

Success in the New Healthcare Market

Executive Leadership SummitSouth Carolina Hospital AssociationJuly 23, 2014

THE CAMDEN GROUP | 7/23/2014 2

Topic

C-Suite Survey

Emerging Working Relationships with Physicians

Gears of Change

Physician Change and Communication

Discussion/Questions and Answers

Agenda


Healthcare Today: Complex, Confounding, Challenging…Changing

Payment Reform

Health ReformAccountable Care Organization

Bundled PaymentMedical Home

Service Line Management

Primary Care

Netw

ork

s

Merg

ers

CompetitionFr

au

d &

Ab

use

Telemedicine

Transparency

People

Ambulatory Centers

Physician Employment

Bon

d

Rati

ng

Joint Ventures

Clinical Integration

Quality Patie

nt

Safe

ty

Supply Chain

Revenue Cycle

PATIENTSATISFACTION

MedicalEducation

Leadership

GOVERNANCE

Evidence Based Medicine

Readmissions

GroupPractice

EMR

CPOE

PHO

MSO

Gainsharing

ManagedCare

P4P

Volume

Market Share

Physician Extenders

Regional Health Information Organizations

Industry Consolidation Networks

Private Equity

Centers of Excellence

Comparative Effectiveness Research

Health Navigators

IT

AC

OH

ealth Insurance Exchanges

Care RedesignCAPITAL

Population Health Management

Medicare

Capitation

Medicaid


The Triple AimTM set forth by the Institute for Healthcare Improvement: Optimal care delivery within

and across the continuum Focused on improving the

health of the population and cost of care

Right care, Right place, Right time

Institute for Healthcare Improvement: The Triple AimTM

Source: http://www.ihi.org/IHI/Programs/StrategicInitiatives/TripleAim.htm

Triple AimTM

PopulationHealth

Experienceof Care

Per CapitaCosts


Does your organization consider each of the following to be a threat or an opportunity?

Chief Executive Officer: Threat or Opportunity?

Issue

Healthcare reform, overall

Health information exchanges

Health insurance exchanges

Reduced reimbursements

Industry consolidation

Shared-risk, shared-reward payments

Primary care redesign

Care continuum relationships, clinical

Care continuum relationships, financial

Retail healthcare (e.g., clinics, pharmacies)

Population health management

Threat

36%

7%

20%

91%

37%

20%

9%

4%

13%

30%

8%

Opportunity

52%

76%

53%

5%

44%

62%

74%

89%

66%

43%

75%

Source: HealthLeaders, January/February 2014


Do you believe the healthcare industry will

make the switch from volume to

value?

Chief Executive Officer’s: Switching from Volume to Value

YES72%

NO

28%



Which are the top 3 areas your organization must improve or address in order to reach your financial targets in the 3-year timeframe?

Top Three Areas to Improve or Address

Source: HealthLeaders ,January/February 2014

Physician-hospital alignment

Cost reduction

Care model (e.g., population health, medical home)

Strategic partnerships with providers


What are the top 3 areas you will focus on next to control costs?

Chief Executive Officers’ Cost-cutting Focus


Expense reduction via process improvement

Labor efficiencies

Expense reduction via supply-chain efficiencies

Capacity management


Hospital and Health System Pressures

Sequestration

SGR(Reimbursement

Reduction)

Credit RatingRequirements

EmployedPhysicianLossesThroughput

VolumeDeclines

OperatingCosts

CapitalRequirements

HealthInsuranceExchange

Hospital Health

Systems

Emerging Working Relationships with Physicians: Leadership and Culture Change


Hospital Employment of Physicians

Factors driving physicians to seek employment include: Desire for economic stability/

security Changes in government

payments to doctors Rising operating expenses The growing emphasis on patient

safety and quality Lifestyle (e.g., predictable hours,

less calls) Inability to recruit new physicians

We Have All Seen the Trends…

Increasing Regulation

Rising Expenses

Merritt Hawkins suggests that the industry will see 75 percent of the nation's physicians employed by hospitals in 2014.

Flat Revenue


Round 1: 1990’s

We heard healthcare financial models changes were coming

The first groups to be employed were physicians in the middle or near the end of their practice cycles

Contracts were often salary-based Practice assets were financially

evaluated (including goodwill) and paid for

No to minimal discussions regarding quality of care, patient satisfaction, or cultural change was discussed

Healthcare financial reimbursement and payment models did not change significantly

Salaried physicians did not produce to cover costs

Over practice management developed

Hospitals stained losses on operational balance sheets

Many contracts and relationships disintegrated

Why What Happened


Round 2: Mid to Late 2000’s

We heard healthcare financial models changes were coming

The new physicians had substantial educational debts

Entering private practice had increased financial cost and risk

New physicians wanted work/life balance

New physicians did not require practice asset acquisition

Some discussions regarding quality of care, patient satisfaction

No-to-minimal cultural change was discussed

Healthcare financial reimbursement and payment models did not change significantly

Salaried physicians did not produce to cover costs

Over practice management developed

Hospitals sustained losses on operational balance sheets

Many contracts and relationships disintegrated

Why What Happened


Round 3: Current and Together Again (“Divorces”)

Healthcare financial models changes are here

Variable based on region and size of system

New physicians have substantial educational debts

Average of $170,000 Entering private practice is not a viable

option in many parts of the country New physicians demand work/life

balance Discussions regarding quality of care,

patient satisfaction are occurring Culture change is starting to be

discussed

Healthcare financial reimbursement and payment models are changing

Providers are leading the charge Salaried physicians may not produce to

cover costs on a pure relative value units (“RVU”) metric

New compensation models New and improved practice

management is being developed Maybe

Hospitals reevaluating physician “losses” on balance sheets

Investments Many contracts and relationships are

still at risk Longevity bonuses are more common

Why What Happened


Pyramid of Success

Defined Population

Commercial CMS Dual Eligibles Medicaid

HMO PPO Direct to Employers Insurance Exchange Bundled Payment

ACO-MSSP Pioneer ACO Medicare Advantage Bundled Payment

HMO HMO Fee-for-Service

Community Hospital

Access Points(UCC, FQHCs, ED, Health Plans, Physician Offices, Retails Clinics, etc.)


Physician-Hospital Integration: Driving the Value Proposition

IntegrationLimited Full

Low

High

COE/SpecialtyInstitutes

SpecialtyCo-management

Managed CareShared Risk

Clinical Integration

Medical FoundationPhysician EmploymentRHC, FQHC, Community Clinics

AccountableCare

IDN/Health Plan

Medical Home

Bundled Payments


Evolving From To

From

Pay for procedures

Fee-for-Service

More facilities/capacity

Physicians/Hospitals acting independently

Physicians and hospitals working in parallel

Hospital-centric

Treat disease/episode of care

To

Pay for value

Case rates/budgets/capitation

Better access to appropriate settings

Physicians/Hospitals collaboration: global risk

Physicians and hospitals working in a highly integrated manner

Continuum of care (population-centric)

Maintain health


Employment Co-Management/Bundled Payment Accountable Care Organizations Clinically Integrated Organizations Network Population Health Management Plan-to-Plan

Emerging Physician Relationships


The Traditional Primary Care Practice Model Is Changing

Single or small group practice primary care clinic no longer economically sustainable.

Patient Centered Medical Home

Past

Future


Hospital contracts with a physician organization, under which the physicians are granted input and managerial authority to design and enforce clinical and operational standards. Generally, the physicians provide only their time and no other personnel or items.

Co-Management Structure

PhysicianGroup/Venture

HospitalCo-Management Service Agreement (“Co-MSA”)

ExecutivePhysician

Director and Physicians

Service Line/Department

Director

Service LineCo-Management

Committee


Physicians Are Involved In Each Aspect of Operations

Possible Co-management Responsibilities

Co-management company governance structure includes various committees for managing all aspects of planning and care delivery (i.e., Quality Care Committee, Technology Committee, Operations Committee, Finance Committee, Research

Committee)

Hospital

Physicians

Financial and Operations Management oversight of staffing Negotiation of service arrangements Operating and capital budgets Length-of-stay management and patient throughput

Planning and Business Development Strategic plan development Technology planning Marketing strategies Clinical research plan

Quality of Care Development of care protocols Quality management and improvement policies Quality outcomes Patient experience


ACO responsible for: Clinical care management (clinical integration) Capture data for continuum of care Measure and monitor costs and quality

ACO StructureInfrastructure

(Provided or Contracted ACO Operations)

Information TechnologyEMR, CPOE, PACSData warehouseReportingHIEWeb portal

Care ManagementHospitalists and

IntensivistsCMODisease managementClinical protocolsAdvanced analytics and

modelingCall centerUtilization managementKnowledge

management

Health NetworkDelivery network

Financial/Payment Systems


Oregon NetworkIDN/ACO

Network Population Health Management

Partnerships Drive Success and Sustainability

NW NetworkIDN/ACO

Columbia NetworkIDN/ACO

Accountable Care

Infrastructure

IDN/ACO

Umbrella Network IDN/ACO

Physicians Physicians Physicians


Goal is Balance

HE

AL

TH

PL

AN F

ACILITIES

CL

INIC

IAN

AL

IGN

ME

NT

Clinically Integrated Network


Plan to Plan/Health Plan

Health Plan(BC, BS, Aetna,

United, etc.)

Your Health Plan

Retain 15 - 20%

Post-Acute Services

HospitalsAmbulatory

ServicesPhysicians Pharmacy

Facilities


Getting the Gears of Change Aligned

Cultural Change

Care Model

Change

Payment Change


Change: What’s In It For…Hospitals?

Participate in new models of care

Enhance quality improvement results

Improve patient care and satisfaction

Transition to new payment models

Improve connectivity and relationships with

physicians


Change: What’s In It For…Physicians?

Care Management Support

Participate in new models of care

Financial Rewards

Enhance Connectivity with Colleagues

Improve Patient Health and Satisfaction


What Incentives Are the Right Incentives?

Strategic Focus or GoalMeasures for Variable

Compensation/Incentives

Patient Outcomes

Patient Satisfaction

Group Profitability/Performance360O Reviews“Citizenship”

Group Profitability Overall

Financial Performance

Quality

Service

Teamwork

New Services/Growth

Productivity: Panel size, wRVU, Collections

Expense management Profit/Loss by site


Incentives must be large enough to motivate behavior Pay at risk component is influenced by the interplay of 2

variables: Physician’s ability to impact the variable Value to the physician

Bonuses measured/paid more frequently reinforce desired behaviors

Incentive-Based Models

Pay at Risk Physician Ability to Impact Value

10% Small Low

15% Key Items Nice Reminder

20% Moderate Motivational

25% Significant High

>30% Driving Behavior Very High


Performance Measures Panel Size Charges RVUs Encounters Net revenue

Staff review Participation in

Group activities Protocol

compliance Availability Medical records

audits Coding compliance

Patient satisfaction Open panel Grievances Peer review Clinical quality Functional status

Visits PMPM Pharmacy utilization Specialty/Ancillary

utilization ED utilization Charges/Case or

Visit

Productivity

Service/Quality

ResourceUtilization

Citizenship

DesiredPerformance


A Challenging Time For Change

Many do not believe there is a need to change Transition during a schizophrenic time of payment models Loss of autonomy

Lose Control Office Patients NPs/PAs/Others

Reimbursement continues to decrease Expenses continue to increases Expanding knowledge-base

Multiple Factors


Why Is It So Difficult


Leads to Emotional Factors

Similar to Kubler-Ross Stages of Dying


Physician Change and Communication

Critical Elements


Make a Case for Change

Create need for change based on data and information Quality metrics Outcomes New financial metrics and payment models Industry market trends

Address new emotional dynamics that may arise Implement change by supporting the processes needed for

the change Sustain change by sharing results of success

Quality Financial

Why, How, What


Identify the “right” people Formal and informal leaders Need some with positions and power to get things done Expertise and credibility to influence others

Start with a small number of clear goals Develop an environment of trust and commitment within the

team

Group Dynamics for Change


Create an “Integrated” Culture

Transparency

Patient-Centered

ContinuousImprovement

Partnership/Collaboration/

Trust

Accountability


Communicate Progress of What is Being Changed

Start with Sharing the Vision

Education OngoingFocused as needed

A Constant and Continuous

Communication PlanMultimedia

Address NaysayersPrivatelyPublically

Engage Grassroots Share Successful

Results

Non-Physician Staff is Just as Important!


Supply training, support, and opportunities for success (i.e., make life easier)

Remove identified barriers that impede progress to the goals and vision

Encourage and value (monetary) involvement Organization must commit the time and necessary resources

Enable Implementation of Change


Target a few agreed upon metrics of success that resonate with providers and the population

Secure broad acceptance through communication and education

Communicate success enthusiastically Include and learning that led to success into the plan Engage others that want to improve

Target Short-Term Wins (Walk Before Run)


Build and Expand On Success

Any small short-term win can lead to bigger longer term wins Build on what works, change what does not See what works and continue to improve on it Continue monitoring metrics an reporting results – good and

bad Achieving tangible results as quickly as possible Build infrastructure that expands, and emphasizes new

behaviors Continue to align financial rewards to behavior change Add new metrics, models, processes, and programs


Cultural Transformation

Start With A Vision

Plan for implementation

Resources and budget

Technology Metrics for

success

Short-term wins, long-term sustainability

Reassess, revise, revisit

Gap assessment

Integrated model design

Rationale Empowerment

and accountability

Interviews Committee

Meetings Vision

Gold Keys for Success and Landmines to Avoid


Understanding risks and rewards Determining individual and organizational expectations Full transparency and confidentiality The legal certainty and business reality mismatch

Keys To Hospital-Physician Alignment Strategies


Not all physicians are the same Employed vs. independent Primary care vs. specialists Exclusive medical staff privileges vs. “splitters” New recruits vs. veterans

Not all terminology has universal or standardized meaning Each model has pros and cons; none is perfect The engagement process is often more important than the

employment model selected

The Fundamentals


Physicians have unrealistic expectations about the value of their practices or their services

Physicians expect hospitals to be the “deep pockets” while reimbursement catches up with the new risk/reward continuum

The compensation methodology is not adequately tied to performance improvement and behavior change

Management of physician practices different than hospitals or departments

Challenges


Driving Issues

Hospital’s and health system’s ability to manage employed physicians and physician practices Billing (if employed) Efficiencies Staff

Physicians lose autonomy “Bosses” Perceived lack of respect

Behavior change Culture

Not Addressed in Contracts - Maybe They Should Be


Failing to address the hospital’s shortcomings up front: Hospital management is not comfortable sharing power and

control with physicians Weak practice management system Hospital is unsure how physicians actually impact hospital

finances Failing to address leadership issues:

Medical directors and physician leadership cannot or will not adjust

Physicians are given inadequate accountability/responsibility Lack of appropriate governance roles for physicians

Common Mistakes


Treating a medical group as just another department of the hospital

Assuming that one approach will work for all medical groups/physicians

Blindly copying the competition’s model Failing to build flexibility into the model Choosing the wrong compensation model for a particular

medical specialty or service line Failing to do adequate due diligence Over-promising/Under-delivering Delivering an inconsistent message Refusing to deal with “the elephant in the room”

Common Mistakes


Develop strategic plan to address the need for uniform compensation model vs. potential deviation for regional assets or hard to recruit specialists Do not sacrifice model for individual physician or group - most

likely, physician will not be a long-term partner Twenty percent of compensation needs to be at risk for behavior

modification Define compensation parameters that apply to all - avoid “car

negotiation” mentality

Lessons Learned


Break down silo mentality to avoid federation of providers and develop true group culture

Do not prioritize growth over cultural compatibility Elevate physicians into leadership positions and create

physician-led committees and/or Clinical Governing Council Engage physicians in selection process for electronic medical

records and other IT systems to allow for effective information management to achieve strategic goals

Beware of insurance companies as the new competitor to your physician-base

Develop metrics to justify employed physician subsidy

Lessons Learned


Understand that divorce is hard and develop strong front-end due diligence process (e.g., including coding and compliance review) including values alignment

Evolve compensation model from production-based to mirror change in reimbursement system to value-based/bundled payment

Lessons Learned


Increasing need to be at or above market due to competition and shortages in key specialties

Still focused on productivity, but quality, utilization, and behavior measures increasingly important due to new payment models

Efficiency (cost of care) of the overall group and care team (members practicing at “top of license”) critical in “new” models

Benefits and intangibles (work/life balance, no politics, etc.) becoming more important to attract physicians

Strategies for engaging part-time physicians More frequent adjustment of compensation design to respond

to changing market conditions and payment models

Trends in Compensation


Recognition of new specialized roles for primary care physicians in particular – patient-centered medical home team leader, manager of post-acute care, chronic disease manager

Longevity bonuses starting to become more frequent

Trends in Compensation


But if We Refuse to Change…

Choluteca Bridge Before Hurricane Mitch


But If We Refuse to Change

Choluteca Bridge After Hurricane Mitch

https://sharepoint.thecamdengroup.com/CI/General%20CI/Presentations/Camden_Success_in_New_Healthcare_Market_07_23_14.pptx

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Success in the New Healthcare Market Executive Leadership Summit South Carolina Hospital Association...

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