The document discusses current industry trends in healthcare, including a shift from volume-based to value-based reimbursement and the development of accountable care organizations and population health management. It outlines two stages of integration for providers: strategic alignment and clinical integration. Stage I strategic alignment can be achieved through various models including joint ventures, clinical co-management agreements, and professional services agreements. Stage II clinical integration focuses on merging clinical and business models through accountable care organizations, clinically integrated networks, and quality collaboratives.
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Building Integrated Care: Physician Alignment Strategies in the Shift to Value
1. Breaking It Down-Building It Up:
The Health System of Tomorrow in the Accountable
Care Era
Max Reiboldt, CPA
President/CEO, Coker Group
Steve Hudson
Director of Strategic and Physician Development,
Northside Hospital-Cherokee
2. Disclaimer
Coker Group and Northside Hospital have
produced this material as an informational
reference for conference attendees. The
contents of this presentation represent the
views of the authors and presenters and do not
necessarily reflect the views of Beckerâs
Hospital Review.
2
3. Contents
I. Current Industry Trends
II. Stage I: Strategic Alignment
a. Physician-to-Hospital Models
â Joint Ventures
â Clinical Co-Management Agreements
â Professional Services Agreements
â Collaboratives
III. Stage II: Clinical Integration
IV. The Overall Integration/Accountable Care Strategy for Private Physicians
V. Q & A
VI. Glossary of Terms
VII. Appendix: Strategic Alignment Case Studies
3
5. 5
Comparative Look at 2013 and 2014
⢠Preparatory year for ACAâs âFull
Implementation Yearâ
⢠Increasing efforts toward alignment
and integration
⢠Shift in reimbursement
methodologies (from volume to
value)*
⢠Care process delivery
transformation initiatives*
⢠Progress within ACO/CIN
development/population health
management (âPHMâ) efforts
⢠Primary care development efforts
to combat workforce shortages
2013 Trends
⢠Major ACA provisions rolled out
January 1, 2014
â Individual mandate
â Comprehensive insurance
plans/coverage
â Medicaid expansion
â Meaningful Use Stage II
⢠Accelerated movement within 2013
trends
⢠Big year for information technology
(âITâ)
â ICD â 10 (potential 2015
implementation)
â PHM solutions
â On-premise to cloud-based systems
⢠Growth of clinically integrated
networks
2014 Projections
*Processes furthered during the year; still early-on in development
6. 6
Hospital Provider Concerns in 2013
⢠Reimbursement and alignment
rated as the top two most
important concerns of a health
system
⢠Alignment is still considered a
primary strategic response to the
continuing financial challenges
⢠Alignment is also Stage I of an
organizationâs accountable care
strategy (without alignment,
clinical integration is highly
unlikely)
Please rate the following factors in regard to the strategic
concerns of your facility.
Source: Merritt Hawkins and Trinity University Department of Healthcare Administration, â2013 Survey of
Alumni Satisfaction and Health System Trendsâ
7. 7
Provider Concerns in 2013 (contâd)
Source: Beckerâs Hospital Review, â10 Most Pressing Career Concerns for Physicians,â July 12, 2013
10 Most Pressing Career Concerns for Physicians
1. Compensation and/or reimbursement â 53.9 percent
2. Work/life balance â 45.2 percent
3. Work-related burnout and stress â 22.1 percent
4. Impact of healthcare reform â 16.6 percent*
5. Lack of autonomy or control in my practice â 11.8 percent
6. Quality of healthcare â 10.8 percent*
7. Finding a new practice opportunity â 7.3 percent
8. Malpractice issues â 6.7 percent
9. Patient-physician relationships â 5.2 percent
10. Implementing electronic medical records â 5 percent*
*Likely to significantly rise in priority within 2014
8. 8
Provider Concerns in 2013 (contâd)
Source: Beckerâs Hospital Review, âPhysician-Hospital Alignment in 2013: 17 Trends,â August 30, 2013
Five Alignment Trends of 2014
1. As 2014 is a mid-term election year, we can expect more debate on the PPACA and
potential political fallout.
2. "Alignment" in advanced stages of accountable care structures will continue, analogous to
what we have termed as âStage IIâ.
3. Compensation and pay plans for physicians within alignment structures will be continuing
to move away from fee-for-volume to fee-for-value.
4. Bundling and shared savings programs will continue to increase; thus, measuring values
among participating providers will become a greater issue.
5. More of the same regarding physician-hospital alignment will continue with the number
of transactions consummated increasing within 2014. As a result, physician-hospital
alignment will be one of the most prominent initiatives on all providers' "to-do" lists for
years to come.
9. 9
Driving Forces for Change: Paradigm Shifts
Integrated care
management
focusing on
preventative care
Coordinated delivery
of care rendering
appropriate services
at appropriate place
and time
Performance (value);
Quality/cost control;
bundled payments;
capitation; risk-based
Collaboratives:
ACOs/CINs/PCMHs/
QCs
Accountable care era health care delivery
Traditional healthcare delivery model
Fragmented care
management
treating primarily
sick people
Episodes of care;
utilization
management
Production
(volume)/Fee-for-
service payments
Disjointed provider
base
10. â˘Providers paid a specified amount for each service provided
Fee-for-Service
â˘Incentives for higher quality measured by evidence-based standards
Pay-for-
Performance
â˘Percentage reimbursement at risk, earned back by high quality outcomes
Value-based
Purchasing
â˘Single payment for episodes of treatment, shared by hospital and
physicians
Bundled Payments
â˘Percentage of savings from reduced cost of care shared with hospitals and
physicians
Shared Savings
â˘All services compensated in one payment that manages the patient across
the delivery system
Global Payments
Driving Forces for Change: Evolving Payment
Models
Increasing
Provider
Risk
10
11. 11
It All Culminates to ValueâŚ
⢠Develop quality initiatives for safety, outcome and
satisfaction
⢠Engage physicians in metric development process
â Process and true outcomes measures
⢠Practice evidence-based medicine
â Establish protocols and best practices
⢠Patient-centered at all times
⢠Utilize a population-health mindset
⢠Accurately measured and attributed
⢠You canât change what you canât measure
⢠True costs, not proxies (e.g. ratio of costs to charges)
⢠Activity-based costs of providing care for common
clinical conditions (e.g. heart failure)
⢠Proactive tracking of medical/personnel utilization
⢠You canât change what you canât measure
Quality Enhancement (Outcomes)
Cost Reduction
=
13. 13
Using Alignment to Further Integration*
⢠Stage I: Alignment
â Common goals and
objectives
â More structural than
functional
⢠Medical staff membership
⢠CCMA
⢠PSA
⢠Employment
â Tied together by legal and
economic connections
⢠Stage II: (Clinical)
Integration
â Merged clinical and
business models
â More functional than
structural
⢠PCMH
⢠ACO
⢠Quality collaborative
⢠CIN
â Tied together by clinical
and cultural connections
*Can be via both physician-hospital and physician-physician strategies
14. II. Stage I: Strategic Alignment
Two Tracks: Physician-Hospital or Physician-Physician Alignment
15. Spectrum of Alignment Models
Private Practice Alignment Model Options
Hospital Employment
Independence
Increasing Integration
Models that Fall Short of Employment
â˘Managed care networks
⢠Medical directorships
â˘Clinical co-management
agreements
â˘Recruitment
â˘Independent practice
associations
⢠Joint ventures
â˘Service line
management
⢠Professional services
agreements
â˘Quality Collaboratives
â˘ACOs/CINs
15
16. Traditional Alignment Model Descriptions
Limited Integration
Managed Care Networks (Independent
Practice Associations, Physician
Hospital Organizations): Loose alliances
for contracting purposes
Moderate Integration
Service Line Management:
Management of all specialty services
within the hospital
MSO/ISO: Ties hospitals to physicianâs
business
Equity Group Assimilation: Ties entities
via legal agreement; joint practice
ownership
Joint Ventures: Unites parties under
common enterprise; difficult to
structure; legal hurdles
Full Integration
Employment*: Strongest alignment;
minimizes economic risk for physicians;
Employment âLiteâ: Professional
services agreements (PSAs) and other
similar models (such as the practice
management arrangement) through
which hospital engages physicians as
contractors
Recruitment/Incubation: Economic
assistance for new physicians
ACO/CIN/QC: Participation in an
organization focused on improving
quality/cost of care for governmental or
non-governmental payers; may be
driven by practices or hospital/groups
16
Group (Legal-Only) Merger: Unites
parties under common legal entity
without an operational merger
Group (Legal and Operational) Merger:
Unites parties under common legal
entity with full integration of operations
Typically Physician-
to-Physician
Typically Physician-
to-Hospital
Either Physician-Physician
or Physician-Hospital
Call Coverage Stipends: Pay for
unassigned ED call
Medical Directorships: Specific clinical
oversight duties
Clinical Co-Management: Physicians
become actively engaged in clinical
operations and oversight of applicable
service line at the hospital
*Includes the Physician Enterprise Model (PEM) and the Group Practice Subsidiary (GPS) model both of
which allow the practice entity to remain intact even after employment of the physicians by the hospital.
18. Joint Ventures
18
Structures*
⢠Specialty Hospitals
⢠Management Services
Arrangements
⢠Under-Arrangement
Arrangements
⢠Freestanding Centers
⢠Pay for Performance
⢠Block Leases
⢠Medical Directorships
âLawsâ to Consider
⢠Stark
⢠Anti-Kickback
⢠Reimbursement
⢠Tax Implications
⢠State Law
Source: Healthcare Financial Management Association
*Physician-to-physician (as well as physician-
to-third party investor) joint ventures are also
possible and subject to similar laws. These
types of transactions are usually project-
driven and intended for the development of
new capital structures (e.g., a new building).
19. Joint Ventures (contâd)
19
Legally permissible
if one of the
following is met:
Physicians must
contribute
financial capital
Physicians must
provide business
expertise
Physicians must
have a business
risk
20. Joint Ventures (contâd)
20
⢠Increasingly complex regulatory landscape are creating significant
challenges for those providers considering Hospital-Physician JVs
â May be JVs with surgery centers or equipment
⢠ASC ventures have specific requirements for physicians
â 1/3 of physicianâs medical practice income from all sources for previous fiscal/12
month period must be derived from performance of Medicare list of ASC covered
procedures
â 1/3 of procedures performed by each physician for previous fiscal/12 month period
must be performed at ASC
â Various fair market value considerations, including but not limited to
such things as:
⢠Returns to investors must be commensurate with their level(s) of risk
assumed (i.e., amount of capital invested)
⢠Payment (cash and non-cash) cannot be based on volume of referrals (Stark
and Anti-Kickback laws)
â As hospital-physician transactions increase in the market, federal
regulators are increasing their scrutiny for compliance purposes
Source: Dixon Hughes
22. CCMA Description
22
Service Line Arrangement
⢠The purpose of the arrangement is to reward
physicians for their efforts in developing,
managing and improving the quality and
efficiency of the hospitalâs service line
⢠A contractual relationship between the
hospital and the management entity results
⢠Compensation is in part performance-based,
tied to achievement of specific quality
objectives
⢠Some shared cost savings initiatives may also
be included
CCMA Logistics
Structure
⢠Clinical co-management agreements offer an
alternative to employment or a professional
services agreement (i.e. employment âliteâ)
relationship, but still serve as a form of
moderate alignment between two parties
⢠CCMAs offer a way for hospitals to align with
providers within its service line
⢠CCMAs can also be in conjunction with a full
alignment transaction in the form of a
âwraparoundâ
23. CCMA Example: Gastroenterology Service
Line*
Practice Hospital
Clinical
Co-Management
Agreement for Oversight
of GI Services
Fixed Fee
Contingent Fee
Colonoscopy
ERCP
Surgery
Management Committee
Representatives
and Medical Director
Management Committee
Representatives
Bronchoscopy
*Each service line/specialty can have its own CCMA, which can be included as a singular alignment strategy or
as a âwraparoundâ (i.e., add-on) to another, major alignment strategy
23
24. CCMA Takeaways
Size
⢠All providers within each applicable service line can
participate in the CCMA
⢠Multiple CCMAs may occur simultaneously
Wraparound
⢠âAdd-onâ services such as medical directorships,
management services agreements, etc. may be
incorporated into the CCMA structure
Flexibility ⢠Can be implemented with or without additional alignment
strategies and can be executed via a number of models
Stability and
Improvement
⢠Providers are incentivized and rewarded for driving the
value proposition (outcomes/cost)
Compensation
⢠Practice will be paid a base management fee for providing
administrative services as well as value-centric incentives
for the achievement of defined performance goals and
measures
24
26. 26
Professional Services Agreements - Overview
⢠Achieve clinical and financial integration
without employment
⢠Contracted services, multiple options
⢠Clinical (Professional) Services
⢠Wraparounds (administrative, call,
quality, etc.)
⢠Typically paid on a top-line basis per wRVU.
Wraparounds can take other forms of
payment for services, if included.
PURPOSE
RELATIONSHIP
SERVICES
REMUNERATION
27. 27
Four Popular PSA Models
1. Traditional PSA: Hospital contracts with
physicians for professional services; Hospital
employs staff and âownsâ administrative
structure
2. Global Payment PSA: Hospital contracts with
practice for Global Payment; practice retains all
management responsibilities
3. Practice Management Arrangement: Practice
entity retained and contracts with Hospital;
administrative management and staff not
employed by Hospital, but physicians are
employed
4. Hybrid Model: Hospital employs/contracts with
physicians; practice entity spun-off into a jointly-
owned MSO/ISO
FOUR POSSIBLE SCENARIOS OF PSA MODEL
⢠Flexibility in structure
⢠Opportunity to increase and
enhance bottom-line for both
Hospital and the Practice
⢠Stability in relationship with
Hospital
⢠Bonus opportunities for
exceptional performance
⢠Opportunities to expand services
together without being fully
aligned (i.e., employment and/or
clinical integration)
⢠Easier segue to full employment
for physicians and staff
PSA OFFERINGS
28. 28
1. PSA â Traditional Model
Hospital/Health
System
Assumes responsibility for Practiceâs management
and operations (includes lease/depreciation
expense and other operating expenses)
Deducted from professional service revenue to
be paid to Practice
Pays the Practiceâs real estate lease
Lease expense deducted from professional
service revenue to be paid to Practice
Purchases or leases ancillary services; bills HOPD
rates
Fixed payment (upfront or annually) to the
Practice, set in advance
Employs Practice staff (both ancillary and non-
ancillary staff)
Fully loaded expense deducted from professional
service revenue to be paid to Practice
Contracts directly with payers for professional and
technical fees
Independent
Contractor
PRACTICE
⢠Contracted by Hospital to provide professional services
⢠Practice providers (but not support staff) remain employees of the Practice
⢠Payment to Practice for professional services equal to net collections less
direct costs paid by Hospital (and any fixed payments for ancillaries) or a rate
per wRVU for production by Practice providers
29. 29
2. PSA â Global Payment Model*
Hospital
(Integrated with Physician
Division Infrastructure)
Global Fee:
⢠Fixed Overhead
⢠Variable
Overhead
⢠Rate per wRVU
Professional Services**
& Non-compete
Agreement
ďŽ Asset Ownership/Lease
ďŽ Payer Contracting
ďŽ A/R Owned
ďŽ Billing***
ďŽ Establishes fee structure
ďŽ Approves Strategy/Finances
ďŽ Oversees Operations/Business Planning
ďŽ Establishes Compensation Principles
ďŽ Achieves Value-Exchange Objectives
ďŽ Is Typically Split 50/50 Between Hospital and
Medical Group
ďŽ Group Governance
ďŽ Physician
Hiring/Termination
ďŽ Income Distribution
ďŽ Clinical Practice/Quality
ďŽ Malpractice
ďŽ Management and Staffing
ďŽ IT Support
ďŽ Physicians and staff remain
employed by Practice
ďŽ Membership
ďŽ Compensation
Hospital Board Practice Board
PSA
Management
Committee
Practice
(For-Profit Entity)
PSA
*Could be a portion
of the Practice
**Services to be provided can include: diagnostic and procedural services; clinical management and
coordination; administrative, supervisory teaching and research functions; complete service line and
clinical co-management; cost savings; quality incentives, etc.
***Billing could be performed by the Practice as a third-party agent.
30. Global Payment
PSA
Practice
Overhead
Physician
Compensation and
Benefits
Example
Fixed Overhead: $6.0M
Variable Overhead: $6/wRVU
Example
$50/wRVU
Example
Total Practice wRVUs = 120,000
Fixed Overhead Portion = $6,000,000
Variable Overhead Portion = $720,000
Phys Comp/Ben Portion = $6,000,000
GLOBAL PSA FEE = $12,720,000
PSA
Rates
per
wRVU
converted
to
Dollars
based
on
wRVU
pool
Example â For Illustration Purposes Only
30
*Totals represent
annual figures
Practice Overhead:
â˘Covers Practiceâs prof. expenses
â˘Pass-through from Hospital
â˘Based on budgeted expenses
â˘Variable expenses per wRVU
â˘Exclusive of phys comp & benefits
â˘Only for professional component
(not technical component, if appl.)
Physician Compensation and
Benefits:
â˘Covers physiciansâ
compensation/benefits
â˘Based on rate per wRVU
â˘Based on historical comp & FMV
â˘Compared against past comp/wRVU
â˘Room for annual increases included
â˘Same as employment model
â˘Comp payments made to practice
(can distribute how MDâs choose)
2. PSA â Global Payment Model: Economic
Components*
31. 31
3. PSA â Practice Management Arrangement
Practice
Infrastructure
Ownership
Practice Physicians
Hospital
Employment
ďŽ Practice Management
ďŽ Billing/Collections
ďŽ Compensation
ďŽ Benefits
⢠Physicians retain ownership of their Practice
infrastructure
⢠Physicians operate as the managers of the
Practice, providing all administrative services,
space, equipment, and support staff
⢠The Hospital contracts with the Practice
entity for these services and pays a fair
market value (FMV) fee
⢠The compensation structure for the
employed physicians is a productivity-based
system
⢠The arrangement can be easily dissolved, as
the Practice entity stays outside the Hospital
control structure
32. 32
PSA â Model Comparison
Global Payment
PSA
Practice Management
Arrangement
Traditional
PSA
Physicians Employed by Hospital X
Physicians Employed by Practice X
Staff Employed by Hospital X
Staff Employed by Practice X X
Real Estate Owned by Hospital * * *
Real Estate Owned by Practice * * *
Non-Ancillary Medical Equipment Owned by Hospital X
Non-Ancillary Medical Equipment Owned by Practice X X
Ancillary Medical Equipment Owned by Hospital * * X
Ancillary Medical Equipment Owned by Practice * *
Hospital/Hospital Affiliate Physician Benefit Plans Utilized X X
Practice Physician Benefit Plans Utilized X
Hospital/Hospital Affiliate Billing Tax ID Used X X X
Practice Billing Tax ID Used
Hospital/Hospital Affiliate Retains A/R (post-alignment) X X X
Practice Retains A/R (post-alignment)
Managed Care Contracting Negotiations Completed by Hospital X X X
Managed Care Contracting Negotiations Completed by Practice
*Depends on negotiated agreement
**Could be structured as a jointly owned venture
33. 33
Employment vs. Employment âLiteâ Comparison
⢠Hospital purchases all Practice assets
including all ancillaries
⢠Practice entity dissolves; Practice
becomes subsidiary of the Hospital
⢠All Practice providers and staff become
employees of the Hospital
⢠Practice physicians achieve the highest
level of integration with the Hospital and
ensure stability but lose a significant
amount of independence and autonomy
⢠Easy segue to clinical integration and
Hospitalâs accountable care era strategy
Employment âLiteâ: PSA
⢠Comprehensive alignment strategy
requiring less integration than
employment
⢠Multiple options (including hybrid
models) which allow for a greater level
of customization
⢠Practice entity retains its structure
⢠Hospital strengthens its service line
while the Practice realizes some financial
benefits
⢠Practice physicians remain independent
⢠Easier segue to clinical integration and
deployment of accountable care era
strategy
Employment
35. Accountable Care Era: Private Practice Decision
⢠With rising financial pressures, some independent physicians are seeking
shelter through employment or integration with large hospital/healthcare
systems
⢠Other physician innovators and entrepreneurs are becoming âtrailblazersâ
by using the current challenges as an opportunity to improve patient care
and the practice environment for themselves
35
Design of highly
reliable, cost
efficient,
evidence based,
patient-centric
processes of care
Measurement
systems to
monitor above
processes of care
(true outcomes
& true costs =
VALUE)
Use of data
metrics to drive
continuous value
improvement
and creation of a
true learning
organization
Creation of a
self-governing
system of
accountability
that holds all
participants to
the physician-
determined
standards of care
Using the care
processes to
drive pricing,
which will
accurately
reflect true costs
of care delivery
36. CMS PAYERS
Multi-Specialty IPA (Joint Contracting Entity)*
CONTRACTED PCPS
CONTRACTED SPECIALISTS
Office-Based
Practice #1
Office-Based
Practice #2
Office-Based
Practice #3
*Can consist of as many private practices as desired by the participating parties; must be clinically integrated.
This Could Be the âLookâ for an IPA Entity
Example â For Illustration Purposes Only
The IPA Model
36
The IPA is increasingly serving as the foundation for providers to work toward
growth and clinical integration
37. Hosp/Systems
Hosp/Systems
Hosp/Systems
CIN/ACO
CMS PAYERS
PHO/IPA
Hosp/Systems
CONTRACTED PCPS*
CONTRACTED SPECIALISTS*
* Physicians could be owners of the QC plus
some contracted
Collaborative Structure
37
As provider-based QCs/CINs
continue to develop, the future of
hospital-provider relationships
could potentially âlookâ like this:
⢠Multiple alignment and
integration strategies co-existing
and interacting with each other
⢠Multiple provider types
partnering/affiliating with each
other
⢠The hospital-physician dynamic is
shifting
39. Clinically Integrated Models
39
STRATEGY BASIC CONCEPT COMPENSATION FRAMEWORK
Patient-Centered Medical Homes â˘Team of providers and medical
individuals collaborating to provide
patient-centric care in a focused
ambulatory care environment; can be
part of ACO/CIN model
â˘Varying incentives based on
contractual relationships with payers
Quality Collaboratives â˘Consortium of providers focused on
furthering the quality outcomes for a
defined population
â˘Internal or external funding sources
determine scope and structure of
available funds
Clinically Integrated Networks â˘Interdependent healthcare facilities
form a network with providers that
collaboratively develop and sustain
clinical initiatives
â˘Incentive (i.e. at-risk) compensation
based on achievement of pre-
determined measures
Accountable Care Organizations â˘Participating hospitals, providers,
and other healthcare professionals
collaborating to deliver quality and
cost effective care to Medicare (and
other) patient populations
â˘Incentive (and punitive) financial
impacts based on cost savings and
quality
40. 40
Effective clinically integrated
facilities meet the goals of the
Institute for Healthcare
Improvementâs Triple Aim:
1.Enhance the patient
experience of care (including
quality, access and reliability)
2.Improve the health of the
population
3.Reduce (or control) the per
capita cost of care
Goal of Clinical Integration: Population
Health Management
41. Clinically Integrating to Deliver Value
41
Clinical integration (CI) is a term
used to describe a collaborative
and coordinated approach to
healthcare delivery
CIâs focus is on reliably producing
high quality clinical outcomes in
the most cost efficient manner
possible
If value is defined as quality per
unit of cost (V = Q/C), then CI is,
quite simply, a method of providing
healthcare services that produce
measurably higher value (i.e. a
high quality to cost ratio)
CI is especially important in the US
healthcare industry, where the two
overarching imperatives behind the
recent reform efforts are also
related to the variables in the value
equation
42. 42
A Clinically Integrated Care Delivery Model
⢠Primary focus of a CIN/CIO is to
create a high degree of
interdependence among
participating providers through
care coordination and data
transfer/sharing/application
⢠Network of interdependent
healthcare facilities and providers
that collaboratively develop and
sustain clinical initiatives and
performance metrics/goals on an
ongoing basis through a
centralized, coordinated strategy
â Patient-centric
â Structures may vary from provider
to provider
â Heavily reliant on robust IT
infrastructure
⢠Centralized contracting is an
essential element of a CIN program
Aligned
Network of
Providers
Care
Practitione
rs; Provider
Groups
Care Process
Transformation
Hospital/
Health
System
Payers
Typical Hospital-Based CIN Structure
43. Future Directions: The Business of Healthcare
43
⢠We are in the midst of a significant cultural shift
⢠The business of healthcare is rapidly becoming the business of
population health management
⢠The engagement of physicians will help lead the way to change for
hospitals and health systems:
⢠Significant clinical buy-in will be necessary to re-tool a care delivery
process
⢠Physicians are arguably the most equipped to influence change
amongst medical staff, physician and non-physician caregivers
⢠Stable and sustainable provider bases will facilitate the overall
integration process
⢠Despite the structural model, new delivery systems will necessitate
HEAVY buy-in from participating providers in order to be functional
45. 45
The Alignment and (Clinical) Integration Strategy
Alignment is Stage One and (Clinical) Integration (with a care delivery system
development process) is Stage Two
⢠Forming a clinically integrated/accountable care organization will require significant
collaboration amongst many different stakeholders, and often times among competitors
⢠A go-forward alignment strategy is ultimately the best way to ensure successful integration
for collaborative models, particularly between distinct private groups
⢠Whether amongst medical groups or with a hospital partner, without sufficient alignment,
quality of care and population health management are likely to suffer
⢠While clinical integration and care delivery transformation are the âend gameâ goals, initial
alignment is its primary vehicle
Fosters an
organizational
culture that supports
teamwork
Promotes an
attitude for success
and remaining
positive, especially
considering the
uncertainties and
likely flexibility
requested
Alleviates many of
the risks/challenges
often associated
with ACO/CIN
development
Sets a strong
foundation for
partnering with local
hospitals/health
systems
46. 46
The Alignment and (Clinical) Integration Strategy
(contâd)
⢠Initial alignment deals assessed
⢠Consider/pursue a range of alternative alignment models (limited to moderate to full)
⢠Potential expansion of outpatient access
⢠Ongoing alignment transactions being considered and concluded
⢠Development of an aligned entity via legal incorporation (or effectuation of a legally binding contract)
⢠Medicare ACO (or commercial payer CIN) participation
⢠Interoperable IT solutions providing communications across all providers and facilities
⢠Possible expansion of network as the consolidated/aligned organization pursues new alignment deals
with high-performing physicians and/or outpatient facilities
⢠Operational integration, including revenue cycle mgmt, personnel, compliance, financial mgmt, etc.
⢠Official recognition from federal government as a CIN
⢠Continued focus on solidifying market share within primary market; not competing outside
⢠Engaging in payer contracting/reimbursement as a CIN based upon a combination of FFS, management
assistance and at-risk (i.e., shared savings, etc.) reimbursement methodologies
Stage I: Alignment & Integration*
Stage II: âAccountable Care Eraâ Strategies & Implementation*
*A staged approach has proven an effective strategy for numerous health systems and private
consortiumsâ clinical integration and ACO/CIN ventures; Stages I and II typically run concurrently after
the initial period (i.e., 1-3 years) of successful alignment transactions
47. 47
The Alignment and (Clinical) Integration Strategy
(contâd)
⢠Continue to address Stage I alignment efforts to grow the physician network
⢠Continue to address and improve infrastructure (either independently or through
alignment initiatives)
⢠Continue refining/developing an internal distribution methodology that includes
payment for services at more than FFS (but still a lot of the total at FFS) plus
bundled reimbursement
⢠Consider the development of a care process design system (i.e., a system that
offers the ability to systematically design, monitor, adjust and produce high value
care delivery on an on-going basis)
Next Steps and Future Strategies
48. 48
In ConclusionâŚ
Accountable care era is ushering in a wave of
changes, all of which pose unique challenges for
private practice physicians
Private practices can lack the
infrastructure/resources (IT, primary care base,
etc.) necessary to respond optimally to these
changes, which will drive more hospital-physician
alignment transactions
While risks/challenges exist, doing nothing will
have detrimental impacts for hospitals/health
systems â traditional care delivery will prove to
be more costly and unsustainable
Federal and commercial payers have begun
supporting ACO/CIN development via
programs/incentives/penalties
ALL PROVIDERS MUST DEVELOP STRATEGIC PLAN FOR RESPONDING TO ACCOUNTABLE
CARE
50. Max Reiboldt, CPA
President & CEO
Coker Group Holdings, LLC
T: 678-832-2007
mreiboldt@cokergroup.com
Steve Hudson
Director of Strategic and Physician Development
Northside Hospital - Cherokee
T: 404-851-6500
Steve.hudson@northside.com
52. ⢠ACCOUNTABLE CARE ORGANIZATION (ACO)âa group of coordinated health care providers that care for
all or some of the health care needs of a defined Medicare patient population. This business model
generally focuses on moving away from fee-for-service by creating payment and delivery reforms that tie
provider reimbursements to quality metrics, reductions in the total cost of care, and patient satisfaction.
⢠AFFORDABLE CARE ACT (ACA) âa US federal statute, also known as the Patient Protection and
Affordable Care Act (PPACA) and/or "Obamacare,â signed into law by President Barack Obama on March
23, 2010 with the goals of increasing the quality and affordability of health insurance, lowering the
uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare
for individuals and the government.
⢠ALIGNMENT âa form of (contractual) affiliation between two parties that entails some form of economic
and legal ties intended to develop a certain level of partnership via common goals and objectives.
⢠BUNDLED PAYMENTSâa payment methodology where a provider agrees to manage a defined group of
services for a specified price. Already common within hospital payment as a DRG, current bundle
payment initiatives are looking to expand services to additional hospital services and post-acute for an
episode of care as a means of driving improved clinical integration and transitions management.
⢠CARE PROCESS DELIVERY SYSTEM âa care delivery system that methodically designs, monitors, adjusts
and produces high value care delivery on an on-going basis
52
Glossary of Terms
53. ⢠CLINICAL CO-MANAGEMENT AGREEMENT (CCMA) âa moderate form of alignment between a hospital
and physicians that compensate the providers for their management oversight of another entity and/or
a service line with economic incentives/rewards for quality improvement and cost reduction efforts
⢠CLINICAL INTEGRATION (CI)âa type of operational integration that enables patients to receive a variety
of health services from the same organization or entity, which streamlines administrative processes and
increases the potential for the delivery of high-quality healthcare.
⢠CLINICALLY INTEGRATED NETWORK (CIN) âa group of coordinated health care providers that care for all
or some of the health care needs of a defined patient population through the meaningful use of
information technology, data sharing and reporting. CINs typically entail commercial payer sponsorship.
⢠COORDINATED CAREâa care model approach that emphasizes a patient-centered, team-based strategy
for delivering coordinated health care services.
⢠ELECTRONIC HEALTH RECORD / ELECTRONIC MEDICAL RECORD (EHR/EMR)âan electronic record of
patient health information that may be stored on a computer or in the cloud, and can be retrieved by
anyone who has access to the system. They are a critical component in building the integration needed
to operate an ACO.
53
Glossary of Terms
54. ⢠EVIDENCE-BASED MEDICINE (EBM)âaims to apply the best available evidence gained from the
scientific method to clinical decision making. It seeks to assess the strength of evidence of the risks and
benefits of treatments (including lack of treatment) and diagnostic tests. EBM is identified through
published best practices, clinical standards, and claims data to help clinicians learn whether or not any
treatment will do more good than harm. When a community is connected within an ACO, this can be a
powerful tool.
⢠HEALTH INFORMATION EXCHANGE (HIE)âthe mobilization of health care information electronically
across organizations within a region, community, or hospital system. HIE provides the capability to
electronically move clinical information among disparate health care information systems while
maintaining the meaning of the information being exchanged. An HIE is a foundational piece of the ACO
because it provides a way for EMRs to exchange information across different types of medical records.
⢠INDEPENDENT PRACTICE ASSOCIATION (IPA) -an association of independent physicians, or other
organizations that contract with independent physicians, and provides services to managed care
organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis
⢠PATIENT-CENTERED MEDICAL HOME (PCMH)âan approach to providing comprehensive primary care
for patients by facilitating partnerships between patients and their primary care provider (PCPs). It is
designed to encourage the PCP to coordinate, but not necessarily directly provide, all aspects of a
patientâs care, including emergency room and post-discharge care.
54
Glossary of Terms
55. ⢠PHYSICIAN HOSPITAL ORGANIZATION (PHO) - legal (or perhaps informal) organizations that bond
hospitals and their attending medical staff via joint ownership of a new legal entity. PHOs are
frequently developed for the purpose of contracting with managed care plans
⢠PIONEER ACOâ A CMMI initiative designed for health care organizations and providers that are already
experienced in coordinating care for patients across care settings. This model is designed to allow these
providers to move more rapidly from a shared savings payment model to a population-based payment
model on a track consistent with, but separate from, the MSSP. There are currently 32 systems that
have been chosen to participate as Pioneer ACOs across the nation, and these systems will have a
portion of their compensation tied to quality measures and their ability to manage per member per
month.
⢠POPULATION HEALTH MANAGEMENT (PHM)âthe health of a defined population which includes not
only the amount of services they receive, but the general well-being of that group.
55
Glossary of Terms
56. ⢠PROFESSIONAL SERVICES AGREEMENT (PSA) â a full integration strategic alignment model that does
not entail employment.
â Traditional PSA â Hospital contracts with physicians for professional services; hospital employs
the practiceâs support staff and âownsâ the practiceâs administrative structure
â Global Payment PSA - Hospital contracts with physicians for professional services and
compensates the practice via a Global Payment (includes providersâ professional services and
benefits); practice retains all management responsibilities
â Practice Management Arrangement â Practice entity, support staff and management are retained
and contracted by the hospital but the physicians become hospital employees
â Hybrid Model â numerous options available that can mix and match the above PSA models with
management services organizations, etc.
⢠QUALITY COLLABORATIVE â another form of an integrated delivery network that functions similarly to
a CIN (i.e., same goals, IT requirements, etc.) made up of a group of interdependent providers working
toward the improvement of the quality of care.
⢠TRIPLE AIM âCMS and The Institute for Healthcare Improvement (IHI) devised goals for improving the
health care system by delivering care more efficiently. The three critical objectives include: improve the
health of the population; enhance the patient experience of care (including quality, access, and
reliability); and reduce, or at least control, the per capita cost of care.
56
Glossary of Terms
57. ⢠PIONEER ACOâ A CMMI initiative designed for health care organizations and providers that are
already experienced in coordinating care for patients across care settings. This model is designed
to allow these providers to move more rapidly from a shared savings payment model to a
population-based payment model on a track consistent with, but separate from, the MSSP. There
are currently 32 systems that have been chosen to participate as Pioneer ACOs across the nation,
and these systems will have a portion of their compensation tied to quality measures and their
ability to manage per member per month.
⢠POPULATION HEALTH MANAGEMENT (PHM)âthe health of a defined population which
includes not only the amount of services they receive, but the general well-being of that group.
⢠PROFESSIONAL SERVICES AGREEMENT (PSA) â a full integration strategic alignment model that
does not entail employment.
â Traditional PSA â Hospital contracts with physicians for professional services; hospital employs the
practiceâs support staff and âownsâ the practiceâs administrative structure
â Global Payment PSA - Hospital contracts with physicians for professional services and compensates the
practice via a Global Payment (includes providersâ professional services and benefits); practice retains all
management responsibilities
â Practice Management Arrangement â Practice entity, support staff and management are retained and
contracted by the hospital but the physicians become hospital employees
â Hybrid Model â numerous options available that can mix and match the above PSA models with
management services organizations, etc.
57
Glossary of Terms
60. CCMA Case Study: The Organization
60
⢠A small (<10 providers) orthopedic surgery private practice in
the Midwest (âOrganization Aâ)
⢠Offers comprehensive orthopedic services with no ancillaries
⢠Has two main hospital affiliations:
â Hospital #1 is the regionâs major health system with numerous
orthopedic service line alignment/integration initiatives
underway
⢠Its employed orthopedic group is the only other large single group in the
area aside from Organization A
â Hospital #2 is a smaller health system
⢠A major competitor of Hospital #1 but with fewer alignment/integration
initiatives
61. CCMA Case Study: The Impetus
61
⢠Organization A, desiring to remain independent but improve its
financial health over the long-term, decided to discuss alignment
options with its hospital affiliates
⢠As Hospital #1 continued to develop its alignment/integration
strategies, it approached Organization A with the potential to
moderately align via a CCMA
⢠Primary motivations for Organization Aâs decision to accept Hospital
#1âs offer:
â Opportunity to realize an additional stream of revenue from Hospital #1âs
quality/cost control initiatives that are inherent to the CCMA
â Ability to segue more easily into a more full form of alignment/integration
(i.e., a professional services agreement, clinical integration or even
employment) with Hospital #1, if so desired
â Ability to continue providing services at Hospital #2
62. CCMA Case Study: What Took Place?
62
⢠Key physician and administrative leaders from both Hospital #1 and
Organization A met via a series of Working Group meetings to
discuss CCMA models and corresponding performance metrics
⢠Parties also discussed prospective cost reduction initiatives
(including a surgical implant standardization effort)
⢠Hospital #1 included Organization Aâs physicians into the overall
Management Services Agreement that memorializes the CCMAâs key
terms and conditions
⢠Organization Aâs physicians and Hospital #1âs orthopedic surgeons
collaborating to improve the value proposition for Hospital #1âs
orthopedic service line
*Cokerâs role was to serve as the lead transaction advisor to Hospital #1, which included facilitating the
working group meetings, structuring the CCMA and the appropriate performance metrics/rewards,
conducting the due diligence and financial analyses related to the deal, collaborating with legal counsel to
develop definitive agreements and overall management of the transactionâs processes.
64. PSA Case Study: The Organization
64
⢠A large (>10 providers) primary care private practice in the South
(âOrganization Bâ)
⢠Represents the regionâs largest and chief primary care facility with
multiple ancillary services including an acute care center
⢠Has two main hospital affiliations:
â Hospital #1 is the regionâs major health system with an established CIN
and substantially more wherewithal than Hospital #2
â Hospital #2 is a smaller health system engaging in several
alignment/clinical integration efforts
⢠Due to its long-standing reputation in the community as well
as its strong primary care nature, Organization B is a highly
coveted private practice partner for both Hospitals (and for
their CINs, in particular)
65. PSA Case Study: The Impetus
65
⢠Organization B, desiring to remain independent but improve its financial
health over the long-term, decided to discuss alignment options with its
hospital affiliates
⢠Organization B approached both Hospitals #1 and #2 with the potential for
a GPPSA wherein the Hospitals contract for the practiceâs professional
services in exchange for a global payment rate
â The Practice entity remains intact
â The Practice physicians and support staff remain employed by the Practice
⢠Primary motivations for Organization Bâs decision to pursue the PSA:
â Opportunity to significantly improve its bottom line without being employed
â Off-loading of administrative burdens (i.e., real estate lease, overhead costs, etc.)
to Hospital (and thereby, realizing a reduction in its cost structure)
â Ability to return to unaligned private practice or segue more easily into a more full
form of alignment/integration (i.e., clinical integration or even employment) with
the Hospital, if so desired
66. PSA Case Study: What Took Place?*
66
⢠Organization B presented the GPPSA model to both Hospitals #1 and #2,
both of which expressed great interest
⢠During negotiations, Hospital #2 was given exclusivity over Hospital #1
(with the ability to resume discussions with Hospital #1) due to its better
reputation amongst the physician community as well as its slightly better
offer
⢠During the exclusive negotiations, Hospital #2 counteroffered with the
Traditional PSA (the main difference being the employment of the Practice
support staff)
â Organization B accepted this change primarily because of Hospital #2âs better
employment benefits package
â Organization B would be able to re-hire these individuals upon PSA termination
⢠Hospital #2 purchased all of Organization Bâs ancillary services (under the
condition that the Practice will be able to repurchase them at the then
current fair market value upon PSA termination)
*Cokerâs role was to serve as the lead transaction advisor to Organization B, which included structuring the
deal(s), conducting the due diligence and financial analyses related to the deal(s), negotiating the transactions
and overall management of the transactionâs processes.