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Current Practice Alignment Strategies to Ensure Long Term Survival


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In this MGMA presentation, John Lutz explores the merits and drawbacks of various physician alignment models and provides insights into competencies needed in the new market.

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Current Practice Alignment Strategies to Ensure Long Term Survival

  1. 1. Current Practice Alignment Strategies to Ensure Long-Term Survival 2013 MGMA Annual Conference October 7, 2013 John A. Lutz, FACMPE, Managing Director, Huron Healthcare
  2. 2. Agenda I. Pressures Driving Transformation Initiatives II. Alignment Models for Long-Term Success III. Examples IV. Competencies Needed V. Q & A © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 2
  3. 3. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 3
  4. 4. Pressures Driving Transformation
  5. 5. 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 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 5
  6. 6. New Path to Success MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL High Volume Great Outcomes High Compensation Great Compensation High Independence Great Partnerships © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 6
  7. 7. New Path to Success MEDICAL GROUPS & HEALTH SYSTEMS ARE REPOSITIONING THEIR BUSINESS MODEL DESTABILIZATION ADAPT TO NEW NORMAL CREATE NEW STABILITY • Rising costs • Management structures • Tighten alignment with partners • Shrinking reimbursement • Operations • Strengthen management • Transition to value-based • Skill mix • Restructure compensation arrangements • Compensation • Affiliations © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. • Strengthen clinical integration • Maintain high member engagement 7
  8. 8. Prioritizing Transformation CLINICAL INTEGRATION & TRANSFORMATION STAGES ACCOUNTABLE CARE CLINICAL INTEGRATION PCMH • • • • • Integrate ACO-like competencies Population health management New relationships with physicians, payers, employers Membership & narrow networks Financial and clinical outcome controls • Formalized structure across the continuum • Governance structure to support population health • Economic model/plan design • Comprehensive, coordinated, primary care • Team-based, all practicing at top of license • Proactive care management to avoid admission Complexity Sophistication Clinical & Financial ROI © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 8
  9. 9. Alignment Models
  10. 10. 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
  11. 11. Physician – Hospital Alignment Strategies • Management Service Organization • Clinically Integrated Physician Networks • Information Infrastructure • Practice Lease Arrangements • MD Councils • Clinical Operations Committee • Direct Physician Leadership (Board, CEO, etc.) © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. Business Services Contracts Structured Engagement Employment • 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 11
  12. 12. 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 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 12
  13. 13. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 13
  14. 14. Alignment Models EMPLOYMENT Includes 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 14
  15. 15. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 15
  16. 16. Professional Service Agreement Example Hospital or Health System Payer PSA & wRVU $ License Operations APP’s Supplies Center of Excellence Medical Group 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 16
  17. 17. Co-Management Example Hospital or Health System Payer Operations Medical Group Designees Designees Operating Committee Service Line Co-management & Profit/Loss Note: No Steering or Cherry Picking! Fair Market Value Applies © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 17
  18. 18. Employed Physician Enterprise Example Health System Health System Joint Strategy and Oversight Committee Health System Medical Group(s) Health System Hospitals Executive Director Physician Executive Practice Support Services (MSO) Primary Care Physician Practices MSO Core Functions Finance/Accounting Operations/Patient Access Performance Analytics Performance Improvement Revenue Cycle Human Resources Information Technology Specialty Physician Practices © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential 18 Affiliated Group (Independent Physicians) 18
  19. 19. Competencies Needed
  20. 20. Core Competencies Management & Financial Platform System Alignment & Compensation Clinical Integration Competence Demand & Capacity Management © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. “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 20
  21. 21. Accountable Care Competencies The model of essential competencies for an Accountable Care Organization is patient-centered and includes new clinical and management competencies. Management Competencies Care Delivery Roles / Team Management & Development Information Technology & Data Analytics Measurement & Performance Management Provider Network Design Clinical Competencies Clinical Integration Management Population Management Transition / Readmission Management Revenue Cycle & Financial Structure Care Variation & Quality Management Patient-Centered Medical Home Patient Lifelong Health Management Clinic / Outpatient © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. Hospital Post-Acute Care Home / Community 21
  22. 22. 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 • • • • Sharp (Wellpoint, Aetna, Blue Shield) Carilion Clinic (Aetna, UHC, CMS) PeaceHealth Dignity CMS ACO • Many Direct provider to employer • Futuristic – Aurora Health • • • Shared risk contracts Capitated & bundled payment Blended: FFS, PMPM, gain/risk sharing • Decision point: Determine commonality and market focus (all or subset). © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 22
  23. 23. 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 © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 23
  24. 24. Accountable Care Competencies CLINICAL 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 highcost 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). © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 24
  25. 25. Characteristics of Success Organizations that are positioned to successfully manage value-based contracts have the following characteristics:  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 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.
  26. 26. Today’s Presenter John A. Lutz, FACHE, FACMPE Managing Director Huron Healthcare 518-491-4267 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.
  27. 27. Q&A
  28. 28. Appendix: From HMOs to ACOs
  29. 29. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 30
  30. 30. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 31
  31. 31. 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. © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 32
  32. 32. Changes in the Payment Model 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. Value-Based Second Curve Payment rewards population value: quality and efficiency Quality impacts reimbursement Partnerships with shared risk Volume-Based First Curve Fee-for-service reimbursement High quality not rewarded No shared financial risk Acute inpatient hospital focus Increased patient severity IT utilization essential for population health management Scale increases in importance Realigned incentives, encouraged coordination IT investment incentives not seen by hospital Stand-alone care systems can thrive Regulatory actions impede hospital-physician collaboration © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. American Hospital Association. “Hospitals and Care Systems of the Future.” September 2011. p.9 33
  33. 33. Patient-Centered Medical Home 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. Process • 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. People • 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 communitybased services), Physical Therapist, etc. • Care Manager: Supports Medical Home Team © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 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 34
  34. 34. SCMG: PCMH to ACO Progression ACO CLINICAL OPERATIONS AND SYSTEMS Accountable Care Organization Medical Groups Skilled Nursing Facilities • SNFists • On-site Case Management • Efficiency Rating Systems “Preferred Facilities” Ancillary Services • Free-Standing ASC & Diagnostic Testing Centers Home Care Hospitals • Enterprise Level Activities • PC-MH Functions • • • • • Service Line Integration Medical Staff Alignment Incentives for Efficiency & Lean Six Sigma Quality (SCIP, Leapfrog) Safety • Outcomes & Evidence Medical Group Enterprise Level Activities • PCP/SCP Incentives & Clinical Guidelines • Pay for Performance Initiatives • Hospitalists, Post Discharge Follow-Up Programs • • • • Based Medicine • Call Coverage • Consult Services (Stroke, STEMI) ER Avoidance Programs Urgent Care End of Life (Palliative Care) Patient Satisfaction & Loyalty • Transition of Care • Provider Satisfaction • Behavioral & Mental Health • Home Safety Visits • Post Discharge Visits • Home Health • Care management (Acute, Coordinator of Chronic, Inpatient, SNF) Services • Health Coaching (Shared Advanced Primary Care Decision Making) Under Patient-Centered Medical Home Hospice • Transitions • Prevention & Wellness • Cost Effective Medical (CHF, COPD, • Point of Care Analytics & Clinical Management & Utilization of Frailty Decision Support Services (SCP, Ancillary) Syndrome, • Gaps in Care • Access, Same Day Appointments, Dementia) • Population Management & Chronic e-Visits Care Registries • Patient Satisfaction & Loyalty • Home Visiting Teams • Provider & Office Staff • Generic Prescribing Satisfaction Patient Program • Personal Health Record Used with Permission: Dr. John Jenrette, CEO Sharp Community Medical Group (2010) © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. DME • Integration & Oversight with Care Management • Patient Portal • Health Risk Assessment • Patient Engagement & Activation 35
  35. 35. 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 © 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 36
  36. 36. 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 © 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential. 37