FROM VOLUME TO VALUE:IS IT REAL OR JUST HYPE?

David A. Williams, CPA, MPH, FHFMA

What’s your opinion on the new location for Tri-State?

1. Really like the new location

2. Location is ok, but go back to Tunica

3. Doesn’t matter where, I’m a Tri-State groupie!

Really lik

e the new lo

cation

Locati

on is ok b

ut go back...

Doesn’t m

atter where, I’

...

0% 0%0%

2

1. CMS Leads Transition to Value Based Payment2. Market drivers – Curb spending3. Bundles – are they voluntary?4. Implications for Providers5. Predictions

AGENDA

3

Should Congress repeal or work to improve ACA?

A. RepealB. Work to improveC. Leave it alone

Repeal

Work to Im

prove

Leav

e it alone

0% 0%0%

4

Total

Favorable

Unfavorable

Democrat

Independent

Republican

0.58

0.9

0.31

0.85

0.56

0.31

0.35

0.07

0.63

0.1

0.39

0.62

Work to improve the law Work to repeal the law and replace it with something else

MORE WANT CONGRESS TO IMPROVE ACA THAN REPEAL AND

REPLACE

*NOTE: Neither of these/they should do something else and Don’t know/Refused answers not shown.SOURCE: Kaiser Family Foundation Health Tracking Poll (conducted April 15-21, 2014)

By Overall ACA Opinion

By Political Party ID

Which would you rather see your representative in Congress do when it comes to the health care law?

5

“quality in relation to the total payment for care”

-Quality is the composite of clinical outcomes, safety and patient experiences with health services

-Payment is the amount paid by all purchasers of health care, including the insurer and patient

Higher quality does not mean higher costs!

QUALITY AND PAYMENTS

6

Volume of

Services

Value for Payment

s

SHIFT OF EMPHASIS

7

2006 2007 2008 2009 2010 2011 2012 2013 20140%

1%

2%

3%

4%

5%

6%

7% 6.50% 6.30%

4.80%

3.80% 3.90% 3.90% 4.10% 3.60%

5.00%

Annual Growth in NHE

Annual Growth in NHE

A RETURN TO PRE-RECESSION HEALTH CARE SPENDING?

8

2010 2011 2012 2013 2014 2015-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%3.5%

1.6%

2.7%2.9%

1.5%

-0.1%

Hospital Price GrowthHospital Price Growth

A LOOK AT HOSPITAL NUMBERSTELL A DIFFERENT STORY

9

700+ hospitals received net payment increase

1700 Hospitals received a bonus payment

3000+ Hospitals in VBP

MANDATORY RISK PROGRAMSIMPACT HOSPITALS

10

Terri Postma, MD, Performance Based Payment Policy Group, CMS at the ACO Learning Network, Brookings Institute…

“CMS will transition payments being tied to value of 85% by 2016 and a minimum of 90% by 2018”

“Payments tied to risk goals 20% - 2015, 30% - 2016 and 50% by 2018”

“Care delivery re-design is a must to reach future improvement goals”

APRIL 9, 2015

11

CMS will reach the alternative payment model-based goals as proposed.

A. TrueB. False

TrueFa

lse

0%0%

12

The Comprehensive Care for Joint Replacement Model (CJR)Coming to 67 markets near youProgram goals

• Focus on joints ($16.5k to 33k)• Comprehensive episode• Retrospective bundle• Estimated savings over 5 years $343mil

VOLUNTOLD BUNDLES

13

1. Leadership buy-in2. Re-design clinical processes around best

practices3. Care Pathway management is not optional4. Post Acute Care coordination

4 MUST DO ITEMS FOR CJRS

14

MACRA

Replacement of SGR pushes risk2 Payment models beginning in 2019

• Merit Based Incentive Payment System (MIPS)

• Alternative Payment Models (APMs) – 25%

25%

15%30%

30%

MIPS Weights

E.H.R UseClinical Im-provementQualityResource Use

15

Government

M Advantage reform

Medicare risk programs

Medicaid managed CareMedicaid block grant funding

1332

Employers

From plans to exchanges

Self funded emphasis on

utilization

Consumers

Premium sensitivity

Price at point of service

MARKET FORCES WILL CURB SPENDING

*NOTE: Some other reason (vol.) and Don’t know/Refused responses not shown.SOURCE: Kaiser Family Foundation Health Tracking Poll (conducted April 15-21, 2014)

COST IS PRIMARY REASON FOR REMAINING UNINSURED

You tried to get coverage but it was too expensive

You don’t think the requirement applies to you

You didn’t know about the requirement to have health insurance

You tried to get coverage but were unable

You would rather pay the fine than pay for health insurance

36%

14%

13%

12%

7%

AMONG THE UNINSURED AGES 18-64: As you may know, the health care law requires nearly all Americans to have health insurance this year or else pay a fine. Which of the following comes closest to why you personally have not gotten health insurance this year?

17

CMS will reach the alternative payment model-based goals as proposed.

A. TrueB. False

TrueFa

lse

0%0%

18

• Lacks patient-centric coordination• Fragmented payment system• Variable quality measures• Volume rewarded• Provider focused• Confusing pricing structure

CURRENT INDUSTRY STATUS

19

• Patient-centric care and coordination• Value based payment system• Uniform set of quality measures• Transparency in price and quality

FUTURE STATE

20

RISKS AND REWARDS

Risk = Uncertainty of the level of spending and clinical outcomes for a clinical episodeRisks and rewards go together

More risk is not inherently bad, and typically speaking, the larger the risk, the larger the potential reward; managing risk is about influence, control, and scale

Two main classifications of risk for healthcare payment:Actuarial Risk (e.g. someone getting sick) Performance Risk (e.g., errors, inefficiencies, patient behavior)

The APII is shifting performance risk to providers, with the logic that those providers have more control over these risks

RISKTRANSFER

21

Common Objectives

Communication Strategies

Cooperative Relationship

ESSENTIAL ELEMENTS BETWEEN CLINICAL AND FINANCIAL TEAM

22

TRUST

• Consider a system model that includes integration• Understand care management – variation will cost

$$$• Reducing costs allows for pricing options• Efficiency is a must for voluntold bundles• Build patient/consumer relationships

LEADERS SHOULD POSITION BY

23

Top 3 Issues in 20161. Financial challenges2. Reform implementation3. Government mandates4. Patient safety5. Care of uninsured6. Patient satisfaction7. Physician-Hospital

relations8. Population health

management9. Technology10. Personnel shortages Fin

ancial C

hallenges

Government m

andates

Care of u

ninsured

Physician Hospita

l relations

Technology

24

ACHE SURVEY OF TOP 10 ISSUES 2014

25

• Data Strategy• Data Availability• Data Integrity

BUSINESS INTELLIGENCE

26

Cost effectiveness• Lean and mean• Narrow portfolio• Rightsized platform

Enterprise-wide perspective• Clinical navigators with engaged leadership team• Cross continuum of care assets are appropriately deployed

- Appropriate Care In the Appropriate SettingConnectivity

• Interconnected patient flow information• Seamless transfer of information

Mass Customization• Uniform care processes to produce consistent clinical

outcomes• Communication and implementation of best practices

CORE COMPETENCIES ESSENTIAL FOR BUSINESS INTELLIGENCE IN AN INTEGRATED DELIVERY SYSTEM

27

• Experience

• Quality

• Access• Cost

Competitive Price

Structure

Appropriate Care at

Proper Setting

Brand Identificati

on

Better Than the

Rest

PROVING THE “WORTH”COMPETITIVE ADVANTAGE

28

• Hospitals are bearing the load of FFS payments• DSH, IPPS Update MACRA, IPPS Update Cuts for FY

• 16 - $29B• 17 - $38B• 18 - $54B• 19 - $67B• 20 - $76B

• Inpatient utilization continues to trend downward

WHY IS APPROPRIATE SETTING IMPORTANT?

29

Source: MedPAC: A Data Book: Health Care Spending and the Medicare Program, June 2012

Source: HC Advisory Board interviews and analysis

• Has duplicative services poorly distributed across markets

• Overbuilt and unused capacity – real estate is a drag on cost, not an investment

• Incompatible offerings – Market demands are totally ignored, unable to match patient acuity

THE SYSTEM THAT IS HEADEDFOR A CRASH

30

WHERE DO YOU FALL?

31

My Hospital profit margin trend is:

A. IncreasingB. DecreasingC. Remains the same

Increasin

g

Decreasin

g

Remains t

he same

0% 0%0%

32

My Hospital profit margin trend, excluding supplemental payments, is:

A. IncreasingB. DecreasingC. Remains the same

Increasin

g

Decreasin

g

Remains t

he same

0% 0%0%

33

CLEAR WINDSHIELD VIEW?

34

OFF THE BEATEN PATH?

35

IT’S COMPLICATED, BUT WE’VE GOT THIS

36

CLEAR AS MUD!

37

My organization is prepared for the future.

A. Strongly AgreeB. Kind ofC. Strongly Disagree

Strongly Agre

e

Kind of

Strongly Disa

gree

0% 0%0%

38

NOW THAT WE’VE DISCUSSED THE MODELS, LET’S TALK…

• What questions does the group have?

• What other information would be helpful to you?

• Where are you currently at in terms of pursuing a bundled payment strategy, if you plan to?

39

Who will win the Democratic Nomination?

A. Bernie SandersB. Hillary ClintonC. Other

Bernie Sanders

Hillary Clin

tonOther

0% 0%0%

40

Who will win the Republican Nomination?

A. Donald TrumpB. Ted CruzC. Marco RubioD. Other

Donald Trump

Ted Cruz

Marco Rubio

Other

0% 0%0%0%

41

David Williams, CPA, MPH, FHFMAPartner, HORNE Healthcaredavid.williams@hornellp.com 601.326.1000

ABOUT THE PRESENTER

JOIN THE CONVERSATION

HORNELLP.COM/HEALTHCARE

Blog.HORNELLP.com/Healthcare@HORNEHealthcare

www.linked .com/company/HORNE-Health-care