Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era
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Transcript of Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era
Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable
Care Era
Max Reiboldt, CPAPresident/CEO, Coker Group
Steve HudsonDirector of Strategic and Physician Development,
Northside Hospital-Cherokee
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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 Becker’s Hospital Review.
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ContentsI. Current Industry TrendsII. Stage I: Strategic Alignment
a. Physician-to-Hospital Models– Joint Ventures– Clinical Co-Management Agreements– Professional Services Agreements– Collaboratives
III. Stage II: Clinical IntegrationIV. The Overall Integration/Accountable Care Strategy for Private PhysiciansV. Q & AVI. Glossary of TermsVII. Appendix: Strategic Alignment Case Studies
I. Current Industry Trends
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Comparative Look at 2013 and 2014
• Preparatory year for ACA’s “Full Implementation Year”
• 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 (“PHM”) efforts
• Primary care development efforts to combat workforce shortages
2013 Trends• Major ACA provisions rolled out
January 1, 2014– Individual mandate – Comprehensive insurance
plans/coverage– Medicaid expansion – Meaningful Use Stage II
• Accelerated movement within 2013 trends
• Big year for information technology (“IT”)– ICD – 10 (potential 2015
implementation)– PHM solutions– On-premise to cloud-based systems
• Growth of clinically integrated networks
2014 Projections
*Processes furthered during the year; still early-on in development
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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 organization’s 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, “2013 Survey of Alumni Satisfaction and Health System Trends”
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Provider Concerns in 2013 (cont’d)
Source: Becker’s Hospital Review, “10 Most Pressing Career Concerns for Physicians,” July 12, 2013
10 Most Pressing Career Concerns for Physicians1. Compensation and/or reimbursement — 53.9 percent2. Work/life balance — 45.2 percent3. Work-related burnout and stress — 22.1 percent4. Impact of healthcare reform — 16.6 percent*5. Lack of autonomy or control in my practice — 11.8 percent 6. Quality of healthcare — 10.8 percent*7. Finding a new practice opportunity — 7.3 percent8. Malpractice issues — 6.7 percent9. Patient-physician relationships — 5.2 percent 10. Implementing electronic medical records — 5 percent**Likely to significantly rise in priority within 2014
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Provider Concerns in 2013 (cont’d)
Source: Becker’s Hospital Review, “Physician-Hospital Alignment in 2013: 17 Trends,” 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 “Stage II”.
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.
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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
• Providers paid a specified amount for each service providedFee-for-Service
• Incentives for higher quality measured by evidence-based standardsPay-for-Performance
• Percentage reimbursement at risk, earned back by high quality outcomesValue-based Purchasing
• Single payment for episodes of treatment, shared by hospital and physiciansBundled Payments
• Percentage of savings from reduced cost of care shared with hospitals and physiciansShared Savings
• All services compensated in one payment that manages the patient across the delivery systemGlobal Payments
Driving Forces for Change: Evolving Payment Models
Incr
easi
ng P
rovi
der R
isk
10
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It All Culminates to Value…
• Develop quality initiatives for safety, outcome and satisfaction
• Engage physicians in metric development process– Process and true outcomes measures
• Practice evidence-based medicine– Establish protocols and best practices
• Patient-centered at all times • Utilize a population-health mindset• Accurately measured and attributed• You can’t change what you can’t 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 can’t change what you can’t measure
Quality Enhancement (Outcomes)
Cost Reduction=
Higher Value
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The Ultimate Provider Challenge
High quality clinical care delivery Cost efficient clinical care delivery Population health management
-Providers must do all simultaneously
to deliver value ( Outcomes / Cost )
all with limited funds
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Using Alignment to Further Integration*
• Stage I: Alignment– Common goals and
objectives – More structural than
functional• Medical staff membership• CCMA• PSA• Employment
– Tied together by legal and economic connections
• Stage II: (Clinical) Integration– Merged clinical and
business models– More functional than
structural• PCMH• ACO• Quality collaborative • CIN
– Tied together by clinical and cultural connections
*Can be via both physician-hospital and physician-physician strategies
II. Stage I: Strategic AlignmentTwo Tracks: Physician-Hospital or Physician-Physician Alignment
Spectrum of Alignment Models
Private Practice Alignment Model Options
Hospital Employment
Independence
Increasing Integration
Models that Fall Short of Employment•Managed care networks• Medical directorships•Clinical co-management agreements•Recruitment•Independent practice associations
• Joint ventures•Service line management• Professional services agreements•Quality Collaboratives•ACOs/CINs
Employment is not the only viable option but some form of alignment with a hospital is
essential!15
Traditional Alignment Model Descriptions
Limited Integration
Managed Care Networks (Independent Practice Associations, Physician Hospital Organizations): Loose alliances for contracting purposes
Moderate IntegrationService Line Management: Management of all specialty services within the hospital
MSO/ISO: Ties hospitals to physician’s 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 “Lite”: 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
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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 .
Joint Ventures
Joint Ventures
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Structures*• Specialty Hospitals• Management Services
Arrangements
• Under-Arrangement Arrangements
• Freestanding Centers
• Pay for Performance
• Block Leases
• Medical Directorships
“Laws” 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).
Joint Ventures (cont’d)
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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
Joint Ventures (cont’d)
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• Increasingly complex regulatory landscape are creating significant challenges for those providers considering Hospital-Physician JVs– May be JVs with surgery centers or equipment
• ASC ventures have specific requirements for physicians – 1/3 of physician’s medical practice income from all sources for previous fiscal/12 month
period must be derived from performance of Medicare list of ASC covered procedures– 1/3 of procedures performed by each physician for previous fiscal/12 month period
must be performed at ASC
– 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)– As hospital-physician transactions increase in the market, federal
regulators are increasing their scrutiny for compliance purposes
Source: Dixon Hughes
Clinical Co-Management Agreements (CCMA)
CCMA Description
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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 hospital’s 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 “lite”) 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 “wraparound”
CCMA Example: Gastroenterology Service Line*
Practice Hospital
Clinical Co-Management
Agreement for Oversight of GI Services
Fixed FeeContingent Fee
ColonoscopyERCP
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 “wraparound” (i.e., add-on) to another, major alignment strategy
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CCMA Takeaways
Size• All providers within each applicable service line can
participate in the CCMA • Multiple CCMAs may occur simultaneously
Wraparound• “Add-on” 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
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Professional Services Agreements: “Employment Lite”
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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
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Four Popular PSA Models
1. Traditional PSA: Hospital contracts with physicians for professional services; Hospital employs staff and “owns” 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
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1. PSA – Traditional Model
Hos
pita
l/H
ealth
Sys
tem
Assumes responsibility for Practice’s management and operations (includes lease/depreciation
expense and other operating expenses)
Deducted from professional service revenue to be paid to Practice
Pays the Practice’s 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
Inde
pend
ent
Cont
ract
or 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
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2. PSA – Global Payment Model*
Hospital(Integrated with Physician
Division Infrastructure)Global Fee:
• Fixed Overhead• Variable
Overhead• Rate per wRVU
Professional Services**& Non-compete
Agreement
Asset Ownership/Lease Payer Contracting A/R Owned Billing*** Establishes fee structure
Approves Strategy/Finances Oversees Operations/Business Planning Establishes Compensation Principles Achieves Value-Exchange Objectives Is Typically Split 50/50 Between Hospital and
Medical Group
Group Governance Physician
Hiring/Termination Income Distribution Clinical Practice/Quality Malpractice Management and Staffing IT Support Physicians and staff remain
employed by Practice
Membership CompensationHospital 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.
Global PaymentPSA
PracticeOverhead
PhysicianCompensation and
Benefits
ExampleFixed Overhead: $6.0M
Variable Overhead: $6/wRVU
Example$50/wRVU
Example
Total Practice wRVUs = 120,000
Fixed Overhead Portion = $6,000,000Variable Overhead Portion = $720,000Phys Comp/Ben Portion = $6,000,000
GLOBAL PSA FEE = $12,720,000
PSA Rates per wRVU
converted to Dollars
based on wRVU
pool
Example – For Illustration Purposes Only
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*Totals represent annual figures
Practice Overhead:•Covers Practice’s prof. expenses•Pass-through from Hospital•Based on budgeted expenses •Variable expenses per wRVU•Exclusive of phys comp & benefits•Only for professional component (not technical component, if appl.)
Physician Compensation and Benefits:•Covers physicians’ compensation/benefits•Based on rate per wRVU•Based on historical comp & FMV•Compared against past comp/wRVU•Room for annual increases included•Same as employment model•Comp payments made to practice(can distribute how MD’s choose)
2. PSA – Global Payment Model: Economic Components*
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3. PSA – Practice Management Arrangement
Practice Infrastructure
Ownership
Practice Physicians
Hospital
Employment
Practice Management Billing/Collections
Compensation 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
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PSA – Model Comparison Global Payment
PSAPractice Management
ArrangementTraditional
PSA
Physicians Employed by Hospital XPhysicians Employed by Practice X Staff Employed by Hospital XStaff Employed by Practice X XReal 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 * * XAncillary Medical Equipment Owned by Practice * *
Hospital/Hospital Affiliate Physician Benefit Plans Utilized X X
Practice Physician Benefit Plans Utilized XHospital/Hospital Affiliate Billing Tax ID Used X X XPractice 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
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Employment vs. Employment “Lite” 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 Hospital’s accountable care era strategy
Employment “Lite”: 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
Collaboratives
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 “trailblazers” by using the current challenges as an opportunity to improve patient care and the practice environment for themselves
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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
CMS PAYERS
Multi-Specialty IPA (Joint Contracting Entity)*
CONTRACTED PCPSCONTRACTED 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 “Look” for an IPA Entity
Example – For Illustration Purposes OnlyThe IPA Model
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The IPA is increasingly serving as the foundation for providers to work toward growth and clinical integration
Hosp/SystemsHosp/Systems
Hosp/Systems
CIN/ACO
CMS PAYERS
PHO/IPA
Hosp/SystemsCONTRACTED PCPS*
CONTRACTED SPECIALISTS*
* Physicians could be owners of the QC plus some contracted
Collaborative Structure
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As provider-based QCs/CINs continue to develop, the future of hospital-provider relationships could potentially “look” 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
III. Stage II: Clinical Integration
Clinically Integrated Models
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STRATEGY BASIC CONCEPT COMPENSATION FRAMEWORK
Patient-Centered Medical Homes •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
•Varying incentives based on contractual relationships with payers
Quality Collaboratives •Consortium of providers focused on furthering the quality outcomes for a defined population
•Internal or external funding sources determine scope and structure of available funds
Clinically Integrated Networks •Interdependent healthcare facilities form a network with providers that collaboratively develop and sustain clinical initiatives
•Incentive (i.e. at-risk) compensation based on achievement of pre-determined measures
Accountable Care Organizations •Participating hospitals, providers, and other healthcare professionals collaborating to deliver quality and cost effective care to Medicare (and other) patient populations
•Incentive (and punitive) financial impacts based on cost savings and quality
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Effective clinically integrated
facilities meet the goals of the
Institute for Healthcare
Improvement’s 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
Clinically Integrating to Deliver Value
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Clinical integration (CI) is a term used to describe a collaborative
and coordinated approach to healthcare delivery
CI’s 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
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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– Patient-centric– Structures may vary from provider to
provider– Heavily reliant on robust IT
infrastructure• Centralized contracting is an essential
element of a CIN program
Aligned Network of Providers
Care Practitioners; Provider
Groups
Care Process Transformation
Hospital/Health System
Payers
Typical Hospital-Based CIN Structure
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Future Directions: The Business of Healthcare• 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
IV. The Overall Integration/Accountable Care
Strategy for Providers
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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 “end game” 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
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The Alignment and (Clinical) Integration Strategy (cont’d)
• 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: “Accountable Care Era” Strategies & Implementation*
*A staged approach has proven an effective strategy for numerous health systems and private consortiums’ 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
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The Alignment and (Clinical) Integration Strategy (cont’d)
• 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
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In Conclusion…
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 – 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
V. Q & A
Max Reiboldt, CPAPresident & CEO
Coker Group Holdings, LLCT: 678-832-2007
Steve HudsonDirector of Strategic and Physician Development
Northside Hospital - CherokeeT: 404-851-6500
VI. Glossary of Terms
• ACCOUNTABLE CARE ORGANIZATION (ACO)—a 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) –a US federal statute, also known as the Patient Protection and Affordable Care Act (PPACA) and/or "Obamacare,“ 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 –a 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 PAYMENTS—a 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 –a care delivery system that methodically designs, monitors, adjusts and produces high value care delivery on an on-going basis
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Glossary of Terms
• CLINICAL CO-MANAGEMENT AGREEMENT (CCMA) –a 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)–a 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) –a 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 CARE—a 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)—an 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.
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Glossary of Terms
• EVIDENCE-BASED MEDICINE (EBM)—aims 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)—the 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)—an 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 patient’s care, including emergency room and post-discharge care.
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Glossary of Terms
• 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 ACO— 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)—the health of a defined population which includes not only the amount of services they receive, but the general well-being of that group.
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Glossary of Terms
• PROFESSIONAL SERVICES AGREEMENT (PSA) – a full integration strategic alignment model that does not entail employment. – Traditional PSA – Hospital contracts with physicians for professional services; hospital employs
the practice’s support staff and “owns” the practice’s administrative structure– Global Payment PSA - Hospital contracts with physicians for professional services and
compensates the practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilities
– Practice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employees
– Hybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.
• QUALITY COLLABORATIVE – 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 —CMS 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.
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Glossary of Terms
• PIONEER ACO— 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)—the 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) – a full integration strategic alignment model that does not entail employment. – Traditional PSA – Hospital contracts with physicians for professional services; hospital employs the practice’s
support staff and “owns” the practice’s administrative structure– Global Payment PSA - Hospital contracts with physicians for professional services and compensates the
practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilities
– Practice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employees
– Hybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.
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Glossary of Terms
VII. AppendixStrategic Alignment Case Studies
CCMA Case Study(“Case Study I”)
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CCMA Case Study: The Organization • A small (<10 providers) orthopedic surgery private practice in
the Midwest (“Organization A”)• Offers comprehensive orthopedic services with no ancillaries • Has two main hospital affiliations:
– Hospital #1 is the region’s 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
– Hospital #2 is a smaller health system • A major competitor of Hospital #1 but with fewer alignment/integration
initiatives
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CCMA Case Study: The Impetus• 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 A’s decision to accept Hospital #1’s offer:– Opportunity to realize an additional stream of revenue from Hospital #1’s
quality/cost control initiatives that are inherent to the CCMA– 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
– Ability to continue providing services at Hospital #2
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CCMA Case Study: What Took Place?• 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 A’s physicians into the overall Management Services Agreement that memorializes the CCMA’s key terms and conditions
• Organization A’s physicians and Hospital #1’s orthopedic surgeons collaborating to improve the value proposition for Hospital #1’s orthopedic service line
*Coker’s 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 transaction’s processes.
PSA Case Study(“Case Study II”)
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PSA Case Study: The Organization • A large (>10 providers) primary care private practice in the South
(“Organization B”)• Represents the region’s largest and chief primary care facility with
multiple ancillary services including an acute care center• Has two main hospital affiliations:
– Hospital #1 is the region’s major health system with an established CIN and substantially more wherewithal than Hospital #2
– 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)
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PSA Case Study: The Impetus• 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 practice’s professional services in exchange for a global payment rate – The Practice entity remains intact– The Practice physicians and support staff remain employed by the Practice
• Primary motivations for Organization B’s decision to pursue the PSA:– Opportunity to significantly improve its bottom line without being employed– Off-loading of administrative burdens (i.e., real estate lease, overhead costs, etc.) to
Hospital (and thereby, realizing a reduction in its cost structure)– 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
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PSA Case Study: What Took Place?*• 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) – Organization B accepted this change primarily because of Hospital #2’s better employment
benefits package – Organization B would be able to re-hire these individuals upon PSA termination
• Hospital #2 purchased all of Organization B’s ancillary services (under the condition that the Practice will be able to repurchase them at the then current fair market value upon PSA termination)
*Coker’s 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 transaction’s processes.