PAYORS AS CHANNEL PARTNERS - Becker's …...* Does not include ~ 32,000 MHHS self-insured lives...

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© The Chartis Group, LLC PAYORS AS CHANNEL PARTNERS Proactively Selecting Partners in an Evolving Insurance Marketplace Christopher Lloyd CEO MHMD, The Memorial Hermann Physician Network CEO MHACO, The Memorial Hermann ACO Brigitte Nettesheim Formerly Principal, The Chartis Group Poras Davé Engagement Manger, The Chartis Group November 19, 2015

Transcript of PAYORS AS CHANNEL PARTNERS - Becker's …...* Does not include ~ 32,000 MHHS self-insured lives...

Page 1: PAYORS AS CHANNEL PARTNERS - Becker's …...* Does not include ~ 32,000 MHHS self-insured lives administered by Health Solutions; ** BUCA = BCBSTX, United, Cigna, Aetna Dominated by

© The Chartis Group, LLC

PAYORS AS CHANNEL PARTNERS

Proactively Selecting Partners in an Evolving Insurance Marketplace

Christopher LloydCEO MHMD, The Memorial Hermann Physician Network

CEO MHACO, The Memorial Hermann ACO

Brigitte NettesheimFormerly Principal, The Chartis Group

Poras DavéEngagement Manger, The Chartis Group

November 19, 2015

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© The Chartis Group, LLC 2

Today’s Discussion

� The Memorial Hermann Accountable Care Organization

• Enterprise Evolution Toward Value-Based Models

• Alignment with Assets of the Integrated Delivery System

• Initial Results from Populations Under Management

� Developing a Proactive Go-to-Market Strategy & Approach

• Enterprise Level Strategic Alignment

• Understanding the Market from the Payor Perspective

• Aligning Targeted Market Segments with MH ACO Value Proposition

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Inpatient Market Share1st: Aggregate Market Share1st: Burns1st: Cardiology1st: ENT1st: General Medicine1st: General Surgery1st: Neurology1st: Neurosurgery1st: Obstetrics1st: Ophthalmology1st: Orthopedics1st: Rehab1st: Thoracic Surgery1st: Urology1st: Vascular2nd: Gynecology2nd: Neonatology2nd : Oncology2nd: Spine

Market Share Ranking212 Locations

$5.5B Total Assets$4.2B Net Operating Revenue

22,000 Employees; 5,000 Physicians

Greater Houston MSA 6.36 million population, projected to 7.0 million (2019)

Memorial Hermann

HCA

Methodist

St. Luke’s

The Memorial Hermann Enterprise

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Memorial Hermann: Our Continued Evolution

In 2012, we made a Board-level commitment to transform our business and the industry

As one of the three key tenets of our system strategy, we continue to develop and refine our offerings

� Care delivery – Market leader in health delivery

� Physicians – Fully integrated physician network

� Health Solutions – Value-added health plans and employer solutions

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Health System

5

Integrated Delivery System Assets

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Clinically Integrated IPAClinical Integration – 2,900ACO – 2,700Medical Home – 323

3 Distinct Practice Models

PrivateEmployment Faculty

Health

System

An aligned physician-led comprehensive is a point of differentiation providing Memorial Hermann a significant market competitive advantage to compete for populations to manage.

Memorial Hermann Accountable Care Organization

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Medicare Shared Savings Program

(MSSP)

• Highest performing ACO in Year 1 (18 months from July 1, 2012 through December 31, 2013)

• Savings to CMS of nearly $60M

Commercial Narrow Network

Aetna, Memorial Hermann’s Owned Health Plan

• Membership continues to grow at double digit rates

• Additional payors, even potential new market entrants, requesting access to MH ACO network as part of product portfolio

• Incremental financial value to health system estimated at $135 PMPY

Medicare Advantage Narrow Network

Memorial Hermann

• 1/1/15 launch attracted over 1,600 members via AEP and continue to show signs of growth

Success has generated demand to access the MH Accountable Care Network, placing Memorial Hermann in a proactive position as a market shaper through payor channels

The Results: Early Wins

Strong Initial Performance Over 220,000 Lives Under Management

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Memorial Hermann ACO’s Proactive Approach

� How does the MH ACO define a payor strategy that enables a proactive approach to the market?

� How does the MH ACO execute on this approach?

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Traditional Model Puts Providers in a Reactive Position

Health Plan Channels

Large Groups

Small Groups

Individual

Purchasers

Payors bundle and package health services by building networks and corresponding products that cater to the needs of different consumer market segments, leaving providers in a largely reactive role.

Purchasers’ Key Questions• Which payor best fits my needs,

providing:oSufficient network access?oQuality healthcare options?oCost mitigation?

Providers’ Key Questions• Are we comfortable with what the

payor is proposing? • What else can we demand from this

arrangement?

Payors’ Key Questions• How do we configure provider

networks to best meet the needs of the various purchasers?

Aetna

Healthcare Service Providers

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Proactive Payor Strategy Drives Strategic Growth

Providers

Health Plan Channels

Large Groups

Small Groups

Individual

The Memorial Hermann ACO has reimagined this pathway, taking a proactive payor channel strategy that positions the organization to drive to its objectives in support of strategic growth.

Purchasers

Providers’ Key Questions: Defining Internal Goals

• How can our provider network accelerate achievement of our strategic objectives?

• What do we have to offer that is differentiated and meets the needs of the purchaser?

Providers’ Key Questions: Targeting Purchaser Segments

• Which purchaser segments are most attractive given our organization’s unique capabilities and market dynamics?

Providers’ Key Questions: Defining an Approach to Channels

• Which channels do we use to accelerate achievement of strategic objectives:o Attract populations?o Serve additional patients and

additional patient needs?• How might other/direct to employer

channels enable us to achieve goals?

Other / Direct to

Employer

Healthcare Service Providers

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Ensure strategic alignment at the

Memorial Hermann enterprise level

Understand the market landscape from a payor

perspective

Align market segments with MH ACO value

proposition and determine logical payor

channels

• Review enterprise strategy, goals and objectives for clarity in establishing MH ACO payorchannel strategy

• Confirm consistency in Enterprise payor relations and MH ACO approach to actively go-to-market

• Support enterprise economic model when establishing MH ACO’s financial risk profile

• Assess the relative size of market segments with emphasis on shifts across segments and identifying high growth areas

• Evaluate the payor competitive landscape by segment to identify potential partners and/or direct relationships

The Approach

• Understand the respective needs of various market segments including key buying characteristics

• Articulate unique value proposition of physician-led narrow network highly integrated with leading health system

• Align market needs with value proposition to identify potential target segments to aggressively pursue

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Achieving Enterprise Strategic Alignment

ALIGN WITH PHYSICIANS

DELIVER QUALITY CARE

VALUE EMPLOYEES

ACHIEVE OPERATIONAL TARGETS

NURTURE GROWTH AND INNOVATION

CONSUMER CENTRIC

ENHANCE POPULATION HEALTH

INFRASTRUCTURE

VALIDATE STRATEGIC ALIGNMENT WITH ENTERPRISE HEALTH SYSTEM

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• Highly price sensitive• Willing tradeoff: network and benefits for low cost• Influenced by local provider footprint and reputation

• Brokers• General

Agents

• Direct• Exchanges in

near future

Small Group1-100 Employees

• Price sensitive, influenced by local provider footprint and reputation

• Dependent upon brokers/benefit consultants

• Brokers• General

Agents

• Brokers• Exchanges

in future

Middle Market101+ Employees

• Price sensitive, mitigating medical cost trend is core focus

• Desire minimal employee disruption• Long sales cycle (union and local political barriers)

• Consultants • Direct• Private Exchanges

in future

Public Sector LaborAll Sizes

Understanding the Market: Purchaser Segments

• Highly price sensitive• Willing tradeoff: network and benefits for low cost• Influenced by provider brand/reputation

Individual

Commercial Group

Government

MarketSegment

Buyer Characteristics

• Direct• Exchanges

• Brokers

• Price sensitive, disruption viewed as unfavorable• Network composition important

• Direct • Brokers

• Exchanges

• Consultants • Direct• Private Exchanges

Line of Business

• Self insured, mitigating total medical cost paramount• Concern for network access across large geography• Sophisticated buyer / population manager

• Consultants • Brokers• Private Exchanges

National Accounts3,000+ Employees

Medicare Advantage-Group

• Price sensitive• Network composition extremely important

Medicare Advantage-Individual

Individual

• Direct • Utilization and care mgmt capabilities paramountManaged Medicaid

Primary Secondary

Marketplace / Influencer

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2014 300,000 749,000 351,000 651,000 658,000 197,000 20,000 81,000 241,000 813,000 1,484,000

2019 est. 240,000 599,000 281,000 521,000 527,000 476,000 627,000 107,000 413,000 850,000 1,440,000

∆ -60,000 -150,000 -70,000 -130,000 -131,000 279,000 607,000 26,000 172,000 37,000 -44,000

% -20.0% -20.0% -20.0% -20.0% -20.0% 142% 3034% 31.8% 71.1% 4.4% -3.0%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Public Sector NationalAccounts

Large Group MiddleGroup

Small Group PublicExchange

PrivateExchange

Open Market(<65)

MedicareAdvantage

Mgd.Medicaid

Uninsured

Evaluating Purchaser Segments: Size & Growth

COMMERCIAL - GROUP GOVERNMENTCOMMERCIAL - INDIVIDUAL

Source: HealthLeaders Interstudy Market Survey (Jan. 2014); Health and Human Services; www.investmentnews.com, Kaiser Family Foundation Survey for

exchange segment assumptions; Texas Workforce Commission; internal MHHS membership data; Truven,, RWJ Foundation, Accenture

Houston Market Managed Lives by Payor Segment, 2014 – 2019 est.

Note: HealthLeaders enrollment data is supplemented with more recent (Apr. 2014) exchange enrollment data;

Knowledge of the evolving insurance segments informs a multi-year approach to payorcontracting and partnerships

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Middle Group(100-499)

Large Group(500-2,999)

Public SectorAll Sizes

Ind

ivid

ua

lC

om

me

rcia

l Gro

up

Go

vern

me

nt

National Accounts(3,000+)

Medicare Advantage

Private Exchange

Managed Medicaid

Small Group(2-99)

Public Exchange

Open Market(Age < 65)

Evaluating Purchaser Segments: Summary

Purchaser Segment (# of employees)

Projected GrowthExamples

MHMD used its segmentation of the purchaser market to assess current and future market attractiveness.

Sh

iftin

g to

in

div

idu

al s

egm

ents

Relative Size

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300,330

712,023

340,159

622,998557,580

17,600

156,622

64,300110,082 88,392

4,490

10,846

27,761100,769

2,400

40,250

16,720

131,372

724,919

PublicSector

NationalAccounts

Large Group MiddleGroup

Small Group PrivateExchange

PublicExchange

Open Market(<65)

MedicareAdvantage

ManagedMedicaid

BUCA All Other

12.0%

3.1%

Suggests working with large national plans to attract

populations across the larger Commercial Group Segments with opportunity to build more

direct offerings in the individual decision-maker segments

Evaluating the Market Landscape: Competition

Major national payors are dominant in the larger commercial group purchaser segments while “down market” segments appear to be more fragmented.

Source: HealthLeaders Interstudy Market Survey (Jan. 2014); BCMS Gold (employer contracts); Hoover’s Dun &

Bradstreet, Chartis analysis; Blue = Health Solution value proposition strategic segments

*

* Does not include ~ 32,000 MHHS self-insured lives administered by Health Solutions; ** BUCA = BCBSTX, United, Cigna, Aetna

Dominated by strong, national players Smaller, local payors enjoying some success

Market Share (Lives) of BUCA** plans vs. All Others

**

15.3%

89.1%

54.4%

20.6%

20.4%

4.3%

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-

100

200

300

400

500

600

700

800

900

1,000

UnitedHealthGroup

Health CareService

Corporation

Aetna Cigna TexasChildren`sHospital

Humana CommunityHealth

Choice (TX)

WellPoint UniversalAmerican

MemorialHermann

HealthSolutions

Cove

red L

ivess (

Thousands)

Commercial Exchange Medicaid Medicare TRICARE

A closer look at payor share by market segment further defines who may be best suited for specific partnership arrangements that best fit Memorial Hermann’s objectives for channel partners.

Evaluating the Market Landscape: Competition

Commercial membership is dominated by 4 large payors Medicare Advantage is a more fragmented

market, evenly distributed across 10 payors averaging approximately 24K lives each

Source: HealthLeaders Interstudy Market Survey (Jan. 2014); Health and Human Services; www.investmentnews.com,

Kaiser Family Foundation Survey for exchange segment assumptions; internal MHHS membership data

Note: HealthLeaders enrollment data is supplemented with more recent (Apr. 2014) exchange enrollment data

Mgd. Mgd.

Medicaid populations are managed primarily by three

small payors

MHHSaccounts for 1.6% of total commercial enrollment

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MH Accountable Care Network Value Proposition Alignment with Purchaser Segment Priorities

Cost

Network & Access

Experience

• Lower priced offerings• Ability to mitigate cost trends

over time• Predictability of cost

• Comprehensive narrow network in a sub-geography of the market

• CIN-led with integrated acute, post-acute and primary care

• Primary care centric• Cohesive service operations

between health plan, health system, and physician network

Commercial IndividualCommercial Group Government Ind

Define the unique value proposition

By segment, examine the relative

attractiveness of product attributes

Understand and evaluate payorstrategies and competencies

Go-to-Market Approach Effectively Utilizing Payors as Channel Partners

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The Results: Defining Appropriate Targets

Ensure strategic

alignment at the

Memorial Hermann

enterprise level

Understand the market

landscape from a payor

perspective

Align market segments

with MH ACO value

proposition and

determine payor

channel partners

Selection of a diverse but targeted set of partners selected to support the organization’s strategic growth objectives

Taking a more proactive approach to the market enabled Memorial Hermann to identify a set of targets and respective payor channel partners to support its overall strategic goals.

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Q & A