Current Practice Alignment Strategies to Ensure Long Term Survival

Current Practice Alignment
Strategies to Ensure
Long-Term Survival
2013 MGMA Annual Conference
October 7, 2013
John A. Lutz, FACMPE, Managing Director, Huron Healthcare

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

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.


3

Pressures Driving Transformation

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


5

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


6

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


• Strengthen clinical integration
• Maintain high member
engagement

7

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

8

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

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.)


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

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

12

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.


13

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.

14

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.


15

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.


16

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

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

Core Competencies

Management &
Financial
Platform

System
Alignment &
Compensation

Clinical
Integration
Competence

Demand &
Capacity
Management


“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

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


Hospital

Post-Acute
Care

Home /
Community

21

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).


22

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


23

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).


24

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


Today’s Presenter

John A. Lutz, FACHE, FACMPE
Managing Director
Huron Healthcare
jlutz@huronconsultinggroup.com
518-491-4267


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.

www.rand.org/pubs/rgs_dissertations/RGSD172/RGSD172.ch1.pdf


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.


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.


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

American Hospital Association. “Hospitals and Care
Systems of the Future.” September 2011. p.9
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


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

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)


DME

• Integration &
Oversight with Care
Management

• Patient Portal
• Health Risk Assessment
• Patient Engagement &
Activation
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

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


37

Current Practice Alignment Strategies to Ensure Long Term Survival

Current Practice Alignment Strategies to Ensure Long Term Survival

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