1. HFMA Update: Strategies for
Success in Today’s Marketplace
Joseph J. Fifer, FHFMA, CPA
President and CEO, HFMA
Dixie Institute 2015
February 18, 2015
2. Joe Fifer
Joseph J. Fifer, FHFMA, CPA is president and chief
executive officer of the Healthcare Financial
Management Association. HFMA provides the
resources healthcare organizations need to achieve
sound fiscal health in order to provide excellent
patient care. With more than 40,000 members,
HFMA is the nation's leading membership
organization of healthcare finance executives and
leaders. In 2014, Fifer was named to Modern
Healthcare’s list of the 100 Most Influential People in
Healthcare.
2
4. Agenda
• Leading the Financial Management of
Health Care
• Delivering Value Across Traditional
Boundaries
• Promoting Price Transparency
4
5. Realignment Is Erasing Traditional
Healthcare Boundaries
5
Driven by demands for care transformation, the healthcare industry is
realigning at an an unprecedented pace.
The Triple Aim framework was developed by
the Institute for Healthcare Improvement in
Cambridge, Mass. (www.ihi.org).
SHARED GOAL
6. HFMA Changes Health Care
6
OUR MISSION
Leading the
financial
management
of health care
OUR VISION
HFMA will
bring value
to the industry
as the leading
organization
for healthcare
finance
7. HFMA Services Carry Benefits Across
Healthcare Boundaries
7
Our core membership of financial professionals comes together with other healthcare leaders
through the wide array of services HFMA offers.
CAREER DEVELOPMENT
AND CERTIFICATION
FINANCIAL
PROFESSIONALS
OTHER
HEALTHCARE
LEADERS
HFMA SERVICES
MEMBERSHIP
CONTINUING EDUCATION
SMALL GROUP-FOCUSED
INTERACTIONS
INFORMATION ANALYSIS
AND PERSPECTIVE
STANDARD SETTING/
GUIDANCE DEVELOPMENT
ORGANIZATIONAL
PERFORMANCE
IMPROVEMENT
VIRTUAL AND FACE-TO-FACE
NETWORKING
8. Agenda
• Leading the Financial Management of
Health Care
• Delivering Value Across Traditional
Boundaries
• Promoting Price Transparency
8
10. Beyond Traditional Mergers &
Acquisitions
• An emphasis on value-focused
acquisition and affiliation
strategies
• An understanding that different
needs require different
approaches
• The emergence of new
organizational combinations
• A blurring of lines between
competitors and collaborators
• The need to change governance
and organizational structures as
systems change
10
12. High Level of Interest in Acquisitions
and Affiliations
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Source: HFMA Value Project Report, 2014
13. Multiple Models Are Being Pursued
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Source: HFMA Value Project Report, 2014
14. Mergers and acquisitions are occurring more
frequently between organizations that are both
financially strong
• Driven by strategy more than financial need
• Financially weaker organizations are more attractive if
they possess other strategic assets: market position,
affiliated physician networks, outpatient clinics, good
payer mix
• Significance of not-for-profit/for-profit status of potential
partners is diminishing
• Appetite for hospital-heavy acquisitions is diminishing
Mergers Occur Between Financial Equals
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15. Multiple Drivers Include Population
Health Management
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Source: HFMA Value Project Report, 2014
17. New HFMA Value Report Focus:
Critical Role of Physicians
• Alignment and employment
options
• Compensation and incentives
• Financial support and
sustainability of the physician
enterprise
• Physician leadership and
governance structures
• Population management
capabilities
20. • Measure and benchmark performance
• Hold physicians accountable for costs
• Recognize importance of smooth onboarding and
credentialing process
• Balance employed specialists with adequate
primary care network.
Strategies to Manage Financial Support
of Employed Physicians
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22. • Having timely information
• Reducing fragmentation of services
• Improving coordination of care
• Increasing access to care
• Engaging the patient
Additional Conditions for Effective
Population Management
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23. CMS Seeks to Propel Industry Forward
“Today, for the first time, we are setting
clear goals –and establishing a clear
timeline --for moving from volume to
value in Medicare payments.
Our first goal is for 30% of all
Medicare provider payments to be
in alternative payment models…
by 2016. Our goal would then be to
get to 50% by 2018.
Our second goal is for virtually all
Medicare fee-for-service payments
to be tied to quality and value; at
least 85% in 2016 and 90% in 2018.”
--HHS Secretary Sylvia Burwell
23
Sylvia Burwell. Progress Towards Achieving Better Care, Smarter Spending, Healthier People. HHS blog, Jan. 26, 2015.
http://www.hhs.gov/blog/2015/01/26/progress-towards-better-care-smarter-spending-healthier-people.html
24. Agenda
• Leading the Financial Management of
Health Care
• Delivering Value Across Traditional
Boundaries
• Promoting Price Transparency
24
26. People and Media Are Speaking Out
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“Reference pricing?
That won’t solve
anything. Hospitals
will just shift the cost
elsewhere.”
“Do the deal and
prices go up
30%. Quality,
too. Yeah...right”
“Health systems
are carving up the
geography!”
27. Help Patients Make the Value Connection
• Patients and other care
purchasers expect more
transparency.
• Patients also expect to be better
off after receiving care than they
were before—they expect value.
• When you deliver value, make
sure that patients and other care
purchasers know it.
• Be transparent about how
realignment improves health
care for patients.
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Source: HFMA Value Project
28. 28
Our Payment System Was Not Designed
for Price Transparency
• Historically, prices have served a wholesale
function
• Only recently have prices been viewed as retail
• Without transparency, neither consumers nor
hospitals could compare hospital prices
• With thousands of items, the chargemaster is not
“transparency-friendly”—and not reflective of
“price”
29. 29
Would this be a
reasonable pricing
system for buying a
truck? Yet, that is the
system hospitals and
doctors are REQUIRED
to use.
30. The Time Is Right for Transparency
In a system where. . .
– Charges are primarily used as a factor in a payment
calculation
– Actual prices are essentially invisible to the consumer,
and…
– Charges have little relationship to the service being
acquired
change is inevitable!
We all contributed to this situation—hospitals, physicians,
payers, the business community, and even patients.
We all need to work together to fix it!
33. Task Force Report
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• Clarifies basic
definitions that are often
misused
• Sets forth guiding
principles
• Establishes roles for
payers, providers,
others
• Reflects consensus of
key stakeholders
hfma.org/dollars
34. Price Information Resource
for Consumers
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• Describes how to request price
estimates, step by step
• Clarifies what estimates may or
may not include
• Explains in-network and
out-of-network care
• Defines key terms
• Available for posting on your
website at no charge
• Hardcopies available for purchase
in bulk at a nominal price through
AHA’s online storehfma.org/transparency
ahaonlinestore.org
35. Best Practices for Patient Financial
Communications & Medical Acct. Resolution
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hfma.org/dollars
36. Patient Financial Communications Training
• Agenda for live training
on site for your patient
access staff
• Slide deck that can be
customized
• Sample financial
policies
• Coaching guidelines
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hfma.org/dollars
37. Recognition Signifies Commitment to
Community
• Recognition demonstrates commitment
to best practices in patient financial
communications
• Based on HFMA review of an application
and supporting documentation
• All provider organizations may apply
• Recognition valid for two years
• Adopters may use the phrase
“Supporter of the Patient Financial
Communications Best Practices” in their
marketing materials
• Makes a strong statement to your community
37
hfma.org/dollars
38. • Logic will get you
from A to B.
Imagination will
take you
everywhere.
• - Albert Einstein
Editor's Notes
There’s a lot going on in health care, but probably the single most important trend is the realignment that’s unfolding throughout the industry.
If you had the opportunity to hear Kari Cornicelli’s presentation this morning, you’ve already seen this slide with the three circles representing three key groups—hospitals, physicians, and payers. Traditionally, these groups have represented separate constituencies, with interests that often conflicted.
We know that times are changing because no one calls us bean counters anymore.
And we have stopped saying things like “managing physicians is like herding cats.”
Because the reality that’s emerging is that we all realize we need to work together. The challenges of our healthcare system today are not challenges that any one group can solve alone.
So as these three circles start merging and the lines start to blur, we see more than hospitals and health systems buying other hospitals and healthcare systems.
We’re seeing mergers between financial equals, not just the weaker ones being taken up by the stronger ones.
We’re seeing hospitals buying physician practices. . .hospitals buying or starting health plans. . .and health plans buying hospitals and practices.
We’re seeing new risk arrangements that focus on quality and align the success of organizations that used to compete with each other.
We’re seeing each of these three circles. . . that used to move in separate orbits. . now aligning around the goals we share.
Those goals are captured well in the Institute for Healthcare Improvement’s Triple Aim, which you see depicted in this slide: improving population health, improving the patient experience, and reducing the per capita cost of health care.
Realignment touches everyone in the healthcare industry today, including associations, as we’ll talk about in a moment.
Where does HFMA fit in, in the context of this realigning environment?
To some extent, our role is the same as it’s ever been, but we now have opportunities to broaden our reach to new audiences.
HFMA’s mission—our reason for being—is to lead the financial management of health care.
And we do this at several levels: we develop individuals so that they are well equipped to improve the performance of their organizations. And these high-performing organizations elevate the entire healthcare system. It’s a virtuous cycle. . . a beneficial cycle of events, each having a positive effect on the next.
Which leads us to HFMA’s vision: HFMA will bring value to the industry as the leading organization for healthcare finance. A vision statement is meant to describe the organization as it would appear in a future successful state.
The vision statement is based on an image of what the organization would look like 10 years from now if it achieved all of its strategic goals. An effective vision statement is inspirational and aspirational.
Now this is the point where our members often want to say, “wait a minute. HFMA already is the leading organization for healthcare finance.” And I say, yes, through the enthusiasm, hard work and dedication of the people in this room—and those who had your roles before you, going back to 1946 when HFMA began—we are the leading organization for healthcare finance professionals. And it’s very important for that to continue. Finance professionals will always be our core membership, the group that’s at the heart of this organization. But in keeping with the changes in health care, it’s time for us to reach out to others. And that’s where the three circles come in.
Finance is an integral part of every challenge and every opportunity in American health care today. HFMA will bring value to the industry by becoming the source, the thought leader, and the ultimate resource for finance expertise and knowledge, across all settings in the healthcare system. That’s our vision.
Knowledge transformation is a pretty broad term that covers a lot of territory. This slide helps us bring it down to specifics.
There are two audiences for HFMA services. One is our core group of financial professionals. The other is a broad category that we’re calling other healthcare leaders. And “other healthcare leaders” is presented as just one circle here, but the three circles we talked about at the beginning are part of this.
One of the ways HFMA is reaching out to other key stakeholders is by forming affinity groups that meet regularly and provide valuable direction on issues of concern to leaders in a wide array of healthcare settings.
Our work with the affinity groups is exciting for several reasons. For example, it gives people who wouldn’t necessarily join HFMA as members a chance to get to know us.
They also give us new perspectives by helping us think about issues like managing risk and value-based payment in new ways. That, in turn, helps us gain more depth on these issues that we can then bring to our members and use to inform our policies and perspectives work.
What’s happening at HFMA is what is happening throughout the industry as the three circles are increasingly aligning around common goals.
As a part of that process, one of the things we’ve seen is a new wave of acquisitions and affiliations among healthcare organizations.
That prompted HFMA…through our Value Project…to investigate this trend.
The report…published last June…highlighted value-focused acquisition and affiliation strategies designed to improve the quality or cost-effectiveness of care.
Research methodology employed in developing the report:
Interviews with subject matter experts in strategic consulting, capital formation, & legal/regulatory issues
Survey of HFMA senior finance executive members
Site visits and interviews
AllSpire Health Partners (Penn. & N.J.)
Dignity Health (multistate, Calif. headquarters)
Froedtert Health (Milwaukee)
HealthPartners (Minneapolis/St. Paul & Wisconsin)
New York-Presbyterian Hospital (N.Y. metro area)
North Shore-LIJ Health System (N.Y. metro area)
SSM Health Care (Midwest)
A survey of HFMA’s senior financial executive members, conducted in the fall of 2013, indicates the extent of interest in acquisition and affiliation activity. More than 80 percent of respondents had entered into an arrangement or were actively considering or open to the idea.
Slide indicates wide variety of activity occurring in the market today. Roughly half of survey respondents pointed to traditional M&A activity as their primary acquisition & affiliation focus, but the remaining half were divided among many options.
When asked what capabilities they would hope to improve through affiliation and acquisition activity, more than half the respondents identified:
• Restructuring of costs
• Improved access to patient population data analytics
• Cross-continuum management of care by physicians
• Optimization of service distribution across facilities
• Creation of common clinical protocols across locations
• Management of risk-based payment
As the responses suggest, the drivers of acquisition and affiliation activity today are multiple and diverse. These needs will be dictated by a variety of factors,
including local market conditions, organization type, and existing and desired organizational capabilities.
Few organizations should aspire to be all things to all sectors of their market. Some are well-situated as they are and have no immediate need to consider a change in structure, but many feel pressure from some or most of these drivers.
Many organizations see inevitable—and potentially rapid— movement toward a system in which providers will be asked to assume financial risk for managing the health of a defined population. They need access to data on populations of a sufficient size to help identify appropriate risk corridors and drivers of utilization and cost in various patient subpopulations.
Let’s move now to the latest report from HFMA’s Value Project, which addresses the critical role of physicians in the transition to value-based payment and care delivery structures.
The report…which was published in November 2014…focuses on how the transition to value affects physician strategy in the following areas:
Alignment and employment options
Compensation and incentives
Financial support and sustainability of the physician enterprise
Physician leadership and governance structures
Population management capabilities
Our research indicates that many factors are pushing hospitals and health systems as well as physicians themselves toward a focus on physician alignment and employment, including:
Demands for better-coordinated and more cost-effective approaches to care delivery,
New health plan products formed around narrow or preferred networks, and
Economic pressures ranging from flat or declining payment rates to the need for investments in electronic health records and healthcare IT.
When asked what arrangement most closely resembles the model they have been pursuing with physicians, HFMA senior financial executive members surveyed for this report clearly favored a more integrated delivery system with an emphasis on employed physicians.
Sixty-four percent of respondents identified such an arrangement as their primary focus.
Clinically integrated networks of private practice physicians was a distant second at 31 percent.
The costs of employing physicians go well beyond compensation.
The costs of managing an acquired practice add significantly to the financial impact of employment. Such costs include:
paying salary and benefits for the practice’s staff
upgrading IT systems,
paying for malpractice insurance, and
other expenses.
Not surprisingly, the HFMA survey found that fewer than 25 percent expected to see a positive ROI from physician employment during the first two years of employment.
Financial support of physicians, however, is not a fixed cost, and there are a number of strategies hospitals and health systems can adopt to reduce this figure significantly such as:
Continually measuring and benchmarking practice performance;
Holding physicians accountable for costs;
Ensuring smooth onboarding and credentialing processes; and
Balancing employed specialists with an adequate primary care network.
Most importantly, finance professionals should fully account for the value that employed physicians bring to the system.
When considering the system as a whole, the question should be: What is an acceptable level of expense to generate revenues that are sufficient to maintain the system’s financial health?
The final area explored in this latest HFMA research is population management capabilities.
The HFMA report uses the Institute for Healthcare Improvement’s definition: Reshaping payment and management of healthcare services for a defined population in pursuit of the Triple Aim of improving the patient experience of care…improving the health of populations…and reducing the per capita cost of health care.
A precondition for movement toward population management is the realignment of incentives within the healthcare system.
Proper incentives are necessary to advance from fee-for-service payment to population management.
As depicted on this slide, an effective incentive chain requires alignment of payment and incentives across many groups.
Additional conditions for effective population management include:
Timely information (IT and data analytics),
Reducing fragmentation of services,
Improving coordination of care,
Increasing access to care for the managed population, and
Patient engagement…reaching the patient and ensuring that patients receive the right care, in the right location, at the right time.
The movement toward toward value-based payment and population health management received a major push in early February when the HHS announced it will seek to make 30% of Medicare payments for hospitals and physicians through alternate payment models like accountable care organizations and bundled payments by 2016…and to have 50% of Medicare payments through alternate payment models by the end of 2018.
Currently, about 20% of Medicare payments are made through alternate payment models.
In addition, HHS will aim to have 85% of Medicare hospital fee-for-service payments tied to quality or value -- through programs such as the Hospital Value-Based Purchasing Program or the Hospital Readmissions Reduction Program -- by the end of 2016. That percentage would increase to 90% by the end of 2018.
A particularly significant aspect of these new HHS goals: Commercial health plans typically follow Medicare’s lead.
And that brings us to the other pressing trend in our evolving healthcare environment…the trend toward consumerism and push for price transparency.
Turn on the news…or log onto the internet…and it’s clear that the realignment in our industry is raising red flags.
These are the headlines I see…and the kinds of comments I’m hearing as I travel around the country.
Do I detect a bit of sarcasm? You bet! There’s also cynicism and anger…and I don’t think it’s going to just fade away.
That’s why this push for price transparency is so important.
