Network Development. Creating a strategic advantage through integration and alignment across the healthcare ecosystem

Transcription

1 Network Development Creating a strategic advantage through integration and alignment across the healthcare ecosystem Michael Strilesky, Principal // Michael Lutkus, Sr. Manager 2

2 PINNACLE SPEAKER PROFILE MICHAEL STRILESKY Principal DHG Healthcare Cleveland, OH

3 PINNACLE SPEAKER PROFILE MICHAEL LUTKUS Senior Manager DHG Healthcare Cleveland, OH

4 Today s Learning Objectives 1. Understand the strategies that Networks are taking to succeed in value-based care and meet the competitive pressures of their unique market conditions 2. Profile the DHG Healthcare services that support identification, development and execution of these strategies 3. Understand the different approaches to network development, using examples from recent project work 5

5 Hypothesis for Network Development The financial viability of the current hospital model and independent private practice has required an approach that rewards integration of providers to align financial objectives and pursue mutually beneficial goals in a market. 6

6 Each Market Contains it s Own Drivers for Network Development

7 8

8 Market Forces Driving Network Development Provider and Payer Competition Competition creates the need for an alternative model to serve patients, payers and employers. Networks are often a strategy for the #2 or #3 player in the market to disrupt the market leaders position Access Ensuring appropriate healthcare services for covered population Some rules for Networks include: 10 min to a PCP, 20 min for Emergency Care and 30 min for IP care Financial Sustainability Ability for independent providers to maintain their position, forcing alignment / integration with larger providers Less than half of all physicians are currently in independent practices 9

9 Overview of Networks and the Healthcare Ecosystem Today Independent providers (Hospitals, Physicians, Ambulatory and Post-Acute) in a region are joining together in Networks to: Form Clinically Integrated Networks (CINs) and Accountable Care Organizations (ACOs) Develop Independent Physician Super Groups Form Statewide or Regional Networks Align a Post-Acute Care Network of Preferred Providers Develop Financially Integrated Models with a Payer Directly Contract with Employers 10

10 Beyond the Tipping Point // Risk Capability 2.0 Topical Relevance and Connectivity Blend of both FFS and Value-Based initiatives Maintain a focus on contracting to ensure access to maximize interactions with patients New and traditional partnerships are at play in Network Development projects 11

11 The Network Model is Far From Mature Nationally We simply cannot find risk capable/risk ready provider organizations able to operate at scale. Brian Kane, CFO, Humana Finding risk ready providers is a barrier for us. Richard Migliori, MD, Chief Medical Officer, UnitedHealth Group 12

12 Network Models We re Seeing Create Significant Activity in 2017 FOCUS: Population Health CINs / ACOs are preferred model to align multiple providers, hospitals, health systems and community providers into one organization FOCUS: Integrated Delivery Employed medical groups create the preferred legal protection and perceived control over referrals to overcome market pressures FOCUS: Patient Care and Coordination Physician Super groups come together to lower operating costs and value-based contracts - focusing on their high utilization patient base to aggressively reduce ED, inpatient admissions and pharmacy costs FOCUS: Payer Contracting Regional Networks that connect providers in each major city or referral region, these networks look to contract for large covered lives (state employees) or Medicaid lives 13

13 Network Objectives Continue to Reinforce Principles of Clinical Integration 1 ACCESS TO PATIENTS Geography Payer Contracts Marketing Secure referral markets Coordination of patients New market growth / penetration Enhance value with comprehensive services Mitigate reimbursement rate pressure Employers and new purchasers Leverage brand & reputation Local presence with big market access Strength & expertise through scale 2 SHARE COSTS & CAPABILITIES Information Technology Skilled / Scarce Resources Platform to build population health analytics Expand Data over continuum of care Clinicians (recruitment & outreach) Leadership & oversight Care management teams Payer & population health expertise illuminus TM kə nekt TM 3 STANDARDIZE Operational Clinical Finance Promote best practice adoption Accelerate innovation Benchmark & measure Consolidate duplicative services Drive patient care coordination Enhance quality Improve each organization s cost structure 14

14 Our Task is to Support Providers to Understand the New Game, but Win in Today s Game The transition from fee-for-service to value-based care focuses on impacting cost through fee schedules and managing utilization through alternative payment models. Despite this focus, integration and networks are often used to drive a volume strategy that is far more traditional than one might believe. VOLUME - Growth in physician integration, particularly with PCPs to ensure access and direct referrals - Development of specialty services and trauma designations to divert historical referral patterns - Placement of new services in desirable locations UTILIZATION & COST - Performance and savings bonuses - Base Rate discussions - Individual pricing and discount negotiations - Collective performance, individual accountability 15

15 A Starting Point for Network Development Strategy Network Structure Generic Mission To create the highest value healthcare network in the <Region> Generic Vision Statement Develop the clinical, operational, and performance excellence to drive improved health outcomes, a better care experience, and a lower total cost of care for the populations it serves. Typical Goals 1. Top-tier quality and outcomes 2. Attribution of commercially-insured patients 3. Financial performance within value-based contracts 4. Leakage avoidance through coordination of care 5. ROI for cost of infrastructure and network integration costs Elements of Strategy Define the Region: State, MSA, Zip Codes Product Offering: Physician integration through CIN Population Health: care management, analytics, programs Contracts with payers / employers Employee benefits collective purchasing Value Proposition Targeted at: Consumers Providers (community physicians, employed physicians, existing CINs, community hospitals) Purchasers (traditional payors, self-insured employers) 16

16 Network Metrics for Performance Management METRIC MEASUREMENT Participants Covered Lives Access Utilization Coordination of Care Leakage Quality Metrics - Acute Quality Metrics Ambulatory Value-Based Agreements Employer Relationships # of Physicians / Providers / Facilities Belly Buttons and % of lives captured with Pop. Health Analytics Drive Time to PCPs, Telehealth Visits Post-acute readmission rates, Home health PMPY reduction, ED utilization PMPY % of patients in care management program % of Spend / Visits within Network Participants Hospital Compare Metrics HEDIS, PQRS, MIPS Dollars earned, # of Contracts, # of Narrow Products # of Contracts / Wellness Clients

17 Most of our evidence is from the MSSP, most recently the 2016 results Total MSSP savings in 2016 that were attributed to ACOs, and what Medicare paid to ACOs $652 million is the savings to CMS $700 million is the amount CMS distributed to ACOs $9.3 million is the amount owed back to CMS from Track 3 participants Source: CMS MSSP PY 2016 Results Number of ACOs nationally today (estimated): 480 shared savings program ACOs serving over 9 million assigned Medicare FFS beneficiaries Other savings results attributed to other CMMI programs CPC model reduced total Medicare A and B expenditures by $14 pmpm (2%) Pioneer ACO Model generated total model savings of $120 million, eleven ACOs qualified for shared savings payments of $82 million Source:

18 DHG Healthcare Network Development Service Offerings 19

19 Network Development Trends Impacting Further Integration Physicians with Health Systems Physicians with Other Providers / Organizations 1. Recruitment 1. Trust with Hospital (not a good partner candidate) 2. Compensation 2. Super Groups 3. Office Expenses 3. ACOs / CINs 4. Market Pressures Competition 4. Payers Employing Physicians 5. Payer Contracting 5. Payer Partnership APMs and Incentives 20

20 How Does DHG Healthcare Support Network Development Core Consulting Services Physician Alignment / Employment Development of a CIN/ACO Optimization of an Existing Network (CIN 2.0) Transactions and Partnerships Payment Model Transformation Analytics (ACO and Bundled Payments) Contracting Design and Deployment Clinical Documentation Initiatives Clinical Quality Enhancement Transformational Solutions kə nekt TM Innovation Acceleration Experience TM illuminus TM Pull-Through Services Tax development of new entities, distribution implications and consolidation activities Audit New entity development 21

21 Process and Approach UNDERSTAND DEVELOP DEPLOY / MEASURE 2-3 Months 4-6 Months Ongoing Market Assessment Current State Analysis Market Data Analysis Market Interviews Market Assessment Outputs Organizational Assessment Current State Analysis Organizational Data Analysis Organizational Interviews / Surveys Organizational Assessment Opportunities, Options & Recommendation Market Potential Health System Implications Sales Strategy Final Gap Analysis recommendations CIN Development Work Plan (if necessary) GO NO GO Steering Committee Formation Work Group Development Quality Information Technology Finance / Contracting Communication / Education Network Design and Buy-in Structure & Governance Infrastructure & Funding Physician Leadership Participation Criteria Performance Objectives IT Design Contracting Strategy Network Business Plan Strategic, Operational and Legal Components Financial Impact Analysis Proforma Implementation Plan GO NO GO Contracting Strategy Product Launch, Contracting & Enrollment IT System Implementation Infrastructure Deployment & Performance Tracking Membership Education & Customer Communication Staffing and Onboarding Peer-to-Peer Evaluations Care Redesign PROJECT PLANNING & MANAGEMENT 22

22 Understand Phase // Organizational Element Gap Analysis ELEMENT ELEMENT DEFINITION READINESS TRANSFORMATIONAL AGILITY GOVERNANCE CLINICAL PROCESS & PATIENT CENTERDNESS A network s ability to quickly and efficiently adapt its business or care delivery model to meet market demands and/or opportunities A physician led, professionally managed governance model that has appropriate performance management and decision-making oversight to effectively advance Network's strategic priorities. A collaboration that brings together care sites, caregivers and community organizations to provide integrated, coordinated care for patients across the continuum. # # # NETWORK ADEQUACY The clinical assets of a network utilized to provide care to the population it serves. # CONTRACTING STRATEGY Established contract portfolio with payers, employers, or health systems that reward the network for demonstrated performance. # PERFORMANCE INITAITIVES Established initiatives that demonstrate value to payers, beneficiaries, employers and provides while creating a sufficient peer-review process. # FUNDS FLOW A defined, transparent distribution methodology that shares performance-based rewards that have been generated through cost savings, quality, and efficiency programs. # INFRASTRUCTURE Organizational infrastructure including human capital, business procedures and policies, and information technology # DATA MANAGEMENT / TECHNICAL CAPABILITIES Effective capture, cleansing and conversion of data into actionable information that can be leveraged in making clinical, operational, financial, strategic, and technological decisions that are critical to long-term success. # 23 *Each element is scored a # between 1 and 5

23 Develop Phase // Educating Participants and Developing the Contracting Strategy GLOBAL BUDGET SET 3 1 CLAIMS RECONCILIATION PAYER / EMPLOYER 2 HEALTHCARE SERVICES FFS Pmt. NETWORK CONTRACT FFS Pmt. 5 NETWORK HOSPITAL PHYSICIAN EXCESS spend 4 SURPLUS savings PERFORMANCE ACHIEVEMENT 5 24

24 Develop Phase // Developing the Methodology to Manage Payouts and Distributions Global budget is set to cover ALL health care services and needs of the defined population under the provider payment structure. Inflation - CPI Performance PROVIDER PAYMENT STRUCTURE Savings opportunity INITIAL GLOBAL BUDGET LEVEL YEAR 1 YEAR 2 YEAR 3 YEAR 4 PERFORMANCE INCENTIVES - Quality & Safety Metrics - Up to % above global budget - Protection against withhold of needed care SAVINGS OPPORTUNITIES - Address underuse, misuse, and overuse - Increase coordination - Reduce inefficiencies 25

25 Deploy & Measure // Plans and Tools to Support Implementation of Network Strategies Enterprise Performance Optimization HEP / Service Line Dashboard(s) 26

26 Network Development Examples / Client Case Studies 27

27 Medicare and MA has emerged as a Logical Starting Point for Most Clients because Similar reimbursement for Medicare population across geographies and providers Medicare shifting 50% of FFS payments to APMs and 90% of all payments to value by 2018 accelerated urgency for change MACRA requirements and CPC+ emerged as critical issues to address across markets and independent physicians The Medicare population inclusive of Medicare Advantage plans provide an opportunity to design narrow networks and offer incentives for meeting quality and cost goals Availability of Data from Medicare and clarity of objectives with Medicare Advantage represented logical starting points for networks Commercial opportunity has been more challenging, initially found it easier to start with health system employee health plans 28

28 AMC and a Community Medical Group Value Proposition Patient Experience / Standard of Care Extension of trusted AMC experience to community Coordination of care across the continuum Recruitment and Retention Placement of AMC-trained residents in affiliated, community setting Legal and Compliance Separation from academic departments (organized under the hospital) allows for Exemption from Joint Commission standards Managed care contracting flexibility Strategy Referral growth and maintenance to compete with external forces Expansion of specialty and sub-specialty care to surrounding communities Expanded platform for population health management Clinical Research New geographies for extension of trials and research (enhanced accrual) 2017 DHG Experience: Physicians Alliance LTD (PAL) chose to join the CMG, after a year of evaluation and development of their preferred employment model. PAL is comprised of 120 physicians, advanced practice clinicians (APC s) and registered dieticians at 13 practice locations in Lancaster, Dauphin and York counties. Collectively, PAL physicians and APC s serve approximately 100,000 patients 29

29 Quotes from a Recent Engagement Putting this deal together is like figuring out how to slingshot around the moon and come back to earth Being on the edge is fine, but it s the last known address of humpty dumpty We re on a playground and the kid is about to give us half his marbles, you don t poke him in the eye. You get half the marbles first 30

30 Networks Continue to Grow and New Partnerships Are Emerging brings an insurer together with a large network of primary care providers: CVS has built more than 1,100 Minute Clinic locations inside its pharmacy stores in 33 states and the District of Columbia serve almost 3 million patients annually at 27 hospitals and more than 500 other sites and would be the 10th largest non-profit hospital system in the U.S 31

31 Vision and Growth Supersedes Profits in Today s Environment. The best value-chain will win in a consumer driven market Apple will do double the profit this quarter that Amazon has done in its entire history Amazon s stock, in my view, will blow by Apple and hit $1T in less than a year. Vision and growth, not profits, is what the market values... Scott Galloway, NYU Professor 32

32 Michael Strilesky PRINCIPAL CLEVELAND // OHIO // Michael Lutkus SENIOR MANAGER CLEVELAND // OHIO // 33