Session 78X The Next Generation of Performance Improvement: Lessons from the UNC Health Care Experience

Transcription

1 Prepared for the Foundation of the American College of Healthcare Executives Session 78X The Next Generation of Performance Improvement: Lessons from the UNC Health Care Experience Presented by: Allen Daugird, MD Andrew Ziskind, MD Erin F. Bartley

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3 The Next Generation of Performance Improvement: Lessons from the UNC Health Care Experience Disclosure of Relevant Financial Relationships The following faculty of this continuing education activity has no relevant financial relationships with commercial interests to disclose: Allen Daugird, MD The following faculty of this continuing education activity has financial relationships with commercial interests to disclose: Andrew Ziskind, MD Premier Salary Employee Erin Bartley Huron Consulting Salary - Employee 2 1

4 Presenters Allen Daugird, M.D. President, UNC Physicians, and Chief Quality & Value Officer, UNC Health Care Erin Bartley Managing Director, Huron Andrew Ziskind, M.D. Sr. Vice President, Premier, Inc. 3 Learning Objectives Understand the value of using organizational alignment and large-scale performance improvement initiatives to achieve systemness Take away practical, actionable tactics and lessons from UNC Health Care s Carolina Value program 4 2

5 Agenda Background (5 min) Case Study: Carolina Value (20 min) Critical Success Factors (10 min) Lessons Learned (15 min) What s Next for UNC Health Care (5 min) Discussion and Q&A (30 min) Wrap Up (5 min) 5 Background 6 3

6 Consolidation is here to stay, but it is difficult to do successfully 7 Notwithstanding the challenges, consolidation continues 350 Announced Hospital Acquisitions #Deals # Hospitals 8 4

7 Physician employment trends are more pronounced 100% Physician Employment Trends 2 80% % 40% % Employed Physicians Independent Physicians 9 Why build scale? Rationale for Consolidation 3 (N=145 healthcare executives) Cost efficiencies/economies of scale Competitive position Physician network/clinical integration Ability to manage pop health Access to capital Risk contracting experience None % Survey Respondents 0% 50% 100% 10 5

8 Why consolidate and integrate? Expected Benefits to Business 3 (N= 145 healthcare executives) Restructure costs Improve analytics Improve cross-continuum care Optimize service distribution Reduce clinical variation Risk-based payments Supply chain management Revenue cycle management % Survey Respondents 30% 40% 50% 60% 70% 11 Impacts of political changes Power shifting to physicians Power shifting to payer Acceleration of cost management imperative Power shifting to drug and device manufacturers 12 6

9 Consolidation Integration Integration necessitates organizational alignment and system-level performance improvement DEFINE SUCCESS BUILD SCALE ALIGN OPERATIONS ACHIEVE SYSTEMNESS 13 Type of consolidation is an important factor in establishing system vision MERGER OF EQUALS Cultural, economic, and non-economic synergies required ACQUISITION New mission and market approach requires support to develop and realize STRATEGIC ALLIANCE JOINT VENTURE MANAGEMENT AGREEMENT Partnership that offers a financial incentive, however, goals of integration widely vary Partnership to leverage scale and knowhow of system including leadership; Local board governance typically remains Forming local networks and partnership with neighboring hospitals and/or external organizations Increasing Complexity of Change 14 7

10 sys tem ness (noun) The ideal functional state of a complex health system delivering appropriately standardized patientcentered, coordinated and quality care across the many parts of the system to maximize value for customers. 15 Case Study: UNC Health Care 16 8

11 Integrated, not-for-profit health care system, owned by the state of North Carolina and based in Chapel Hill Mission: To provide comprehensive patient care, facilitate physician education and research excellence, and promote the health and well-being of all North Carolinians 17 Nationally recognized for leading, teaching and caring Nobel Prizes for Science 2016 HOSPITAL RANKINGS: 8 nationally recognized adult specialties 2 high performing adult specialties 7 nationally recognized children s specialties BEST HOSPITALS IN THE REGION : UNC Hospitals UNC Rex High Point Regional 2016 SCHOOL RANKINGS #2 for Primary Care #2 School of Public Health 18 9

12 Growth strategy includes multiple consolidation types Legacy entities All fully owned New Hospitals/Systems 2011 MA Type of Integration AQ Acquisition JV Joint Venture MA Management Agreement 2013 AQ AQ 2014 MA JV 2016 MA MA 19 Collaborative network of faculty and community physicians Community-based physician groups serving central NC 158 physicians and 60 APPs 40+ practice locations Faculty physician practice primarily serving UNC Hospitals >1,700 primary and specialty care physicians 19 clinical departments Secondary, tertiary and quaternary care services Multi-specialty primary and specialty care physician group serving the High Point area 123 providers, 19 medical specialties, 28 locations >240,000 clinic visits Multi-specialty primary and specialty care physician group service Caldwell county 45 providers, 10 medical specialties, 20 practices >160,000 clinic visits Note. This is a sample of the UNC HC footprint and does not include all network physicians

13 UNC Health Care today 21 Growth strategy resulted in increased revenue and operating complexity NPR +130% Beds +122% Employees +114% Clinic Visits +109% Surgeries + 75% ED Visits +185% $2B $4.6B 1,530 3,400 14,000 30, M 2.3M 60, , , ,

14 Growth required new system vision and long-term investment in transformation System-wide initiative to improve our operational efficiency, enhance the quality of our system processes and strengthen our financial stability. Improve the health of North Carolina Increase our efficiency across all entities Provide exceptional patient care and service Help us work together as one team leverage the tremendous combined talent and best practices from across the system and the medical school 23 Why change now? Ensuring success in a rapidly changing environment. 1 Rapid health care system expansion 2 Intensifying margin pressures Transitions in healthcare models and delivery (i.e., Pop Health) Constrained capital Medical school funding constraints Action today ensures we will be able to continue: Serving our patients (high quality and exceptional service) Conducting groundbreaking research Teaching the next generation of health care leaders Being a financially strong organization (sufficient scale and scope; fully integrated and cost competitive) 24 12

15 What needed to change? Shifting to run like a system vs. individual entities. Pre-Carolina Value Carolina Value Process Improvement Performance Metrics Reporting and Accountability Incentives and rewards Decision Making Ad hoc, episodic Inconsistent Inconsistent, complex Inconsistent Bureaucratic, slow, ambiguous Systematic & standardized Transparent, objective Tools & skills to enable efficient management Consistency of purpose Responsive, committed new governance structure 25 Two year journey focused on sustainment from the start Phase 1: Assessment Sept 2014 Jan 2015 Phase 3: Transition/Sustain Feb 2016 Ongoing Assess Develop Execute Transition and Sustain Phase 2: Implementation Feb 2015 Dec 2016 Continuous Performance Improvement 26 13

16 Engaged leaders across the UNC system supported by a trusted partner UNC Team Members Project Managers Staff Members Communications Liaisons Clinicians Executives Managers External Experts Huron consultants, including: Subject Matter Experts Clinicians Project Managers Analysts IT Specialists 27 First task was to redesign system governance 28 14

17 Locally-focused initiatives drove standardization and efficiency Solution Focus Impact Care Access Clinical Documentation Clinical Operations Perioperative Physician Workforce Staffing Process improvement and standardization Education (provider & staff) and process improvement Patient care efficiency (inpatient throughput, care coordination, regionalization) Productivity and operational efficiency Practice standards Productivity and process improvement Created capacity and improved patient experience Enhanced quality and clinical revenue Reduced LOS and revenue enhancement Increased on-time starts, improved case duration accuracy Improved productivity (wrvus) and practice efficiency Reduced labor expense 29 System integration focus leveraged shared models to improve service and lower cost IT & Marketing Supply Chain Revenue Cycle Lab & Pharmacy Human Resources Enhancements to existing shared / central functions with service level agreements Standard products & services Lower cost with scale Standard processes & tools Central leadership & blended staff model Shared leadership & resources Optimized pharmacy distribution Central support services Workforce alignment through Total Rewards Degree of shared service model change 30 15

18 Resulted in positive impact on our service and efficiency Caring for more patients Connecting care team with families Improved satisfaction Streamlined inpatient flow Reduced errors Shorter wait times Easier clinic access More accurate records Improved cost effectiveness Streamlined billing Improved tools and reports Aligned HR policies and programs Standardized definitions and metrics Strengthened relationships 31 On-target to achieve more than $300M in annual recurring benefit $305M Solution Area Projected Benefit % Revenue Cycle $92 M 29% Supply Chain $66 M 21% Care Access $37 M 12% Labor $35 M 11% Human Resources $29 M 9% Perioperative $16 M 5% Clinical Operations $12 M 4% Shared Services $10 M 3% Other solutions: Physician Solutions School of Medicine Clinical Documentation $18 M 6% 32 16

19 Critical Success Factors 33 Integration planning and expertise are critical to capturing expected benefits What factors lead to deal success? 4 Well-executed integration plan 42% Correct valuation/deal price 26% Effective due diligence 18% Positive economic conditions 11% Other 3% % Survey Respondents 34 17

20 Critical success factors 1 Clarify vision 2 Integrate sensibly 3 Accountability for sustained results 35 CRITICAL SUCCESS FACTOR 1 Clear vision and comprehensive program design Define purpose and scope Brand program Create governance structures Formalize decision making process Align incentives 36 18

21 This is a team effort. What we've accomplished, and this is still a work in progress, is getting real alignment from our faculty, our health system leaders, so that we're all pulling in the same direction. But we're not satisfied. That's why we embarked on a project called CAROLINA VALUE last year. We're integrating all of the parts of UNC Health Care soon to be nine community hospitals, two academic hospitals, and thousands of physicians into a well-functioning organization. We will have one revenue cycle, one HR system, one employee benefit plan, one way of making decisions about staffing of our clinical operations. In this world where people value brands, if we put the UNC Health Care name on a hospital, a clinic, or a doctor's office, we want to make sure we have clinical integration, so that we can vouch for and stand behind that practitioner or institution. - Dr. Bill Roper, Dean of UNC School of Medicine and CEO of UNC Health Care 37 Carolina Value Kickoff March 2015 Bringing managers and leaders from across the system together around the cause

22 First task was to redesign system governance 39 CRITICAL SUCCESS FACTOR 2 Integrate sensibly leverage standardization to get early results Determine standardization expectations and flexibility for deviation Formalize intra-system connections Standardize metrics and create a common language Balance local entity culture with system goals 40 20

23 Transparency and accountability driven by standard metrics and reporting 41 CRITICAL SUCCESS FACTOR 3 Accountability for sustainable results from the onset Drive with data Document new expectations Align incentives Invest in support resources Proactively plan for long-term ownership 42 21

24 Performance incentives create focus and align priorities 43 Lessons Learned 44 22

25 Lessons learned 1 Recognize each shared service s journey 2 Align around stakeholder groups 3 Continually reevaluate structure and vision 45 LESSON LEARNED 1 The journey isn t the same for every shared service Evaluate maturity of shared services Acknowledge progress and challenges Sequence initiatives according to specific criteria Balance service execution and people needs Engage skeptics in solution design 46 23

26 Prioritize integration opportunities to guide implementation timing and approach Organizational Efficiencies High Consistency Legal Improvement Strategy Mission Financial Reporting Analytics OPPORTUNITY Marketing IT Facilities High Priority Home Office Physician Services Insurance/Claims Impact HR Revenue Cycle Low Supply Chain CIN Financial Opportunities *Image size reflects financial opportunity CLINICAL CLINICAL / OPERATIONAL OPERATIONAL ADMINISTRATIVE 47 System integration focus leveraged shared models to improve service and lower cost IT & Marketing Supply Chain Revenue Cycle Lab & Pharmacy Human Resources Enhancements to existing shared /central functions with service level agreements Standard products & services Lower cost with scale Standard processes & tools Central leadership & blended staff model Shared leadership & resources Optimized pharmacy distribution Central support services Workforce alignment through Total Rewards 48 24

27 Evaluate where each function falls on the shared services evolutionary curve The consolidation and operational efficiency benefits of Shared Services evolve over time. Functional areas may move along the evolutionary curve at different rates. High Infancy Developing Mature Efficiency Consolidating disparate functions Advancing operational performance Leveraging scale and growth Low Decentralized Centralized Structure 49 LESSON LEARNED 2 Align around stakeholder groups Evaluate stakeholder needs and cultural discrepancies Define unique approaches for each consolidation type Engage entities executives and boards early Engage physicians via what is most relevant to them 50 25

28 Engage local executives and boards Consider the types of integration involved and build unique change management and communication plans around each stakeholder group Executives MERGER OF EQUALS Board Members Physicians ACQUISITION Managers/ Staff Nurses JOINT VENTURE MANAGEMENT AGREEMENT Patients STRATEGIC ALLIANCE 51 Engage physicians based on what matters to them Patients first Follow the data Keep it simple Why? Physicians often set the tone for culture and collaboration across the health enterprise A Gallup survey 5 found that one engaged physician adds an average of $460,000 in patient revenue per year 52 26

29 LESSON LEARNED 3 Accountability structure evolution Clarify entity vs. system level governing bodies Re-evaluate governance structures regularly Align future growth plans with new system vision (acquire vs. partner, management agreement construct) 53 Examples governance structure Defines system strategic priorities Makes escalation decisions Senior Executive Team (SET) Operational decision making Reporting and accountability on operational performance CEO Roundtable System Project Management Performance Improvement execution Escalates risks to SET and CEO roundtable for decision making Provide executive-level guidance and support Vehicle to build crossentity relationships System Roundtables (CFO, CNO, etc.) 54 27

30 Looking Forward: What s Next for UNC HC 55 What s Next for UNC HC Grow the research enterprise Expand medical education Demonstrate excellence Lead transition to value Enhance statewide network 56 28

31 UNC Health Alliance is our clinically integrated network Practices & Hospitals Payers Participation Agreements Non-exclusive Modest expense Operating Agreements UNC HA Board Value-Based Contracts Employers Commercial Medicare Medicaid 57 Discussion and Q&A 58 29

32 Wrap-Up 59 Key Takeaway #1 Clearly define what type of system you want to become, including breadth of market reach and depth of services. Align your growth strategy to your future state vision. DEFINE SUCCESS BUILD SCALE ALIGN OPERATIONS ACHIEVE SYSTEMNESS 60 30

33 Key Takeaway #2 Align operations through organizational restructuring and performance improvement. Engage all stakeholders, align incentives, and execute a tailored change management plan. DEFINE SUCCESS BUILD SCALE ALIGN OPERATIONS ACHIEVE SYSTEMNESS 61 Key Takeaway #3 Systemness and the vision for system are moving targets. Continually reevaluate growth strategy, governance structures, and operational goals to ensure alignment with the vision. DEFINE SUCCESS BUILD SCALE ALIGN OPERATIONS ACHIEVE SYSTEMNESS 62 31

34 Thank you 63 Contact Information Allen Daugird, M.D. President, UNC Physicians, and Chief Value Officer, UNC Health Care Erin Bartley Managing Director, Huron Andrew Ziskind, M.D. Sr. Vice President, Premier, Inc

35 APPENDIX 65 Dr. Allen Daugird Allen Daugird, M.D.,MBA is the President of UNC Physicians, which includes UNC Faculty Physicians, UNC Physicians Network, and physician practices at UNC HC s Affiliate Hospitals. He is responsible for the physician clinical enterprise of UNC Health Care, which includes 2400 physicians, and the UNC Physicians Professional Services Office, which provides central revenue cycle, quality improvement, training, and other support services to UNC HC's 450 physician practices. Dr. Daugird is also Chief Quality and Value Officer for UNC Health Care, overseeing quality, population health, and value care initiatives. Since 2014 Dr. Daugird has led the Carolina Value program as a member of the Executive Steering Committee and the Physician Solution Team Sponsor. Dr. Daugird is a family physician by training, graduating from the UNC School of Medicine and the University of Missouri Family Medicine residency

36 Erin Bartley Erin Bartley, managing director at Huron, has over fourteen years of experience leading health system transformation projects with expertise in designing and implementing new processes, facilitating cultural change and managing project execution. Erin focuses on leading complex engagements for health systems driving financial and operational performance excellence and health system integration. Over the last two years, Erin has closely worked with UNC Health Care to improve operational effectiveness and organizational alignment through its system-wide program, Carolina Value. In this role, Erin has served as a trusted strategic partner with UNC Health Care executives and Project Management Office leaders to set the direction for the successful implementation of the program s performance improvement and system integration objectives. Erin has her Bachelor s in Business Administration from the University of North Carolina and her Master s in Health Services Administration from the University of Michigan. 67 Dr. Andrew Ziskind Dr. Ziskind has extensive experience in clinical care and academic health system leadership. He is an MGH-trained cardiologist who developed and led innovative primary care and specialty delivery systems that span AMCs, community hospitals and affiliated physicians. He is a sought after consultant, and was recognized by Consulting Magazine as one of the 25 most influential consultants in the US. Dr. Ziskind served as Vice Dean for Clinical Affairs and Associate Vice President at the University of Washington and then as President of Barnes- Jewish Hospital and Group President at BJC Healthcare. His consulting focuses on academic health system strategic and operational transformation, optimizing governance, faculty practice operations, and clinical performance across academic health systems and their affiliated entities. Most recently, he became Senior Vice President and is leading Premier s Academic Alliance

37 References 1. Irving Levin Associates database. Previously HealthcareMandA.com. 2. Gamble. M. (2012). 42 Statistics on Independent Physicians From 2000 to Becker s Hospital Review. 3. Acquisition and Affiliation Strategies. (2014). Healthcare Financial Management Association M&A Outlook Survey Report. (2015). KPMG. 5. Burger, J., & Giger, A. (2014). Want to Increase Hospital Revenues? Engage Your Physicians. Gallup