1 / 66

Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era

Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era. Steve Hudson Director of Strategic and Physician Development, Northside Hospital-Cherokee. Max Reiboldt, CPA President/CEO, Coker Group. Disclaimer.

adanne
Download Presentation

Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era Steve Hudson Director of Strategic and Physician Development, Northside Hospital-Cherokee Max Reiboldt, CPA President/CEO, Coker Group

  2. Disclaimer Coker Group and Northside Hospital have produced this material as an informational reference for conference attendees. The contents of this presentation represent the views of the authors and presenters and do not necessarily reflect the views of Becker’s Hospital Review.

  3. Contents • Current Industry Trends • Stage I: Strategic Alignment • Physician-to-Hospital Models • Joint Ventures • Clinical Co-Management Agreements • Professional Services Agreements • Collaboratives • Stage II: Clinical Integration • The Overall Integration/Accountable Care Strategy for Private Physicians • Q & A • Glossary of Terms • Appendix: Strategic Alignment Case Studies

  4. I. Current Industry Trends

  5. Comparative Look at 2013 and 2014 2014 Projections 2013 Trends *Processes furthered during the year; still early-on in development Preparatory year for ACA’s “Full Implementation Year” Increasing efforts toward alignment and integration Shift in reimbursement methodologies (from volume to value)* Care process delivery transformation initiatives* Progress within ACO/CIN development/population health management (“PHM”) efforts Primary care development efforts to combat workforce shortages • Major ACA provisions rolled out January 1, 2014 • Individual mandate • Comprehensive insurance plans/coverage • Medicaid expansion • Meaningful Use Stage II • Accelerated movement within 2013 trends • Big year for information technology (“IT”) • ICD – 10 (potential 2015 implementation) • PHM solutions • On-premise to cloud-based systems • Growth of clinically integrated networks

  6. Hospital Provider Concerns in 2013 Please rate the following factors in regard to the strategic concerns of your facility. Source: Merritt Hawkins and Trinity University Department of Healthcare Administration, “2013 Survey of Alumni Satisfaction and Health System Trends” Reimbursement and alignment rated as the top two most important concerns of a health system Alignment is still considered a primary strategic response to the continuing financial challenges Alignment is also Stage I of an organization’s accountable care strategy (without alignment, clinical integration is highly unlikely)

  7. Provider Concerns in 2013 (cont’d) 10 Most Pressing Career Concerns for Physicians 1. Compensation and/or reimbursement — 53.9 percent2. Work/life balance — 45.2 percent3. Work-related burnout and stress — 22.1 percent4. Impact of healthcare reform — 16.6 percent*5. Lack of autonomy or control in my practice — 11.8 percent6. Quality of healthcare — 10.8 percent*7. Finding a new practice opportunity — 7.3 percent8. Malpractice issues — 6.7 percent9. Patient-physician relationships — 5.2 percent 10. Implementing electronic medical records — 5 percent* *Likely to significantly rise in priority within 2014 Source: Becker’s Hospital Review, “10 Most Pressing Career Concerns for Physicians,” July 12, 2013

  8. Provider Concerns in 2013 (cont’d) Five Alignment Trends of 2014 • As 2014 is a mid-term election year, we can expect more debate on the PPACA and potential political fallout. • "Alignment" in advanced stages of accountable care structures will continue, analogous to what we have termed as “Stage II”. • Compensation and pay plans for physicians within alignment structures will be continuing to move away from fee-for-volume to fee-for-value. • Bundling and shared savings programs will continue to increase; thus, measuring values among participating providers will become a greater issue. • More of the same regarding physician-hospital alignment will continuewith the number of transactions consummated increasing within 2014. As a result, physician-hospital alignment will be one of the most prominent initiatives on all providers' "to-do" lists for years to come. Source: Becker’s Hospital Review, “Physician-Hospital Alignment in 2013: 17 Trends,” August 30, 2013

  9. Driving Forces for Change: Paradigm Shifts Traditional healthcare delivery model Disjointed provider base Fragmented care management treating primarily sick people Episodes of care; utilization management Production (volume)/Fee-for-service payments Integrated care management focusing on preventative care Coordinated delivery of care rendering appropriate services at appropriate place and time Performance (value); Quality/cost control; bundled payments; capitation; risk-based Collaboratives: ACOs/CINs/PCMHs/ QCs Accountable care era health care delivery

  10. Driving Forces for Change: Evolving Payment Models Increasing Provider Risk

  11. It All Culminates to Value… Quality Enhancement (Outcomes) • Develop quality initiatives for safety, outcome and satisfaction • Engage physicians in metric development process • Process andtrue outcomes measures • Practice evidence-based medicine • Establish protocols and best practices • Patient-centered at all times • Utilize a population-health mindset • Accurately measured and attributed • You can’t change what you can’t measure • True costs, not proxies (e.g. ratio of costs to charges) • Activity-based costs of providing care for common clinical conditions (e.g. heart failure) • Proactive tracking of medical/personnel utilization • You can’t change what you can’t measure Higher Value = Cost Reduction

  12. The Ultimate Provider Challenge • High quality clinical care delivery • Cost efficient clinical care delivery • Population health management • -Providers must do all simultaneously • to deliver value (Outcomes / Cost ) • all with limited funds

  13. Using Alignment to Further Integration* • Stage I: Alignment • Common goals and objectives • More structural than functional • Medical staff membership • CCMA • PSA • Employment • Tied together by legal and economic connections • Stage II: (Clinical) Integration • Merged clinical and business models • More functional than structural • PCMH • ACO • Quality collaborative • CIN • Tied together by clinical and cultural connections *Can be via both physician-hospital and physician-physician strategies

  14. II. Stage I: Strategic Alignment Two Tracks: Physician-Hospital or Physician-Physician Alignment

  15. Spectrum of Alignment Models Models that Fall Short of Employment Independence Private Practice Alignment Model Options Hospital Employment Increasing Integration Employment is not the only viable option but some form of alignment with a hospital is essential!

  16. Traditional Alignment Model Descriptions Limited Integration Moderate Integration Full Integration Service Line Management: Management of all specialty services within the hospital Managed Care Networks (Independent Practice Associations, Physician Hospital Organizations):Loose alliances for contracting purposes ACO/CIN/QC: Participation in an organization focused on improving quality/cost of care for governmental or non-governmental payers; may be driven by practices or hospital/groups MSO/ISO: Ties hospitals to physician’s business Recruitment/Incubation:Economic assistance for new physicians Employment “Lite”: Professional services agreements (PSAs) and other similar models (such as the practice management arrangement) through which hospital engages physicians as contractors Clinical Co-Management: Physicians become actively engaged in clinical operations and oversight of applicable service line at the hospital Group (Legal-Only) Merger: Unites parties under common legal entity without an operational merger Equity Group Assimilation: Ties entities via legal agreement; joint practice ownership Call Coverage Stipends:Pay for unassigned ED call Employment*: Strongest alignment; minimizes economic risk for physicians; Group (Legal and Operational) Merger: Unites parties under common legal entity with full integration of operations Medical Directorships: Specific clinical oversight duties Joint Ventures: Unites parties under common enterprise; difficult to structure; legal hurdles Typically Physician-to-Physician Typically Physician-to-Hospital Either Physician-Physician or Physician-Hospital *Includes the Physician Enterprise Model (PEM) and the Group Practice Subsidiary (GPS) model both of which allow the practice entity to remain intact even after employment of the physicians by the hospital.

  17. Joint Ventures

  18. Joint Ventures “Laws” to Consider • Stark • Anti-Kickback • Reimbursement • Tax Implications • State Law Structures* • Specialty Hospitals • Management Services Arrangements • Under-Arrangement Arrangements • Freestanding Centers • Pay for Performance • Block Leases • Medical Directorships *Physician-to-physician (as well as physician-to-third party investor) joint ventures are also possible and subject to similar laws. These types of transactions are usually project-driven and intended for the development of new capital structures (e.g., a new building). Source: Healthcare Financial Management Association

  19. Joint Ventures (cont’d)

  20. Joint Ventures (cont’d) • Increasingly complex regulatory landscape are creating significant challenges for those providers considering Hospital-Physician JVs • May be JVs with surgery centers or equipment • ASC ventures have specific requirements for physicians • 1/3 of physician’s medical practice income from all sources for previous fiscal/12 month period must be derived from performance of Medicare list of ASC covered procedures • 1/3 of procedures performed by each physician for previous fiscal/12 month period must be performed at ASC • Various fair market value considerations, including but not limited to such things as: • Returns to investors must be commensurate with their level(s) of risk assumed (i.e., amount of capital invested) • Payment (cash and non-cash) cannotbe based on volume of referrals (Stark and Anti-Kickback laws) • As hospital-physician transactions increase in the market, federal regulators are increasing their scrutiny for compliance purposes Source: Dixon Hughes

  21. Clinical Co-Management Agreements (CCMA)

  22. CCMA Description CCMA Logistics Service Line Arrangement Structure • The purpose of the arrangement is to reward physicians for their efforts in developing, managing and improving the quality and efficiency of the hospital’s service line • A contractual relationship between the hospital and the management entity results • Compensation is in part performance-based, tied to achievement of specific quality objectives • Some shared cost savings initiatives may also be included • Clinical co-management agreements offer an alternative to employment or a professional services agreement (i.e. employment “lite”) relationship, but still serve as a form of moderate alignment between two parties • CCMAs offer a way for hospitals to align with providers within its service line • CCMAs can also be in conjunction with a full alignment transaction in the form of a “wraparound”

  23. CCMA Example: Gastroenterology Service Line* ERCP Bronchoscopy Colonoscopy Surgery Clinical Co-Management Agreement for Oversight of GI Services Hospital Practice Fixed Fee Contingent Fee Management Committee Representatives and Medical Director Management Committee Representatives *Each service line/specialty can have its own CCMA, which can be included as a singular alignment strategy or as a “wraparound” (i.e., add-on) to another, major alignment strategy

  24. CCMA Takeaways

  25. Professional Services Agreements: “Employment Lite”

  26. Professional Services Agreements - Overview PURPOSE • Achieve clinical and financial integration without employment • Contracted services, multiple options • Clinical (Professional) Services • Wraparounds (administrative, call, quality, etc.) • Typically paid on a top-line basis per wRVU. Wraparounds can take other forms of payment for services, if included. RELATIONSHIP SERVICES REMUNERATION

  27. Four Popular PSA Models PSA Offerings Four Possible Scenarios of PSA Model • Traditional PSA: Hospital contracts with physicians for professional services; Hospital employs staff and “owns” administrative structure • Global Payment PSA: Hospital contracts with practice for Global Payment; practice retains all management responsibilities • Practice Management Arrangement: Practice entity retained and contracts with Hospital; administrative management and staff not employed by Hospital, but physicians are employed • Hybrid Model: Hospital employs/contracts with physicians; practice entity spun-off into a jointly-owned MSO/ISO • Flexibility in structure • Opportunity to increase and enhance bottom-line for both Hospital and the Practice • Stability in relationship with Hospital • Bonus opportunities for exceptional performance • Opportunities to expand services together without being fully aligned (i.e., employment and/or clinical integration) • Easier segue to full employment for physicians and staff

  28. 1. PSA – Traditional Model • PRACTICE • Contracted by Hospital to provide professional services • Practice providers(but not support staff) remain employees of the Practice • Payment to Practice for professional services equal to net collections less direct costs paid by Hospital (and any fixed payments for ancillaries) or a rate per wRVU for production by Practice providers Independent Contractor

  29. 2. PSA – Global Payment Model* • Membership • Compensation Hospital Board Practice Board Professional Services** & Non-compete Agreement Hospital (Integrated with Physician Division Infrastructure) Practice (For-Profit Entity) PSA • Global Fee: • Fixed Overhead • Variable Overhead • Rate per wRVU • Group Governance • Physician Hiring/Termination • Income Distribution • Clinical Practice/Quality • Malpractice • Management and Staffing • IT Support • Physicians and staff remain employed by Practice • Asset Ownership/Lease • Payer Contracting • A/R Owned • Billing*** • Establishes fee structure PSA Management Committee • Approves Strategy/Finances • Oversees Operations/Business Planning • Establishes Compensation Principles • Achieves Value-Exchange Objectives • Is Typically Split 50/50 Between Hospital and Medical Group *Could be a portion of the Practice **Services to be provided can include: diagnostic and procedural services; clinical management and coordination; administrative, supervisory teaching and research functions; complete service line and clinical co-management; cost savings; quality incentives, etc. ***Billing could be performed by the Practice as a third-party agent.

  30. 2. PSA – Global Payment Model: Economic Components* *Totals represent annual figures Global Payment PSA Example – For Illustration Purposes Only Practice Overhead: • Covers Practice’s prof. expenses • Pass-through from Hospital • Based on budgeted expenses • Variable expenses per wRVU • Exclusive of phys comp & benefits • Only for professional component (not technical component, if appl.) Practice Overhead Physician Compensation and Benefits Example Fixed Overhead: $6.0M Variable Overhead: $6/wRVU Example $50/wRVU Physician Compensation and Benefits: • Covers physicians’ compensation/benefits • Based on rate per wRVU • Based on historical comp & FMV • Compared against past comp/wRVU • Room for annual increases included • Same as employment model • Comp payments made to practice (can distribute how MD’s choose) PSA Rates per wRVU converted to Dollars based on wRVU pool Example Total Practice wRVUs = 120,000 Fixed Overhead Portion = $6,000,000 Variable Overhead Portion = $720,000 Phys Comp/Ben Portion = $6,000,000 GLOBAL PSA FEE = $12,720,000

  31. 3. PSA – Practice Management Arrangement • Physicians retain ownership of their Practice infrastructure • Physicians operate as the managers of the Practice, providing all administrative services, space, equipment, and support staff • The Hospital contracts with the Practice entity for these services and pays a fair market value (FMV) fee • The compensation structure for the employed physicians is a productivity-based system • The arrangement can be easily dissolved, as the Practice entity stays outside the Hospital control structure Hospital Employment Practice Physicians • Compensation • Benefits Ownership Practice Infrastructure • Practice Management • Billing/Collections

  32. PSA – Model Comparison

  33. Employment vs. Employment “Lite” Comparison Employment Employment “Lite”: PSA • Hospital purchases all Practice assets including all ancillaries • Practice entity dissolves; Practice becomes subsidiary of the Hospital • All Practice providers and staff become employees of the Hospital • Practice physicians achieve the highest level of integration with the Hospital and ensure stability but lose a significant amount of independence and autonomy • Easy segue to clinical integration and Hospital’s accountable care era strategy • Comprehensive alignment strategy requiring less integration than employment • Multiple options (including hybrid models) which allow for a greater level of customization • Practice entity retains its structure • Hospital strengthens its service line while the Practice realizes some financial benefits • Practice physicians remain independent • Easier segue to clinical integration and deployment of accountable care era strategy

  34. Collaboratives

  35. Accountable Care Era: Private Practice Decision • With rising financial pressures, some independent physicians are seeking shelter through employment or integration with large hospital/healthcare systems • Other physician innovators and entrepreneurs are becoming “trailblazers” by using the current challenges as an opportunity to improve patient care and the practice environment for themselves

  36. The IPA Model Example – For Illustration Purposes Only This Could Be the “Look” for an IPA Entity CMS PAYERS Multi-Specialty IPA (Joint Contracting Entity)* Office-Based Practice #1 Office-Based Practice #2 Office-Based Practice #3 Contracted Specialists Contracted PCPs *Can consist of as many private practices as desired by the participating parties; must be clinically integrated. The IPA is increasingly serving as the foundation for providers to work toward growth and clinical integration

  37. Collaborative Structure • As provider-based QCs/CINs continue to develop, the future of hospital-provider relationships could potentially “look” like this: • Multiple alignment and integration strategies co-existing and interacting with each other • Multiple provider types partnering/affiliating with each other • The hospital-physician dynamic is shifting CMS PAYERS PHO/IPA CIN/ACO Hosp/Systems Hosp/Systems Hosp/Systems Hosp/Systems Contracted PCPs* Contracted Specialists* * Physicians could be owners of the QC plus some contracted

  38. III. Stage II: Clinical Integration

  39. Clinically Integrated Models

  40. Goal of Clinical Integration: Population Health Management Effective clinically integrated facilities meet the goals of the Institute for Healthcare Improvement’s Triple Aim: • Enhance the patient experience of care (including quality, access and reliability) • Improve the health of the population • Reduce (or control) the per capita cost of care

  41. Clinically Integrating to Deliver Value

  42. A Clinically Integrated Care Delivery Model • Primary focus of a CIN/CIO is to create a high degree of interdependence among participating providers through care coordination and data transfer/sharing/application • Network of interdependent healthcare facilities and providers that collaboratively develop and sustain clinical initiatives and performance metrics/goals on an ongoing basis through a centralized, coordinated strategy • Patient-centric • Structures may vary from provider to provider • Heavily reliant on robust IT infrastructure • Centralized contracting is an essential element of a CIN program Typical Hospital-Based CIN Structure Payers Aligned Network of Providers Care Practitioners; Provider Groups Care Process Transformation Hospital/ Health System

  43. Future Directions: The Business of Healthcare • We are in the midst of a significant cultural shift • The business of healthcare is rapidly becoming the business of population health management • The engagement of physicians will help lead the way to change for hospitals and health systems: • Significant clinical buy-in will be necessary to re-tool a care delivery process • Physicians are arguably the most equipped to influence change amongst medical staff, physician and non-physician caregivers • Stable and sustainable provider bases will facilitate the overall integration process • Despite the structural model, new delivery systems will necessitate HEAVY buy-in from participating providers in order to be functional

  44. IV. The Overall Integration/Accountable Care Strategy for Providers

  45. The Alignment and (Clinical) Integration Strategy • Alignment is Stage One and (Clinical) Integration (with a care delivery system development process) is Stage Two • Forming a clinically integrated/accountable care organization will require significant collaboration amongst many different stakeholders, and often times among competitors • A go-forward alignment strategy is ultimately the best way to ensure successful integration for collaborative models, particularly between distinct private groups • Whether amongst medical groups or with a hospital partner, without sufficient alignment, quality of care and population health management are likely to suffer • While clinical integration and care delivery transformation are the “end game” goals, initial alignment is its primary vehicle

  46. The Alignment and (Clinical) Integration Strategy (cont’d) Stage I: Alignment & Integration* • Initial alignment deals assessed • Consider/pursue a range of alternative alignment models (limited to moderate to full) • Potential expansion of outpatient access • Ongoing alignment transactions being considered and concluded • Development of an aligned entity via legal incorporation (or effectuation of a legally binding contract) • Medicare ACO (or commercial payer CIN) participation • Interoperable IT solutions providing communications across all providers and facilities • Possible expansion of network as the consolidated/aligned organization pursues new alignment deals with high-performing physicians and/or outpatient facilities • Operational integration, including revenue cycle mgmt, personnel, compliance, financial mgmt, etc. • Official recognition from federal government as a CIN • Continued focus on solidifying market share within primary market; not competing outside • Engaging in payer contracting/reimbursement as a CIN based upon a combination of FFS, management assistance and at-risk (i.e., shared savings, etc.) reimbursement methodologies Stage II: “Accountable Care Era” Strategies & Implementation* *A staged approach has proven an effective strategy for numerous health systems and private consortiums’ clinical integration and ACO/CIN ventures; Stages I and II typically run concurrently after the initial period (i.e., 1-3 years) of successful alignment transactions

  47. The Alignment and (Clinical) Integration Strategy (cont’d) • Continue to address Stage I alignment efforts to grow the physician network • Continue to address and improve infrastructure (either independently or through alignment initiatives) • Continue refining/developing an internal distribution methodology that includes payment for services at more than FFS (but still a lot of the total at FFS) plus bundled reimbursement • Consider the development of a care process design system (i.e., a system that offers the ability to systematically design, monitor, adjust and produce high value care delivery on an on-going basis) Next Steps and Future Strategies

  48. In Conclusion…

  49. V. Q & A

  50. Steve Hudson Director of Strategic and Physician Development Northside Hospital - Cherokee T: 404-851-6500 Steve.hudson@northside.com Max Reiboldt, CPA President & CEO Coker Group Holdings, LLC T: 678-832-2007 mreiboldt@cokergroup.com

More Related