Physician-Hospital Economic Alignment

1. Physician-HospitalEconomicAlignment May 17, 2014 Becker’s Hospital Review Annual Meeting

2. Agenda: Three Components

3. Models and Strategy

4. Traditional Hospital-Physician Relationship No relationship to quality, cost, or defined process Independent Delivered Patient Care Physician clinical decisions No concern for how Products & Services are used Independent decisions Hospital Pays for Care Inefficient & Uncoordinated Care

5. Hospital-Physician Economic Relationship Coordinated Patient Care Physician clinical decisions MD concerned about quality, cost, utilization & process Hospital Pays for Better Outcomes & Less Utilization Information Driven Decisions

6. Many Types of Hospital-Physician Alignment

7. Numerous Hospital-Physician Economic Models Three examples

8. The Opportunity Infinite Ways to Deliver Care to same patient type Re-engineer Care

9. Average Suture Cost $622

10. Benchmark Average Cost $118

11. The untapped power of physicians PRICE utilization • 10% Discount on Suture • Cost/case: $622 • Current annual suture cost: $311,000 • Annual Savings: $31,000 • Obtaining Benchmark Level Utilization • Best in class Benchmark: $118 • Annual Cost: $59,000 • Annual Savings: $252,000

12. Clinical re-design Appreciation to the staff of Chicago Health System, a part of Tenet Health

13. High cost/high risk patients

14. Ambulatory Steps for Change Biggest Bang for the Buck

15. Complex Case Management

16. Complex Case Management Utilization by Program Duration Visible trends in both charts, yet neither show statistical significance Sharp trends driven by a few high utilizers in a relatively small pool of members

17. Complex Case ManagementUtilization vs. Baseline

18. Complex Case Management Total Medical Expense and Member Months July – September post significantly lower than pre

19. Hospital • Hospital notification about ED and admissions for Bundles/ACO patients • Early assessment/enrollment into CCM

20. Post acute strategy

21. Post Acute Platform Across All Strategies Preferred Provider Network ACO Patients • Service requirements • Metrics & Outcomes • PCP Connections • CHS Central Tracking BP Patients Financial Performance Quality Metrics Patient Experience Growth CCE CHS Others

22. Post acute providers • Used generally available quality criteria • Some additional work • Now push back on LOS for bundles • History: • Started with 140 SNF/rehab and 30 HH partners • Narrowed down to 5 HH and 30 SNF/Rehab • They all agreed to play nice in the sandbox

23. Criteria for Post acute providers • 24/7 • Geographic coverage • EMR • Visit frequency • Employed RN • Employed therapists • JCO/CHAP certified Medicare Medicaid Managed care Psych Wound Care

24. Monthly SNF Quality Reporting 24

25. Manage, measure, compliance

26. Elements of Safe harbor • Term of at least one year • In writing by both parties • Specify aggregate payment and set in advance • Payment is reasonable and fair market value • Compensation not related to volume or value of business • Exact services to be performed must be outlined • Services are commercially reasonable

27. The challenge is execution DUTIES FAIR MARKET VALUE CONTRACT MGMT LEGAL TERMS

28. tracking is a Manual process Paper process ROOM FOR ERROR FRUSTRATING FOR PHYSICIANS COMPLIANCE RISKS EXPENSIVE MISTAKES

29. Don’t be the next headline

30. contract integrity and physician Engagement Financial Reporting Time Log Automation

31. Physician payments – Risk Contracts Physician Monthly Payment Made

32. Adjudicate and analyze

33. Best Practice • Payments to physicians should be made only with proper documentation • Check against agreement terms • Invest in technology that prevents errors and respects physician time • Audit time log duties • Adjudicate payments monthly and review all agreements annually

34. Contact Information JoaneGoodroe, jgoodroe@jgoodroe.com Gary Wainer, DO, gwainer@cadence.org Gail Peace, gail@ludiinc.com