Overview

1. Innovation Nation July 12, 2012 Presented by Kathryn Alexandrei Overview

2. Understanding what is meant by innovation in behavioral healthcare Developing an Innovation Framework Becoming conversant with new models like Accountable Care Organizations (ACOs) Next Steps – Your Innovation Cycle Learning Objectives

3. 5 Reasons to Innovate Now • Advent of health care reforms (Affordable Care Act) • Cycle of breakthrough in research and brain science • Prevalence of psychiatric and substance use disorders • Co-morbidity with chronic medical conditions and explosion of diabetes, asthma, autism, obesity • Availability of consumer and provider-friendly technologies

4. R & D What Drives Innovation? Skills and Abilities Market Structure Ancillary Markets

5. Two Types: Sustaining Innovations (correction ribbon, lighted refrigerator, bucket seats) allow you to make incremental changes in order to do what you’ve been doing more efficiently or to produce a better outcome doing it. Also allows you to maintain market share. Disruptive Innovations (NetFlix, Craigslist, Amazon) fostered by outsiders who want to upend markets and the way things are done totally transforming the business model What is Innovation?

6. Technology simplifies what had previously been complicated and cumbersome Lower-cost financial model Value Network is economically coherent (mutually reinforcing) Elements of Disruptive Innovation Source: Clayton Christensen

7. Advantage Innovation • Innovation for sake of novelty • Innovation for sake of change • Innovation to gain strategic advantage over competition

8. Solution Shop – expertise to diagnose and solve problems (you, lawyers, consultants). Charge for cost of expert time. Focus on diagnosis. Value-Add Process – assembling solutions of higher value (retailers, auto-makers). Charge for value of assembled products and services. Focus on treatment after diagnosis. Facilitated Networks – models wherein people exchange things with one another (insurance, mutual funds, eBay and WebMD are examples). WebMD has begun building communities of people with certain chronic conditions like diabetes. These models harness vast amounts of data and technology architecture. Progressive Innovations From To Source: C. Christensen

9. Conditions Ripe for Innovation? • Organizational – do you have formal or informal teams with a Charter to improve and innovate your services? Is it safe to try and fail? Really? • Do you conduct focus groups with your customers? Do you ask your customers what they need and how they want it? • Measures – do you measure: • new product revenue? • spending on R&D? • time to market?

10. Conditions • Is the political, legislative and regulatory environment stimulating change in the market (YES!) • Is government supporting the diffusion of innovations (YES!) • Has the economy performed at a level that is impacting consumer behavior and pricing? (YES!) • Are social and cultural dimensions of the market supportive of new approaches? (YES!) • Is technology supporting innovations? (YES!)

11. Reforming health care financing (pricing, premiums, policies, coinsurance, financial eligibility, FFS, capitation, episode and case rates, etc.) Health information technology (EMR, HIE, MU, PHR, etc.) Internet and facilitated networks Pharmaceuticals and medical devices Medical education (behavioral medicine) Examples of Health Care Innovations

12. Neuro-Tech Bio-Tech Mobile Devices Retail (Minute-Clinics, Wal-Mart) Tele-Medicine Web-based Providers Examples of Health Care Innovations

13. Innovations in Health Insurance Personal Spending Accounts (debit cards) Hospital and Provider Cost & Quality Comparisons online Personal Health Records (PHR) Coverage, Treatment and Cost Advisors Health Risk Assessments with Incentives ($) Disease Management Programs Choice of Networks Exclusive Provider Networks Prevention Benefits and Services Accountable Care Organizations Patient-Centered Medical Homes Value-Based Insurance Design (VBID)

14. 1.  Administrative Mandates (HIPAA 5010, ICD-10, etc.)   2.  Care Management, Data Analytics, and Informatics.   3.  Health Insurance Exchanges and Individual Markets. 4.  New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.) 5.  Bending the Cost Curve. 6.  Medicare and Medicaid. 7.  Health Information Exchanges and EMRs. 8.  Consumer's Role in the Modernization of Healthcare (social networking, incentives, CDHP, etc.) 9.  Reform Uncertainties. 10.Payer / Provider Interoperability. Top 10 Issues/Opportunities2011-2014 (Source: Managed Care Executives Group, March, 2011)

15. What is Desirable? What is Possible? What is Viable? Innovation Framework

16. Innovation Framework • Research – better understanding the market, unmet demand, customers and their preferences, pricing and profit models, the cutting-edge of science and technology, and value networks across our partners and supply chain. • Review existing product-line and previous attempts at innovations • Survey payers, customers, partners, line-staff and leadership team • Analyze customer pain points • Assign Innovation Instigators across the ranks • Conduct key informant interviews • Conduct environmental scan and literature review • Conduct market research and competitive intelligence • Review financials and other business intelligence

17. Innovation Framework • Development – identifying a more effective and efficient way to promote and manage disruptive innovations, pilot programs, demonstrate viability and bring new products to market • Product Development and Innovation Process • Inventory assumptions about the way it is • Learning to ask disruptive questions • Looking for natural product bundling opportunities • Observing how customers interact with services today to detect opportunities for improvement • Investigating and experimenting with new ways of doing things • Networking and associating withpeople, technologies, and ideas from diverse backgrounds

18. Innovation Framework • Identifying: • Gaps, voids and opportunities • Market compatibility • Quality and compliance standards • Key performance indicators, forecasts and projections • Potential issues and risks • Early-stage business operating and/or financial models and their implications

19. Innovation Framework • Critiquing the proposal • Is the proposal overly optimistic or too cautious? • Is quality assured? • Were there contrary opinions on the Team? • Are there credible alternatives to the proposed solution? • Is there sufficient data to support the decision? Valid sources? • Is there an assumption of success with the pilot based on past performance elsewhere? Where? • Is planning overconfident? Is the worst case awful enough?

20. Innovation Framework • Prototype and Pilot • Develop the product/service in its entirety, ready to test • Execution – planning and deploying new products with adequate resources and management, reporting progress, remaining accountable, capturing lessons-learned, and knowing when and how to say “No” • Develop proof of concept model and parameters • Decide whether to pilot prototype internally, to out-source it, or to spin it off under its own brand • Implement the strategy, develop and test the product/service • Manage expectations, people and outcomes

21. Innovation Framework • Evaluation – measuring the impact of the new product and the success of the implementation team • Actual costs, revenues, and profits • Return-on-Investment • Customer, Employee and Payer Satisfaction • Customer Experience • Quality • Outcomes • Market demand

22. Health Care Reform

23. Patient Protection and Affordable Care Act (ACA) • The Act Does Several Things: • Expands Insurance Coverage • Institutes Insurance Reforms • Builds Infrastructure to Provide Improved Health Outcomes • Puts In Motion Structural Changes to how Healthcare Delivery is Structured & Financed • Goals of the Act: • Increase Access • Provide Comprehensive Care  Better Health Outcomes • Control Costs

24. Go Live 2014 • Phased Implementation Is Needed To: • Build Needed Infrastructure • Plan and Implement Provisions Well • Changes To Benefits and Insurance Reforms Began To Be Implemented In 2010 • Major Coverage Expansion Occurs in 2014 • Health Insurance Exchanges • Medicaid Expansion (in approx. half of states) • Longer-term Benefits Result From Sum of Structural and Cultural Changes

25. Expanded Health Insurance Coverage - 2014 • Insurance Coverage Expands From 83% to 94% • Individual Mandate is Constitutional • Subsidies For Those Under 400% FPL • Medicaid Eligibility Set At 133% FPL and Includes Single, Childless Adults in Expansion Category • Medicaid Expands by 8-22 Million • 25 Million Americans to Get Insurance Through State Exchanges

26. Market Results of Coverage Expansion • Result of Change in Coverage for non-elderly individuals (by 2019) • 158 M will have coverage through employers • 50 M will have coverage through Medicaid/CHIP • 25 M will have coverage through exchanges • 26 M will have coverage through non-group plans • 26 M will remain uninsured Source: Congressional Budget Office (CBO)

27. Impact of Affordable Care Act Focus on coordination between primary care and specialty care: • Significant enhancements to primary care • Workforce enhancements • Increased funding to SAMHSA, HRSA and IHS • Bi-directional • MH/SUD in primary care through FQHCs • Primary care in MH/SUD settings through CMHCs and other agencies • Services and technical assistance • Health Homes and Accountable Care Organizations

28. Implications For States & Providers • Need For Infrastructure To Work With Insurance • Grant Funds Re-conceptualized in order not to Duplicate Insured Benefits (look for braiding and blending) • Medicaid Changes and State Insurance Mandates • Integration of MH/SUD with Primary Care • Health Homes and Accountable Care Organizations • Electronic Health Records • Payment Reform Pilot Programs • Evidence Based Practices • Licensure and Credentialing Standards

29. Managing Multiple Chronic Conditions (MCC) Educating the Public Medication Assisted Treatment Population Mgmt Accountable Care Organizations (ACO) Patient-Centered Medical Home and Health Home Models (PCMH) – Focus on Primary Care Integration What are the Opportunities for Innovation in the Market Today?

30. Value-Based Insurance Design (VBID) Promoting Evidence-Based Practices (EBPs) with Lower Coinsurance When Patients See Higher Performing Providers Behavioral Medicine Pay-for-Recovery Outcomes/Quality/Value Prevention “Blending and Braiding” Systems of Care Joint Ventures and Affiliations What are the Opportunities for Innovation in the Market Today?

31. Accountable Care Organization What is an Accountable Care Organization (ACO)? A group that would include a hospital, primary care physicians, specialists, and possibly others involved in coordinating care for shared (Medicare, Medicaid, or other insurance) patients. The ACO's goal would be to ensure that the care provided meets or exceeds quality benchmarks within the fee-for-service structure. ACO members would share in resulting cost savings.

32. Goals & Objectives Improve Inpatient Care Efficiency Use Lower Cost Treatments Improve Health Outcomes Reduce Adverse Events Improve Management of Complex Cases Hospitals & Specialists Reduce Preventable Readmissions Reduce Preventable ER Visits & Admissions Lower Total Healthcare Costs Use Lowest-Cost Settings and Providers Primary Care Reduce Unnecessary Testing & Referrals Improve Practice Efficiencies Improve Prevention & Early Diagnosis

33. ACO: Reimbursement Innovations Revised Capitation (Global Payment Systems or Comprehensive Care Payment Systems) Episode of Care Payment System Administrative Fees Net Savings Hybrid Models

34. Population Health Management ACOs must develop a process for: identifying patients who have complex needs (multiple chronic conditions) or those who are at high risk of developing such needs and provide them with wellness and prevention programs, disease management, and complex case management, as needed ACOs must make available or support providers’ use of electronic prescribing, electronic health records systems, registries, and self-management tools

35. Financial Infrastructure – Ability to track performance and payments Reporting Infrastructure – Interface with Case Managers, Primary Care, and Care Coordinators Performance Management – Access to disease-specific dashboards, baselines, benchmarks and adherence to best practices Data Aggregation – Data warehouse, clinical decision support, and disease registry capabilities Health Information Exchange – Interoperability and Meaningful Use ACO Readiness and Capabilities

36. Information Technology Components EMR, EHR Pervasive Connectivity/Networking Data Analytics and Predictive Modeling Disease and Case Management Software Applications Establishing Readiness and Capabilities for Market Innovations

37. Enable your organization for change Develop a strategic plan, business plan, and *especially* a marketing plan that enables innovation based on knowledge of market forces and market structural changes Commit capital, develop a budget, and/or find investors or partners if you need them Address staffing and the need for periodic expertise where innovation is concerned Align innovation with your IT plans Commit to Performance Mgmt framework Next Steps

38. Manage your organization through change Executives set the course and the mood Establish and measure your expectations Keep distractions and competing priorities to a minimum Hold people (including yourselves) accountable Align efforts so time and energy are not wasted Provide reinforcements, encouragement and rewards (recognition) Next Steps

39. Manage your organization through change Become Learning Organizations (there is a lot to learn!) Recruit, retain and train the right people in administrative as well as clinical areas Leverage your Core Competencies Encourage some risk-taking, experimentation and tolerate mistakes. Ask “What if…?”ALOT Conduct market research – what you don’t know can hurt you Invest in your brand image and dress the part of innovator Use thoughtful scenario-based business modeling and business case methods to pilot your innovations Next Steps

40. Thank You! Questions and Contact Kathryn Alexandrei AHP Healthcare Solutions kalexandrei@ahpnet.com