MHA Hospital-Physician Alignment Committee Update January 7, 2011

1. MHA Hospital-Physician Alignment Committee Update January 7, 2011 Brian Peters Executive Vice President – Operations Michigan Health & Hospital Association

2. Physicians Looking to Hospitals Percent of Hospitals Reporting an Increase in the Degree to which Physicians are Seeking Financial Support from Hospitals Since Economic Conditions Began to Deteriorate in September 2008 Percent of Above Citing Type of Support Sought Source: AHA. (March 2009). Rapid Response Survey, The Economic Crisis: Ongoing Monitoring of Impact on Hospitals.

3. Physician Employment Trend • Key Difference • 1990s: Hospitals sought out physicians • 2010: Physicians also seeking out hospitals • Key Factors • Lifestyle considerations • Call coverage • HIT • Capital costs to maintain a private practice • Liability insurance • Rising number of Medicaid and uninsured patients • Annual political circus around Medicare physician fee cut • Income stability in unpredictable market

4. Federal Reform – Delivery System • Value-based purchasing • Bundled payment • Accountable Care Organizations • Rehospitalization • Shift from volume-driven fee-for-service, to at-risk financing • Will require much improved alignment between hospitals and physicians

5. Federal Reform – Delivery System • Value-based purchasing • FY 2013: devotes 1% of total hospital payments devoted to hospital performance; grows to 2% for 2017 and beyond; budget neutral • Bundled payment • FY 2013: national, voluntary, 5-year pilot program focused on 10 conditions • Accountable Care Organizations • FY 2012: allows hospitals, in cooperation with physicians, to form ACOs; resulting savings may be shared with providers • Rehospitalization • FY 2013: financial penalties for rehospitalizations above “expected” norm for 30-day window (CAHs excluded)

6. MHA Task Force on Hospital-Physician Alignment Charge: The MHA Task Force on Hospital-Physician Alignment is charged with examining the relevant environmental trends affecting Michigan hospitals and physicians, and recommending an appropriate association role in creating enhanced hospital-physician alignment strategies designed to improve the quality and cost-effectiveness of health care delivered to Michigan communities and patients. Chair:John MacKeigan, MD Executive Vice President & Chief Medical Officer Spectrum Health System Vice Chair: Thomas Petroff, DO Vice President of Medical Affairs Ingham Regional Medical Center Transitioned to standing MHA Committee for 2010-2011 program year

7. MHA Task Force on Hospital-Physician Alignment • Guiding Principles for Hospital-Physician Collaboration for Delivery System Reform • Actual reform must be accomplished by those responsible for patients across the continuum of care; • Primary goal of alignment effort = best care possible for a defined population as well as each individual patient; cost containment is an equally important goal; • Leadership and commitment from physicians is necessary to ensure appropriate stewardship of limited resources in every community; • Hospitals and physicians can no longer practice in silos;

8. MHA Task Force on Hospital-Physician Alignment • Guiding Principles for Hospital-Physician Collaboration for Delivery System Reform (con’t.) • To resolve conflicting incentives, new models – including “hybrid” models that blend fee-for-service with new models – should be implemented; • Prevention and Wellness efforts on the part of providers must be rewarded and incentivized; • Reimbursement “carrots” are preferred to “sticks”; however, both will be present; • Alignment and coordination among insurers and health plans is an important element in making significant impact across the state;

9. MHA Task Force on Hospital-Physician Alignment Guiding Principles for Hospital-Physician Collaboration for Delivery System Reform (con’t.) • A “one-size-fits-all” approach to alignment is not realistic, e.g. in some markets/organizations, hospital employment of physicians will be the preferred model, while in others, creation of PHOs may make sense; • Data transparency is a key driver, and should apply to clinical outcomes, financial performance, and population health metrics; full disclosure regarding relationships between physicians, hospitals, and technology vendors should be made to both patients and payors.

10. MHA Task Force on Hospital-Physician Alignment TACTICS • Incentive dollars should be made available to fund “Physician Champions;” • Physician incentive payment programs should be extended to hospital-based physicians; such a program should align incentives such as Core Measures for CHF/AMI/Pneumonia and SCIP; participation in CQIs; and participation in MHA Keystone collaboratives; • MHA Keystone Center, MHA PSO, and other existing regional and specialty/disease-specific consortiums should be leveraged to their maximum potential; • A mechanism for measuring the outcomes of ACOs is necessary to determine effectiveness; aspects should include both inputs and outcomes.

11. Interlocking Activities FEDERAL REFORM Government and commercial payors will create new pressures on hospitals and physicians

12. MHA Resource Guide

13. QUESTIONS / DISCUSSION? BRIAN PETERS | Executive Vice President Operations Michigan Health & Hospital Association 6215 W. St. Joseph Hwy | Lansing, MI 48917 517-886-8223 Phone | 517-323-1132 Fax  bpeters@mha.org  www.mha.org