MGMA Annual Conference

1. MGMA Annual Conference Healthcare Partners: Integration Strategies for Improved Outcomes and Satisfaction Sunday, October 6, 2013

2. AGENDA • Healthcare Partners • Problem with Integration Today • Alignment Models • Cardiology / Cardiovascular Hospital Employment • Integration Defined • Centers of Excellence and Hospital Service Line Strategies • High Satisfaction Integration Components • Best Practice Elements • Summary

3. HEALTHCARE PARTNERS? Understanding The Drivers Behind The Need For Integration Hospitals • Grow Service Line market share • PCP Network – secure referrals • Prepare for payment reform • Direct Contacting • Performance under Value Based Purchasing • Other Regulatory penalties or incentives Physicians • Complexity of business management under reform – How To Do It? • Information Technology and data acquisition, barrier for some practices • How to be viable under alternative models: ACO, Narrow Networks • Pay For Performance- Practice & Hospital?

4. DIVERGENT ISSUES AND FOCUS The Squeeze is Tight for Hospitals…. • Readmission Penalties • Value Based Purchasing Reductions • Sequester • DSH Payment Reductions • RAC Audit Denials • Quality Metric Performance • New recruits want employment model Cardiology feeling the pinch too… • Stagnate or declining reimbursement • Loss of ancillary reimbursement • Significant decline in compensation • Public quality reporting • Transitioning from Fee-For-Service • New recruits want employment model

5. CARDIOLOGY INPATIENT & OUTPATIENT GROWTH PROJECTIONS, 2013-2018 • There will be less inpatient utilization as a result of service line trends, utilization, disease management, technologies and healthcare reform. 5 Source: Truven Health Analytics Inpatient & Outpatient Estimates

6. Healthcare Reform Has Become “Patient Central” Physicians Hospitals • Today (or yesterday) • Independent decision making • Variability in physician practice • Acute or episodic patient care • Volume focused • Today (or yesterday) • Specialty Care (Service Line) Focused • Hospital centric programs & decisions • Volume focused • Market share focused • Proactive Management • Coordination of Patient Care • Full Continuum of Care • Pre-Hospital Condition Analysis • Post Hospital Monitoring • Total Person Care • Tomorrow (or Now) • Team based patient management • Evidence based medicine • Population and disease management • Control of cost & quality outcomes • Tomorrow (or Now) • Physician collaboration • Population management • Value based care • Risk based payment alternatives • Reduced utilization and cost of care Photo Source: Energy.gov http://energy.gov/articles/sec-chu-travels-houston

7. Alignment Models and Degree of Collaboration Achieved It may take more than one model to achieve alignment High Alignment ACO Bundled Payment Co-Management Employment Patient Centered Medical Home I/T EHR Linkage PSA MSO Foundation Joint Equity JV Recruitment Assistance Medical Director Joint Operating Agreement (PHO) Leadership Council Low Alignment Real Estate Partner Acquisition without Employment

8. CARDIOLOGY – CARDIOVASCULAR COMPATABLE ALIGNMENT MODELS • Co-Management • Bundled Payments • Centers of Excellence • Narrow Networks • Employment • Joint Ventures • PSA or Joint Equity Models • PHOs

9. Co-Management Model Physician Investors LLC Hospital Management Agreement Co-Management Company Benefits of Alignment Benefits of Alignment Improved quality & efficiencies of service line • Compensated for medical • administrative duties Improved patient Satisfaction Incentive bonus for achieving quality & efficiency targets Improved operations Physicians collaborate & change results are improved patient care Joint Board Low cost, high quality, value based delivery of specialty care Reduced waste or utilization Finance Committee Quality Committee

10. BUNDLED PAYMENTS Post Acute

11. CARDIOLOGY – CABG INPATIENT TRIGGER TOTAL REIMBURSEMENT Facility payments represent ~85% of total inpatient reimbursement Source: Truven Health Analytics utilizing CMMI LDS Data 2008-2009 for all patients in local service area triggered in any facility

12. Where is your hospital? • Variation in hospital post acute use rates following CABG : CMMI ‘converged episode definition’ Source: Medicare Standard Analytical Files, 2010 National Discharges

13. THE EMPLOYMENT MODEL:Understanding The Physician Goal Seeking Employment Because? • Need Hospital Partner For PPACA • Need Financial Stability – Practice Level • Need To Grow The Size Of Practice To Cover Overhead • Internal Conflicts • Retiring Partners – Can’t Fund Buyout • Unable to Sustain Current Compensation

14. Time Investment in Practice Acquisition Process Post-Acquisition Transition Time Pre-Acquisition Analysis Time Pre-Acquisition Relationship Time Post-Acquisition Communication Time

15. INTEGRATION DEFINED FTC DEFINITION OF CLINICAL INTEGRATION: • An active and ongoing program to evaluate and modify practice patterns by the networks’ physician participants and create • A high degree of interdependence and cooperation among the physicians to control costs and ensure quality. This program may include: • Establishing mechanisms to monitor and control utilization of healthcare services that are designed to control costs and ensure quality of care; • Selectively choosing network physicians who are likely to further these efficiency objectives; and • The significant investment of capital, both monetary and human, in the necessary infrastructure and capability to realize the claimed efficiencies.” The FTC said it will not pursue action against clinical integration arrangements if they meet a three-part test: • The network’s program of clinical integration is likely to achieve “real” integration of providers; • The initiatives of the program are designed to achieve likely improvements in healthcare cost, quality and efficiency; and • Joint contracting with health plans is “reasonably necessary” to achieve the efficiencies of the clinical integration program.

16. CLINICAL INTEGRATION • Today’s purpose for clinical integration: • To create value for Patients, Payors, and Employers • Improved Quality • Reduce Expense • Excellent Patient Experience The Triple Aim

17. CENTERS OF EXCELLENCE, NARROW NETWORKS & SERVICE LINE REDESIGN STRATEGIES • Similar concepts – All require comprehensive collaboration between physicians and hospitals • Can include both employed physicians and independent practices • Shared savings potential • Market share growth potential from payors • Requires access to data, measurement of each physician’s performance against others, and targets

18. Centers of Excellence: • Delivery of High Quality Care • Consistency in Process • Helps Hospitals Reach Quality • Standards including Federal • Reimbursement (VBP) • Reduces Variability, Which • Improves Outcomes • Increases Physician Alignment • Attracts Physicians • Drives Market Share • Improves Patient Satisfaction • Best Practices Developed at COE • can be shared or replicated in other • Service Lines • Differentiates Hospital from • Competitors • Aligns organization for narrow network Centers of Excellence

19. Narrow Networks Narrow Networks • Employers driving trend - payors responding by selecting highly efficient providers at the best price for their networks • Health plan utilizing their data to determine who are the highest quality and most efficient providers in market • Some Narrow Networks contain < 50% of full network of providers • Health Plans are steering patients into highly efficient providers with PCMH & ACOs • Narrow Network designed to include only specific providers and hospital demonstrating ability to meet Quality and Efficiency criteria • Very Narrow Networks do not allow employee/patient choice – must pay out of network pricing

20. SERVICE LINE REDESIGN Develop Physician Leadership & Skills Compensation Based on Achieving Key Department Performance Metrics Physician Led Standardization of Care Transformation Proactive Care Management Across & Elimination of Silos Alternative Payment Models to Accelerate Change – Payor Driven Market Share Dyad Management of Service Line Data And Information Technology to Support Metrics Patient Co-Management, Hand-Off, Discharge: Improved Transitions Quality Improvement and Measurement Program

21. How Is Quality Defined? Definition: The Institute of Medicine defines healthcare quality as the extent to which health services provided to individuals and patient populations improve desired health outcomes. The care should be based on the strongest clinical evidence and provided in a technically and culturally competent manner with good communication and shared decision making. Total quality is best defined as an attitude, an orientation that permeates an entire organization, and the way in which that organization performs its internal and external business. People who work in organizations dedicated to the concept of total quality constantly strive for excellence and continuous quality improvement in all that they do. The Definition of Healthcare Quality and the Institute of Medicine Pelletier & Beaudin, PhD, Q Solutions: Essential Resources for the Healthcare Quality Professional, Second Edition, (Glenview, IL: National Association for Healthcare Quality, 2008); p.3.

22. QUALITY • Quality Is Subjective – Many Ways To Measure: • Single Diagnosis Or Condition • Top Deciles or National Benchmarks • ALOS • Complications • Mortality • Patient Satisfaction • Use of Evidence Based Medicine • Process Measures Related To Quality: • Use of Electronic Health Record Or Hospital Computerized Physician Order Entry (CPOE) • Reporting Quality - PQRS

23. Why Measure Your Organization To The Top Performers? Mortality Rates • When Compared • to National Norms • the Mortality for • this Hospital looks • good • When compared • to the Top Deciles, • the performance • has a long way to • climb Observed Hospital Performance National Average Top Deciles /Source: Truven Health Analytics blinded client data .

24. LENGTH OF STAY: OVERALL EXAMPLE Length of stay (LOS) is 6% higher than the national average and 31% higher than the top decile.

25. PHYSICIAN PERFORMANCE FOR TOP LOS OPPORTUNITY EXAMPLE Within Heart Failure, the ALOS of two physicians are statistically better than expected. What are they doing differently than the others?

26. Physician Variability Excess Length of Stay is Related To Physician Variability

27. Are Certain Specialties Performing Better for the Same Diagnosis? EXAMPLE Hospitalists demonstrate a lower length of stay and cost when treating heart failure. Hospitalist Performance Cardiologist

28. Accounting for Acuity, Are Some Physicians Performing Better than others? EXAMPLE After risk adjustment, the pattern remains.

29. HIGH SATISFACTION INTEGRATION PROCESS Start By Assessing The Differences Between Physician Practice Culture/Practice Style And Those Of The Hospital:

30. CLINICAL INTEGRATION

31. BEST PRACTICE ELEMENTS First: Integration Requires A Strategy! • Trust – define your strategy, know expectations and role of each stakeholder – Trust is built by consistently doing what is expected of you • Measure – achieving wins or accomplishments builds trust in the process and the people – know where you started and where you want to go • Transparency – Data, Information, Communication, et al must be transparent for each side to trust and continue to make lasting changes • Physician Authority – Allow the physician to create value by providing them the responsibility and authority to utilized clinical expertise for creation and implementation of protocols, evidence based medicine, or other clinical guidelines • Physician Leadership – Physicians as partners not employees – physician led and governed provides for better patient care, better physician satisfaction and more collaboration on key clinical initiatives – the motivator • Compromise – The ability to effectively communicate, negotiate and compromise for the good of all is a skill that is often overlooked on both sides

32. SUMMARY Successful Transitions Start With Commitment Of Time and Willingness To Understand Each Others Goals And Culture Payment Models That Create Mutually Agreeable Goals Are Best Ways To Create An Environment Of Collaboration Utilized Physicians Skills - Tap Into Rich Quality, And Clinical Transformation Resources By Providing Physician Leadership Opportunities Set Goal For Top Performance And Benchmark Against Top Deciles Understand That Clinical Integration Requires An Equal Partnership Relationship Between Physicians And Hospitals To Be Successful Support All Clinical Integration Process With Meaningful And Transparent Data

33. QUESTIONS ? THANK YOU! Carol E. Alexander Senior Principal Truven Health Analytics Carol.alexander@truvenhealth.com

34. APPENDIX

35. ADVANTAGES & DISADVANTAGES TOPHYSICIAN ALIGNMENT MODELS Source (partial): Journal of Vascular Surgery Vol. 51, No. 4; April 2010; 51: 1046-53, Satiani and Vaccaro