Presentation Transcript

1. MGMA ANNUAL CONFERENCE TO INTEGRATE OR NOT TO INTEGRATE: THAT IS THE QUESTION – PART 1 OCTOBER 7, 2013
2. OBJECTIVES Identify forces driving practices to evaluate integration options Analyze methodology to determining your practice’s strategic vision Compare strategies and outcomes between one group that integrated and one that remained independent
3. Physician Integration What is driving the need to Employ Physicians? Need to demonstrate to: Payers/CMS/Employers and Consumers that our Quality isat the highest level Impending Payment Reform Core Measures Readmissions Value Based Purchasing Chronic Care Management Post Acute Care & Cost Market Share driven to high performance providers Change in Payment Models –How to transition from FFS and still cover fixed cost? New Payment Models don’t provide more revenue; success is achieved by increasing margin Success will be driven by collaboration not competition How do we all align for this purpose? Can it be done with independent and employed physicians?
4. WHAT DOES IT MEAN TO BE INTEGRATED? ALIGNMENT CLINICAL INTEGRATION Hospitals and Physicians jointly contract for commercial insurance Employment has less antitrust issues as the hospital and physician are financially integrated Can be achieved with non-employed physicians Focuses on quality and clinical performance improvement Mutual goals and incentives for hospital and physicians Does not require employment A model that encourages or requires collaboration for change Co-Management of Service Lines Bundled Payments ACOs Employment of Physicians Clinically Integrated PHO (Contract) IPA
5. CMMI Demonstration Projects Targeted At Fostering Integration
6. Hospitals and Physicians Are Positioning For Healthcare Reform Through Employment Source: MGMA Physician Compensation and Production Survey: 2012 Report Based on 2011 Data. Used with permission from the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112.  www.mgma.com.
7. By 2014 It is Estimated that 75% of Physicians Will be Employed 2,710 Searches between April 2011 and March 2012 Yielded 1% for Solo Practices Compared to 22% in 2004 Source: Merritt Hawkins
8. Physician Employment Challenges Alignment
9. Physician Enterprise Investment Cost
10. Buying A Physician Practice is Expensive! Transitioning to Single IT Platform Status Quo Developing an ACO Work In Progress: Joint Contracting/Risk Work In Progress: Evidence Based Medicine or PCMH
11. Net Loss/Profit Per FTE Physician 2010 MGMA Net Loss 2011 MGMA Net Loss Median ($174,503) Median ($189,910) N: 183 N:189 75th Percentile ($71,450) 75th Percentile ($81,092) 25th Percentile ($282,246) 25th Percentile ($273,256) MGMA Cost Survey published 2012 & 2011reSource: Cost Survey for Multispecialty Practices: 2011 Report Based on 2010 Data and Cost Survey for Multispecialty Practices: 2012 Report Based on 2011 Data. Used with permission from the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112.  www.mgma.com. ported data from 2011 and 2010
12. Top Factors Contributing To Negative Hospital-Employed Physician Financial Performance
13. Generational Difference Highest Productivity Baby Boomers: 1946-1964 55-59 Generation X: 1965-1983 Generation Y: 1984-2002 Chart Source: Truven Pulse Data 2012
14. Hospital Employed vs. Physician Owned Source: MGMA Cost Survey for Multispecialty Practices: 2012 Report Based on 2011 Data. Used with permission from the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112.  www.mgma.com.
15. Acquisition and Employment From The Physician Perspective
16. Physician Considerations Declining Physician Income and Rising Practice Expense Driving Physicians To Seek Employment Investment in Information Technology Younger Physicians Not Interested in “Traditional Practice” – Expense, and Lifestyle Hospitalists Have Changed the Characteristics of the Practice Specialty Group Employment Changes Perception Of Hospital Employment Accountable Care Act Has Or Will Increase Need For More Business Expertise to Manage a Practice
17. What Physicians are Seeking
18. Acquisition and Employment From The Hospital/Health System Perspective
19. Hospital Considerations Need for Physician Collaboration to Advance Healthcare Reform – Quality Initiatives – Clinical Integration PCPs Drive New Models, Hospitals Need Strong PCP Network Market Share and Competition Driving Early Acquisition Service Line Strategy Support Existing Medical Staff Looking For Employment Contracting – Financial Integration Embracing “Physician Leadership”
20. What Hospitals are Seeking:
21. Acquisition
22. Understanding The Group’s 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
23. Large Group Infrastructure
24. Evaluate The Practice 1 How is group performing today: Overhead? Revenue Cycle? I/T infrastructure? 2 How do they govern themselves? If solo or small practice – physician leadership? 3 What do we know about physician quality? PRQS measures? Hospital quality? 4 What “Best Practice” can be gleaned from target group and be used to benefit hospital group? 5 Managed Care contracts- better or worse?
25. The Courtship: 5 Success Factors hospitalS should consider Before acquisition
26. Communication Success Factor # 1 Build a Relationship And Understanding Of Each Other Before Negotiations Begin Leave Egos At The Door Acknowledge Any Past History or Relationship Issues Be Prepared – Don’t Change Detail Of Offer
27. Physician Compensation Success Factor # 2 Method Of Compensation and Model Time Frame of Guarantee How and When Can Incentive Pay Be Earned
28. Governance Success Factor # 3 How Is Group Represented? Physician Leadership Board / Committee Structure Operating Committee Decision Making Local Management
29. Expense Accountability Success Factor # 4 Expense Structure After Guarantee-How Will It Affect Compensation? Allocation of Hospital Expense To Medical Practice Cost Allocation by Physician/Department: Method Used Real Estate / Rent-Lease Expense; How Will It Be Allocated to Physicians? Future Capital Purchases; How Are Expenses Allocated
30. Letter Of Intent Success Factor # 5 Don’t Assume Everyone Knows The Process; Be Detailed Does The Group Know Enough About You To Offer Exclusivity? Non-Compete & Restrictive Covenants Representations & Warranties Term and Expense
31. More detail is better Use Of Standard Benchmarks Hard Assets Intangible Assets Capital Leases Real Estate Value For Physician & Mid-Level Work Force In Place Accounts Receivable & Escrow Accounts
32. The Marriage: It TAKES TWO 3 Areas of Continuous work
33. The Honeymoon Discontent Can Creep In After The Transaction: When Small Changes Are Made That Are Inconsistent To Verbal Promises or Agreements When Communication Is Lacking Sometimes Compromise On “Surprises” Is Best Action When Attitude of “Your Employed Now” Takes Over When “Transition Requirements” That Were Not Discussed Impact Physician Work Flow or Productivity
34. After The Close Prepare, Communicate, Be Consistent in Message Remember The Staff Are Less Informed Than The Physicians Approach the Transition with Mutual Respect – Culture is Key Physician Practice Management Is Different Than Hospital Management Hospital Management Is Different Than The Physician Practice Use Your Best Change Management Staff On The Transition Team Capitalize on the Talent, Experience, Infrastructure and Resources of The Practice Identify Best Practice Opportunities – Don’t Change Process For The Sake of Change Remember That Physician Autonomy Is Important – How Do You Coexist Under Employment Model and Still Give Physicians a Sense Of Autonomy?
35. Follow Through Follow Through On All Commitments Communicate Often and In Advance On Physician Compensation Performance – No Surprises at End of Guarantee Period Make Effort To Integrate Group To Others In Hospital Physician Enterprise Make Effort To Integrate Staff to Other In Hospital Physician Enterprise Physicians: Make Effort To Embrace New Role and Environment
36. Now We Are Employed, What Next?
37. Centers of Excellence All Efforts Require Hospital-Physician Collaboration Narrow Networks Bundled Payments
38. 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
39. 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
40. The Definition of High Value Physician Has Changed High Volume Admitters Utilized Ancillaries Referral to Specialists Loyalty: non-splitter for Fee-for-service Clinical Quality Evidence Based Medicine Physician Leadership Qualities & Alignment Potential Controlled Utilization Loyalty: non-splitter for clinical integration 2000 Physician Characteristics 2015 Physician Characteristics
41. Identifying High Value Physicians is an Evolving Process Complications Mortality Core Measures Readmissions Patient Safety Patient Satisfaction Physician Relationship Management Enhancing MD liaison programs Diabetic management Outpatient metrics PQRS HEDIS Practice Benchmarking Payer mix Efficiency, including LOS Utilization Cost
42. The Real Value of An Acquisition
43. High Value Physician Check List Patient Centered, Quality Outcome Focused Adaptable to Evidenced Base Medicine, and Technology Waiting Out for Retirement Under Guaranteed Income Has physician leadership qualities- Collaborates with Hospital Based Physicians and PCP/Specialists Accountable for Cost and Quality – good performance risk partner Quality Issues that are not improving Has demonstrated behavior in quality performance Referrals within the network Does the Physician/group help prepare you for narrow networks?
44. To Integrate Or Not To Integrate: That Is The Question! Consider Integrating Consider Remaining Independent Strong Physician Governance Positive Financial Position Ability to Respond and Participate in Reform Models Can Partner with Hospital And Other Providers Through Alternate Means Physician Compensation and Culture Can Adapt to New Generation Work Life Requirements Strong Practice Management Expertise Favorable Contracts and Ability to Transition From FFS Unable to manage practice complexity under reform Lacking Physician Governance Unable To Meet Fixed Costs Unable to Recruit and Replace Physicians More Leverage Under Hospital Ownership for Contracts Hospital (competing or other) Employment Has Eroded Group Practice or Partners Aging Physician Group Lack of Capital/Cash To Invest
45. Thank You!Carol E. AlexanderSenior PrincipalTruven Health AnalyticsCell: 404-556-7874carol.alexander@truvenhealth.com