Where Healthcare Is, Where It’s Going, and How You Can Prepare for the Future

1. Where Healthcare Is, Where It’s Going, and How You Can Prepare for the Future West Virginia MGMA Conference Roanoke, West Virginia September 18,2014 David N. Gans, MSHA, FACMPE Senior Fellow Industry Affairs Medical Group Management Association The presenter has nothing to disclose.

2. Healthcare Is Changing - What Will Happen Next? The future ain't what it used to be. Yogi Berra Baseball Hall of Fame Player, Coach, and Manager

3. Learning Objectives This session will provide you with the knowledge to: • Define the major issues affecting medical practices today • Describe the issues that will affect healthcare in the future • Describe how you can prepare your practice to succeed now and tomorrow What do you want to accomplish with today's presentation?

4. Learning Objective 1 • Define the major issues affecting medical practices today

5. Not Every Current Issue Is New “The biggest problem directly facing this group today is to see that the cost of producing professional service is kept within the ability of the average citizen to pay.” Harry Harwick, Business Manager, Mayo Clinic • 1st Annual Conference of Clinic Managers • Madison, Wisconsin • November 1, 1926

6. Healthcare Is and Will Continue to Be a Significant Portion of Federal Spending

7. Federal Health Expenditures Are Continuing to Increase -- Maybe

8. Practice Costs and Inflation Are Increasing More than Medicare Payment

9. There Is a Shortage of Providers – and It Will Only Get Worse • 32 million Americans will acquire health care coverage under the ACA • 36 percent growth in the number of Americans over age 65 • Nearly one-third of all physicians are expected to retire in the next decade while medical schools will expand by 7,000 graduates every year • The shortage is in both primary primary care and specialists, including a 2015 shortfall of 33,100 cardiologists, oncologists, and emergency medicine doctors Physician Shortages to Worsen Without Increases in Residency Training, AAMC Center for Workforce Studies https://www.aamc.org/download/150584/data/physician_shortages_factsheet.pdf

10. Recruiting Qualified Staff Is Still Easy, But Changes Are Coming

11. Women Are an Increasing Proportion of the Workforce • Women have surpassed men in terms of completing secondary and post-secondary education • 2012 high school dropout rates were 7.3% for males and 5.9% for females • In 2016/2017, women are projected to earn 64.2% of Associate's degrees, 59.9% of Bachelor's degrees, 62.9% of Master's degrees, and 55.5% of Doctorates • Access to health care services and health insurance are critical benefits for women • The mother generally controls health care for the family • Employers wanting to retain and attract skilled employees will look at health insurance as a necessity • As more women have health insurance, demand for primary care services will exceed current levels National Center for Education Statistics: http://nces.ed.gov/programs/digest/d07/tables/dt07_258.asp

12. Staff Costs and General Operational Costs Are Increasing Source: MGMA Cost Survey: 2014 Report Based on 2013 Data

13. Contractual Adjustments Are Increasing Source: MGMA Cost Survey: 2014 Report Based on 2013 Data

14. What Will the Future Healthcare Environment Look Like? • Total healthcare costs will continue to increase, but at a reduce rate of change • Practice operating expenses will continue to increase at a greater rate than any increase in payment • The percent of patients with Medicare and Medicaid will increase • The shortage of primary care and specialty providers will get worse • Businesses will accommodate the needs of a larger female workforce • Each of these will impact physicians and provide an opportunity for organizations who are prepared to act

15. Learning Objective 2 • Describe the issues that will affect healthcare in the future

16. The Affordable Care Act Is Changing Healthcare Financing

17. Technology Will Change Healthcare In Ways We Cannot Imagine The hospital room of the future by Eric J. Topol, MD, Director of Scripps Translational Science Institute Patient Room 2020 by NXT Health

18. Some Change Is Already Happening

19. “Start Trek” Medicine Is Coming

20. Consumer Products Will Replace Medical Telemetry

21. Telemetry Will Collect Terabytes of Data Google Smart Contact Lens One reading per second X 60 seconds X 60 minutes X 24 hours = 86,400 readings per day and 31,536,000 readings per year

22. Understanding the Human GenomeWill Enable True Personalized Medicine

23. Care Will Have Multiple Delivery Points

24. Payment Will Reward Outcomes and Patient Experience Not Just the Volume of Service

25. Quality Will Be Guaranteed

26. Learning Objective 3 • Describe how you can prepare your practice to succeed now and tomorrow

27. How Medical Practice Administrators Rate Their Current Challenges MGMA 2014 Medical Practice Management Today Research

28. What You Do Today Will Determine Your Future Good management is more important than ever • Know your revenue and costs • Know what you cost the insurer • Optimize use of technology to increase efficiency and improve quality • Know your quality metrics • Analyze payer contracts • Deliver a better patient experience • Prepare for new payment mechanisms

29. Know Your Practice’s Revenue and Costs • Benchmark your group’s financial performance • Evaluate the revenue cycle of the practice and for individual payers • Total Accounts Receivable • Mean Payment per Total RVU • Mean Days from Billing to Payment • Percent of Rejected Claims or with Adjusted Payment • Evaluate costs in the context of improving productivity and profit • Study workflow to increase practice efficiency

30. Know What You Cost • Analyze the cost (to the insurance company and patient) per procedure and per case • Track the days of hospitalization by DRG • Know the cost of infused chemotherapy drugs • Know the cost of prescribed drugs and their generic equivalents • Know the cost of surgical implants • Know the cost of referrals to specialists • Be able to describe your costs to insurers, ACOs, and capitated practices who accept professional service risk • Multispecialty practices should be prepared for global payment contracts • Specialists should be prepared for bundled payment and requests to “subcap” services

31. Implement Technology Implement and optimize use of an electronic health record (EHR) to qualify for the Health Information Technology for Economic and Clinical Health (HITECH) Act “meaningful use” incentive Utilize your EHR to implement patient population quality measures such as chronic disease registries Utilize your EHR to track the appropriate patient experience and quality measures proposed for Accountable Care Organizations Exchange clinical information with other practices and hospitals Adopt clinical and administrative technologies to improve patient care and service

32. Know Your Quality Measures Access measures (e.g., waiting times, 3rd next available appointment) Process measures (e.g., HbA1c testing (2X) annually) Clinical outcome measures (e.g., HbA1c in poor control) Patient experience measures (e.g., CAHPS patient experience survey, patient satisfaction survey) Patient safety measures (e.g., patient falls, catheter associated UTI) Preventive health measures (e.g., influenza immunization rate, blood pressure measurement) Utilization measures (e.g., 30-day hospital readmissions emergency room use) Patient reported health outcome measures (e.g., SF 12 health status questionnaire)

33. Analyze Payer Contracts

34. Deliver a Better Patient Experience • Use your EHR to assess quality of care and to schedule preventive services for individual patients • Implement patient registries to evaluate surgical outcomes, treatment protocols, and the health status of patients with chronic disease • Improve access by extending hours • Implement electronic communications with patients, hospitals and other providers • Expand patient education to include activity and nutrition counseling. • Engage patients to accept personal responsibility for their care • Evaluate being a Patient Centered Medical Home (PCMH) or “PCMH Neighbor”

35. Prepare for New Payment Mechanisms • Shared Savings, Bundled Payment and Global Payment methods make physicians and hospitals, not insurance companies or CMS, accountable for quality and utilization (efficiency/cost) • Rewards coordination of clinical care among providers • Assesses the quality of healthcare to include patient experience, outcomes, and health status • Rewards outcomes not the volume of services • Incentives are designed to encourage providers to deliver efficient and quality care • Evaluate your systems for your ability to provide better quality, lower cost care

36. In the Future, the Successful Practice Will Balance Value and Costs • Quality • Both financial and non-financial metrics are needed • Quality and patient experience metrics will be the basis for payment • The practice’s information system will need to aggregate data from multiple sources and time periods 36

37. Medical Groups Need the “Right Stuff” The future competitive environment of accountable care will reward practices who have: Lower utilization Better quality Better patient satisfaction Better patient outcomes Lower cost to the insurer Which are the same factors that enable a practice to thrive in today’s fee-for-service payment system Good management will make the difference

38. Who Will Succeed in the Future? It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. Charles Darwin It is not necessary to change. Survival is not mandatory. W. Edwards Deming We are confronted with insurmountable opportunities. Walt Kelly

39. Are there any questions? David N. Gans, MSHA, FACMPE Senior Fellow Industry Affairs MGMA dgans@mgma.org 303.799.1111 x1270

40. Since 1926 the Medical Group Management Association (MGMA) has been the leading association for medical practice administrators and executives. MGMA assists practices improve performance with education, advocacy, networking opportunities, and robust performance information. Through its industry-leading ACMPE Board Certification and Fellowship programs, MGMA advances the profession of medical practice management. Through its national membership and 50 state affiliates, MGMA represents more than 33,000 medical practice administrators and executives in practices of all sizes, types, structures and specialties. MGMA is headquartered in Englewood, Colo., with a Government Affairs office in Washington, D.C. About MGMA

41. Biographical Summary Mr. Gans is a national authority on medical practice operations, patient safety, quality, payment methodologies, and health systems organization. He advises the Medical Group Management Association staff and members on all areas of medical group practice, sharing expertise through personal communications, workgroups, presentations, webinars, member community postings, and journal articles. Mr. Gans received his Bachelor of Arts degree in Government from the University of Notre Dame, a Masters of Science degree in Education from the University of Southern California, and a Master of Science in Health Administration degree from the University of Colorado. Mr. Gans retired from the United States Army Medical Service Corps in the grade of Colonel, U.S. Army Reserve, is a Certified Medical Practice Executive and a Fellow in the American College of Medical Practice Executives. Address: MGMA, 104 Inverness Terrace East, Englewood, CO 80112 Phone: (303) 799-1111, ext. 1270 E-mail: dgans@mgma.org