Thriving Among the New Realities of Pay/Risk

Exclusive to Healthcare. Dedicated to People. SM

Don Seymour
1
Don Seymour is an Executive Vice President & Practice Leader for INTEGRATED Healthcare Strategies’ Strategy &
Governance practice. Don has worked with healthcare organizations of all types and sizes on strategy, governance, and
organization planning, as well as a broad range of performance and medical staff issues.
Don frequently presents on a variety of subjects related to senior leadership in healthcare organizations. In addition to
being on the faculty of The Governance Institute he has made presentations to the American Hospital Association (AHA),
Fortune 100 Companies, and a variety of other national, state and regional groups. He serves as lead faculty for the
American College of Healthcare Executives seminars on Culture, Process & Outcomes-Where Strategy Begins and
Strategic Growth In The Reform Era. His articles have been published in a number of journals including BoardRoom
Press, E-Briefings, Hospitals & Health Networks, Trustee and Spectrum. He has served as Executive Editor for
Futurescan™ (AHA’s annual healthcare trends publication) since 2004.
Prior to joining INTEGRATED, Don founded and led an independent consulting firm. Don is a past president of the Society
for Healthcare Strategy & Market Development of the American Hospital Association, the New England Society for
Healthcare Planning & Marketing and the Metropolitan Boston Society for Healthcare Planning & Marketing. He is also a
past chair of the American Association of Healthcare Consultants. In 2008 he was the recipient of the SHSMD Award for
Individual Professional Excellence.
Professional Highlights
•  Board assessment for a major oncologic hospital & research organization
•  Developed a bottoms-up, physician led, clinical plan for a New York multi-hospital system.
•  Assisted a New England-based multihospital system (hubed around an academic medical center) in transitioning
from a holding company model to an effective form of system governance.
•  Analyzed statewide strategic partnership opportunities for a mid-Atlantic, university affiliated medical center.
•  Board leadership retreat focused on community outreach/support in the wake of Katrina for a New Orleans Parish
Hospital.
•  Facilitated a merger among three Massachusetts hospitals
He received his M.B.A. from the Johnson School at Cornell University and his Bachelors Degree from George Mason
University.
Don Seymour will be based out of our Boston office and can be contacted at Don.Seymour@ihstrategies.com, or
at 612-339-0919.
Don Seymour
Executive Vice President
& Practice Leader
Governance and
Leadership


William F. Jessee MD, FACMPE
2
William F. Jessee, MD, FACMPE joined INTEGRATED Healthcare Strategies in October, 2011, after serving for more than
12 years as President and Chief Executive Officer of the Medical Group Management Association (MGMA). He also
holds an academic appointment as Clinical Professor of Health Systems, Policy and Management at the University of
Colorado School of Public Health.
Dr. Jessee is one of the nation’s leading experts on physician services management and hospital-physician integration. In
particular, he is skilled in the development and implementation of strategies for creating aligned economic interests among
physicians, hospitals and payers. He is also widely recognized as an expert on health policy issues, and the role of
governance in quality improvement and patient safety.
Before joining MGMA, Dr. Jessee was Vice-President for Quality and Managed Care Standards at the American Medical
Association. His experience also includes service as CEO of a regional integrated delivery system in Louisville, Kentucky;
as a Vice President of the Joint Commission on Accreditation of Healthcare Organizations; and as corporate Vice
President for Quality Management at Humana Inc. From 1980 -1986, Dr. Jessee was a full time academician as Associate
Professor of Health Policy and Administration at the University of North Carolina, School of Public Health, Chapel Hill.
Professional Highlights
•  More than twelve years leading MGMA, a national association for managers of medical group practices.
Extensive experience in all facets of the management of cost-effective, profitable, high quality medical groups,
achieving high levels of patient and physician satisfaction.
•  Nine years as a board member of Exempla Healthcare, a three hospital system. Extensive experience in
physician practice acquisition, strategic integration of physician services, and development and use of metrics for
improving individual and organizational performance.
•  In-depth knowledge of hospital board, management, and clinical staff responsibilities for patient care quality and
safety.
•  Extensive experience in developing strategic plans and initiatives for achieving the clinical and financial
integration necessary to meet payer and purchaser demands for cost-effectiveness, quality, safety and patient
satisfaction.
•  A nationally well-known educator on physician leadership, hospital and health system governance, and ACO
development and implementation.
An honors graduate of Stanford University, Dr. Jessee received his medical degree at the University of California, San
Diego School of Medicine. He took residency training in pediatrics at Indiana University Hospitals, Indianapolis, and
completed his training in preventive medicine at the University of Maryland Hospital, Baltimore.
Dr. Jessee works out of the Minneapolis office and can be contacted at bill.jessee@ihstrategies.com, or at
612.339.0919.
William F. Jessee MD,
FACMPE
Senior Vice President and
Senior Advisor


What We Plan To Cover...
What are the forces driving reductions in provider revenues and increases in provider
risk?
What are some effective strategies for not only coping, but thriving in this new
environment?
•  Physician/hospital integration
•  Risk-bearing joint ventures
•  Hospital-owned health plans
•  Population health management
What are the roles of the board and management in the volume to value transition?
3


WHAT ARE THE FORCES DRIVING
DECREASED REVENUES AND
INCREASED RISK?
4


National Overview
•  Everyone will be paid less per increment of service and challenged to assume greater risk
•  Acute care volume will shift from inpatient to ambulatory venues
•  Consumerism will grow (Boomers and newly insured)
•  Population management will be implemented … slowly; near term focus still needs to be on volume
•  Provider cultures will be challenged; everyone will have to:
–  Do more with less
–  Move away from hospital centric model
–  Embrace a patient centric approach
5

Exclusive ��to Healthcare. Dedicated to People. SM

Surviving The Ordeal
6


Strategic Oversight
7
MISSION
* KSIs: Key Strategic Issues
EXTERNAL TRENDS
INTERNAL CAPABILITIES
Can we finance our plans?SOURCES AND USES
Do we have
a plan for
each KSI?
What do we want
to look like in
5 -10 years?
VISION
What are the 5
most important
things we will
do to support
the Mission and
Vision?
IMPLEMENTATIONKSIS*
How do we provide the greatest community benefit?
How will our
world change?
What do we have
going for us?


ACA Stops Short (For Now)
•  Three major problems: uninsured, cost and quality
•  The ACA primarily addresses the uninsured
•  The ACA does not ensure that care is effective, high-quality, and affordable for recipients or
taxpayers
8
NEJM -- Interview with Drs. Gail Wilensky and John McDonough


Private Payers & Employers Not Waiting
•  Narrow networks with performance “bonuses”
•  HDHP with savings option
•  Channeling: Wal-mart, Boeing & Darden
9


New Competitors/Collaborators
•  Wal-Mart & CVS
•  Apps
•  Top of license
•  Taxable hospital companies
•  Large multi-specialty groups (MSGs)
10
Change comes from the outside!


STRATEGIES FOR RESPONDING TO
THE NEW ENVIRONMENT
11


Hospital Staffs;
Some Academic /
Faculty Practices
Integrated
Delivery Systems;
Henry Ford
Mayo
Geisinger
Ochsner
Multispecialty
Groups +/-
Hospital Affiliations
Marshfield Clinic
Harvard Vanguard
Vanderbilt U
Independent
Physicians
IPAs
Single Specialty
Groups
Hospital Chains
Single MDs
Small Groups
Single Hospitals
Less Integrated or Organized Systems
SPECTRUM OF INTEGRATION ACROSS AMERICA’S HEALTHCARE DELIVERY SYSTEM
More Integrated or Organized Systems
Fully Integrated
Systems
Kaiser
Group Health
Co-op
VA
www.amga-capp.org/deliverysystem.html
“Typical”
Community
Hospital
CAPPs
Physician / Hospital Integration
12


Two distinct integration challenges
•  Structural integration
•  Clinical integration
Numerous approaches to structural integration
•  Physician employment
•  Professional services agreements
•  MSO services for independent physicians
•  PHO formation
•  ACO formation or participation
•  Various joint ventures
No “one size fits all” solution
13


Clinical integration more complex than structural
•  Will generally require significant new investment
–  Information systems
–  New personnel (care coordinators, nutritionists, home care specialists, etc.)
–  Patient-centered medical homes (PCMH)
•  For most physicians, it is a new way of providing care and will require new referral patterns,
communication, follow-up, “tickler files”, patient reminders, etc.
•  Cuts across multiple sites including primary care and specialist offices, hospital, post-acute settings,
home, etc.
14


Establish MSG* Member Criteria
15
* Multi-Specialty Group
1.  Provides high quality patient care as defined by best practices
(not necessarily the MEC)
2.  Meets/exceeds patient expectations
3.  Operates in a financially responsible manner
4.  Respects clinical autonomy but adheres to best practices
5.  “Captures” appropriate referrals within the network
6.  Leverages information technology


The up side:
•  Improved population health
•  Reduction in total costs of care
•  Improved results and patient satisfaction
•  Reduced risk in “at risk” payment schemes
The down side:
•  New expenses, both initial and ongoing
•  Requires cultural change
•  Reduces inpatient revenues
•  MAY reduce ambulatory revenues, as well
•  May or may not be rewarded by payers
16


Risk Bearing JV Options
•  JVs with insurers
•  Hospital owned private ACOs, with or without a PHO
•  Medicare ACOs
17


Risk Bearing JVs Challenges
• One organization’s revenue is another’s expense
• Providers know little about actuarial risk
• Providers and insurers know little about population management
• Reimbursement algorithms don’t support population management; neither do IT platforms
• 80% of cost is related to six chronic diseases
• Many chronic disease patients don’t have an HDHP; those that do will burn through the out-of-pocket
incentives in a month
• Many patients aren’t compliant
18


Hospital-owned Health Plans
A very high risk strategy...
•  ...but also one with high potential rewards
•  A Medicare Advantage plan receives $800-900 monthly for each enrollee -- for 10,000 enrollees,
that translates to $96M to $108M per year
•  Many organizations starting with an ACO for their employees, then expanding to licensed health
plan
•  IF you can manage care to produce safe, high quality, satisfying care within the capitated amounts,
there is significant upside potential
19


MANY caveats and potential pitfalls
•  Significant start up costs
•  Requires extensive expertise outside the traditional portfolio of hospital leaders
•  Expect losses for first several years
•  Size is essential---small doesn’t work
•  Beware of adverse selection
•  Extensive clinical integration also essential
•  Other payers will view you as a competitor
•  Data needs are extensive
20


Extensive merged relational databases are essential...
...as are tools to extract reports you need on an almost real-time basis (“predictive analytics”)
Some examples:
•  What does it cost you to produce a total hip replacement?
•  How much variation is there in that cost among your orthopedists?
•  What does it cost to manage a diabetic for a year?
•  How much variation is there in that cost among your PCPs?
•  How much does one hospital admission change that cost?
•  How many diabetics should you expect?
21


Population Health Management
•  Regardless of how much risk you choose (or are forced) to take, the capacity to manage the health
of a defined population will be essential
•  The metrics are those of accountable care:
–  Safety
–  Quality (process and outcomes)
–  Satisfaction
–  Efficiency
•  Timing is everything -- developing capacity early is good, but premature implementation can be fatal
22


Multiple tools are available
•  Chronic disease management
–  25.6% of Medicare patients have diabetes; they account for 41.2% of ALL Medicare spending
–  Six chronic diseases (diabetes, congestive heart failure, coronary artery disease, asthma, depression and
obesity) account for about 80% of total healthcare costs
•  Patient-Centered Medical Homes (PCMH)---expanded primary care patient management, with
decreased use of specialists and hospitals
•  In-home care management
•  Referral management
23


All of these tactics require
•  Interoperable electronic health records
•  Extensive data from multiple sources
•  New types of personnel
•  New patterns of care management
•  Extensive communication among providers and with patients
•  A new culture
24


LEADING THE VOLUME TO VALUE
TRANSITION: ADDITIONAL
CONSIDERATIONS
25


KEY:
Virtual
MSG
* Note: All references to physicians include appropriate utilization of mid-level practitioners.
HOSPITAL
SYSTEM
Independent
Physicians
Virtual IDN
26
Virtual
IDN

Public & Private
Agencies
Independent
Hospitals
Control Contract
Post
Acute
Ambulatory
Employed
Physicians*


Compelling Motivation
Successful affiliations begin with a clear identification of the single most important
driver(s), for example:
•  Capital
•  Cost Reduction
•  Referrals
•  Physician Integration
•  Risk Contracting (Acute Care)
•  Population Management
•  Other …
27


Howard Buffett [a farmer] will become
Chairman of Berkshire Hathaway when I retire.
He may not understand investments but he does
understand the values and culture of this company.
- WARREN BUFFETT / CHAIRMAN
BERKSHIRE HATHAWAY
Cultural Fit
28
60 MINUTES / JANUARY 5, 2014


Case Example
29
Physician discontentment and cultural differences appear to
have ended the six-month merger talks between
Henry Ford Health System and Beaumont Health System.
MODERN HEALTHCARE
MAY 21, 2013


System Goals & Operating Objectives
Goals
•  Improve acute care performance
•  Develop scale to access capital at preferable rates
•  Begin the journey to managing the care of a defined population
Operating Objectives
•  Foster collaboration in order to reduce fragmentation of care
•  Standardize care in order to improve outcomes
•  Centralize control in order to achieve the benefits of systemness
30


Reality Interferes
31
Too often these [System] governing bodies are assembled
without sufficient attention to the original purpose of the
consolidation resulting in the creation of a system that has
compromised its own effectiveness and, in some cases,
rendered itself virtually ungovernable and unmanageable.

- DON SEYMOUR
Transitioning To Effective System Governance
BOARDROOM PRESS
FEBRUARY 2013

BALANCING ACT
§  Centralization of decision making
§  Relinquishing local control and autonomy


A-14
Consumerism 2.0
32
1988 1996 2006 2010 2014
Conventional* 73% 27% 3% 1% 1%
PPO 11% 28% 60% 58% 53%
HMO 16% 31% 20% 19% 16%
POS** 14% 13% 8% 9%
HDHP / SO*** 4% 13% 21%
* Conventional plans refer to traditional indemnity plans.
** Point-of-service plans not separately identified in 1988.
*** In 2006, the survey began asking about HDHP/SO, high deductible health plans with a savings option.
EMPLOYER BASED INSURANCE


Holy Family Memorial, Manitowoc, WI
Can’t Make This Up
33


Or Else What?!
34


Low Socioeconomic Patients Prefer ED
•  It’s more affordable
•  It’s more accessible
–  Transportation
–  “Same-Day Appointment”
–  One-Stop Shopping
•  Clinically Superior
–  “The hospital is where you go when you are sick or in
–  pain at all, and the primary is just for checkups.”
35
Health Affairs, July 2013


Your IPhone Will See You Now
36
Fast Company / February 2012
DIABETES
… have developed … the most badass blood test …
a tiny tattoo packed with a glucose-sensing dye that,
when hit with a special light from your handy iPhone attachment,
reveals your blood-sugar status.


Implications For Providers
•  Confront the “brutal facts” re your outcomes
•  Become patient-centered…really
•  Focus marketing efforts on consumer decision points
•  Assess your external communications on the Flesch-Kincaid Reading Index
•  Dissect a major service line from the patient/family/friends perspective
37


Questions??
38


Locations and Contact
39
Contact
Don Seymour William F. Jessee, MD, FACMPE
Don.Seymour@IHStrategies.com Bill.Jessee@IHStrategies.com
612-339-0919 612-339-0919
Company
1.800.327.9335 | info@ihstrategies.com
www.INTEGRATEDHealthcareStrategies.com
Locations
Boston │Dallas | Kansas City | Minneapolis
Connect
*

Thriving Among the New Realities of Pay/Risk

Related slideshows

More Related Content

Thriving Among the New Realities of Pay/Risk