beyond acos: sustaining physician-led enterprises
TRANSCRIPT
Beyond ACOs, Sustaining Physician-‐Led Enterprises Fall Managed Care Forum November 14, 2014 Don McDaniel Sage Growth Partners
…Current State
…PPACA & ImplicaLons
What I’ll Cover
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…Sustainable OrganizaLons
CURRENT STATE
The SituaLon
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DEMOGRAPHICS Chronic Disease, Aging,
PopulaLon Health, Delivery System Supply
CONSUMERISM PaLent Engagement,
Transparency, Access, Ubiquity
TECHNOLOGY Interoperability, mHealth,
Structured Data, Risk-‐Adjusted Payments, AnalyLcs
REGULATION PPACA, MU, ICD-‐10, ACO,
PCMH, PenalLes
ECONOMICS Margins, Cash Flow, Public Sector Stress, Enrollment Expansion, RAC, Denials
Few PaLents Make Up Majority of Costs
4 Source: h[p://www.oliverwyman.com/media/OW_ENG_HLS_PUBL_Volume_to_Value_RevoluLon.pdf
Image adapted from Allstate Ad: http://www.allstate.com/content/refresh-attachments/advoc_camp_Jumbo_Jet.pdf
The US Health System Is Not Safe
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A Tale of Two Industries
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Medical Cost Trends – Flat at 6.5%
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+ -‐
ULlizaLon Technological
Medical Supplies/Equipment
Price Transparency
Primary Care InnovaLon
• Aging • Economic Recovery • Employment
• Advancements • RoboLcs • PET • Increasing High Cost
Cases
• ConsolidaLon • Physician
employment • Purchaser Pressure
• ComparaLve Cost InformaLon
• State-‐mandated ReporLng – 30 states
• Workplace and retail clinics
• Telemedicine • Mobile Health • PCMH
Pharma “off patent”
• Many blockbusters “off patent” driving savings
Source: Price Waterhouse Coopers Medical Cost Trend: Behind the Numbers 2014
Challenged Public Payers
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Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2012, for community hospitals. (1) Includes Medicare Disproportionate Share payments. (2) Includes Medicaid Disproportionate Share payments.
70%
80%
90%
100%
110%
120%
130%
140%
150%
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Rise in High DeducLble Plans
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DeducLbles over $1,000 for Single Coverage
16%
21%*
35%*
40%
46% 50% 49%
58%*
6% 8% 9%
13%* 17%
22%* 26%
28%
10% 12%*
18%* 22%*
27%* 31%
34% 38%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013
All Small Firms (3-‐199 Workers)
All Large Firms (200 or More Workers)
All Firms
* EsLmate is staLsLcally different from esLmate for the previous year shown (p<.05).
NOTE: These esLmates include workers enrolled in HDHP/SO and other plan types. Average general annual health plan deducLbles for PPOs, POS plans, and HDHP/SOs are for in-‐network services.
SOURCE: Kaiser/HRET Survey of Employer-‐Sponsored Health Benefits, 2006-‐2013.
FighLng over the same turf
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Physician Employment Trends
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Source: Accenture Physician Alignment Survey 2012. h[p://www.accenture.com/SiteCollecLonDocuments/PDF/Accenture-‐Clinical-‐TransformaLon-‐New-‐Business-‐Models-‐for-‐a-‐New-‐Era-‐in-‐Healthcare.pdf
PPACA & IMPLICATIONS
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PPACA Timeline and Delays
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Source: Advisory Board
One of many implementaLon issues?
• Employer Mandate • Treasury's informaLon technology isn't ready to process and cross-‐check paperwork across the 5.7 million businesses in America, especially the pass-‐through S-‐corps and partnerships that file under the individual tax code.
• Individual Mandate • During the delay -‐ Insurers will not have to report the names and social security numbers of people they cover
• Income ExempLon • Requires informaLon from every employer of every family member, including the employee share of the premium for employer-‐sponsored coverage, whether the employee worked more or less than 30 hours per week, the amount paid by that employer, and whether the coverage is for the employee only, or the employee plus his or her family.
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Source: h[p://www.forbes.com/sites/theapothecary/2013/07/08/did-‐they-‐postpone-‐the-‐individual-‐mandate-‐also/ h[p://online.wsj.com/arLcle/SB10001424127887323899704578583493972896364.html#
Not only $700 Billion in Medicare Cuts But…
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State Decisions on Medicaid Expansion
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Source: Advisory Board h[p://www.advisory.com/~/media/Advisory-‐com/Daily-‐Briefing/2012/11/DB_medicaid_map_lg.jpg
State Decisions for CreaLng State Insurance Exchanges
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Medicare Advantage -‐ InnovaLon or Albatross?
• 12.7 million (25% of total Medicare book) currently parLcipaLng • CMS revised the methodology for paying plans and reduced the
benchmarks -‐ 2011 benchmarks were frozen at 2010 levels. • Beginning in 2012, reducLons in benchmarks will be phased-‐in over 3
to 6 years • 40% of African-‐Americans and 54% of LaLno seniors parLcipate in
MA – mimics Medigap without the added cost
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Lessons from Massachuse[s
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SUSTAINABLE ORGANIZATIONS
IncenLves Drive (bad) Behavior
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Building Blocks of Value Based Payments
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Economic Outlook
Reform and RegulaLon
Delivery Redesign
Payment Model AnalyLcs
PopulaLon Health
Consumer Engagement
Lines are Blurring: Providers/Payers
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Employers are Agitated
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CumulaLve Percent Change in NaLonal Health Expenditures, 2010 to 2019 Given ImplementaLon of Possible Approaches to Health Reform
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• Authors called top-‐ranked orthopedic hospitals in the US and 2 largest hospitals in each state • Fee for hospital + fee for surgeon
• Of the 20 top-‐ranked hospitals, 55% could not provide a single “bundled price” for the procedure • 40% could not provide an esLmate
• 90% could not provide a single “bundled price” • 37% could not provide an esLmate
• VariaLon was shockingly vast, ranging from a low of $11,100 to a high of $125,798.70
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Source: Journal of the American Medical AssociaLon Internal Medicine h[p://archinte.jamanetwork.com/data/Journals/INTEMED/0/jamainternmed.2013.465.pdf
REAL EXAMPLES
Texas IPA
• 150 physicians – mulL-‐specialty, strong primary care focus • Two community-‐hospital town • Launching NewCo IPA/MSO for purposes of entering into capitated
arrangement with Medicare Advantage plan • Narrow network will aggregate ~10,000 MA members, migraLng to at-‐risk
payment arrangement • Building capacity to aggressively add primary care
• Build single tax-‐ID primary care group to capture new PCPs to market • “Secure” payment guarantees from local hospitals
• Building markeLng capability to convert indemnity Medicare members already in panels – incorporaLng co-‐op $ from payer
• Build/Buy decision about HP administraLve services – HP partner offers capLve TPA enLty as an opLon
• Core needs – claims, enrollment management, financial reporLng, case management, referral management
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SoCal Medical Group
• Inland, Los Angeles-‐based 300-‐physician mulL-‐specialty medical group – building wrap-‐around IPA
• Sister MSO serving ~1,000 physicians and hospitals • Major Academic Medical InsLtuLon parLal owner of MSO – shiwing University
employees into narrow networks • Knox-‐Keene licensed Plan for commercial acLvity and to be listed on HIX – 23
KK are provider enLLes • In acLve MSSP ACO discussions with mulLple payers • 17 locaLons • Covers more than 100,000 HMO members • Claims administraLon handled today by health plans – “shadow” capitaLon/
global budget • Delayed reporLng from plans for even basic claims data, feeling vulnerable to
risk straLficaLon, not comfortable that health plans “se[le-‐up” appropriately • Knox-‐Keene allows them lots of flexibility – but feeling they need HP
administraLon capabiliLes capLve to control their desLny
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Tail Wagging the Dog ACO
• Advanced physician-‐led delivery organizaLon • 200+ MDs, single tax ID mulL-‐specialty group • “Wrap-‐around” IPA • Joint venture MSO with Community Hospital
• CBO selling revenue cycle services • GPO aggregaLng buyer power • IT services organizaLon offering provider and payer systems • Health plan infrastructure to pay claims, manage enrollment, track financial performance, manage “high-‐flyers,” etc.
• Ownership in MA plan • CerLfied Medicaid ACO in its state – a gate to risk transference
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Covington Health
• 280 employed physicians in 3 states • 6 hospitals, ~1,000 affiliated physicians, PHO, IPA, full-‐service conLnuum
modaliLes • Very high customer saLsfacLon in market, growing affluent market • Tremendous pressures on census perceived over the next 3-‐5 years • Significant growth in Medicare and adjacent to urban market with
Medicaid growth – FFS “doesn’t cut it” for them because payments are too low – the model they desire it to manage uLlizaLon to appropriate levels to allow for adequate payments
• Payer community desires risk transference • OrganizaLon is preparing readiness assessment for financial risk-‐
assumpLon – biggest gap are core capabiliLes
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Recap
• ACA is the law; ACOs are for real • Purchasers are moLvated and acLvated to seek lower prices • The New Normal Medicare means taking ~25%+ out of costs – toughest on
AMCs • Hospitals and high-‐cost procedure-‐oriented specialLes (CV, neuro, ortho) are especially suscepLble to demand destrucLon
• Back to the Future – focus on Primary Care • Many interim steps in migraLon to capitaLon – P4P, penalLes, bundled
payments, ACO shared savings – BUT… capitaLon is coming back in force • Benefits cost increases – some quite dramaLc – will drive “narrow
network” growth and increased focus on price transparency • Massive consolidaLon (integraLon???) is underway
• David vs. Goliath set-‐up
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Some Takeaways
• You could be the “tail that wags the dog”! • In old-‐economy health care there was no premium paid for
choreography and “systems thinking”-‐ that’s changing • Don’t deploy technology for technology-‐sake – invest in
things that drive value – populaLon/enterprise care management will pay dividends
• Really understand the economics of the disease burden of your populaLon
• Think like a health plan
QuesLons?
Thank you
Don McDaniel dmcdaniel@sage-‐growth.com
410.534.1161 443.904.2882
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