key considerations for rural healthcare leaders · bundled payments pay for performance partial or...
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Key Considerations for Rural Healthcare Leaders
Michael Topchik, MPHNational Leader
The Chartis Center for Rural Health
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The Administration’s Rural Health Strategy
1. Apply a rural lens to CMS programs
and policies
2. Improve access to care through
provider engagement and support
3. Advance telehealth and telemedicine
4. Empower patients to make decisions
about their health care
5. Leverage partnerships to achieve
goals CMS Rural Strategy goals
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Engaging Rural Hospital Leadership Teams Across the Country
500+ healthcare executives
and their trustees.
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Key Considerations for Rural Hospitals
Remote geography presents both opportunities and challenges for rural providers
Physician recruitment, retention, retirement, and burnout are significant patient
barriers to access in rural healthcare
Reliance on government reimbursement disproportionately impacts the rural health
safety net
Improving access and quality of care requires clinical integration
EHR integration is critical to effective clinical partnerships
Virtual care may improve access and patient experience at low cost, but may be a
disruptor to current care delivery and payment models
Value is incentivized by alternative payment models, under which strong
performance is essential to secure bonus revenues
Investment in primary care networks by rural acute care providers is critical
Population health management demands high-value, coordinated care, incentivized
by alternative payment models that reward improved community health
Strategic governance must be informed by the latest rural-relevant research
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Older, Less Healthy and Less Affluent
Rural populations are more socioeconomically disadvantaged and impacted by health disparities including:
Child Poverty
PCP Access 65+
Opioid Addiction Diabetes
Mental Health Access
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Older, Less Healthy, Less Affluent…
…and Limited Access to Multiple Types of Care
Rural populations are more socioeconomically disadvantaged and impacted by health disparities.
0
10
20
30
40
50
60
70
80
Veterans Over 65 Child
Poverty
Diabetes
Non-Rural Median
010203040506070
Mental
Health
Access
Dental
Access
Primary
Care
AccessRural Median
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Limited Access to Care
P O P UL AT I ON H E A LT H M A NAGE M E NT A N D VA LU E - B AS E D PAY M E NT S T R AT E G YPAT I E N T B A R R I E R S TO A C C E S S E X I S T – A N D P E R S I S T – I N R U R A L C O M M U N I T I E S
Recruitment Retention Retirement
Provider integration into the
community (i.e., family life, lifestyle)
Rural residents seek employment in
urban areas (i.e., technology,
coverage, professional growth)
Loan repayment and forgiveness
pose financial burdens for providers
Burnout threatens physician health,
turnover, and patient safety
Success Story: Tufts Maine Track
(Grow Your Own/Rural Residency)
Remote communities are often
viewed as unfavorable (i.e,
technology, on-call, lack of
integration, professional
growth/collaboration)
Rural hospitals struggle to offer
competitive compensation
H1B Visa-Docs are often challenged
by language/cultural barriers
of HPSAs are rural (or partially rural)1
Rural providers are aging
Physicians often remain on staff
until retirement
Providers seeking employment in
rural areas are often late in their
careers
81%
1 Healthcare Resource & Services
Administration (HRSA), 2018
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Sustained Pressure on Margins
⚫ Experimentation with DSRIP
programs in numerous states
⚫ Continued push towards
Medicare Advantage conversion
⚫ Goal of 50% of payments tied to
value by 2018
⚫ Healthcare transformation task
force commits to shifting 75% of
its business into value-based
contracts by 2020
Source:S&P Global Market Intelligence, Not for Profit Healthcare Sector Outlook, Jan 2017; Moody’s, Not-for-Profit Healthcare and Public Hospitals, May 2017; Becker Hospital Review, 50 Things to Know About the Hospital Industry, Jan 2017
“Median operating margin decreased from 3.4% to 2.7% from 2015 to 2016”
“United States
nonprofit hospitals see
decrease in median
operating margins”
“Growing concern of weaker operating performance due to declines in utilization and payor mix”
Evidence of sustained reimbursement pressure coupled with rising operating costs culminate in slim
and shrinking operating margins.
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New Healthcare Delivery Models Emerge
Retail /
Convenient Care
▪ Preventative care
▪ Minor trauma
▪ Travel clinic
▪ Virtual consults
Existing Primary
Care Models
Next-Generation
“Primary” Care
▪ Imaging
▪ Routine Dx (e.g. lab)
▪ Low-complexity specialty
care
Traditional
Specialist
Providers
Free-Standing
Outpatient Services
▪ Outpatient Surgery
▪ Interventional
Cardiology
▪ Chemotherapy
▪ Urgent care
Hospitals
The new (l) is competing with the traditional (r)
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Employers Continue to Test New and Innovative
Models to Contain Costs
72%
28%Of employers:
healthcare delivery payment reform is
part of current strategy
“In the private sector, escalating [healthcare] costs have eroded the
bottom line ...purchasers simply cannot afford the status quo”
2012 IOM executive roundtable findings
SEEKING
NATIONAL
CONTRACTS
SHIFTING RISK
TO DEFINED
CONTRIBUTION
CAPPING
PAYMENTS
SPREADING
MODELS
Reference pricing
Purchaser consortium
Private exchange
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The Lines Begin to Blur Across the Healthcare Landscape
Providers are becoming payors
Payors are becoming providers
Companies from other segments are
becoming providers
New players are getting into the risk
business
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Disruptors May Upend Healthcare as We Know It
• These companies are moving into
healthcare because they see
opportunity: a broken healthcare
system hampered by legacy assets,
business models, and payment systems
• They bring with them elements that
traditional healthcare providers and
start-ups don’t have, including: tons
of cash, large customer bases,
distribution networks, advanced data
tracking and analysis capabilities,
artificial intelligence experience
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Challenges and Opportunities: Rural Geography
As an “island”, rural providers gain:
Historic captive market
Strong community support for
local access to care
Primary care network serves as a
future asset in value based care
Success Story: Aspen Valley,
CO/Park City, UT ortho program;
Tahoe Forest, CA/Transylvania, NC
oncology
However, in isolation, rural providers face:
Recruitment and retention
challenges
Lack of clinical integration and
“system-ness”
Lack of sub-specialties
Population health challenges
High costs
Greater exposure to localized
disruptions
Strengths Risks
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A Shift in Focus – from Treating Individuals to Managing
a Population
Key capabilities required:
• Providers with clinical capabilities
• A mix of services that the population
demands, generally of your choosing
• Facilities, equipment, supplies
• Some IT platforms
• Billing and coding department
• Administrative infrastructure
Key capabilities required:• Everything to the left, plus:
• Full range of services, owned or via partnership
• Population risk stratification
• Actuarial capabilities to examine costs
• Advanced data informatics capabilities
• Disease management programs and
interventions
• Care coordination
• Clinical integration
• Extensive quality improvement programs
• Patient attraction and retention strategies
FOCUS ON TREATING INDIVIDUALS FOCUS ON MANAGING A POPULATION
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Proliferation of Value Based Models with Varying
Degrees of Risk & Reward
Fee For Service (FFS)
Bundled Payments
Pay for Performance
Partial or Full Capitation (ACO
Model)
Shared Savings (ACO Model)
Quality andExperience
Cost
Value-Based Payment Models
Volume of Services Provided
Volume (Services, Episodes and/or Attributed Lives) + Outcomes and Cost Effectiveness
Value is being embedded in traditional models –
through benefits design, value- based purchasing,
and reference based pricing
Portion of reimbursement tied to performance on
specific metrics. -typically on top of a FFS base
Fixed reimbursement for an episode of care -
providers take responsibility for managing costs
Actual spending compared to target for
defined population over a set period.
Providers and payors share in any savings
Provider groups receive prospective fixed payment and take responsibility for managing all associated costs.
While the private sector continues to expand and test a range of value-based payment models,
CMS has already transitioned 85% of FFS payments to value based purchasing categories.
Increasing Degree of Risk/Reward
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Increasingly, Rural Hospitals Seek Affiliations and Partnerships
System-affiliated rural hospitals tend to see higher operating margins (based on INDEX).
1 AHA Data Viewer, 20152 Healthcare Cost Report Information System (HCRIS) Q3 2017
53% of Rural Hospitals
are System-Affiliated1
29% Of these facilities are
Contract-Managed1
47% of Rural Hospitals are
Freestanding1
2.9%
0.6%
0.0%
1.3%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
System-Affiliated (incl.
Contract Mgd)
Contract-Managed Freestanding
Med
ian R
ura
l H
osp
ital
Op
era
ting
Pro
fit
Marg
in2
Median Operating Profit Margin All Rural Median
52%ile 52%ile
49%ile50%ile
40
45
50
55
60
System-Affiliated (incl.
Contract Mgd)
Contract-Managed Freestanding
Med
ian IN
DEX
Sco
re
Median INDEX Score All Rural Median
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Creating Sustainable Value in Rural IDNs
Creating value in a rural IDN is fundamentally predicated on achieving the benefits of economies of scale, without sacrificing the collective “voice” of the local entities.
Rural Affiliates Health System
Articulation & Prioritization
of (Aggregate) Needs
Provision of High Value
Service & Technology
Solutions
Joint Assessment & Review
of Service and/or
Technology Provision
Sustainable value requires explicit definition of the relationship between affiliates and the system across four dimensions:
(1) Governance, (2) Management, (3) Economics, and (4) Strategy
1 2
3
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Articulating Goals & Partnership Requirements
Establishing an open dialogue across the enterprise that facilitates a candid discussion of needs and the associated trade-offs is essential to defining overall strategic direction and objectives.
Rural Affiliates Health System
Articulating Goals
What services or technologies would be
helpful in delivering care to your local
communities?
What are they system’s goals and
expectations from better alignment with
rural affiliates?
Considerations & Trade-Offs
What level of control would be
acceptable to share in order to access
this suite of services/technology?
What level of control would be
acceptable to share to gain tighter
alignment with rural affiliates?
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Rural Clinical Integration Requires a Digital Strategy
C R E AT I N G A C C E S S I B L E H I G H - Q U A L I T Y H E A LT H C A R E R E Q U I R E S
A C O O R D I N AT E D A P P R O A C H TO C L I N I C A L I N T E G R AT I O N
Local Care Delivery
Capabilities
Regional Care
Delivery CapabilitiesDigital Capabilities
Elements of Effective Clinical Integration:
Active engagement of care team members in
care model development and management
Effective communication between caregivers
Digital tools seamlessly integrated across the
care continuum and all combined sites of care
Consistent EHR access across all providers
Clearly-defined care protocols for discrete
patient populations
Seamless patient transitions across care
settings and sites of care
Commitment to shared objectives
Transparent economic and performance data
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The Three Future Dimensions of Clinically
Integrated Care Delivery
Clinical
Quality
Operational
Consumer
Experience
Operational
Efficiency
Quadruple
Aim
Individual
Serving the Needs of the
Healthcare Consumer…1Through a Comprehensive Digital
Delivery Network
Care Team
Delivering Exceptional
Patient-Centric Care…2Through Integrated Digital
Care Models
Business Units
Seamlessly Coordinating
Business Operations…3Through Integrated Digital
Operating Ecosystem
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How Are Rural Providers Coping With Pressure?
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Key Industry Responses to Changing Environment
Material changes in the structure of the healthcare market…
Unsustainable national and state healthcare
spending
Uncertainty driven by repeal and replace
Fueling of consumerism and rise of new
disruptive healthcare models
Shift of risk to providers – value based models,
innovative employer cost containment
strategies
Sustained pressure on margins
1
2
3
4
5
…resulted in key industry responses
I
II
IV
III
Seeking meaningful scale & regional
consolidation
Moving from care asset aggregation to
coordinated system clinical integration
Investing in new capabilities like pop. health,
consumerism & digital
Pursuing new pathways to strategically
differentiate
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Rural Health Strategy – Building Blocks for the Future
⚫ Consider ‘staying the course’ provided existence of geographic monopoly
and sufficient private payer base
⚫ Develop virtual care models capable of extending services and reaching
more patients within the community
⚫ Increase investment in community outreach (e.g. community health
workers)
⚫ Pursue clinical integration in combination with alternative payment
models
⚫ Pursue partnerships/affiliations at a minimum through CINs
⚫ (If already part of a health system) advocate for a global budget
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Sample Questions and Challenges Facing Key
Stakeholder Groups
Hospitals and Healthcare
Systems
Physicians/Clinicians and
Medical Groups
• How do we attract more commercial patients to improve margins near-term? How do we
optimize revenue?
• How can we better understand and control our costs?
• Where do we get access to capital?
• How can we grow our physician group?
• What services will be needed in the future?
• What IT systems should we invest in?
• How do we break into digital health? Where do we begin?
• Do we need a partner?
• Can I survive as an independent practice? How do I keep costs down? How can I grow my
revenue? Should I combine with another practice, group or health system? Should I retire
early?
• What new capabilities do I need, by when, and how will I afford them? Where do I find
them? How do I implement them?
• Do we have the right leadership in place to guide us into the future?
• What do my patients want and how do I provide it?
• How do I tackle all of this and stay abreast of new medical advancements, billing and
coding, continuing medical education – and avoid burnout?
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Key Considerations for Rural Hospitals
Remote geography presents both opportunities and challenges for rural providers
Physician recruitment, retention, retirement, and burnout are significant patient
barriers to access in rural healthcare
Reliance on government reimbursement disproportionately impacts the rural health
safety net
Improving access and quality of care requires clinical integration
EHR integration is critical to effective clinical partnerships
Virtual care may improve access and patient experience at low cost, but may be a
disruptor to current care delivery and payment models
Value is incentivized by alternative payment models, under which strong
performance is essential to secure bonus revenues
Investment in primary care networks by rural acute care providers is critical
Population health management demands high-value, coordinated care, incentivized
by alternative payment models that reward improved community health
Strategic governance must be informed by the latest rural-relevant research
© 2019 The Chartis Group, LLC. All Rights Reserved. March 2019 Page 28
Michael Topchik
National Leader, The Chartis Center for Rural Health
Senior Vice President, iVantage Health Analytics
Thank You For Your Time and Attention