nchfma 4 20 12 webinar pt 3 kalkhof assessment of clinical integration readiness global cap co

north carolina chapter

© Copyright 2012. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only.

PART III: ASSESSMENT OF CLINICAL INTEGRATION READINESS AND GLOBAL CAP CONSIDERATIONS

NORTH CAROLINA HFMA WEBINAR SERIES

April 20, 2012

Christopher J. Kalkhof, FACHEDirector, Healthcare Industry Group - Alvarez & Marsal, New York Office

TODAY’S PRESENTATION

1) Clinical Integration Defined and

Regulatory Overview

2) Clinical Integration Planning and

Gap Analysis Process

3) Clinical Integration – Payer

© Copyright 2012. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only.© Copyright 2012 Alvarez & Marsal Holdings, LLC. All rights reserved. ALVAREZ & MARSAL®,

® and A&M® are trademarks of Alvarez & Marsal Holdings, LLC.

3) Clinical Integration – Payer

Contracting Considerations

4) Appendices� Example – High Level Clinical Integration Work Plan Development

� Examples of Pre-ACA Clinical Integration Models

� Presenter Bio

NC HFMA Webinar Series

� January 13th – Part I: Strategic Managed Care: Post–ACA

� February 17th – Part II: ACO Model Network Design & Shared Savings Model Allocations

� APRIL 20TH – PART III: ASSESSMENT OF CLINICAL INTEGRATION READINESS & GLOBAL CAP CONSIDERATIONS

Building on Topics Discussed During Webinars 1 and 2

� A provider organization’s core care delivery model must account for:

– Reimbursement models which reward value and penalize poor value.

– Effective physician alignment and integration.

� Market scale with multiple portals of access across the care continuum and

geographies served to increase brand recognition and build brand equity.

� A service portfolio management approach linked with payer contracting strategies.

�

Post-Reform Overall Provider Business Model Sustainability?

STRATEGIC MANAGED CARE – POST-REFORM CARE MODELS

Ac u teHo s p i ta l

Patient Service Intensity and Cost of Care

HIGH S N F s L T C H sI R F sFu t u r e Ca r e Mo d e ls–Am b u la to r y- In t en s iv eT h e ra p y A l t e rn a t iv e toS b A t I / P S t t iRange of Acute and Post-Acute Services for

Seniors with Varying Degrees of Care Complexity

CMS SHARED SAVINGS ACO – FUTURE ACUTE /

POST-ACUTE CARE NETWORK

Clinical Services Integration and Care Continuum for Seniors in ACO Model

ACO BUSINESS MODEL: A POST-ACA PROVIDER NETWORK

Multi-Hospital /

Multi-County ACO

Network Model

Full Medicare Part A & B with Chronic

Care Emphasis Focus

Webinar 1: Strategic Managed Care Webinar 2: ACO Network Model Design

DEVELOPING A CLINICALLY INTEGRATED PROVIDER NETWORK

© Copyright 2012. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only. 2

� Ability to manage patient populations under financial risk.

� Advanced IT, operational and decision/clinical analytics support.Re im bu r se m e n t, R i s ka n d P a ym e n t Ru l e s P h y s ic i a n A l ig n m e n ta n d I n t e g r a t io n o fC l i n ic a l a n dE c o n o m i c I n t e re s t s Su s ta in a b i l i ty o fBu s in e s s M o d e lPayer Strategy Physician Strategy Hospital StrategyOperations StrategyR e ve n u e C yc l e a n dC a se M a n a g e m e n tI n t e g r a t io n Care Model StrategyC l i n ic a l I n t e g r a t io n ,Po p u l a t io nM a n ag e m e n t a n dP a t i e n t Ex p e r i e n c ePatient Severity/Complexity

Patient Service Intensity and Cost of Care

HIGH

LOW

LOW

S N F s[Re ha bin c lu de d ]A du ltDa y CO / P &C O R F As s t.L iv in g Ho s p i c eHo m eH e a l t h Fu t u r e Ca r e Mo d e ls– S p e c ia l t yN eu ro - S p in e R e ha b S e rv i c es…m a y b e co m e S N F / I R F s u bs t i t u t e Fu t u r e Ca r e Mo d e ls–An Ex pa n d e d S ev e r i t y /Co m p l ex i t y Ro l eS u b - A c u t e I / P S e t t in g Fu t u r e Ca r e Mo d e ls–Co m m u n i t y In t e g ra t e d& T ra n s i t io n a l L iv i n g Fu t u r e Ca r e Mo d e ls–On l y Co m p l ex / H i g hR is k I / P

Fu t u r e Ca r e Mo d e ls–M e d i ca l Ho m e Co m po n en t Physician and Professional

Services Integration

Aging Well Services

Integration

Community Aging

Services Integration

Clinically Integrated Provider Network

Planning and Development… Implementation… Operationalization… Growth

“Ideas are easy, execution is everything, and in anything worth

doing, it takes a team to win” (John Doerr, venture capitalist)

PLANNING IMPLEMENTATION



Clinical Integration requires alignment and broad-based collaboration to succeed!

TEN STEP CLINICAL INTEGRATION NETWORK

DEVELOPMENT AND IMPLEMENTATION PROCESS

II. Clinical Integration as a Business Strategy for Accelerated GrowthDeveloping a Clinical Integration Model Across a Delivery Network is Complex,

Requires a Significant Commitment of Time and Can Be Capital Intensive


Project Planning

Delivery Model and Clinical Integration Gap Analysis

Determine Provider Network and Clinical Integration Organization Model

Determine Joint Define and Plan Joint

Phase 1

Components


Determine Joint Clinical Infrastructure

Define and Plan Joint Clinical Initiatives

Determine Regulatory Compliance

Implement Initial Clinical Integration

Programs

Measure, Monitor, Report and Educate

Network & Clinical Integration Business Plan

Implement and Operationalize Network

Delivery Model

Phase 1

Components

Phase 2 Components4

CLINICAL INTEGRATION DEFINED

AND REGULATORY OVERVIEW


The Regulatory Definition of Clinical Integration

Clinical Integration as defined by regulators…

� 1996 Department of Justice and Federal Trade Commission

Statements of Antitrust Enforcement Policy in Health Care:

– "[A]n active and ongoing program to evaluate and



– "[A]n active and ongoing program to evaluate and

modify practice patterns by the network's physician

participants and create a high degree of

interdependence and cooperation among the

physicians to control costs and ensure quality."

No Legal Opinion implied. Based on Layman’s understanding.

FTC review typically encompasses the following considerations:

1. Integration of facilities/practitioners that represents true inter-dependence

in collaboration and productive information sharing.

2. Participation of both specialists and primary care physicians, in a way that

requires in-network referrals.

3. Treatment of a broad spectrum of diseases/disorders accompanied by a

General FTC Guidelines on What Clinical Integration Looks Like



3. Treatment of a broad spectrum of diseases/disorders accompanied by a

comprehensive array of corresponding clinical protocols.

4. Integrated information technology that allows network providers to efficiently

and effectively exchange information regarding patients and practice

experience.


Note: Engage qualified legal counsel in the early development stages to ensure strategies, alliances and the business model being formed will be in regulatory compliance and to also advise on pros/cons of seeking a FTC Advisory Opinion on your clinical integration plan.

7

General FTC Guidelines on What Clinical Integration Looks Like

5. Integrated IT in which utilization and claims information is collected,

analyzed, and distributed with the goals of lowering costs, reducing

utilization rates, and improving the quality of care.

6. Integrated IT that enables the measurement of physician compliance and

performance, in comparison to widely accepted, peer-reviewed

benchmarks and standards.



7. A high level of physician financial investment and commitment of time

for training and utilization of the system, accompanied by agreement

among physicians to comply with the standards, benchmarks, and

protocols of the network.

8. Processes for improving performance and compliance, with enforceable

consequences for non-compliance.


Note: For an ACO shared savings model application to CMS, the same above general guidelines apply and for a new ACO, which CMS shares with the FTC.

� “Pooling” of data and information across payers, patients, and providers.

� Provides for common standards and quality enforcement mechanisms.

� Provides a single efficient vehicle for physicians to interface with health plans.

� Provides an important vehicle for hospitals to achieve quality and community

mandates with physician participation.

� Enables efficiencies and quality enhancement that cannot be achieved by

The Value of Clinical Integration



� Enables efficiencies and quality enhancement that cannot be achieved by

physicians and/or hospitals working independently.

� Recognizes that physicians can achieve cost and quality efficiencies

without having to merge, sell their practices or become employed.

� Improves the value for the healthcare buyer and the patient.

� Supports COE focused/innovative care delivery models and care settings

specific to patient clinical risk/complexity and patient/physician preference.

� Prepares organization for a post-ACA business environment and emerging

payment models/financial risk.

9

CLINICAL INTEGRATION PLANNING

AND GAP ANALYSIS PROCESS


� Clinical integration and the reasons for pursuing this business strategy

should first and foremost be about improving Care Delivery, Quality, Patient

Safety and Organizational Efficiency/ Effectiveness (e.g., the Triple Aim).

– Obtaining higher reimbursements should not be viewed as the “primary

goal.”

– It requires a multi-venue care continuum, which is supported and enabled

through clinical/financial information and financial incentives.

Core Considerations for “Why” You Want to Develop a Clinical Integration Model



through clinical/financial information and financial incentives.

– The business model uses technology and interdisciplinary care management

processes to facilitate improving the physician-patient experience, clinical

and service quality outcomes and operational/financial performance.

– The development process requires new and expanded relationships which

align incentives between all provider participants and key payers.

– Successful development and implementation of the business model requires a

fundamental change in corporate culture and working relationships.

11

� Increasingly difficult to the sustain traditional business models?

� Technology integration/interoperatability has become a key factor

for remaining competitive?

� Major purchasers of healthcare are demanding evidence of improved

quality, cost controls and utilization efficiency… value for the monies

Clinical Integration – Is Your Market Ready?



quality, cost controls and utilization efficiency… value for the monies

spent on healthcare?

� Practice economics declining and physicians are overworked?

� Physicians and hospital management believe that future success will be

measured by quality/efficiency/outcomes and jointly believe that clinical

and economic alignment with each other is essential?

� Care delivery costs are perceived as being too high?

12

� Measurable or perceived care quality is mediocre… length of stay

is too high and there is lots of variation in practice patters with little

meaningful coordination of inpatient/outpatient/ambulatory care service

settings relative to patient clinical risk and complexity?

� Decreased cooperation between hospitals and physicians with

increased competition between both with each other… i.e., both going

after the same fixed piece of the pie vs. looking to work together to

Clinical Integration – Is Your Market Ready?



after the same fixed piece of the pie vs. looking to work together to

increase the size of the pie piece?

� Third party payers are reorganizing their provider network structures

and reimbursements to reward quality/outcomes/efficiency?

Such market environments are favorable for clinical integration,

however clinical integration goals cannot be achieved unless all

providers are aligned around the same clinical and financial interests.

13

Key Clinical Integration Gap Assessment Issues:

� Readiness of the medical staff.

Clinical Integration Readiness Assessment - Key Areas


Project Planning

IPN & Clinical Integration Gap Analysis

Determine Combined IPN & C.I. Business

Model

Determine Joint Clinical Infrastructure

Define and Plan Joint Clinical Initiatives


Implement Initial C.I. Programs

Measure, Monitor, Report & Educate

Hospital-Physician Integrated Provider Network & Clinical Integration Development Process

Phase 1 Phase 2

Time Line: 2 to 3 Years


� “Level of functional clinical integration” across service portfolio.

� Level of functional clinical integration among affiliated physicians (e.g., in-

network referrals and patient care management collaboration).

� Technology gap in enabling technology for a clinical integration model.

� Current care delivery model (service mix and care settings) to manage care across

an entire care continuum to determine care delivery and access gaps.

� Physician alignment vehicle to start the clinical integration process from (e.g., an

IPA or PHO vs. a de novo start-up).

� Joint governance model for the clinical integration model.

� Ability to manage financial risk and patient populations.14

Project Planning and Project Management:

� While a clinical integration readiness assessment or gap analysis will provide

you with a current state snap shot of where you are and where you need to

go… it does not represent the full roadmap for the complexities you face ahead.

� Developing a clinical integration business model is a marathon process, not a

sprint… usually taking from 2 to 4 years depending upon where you start on the

clinical integration spectrum.

Clinical Integration Readiness Assessment - Project Planning



clinical integration spectrum.

� The overall planning and development process needs to be a collaborative

process between the hospital and its affiliated physicians, with aligned

economic incentives and active… physician lead development of clinical

protocols and in the shaping of the clinical integration care delivery model…

– Defining clinical needs of patient populations.

– Clinical care needs across care continuums.

– Care setting needs determination relative to patient clinical risk/complexity.

– Clinical protocols… routine patient care + high cost/complex patients.

15

Health System # 1 - C.I. Core Organizing Goals and Objectives:

� Continue to improve the quality of patient care and patient safety.

� Continue to improve the efficiency and effectiveness of care delivery service

flow for patients and physicians.

� Reduce administrative costs associated with provider payment and regulatory

compliance issues.

� Develop further mechanisms to identify unnecessary clinical resource usage

Clinical Integration Readiness Assessment - Project Goals and Objectives



� Develop further mechanisms to identify unnecessary clinical resource usage

costs associated with the delivery of inpatient-outpatient-ambulatory care

services on a system wide basis.

� Further align and integrate incentives between PHO physicians and Health

System operations to accelerate the change process from episodic to a

continuum of healthcare services for which cost and quality are constantly

measured and benchmarked.

16Evolution of Messenger Model PHO in

Response to Primary Competitor C.I. Efforts

At the regulatory level… defining how your goals/objectives will lead to greater

collaboration, efficiencies, reduced costs and improved quality… is essential.

Health System # 2 - C.I. Core Organizing Goals and Objectives:

� Population-based.

� Accountability for the cost and quality of care.

� Commitment to improving the quality of care at practice and health system level.

� Use of established measures of quality of care… e.g., HEDIS, CMS core

measures, clinical practice guidelines and other EBM measures.

� Support use of advanced IT with emphasis on E.H.R. adoption.

Clinical Integration Readiness Assessment - Project Goals and Objectives



� Support use of advanced IT with emphasis on E.H.R. adoption.

� Commitment to using audited, self-reported physician data to track quality.

� Active involvement of physicians in development, oversight and implementation.

� Use of best practice P-4-P guidelines to design/implement the program.

� Collaboration with health plans to align improvement goals.

� Strengthen practice office staff ability to treat patients with chronic conditions.

� Serve as a vehicle for sustaining private practice physicians and seek

opportunities to economically align with physicians (post-ACA passage).

17

Evolution of Messenger Model IPA and Becoming High Efficiency System and a Home for Private Practice Physicians Whom Did Not Want Employment from Larger Health System

� How strong are the Hospital’s present ties to its medical staff?

� What is the appropriate structure (e.g., IPA, PHO, ACO, etc.) of the

clinical integration model to maximize value?

� Can the parties withstand challenges to derail… internal/external…

managing process, capital needs and regulatory requirements?

� Will organizing a more integrated care delivery model raise the bar of

Getting Started – Some Basic Questions to Discuss Internally



� Will organizing a more integrated care delivery model raise the bar of

scrutiny by the FTC relative to restraint of trade issues?

� How will hospital management gain full physician support… which is

crucial and requires a great deal of work and trust?

� Are resources adequate and sustainable to support design,

development, building infrastructure and long-term operations?

� How high is the risk tolerance for both the hospital and the physicians?

� Are physician’s willing to invest (critical to avoid legal challenges)?

� Other?

18

� Demographic and Market Analysis

– Identification of primary (PSA) and secondary (SSA) service areas for

clinically integrated provider network (own organization, physician alignment

organization and possible strategic alliance partners).

� Population demographics residing within determined PSA/SSA by age and gender

groups… current and projected at 5 years, 10 years, 15 years.

� Patient care service needs across a continuum of care for the different

Primary/Secondary Service Area - Gap Assessment



� Patient care service needs across a continuum of care for the different

populations such as seniors, pediatric, adult (think HMO network development under

their PMPM budgets and service lines)… in acute, post-acute, ambulatory, physician

office, home care, etc. settings.

� Physician leaders should be actively engaged in this gap analysis.

– Determine health status/ranking issues in PSA/SSA (e.g., see

http://www.countyhealthrankings.org/north-carolina).

– Market share analysis (I/P, O/P and for tentative physician network).

– Current service area outmigration patterns (e.g., in-network vs. O-O-N).

– Analysis of PSA/SSA future market trends which would impact model.

19

� Clinical Integration SWOT Analysis

– Competition analysis

– Cost competition

– Clinical quality assessment

� An effective clinical integration model creates a roadmap to

Services/Service Line - Gap Assessment



� An effective clinical integration model creates a roadmap to

achieving the Medicare “Triple Aim”… improved individual

patient outcomes… improved population health… reduced

expenditures.

– Impact of ACA, Medicaid and Medicare reform initiatives?

20

� Clinical Integration Service Line Assessment

– If you have defined core service lines… define

care continuum elements and identify

care/access gaps relative to defined PSA/SSA?

If you do not have defined service lines…

what services represent 80% of volume?

� Your relative market share across each

potential integrated network care setting “cost

Services/Service Line - Gap Assessment


Acute

Rehab & Sub-Acute


potential integrated network care setting “cost

center”?

� Service line profitability and estimation of your

reimbursement relative to median market

benchmarks?

– Ability to operate acute/post-acute as “centers

of excellence”?

– Services and resource gaps across

PSA/SSA?

– Your ability to manage care “in-network”?

21

Ambulatory

Physicians

Current State

Understanding

Clinical Integration

Objectives

Supporting Systems Strategy

II. Clinical Integration as a Business Strategy for Accelerated Growth: Assessment to CIO Business Plan

Potential supporting systems IT strategies may include the

IT Infrastructure - Gap Assessment



� Clinical data broker technologies

� Common EHR / Affiliate EHR

� Data warehousing

� Managed care systems

� Single purpose 3rd party integration “overlays”

� Patient registry systems

� Portals

� Health data exchange technologies

Determine Clinical Infrastructure and Define/Plan Clinical Integration Initiatives

Potential supporting systems IT strategies may include the

following:

22

IT Infrastructure - Gap Assessment (In-Source and Outsource Decisions)Ye s No Ye s NoTo ta l In fo r m a t io n Sy s te m Ex pe n se ( a s e x pe n se d )In fo r m a t i o n Sy s t e m s Op e r a t i o n s an d Su p p o r t S e r v ic e s X X Ye sIn fo r m a t i o n Sy s t e m Ap p l ic a t i o n an d M a i n t en an c e X X Ye sIn fo r m a t i o n Sy s t e m s Ap p l ic a t i o n s Ac q u i s i t i o n an dD e v e l o p m en t X X Ye sI T S ec u r i ty A d m i n i s t r a t i o n an d En fo rc e m en t X X Ye sP ro v i d e r N e tw o r k M a n a ge me n t a n d Se r v ic e sP ro v i d e r R e l a t i o n s S e r v ic e s X X Ye sP ro v i d e r Co n t r ac t i n g X X Ye sP ro v i d e r Au d i t /B i l l i n g V a l i d a t i o n X X Ye sO t h e r P ro v i d e r N e t wo r k M g m t. an d S e r v ic e s X X Ye sM e d ic a l M g m t. /Q u a l i ty A s s u ra n c e / We l l n e s sHe a l t h P l a n B u s i n e s s En te r p r i se De p a r t m e n t s a n d Co s tCe n te r s C I Mo d e l Re q u i re d ? H M O O u t so u rc e N e e d ? Re q u ir e d fo rR is k /D e le g a te dSe r v Co n tr a c ts

I P Ne tw o r kMg m t.

Ye s No Ye s NoPa t ie n t Re g is tr ie s- D is e a s e Ma n a ge me n t Da taWa r e ho us e X Ye sE le c tr o n i c He a l t h Re co r ds a n dI n te r o pe r a ta b i l i tya cr o s s I P ne tw o r k X Ye sHe a l t hI n fo r m a t i o n Ex c h a n ge ca p a b i l i t ie s fo r Sy s te mI P Ne tw o r k, I P A, O t he r A l i g ne d P r o v i de r s a cr o s ss e r v i ce ca r e co n t i n u u ms , w h i c h a ls o a l l o w s fo re le c tr o n i c r e fe r r a ls a n d s c he d u l i n g be tw e e nI P N CIpa r t i c i pa n ts , d r u g a n d a l le r gy i n te r a c t i o n a le r ts a n dp r e - a d m is s i o n s c he d u l i n g to ho s p i ta l fa c i l i t ie s X Ye sI P N / CI a s s i g ne d me m be r " i de n t i ty " m a n a ge me n tw h i c h ca n e s ta b l is h a l o n g i t u d i n a l pa t ie n t r e co r da cr o s s t he I P A pa r t i c i p a t i n g p r o v i de r ne tw o r k X Ye sI P N / CI ca r e co n t i n u u m pa t ie n t, w e b- b a s e d pe r s o n a lhe a l t h r e co r d a n d o t he r Ga te w a y s e r v i ce s s u c h a s ap h y s i c i a n po r ta l o n Ca r e Ma n a ge me n t X Ye s

Pa t ie n t Ca re Co o r d i na t i o n- Co m m u n ic a t i o n s-Re fe r ra l s- Co n n e c t iv i ty - I T S u p p o r t C I Mo d e lR e q u ir e d ? Ho s p C ur r e n t Ca pa b i l i ty ? Re q u ir e d fo rR is k / D e l e g a te dS e r v Co n tr a c tsDEVELOPING A CLINICALLY INTEGRATED PROVIDER NETWORK


P r e- C e r t i f ic a t i o n X XC a s e M an a g e m en t X XD i s e a s e M an a g e m en t X XN u r s e C a r e N a v i g a t i o n X XH e a l t h an d W e l l n e s s / P r e v en t i o n X XQu a l i ty Co mp o n en t s X XU t i l iz a t i o n R e v i e w X XM e d ic a l In fo r m a t ic s X X Ye sO t h e r M e d ic a l M an a g e m en t X X Ye sF i n a n c e a n d Ac c o un t i n gOp e r a t i o n a l an d C ap i t a l B u d g e t s /F i n an c i a l P l an n i n g X X Ye sS h a r e d S a v i n g s Mo d e l T r ac k i n g & D i s t r i b u t i o n X X Ye sB an k i n g F u n c t i o n s / Wo r k i n g C a p i t a l M g m t. X X Ye sF i n an c i a l R e p o r t in g / T a x F i l i n g s X X Ye sAc t u a r i a l Se r v ic e sP r ic i n g R e l a t i v e to Co v e r e d S e r v ic e s X XC l a i m s /F i n an c i a l An a l y s i s / D e v e l o p m en t o f R i s kP a y m en t Mo d e l s X XR e s e r v e C a lc u l a t i o n s / R e gu l a to ry F i l i n g s X XP ro v i d e r Co n t r ac t An a l y s i s X XS e l f F u n d i n g An a l y s i s fo r E mp l o y e r s X X Ye s (i fr is kc o n tr a c ts s u c has g l o b a lc a pi t a t i o n a n dd i r e c tc o n tr a c tswi t h gr o u psYe s ( a l l a p p lywi t hd e l e g a t e dm e d i c a lm a n a g e m e n ta n d r i s k-b as e dc o n tr a c ts )

p y p gE v i de n ce Ba s e d a n d C l i n i ca l P r o to co ls fo r ca r ema n a ge me n t a cr o s s I P N / CI ne tw o r k X Ye sDe c is i o n S u p po r t- A n a l y s is o f Ca r e Pa t te r ns , C l i n i ca lDe c is i o n S u p po r t, Me d i ca t i o n Ma n a ge me n t r e l a t i ve toD is e a s e , Pa t ie n t C l i n i ca l R is k S tr a t i f i ca t i o n , e t c. X Ye sU t i l iz a t i o n Re v ie w , Ca s e Ma n a ge me n t, Tr a ns i t i o n a lCa r e Co o r d i n a t i o n a n d N a v i ga t i o n a cr o s s I P N / CI ca r eco n t i n u u ms a n d de l i ve r y ne tw o r k X Ye sTe le p ho n i c Co a c h i n g fr o m C l i n i ca l S pe c i a l is ts fo r P C PI P N / CI p a r t i c i pa n ts r e l a t i ve to pa t ie n t tr e a t me n to p t i o ns fo r mo de r a te - h i g h c l i n i ca l r is k pa t ie n ts X Ye sP r e ve n t i ve Ca r e a n d C l i n i ca l E ve n t A vo i d a n ce t h r o u g hi de n t i f i ca t i o n , i n te r ve n t i o n a n d ma n a ge me n t o fmo de r a te - h i g h c l i n i ca l r is k pa t ie n ts be fo r e a n a c u tee p is o de o c c u r s X Ye sPa t ie n t E d u ca t i o n a n d A d vo ca te ( i n fo r me d ca r eo p t i o ns , co m m u n i ty s e r v i ce s a va i l a b le fo r e l de r l y , X Ye sA c ce s s Ma n a ge me n t a n d Tr i a ge / Ca l l Ce n te r- He a l t hI n fo r m a t i o n / Re fe r r a l Se r v i ce s a n dI n te r co n ne c t i v i tya cr o s s I P N / CI ne tw o r k X Ye sC l i n i ca l Pe r fo r m a n ce Me a s u r e s a n dMo n i to r i n g / Re po r t i n g o n S pe c i f i c Pa t ie n ts a n dI P N / CIP r o v i de r P a r t i c i pa n ts X Ye sI P N / CI E d u ca t i o n a n d Re l a t i o ns h i p Ma n a ge me n t w i t hp r o v i de r p a r t i c i pa n ts to i m p r o ve ca r e q u a l i ty a n do u t co me s X Ye s

Joint Venture

Physician

Integration

Continuum


Physician Integration and Alignment - Options


Cooperation

• Medical Directorships• On-Call Coverage

Employment

• Employment• Independent

Contractors

Purchase

• Asset Purchase• Non-Competes• Employment

Joint Venture

• PHO/IPA/PO• MSO/PSO• Surgery, Urgent &

Imaging Centers• Hospital Syndication

& Ownership• Patient Centered

Medical Home• Accountable Care

Organization

24

� Assess options for “optimal” physician enterprise model:– Hospital-Based Physicians and Faculty Practice Plan?

– Employed and Independent Physicians?

– NewCo vs. expand existing IPA, PHO, ACO or other Physician Organization?

� Physician enterprise governance considerations:– Hospital and physician governance roles?

– Incorporation of clinics and employed physicians into the new enterprise?

– What’s needed for development of Board, Finance, Clinical committee structures?

Physician Integration/Alignment - Gap Assessment



– What’s needed for development of Board, Finance, Clinical committee structures?

– Clinical integration payment model considerations and ability to manage?

� Clinical integration readiness audit of the medical staff (employed and non-

employed) in order to assess the level of motivation physicians have for a

collaborative clinical integration initiative.

� Assess current “level of clinical integration” among inpatient, outpatient and

ambulatory services. This would include but not be limited to:

– An assessment of clinical integration among physicians… e.g., in-network referrals

vs. out-of-network referrals and the reasons behind referral patterns… communication

and care coordination processes in place… working relationships to improve patient

care quality and outcomes, etc.

25

CLINICAL INTEGRATION – PAYER

CONTRACTING CONSIDERATIONS


� Basic P-4-P… Reward explicitly measured dimensions of performance… across

defined domains of performance.

– Expect to see more P-4-P in contracts going forward for Commercial, Medicare

Advantage and Managed Medicaid contracts.

� Commercial P-4-P arrangements can encompass multiple domains of

performance depending on what the specific payer deems of greatest importance.

– CMS shared savings ACO domains may result in broad-based adoption.

P-4-P – Clinical Integration Contracting Models



– CMS shared savings ACO domains may result in broad-based adoption.

– Other domains and performance may be market or payer specific.

– Expect a mix of “value-driven” FFS / partial/full risk payment methodologies.

� Common Theme of P-4-Ps post-ACA:

– Quality and Outcomes Improvement… Financial Penalties for Hospital

Acquired Infections and Preventable Readmissions… Total Spend

Reduction.

– Triple Aim: Better care for individuals… better population health… and

reduced expenses.

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� Understand the underwriting cycle and risk of different patient populations that

you will provide services to under a payer contract. Population risk…

– Healthy (70%-75%)… Health Risk/Asymptomatic (10%-15%)… Identified

Risk/Symptomatic (10%-15%) and Acute/Chronic Event (5%-10%).

� Establish an overall “medical budget” for the P-4-P/Risk budget and

subdivide along care delivery buckets and most likely referral patterns. E.G.,

Global Capitation - Population Management and Financial Risk



subdivide along care delivery buckets and most likely referral patterns. E.G.,

– Outpatient/Ambulatory: PCPs, Specialists, Ancillaries, Pharmacy,

Diagnostic Imaging/Radiology Services, ASC, Emergency Room, Urgent

Care, Radiation Therapy/Chemo, DME, Home Health, Medical Day Care,

Ambulance, Lab, Other Diagnostic/Therapeutic/Procedure Services,

Transportation and Other.

– Inpatient: Acute (Community and Tertiary/Quaternary), IRF/LTAC, SNF,

Assisted Living and Supportive Housing.

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– Inpatient and Outpatient…

� Care Setting, Care Management/Coordination/Navigation Model

� In-Network vs. Out-of-Network

� For an entire network (e.g., ACO) or a more localized aggregation of

services such as a PHO or a Medical Group?

� Services Offered/Not Offered for Population Health Care Continuum

� Service Mix and Volume Changes

Global Capitation - Population Management and Financial Risk



� Service Mix and Volume Changes

� Quality and Outcomes Metrics

� Service Utilization Assumptions

� Evidence Based Medicine Protocols and Precision Medicine Factors

� Payment Methodology relative to above (e.g., capitation or bundled)

� Baseline costs for all of the above… discrete risk pools… surplus/deficit

mechanisms… tracking/monitoring/reporting.

� Actuarially valid data… reliable, relevant, specific/controllable, actionable, core

measure focused and not administratively burdensome.

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The Model (08’ rollout)

�Global payment to cover all

healthcare services

�Performance incentives

based on quality and safety

metrics

– Up to 10% above global

payment

Illustration – BCBS MA Alternative Quality Contract (Global Capitation)


© Copyright 2012. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only. (30)

Source: Blue Cross Blue Shield of Massachusetts - The Alternative Quality Contract

payment

– Protection against

withholding of needed care

�Savings opportunities by

addressing underuse,

misuse and overuse within

global payment level

– Inflation factor derived from

CPI

– At controlled and

predictable level

If a Hospital-PHO/IPA DOES Enter Into C.I. Payer Contract:

� Will not have to “messenger” the contract to members for acceptance.

� Will automatically be participating in the payer contract, as part of the group.

� Will not have the choice to “opt out” of the clinically integrated group contract.

If a Hospital-PHO/IPA DOES NOT Enter Into C.I. Payer Contract:

Clinical Integration Payer Contracting Considerations



If a Hospital-PHO/IPA DOES NOT Enter Into C.I. Payer Contract:

� Payer has the right to send individual contracts to any member at any time.

� Member physicians will decide individually whether to accept or decline an

individual contract… i.e., messenger model format or as independent.

� PHO and its member physicians cannot discuss terms of individual physician

contracts, nor in any way impede the rights of payers to offer contracts and

physicians to individually accept or decline those contracts.

31

Payer responses to clinical integration have been mixed.


LESSONS LEARNED


� Gaining consensus and buy-in among management and physician leadership.

� A firm commitment by all key stakeholders to transition to a value-

driven/clinically integrated healthcare delivery network.

� An understanding of clinical integration best practices achieved by other

organizations across the country.

� The ability to work with a qualified law firm to avoid the regulatory landmines.

� An awareness of the history of physician hospital ventures and how hospital

The Final Word… Critical Success Factors for Clinical Integration



� An awareness of the history of physician hospital ventures and how hospital

management and independent physicians will align both clinical and economic

interests in a post-2014 business environment.

� A well planned out and sequenced technology and operational support plan

from which to build clinical integration initiatives and deliver value to the patients

and purchasers of healthcare services.

� A defined resource allocation methodology to support and prioritize different

implementation initiatives.

� An understanding of the future direction of healthcare under federal healthcare

reform and how that will impact both care delivery models and payment systems.

APPENDIX

� Example – High Level Clinical Integration Work Plan Development

� Examples of Pre-ACA Clinical Integration


� Examples of Pre-ACA Clinical Integration Models

� Presenter Bio

DEVELOPMENT OF AN INTEGRATED PROVIDER NETWORK MODEL

Clinical Integration Project Work Plan Development

Project Timeline Month Month Month Month Month Month

PHASE 1

Component 1:

Project Start Up

Component 2:

IPN and C.I. Gap Analysis

Component 3:

Combined IPN & C.I. Business Model


Component 4:

Determine Joint Clinical Integration Infrastructure

Component 5:

Board Planning Retreat

Component 6:

Define and Plan Joint Clinical Integration Initiatives

Component 7:


Component 8: Finalize

IPN/C.I. Business Plan

= Milestone Note: IPN means Integrated Provider Network

DEVELOPMENT OF AN INTEGRATED PROVIDER NETWORK MODEL

Clinical Integration Implementation

Project Timeline Month Month Year 2 Year 3 Go Live (w/Payer Contracts)

PHASE 2

Component 1: Implementation Planning Project Start-Up

Component 2: Establish Governance/Mgmt. Model/Staff , Legal Framework & Operating Budgets

Component 3: Clinical Committees/C.I. Implementation


Component 4: IT Infrastructure, EHR, HIE, Communications Network, Patient Referral & Navigation Systems, Disease Registries, Disease Mgmt. Tools, Quality/Metric Tracking &/Reporting, Data Analytics, Predictive Modeling, etc.

Component 5: Care Model Redesign/Re-Purposing/Buys & New Builds, PCMHs, Strategic Alliances, etc.

Component 6: Reorganize Revenue Management, Managed Care, Case Mgmt., etc.

Component 7: Payer Relations, Contracting and C.I. Network Mgmt. and Employer Relations

Component 8: Other Operational Related Implementations

= Milestone

Ongoing with Growth

Illustration - GRIPA Operating Clinical Integration Model

Illustration of GRIPA Clinical Integration Model – Received an FTC Consent

Decree – Often Noted as “Gold Standard” of Clinical Integration



Greater Rochester IPA (Rochester, NY) – FTC advisory opinion “Gold Standard” for clinical integration. For-profit partnership (PHO) which is 50% owned by non-profit Rochester General Health System (2 hospitals) and 50% owned by physician shareholders who made capital investments ( 430 private practice, 230 employed by RGHS and 120 non-shareholders, representing 41 medical and surgical specialties. GRIPA has a Staff of 40 to support its payer contracts relative to Care Management, Provider Relations/Credentialing, Information Technology, Data Analysis and Financial/Actuarial/Contracting functions.

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Some clinically integrated operating models with/without a formal FTC opinions:

� Advocate Health (Chicago, IL) - First FTC clinical integration test case after a $250 million lawsuit filed by United Healthcare. Comprised of 10 Hospital Campuses (common health system ownership with nine PHO Boards), 6,000 Medical Staff members, 200 sites of care, 27,000 Associates, $4.1 Billion Annual Revenue, AA Bond Rating, 2.5 Million Visits Annually, pluralistic physician integration approach. Advocate's CIP includes 116 system-wide clinical and efficiency goals, which are updated annually, and the program is funded by commercial insurers that contract with the health system. The insurers provide an additional payment of approximately 10 percent of physician fees to a clinical integration pool, which is managed by the Advocate Physician Partners, an affiliate of Advocate Health Care. AHC/APP have contracts with all the major payors in the Chicago area. Long term stated business goals are fully

Existing Clinical Integration Models: Pre-ACA (Some are Now ACOs)



contracts with all the major payors in the Chicago area. Long term stated business goals are fully integrated population management for 1,000,000 lives in the Chicago area and accepts . Favorable FTC Consent Decree granted after four year legal battle at the end of 2006.

� Long Island Health Network (Melville, NY) – Comprised of 10 hospitals (Catholic Health Services of Long Island and six other hospitals of which LIHN does not directly own any facilities, under six separate Boards or governance) which was formed to improve and standardize their clinical quality, enhance their operational efficiency and expand access to care for all Long Islanders. As an ancillary benefit to the LIHN initiatives, collective bargaining is allowed and LIHN enters one contract with payors, however, not all hospitals are necessarily treated the same, meaning the individual facility contracts are not necessarily uniform with the payors. The “provider-initiated” P-4-P is unique in that it was voluntarily operated and not driven by payors. LIHN has not sought an FTC advisory opinion, however its clinical integration model has withstood multiple challenges by NYC area payers.


39


� Catholic Health (Buffalo, NY) – Multi-Hospital common system governance, PHO/IPA business model with elements of the FTC clinical guidelines in operation and collective payer contracting. Catholic Health represents a non-asset merger with three different sponsoring religious organizations, 4 hospitals, employed PCPs, approximately 850 IPA physicians and a common hospital system governance structure and shared IPA governance structure (the payer contracting vehicle and main FTE staffing location). A recent expansion of the C.I. network and related integration benefits was extended to another Catholic, non-aligned hospital in a contiguous county. Catholic Health has not sought FTC advisory opinion.




– Catholic Health is also a pilot Medicaid ACO and a Medicare ACO.

� TriState Health Partners, Inc.(Hagerstown, MD) - TriState’s program integrates the services of more than 200 physicians and Washington County Hospital through a PHO structure and focuses on delivering proper care at an appropriate level in the right setting. Physicians will utilize an EHR, which incorporates software that supplies and monitors clinical practice guidelines, provides information on the treatment cost for each episode of care, and identifies high-cost and high-risk patients. The EHR will facilitate collaboration, through exchange of treatment information, among TriState’s physicians in the care of common patients. Because of its rural location, large percentage of participating providers, and hospital participation, TriState did, however, raise some unique issues. The basic model was developed along the lines of GRIPA. The FTC issued an advisory opinion to TriState Health Partners which is supportive of Tri-State’s initiatives.


40


� Suburban Health Organization (Indianapolis, IN) - SHO is an Indiana NFP corporation formed to undertake risk-based contracts with health plans and other payers of health care services, such as self-insured employers. SHO functions as a "super-PHO" (physician-hospital organization), consisting of seven local PHOs in the Indianapolis area, each affiliated with a local hospital, and one multi-facility health system. The eight SHO member hospitals together employ a total of 192 primary care physicians, who generally practice medicine within their respective hospitals’ primary service areas. SHO sought a FTC advisory opinion and relative to the PHO hospitals, the FTC concluded that since the individual SHO hospitals previously were not actual competitors (and, arguably, not potential




the individual SHO hospitals previously were not actual competitors (and, arguably, not potential competitors) with regard to developing and providing such services, the setting of prices for the “new” services that the joint venture makes available likely would not be anti-competitive. Regarding the employed physicians however, a negative opinion was provided by the FTC, concluding that “collective price negotiations for employed physicians” does not appear to be reasonably necessary or “ancillary” to achieving network efficiencies.

� NorthShore LIJ Health System (Manhasset, NY) – 5,600 bed (acute/other), fifteen hospital health system with a medical staff of over 9,000 and over 42,000 employees. Current in development clinical integration model which started by forming a 4,000 physician IPA along with employed physicians and the initiation of P-4-P arrangements with payors. Current stage is involved with developing and implementing clinical integration criterion and piloting with employees of health system. Anticipate completion and receipt of a FTC Advisory Opinion by 2013.


41

� Mr. Kalkhof is a Director with Alvarez & Marsal’s Healthcare Industry Group in New York. He has more than 27 years of diverse healthcare

management experience and he specializes in strategic re-positioning and revenue improvement. Specific expertise includes managed

care strategy development and contract negotiations; contract implementation and integration with revenue cycle/case management

processes; provider-payer collaborations; physician alignment and integration; strategic planning and new product development.

– During the last several years, Mr. Kalkhof has spent much of his time assisting clients optimize their net revenue potential, resulting in

direct net revenue improvements of nearly $500 million per annum. Over the span of his career he has gained work experience in over

20 states and has been involved with over 100 strategic repositioning/new business development initiatives.

� Representative current or recent strategic-repositioning and revenue improvement experience includes:

– Payer contract strategy development, developing contract pricing targets and renegotiating agreements for multiple hospitals.

– Working with a clinically integrated, multi-hospital system to develop an ambulatory services strategy to support the health system’s

Christopher Kalkhof, MHA, FACHE

Director, Healthcare

Industry Group

600 Lexington Avenue, 6th Floor

New York, NY 10022

Office: (347) 254-2433

Mobile: (716) 912-0309

[email protected]

www.alvarezandmarsal.com

© Copyright 2012. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only.© Copyright 2011. Alvarez & Marsal Healthcare Industry Group, LLC. All Rights Reserved. Confidential. For discussion purposes only.

– Working with a clinically integrated, multi-hospital system to develop an ambulatory services strategy to support the health system’s

core service lines and close access gaps while also creating new care access points. Also addressed the best re-purposed use for

existing ambulatory services capacity and how ambulatory services strategies could strengthen physician alignment.

– Working with a multi-hospital system to assist in the preparation its Medicare Shared Savings Accountable Care Organization

application, associated operational budgets as well as the design the overall hospital-physician alignment/patient care delivery strategy.

– Working with an academic health system on their managed care strategic pricing strategy and impact of pricing on market positioning.

– Working with a clinically integrated academic health system and a teaching hospital through their merger process, relative to revenue

cycle and managed care operations integration.

� Prior to joining A&M, Mr. Kalkhof was: Director/National Managed Care Lead for a Big 4 firm’s provider consulting practice; Interim SVP of

Delivery Systems/Payer Relations for a nine hospital health system; Interim VP Managed Care for community hospital; interim Director of

Managed Care for a physician owned hospital through the bankruptcy and post-bankruptcy emergence.

� Mr. Kalkhof received his Master of Health Administration degree from Tulane University and his Bachelor of Science degree from Allegheny

College. He is a former Chapter President of the HFMA WNY and has received the HFMA Bronze, Silver and Gold awards, has served as a

Yerger judge on three occasions and has presented at five ANIs. Finally, he is also a Fellow in the American College of Healthcare

Executives and a frequent presenter on revenue improvement and strategic re-positioning topics.

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nchfma 4 20 12 webinar pt 3 kalkhof assessment of clinical integration readiness global cap co

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