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Mary BarkerVice President, Publishing and Education

Welcome

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Webinar 1 Issue BriefPowerPoint File

• An email with links to these documents was sent to all registered participants April 21

• Check your inbox for an email from the “California Hospital Association”

• For assistance, call CHA Education at (916) 552-7637

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Staff

Anne McLeodSenior Vice President, Health Policy & InnovationCalifornia Hospital Association

Anne McLeod serves as CHA’s health care reform resource for member hospitals. Using her knowledge of both federal and state health care reform legislation and regulations, she coordinates CHA’s efforts on the development, communication, and implementation of policies related to health care reform. She also provides leadership for the design, development and implementation of the hospital fee and other financing programs.

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Mark E. GrubeManaging DirectorKaufman Hall

Speakers

Mark Grube leads Kaufman Hall’s Strategic Advisory practice. Mr. Grube has more than 25 years of experience in the health care industry as a consultant and as a planning executive with one of the nation’s largest health care systems. Mr. Grube is a frequent speaker and author, and he is a three-time winner of the Helen Yerger/L. Vann Seawell Best Article Award from the Healthcare Financial Management Association. He has presented at meetings of the American College of Healthcare Executives, The Governance Institute, The Healthcare Roundtable, HFMA, and the Society for Healthcare Strategy and Market Development.

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Jody Hill-MischelManaging DirectorKaufman Hall

Speakers

With more than 30 years in healthcare consulting, Jody Hill-Mischel’s expertise includes strategic financial and capital planning, strategic options assessment, merger, acquisition, divestiture, and partnership arrangements, and capital and financial advisory services. Director of Kaufman Hall’s Los Angeles office, Ms. Hill-Mischel serves clients including healthcare systems, academic medical centers, community medical centers, and physician groups. Ms. Hill-Mischel has written for healthcare professional journals including hfmmagazine and is a regular speaker on healthcare strategy and finance topics.

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Robert W. YorkSenior Vice PresidentKaufman Hall

Speakers

Rob York is a Senior Vice President of Kaufman Hall and leader of the PHM division in the firm’s Strategy practice. He provides strategic services for a range of healthcare clients, including large healthcare systems, public/safety-net providers, academic medical centers, and community hospitals. Mr. York’s responsibilities focus on developing strategies to help providers remain relevant and viable in the new healthcare environment based on rigorous market analysis, population and payer segment and demand analysis, and strategic partnership evaluation.

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1. The Rationale and Vision for PHM

2. Key Competencies

3. PHM Prospects and Progress in California

4. Provider Roles in Future PHM

5. Framework for Pursuing PHM

6. Concluding Comments

7. Q&A/Discussion

Today’s Topics

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Polling Question 1

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Polling Question 2

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The Rationale and Vision for Population Health Management

Mark E. Grube

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• Macroeconomic issues are driving real change

• Employer and insurance markets are transforming

• Consumerism is increasing

• Well-funded competitors are emerging

• Innovative technology is changing care delivery

Drivers of PHM

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1946-Today 2014 (and Beyond)

Through Disruption, a New Business Model Emerges

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PHM is an approach to improving health and quality of care while managing costs. This isthe direction healthcare is moving, and all stakeholders will need to get on board.

Population Health Management: What Is It?

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PHM considers “the health outcomes of a group of individuals, including the distribution of such outcomes within the group.”

It encompasses the following:

• Identification and surveillance of individuals at risk of developing disease, or those with chronic diseases

• Interventions in early disease stages to improve health outcomes and reduce costs by preventing illness or slowing progression of chronic illness to acute stages

Sources: Kindig, D., and Stoddart, G.: “What Is Population Health?” Am J Public Health 93(3): 380-383, March 2003; and Kaufman, Hall & Associates, LLC

PHM: A Clinically Oriented Definition

16Source: Hill, G., Sarafin, G., and Hagan, S.: “Population Health Management – Hill’s Handbook to the Next Decade in Healthcare Technology.” Citi Research, May 14, 2013; and Kaufman, Hall & Associates, LLC

“Population health management occurs when a healthcare system or network of providers works in a coordinated manner to improve the overall health, health outcomes, and well-being of patients across all defined care settings under risk-bearing arrangements.”

The healthcare system or network of providers may work under contractual arrangements with another entity such as an insurer.

PHM: A Services Delivery-Oriented Definition

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Observations on the Early Stages of PHM

• California providers have more experience with managed care models

• California has seen more proof of concept and large-scale benefit of PHM

• Many California markets are ahead of national benchmarks, but California is still evolving

• California-based PHM models also have been exported to new markets

• Sustainable improvements in population health have yet to be quantified on a large scale

• Early stage investments often take 5+ years to show positive ROI

• Behavior change among stakeholders (physicians, hospitals, purchasers, patients) takes time to occur and stabilize

• New partnerships likely will be required to cover new services and/or geographies; establishing such arrangements will take time

National California

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Polling Question 3

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Key Competencies

Mark E. Grube

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Financing/Distribution System Competencies

• Claims management• Network management operations• Product development• Customer service and satisfaction• Marketing and communications• Regulatory readiness• Actuarial services• Business intelligence• Financial performance

Historic Health System Historic Insurer

Delivery System Competencies

• Physician integration and alignment• Care coordination and management• Information systems sophistication• Service distribution system • Cost management/cost structure• Scale/essentiality• Brand identification• Payer relationships/contracts• Financial strength/capital capacity• Risk management

Care Management

Care Management

Technology/Infrastructure(Medical records-focused)

Technology/Infrastructure (Claims-focused)

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Clinical Components

Clinical Components

Clinical Components

Business Components

Chronic Disease Management and

Evidence-Based Practices

Claims and EMR Management/Analytics

Network Management and Operations

Business Intelligence/ Actuarial Sciences

Contracting Arrangements

Effective Care Management Has Clinical and Business Components

Care Management

Care Management

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Polling Question 4

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PHM Prospects and Progress in CaliforniaJody Hill-Mischel

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California Has a Track Record of Providing Efficient, Coordinated Care

Source: Managed Care Digest Series: California Health Care Data Summary 2013, 6th Edition

199

1,156

1,508

253

1,780

1,634

224

1,573

1,749

236

1,6431,734

Commercial HMO Medicare HMO Medicare FFS

California New England Southwest U.S.

Inpatient Days per 1,000 Population by Select Product Type, CY2011

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25

25%

30%

35%

40%

45%

50%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Commercial Medi-Cal/ Healthy Families Medicare/Duals Enrollment as % of Pop

76% 75% 74% 73% 71% 69% 66% 64% 62% 61% 57% 57%

9% 9% 9% 9% 9%10% 10%

10% 10% 12%12% 12%

Managed Care Remains Strong in California, with Recent Growth Driven by Public Sector

Note: Effective Jan. 1, 2013, the State mandated Healthy Family (HF) Enrollees be transitioned into Medi-Cal, therefore HF enrollment is not reported after 2013. Sources: Scheffler, R.M., Bowers, L.G.: A New Vision for California’s Healthcare System: Integrated Care with Aligned Financial Incentives. Berkley Forum, 2013; and HMO enrollment data and analysis, Cattaneo & Stroud, Inc.

HMO Enrollment in California, 2004 – 2015

16% 17% 17% 18% 20%21%

24% 26% 27% 27% 31% 31%

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Given High Penetration of Managed Care, Adoptionof HDHPs Has Been Slower than in Other Markets

Sources: AHIP Center for Policy and Research: January 2014 Census Shows 17.3 Million Enrollees in Health Savings Account-Eligible High Deductible Health Plans. July 2014; AHIP Center for Policy and Research: January 2013 Census Shows 15.5 People Covered by Health Savings Account/High-Deductible Health Plans. June 2013.

5%

3%

8%

3%

2%

5%

12%

8%9%

3%

8%

4% 5%

8%

6%

14%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Arizona California Colorado Nevada New Mexico Oregon Utah Washington

Jan-13 Jan-14

Enrollment in HSA-Qualified High-Deductible Health Plans as % of Total Enrollment in Private Health Plans

2014 National Average for HSA-Qualified HDHP Enrollment = 7.4%

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What is next with population health management in California?

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Despite Advancements, There Is Room for Improvement in Cost and Quality

Source: Yegian, J., Yanagihara, D.: “Value Based Pay for Performance in California.” Issue Brief (No. 8), Integrated Healthcare Association, Sept. 2013 .

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California’s health insurance and delivery market continues to evolve.

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PHM 1.0: Early Models

Developed in 2009

Included in 2011 Expansion

Spending reduction achieved:Year one: $20 millionYear two: $17 millionYear three: $22 million

Source: Cohen, A., Klein, S., McCarthy, D. “Hill Physicians Medical Group: A Market-Driven Approach to Accountable Care for Commercially Insured Patients.” The Commonwealth Fund, Oct. 2014.

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PHM 2.0: Evolving Model with Hospitals and Health Systems Organizing Care Delivery

Narrow Network HMO Product Priced 10-20% below current

market premiums

Customers

Public Employers

LargeGroup

Other

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Heritage Provider Network, Inc.c.1997

PRIMECARE Medical Network, Inc.

TodayPending: AltaMed Health Network, Inc., Dignity Health Provider Resources, Inc., & John Muir/UCSF

c.1998

1977 1997 1998 – 2000 2001 – 2003 2004 – 2006 2007 – 2009 2010 – 2012 2013 ‐ 2015

Scripps Health Plan Services, Inc. c.1999

Premier Health Plan Services, Inc.c. 2009

Choice Physicians Network, Inc.c. 2009

EPIC Health Planc. 2010

Seaside Health Planc. 2013

AmericasHealth Plan, Inc.c. 2013

Brown and Toland Health Servicesc. 2013

DaVita HealthCare Partners Planc. 2013

Providence Health Networkc. 2013

Prospect Health Plan, Inc.c. 2014

PIH Health Care Solutionsc. 2014

Access Senior HealthCare, Inc.c. 2014

Providers Moving Toward Taking Risk for Total Cost of Care

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Provider Roles in Future PHM

Robert W. York

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Provider Roles Vary Across a Broad Spectrum Prepaid

Population Health Manager: Integrated delivery system and/or health plan with the ability to provide and/or contract for a full continuum of services across all levels of acuity; well positioned to develop own insurance products and/or manage full provider risk

Single Product Participant: Provider organization working within a network managed by a Population Health Manager/Comanager, to provide specified and targeted services and/or population; these organizations will be critical components of narrow networks

Contracted Participant: Smaller niche providers, some of which may serve rural communities, that provide population access points under contractual arrangements; they face significant risk of commoditizationFFS

Fu

ture

Pay

men

t M

od

el

Multiproduct Participant: Provider organization that works within a network(s) managed by a Population Health Manager/Comanager to provide a defined set of services for a broad population base comprised of both government and private-pay patients; critical role in future delivery system

Population Health Co-manager: Regional provider organization, clinically integrated with other organizations, that forms a value-based delivery system; well positioned to participate in PHM and risk-bearing arrangements, in a delegated and/or direct fashion

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CharacteristicsContractedParticipant

Single Product

Participant

Multiproduct Participant

Population Co-manager

Population Manager

Risk/Payment ModelNone, FFS payment

Blend/episodic Blend/episodic

Full or partial provider risk; unlikely

to assume health plan risk

Full provider risk; may take health plan

risk

Clinical Integration No Maybe Likely Yes Yes

Network Adequacy/Market Essentiality

Low LowLow to

moderateModerate High

Insurance License Ownership

No No NoMaybe, but not

requiredLimited or regular

license

Membership Ownership No No No Maybe, but unlikely Yes

Examples

• Critical access hospitals

• Safety net hospitals

• Community hospitals

• Academic medical centers• Children’s hospitals• Specialty hospitals• Senior IPAs • Community health systems

• Integrated delivery networks • IPAs• Clinically integrated networks

Key Characteristics of Future Roles

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Polling Question 5

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Framework for Pursuing PHM

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Leadership Imperative: Define the Strategic Roadmap

Context-SettingValue

Proposition The PHM Plan

1. Understand and Organize Around PHM

2. Determine Market Stage

3. Evaluate Position and

Gaps

5. Determine Scope of PHM Network/Role

6. Define PHM Contracting

Strategy

4. Identify PHM Market

Opportunities

7. Identify Path –Build, Buy

and/or Partner

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Are you trying to make the old model work in the new

world?

Are you learning to use a new model based on the

new world?OR

1. Understand and Organize Around PHM

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2. Determine Market Stage

Val

ue

Bas

edT

rad

itio

nal

Organized

Fragmented

Consolidated

Fragmented

Material

Limited

Provider Organization

Payer Consolidation

Vertical Collaboration

Decreasing/shifting to OP

High/increasing

Market Demand

Oversupplied

Undersupplied

Market Supply

Narrow network/risk

Open network/FFS

Product Sophistication

High pressure/transparency

Low pressure/ transparency

Pricing Environment

Inactive

Regulatory Environment

Active

Participant Factors Market Characteristics

National

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3. Evaluate Organizational Position and GapsTraditional Provider Managed Care ProvidersOperational silos across medical staff and varying goals between providers & system

Strong, cooperative relationships between MD and Hospital based IP and OP services

Clinical and PhysicianAlignment

Limited real clinical quality data; moderate quality/safety outcomes

Ability to impact quality outcomes in a timely manner; strong quality performance

Quality and SafetyLittle to no provider incentives for quality; no measurement/reporting beyond regs.

Robust incentive programs with broad measurement and reporting of quality

Care Management Capability

Traditional decision support; limited cost accounting; limited utilization of IT tools

Comprehensive clinical and business analytics to inform decision-making

Clinical and Business Intelligence

Localized primary and acute care services; duplicated services; limited post-acute

Regional provision of well rationalized services across the care continuum

Network DevelopmentTraditional efficiency initiatives focused on departmental operations

Highly efficient business processes, streamlined clinical process, low variability

Operational Efficiency Basic FFS relationships with traditional contracting agencies/entities

Advanced/innovative arrangements with employers, carriers and insure. marketplace

Purchaser RelationshipsWeak/unsustainable financial performance; limited capital capacity

Strong/sustainable financial performance; sufficient capital capacity

Financial Strength and Capital Capacity

Customer service focused on individual business units and/or silos

Strong patient adherence, member service,consumer reporting and benchmarking

Customer Service and Engagement

Limited “bench strength”; misaligned incentives; complicated governance

Deep MD and admin depth; global incentives and nimble governance structure

Leadership and Governance

Hospital National

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• Define PHM strategy within the integrated strategic-financial plan in order to manage risk during the transition to value-based payment

• Consider these key variables:

The specific patient population, which should be segmented and considered by how they are insured

The overall insurance market, including available networks, product types, benefit designs, enrollment, pricing, and other items

The value proposition the organization would offer within its community based upon its unique mix of access, service, quality, and cost

4. Identify PHM Market Opportunities

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5. Determine Scope/Role of PHM Network

Primary Care

Specialist Care

General Acute

Skilled Nursing

Psych

Outpatient/ Behavioral

Health/Other Services

Home Health

Inpatient Rehab

Ambulatory CareInpatient Care

Post-Acute Care

Wellness

Population Health

Management

Population in the Community

Long-Term Acute

Hospice and

Palliative

Ancillary Services

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FFS P4P Shared Savings

Case Rates

Partial Risk Full Risk

Provider-Sponsored Insurance

Financial and Operating Risk MoreLess

Shared Risk

6. Define PHM Contracting Strategy

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• Build competencies and capabilities internally

• Buy or purchase access to certain competencies or services from

another entity

• Partner with another entity to gain access to required competences

To participate in PHM in a significant way, most hospitals and health systems will need

to use the latter two approaches.

7. Identify Path – Build, Buy, and/or Partner

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• Partnerships focused on acquiring selected PHM/value-based

capabilities

• Partnerships for broad collaboration on network and care

management

• Partnerships for focused network development

• Partnerships between large employers and provider networks to

manage defined populations

• Partnerships designed to achieve full population manager capabilities

A New View of Partnerships

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Polling Question 6

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Concluding Comments

Mark E. Grube

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• Establish and commit to a vision for the future

• Understand the PHM model and its implications for providers,

purchasers, consumers, and other stakeholders

• Invest in the PHM model using a strategic and planned approach

• Consider partnerships to cover new services and/or geographies

• Develop an expertise in managing rapid and large-scale change

Keys to Success Under PHM

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Significant Opportunity Exists for Hospitals toLead the Population Health Movement in CA

Breakdown of Payment Mechanisms and Delivery System Integration in California, by Lives and Dollars, 2012

Notes: 1. Expenditure estimates are reported in 2012 dollars. 2. Full/dual risk refers to a payment arrangement in which providers accept risk for both professional services and hospital services; Partial risk refers to a payment arrangement in which providers accept professional services risk only. Source: Scheffler, R.M., Bowers, L.G.: A New Vision for California’s Healthcare System: Integrated Care with Aligned Incentives. Berkeley Forum and University of California, Berkeley School of Public Health, Feb. 2013.

$245.0

21.1

$20.6

8.5

$47.7 8.1

0102030405060708090

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Payment typeFee-for-servicePartial riskFull / dual risk

Payment type1,2

($, billions)Payment type2

(Lives, millions)

PHM Opportunity

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Press *1 to enter the queue.Press *2 to remove yourself from the queue.

Phone questions:

Questions?

Online questions:Type your question in the Q & A box, hit enter.

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An email will be sent to all registered participants this afternoon.

You must complete the survey and attest to participation to receive the Certificate of Population Health Management and CEs.

Evaluation and Attestation

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Upcoming Webinars

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June 11, SacramentoJune 16, PasadenaJune 17, Costa MesaThis seminar will provide hospital executives with up-to-the minute information and practical guidance on issues impacting hospital finance and reimbursement.

CHA’s Hospital Finance and Reimbursement Seminar

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Thank youAnne McLeodamcleod@calhospital.org

Mark E. Grubemgrube@kaufmanhall.com

Jody Hill-Mischeljhillmischel@kaufmanhall.com

Robert W. Yorkryork@kaufmanhall.com