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Systemic Change and the Revenue Cycle September 2014 Presented by: David Smith, Partner Twitter: @DavidSmithLP

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Page 1: Webinar: Health Reform's Impact on Your Hospital's Financial Future

Systemic Change and the Revenue Cycle

September 2014

Presented by:

David Smith, Partner

Twitter: @DavidSmithLP

Page 2: Webinar: Health Reform's Impact on Your Hospital's Financial Future

Our Speakers

Michael Mast

Director, Product Marketing

GE Healthcare

David E. Smith

Director of Payer Services & Partner

Leavitt Partners

Page 3: Webinar: Health Reform's Impact on Your Hospital's Financial Future

©2014 LEAVITT PARTNERS

Changes to Coverage

Page 4: Webinar: Health Reform's Impact on Your Hospital's Financial Future
Page 5: Webinar: Health Reform's Impact on Your Hospital's Financial Future
Page 6: Webinar: Health Reform's Impact on Your Hospital's Financial Future
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© 2014 Leavitt Partners

The Number of Uninsured is Certainly Falling

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Office

Back End

Impact Dashboard

20.8 21.120 20.3

18.7 18.317.5

18.5 17.917.4

15.213.9

14.8

16.5 16.215.1

12.3

10.1

0

5

10

15

20

25

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

Trends in Uninsured

states Not Expanding Medicaid All adults States Expanding Medicaid

Gallup Poll

Source: Urban Institute

Health Policy Center

Page 11: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

But This Has Certainly Fostered an Increasingly Complex

Insurance Market because…..

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Office

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Impact Dashboard0

5

10

15

20

25

30

35

40

45

2014 2015 2016 2017 2018

CBO Public Exchange Projections

Accenture Predicted Private Exchange Enrollment

~65 M new

enrollees

Page 12: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Next Year’s Exchange Enrollment Could Double PY2014

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

1 2 3 4

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

11/1/2014 12/1/2014 1/1/2015 2/1/2015 -

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

11/1/2014 12/1/2014 1/1/2015 2/1/2015

11/15/14 12/15/14 1/15/15 2/15/15

11/15/14 12/15/14 1/15/15 2/15/1511/15/14 12/15/14 1/15/15 2/15/15

Monthly Projection Cumulative Projection

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

1 2 2 3 3 4 411/15/1

4

12/15/1

41/15/15 2/15/15

Page 13: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Price Rules and HDHPs will be the New Normal for ~65M

Enrollees

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Office

Back End

Impact Dashboard

Page 14: Webinar: Health Reform's Impact on Your Hospital's Financial Future

©2014 LEAVITT PARTNERS

Q1: What is your most prominent strategy to accommodate

the volume and complexity associated with the ACA?

A. Major workflow realignments are already underway

B. Making technology investments

C. Consolidating business offices

D. Acquiring outpatient centers

E. All of the above

Page 15: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Catalyzing in Tremendous Pricing Pressure on Some Providers

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Impact Dashboard

Page 16: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

And Creating New Strategic Opportunities, Which

Exacerbates the Existing Complexity

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Impact Dashboard

Page 17: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Risk Mitigation Programs Will Necessitate Flawless Coding

Across Markets

Implementation Step Timing

1 Rate filings due for 2015 products (approximate) May 2014 (est.)

2 First installment of reinsurance contribution is due Jan 2015

3 Issuers submit year-end financials based on State schedule Mar 1 or Apr 1, 2015

4 Issuers submit full year 2014 data with 3 months of run-out, for risk adjustment Apr 2015

5 HHS calculates and reports final risk adjustment payments (in and out) Jun 30, 2015

6 HHS collects final risk adjustment payments from low-risk carriers Jul 2015

7 Risk corridor (and MLR) reporting deadline for 2014 benefit year Jul 31, 2015

8 HHS makes reinsurance payments to issuers Aug 2015 (est.)

9 HHS distributes final risk adjustment payment to high-risk carriers Aug 2015

10 Second installment of 2014 reinsurance contribution is invoiced (U.S. Treasury portion) Oct 2015 (est.)

11 Second installment of 2014 reinsurance contribution is due (U.S. Treasury portion) Dec 2015 (est.)

Source: Wakely Consulting

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© 2014 Leavitt Partners

Strategic Considerations

• Uninsured will continue to fall. Private and public exchange growth will drive greater access

and more complex products.

• Distribution changes will catalyze transformative economic considerations at the provider-

level.

• Unusual strategic partnerships will abound.

• Greater need for patient education in using/selecting health plans to mitigate bad debt.

• Proper coding and clinical documentation are mission-critical.

• Payer-based changes will require improved efficiencies on the front and back end of the

revenue cycle.

Page 19: Webinar: Health Reform's Impact on Your Hospital's Financial Future

©2014 LEAVITT PARTNERS

Payment & Delivery System Reform

Page 20: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

The Absolute Volume of ACOs Continues to Grow

8197

138 148

208

334356

458489

606 627631

0

100

200

300

400

500

600

700

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

#o

f A

CO

s

Leavitt Partners Center for Accountable Care Intelligence 2014

Front End Middle

Office

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Impact Dashboard

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© 2014 Leavitt Partners

73

145 150

197201 203

260

109

147

159 186197

203

238

2031 35

46 49 50 55

611 12

29 32 33

53

0

50

100

150

200

250

300

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

#o

f A

CO

s

Physician Group Hospital System Insurer Other

Physician Group Models are Becoming more Dominant

Page 22: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Different Strokes for Different Folks

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© 2014 Leavitt Partners

Factors Driving Transition to VBP

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© 2014 Leavitt Partners

Inflection Point: 2016

Page 25: Webinar: Health Reform's Impact on Your Hospital's Financial Future

©2014 LEAVITT PARTNERS

Q2: Does your organization have a plan to assume a greater

percentage of risk?

A. Yes. A clearly defined 1-3 year plan

B. Yes. A clearly defined 3-5 year plan

C. Yes, but without a clear defined timeline

D. We do not have a plan in place

E. We do not plan to assume risk now or in the future

Page 26: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Page 27: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Strategic Considerations

• ACOs represent a systemic trend of evolving financial complexity in the short and medium

term.

• A confluence of government programs and commercial arrangements will drive delivery

system change.

• The pace of change varies widely from market to market resulting in unique solutions by

unique providers.

• The timing of the transition from volume to value is contingent on myriad factors; the

transition itself will require management of multiple payment models.

Page 28: Webinar: Health Reform's Impact on Your Hospital's Financial Future

©2014 LEAVITT PARTNERS

Government Program Changes

Page 29: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Medicaid’s Systemic Influence is Rising

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© 2014 Leavitt Partners

1115 Demonstration waivers or

SPAs that have been approved

by CMS

In Negotiation DevelopmentPropose

d

POLICY OPTION/STRATEGY

Ark

an

sas

Iow

a

Mic

hig

an

Wis

con

sin

Pen

nsy

lvan

ia

Ind

ian

a

New

Ham

psh

ire

Uta

h

Private Option/Premium Assistance X X X X X

Health Savings Account Model X X X

Cost Sharing – Premiums X X X X X X

Cost Sharing – Service Copays

(above federal levels)X X X X2

Incentives for Healthy Behaviors X X X X X

Medical Home/Care Coordination/ACOs X X X

Work Component X X X X

Enrollment Limits X

Global Waiver/”Block Grant” X

• 4 States with

alternative waivers

and potentially

more to come

• Each alternative

waiver is tailored

to the state

• Most waivers are

quite different—no

standard model of

deviation

• Most states will

end up expanding

Medicaid

And Myriad Forms of Expansion will Prevail

Page 31: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Most States will Expand in Medium/Long Run

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© 2014 Leavitt Partners

Most States will Expand in Medium/Long Run

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Office

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Impact Dashboard

Page 33: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

State Innovation ModelsDuals Demonstration Projects

And Other Payment & Delivery Form Innovations will

Emerge

Page 34: Webinar: Health Reform's Impact on Your Hospital's Financial Future

© 2014 Leavitt Partners

Strategic Considerations

• One in four Americans will be covered by Medicaid in some way by 2024.

• States are experimenting with myriad new payment models (privatization of Medicaid) ; that

will accelerate the transition to value.

• Expanded access to coverage on the part of the Medicaid population will increase provider

opportunity; complexity with different payment forms could exacerbate existing challenges.

• Other programs from CMMI are driving various innovations in the delivery system; CMMI is

poised to drive others.

Page 35: Webinar: Health Reform's Impact on Your Hospital's Financial Future

A health care intelligence business

LeavittPartners.com

Page 36: Webinar: Health Reform's Impact on Your Hospital's Financial Future

Imagination at work.

GE Healthcare IT

Integrated Care Solutions Connecting productivity with care

JB21000XX | May 2014

Page 37: Webinar: Health Reform's Impact on Your Hospital's Financial Future

37JB21000XX | May 2014

©2014 General Electric Company – All rights reserved.

The results expressed in this document may not be applicable to a particular site or installation and individual results may vary. This document and its

contents are provided to you for informational purposes only and do not constitute a representation, warranty or performance guarantee. GE

disclaims liability for any loss, which may arise from reliance on or use of information, contained in this document. All illustrations are provided as

fictional examples only. Your product features and configuration may be different than those shown. Information contained herein is proprietary to

GE. No part of this publication may be reproduced for any purpose without written permission of GE.

DESCRIPTIONS OF FUTURE FUNCTIONALITY REFLECT CURRENT PRODUCT DIRECTION, ARE FOR INFORMATIONAL PURPOSES ONLY

AND DO NOT CONSTITUTE A COMMITMENT TO PROVIDE SPECIFIC FUNCTIONALITY. TIMING AND AVAILABILITY REMAIN AT GE’S

DISCRETION AND ARE SUBJECT TO CHANGE AND APPLICABLE REGULATORY CLEARANCE.

Omnyx products are for in vitro diagnostic use for specific clinical applications, and are intended for research use only on other applications.

Predix™ is GE’s software platform for the Industrial Internet. Predix enables asset and operations optimization by providing a standard way to run

industrial-scale analytics and connect machines, data, and people. Whether your solutions are deployed on machines, on-premise or in the cloud,

Predix provides an integrated stack of technologies for distributed computing and big data analytics, asset management, machine-to-machine

communication and mobility, meeting your needs for scalability, extensibility, customizability, and security.

GE, the GE Monogram, Centricity, Predix, and imagination at work are trademarks of General Electric Company.

Caradigm is a registered trademark of Caradigm USA LLC. Omnyx is a trademark of Omnyx, LLC.

All other product names and logos are trademarks or registered trademarks of their respective companies.

General Electric Company, by and through its GE Healthcare division.

Page 38: Webinar: Health Reform's Impact on Your Hospital's Financial Future

38

HYPOTHETICAL EXAMPLE . Information presented in this example is hypothetical and for illustrative purposes only. Any analysis or information derived from this

example is for general information purposes only and is being furnished free of charge without representation or warranty of any kind whatsoever, including with respect to

the calculations, inputs, outputs, and/or information provided in such analysis. While this example allows several variables to be entered by you and is based on your

unaudited inputs, it also contains certain assumptions that may not be valid for your specific facts and circumstances. Actual expenses will vary depending on many

factors including, without limitation, your specific operating costs, savings, actual numbers and types of procedures performed. This example and any analysis are

provided for your use only and may not be transferred to any third party.

THIS example IS BASED UPON CERTAIN PUBLIC INFORMATION AND ASSUMPTIONS WHICH MAY NOT APPLY TO YOU Certain values provided in this example

were obtained from available third party sources and are being furnished by way of example only. No representations or warranties are given regarding the accuracy of

any such values.

YOU MUST INDEPENDENTLY VERIFY THIS INFORMATION AND SEEK EXPERT ADVICE. You should not rely on any analysis, calculation, output or information

provided by this example. Any reliance shall be at your sole risk, and we shall have no liability to you or any third party for any reason. Nothing in this example and no

analysis derived therefrom should be construed as constituting tax, accounting, legal or financial advice. You should consult your own professional advisors for such

advice. Nothing herein constitutes a proposal or commitment for any particular transaction. Any such transaction would be subject to execution of documentation in form

and substance satisfactory to GE.

HEALTHCARE PROFESSIONALS ARE RESPONSIBLE FOR MAKING INDEPENDENT CLINICAL DECISIONS AND APPROPRIATELY BILLING, CODING AND

DOCUMENTATION THEIR SERVICES. This example is not intended to interfere with a health care professional’s independent clinical decision making. Other important

considerations should be taken into account when making purchasing decisions, including clinical value. The health care provider has the responsibility, when billing to

government and other payers (including patients), to submit claims or invoices for payment only for procedures which are appropriate and medically necessary and in

accordance with applicable laws. You should consult with your reimbursement manager or healthcare consultant, as well as experienced legal counsel, prior to any

expansion of service.

© 2014 General Electric Company – All rights reserved

ROI Disclaimer

JB21000XX | May 2014

Page 39: Webinar: Health Reform's Impact on Your Hospital's Financial Future

39

The world has changed…

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The rapid rise of value-driven healthcare

JB21000XX | May 2014

Increased government

policiesand financial pressures…

…drive shift to more integratedand value-based care models…

…which require software-enabled

solutions to deliver on cost and

quality

Page 41: Webinar: Health Reform's Impact on Your Hospital's Financial Future

41

Our joint opportunityHealthcare IT transformation to help drive better outcomes

Accelerating workflows,

streamlining processes, improving analytics

capabilities…

Liberate and create new

value from dataEnable patientswith more informed and proactive healthcare experience

Give providerstools to help deliver better outcomes

From treating illness to managing health

JB21000XX | May 2014

Page 42: Webinar: Health Reform's Impact on Your Hospital's Financial Future

42

Key ingredients to deliver successful outcomes

Software & Analytics

Workflow & Domain Expertise

StrongEcosystem

JB21000XX | May 2014

All three elements required to improve healthcare delivery

Page 43: Webinar: Health Reform's Impact on Your Hospital's Financial Future

43

Bringing it all together to deliver successful outcomes

JB21000XX | May 2014

Software Analytics Services Expertise Ecosystem

Care Delivery Management

Enterprise Imaging

Population Health Management

Financial Management

Financial Performance

Clinical Quality

Operational Efficiency

Outcomes

Solutions

Enablers

Page 44: Webinar: Health Reform's Impact on Your Hospital's Financial Future

44

Turning Insights into Outcomes

Common Approach:

High Cost patients

77,000 Diabetics

High Cost Population

High Impact Population

54,552patients

925patients

Savings Potential

$6,403,775

1.6 M population

Stronger Analytics:

Acute Impact

Quality Compliance

Motivation

Movers

Savings potential

$425 PM/PY

Risk Management - Maximizing Return on InterventionFocus on the right interventions with the most actionable patients

Savings potential

$7000 PM/PY

Page 45: Webinar: Health Reform's Impact on Your Hospital's Financial Future

45

Enterprise Revenue Cycle Solution

Integrated

EDI

Financial

Risk

Manager

Patient

Access

Mobile

Connectivity

Services

Practice

Mgmt

Systems

High-performingDrives financial results through increased efficiency from scheduling through collections

Integrated financialsIs reform-ready from ambulatory to hospital

Comprehensive automationEnables control of every aspect of your accounts receivable -- every payer, every edit, every rejection

Page 46: Webinar: Health Reform's Impact on Your Hospital's Financial Future

46

Financial Management

Reduced billing lag time by 69%1“How can we take on risk

and still deliver solid patient outcomes?”

Financial Risk Management Solutions

Decreased A/R days by 58%2“What type of healthcare

reform model is rightfor my practice?”

Contract Modeling & Management

Helped reduce cost to collect to less than 4%3

“Which metrics should I focus on to drive

maximum profitability?”

Revenue Cycle Management

Activity-Based Costing

Increased up-front collections by $2M to $12M3

“How do I connect my ITsystems to ensure accuracy and great

outcomes in reporting?”

EDI & Claims Processing

1 Baystate Health in Massachusetts: reduced billing lag time by 69% - Source: Baystate Health in Massachusetts Case Study, 20122 University of Missouri Health: decreased days in A/R by 58% - Source: University of Missouri Health Case Study, 20123 Saint Francis Health System: increased up-front collections by $2M to $12M. Source: Optimizing Revenue Cycle Management: A Case Study of Centricity Business at Saint Francis Health System, IDC Health Insight, August 2012

Customer Challenges GE Solutions Customer Outcomes

JB21000XX | May 2014

Page 47: Webinar: Health Reform's Impact on Your Hospital's Financial Future

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Questions