The Evolving Health Care Landscape and Move Toward ...

Welcome to today’s webinar

The Evolving Health Care Landscape and Move Toward Accountable Care

GE Healthcare11/19/2013

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Today’s speakers

Wayne SensorSr. AdvisorLeavitt Partners

Michael MastSenior Marketing ManagerGE Healthcare

The Evolving Health Care Landscape and Move Toward Accountable Care

Wayne A. Sensor, Sr. AdvisorNovember 19, 2013

©2012 LEAVITT PARTNERS

Our Health Care Story

Structure

• The burden of entitlement compassion versus economic dispassion will

enact pressure

• The U.S. health care system will be forced to change due to burdensome

pressure

• Various modes of payment and models of care are emerging to contain

cost and provide value

• The pace of health care system change will depend upon market

pressures and enabling forces


The Compounding of Compassion

Structure

Medicare

Medicaid

SS Insurance

Unemployment

AFDC

1935Roosevelt

2010Obama

ACA

1965Johnson

1974Nixon

SSI

1997Clinton

CHIP

TANF

2006Bush

Medicare (Part D)


Staggering Medicaid Spending Growth


Pressure to Change

1. Federal• Medicare Trust Fund depletion• Sustainable Growth Rate problems

2. State• Medicaid growth, crowding out other

programs• Program Integrity Efforts

3. Commercial• ACA Implementation Implications• Transparency


Broken System, New Models

Structure

Hospital Acquired Conditions

Health Systems and Physicians Collaborate

Payers Evolve


Providers are evolving

• Provider consolidation

• The Cleveland Clinic and hospital chain Community Health Systems Inc. purchased Akron General Health System in August, 2013

• Payer competition increasing from Integrated delivery systems

• Geisinger is planning on creating a private exchange

• Providers creating insurance plans

• Catholic Health Partners announced it will acquire Kaiser Permanente Ohio (5/13)

• National insurers are acquiring physician groups and enabling them

• Humana purchased Metropolitan Health Networks in Dec. 2012

Source: Company websites and news releases

Providers Collaborate and Evolve


Physician Practices Evolve

Outcomes

Processes

Structures

Current State Future State

• Lack of familiarity with or acceptance of ACOs and Patient-centered Medical Homes

• Emerging consolidation / integration of physician groups

• Emerging use of disease management / utilization mgmt

• Health plans experimenting with cost / quality controls over physicians / hospitals

• Increased physician-hospital integration

• Increased use of mid-level professionals in primary care

• Increased EHR adoption by physicians

• Increased connectivity with patients using online and mobile technologies

2-5 years


IDNs Look to Manage Population Health

N E T W O R K P A R T N E R S

Employers Preferred Specialists

IntegratedDeliveryNetworks

• Gainshare• Capitation• Full Global

Risk

Can assume

riskInvest heavy

In technology

• Clinical decision support• Predictive modeling• Prospective

budgets/resource planning

Data Analytics

• Coordinated care across settings

• Clinical and managerial coordination

• Care teams

Care Coordination:

“HIMSS rates Kaiser hospitals at the highest stage on their Analytics scale. Kaiser hospitals make up one third of the 98 hospitals in the most sophisticated stage.” -HIMSS, 2012

Source: BCBSA


ACO Benchmarks

Vertical Integration

Provider Market Trends

Legislation/Regulation

Employer & Consumer

Movements

Enabling Technology

Drivers of Vertical Integration

Population Based

PaymentsFee for Service

P4PValue Based

Purchasing

Episode Based

Payments

Level of financial risk borne by provider

Level of financial risk borne by payer

Projected evolution of risk-based provider entities

Source: BCBSA

Providers Integrate Vertically

Capitation


Payers are partnering

• Healthagen enables providers to assume risk and manage costs

• Engaging in strategic partnerships and forming collaborative care entities

• Forming collaborative accountable care (CAC) relationships

• Plans to form 100 CAC relationships by 2014

• ACO contracts are expected to total $50 billion by the end of 2017

• Optum’s strategic acquisitions across 30 states facilitates provider partnerships

• Emphasizing provider acquisition with goal of lowering costs 15%

• Investing $300-400 million to acquire MSOs and physician groups

Source: Company websites and news releases

Payers Partner

The Movement Towards Accountable Care


LP Definition: Accountable Care

• Bear financial risk for the measured health of a population• Align incentives to encourage the production of high quality health outcomes

• Oversee the provision of clinical care• Coordinate the provision of care across the continuum of health services• Invest in and learn to use appropriate IT to manage population health

• Improve the individual experience of care• Improve population health• Reduce the cost of health care for populations

Processes

Outcomes

StructurePrepared for Walgreens Proprietary and Confidential


Types of ACOs

Payer-Provider Collaboration• Provider partners are diverse• Payer-involvement varies from

o TPA/MSOo First-payer status (temporary

exclusivity)o True collaborative partner

Single-Provider ACO• Tends to be original entity (Billings Clinic,

Sharp Healthcare)• More likely to be looking to develop in-

house competency (unless existing)• Decision making mechanism is less likely to

see change*

*LP has noticed a general trend within ACOs to create more collaborative governing bodies. Much of this stems from organizationsseeking physician buy-in and using leadership positions to create opportunities for physician contribution.

Insurer-Led ACO• More likely to be a physician group

(physician problems)• Insurer likely to retain formulary decisions

Multiple-Provider ACO• High likelihood of separate governing

structures (unless M/A in the works)• Decisions may be joint but purchases are

along original lines (hospital/physician group)


Payment Arrangements

• 212 of the 220 MSSP ACOs are shared savings only (no downside risk)

• Commercial contracts are mostly upside only• Timeline is usually 3 years for the transition to actual risk bearing


Bundled Payments

A single, comprehensive payment that

covers all of the services involved in the

patient’s care over a defined period of time

Essential attributes for bundling payments include:

o Administrative capacity to collect and dispense income in a transparent manner as well as determine what patients’ continuing care needs may be

o Ability to effectively work with other care providers to hold them accountable for high quality and efficient care delivery

o Information technology systems to track and manage processes


Bundled Payments: Success Factors / Challenges

Commitment from top leaders

Open mind to new ideas

Adequate resources:

Program design, administration,

provider contracting

Success Factors

Challenges• A lack of leadership

commitment, adequate resources, and an open mind

• Data deficits

• Lack of engagement in local efforts by national plans

Source: Healthcare Incentives Improvement Institute


Commercial Bundled Payment ActivityCommercial Payer Service Line Location

Aetna, CIGNA, BCBS Orthopedics Irvine, CA

BCBS of Idaho Obstetrics Idaho

BCBS of Minnesota Orthopedics Bloomington, MN

Anthem BCBS Orthopedics Appleton, WI

Anthem BCBS of MO Orthopedics St. Louis, MO

BCBS of Tennessee Orthopedics Memphis, TN; Nashville, TN; Knoxville, TN

BCBS of North Carolina Orthopedics Gastonia, NC

BCBS of North Carolina Knee replacement Durham, NC

BCBS of South Carolina Cardiovascular Columbia, NC

BCBS of Western NY Cardiovascular Buffalo, NY

Connecticare Orthopedics Hartford, CT

Florida Blue Orthopedics Jacksonville, FL

Humana Radiation therapy services Ft. Myers, FL

Blue Cross Blue Shield of Florida Prostate Cancer Miami, FLSource: The Advisory Board, Commercial Bundled Payment Adoption Tracker


Employer Bundled Payment Activity

Source: The Advisory Board, Commercial Bundled Payment Adoption Tracker

Employer Service Line Location

Wal-Mart Cardiovascular / Spine Seattle, WA; Scottsdale, AZ; Temple, TX; Springfield, MO; Rochester, MN; Cleveland, OH; Danville, PA; Jacksonville, FL

Kroger Co Orthopedics Irvine, CA

South Dakota State Employee Health Plan

Outpatient back procedures

Rapid City, SD

Boeing Cardiovascular Chicago, IL

Lowes Cardiovascular Cleveland, OH

Pepsi Co Cardiovascular Baltimore, MD

Local employers Cardiovascular Charlotte, NC


CMS Bundled Payments for Care Improvement (BPCI) Initiative

PPACA called for a pilot program by 2013: In early 2013, CMS rolled out 4 models with more than 500 organizations selected to participate.

Retrospective Acute Care Hospital Stay

Only

Includes an episode of care focused on the acute care inpatient hospitalization

Participants agree to provide a standard

discount to Medicare from the usual Part A hospital

inpatient payments

Retrospective Acute Care Hospital Stay

plus Post-Acute Care

The episode of care will include the inpatient stay

and all related services during the episode

Involves a retrospective bundled payment

arrangement where actual expenditures are reconciled against a target price for an

episode of care

Retrospective Post-Acute Care Only

The episode of care is triggered by a hospital stay and begins at the onset of post-acute care services

Involves a retrospective bundled payment

arrangement where actual expenditures are reconciled against a target price for an

episode of care

Acute Care Hospital Stay Only

Involves a prospective bundled payment

arrangement where a lump sum payment is made to a

provider for the entire episode of care

Source: Centers for Medicare and Medicaid Services


CMS Demonstration Sites

Source: Centers for Medicare and Medicaid Services

The BPCI program is CMS’s largest accountable care initiative, due in part to the ability of post-acute providers to apply independently.


Top 10 Clinical Bundles for Billing

Source: The Advisory Board

43%

44%

46%

47%

47%

48%

49%

51%

58%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Double replacement of the lower extremity

Revision of the hip or knee

Cardiac defibrillator

Simple pneumonia and respiratory infections

Cardiac valve

Percutaneous coronary intervention

COPD, bronchitis/asthma

Coronary artery bypass graft

Congestive heart failure

Major joint replacement of lower extremity

Medical bundle

Surgical bundle

Percentage of model 2-4 applicants selecting condition

Most participants are bundling across multiple service lines, with more than 1/3 of providers in Models 2-4 selecting all 48 of the possible bundles.


Projected Changes in Payment Models


ACO Growth (overall)

Leavitt Partners Center for Accountable Care Intelligence 2013


ACO Sponsoring Entities

Community-Based Organizations

Hospital Systems

Physician Groups

Insurers


Where are They Forming?


Pioneer ACO Developments

Financial Results• $140 million in total savings

o $76million in shared savings will be returned to the 13 Pioneerso $33million in net savings for Medicare Trust Funds

• 12 did not achieve significant savings; 2 cost Medicare more and will owe $4 million back

• 18 achieved some cost savings, but only 13 saved enough to share savings with Medicare

Quality results• All improved quality and rated highly on patient satisfaction scores• 25/32 Pioneers lowered risk-adjusted readmission rates compared with FFS

Departures & Transitions• 7 Pioneer ACOs are leaving to the lower-risk MSSP• 2 Pioneer ACOs are leaving the CMS ACO programs altogether

• Presbyterian New Mexico & Plus! ACO (North Texas Specialty Physicians)*

Trends and Financial Impact


Major Mergers/Acquisitions


Merger & Acquisition Trends Across Health Care


Provider Financial Trends: Changing Payers


Provider Financial Trends

Trendso Progressive decrease in

uncompensated care from 2014-2016 (including charity care)

o Decrease in Disproportionate Share Hospital (DSH) funding

o Medicare/Medicaid rates likely to moderate

o Slight erosion in employer sponsored insurance plans

o Compression of commercial rates in certain markets

o Increase in risk-based payment

Implicationso Greater consolidationo Increased rate of accountable

care capability developmento Cost-shifting to employer-

sponsored insurance


Utilization Changes on Horizon

FactorsNew Userso 7 million people will enroll

through the 2014 exchangeso Or 8.5 million, or moreo Or fewer

o Some Medicaid expansion

New Dynamicso Unclear Health IQ levels for new

commercial/Medicaid populations

o More efficient inpatient care driving greater outpatient volumes

Implicationso Higher Emergency

Department/Urgent Care utilization

o Pent-up demand could increase medical price inflation

o Workforce challenges


Hypothetical Financial Impact

Johns Hopkins Income Statement

The Question of When


The transition may not happen over night…


…but will happen sooner than anticipated.

Unlock the performance of your revenue cycle


Strengthen financial performanceImprove your ability to optimize net collections to help navigate falling reimbursement

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Your need Our solution

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Source: GE Healthcare customer metric data



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Faculty Practice Solutions Center2012 Top Performing Organizations7 out of the top 10 best performing organizations are Centricity Business customers:

1. University of Pittsburg Medical Center2. Duke Medicine3. The Emory Clinic4. University of Minnesota Physicians5. University of Massachusetts Medical Group6. University of Wisconsin Medical Foundation7. The Medical College of Wisconsin8. Fletcher Allen Health Care – University of Vermont9. Vanderbilt Medical Group10. University of Missouri Health Care – University

Physicians

Source: Faculty Practice Solutions Center; Billing Office Survey FY2012 Results


Services

Connectivity

RiskManagement

PatientAccess

IntegratedEDI

Mobile

CentricityBusiness

Enterprise Revenue Cycle Solution

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

Enterprise-readyIs reform-ready from ambulatory to hospital

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