Minnesota HomeCare Association
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1 Minnesota HomeCare Association Philips National Study on the Future of Technology and Telehealth in Home Care May 2008 Presented by Dr. Robert Fazzi 243 King Street, Suite 246 Northampton, MA
2 Why the Growing Interest in Home Care? We have a growing deficit in this country. National expenditures for nondomestic cost continues to grow. Cost of health care is growing dramatically. Projected health care percentage of GDP is projected to grow to 19.5% by Every aspect of health care is being looked at for cost savings including home care. Direct Health Care Expenditures by Sector Year: 2006 Home Care, 3% Hospital, 37% Dental, 5% Other, 11% Prescription Drugs, 12% SNF 7% Physician/ Clinical Services, 25% Growing Belief That Despite Cost Increases, Home Care May Be Making Excess Profits MedPAC 2005 MedPAC 2006 MedPAC 2007 MedPAC 2008 NAHC 2008** BestWorks Avg 2007** Urban Profit Margins 16.5% 14.1% 14.6% 14.3% Projected 16.8% Projected 11% Projected 2% 17.35% Rural Profit Margins All 17.3% 15.4% 16.14% 15.81% * Note: MedPAC prediction for 2008 all average: 11.4% ** NAHC and BestWorks include hospitalbased. MedPAC does not. Fazzi Associates, Inc. Page 1
3 What Are Leading Agencies Doing? Focusing on Their Two Major Outcomes 1. Improving Quality: Clinical quality Patient satisfaction 2. Improving financial performance and profitability. For Home Care, the Clinical Quality Goals Are Clear Number of Agencies with Scores for All Home Health Compare Measures Hospitalbased Reporting Freestanding Reporting Range of Fazzi s Quality Composite Percentile Scores for All Agencies Range of Quality Composite Percentile Scores for Top 20% Number of Agencies in Top 20% (Top 20%=Composite Score in 80 th Percentile or Higher) National 5,523 1,264 4,259 0 to 100 th Percentile 80 th to 100 th Percentile 1,105 20% Source: CMS Home Health Compare, March 2008 MN to 87 th Percentile 83 rd to 87 th Percentile 2 2.5% For Home Care, the Profitability Goals Are Clear Number of Agencies Reporting Hospitalbased Reporting Freestanding Reporting Range of Profitability/Medicare Episode For All Number of Agencies in Top 20% Range of Profitability/Medicare Episode for Top 20% National 5, ,651 (50%) to +50% 1, % to 49.7% MN (50%) to +40% % to 39.8% Source: CMS Cost Report Data, 2006, 2007, 2008 Fazzi Associates, Inc. Page 2
4 Who Are the Benchmark Exceptional Agencies? Those in Top 20% of Both Quality and Profit Number of Agencies Eligible for Comparison, i.e. Have Both Quality and Profit Scores Top 20% in Quality Top 20% in Profit Number of Agencies in Top 20% of Both Quality and Profit National 4,929 1,105 1, % Minnesota % Source: CMS Home Health Compare, March 2008, and CMS Cost Report data, 2004, 2005, 2006, 2007 To Control Your Future, Here Are Two Numbers You May Need to Match or Beat 11.4% MedPAC s 2008 projected average Medicare Profit Margin CMS reported average Case Mix Weight at RAP 1.23 The Philips National Study: Background Information Goal: To learn adoption rates, trends and how agencies use technology, particularly telehealth, to improve quality and financial outcomes Sponsor: The Philip's Consumer Healthcare Solutions CoSponsors: The National Association for Home Care and Hospice and Fazzi Associates Length of Time: Nine Months Primary Focus: Home Care and Hospice s four main types of technology: Backroom fiscal, billing, payroll, HR, IS services Point of Care (POC) Emergency Medical Records (EMR) Telehealth Fazzi Associates, Inc. Page 3
5 Supported by National Steering Committee 2007 Region I Joan Hull, Home Health VNA Region II Laurie Neander, At Home Care Bridget Gallagher, Jewish Home and Hospital Lifecare System Region III Rhonda Chetney, Sentara Home Care Services Kristy Wright, VNA Hospice of Western Pennsylvania Region IV John G. Beard, Alacare Home Health and Hospice Region V Cathy Barr, HealthEast Home Care Mary Ann Rayrat, Mercy Home Care/Cranbrook Hospice 2007 National Steering Committee Region VI Tasha Mears, LHC Group Debra Bilbo, Christus Home Health Region VII Elizabeth Sutter, Iowa Health Home Care Region VIII Jen Porter, Good Samaritan Society Jo Burdick, MeritCare Home Care Region IX Marcia Reissig, Sutter Home Health Lyleen Pricor, Sharp Home Care Region X Sheryl Olson, Providence Health System National Erin Denholm, Centura Home Care and Hospice Mary St. Pierre, NAHC Joan Marren, VNS of NY Susan Sender, Gentiva Health Services Decision to Use Representative Sample for Agencies Over $1 Million in Medicare Revenue National Minnesota HHA Revenue Agencies Percent Agencies $0 $500, % 20 16% $500,000 $1M % 29 23% $1 $2 million % 36 28% $2 $3 million % 13 10% $3 $4 million 518 8% 7 5% $4 $5 million 342 5% 4 3% $5 $6 million $6 million plus % 13% 6 13 Percent 5% 10% Source: CMS Home Health Cost Reports (extracted March 2008) Fazzi Associates, Inc. Page 4
6 Number of Participating Agencies by State Alabama 16 Indiana 34 Alaska 2 Iowa 11 Arizona 16 Kansas 12 Arkansas 12 Kentucky 13 California 53 Louisiana 35 Colorado 15 Maine 6 Connecticut 12 Maryland 4 Delaware 2 Massachusetts 11 Florida 50 Michigan 43 Georgia 17 Minnesota 24 Hawaii 2 Mississippi 10 Idaho 3 Missouri 19 Illinois 59 Montana 7 Number of Participating Agencies by State Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Key Representative Sample Segments Telehealth Non Telehealth <$1M $1M $3M $3 $6M >$6M Total Agencies = 976 Telehealth Status National Annual Revenues National MN 12 6 MN Fazzi Associates, Inc. Page 5
7 Key Representative Sample Segments Total Agencies = 976 Freestanding Hospitalbased ForProfit Not ForProfit Other Primarily Rural Primarily Urban National MN How Important Is Technology to the Future of Health Care? Better technology can help to rescue a health care system that is saturated with inefficiency. Mike Leavitt Secretary of Health and Human Services Stanford University May 2005 The Four Technology/Telehealth Infrastructure Components of Present and Future Agencies Fiscal and Backroom Point of Care (POC) Electronic Medical Records Telehealth Fazzi Associates, Inc. Page 6
8 Technology Number I A Short History of Fiscal/Billing Systems : HCFA (now CMS) encouraged home care providers to do electronic claims submission. 1997: The vast majority (+95%) of providers had back office systems or were using billing services for electronic claims. 2008: Changes in PPS may lead HHAs to update systems to new versions. Today: Nearly eighty percent of agencies (77.2%) contract with outside vendors. Satisfaction With Present System How satisfied are you with your present billing/fiscal system? Very Dissatisfied Somewhat Dissatisfied Somewhat Satisfied Very Satisfied All 3.5% 9.8% 33.8% 52.9% Hospital based 5.5% 13.9% 34.4% 46.2% Not for Profit 5.7% 12.9% 33.5% 47.9% MN 0% 13.0% 39.1% 47.8% 21.6% Percentage of agencies that report that they will be upgrading or replacing their present system in the next twelve months. 5.6%: Agencies considering it. Source: Philips National Study on the Future of Technology and Telehealth in Home Care, Fazzi Associates: 2007 Fazzi Associates, Inc. Page 7
9 Technology Number II Short History of Point of Care Systems : First products introduced : Growth driven by agencies desire to improve capacity to collect data and maybe increase productivity. 1997: An estimated 10% of providers using POC : IPS froze the market with no growth until PPS was introduced : Premium on capturing and communicating clinical data. Significant growth. 2007: Percent of agencies with POC: 61.0%. Use of Point of Care Systems Do you presently use a Point of Care system to collect data in your patients homes? All National 61.0% MN 66.7% Hospitalbased Not for Profit Freestanding Under $1 Million 77.6% 79.1% 50.6% 51.1% no responses in category Type of Hardware Used What type of hardware do your clinicians use? All Hospitalbased For Profits Laptop 70.7% 77.2% 64.0% Handheld 4.3% 1.7% 9.6% Tablets or Notebook 19.8% 15.0% 20.0% Other 5.1% 6.1% 6.4% Fazzi Associates, Inc. Page 8
10 Time to Learn POC System How long did it take your clinicians to learn the POC system and return to previous productivity levels? 0 2 Weeks 2 4 Weeks 4 8 Weeks 8 12 Weeks 12.1% 16.6% 18.5% 14.7% More than 12 Weeks Never Reached Previous Productivity Levels 31.6% 6.4% General Information About Those With Point of Care Systems 86.6%: Obtain system from outside vendor. 25+: Number of systems identified in the study. 16.8%: Users of Point of Care who will replace or update in the next twelve months. 31.3%: Users planning on updating with a new vendor. An additional 10.9% are unsure. 10.2%: Users considering changing hardware. 44.4%: Users considering tablets or notebooks. Technology Number III Electronic Medical Record Systems Vendors started referring to their clinical systems as an EMR over the last 2 to 3 years as interest in this technology has increased. Very little integration of home care clinical systems with those in other settings, i.e. hospital or physician settings. Home health already may be deep into EMR but possibly not on a platform that will be the all payer platform that may get adopted. Many definitions of this term. Confusion over EHR (Electronic Health Records) and EMR (Electronic Medical Records). Often used interchangeably. Fazzi Associates, Inc. Page 9
11 Administration Increasing Pressure for Adopting Electronic Medical Records We will make wider use of electronic records and other health information technology, to help control costs and reduce dangerous medical errors." President George W. Bush, State of the Union Address, January 31, 2006 Source: The White House, Strengthening Health Care, Speeches and News Releases Use EMR Systems Do you presently have some type of EMR system to input, store and retrieve patient data in the field or your office? Yes No All* 58.5% 41.5% Hospitalbased Not for Profit $3M to $6M 61.3% 69.3% 66.5% 38.7% 30.7% 33.5% Note: Maybe confusion over definition. Does EMR mean digital medical records or integration with all segments of the health field? Technology Number IV Telehealth Systems/Remote Patient Monitoring Telemedicine is the use of medical information exchanged from one site to another via electronic communications to improve patients' health status. American Telemedicine Association Telemedicine incorporates direct clinical, preventive, diagnostic, and therapeutic services and treatment; consultative and followup services; remote monitoring of patients; rehabilitative services; and patient education. US Food and Drug Administration Fazzi Associates, Inc. Page 10
12 Use of Telehealth Systems Do you presently have some type of Telehealth or Remote Patient Monitoring system? All Under $1 Million Over $6 Million Hospitalbased Not for Profit National 17.1% 9.0% 32.0% 15.0% 23.6% MN 25.0% Length of Time Using Telehealth How long have you used your telehealth system? Less than one year 24.4% 1 3 Years 44.0% 3 5 Years 22.0% More than five years 9.5% Types of System Which type of system best explains your telehealth system? Serverbased Webbased Both All 41.9% 40.7% 17.4% Rural 32.7% 51.0% 16.3% Urban 45.8% 36.4% 17.8% Freestanding 46.0% 34.5% 19.5% Hospitalbased 33.3% 53.7% 13.0% Fazzi Associates, Inc. Page 11
13 Percentage of Units Actually Being Used On an average day, what percent of your units are actually being used? Hospitalbased All Freestanding Less than 25% 14.5% 8.0% 27.8% 25% 50% 16.3% 17.0% 13.0% 51% 75% 25.9% 30.4% 18.5% 76% 90% 24.1% 22.3% 27.8% 91% 100% 19.3% 22.3% 13.0% 32.4% Percentage of agencies who presently do not have a telehealth system but are planning on purchasing a system in the next twentyfour months. 16.5%: Agencies not sure and are considering it. Source: Philips National Study on the Future of Technology and Telehealth in Home Care, Fazzi Associates: 2007 Percentage of Agencies Planning on Entering the Telehealth Field Do you plan on purchasing some type of Telehealth or Remote Patient Monitoring system in the next two years? All Less than $1 Million $1M $3M Yes 32.4% 31.5% 33.7% No 51.0% 54.4% 47.5% Don t Know 16.5% 14.1% 18.8% MN Yes 27.8% $3M $6M 33.9% 50.0% 16.1% $6M or More 29.4% 51.8% 18.8% Fazzi Associates, Inc. Page 12
14 When Purchasing, Importance of Having Telehealth System Integrate With EMR 77.4% When you purchased either your EMR or telehealth system, how important was it that it integrate with the each other? 52.7% EMR Telehealth Percent of Agencies Who Felt It Was Important Questions Home Care Leaders Most Wanted Answered During the Web Input Phase How receptive are patients to having units in their house? How receptive are clinical staff to having a telehealth program? What impact do telehealth programs have on clinical operations? What impact do telehealth programs have on quality? What impact do telehealth programs have on profitability? How Receptive Are Patients to Having a Telehealth System in Their House? Percentage of Patients Who Refuse the System Less than 5% 5% to 10% 11 20% More than 20% 64.3% 19.6% 8.9% 7.1% Note: Rural agencies has the least rejection rate: 70.0% at less than 5% Fazzi Associates, Inc. Page 13
15 Receptivity of Staff to Having Telehealth Services in Their Agency Not Receptive Before Program Implemented 21.4% After One Year 12.3% Indifferent 14.6% 10.0% Receptive 45.7% 52.3% Very Receptive 18.3% 25.4% Does Telehealth Have Any Impact on Quality? What Respondents Say Yes No Don t Know Overall Quality 88.6% 3.6% 7.8% Emergent Care 79.8% 8.9% 11.3% Unplanned Hospitalizations 75.4% 14.4% 10.2% Patient Satisfaction 70.8% 15.5% 13.7% 75.9% An additional finding: Percentage of agencies report that telehealth services has led to patients improving self care. Source: Philips National Study on the Future of Technology and Telehealth in Home Care, Fazzi Associates: 2007 Fazzi Associates, Inc. Page 14
16 Does Telehealth Help You Improve Your Financial Results? Five Options 1. Increase your revenue/episode. 2. Increase your cases/clinician. 3. Increase clinical productivity, i.e. number of visits/day. 4. Decrease your visits/episode. 5. Increasing your revenue by increasing referrals that you costeffectively manage in a quality manner. Does Telehealth Help You Increase Your Revenue/Episode? No Revenue impacted most by OASIS assessments. Increase by 1/100 can have a dramatic impact. Consider What Would Happen If You Improved the Accuracy of Your OASIS Scores? Assume 500 SOC Average Case Mix Weight National 1.23** Revenue/ Episode $2,270.32* $2, $2, $2, $2, $2, $2, $2, SOC Net Revenue $1,396,247 $1,362,192 $1,305,434 $1,248,676 $1,191,918 $1,135,160 $1,078,402 What a Small Improvement Would Mean N/A ($34,055) ($90,813) ($147,571) ($204,329) ($261,087) ($317,845) *Current CMS Standardized 60 Day Rate for Episodes as of Jan. 1, 2008 **BestWorks, SOC Case Wgt. 2008/Q1 Fazzi Associates, Inc. Page 15
17 Can Telehealth Help You Decrease Your Cost/Visit by Having More Cases/Clinicians? Maybe Clinical Caseloads Increase: 19.8% Decrease: 13.2% No Impact: 63.5% Can Telehealth Help You Decrease Your Cost/Visit by Increasing Your Clinical Productivity, i.e. Visits/Day? Yes Yes: 31.7% No: 6.0% No Impact: 60.5% Not Sure: 4.1% Can Telehealth Help You Decrease Your Cost/Episode by Decreasing Visits/Episode? Yes Yes: 49.7% No: 13.6% No Impact: 36.5% Not Sure: 0% Fazzi Associates, Inc. Page 16
18 Can Telehealth Help You Increase Revenue by Increasing Referrals That You CostEffectively Manage? Yes Increase: 45.2% Decrease: 0.6% No Impact: 50.0% Not Sure: 4.2% What Differentiates Successful Telehealth Agencies From Those With Less Success? Best Practices What Impact Has Telehealth Had on Cost, Profitability and Clinical Operations? Increase Decrease No Impact Don t Know Clinical Caseloads 19.8% 13.2% 63.5% 0% Clinical Productivity 31.7% 6.0% 60.5% 4.1% OnSite Visits by Clinical Staff 13.6% 49.7% 36.5% 0% Referrals 45.2% 0.6% 50.0% 4.2% Fazzi Associates, Inc. Page 17
19 42.8% Percentage of agencies that say that their telehealth program has led to a reduction in cost. Source: Philips National Study on the Future of Technology and Telehealth in Home Care, Fazzi Associates: 2007 The One Strategic Clinical Area That Most Agencies Are Interested In: Disease Management What percentage of agencies use telehealth as part of a disease management program? What impact does telehealth have on quality outcomes within a disease management program? What impact does telehealth have on financial outcomes in a disease management program? Why Such an Interest in Chronic Disease Management? More than half of Americans suffer from one or more chronic diseases. The most common chronic diseases cost the economy more than $1 trillion annually. Each year millions of people are diagnosed with chronic disease, and millions more die from their condition. The aging population is expected to drive a substantial increase in the number of cases of chronic disease over the next 20 years. Home care provides extensive services to those with chronic diseases. Source: Milken Institute, An Unhealthy America: The Economic Burden of Chronic Disease, Charting a New Course to Save Lives and Increase Productivity and Economic Growth, October 2007 Fazzi Associates, Inc. Page 18
20 Medicare Home Health Population Principal Diagnosis: 2005 CHF COPD Diabetes Hypertension 170,000 73, , ,000 Total Patients Served: 2,976,000 Source: Health Care Financing Review, 2007 Statistical Supplement, Table 7.6, Persons Using Medicare Home Health Agency Services, Visits, Total Charges, Visit Charges, and Program Payments, by Principal Diagnosis Within Major Diagnostic Classifications (MDCs): Calendar Year 2005 Total Medicare Cost for All Patients: 2005 CHF COPD Diabetes Hypertension $433,864,000 $179,368,000 $1,462,254,000 $297,456,000 Source: Health Care Financing Review, 2007 Statistical Supplement, Table 7.6, Persons Using Medicare Home Health Agency Services, Visits, Total Charges, Visit Charges, and Program Payments, by Principal Diagnosis Within Major Diagnostic Classifications (MDCs): Calendar Year 2005 What Do We Know About People With Chronic Diseases? They are hospitalized more. They visit the emergency room more. They are more costly than the average person of their age. They represent a high proportion of all home health patients. They have the highest risk of being institutionalized. Fazzi Associates, Inc. Page 19
21 Agencies Who Use Telehealth as Part of Their Disease Management Program Is your telehealth service part of a disease management program? Yes All Under $1M Over $6M Urban Rural 66.3% 76.7% 70.0% 72.0% 52.0% Focus of Telehealth Services in Disease Management Which of the following diseases are part of your telehealth disease management program? CHF COPD Diabetes Hypertension Asthma 93.2% 78.2% 66.2% 60.2% 39.1% Profitability: The Impact of Telehealth Programs on Disease Management 13.2% 10.4% 17.0% All Agencies No Disease Management Disease Management / Telehealth Source: BestWorks National Database, October 2007 Fazzi Associates, Inc. Page 20
22 Quality: The Impact of Telehealth Programs on Disease Management 46 th 60 th 67 th 76 th All Agencies HHC No Disease Management BestWorks Disease Management/ No Telehealth BestWorks Disease Management/ Telehealth BestWorks Source: BestWorks National Database and Home Health Compare Data, October % Percentage of telehealth agency leaders who say that given what they know now, they would still invest their time and resources in starting a telehealth program. Source: Philips National Study on the Future of Technology and Telehealth in Home Care, Fazzi Associates: 2007 And Finally, Remember Peter Drucker s Recommendation The best way to predict the future is to create it. Peter Drucker Fazzi Associates, Inc. Page 21
23 Why Fazzi Associates Your Partner for Positive Change. Fazzi Associates is the only national consulting firm to have an operational best practice benchmark service. We have evidence based knowledge and insights into what practices work the best. We use these insights to support and inform clients in all of our operational, strategic, quality and OASIS consulting services. Dr. Robert Fazzi, President/CEO Founder: Fazzi Associates Your Partner for Positive Change Fazzi Associates, Inc. 243 King Street, Suite 246 Northampton, MA Fazzi Associates, Inc. Page 22
3+ 3+ N = 155, 442 3+ R 2 =.32 < < < 3+ N = 149, 685 3+ R 2 =.27 < < < 3+ N = 99, 752 3+ R 2 =.4 < < < 3+ N = 98, 887 3+ R 2 =.6 < < < 3+ N = 52, 624 3+ R 2 =.28 < < < 3+ N = 36, 281 3+ R 2 =.5 < < < 7+
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