2016 Trends Managed Care and Beyond

Size: px

Start display at page:

Download "2016 Trends Managed Care and Beyond"

Shanna Moody
5 years ago
Views:

1 2016 Trends Managed Care and Beyond HFMA and CHEF's Managed Care Meeting 2016 Updates on Changes and Challenges February 4, South LaSalle Street, Suite 2750 Chicago, IL P F

6 Access will take top priority. 7 Workforces will be retooled. 8 Population health will be defined.

2 2016 Trends Introduction 1 Consolidation will continue. 2 Providers will piece together the cost puzzle. 3 Data management will be key. 4 There will be a focus on patient engagement. 5 The consumer will become the king. 6 Access will take top priority. 7 Workforces will be retooled. 8 Population health will be defined. 9 IT efforts will move from implementation to optimization/interoperability. 10 Adjustments to the organization s strategic framework will be necessary. 1

3 #1 CONSOLIDATION WILL CONTINUE Deal Volume Will Remain Strong Five years after the Affordable Care Act helped set off a healthcare merger frenzy, the pace of consolidation is accelerating, transforming the medical marketplace into a land of giants. Wall Street Journal Major Health Plan Transactions 2015 Hospital and Medical Group M&A 3 Activity 4,5 Buyer Target Estimated Incremental Impact 1 Enrollment (millions) Premium Revenue (billions) Anthem Cigna 2 ~ 2.9 $27.2 Aetna Humana 2 ~ 9.3 $45.9 Centene HealthNet ~ 3.1 $ United States Securities and Exchange Commission, Form 10-K statements, as of June Transaction is pending; expected to close in M&A = mergers and acquisitions. 4 M. Gamble, 2014: The year of 95 hospital transactions, Becker s Hospital Review, February 10, 2015, 5 PwC, Q US health services deals insights, November 2015, Q3 2015A Hospital Transaction volume will likely remain strong in 2016, as payors and providers pursue market share as a pathway to operating efficiencies and profitability. Medical Group 2

T I V E S» Establish forums to facilitate sharing of best practices.» Boost purchasing power with vendors/suppliers and reduce operating costs.

4 #1 CONSOLIDATION WILL CONTINUE Rise of Non-M&A Partnerships While M&A dominate headlines, a deeper trend of provider integration is under way. NON- M & A P A R T N E R S H I P S Clinical Affiliation Regional Collaborative Joint Venture Joint Operating Agreement Acquisition/Member Substitution LESS AFFILIATED MORE AFFILIATED COMMON O B J E C T I V E S» Establish forums to facilitate sharing of best practices.» Boost purchasing power with vendors/suppliers and reduce operating costs.» Develop population health management capabilities in a more coordinated manner.» Organize to partner with payors and employers on value-based arrangements. R E C E N T E X A M P L E S In many markets/regions, the adoption of the above tactics will likely solicit a defensive response among competitors, spurring further consolidation. 3

5 #1 CONSOLIDATION WILL CONTINUE Academic Medical Centers Will Be More Proactive Historically slow and methodical, the formation of large regional health systems and collaboratives will force academic medical centers (AMCs) to be more aggressive consolidators. AMCs COMMUNITY PROVIDER ORGANIZATIONS AMC Challenges Partnership Objectives Tripartite mission T R A D I T I O N A L Unfavorable economics Specialtycare focus E M E R G I N G Inpatient orientation Performance improvement (operational efficiency, clinical quality, cost positioning) Revenue diversification (new revenue streams, referral sources for complex patients) Limited provider integration New competitors Narrow network exclusion Referral pattern disruption Narrow network participation, payor partnerships, and enhanced provider networks Source: Adapted from M. Morris, M.D., et al., Academic Medical Centers: Joining forces with community providers for broad benefits and positive outcomes, Deloitte, 2015, Previous AMC-driven partnerships have proven to yield significant strategic, financial, and operational advantages in an increasingly value-based environment. 4

6 #2: PROVIDERS PIECE TOGETHER THE COST PUZZLE New Payment Models Will Force Providers to Understand Their Costs With new payment mechanisms being adopted by providers, hospitals and physicians will begin to truly understand the cost of the services they provide.» Establish better cost allocation and reporting systems.» Create more robust reporting capabilities. BETTER REPORTING ACHIEVE EFFICIENCIES» Identify high-cost services.» Implement changes and achieve efficiencies/savings.» Create pricing flexibility.» Establish pricing transparency. FLEXIBLE PRICING Less Risk Fee-for- Service Medical Home 1 The Risk Continuum Associated With Existing and Proposed Reimbursement Structures P4P Bundled Payment Payment for Episodes of Care Gain Sharing Global Payment With Financial Risk More Risk 5

7 #2: PROVIDERS PIECE TOGETHER THE COST PUZZLE Price Transparency Will Be an Organization-Wide Focus The demand for organizations to be more transparent with their pricing will continue due to pressure from both patients and the government. Pressure from patients, who are increasingly carrying a greater burden of the costs Pressure from CMS and state governments forcing organizations to be more transparent Growth of HSA Qualified High-Deductible Health Plan Enrollment, Covered Lives (Millions) January 2013 January 2012 January CMS has identified significant variation in pricing and cost of care across the county and has released data that shows what providers charge for common services. This data includes information comparing the charges for the 100 most common inpatient services and 30 most common outpatient services. January Individual Small Group Large Group Other Group Uncategorized Source: AHIP Center for Policy and Research, HAS/HDHP Census Reports. 6

» Providers will begin to understand not only which service lines are profitable, but also which discreet services within the service line drive

8 #2: PROVIDERS PIECE TOGETHER THE COST PUZZLE Data-Driven Decision Making With a better understanding of costs, providers will begin analyzing profitability more extensively and begin to manage their organizational assets more akin to other industries.» Providers will begin to understand not only which service lines are profitable, but also which discreet services within the service line drive positive operating margins.» Comparing financial performance across regions and services will influence key managerial decisions related to consolidation or location of services and deployment of real estate. 7

9 #3 DATA MANAGEMENT WILL BE KEY Advanced Analytics Will Define Successful Organizations Successful organizations will invest in data management to better enable population health, care coordination, and value-based initiatives. EVOLVING ANALYTICS STRATEGY CONNECTED PLATFORMS NEW TALENT TO SUPPORT A NEW CULTURE EMERGING PERSONALIZED CARE Strategic planning will include developing enterprise analytics and data management plans to support valuebased initiatives. Early adopters will move beyond the EHR to integrate data from multiple platforms and enable population health and value-based care. Organizations will develop new skillsets, organically or through hiring, to support a datadriven culture. Available patient data, historical and across the continuum of care, will allow providers to develop personalized, integrated plans of care. 8

10 #3 DATA MANAGEMENT WILL BE KEY But Data Challenges Will Impede Progress for Many While the term big data is on everyone s tongue, extracting actionable intelligence remains difficult. Investment in advanced analytics will also be directed at removing barriers. PRIVACY AND DATA SECURITY CONCERNS DISPARATE DATA SOURCES CHALLENGING DATA FORMATS CULTURAL GAPS Patient privacy concerns and related regulations inhibit the sharing of data and require investment in security capabilities and compliance. Advanced analytics requires data integration and harmonization, yet important data is split across disparate data platforms. Valuable data sets are locked away in challenging formats, such as scanned information and freetext notes. Analytics is often treated as a nice-tohave reporting function. A shift is required to become a truly data-driven organization. 9

11 #4 FOCUS ON PATIENT ENGAGEMENT Patient Engagement May Be the Most Important Factor in Impacting Value The National e-health Collaborative defines patient engagement as actions individuals must take to receive the most benefit from the health services available to them. Embrace Mobile and Wearable Technology Encourage Frequent Communication Shift From Providing Content to a Focus on the Context of Interaction Provide Access Through Multiple Channels PATIENT ENGAGEMENT Invest in the Right Technology, Both EHR and Third Party Educate Patients and Providers Constantly Employ Analytics to Collect and Distribute Information Determine What Is Important to Patients Patient engagement is crucial as organizations seek to demonstrate high value care and reduced costs. This starts with providers educating and empowering patients to become active participants in their care and take the necessary steps toward better health. 10

12 #4 FOCUS ON PATIENT ENGAGEMENT Engaging Patients Will Require New Approaches Imagine the potential benefits of communicating with and monitoring patients postdischarge based on their preferred method of interaction. 1 E X A M P L E» A provider asks the patient how he/she would like to be monitored postdischarge, and the patient requests an app that can be accessed from his/her phone. 2» The provider prescribes the app and associated instructions for its use.» 3 The patient enjoys this method of tracking, is responsible for inputting the requested data during treatment, and actively participates in care decisions with the provider. 4» The provider is able to monitor vital signs and activity levels and adjust treatment in real time. Outcome In a 2014 Mayo Clinic study, app usage by cardiac stent patients reduced readmissions by 40%. 1 The patient is not readmitted, and the provider shares in the associated cost savings. 1 Source: J. Comstock, Mayo Clinic study finds app reduces cardiac readmissions by 40 percent, mobi health news, April 1, 2014, 11

#5 THE CONSUMER AS KING The Traditional Consumer Model Just Won t Cut it Anymore Historically, patients have been told how they can and cannot obtain care in a very paternalist approach.

13 #5 THE CONSUMER AS KING The Traditional Consumer Model Just Won t Cut it Anymore Historically, patients have been told how they can and cannot obtain care in a very paternalist approach. For example: WHICH INSURANCE PLAN(S) THEY CAN CHOOSE FROM WHICH PROVIDER(S) THEY CAN SEE WHICH PROCEDURE(S) THEY NEED TO HAVE WHAT MEDICATION(S) TO TAKE HOW MUCH THEY HAVE TO PAY WITH NO MENTION OF COST With the shift to consumerism, providers and health plans must adopt a more transparent and collaborative approach by asking the patient what he/she wants and sharing decisionmaking responsibility with the patient. 12

14 #5 THE CONSUMER AS KING Consumers Will Shop Based on Cost, Quality, and Convenience Because of shifting trends, organizations are adopting a patient-centered, consumer-driven approach to delivering and financing healthcare. Healthcare organizations will need to identify the wants and needs of heterogeneous patient populations on an individual patient level. E X A M P L E S Detailed demographics information, patient satisfaction surveys, and patient advisory boards Patients will look for services or products of varying quality and price. E X A M P L E S Retail clinics, urgent care, telemedicine, concierge medicine, and provider-based versus freestanding Patients must be able to judge differences in the quality and price of services or products. E X A M P L E S Price and quality transparency tools, CMS Hospital Compare, online reviews, and other third-party reviewers. 13

15 #5 THE CONSUMER AS KING Benefit Design Will Also Fuel the Consumer Revolution As costs are shifted to patients via high deductible health plans, increased out-ofpocket responsibilities, and the implementation of reference pricing, patients will increasingly shop for providers based on quality and cost. As a result, consumers will demand:» Price transparency for services.» Outcomes/quality reporting from providers.» Online reviews from other patients.» Enhanced customer service, from scheduling the appointment up to paying the bill.» Personalized visits, information, and health recommendations based on their care needs and desires. Patients are shifting to active consumers of care and will place greater pressure on providers to earn their business. 14

#6 ACCESS TAKES TOP PRIORITY Patient Access Will Evolve to Meet New Consumer Demands Traditional ways of delivering care are increasingly ineffective at meeting the health needs and expectations

16 #6 ACCESS TAKES TOP PRIORITY Patient Access Will Evolve to Meet New Consumer Demands Traditional ways of delivering care are increasingly ineffective at meeting the health needs and expectations of the population. O L D PA R A D I G M N E W PA R A D I G M DOCTOR/APC IN-PERSON VISITS TELEMEDICINE MEDICAL CLINIC PHONE NURSE ADVICE SECURE MESSAGING RETAIL CLINICS/URGENT CARE IN-HOME VISITS 15

technologies is creating a renewed focus on reaching patients

17 #6 ACCESS TAKES TOP PRIORITY Technology Will Lead the Way to Opening Up New Access Channels Innovation in patient care and engagement technologies is creating a renewed focus on reaching patients virtually. O P E R AT I O N A L E N A B L E R S N E W A C C E S S AV E N U E S 16

18 #6 ACCESS TAKES TOP PRIORITY Access Will Be Critical to Optimizing Health System Performance As providers continue to pursue the Triple Aim, patient access will emerge as a pivotal strategic priority. The IHI Triple Aim POPULATION HEALTH P O P U L A T I O N H E A L T H» Patients need access to follow-up and preventive care.» Access to clinicians and health information helps engage patients. EXPERIENCE OF CARE PER CAPITA COST P E R C A P I T A C O S T» Managing patient health by providing timely care keeps patients out of high-cost settings.» Optimizing patient access and throughput increases efficiency and utilization of existing resources. E X P E R I E N C E O F C A R E» Lack of access is the chief complaint reported by patients who switch providers.» Utilizing multiple avenues for patients to access care is key to a patient-centric care model. 17

19 #7 WORKFORCES WILL BE RETOOLED Hospital Workforce Roles and Models Will Continue to Evolve as We Move Toward a Value-Based Care System To promote collaboration, achieve strategic priorities, and foster a culture of innovation, health systems will make changes in leadership, talent, and structure. NEW REIMBURSEMENT AND COLLABORATION MODEL CONNECTED, ON-THE-GO, AND DEMANDING CONSUMER NEW AND EMERGING COMPETITORS CONSOLIDATION/ PROVIDER LEAD HEALTH SYSTEMS BIG DATA» Create new leadership positions.» Fill leadership positions with candidates without traditional healthcare backgrounds.» Ask current leadership to develop a broader set of business strategy and technical skills.» Evaluate and review the composition of the Board.» Add talent/grow capabilities across data analytics, nontraditional health partnerships, innovation, population health management, and transformation and change management.» Experiment with different organizational models. 18

20 #7 WORKFORCES WILL BE RETOOLED Boards and Leadership Will Add New Talent and Expertise Board Evaluate composition and add expertise in consumer business, digital, financial/risk management, payors, social media, and technology. Leadership Enhance leadership team competencies by adding new roles:» Population health management (e.g., chief population health officer)» Change management and transformation (e.g., chief transformation officer, head of cost containment)» Data analytics (e.g., head of data analytics)» Nontraditional health partnerships (e.g., chief partnership officer)» Innovation (e.g., head of technology innovation/ chief digital officer)» Consumerism (e.g., chief patient experience officer) 19

21 #7 WORKFORCES WILL BE RETOOLED Staff Will Be Asked to Expand Roles and Develop New Skills Leadership» Think beyond the traditional hospital walls.» Foster collaboration between the clinical and administrative staff. Clinical Staff» Continue to build quality and patient safety expertise.» Focus on improving service and meeting consumer demands.» Build skills and competencies around care coordination and health information systems. Administrative (Nonclinical)» Provide a positive experience and be service focused/oriented.» Become the brand ambassadors. 20

#7 WORKFORCES WILL BE RETOOLED Organizations, Led by AMCs, Will Experiment With Implementing Models That Promote Greater Integration An ECG study of academic medical center performance showed

22 #7 WORKFORCES WILL BE RETOOLED Organizations, Led by AMCs, Will Experiment With Implementing Models That Promote Greater Integration An ECG study of academic medical center performance showed that more integrated healthcare organizations outperform their less integrated peers across multiple metrics. Performance Relative to Level of Integration Key Components of Functional Integration 21

#8 POPULATION HEALTH IS DEFINED Population Health Will Be Defined by Process and Outcomes P O P U L AT I O N H E A LT H» Process The iterative process of strategically and proactively managing

23 #8 POPULATION HEALTH IS DEFINED Population Health Will Be Defined by Process and Outcomes P O P U L AT I O N H E A LT H» Process The iterative process of strategically and proactively managing clinical and financial opportunities and resources for the patient population.» Outcomes Improve the health, experience, and cost of care for the patient population, over time. Population health, regardless of the definition, continues to become increasingly prevalent as the defined future-state goal for numerous organizations nationwide. 22

24 #8 POPULATION HEALTH IS DEFINED Organizations Will Have to Segment Populations by Risk Segmenting your risk and addressing each population appropriately are essential for success under population health, and necessary short- and long-term strategies. P A T I E N T P O P U L A T I O N S H I G H R I S K M A N A G E R I S I N G R I S K P R E V E N T L O W R I S K S C A L E K E Y C O M P O N E N T S O F D E F I N I N G P A T I E N T P O P U L A T I O N S R I S K F A C T O R S D I S E A S E S T A T E P A Y O R P R O G R A M» Age» Disease Comorbidities» Utilization History» Social Issues (e.g., housing and job status, insurance coverage, nutrition, obesity)» Chronic Issues» Acute Issues» Episodes of Care Management» Full Risk» Performance Incentives» Partial Risk» Metric-Specific Incentives The result of this effort is to identify the patients who require the most focus and attention. 23

25 #8 POPULATION HEALTH IS DEFINED Organizations Will Cut Their Teeth on Select Populations Organizations will begin to gain the experience necessary to expand population health programs to manage all high-, medium-, and low-risk patients. K E Y E L E M E N T S» Data drives any population health strategy.» Physician engagement is critical to manage risk appropriately.» A flexible population health approach must be developed.» Patient engagement should be supported.» Ensure ongoing management and improvement as patient needs and risk levels change.» Incentives in place should be put in place. 6 Measure Outcomes 7 Manage Care 5 Distribute Incentive Payment Define Population» Data Integration» Analysis» Reporting» Best Practices» Physician Champion» Communications Engage Patients 4 1 Identify Care Gaps Stratify Risks

26 #8 POPULATION HEALTH IS DEFINED Total Population Health Requires a Comprehensive Care Model ECG believes organizations that are able to develop and apply care coordination and care management principles effectively will be the most successful in transitioning to total population health that is payor and program agnostic. T R E N D S Optimal Care Team Example» Patient demands and increasing complexity will place a premium on care coordination and care management efforts.» With information and experience, care teams will be appropriately defined and staffing models determined. COMMUNITY/ VOLUNTEER CARE MANAGERS/ COORDINATOR SOCIAL WORKER NURSE PATIENT PATIENT NAVIGATOR/ HEALTH COACH OTHER SPECIALISTS PCP AND APC 25

27 #9 IT OPTIMIZATION New Models for a New Era The transition to value-based care, supported by the Office of the National Coordinator (ONC) for Health Information Technology s 10-year interoperability road map will change IT departments, not just their technology will see healthcare organizations revising their IT strategy and operating models to set the stage for value-based care. 2 Such thinking will require IT departments to change and:» Adopt new organizational structures.» Develop enterprise-based functions.» Acquire new skill sets. 26

28 #9 IT OPTIMIZATION From Implementation to Optimization and Interoperability The 2016 healthcare IT solution landscape will see an increase in EHR replacement and optimization. 3 Optimization efforts will focus on interoperability and connectivity with various platforms and data sources across the continuum of care. 4 Organizations looking to replace legacy systems will have to factor-in the needs of potential integrated care partners into the selection process. 5 At the same time, smaller organizations in need of EHR replacement may look into third-party arrangements with larger partners. 27

29 #10 ADJUSTING YOUR STRATEGIC FRAMEWORK Transition to FFV Should Frame Every Strategic Decision Each organization s pacing to a FFV reimbursement environment will underpin nearly every significant organizational decision, but the adoption of FFV will be based on market-specific factors. Factors Impacting Pacing» Market competition» Payor/employer interest level» Nimbleness of organization» Consumer demands» Alignment level with providers» Current reimbursement levels» Current cost levels Implications» Planning frameworks need to be recasted in light of FFV. Strategic Facility Medical staff development» Traditional decision-making criteria need to be updated. Population management Total cost of care Market share, whether measured in terms of volume or lives, will continue to be critical. 28

30 Questions & Discussion Terri Welter

31 about ECG ECG partners with providers to create the strategies and solutions that are transforming healthcare delivery. With more than 40 years of service to the healthcare industry, we can help your organization thrive in a value-based world. 30

THE NEW IMPERATIVE: WHY HEALTHCARE ORGANIZATIONS ARE SEEKING TRANSFORMATIONAL CHANGE AND HOW THEY CAN ACHIEVE IT

THE NEW IMPERATIVE: WHY HEALTHCARE ORGANIZATIONS ARE SEEKING TRANSFORMATIONAL CHANGE AND HOW THEY CAN ACHIEVE IT Today s challenges are not incremental, but transformational; across the country, many CEOs and executives in healthcare see the need not merely to improve traditional ways of doing business, but to map