Business Development in an ACO World, 2.0: Thank You. Is this your day? it s often mine. Driving Quality Growth in a Wellness Environment

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Donald Thornton
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Advocate Illinois Masonic Medical Center Faculty, UIC Graduate School of Public Health May 8, 2015 Thank You Becker s

and University of Illinois-Chicago Confession: Long-Suffering Cub Fan This is the Year! 2 Is this your day?

epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the

1 Business Development in an ACO World, 2.0: Driving Quality Growth in a Wellness Environment Michael Swarzman VP of Business Development and Clinical Institutes Advocate Illinois Masonic Medical Center Faculty, UIC Graduate School of Public Health May 8, 2015 Thank You Becker s Hospital Review 6 th Annual Meeting Happy to represent Advocate Health Care, Advocate Illinois Masonic Medical Center and University of Illinois-Chicago Confession: Long-Suffering Cub Fan This is the Year! 2 Is this your day? It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way. ~ A Tale of Two Cities it s often mine. 3 1

2 The Natural Complement To other speakers and myriad health care reform discussions and articles Because health care reform will define U.S. health care delivery for decades to come (as providers increasingly assume traditional insurance risk) Because Business Development is THE transitional key to market share, and critical influencer of net income performance in an ACO world 4 Today s Lexicon Addition: Backfill Defined What it s NOT Backfill, in Business Development parlance, is: new business brought into a health care system as a result of immediately available capacity due to health care reform implementation, plummeting utilization and/or other health care payor reform initiatives. Without backfill, even with newly earned shared savings revenue, net income will (very likely) be off budget targets 5 A Transformative Moment Business Development is my expressive health care professional choice ACOs announced:dramatic, transformative directional change: the hospital will become an expense, rather than profit, center Immediate clinical paradigm shift: from volume to value (yet budget performance lags) Immediate new competencies required for success How does health care manage the transition? 6 2

3 Today s Presentation Introduction The Burning Platform Transitional Business Development Tactics A Glimpse into a Likely Future Questions All in 35 Remaining Minutes 7 The Burning Platform Costs Dramatically Increase with Age $45,000 Annual per capita healthcare costs $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 UK Germany Sweden US Spain U.S. is spending much more for older population $5,000 8 $ Age Source: Fischbeck, Paul. US-Europe Comparisons of Health Risk for Specific Gender-Age Groups Carnegie Mellon University; September, 2009 The Burning Platform It s a New Day Insurers acknowledge inability to manage rising costs Population is aging 10,000 new Medicare beneficiaries per day Medicare finances are not sustainable Previously uninsured enter the system with no utilization history 9 3

4 The Burning Platform Provider System Collision Course Decreasing Revenues Medicare Medicaid Insurers/employers Utilization Squeezed Net Income Increasing Expenses Shrinking Margins Wages and Benefits Supplies Technology 10 The Burning Platform Collision Avoidance SIGNIFICANT Cost Reduction Willingness to examine/change everything Industry-wide cost reduction mandates Speed in implementing change Agility Nimble/Flexible However, cost reduction will not be enough 11 Market Context is Critical: Advocate Illinois Masonic Medical Center 12 4

Truven 100 Top Hospital (6 consecutive years); Magnet; Energy Star; LGBTQ Healthcare Equality;

competitive health care markets in the U.S.

5 Advocate Illinois Masonic, Advocate Illinois Masonic Medical Center Operating Profile 400-bed teaching hospital on Chicago s northside (AHC s Chicago hub) Level I Trauma Center; Level III NICU Truven 100 Top Hospital (6 consecutive years); Magnet; Energy Star; LGBTQ Healthcare Equality; Academic Programming Strong #2 (Northwestern); other academic medical centers Historically one of most competitive health care markets in the U.S. (shadow of three academic medical centers), but market is cracking. As predicted 14 Market Hospital Closures from 1986 to present 15 Source: IHA COMPdata Informatics (2012). 5

6 APP Utilization Metrics, Jan June 2013 APP Control Group Change Change Inpatient Admit Rate/1000 Length of Stay % % % % Days/ % % Outpatient ER Visits/1000 Advanced Imaging/ % % % % APP = Advocate Physician Partners. 16 Source: The 2014 Value Report. Advocate Physician Partners, The Current, Transitional Business Development Paradigm 17 The Scramble Begins Given plummeting utilization, scramble to identify effective backfill strategies Even more critical to maintain patients in system The following are representative, not inclusive nor exhaustive, but likely currently affects your organization 18 6

Most Common Backfill Strategies: Employed Physician Groups Pros: Ease and speed implementation, immediate alignment, eliminate competition, CI implementation, patients/dollars in system Cons:

7 Most Common Backfill Strategies: Employed Physician Groups Pros: Ease and speed implementation, immediate alignment, eliminate competition, CI implementation, patients/dollars in system Cons: Operating loss, specialist hiring slowdown, force fit, alienate independent MDs, history of failure Challenge: professional management and physician governance CI = Clinical Integration. 19 Most Common Backfill Strategies: Physician Splitter Loyalty What is a splitter? Pros:lower cost, direct alignment/behavioral change, well-received Cons:speed, fluid competition, Faustian Gamble (patients, payment) Medical staff competition (e.g. urology, orthopedics) 20 A Retail Response Overview Non-traditional competitors are experts in consumer behavior Emphasis on price, access, patient satisfaction Potentially crashing margins on traditional business Hometown discounts in full-premium, risk-assumption world? Openness to new collaborations, joint ventures Who controls the patient population? 21 7

A Glimpse Into The Future Interoperability to Control New Channels of Patient Distribution The evolving health care paradigm shift is driving new and emerging channels of patient distribution

8 A Glimpse Into The Future Interoperability to Control New Channels of Patient Distribution The evolving health care paradigm shift is driving new and emerging channels of patient distribution identification Disruptive technology is a potential solution to the manual referral process and complements current growth strategies Aseamless referral, scheduling, and result reporting technology platform is a next evolutionary step in channel management 22 New and Emerging Channels of Patient Distribution Aligned, On-Staff MDs Home Visiting Physicians FQHCs/Community Health Centers Chiropractors Non-Provider Channels Physical/Occupational Therapy Urgent Care/Walk-In Clinics Health System Health & Welfare Funds Independent Physician Associations (IPAs) Dialysis-Vascular ACOs Podiatrists Hospital Service Lines/Satellite Clinics Community MDs Other SNFs, ALFs, ILFs 23 Access to Channels of Distribution The Vision for Interoperability That Will Drive Growth Channel of Distribution Provider Non-Traditional Home Visiting Physicians Community MDs Chiropractors, PT/OT Process & Information Exchange Platform Traditional Non-Provider/ Consumer 24 Aligned, Non-APP MDs SNFs FQHCs/Community Health Centers C2B (e.g. Retail) B2B (e.g. Hospital Transfers) Referral Management Results Delivery Schedule Visit Hospital Outpatient Facility 8

9 Access to Channels of Patient Distribution: Growth Strategy Value Proposition to Channel = increase revenue and reduce resources Information Access & Exchange Delivery of clinical results directly into EMR Reduced TAT for patient results Direct Access to Provider Network Immediately refer patient to right provider One workflow process for all referrals and results Scheduling Efficiency Reduce number of days to appointment Eliminate printing, scanning, faxing Reduce on-the-phone times Automated & Seamless Care Coordination Process Care Coordination Ensure proper follow-up care, posthospital visit Streamline communication between providers 25 Access to Channels of Patient Distribution: Growth Strategy Value Proposition to Provider System = create market barrier to entry and grow market share Drive Incremental Quality Growth Access and capture traditional and emerging channels Strengthen alignment and access through a seamless process Complement existing site growth strategies Support Population Health Management Framework Reduce fragmented care throughout continuum Prevent system leakage and outmigration Capture patient data for full episodes of care Improve Information Access & Exchange Streamline referral process through IT infrastructure Bridge the information gap between channels and Advocate Foster safety, quality and compliance of patient care 26 Other Quality Growth Benefits In-network alignment Leakage reduction Increase physician satisfaction Increase patient retention & satisfaction Service line growth Market share growth 27 9

10 Intriguing Questions How will hospital s profit and loss strategies reflect value performance? Can providers really move away from a volume business, particularly physician stars? How do you currently manage a volume-driven facility with a sophisticated PHO that is committed to risk assumption? In a clinical context, will good enough ultimately replace best? PHO = Physician-Hospital Organization. 28 Pre-ACA Business Development Executive Competencies Acknowledge market position and brand currency Staff strategic plan development and key tactic execution Market and product line research Marketing communication Community and physician relations (soft sales) More limited: Physician recruitment Occupational/workplace health MCO credentialing = Primarily staff function without hard sales MCO = Managed Care Organization. 29 Post-ACA Business Development Executive Competencies Ability to marshal all market resources of riskbearing enterprise, employed physician group, and site of care into a single, unified market strategy Pounce on cracking market opportunities Comfort with ambiguity and sharing control Quickly assess opportunity, ROI and granular analysis reflexive All growth isn t quality growth! Highly competitive Moral compass Close attention to tactical execution 30 10

Post-ACA Business Development Executive Competencies Tie to market coordination/net income objectives Symbiotic relationship with risk-bearing and MD employment organizations IT (alignment and

11 Post-ACA Business Development Executive Competencies Tie to market coordination/net income objectives Symbiotic relationship with risk-bearing and MD employment organizations IT (alignment and integration) ROI focus and business startup competence Public products (ACE, Medicare Advantage) Beware Branding Sales centralization 31 ACE = Accountable Care Entity. The faithful person perceives nothing less than opportunity in difficulties. ~Criss Jami 32 Thank You Questions? (and, hopefully, Answers) 33 11

Click to edit Master title style

Click to edit Master title style Transition Support Program (TSP) The Business Case for Patient Navigation Michael Swarzman, Vice President, System Growth, Advocate Health Care; Faculty, UIC School of