Our Response to Health Reform: Collaborative Initiatives for Success

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1 Our Response to Health Reform: Collaborative Initiatives for Success February 11, 2012 Joseph R Swedish, FACHE President and CEO Trinity Health

2 Trinity Health: Unified Enterprise Ministry Serving Ten States Nationwide One of the largest Catholic health systems in the United States (based on Operating Revenue) 53,400 full-time equivalent employees More than 10,800 active staff physicians (1,500 employed) 20 Ministry Organizations, encompassing 47 hospitals 35 owned, 12 managed 401 outpatient centers Revenues of about $9 billion Over $453 million in Community Benefit Ministry Copyright 2011 Trinity Health Novi, Michigan 3

3 Trinity Health s Strategic Model Key Elements An unrelenting focus on clinical quality, safety and excellence in the care experience Use the skill and scale of our large organization to improve performance Maintain financial strength in support of community and capital needs

4 The Future Outlook: Economic Hangover Value to Volume Payment Reform Tide of Technology Integration & Coordination Jump Ball Opportunity Consumer is King Lost decade will have lasting impact on almost all consumer spending, including health care; must differentiate on cost, quality and service. As consumers seek value, the cost and value proposition must be unambiguous. We must strive for market share gains in a competitive landscape. Feds and states are drained by Medicare/Medicaid; major overhauls likely with margin compression in all sectors; must be an effective and efficient government partner. Relentless tide of diffusion of new technologies and apps will transform delivery and patient engagement. Communications expertise is a must. Regardless of reform outcome, patient-centered, coordinated, virtually integrated systems of care will grow aided by new tools and technologies. Jump ball moment as states expand Medicaid managed care and exchanges are formed. The game is short just a few years to achieve success or get left behind. Exchanges/subsidies will transform the commercial market into a largely retail consumer market and large group market; small group is fading.

5 Characteristics of Winning Organizations Culture Consolidation Consistency Coordination Cost Collaboration Navigating the Consumerism 7Cs

6 Elements Transforming the Delivery System Hospital-Centric Organizations Accountable Health Networks Inpatient market share growth, service line development Ambulatory strategy to support inpatient growth Physician recruitment to support inpatient growth Reimbursed for volume Strategic Response Drive quality and efficiency by providing coordinated care across the continuum Focus on management of chronic disease, not discreet institutional services Align with physicians to create clinical collaboration and continuity Receive at risk payment for value

7 Projected Industry Shifts Reward Value Over Volume Today Rewards Volume New Models Reward Efficiency & Effectiveness Fee-for-Service Volume-based Rewards Limited Coordination Private and Public Sector Initiatives Pay-for-Performance Bundled Payments Accountable Care Organizations??

8 The ACO idea may be worth experimenting with, but if recent history is any guide, it is not an idea worth betting the future on. As a vehicle for reorganizing medical practice at the community level, ACOs are not ready for prime time. - Jeff Goldsmith, health care analyst/futurist - a post on Health Affairs blog

9 In theory there is no difference between theory and practice, in practice there is. - Yogi Berra

10 Transitioning Between Business Models Crossing the Crevasse FEE FOR SERVICE A business we know and love (and have thrived at) All about volume Maximize price to commercial payers to offset losses on government business Focus on specialists VALUE-BASED PAYMENT Focused on populations and episodes of care Primary care becomes key Profits from higher quality care in home setting Longitudinal payments for chronic care Joint contracts with payers Focus on data How fast and how far do we need to make the leap? 10

11 Clinical Integration is an extension of our Strategic Plan Accelerated Integration Implement practices, processes and policies that help us operate more effectively as a Unified Enterprise Ministry (UEM). Physician Alignment To partner with physicians and clinicians to share goals and accountability for care coordination and outcomes for patients across the entire continuum of care. Accountable Health Networks To distinguish Trinity Health as a premier patient-centered care management organization that is aligned with physicians/clinicians and other recognized service providers to integrate and coordinate care

12 Unified Enterprise Ministry v4.0 Clinical Integration Provider governed organization, aligns all providers with hospitals Purpose is to improve clinical quality, safety and efficiency to manage health of populations Supporting infrastructure including IT, focused on clinical improvement Contracts with payers designed to compensate network participants for value created and achieved Functions across a wide range of reimbursement models, from fee-for service to capitation 12 5

13 Clinical Integration Our Working Definition Clinical integration is aligning physicians, hospitals and other providers to improve clinical quality, safety and efficiency, and to contract effectively in order to compensate providers for value created. It is not an end, in and of itself. Its purpose is to position Trinity and its providers for success in the management of population health and to sustain the viability of our Mission. 13

14 The Five Essential Capabilities CORE CAPABILITIES 1. Deliver coordinated, patient-centered care across the continuum 2. Integrate all provider types and jointly contract 3. Be financially accountable for populations of patients 14

15 The Five Essential Capabilities CORE CAPABILITIES 1. Deliver coordinated, patient-centered care across the continuum 2. Integrate all provider types and jointly contract 3. Be financially accountable for populations of patients OVERARCHING / SUPPORTING CAPABILITIES 4.Capability to create collaborative governance, leadership and culture 5. Capability to develop advanced communication and information technologies 15

16 Trinity Health Information Systems Migration

17 Developing Capabilities Foundation of AHNs Goals of AHNs Focus on the Patient Efficiency Quality Clinical Outcomes Collaboration Coordination of Care Copyright 2011 Trinity Health Novi, Michigan

18 Clinically Integrated Network New Pluralistic entity Health System Trustees CIN Governance Aligned goals and incentives Speaks with one voice New Contracting Paradigm Hospital PCMH Specialists SNF BC/BS PCPs Population Health Aetna Medical Group HHC Specialists PCPs United Health Humana Specialists PCPs Specialists 18 Incorporate full continuum

19 Clinical Integration Ministry Organization Specific Strategies Our MOs reflect three broad stages of readiness 19

20 Projected Industry Shifts Reward Value Over Volume Today Rewards Volume New Models Reward Efficiency & Effectiveness Fee-for-Service Volume-based Rewards Limited Coordination Private and Public Sector Initiatives Pay-for-Performance Bundled Payments Accountable Care Organizations?? Medical Homes

21 Strategic Assessment: Patient-Centered Medical Home Deloitte Center for Health Solutions

22 Drivers of medical home implementation Drivers of Adoption Cost Access to Physicians Quality The US spends significantly more per capita on health care than other industrialized nations 1 Health Care Spending Per Capita, 2007 Comparison of 10 OECD Countries Increased need: 50% of Americans Despite higher US spending, our nation currently live with a chronic condition, lags behind benchmark countries in and the number is expected to grow to measures of health care outcomes 4 171M by ,3 Life Expectancy at Birth, 2004 Comparison of 10 OECD Countries OECD Average United States US Ranking (out of 15 countrie s) Health Care Expenditure % of GDP* 8.9% 16.0% 15th Average Life Expectancy at Birth th Public Financing % of Health Care 73.0% 45.4% 14th Prevalence of Diabetes in Adults (aged 20-79)* 6.3% 10.3% 14th Prevalence of Obesity 34.0% 14th Rate of Caesarean Deliveries* 25% 31% 12th # of Asthma Hospital Admission Rates per 100,000 (aged 15+)* th # of Diabetes Complications Admission Rates per 100,000 (aged 15+)* th Sources: 1. OECD Health Data 2009; 2. Website: Improving Chronic Care The Chronic Care Model ; 3. Health Policy Brief - Patient-Centered Medical Homes - Robert Wood Johnson Foundation (2010); 4. OECD Health Data 2006; The Medical Home Disruptive Innovation for a New Primary Care Model ; Deloitte Center for Health Solutions (2008); Will the Patient-Centered Medical Home Transform the Delivery of Health Care? (2011)

23 PCMHs seek to optimize higher quality and costeffective primary care Patient-Centered Medical Home - Definition A primary care health care model in which patients use a primary care practice as the basis for accessible, continuous, comprehensive and integrated care Considered to be a very promising solution for delivering higher-quality, cost-effective primary care, particularly to chronically-ill patients Focus on strengthening the quality of primary care, building a robust health information technology (IT) component, exploring modified payment schemes and enhancing care coordination quality History The term medical home was first coined in 1967 by the American Academy of Pediatrics (AAP) in reference to establishing a repository of centralized and accessible medical records for medically complex, chronically ill children. Professional physician societies have refined and expanded the definition to create the patient-centered medical home definition endorsed by the physician professional societies Joint Principles In Feb 2007, the AAP, the American Academy of Family Physicians, the American College of Physicians and the American Osteopathic Association, representing 330,000 physicians released the Joint Principles for the PCMH Sources: The Medical Home Disruptive Innovation for a New Primary Care Model, Deloitte Center for Health Solutions (2008); Deloitte Issue Brief: Medical Home 2.0: The Present, The Future, (2010)

24 Desired goals for medical homes Desired Outcomes, Incentives & Results Patients Patients should benefit from a more integrated approach between primary care practices, specialists and hospitals Better clinical outcomes for patients are expected through the use of evidence-based medicine Patient-centeredness has not been a focus of recognition standards and thus the impact remains unclear at this stage Payers Could have a direct tangible benefit of payer cost savings The model is being tested via demonstrations by various federal agencies, health plans and providers A shift is likely to occur from a more expensive acute care setting to preventive and chronic care clinics where costs will be comparatively lower Some pilots have shown a reduction in ER visits and hospitalizations Monetary cost savings per enrollee have also been seen in some cases Providers/Physicians Large providers see the PCMH as a foundation towards attaining ACO level 1 status For integrated delivery systems, there is a financial incentive to keeping ER/hospitalization costs low A key monetary benefit of PCHM is enhanced reimbursement rates as compared to existing Fee for Service levels The adoption of a medical home could increase the prestige factor associated with a primary care physician and have an indirect upward impact on compensation Physicians, health coaches, psychologists, dentists, allied health professionals Incentives to work as a team to increase patient self-care management and medication adherence, avoidable tests and procedures not evidence based, and avoidable readmissions and Sources: Will the Patient-Centered Medical Home Transform the Delivery of Health Care? (2011) hospital costs.

25 PCMHs gain traction as the number of pilots increase Size of PCMH Market Over 14,800 PCMH with some level of recognition 1 Over 100 demonstration projects have taken place Medicare s Multi-payer Advanced Primary Care Practice demonstration will give 1 million access to medical home pilots in 8 states 4 39 states are planning or implementing medical home pilots within Medicaid or the Children s Health Insurance Program (CHIP)3 1,506 NCQA accredited PCMH sites across the US with more than 7,600 clinicians with PCMH recognition according to NCQA standards NCQA PCMH Recognition The NCQA has three levels of recognition, based on 9 standards: Level 1: PCMH has a practice management system Level 2: requires an EHR or e-prescribing Level 3: based on interoperable technology that allows a practice to both send and receive data Growth of NCQA s PCMH Accreditation Program Sources: 1. Presentation on Patient-Centered Primary Care Collaborative and the National Patient Centered Medical Home Movement (2011); 2. Health Policy Brief - Patient-Centered Medical Homes - Robert Wood Johnson Foundation (2010); 3.4. Will the Patient-Centered Medical Home Transform the Delivery of Health Care? (2011) 5. NCQA website Patient-Centered Medical Home (PCMH) (2011); The Medical Home Disruptive Innovation for a New Primary Care Model, Deloitte Center for Health Solutions (2008);

26 Strategic Assessment Summary Key Findings The PCMH model of health care delivery is gaining traction in the US: >100 demonstration projects to date Steep rise in the number of NCQA accreditations for PCMH sites (>1,500 accredited, 53x increase since Dec. 2008) and clinicians (>7,600 accredited, 36x increase since Dec. 2008) Medical homes can be segmented on the basis of populations served chronic disease, diabetes, oncology, geriatric, pediatric, complex care, and behavioral health condition populations Access to capital is vital in establishing a medical home, and practices that are affiliated with larger health care delivery systems are at an advantage Leaders in the PCMH space (e.g., Group Health Cooperative, Geisinger Health System) typically exhibit extensive sponsor support, robust analytics, and strong HIT capabilities For hospitals, an element of a clinical integration strategy inclusive of bundled payments and accountable care

27 Strategic Assessment Summary Preliminary Conclusions PCMHs represent a still-evolving healthcare model with market players continuing to tread lightly Opportunities for hospital collaboration in PCMH space include: Partnering with PCMH to support Comprehensive Medication Management (CMM) leveraging e-prescribing platform, patient education programs in hospitals Collaborating with health plans in shared savings Targeting local employers with high numbers of retirees for direct contracting Current Gaps Deeper analysis of outcomes, value drivers, and characteristics of PCMH pilots Historic/trended data about optimal business models and risk sharing with plans/employers Bottom line for health systems and physicians Medical homes strengthen primary care medical management capabilities but require investments. Appropriate operational improvements in care management and gain sharing arrangements with PCPs to achieve medical home cost reductions and quality improvements are the challenge..

28 Eight critical success factors for PCMH Effective Leadership A strong leadership team which addresses change fatigue and guides the workforce towards successful adaptation is critical Effective Change Management Organizations with effective change management practices are better equipped to handle the large-scale transformational changes Facilitation from External Sources Initiatives that engage in external facilitation to aid in the transformation process are more likely to succeed Assist Physicians with Transformation Physician reluctance should be addressed by assisting in learning new management practices Key Success Factors Support from a Larger System Initiatives that are part of a larger health care delivery system are more likely to succeed Appropriate Funding Funding from various sources is an integral component of an optimally functioning medical home Establish a Practice Technology Plan HIT implementation is a complex process and will benefit from a technology plan which addresses work flow changes, integration issues etc. Engagement in Comprehensive Medication Management (CMM) Especially for chronic disease management, CMM program could enhance clinical outcomes Sources: Initial Lessons from the First National Demonstration Project on Practice Transformation to a Patient-Centered Medical Home Annals of Family Medicine (2009); Patient-Centered Primary Care Website Medication Management

29 The Patient-Centered Medical Home: Principles and Practice Physician directed medical practice Primary-care team (physicians and allied health professionals) Use nurse navigators Coordinated/integrated care Integrate home care as part of team Patient registries for chronic conditions E-prescribing Quality and safety data monitoring/management Enhanced access Primary Care

30 Michigan Patient Centered Medical Homes Blue Cross Blue Shield of Michigan engaged select physicians throughout the state 1. 8,147 PCPs 2. 2,477 practices million members Trinity Health physicians active in defining and implementing the program in their communities Disease registries for diabetes, pediatrics, asthma, CAD FFS with lump sum payments to qualifying practices based upon documented level of NCQA PPC-PCMH achievement Participating Trinity Health affiliated and owned practices have: Demonstrated improved clinical performance in preventive health and chronic disease Developed increased competencies in data capture and management Improved efficiency of care

31 Key Components of a PCMH Program PATIENT-PROVIDER PARTNERSHIP PATIENT REGISTRY PERFORMANCE REPORTING INDIVIDUAL CARE MANAGEMENT EXTENDED ACCESS TEST RESULTS TRACKING & FOLLOW-UP PREVENTIVE SERVICES LINKAGE TO COMMUNITY SERVICES SELF-MANAGEMENT SUPPORT PATIENT WEB PORTAL PAYMENT REFLECTS ADDED VALUE OF CARE MANAGEMENT

32 Do medical homes work? Definitive data unavailable Lack of Definition Industry Structural Issues Physician Resistance Risks & Challenges No agreement on components and processes that constitute a medical home, which results in lack of consensus and measurability across practices NCQA is leading accreditation agency for medical homes; but, it lacks an exhaustive definition, which impedes accurately measuring PCMH outcomes A shortage of primary care physicians, which is expected to worsen with time. The availability of Physician Extenders (Nurse Practitioners, Physician Assistants, etc) will also be strained under health reform. Policy issues could arise for federal and state governments - e.g. bad clinical outcome using EBM indicate the need for legislatures to consider medical courts to address malpractice issues Miscommunication could be an issue between chronic patients and primary care practices due to misdiagnosis and inaccuracy of treatments Potential turf wars among PCMH, providers and health plans as they compete for chronic patients for health coaching in primary care facilities Physicians typically demonstrate resistance to training in teams and care coordination as compared to health plans and niche vendors Physicians are averse to the high investment requirement for establishing a medical home, especially the HIT component

33 ROI: reduction in hospitalization and ER visit rates Pilot No. of Patients Population Reimbursement Model Results Hospitalization Reduction (%) ER Visit Reduction (%) Total Savings per Patient Colorado Medical Homes for Children 150,000 Medicaid CHIP + Pay for Performance (P4P) 18% N/A $215 Community Care of North Carolina 970,000 Medicaid Per Member Per Month (PMPM) 40% 16% $516 Geisinger Medicare Advantage P4P, PMPM Payment, Shared Savings 18% N/A $500 Group Health Cooperative 7,018 All Salary plus incentive based on quality of care, productivity, service 16% 29% $10 PMPM

34 Insights Part of larger integrated healthcare delivery systems Larger primary care facilities which are part of integrated delivery systems are more likely to have the capital to fund costs related to effective PCMH transformation (e.g., Geisinger Health System) Integrated delivery systems both deliver and fund health care services, and they have clear financial incentives to effectively manage total health care costs and support PCMH Stand alone primary care office As part of a health plan Smaller practices are likely to require a complete overhaul in terms of their infrastructure, processes, staffing and care pathways to be eligible for PCMH recognition Private and public insurance plans are major players in the medical home market, and their combined efforts are expected to reach 13M patients within the next few years As part of an employer-driven benefits package Large companies are beginning to experiment with the medical home model; an example is Whirlpool Corporation which has launched a three year medical home pilot which augments its existing occupational health infrastructure

35 Key Takeaways Assess your strengths Focus on developing essential capabilities versus focusing excessively on end structure Develop clinical integration across the continuum, leverage skill and scale Consider timing on transitioning to greater degree of accountable care since the environment is still in fee for service Understand and manage engagement in the risk continuum What is the North Iowa brand?

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