Maximizing the Financial Performance of Employed Physicians Presented by: Health Directions, LLC Sabrina Burnett, Vice President HFMA Kentucky Chapter Summer Institute, July 24, 2014
About Health Directions, LLC A premier healthcare consulting firm that delivers a national perspective to regional provider organizations Assists healthcare organizations in improving their financial performance, physician satisfaction, health IT optimization, and strategic positioning Delivers a range of health care consulting services through an experienced team of professionals ACO Strategy and Development Managed Care Strategy Clinical Integration EMR Implementation & Optimization Health Information Technology Physician On-Boarding and Enrollment Strategic Planning 2
Today s Objectives Provide an overview of the industry trends and physician integration strategies Introduce a concierge approach for successfully onboarding physicians Present key performance indicators for employed physicians Provide an overview of value-based contracting 3
Healthcare Trends and Challenges
Trends and Challenges Aging demographics Chronic disease: 75% of healthcare spending Preventable Diseases consume 80% of spending Rising costs Consumer demands Technologic Advances 5
Changing Healthcare Landscape Payment Reform Fee-for-service versus Pay-for-performance Healthcare Technology Drives connected care Accountable Care Growth of ACOs accelerates Patient Satisfaction Patient-provider communication and relationship critical to economic success 6
Fundamental Shifts in Care Delivery From Silo Care Management Episodes of Care Hospital Centric Episodic Reimbursement Discharges Utilization Management Caring for the sick Production (volume) To Enterprise Care Management Coordination of Care Patient Centric Financial Incentives based on outcomes and care coordination Transitions Proactive care at the right place, right time Focus on prevention and wellness Performance (value) 7
Options For Physicians & Organizations Physician s Level of Collaboration High Create Provider-Driven Medical Home Model Coordinate care within practice s population Establish value around chronic disease outcomes Use outcomes to create value with payers Do Nothing Maintain FFS Model Negotiate contracts under current strategy Tolerate fee schedule reductions Clinically Integrate Care Track quality across continuum Establish a patient longitudinal record Prepare for value-based contracting Develop Hospital Coordinated Care Model Focus on cost reduction Invest in health information technology Connect providers to acute care setting Low Organization s Level of Collaboration High 8 8
Physician Integration
Strategy Becomes Your First Filter 10
Objectives of the Hospital Positive hospital/physician relationships Increased referrals Market positioning Services and payer mix Enhanced managed care contracting Positioning for healthcare reform Developing an integrated care network 11
Physician Integration Models Employment Co-Management Clinically Integrated Network Practice Support Services (i.e., MSO, EHR) Payor Contracting 12
Employed Physicians Hospitals are employing physicians: Out of 193 surveyed hospitals, 94% have employed physicians (Modern Healthcare and Press Ganey) 80% 60% 40% 43% 45% 47% 48% 50% 51% 53% 54% 56% 57% 58% 59% 61% 64% 20% 0% Source: Clinical Transformation: New Business Models for a New Era in Healthcare, Accenture, Oct. 31 (link) 13
Top Concerns for Physicians Considering Employment 87% - business expenses 61% - managed care 53% - EHR requirements 53% - maintaining and managing staff 39% - number of patients required to break even Source: Clinical Transformation: New Business Models for a New Era in Healthcare, Accenture, Oct. 31 (link) 14
Reasons Physicians Stay Independent Control over practice decisions/autonomy Protection of staff Job security (termination, covenant) Personalities Entrepreneurship Outside income sources Locations and hours of work Relationship with patients 15 15
Challenges for Hospital Leaders Identifying the value that the physician practices bring Specialty network Patient longitudinal record Comprehensive managed care contracting Identifying ROI and/or minimizing the losses Managing a physician practice is different than managing a hospital Managed care contracts / Revenue cycle management / Business metrics IT support systems 16
Measure Twice, Employ Once Start with Strategy as first line filter Ensure prospect aligns with organizational goals Create a sound financial pro forma of practice Evaluate data carefully Use industry metrics and benchmarks for evaluation Interview/evaluate for culture fit soft costs 17
4 Key Pro-Forma Areas Ancillary Revenue Compensation Technology Staffing 18
Ancillary: Revenue Growth Better performing practices generate greater than 15% of physician income from ancillary revenue Average physician collects $50,000 in ancillary services Growth of vertically integrated group practices 19
Compensation: Link between Productivity and Pay Compensation plans need to be based on productivity Understand the guarantee or short-term incentives Evaluate work RVUs and bonus incentives What makes sense for one specialty may not make sense across the board (strategy) Evaluate Employment vs. Provider Services Agreement based on strategy Benchmark comparisons: apples to apples 20
Technology: Strike a Balance on EHR Evaluate system compatibility and interoperability and current use Overhaul practice workflows Perform Meaningful Use and other Clinical Data Gap Analysis 21
Staffing: Evaluate the Internal Team Staffing model in current state Skill sets of existing team members Duplication of effort in consolidated model (too many office managers?) 22
Sample Pro-Forma FTE Benchmark FY13 FY14 FY15 FY16 MGMA Physician FTEs Support FTEs TOTAL PRACTICE FTEs 0 0 0 0 Physician WRVUs REVENUE Gross Revenue Contractual Allowances Net Patient Service Revenue $ - $ - $ - $ - TOTAL NET REVENUE $ - $ - $ - $ - EXPENSES DIRECT EXPENSES Staffing Benefits Pharmaceutical Total Occupancy Supplies/Medical & Office Purchased Services Professional and General Liability Information Technology Local Depreciation and Amortization Other TOTAL DIRECT EXPENSES $ - $ - $ - $ - $ - PHYSICIAN PERFORMANCE BEFORE PROVIDER EXPENSES $ - $ - $ - $ - $ - PROVIDER EXPENSES Physician Compensation Physician Benefit Expense TOTAL PROVIDER EXPENSES $ - $ - $ - $ - $ - PHYSICIAN PERFORMANCE BEFORE OVERHEAD EXPENSES $ - $ - $ - $ - $ - OVERHEAD EXPENSES System and Local Expense Allocation TOTAL EXPENSE $ - TOTAL $ - 23
Employment Process Complete due diligence and qualification process Create 1-page employment summary prior to the employment agreement Illustrate compensation, bonus and benefits using formula Negotiate terms, then draft employment agreement Encourage involvement of legal counsel early Execute agreement and deploy on-boarding plan 24
Physician On-Boarding
Why a Concierge Approach? Concierge services are offered to those who need assistance whether it be for pleasure or out of necessity. From hotel guests who want a specific meal not listed on the menu to senior citizens who need companionship, concierge services are available to take care of specific needs. During the employment transition cycle, physicians have specific needs that a hospital organization structure may not address. 26
On-boarding Program 27
Phase 1: Discovery Checklist Task Point Person/Dept Duration Confidentiality Agreement PM 15 days Pro-Forma Preparation Planning IT/IS Discovery IT Assessment Operational/Practice Operations Assessment Director Valuation of Assets Physician Interviews 15 days 15 days 15 days 30 days TBD DECISION TO HIRE PM 30-60 days Physician Data Sheet, CV Status / Completion Date Trigger Signed Confidentiality Agreement Discovery PMO after Signed Conf Agrmt Signed Confidentiality Agreement Signed Confidentiality Agreement Proforma, Executive Sign Off, Physician Data Sheet and CV required before moving to Phase II 28
Phase 2 Checklist Task Point Person/Dept Duration Plan for IT Installation/Implementation IT/IS Telecom 90 days Practice Start-Up Checklist Project Manager 5 days Employment Letter Legal 30 days Offer Letter HR 30 days Position Posted in Position Mgmt Operations Director 10 days Credentialing Checklist/Intro Package Business Office 15 days Contracting Contracting Dept 60 days Hospital Privileges Med Staff 30 days Malpractice Risk Management 30 days Cost center, Banking Finance 60 days Collateral Development Marketing 45 days Staff Offer Letters Human Resources 30 days EHR Templates IT 60 days Medical Malpractice Risk Management 30 days Office Furniture Facilities 60 days Hospital Tours Physician Relations 30 days Credit Card Machine CBO 30 days Status / Completion Date 29
Provider Enrollment 30
Provider Enrollment Tools Credentialing Software Manages credentialing status Populates applications, forms and letters Reporting Tool Tracking Module Alert System Imaging Module 31
Benefits of Centralized Credentialing Improved Provider Relationships Staffing Cost Reduction Service Improvement Revenue Cycle Optimization 32
Phase 3 Final Transition (Duration: 7 30 days) - Execute Employment Agreement (Contract) - Complete on-boarding Project Plan - Finalize all hospital employment documentation for physicians and staff - Testing of IT/IS/Telecom systems for transition - Build provider schedule, profiles and clinic support functions - Staff training on systems, HR functions, etc. - Go-live day - Full practice transition to Hospital Operations Manager - Post go-live transition support for 30 days if required 33
Prepare a Toolkit Practice Acquisition Checklist Acquisition Document Requests Pro-forma Methodology tied to strategy Practice Project Plan Checklist On-boarding Tracking Tool (summary of milestones) Department Work Plans leverage your existing infrastructure to support physician employment 34
Key Performance Indicators
Continuous Success Requires Measurement Financial and outcome indicators help define practice priorities and evaluate success Evaluate performance based on strategy (value proposition of why we became partners) Incorporate dashboard reports that are simple and easily understood by managers, physicians and staff 36
Physician Key Performance Indicators Revenue Cycle Patient Satisfaction Payment Analysis Patient Access Key Performance Indicators Cost / Profitability Care and Outcomes Production 37
The Revenue Cycle 38
Front-End Key Indicators Measure Best Practice Front-end edits 1-3% Office charge lag <1 day Hospital charge lag 1-3 days Co-pay collection % 90%-98% Time-of-service payments 85% Percentage of cancellations / no shows 5% 39
Back-End Key Indicators Measure Best Practice Charge Capture Rate 100% Claim Submission Frequency 1 day Edit Rate 4% Denial Rate 5% Days in A/R 37 Bad debt 1.5% Patient AR over 120 days 7% AR over 120 days 9% 40
Value of Benchmarking Allows you to measure and track performance against peers Gives you what s reasonable as well as what s possible scenarios Helps to quickly identify issues and proactively address them Insight into what others in the industry are doing If you can t measure it, you can t manage it. -Norton & Kaplan 41
New Generation KPIs Financial metrics are important to running a successful business, but there is a next generation of indicators that involve clinical performance, quality, patient satisfaction/engagement and cost of care Meaningful Use Dashboard Clinical quality scorecard Value of connectivity and data 42
Meaningful Use Dashboard 43
ACO Measures ACO Measure Title 1 Patient Experience Survey 2 Patient Experience Survey 3 Patient Experience Survey 4 Patient Experience Survey 5 Patient Experience Survey 6 Patient Experience Survey 7 Health Status Survey 8 Hospital readmissions 9 Ambulatory Sensitive Conditions Admissions: Chronic obstructive pulmonary disease 10 Admissions: congestive heart failure 11 % of all PCPs meeting stage 1 of meaningful use 12 Post Discharge: 65 and older medication reconciliation 13 Falls: Screening for Fall Risk 14 Influenza Immunization 15 Pneumococcal Vaccination 16 Adult Weight Screening and Follow-up 17 Tobacco Use Assessment and Tobacco Cessation Intervention 18 Depression Screening 19 Colorectal Cancer Screening 20 Mammography Screening 21 Blood Pressure Measurement 22 Diabetes Composite Hemoglobin A1c 23 Diabetes Mellitus: Low Density Lipoprotein Control in Diabetes Mellitus 24 Diabetes Mellitus: High blood pressure control in diabetes mellitus 25 Diabetes Composite: Tobacco Non Use 26 Diabetes Mellitus: Aspirin Use 27 Diabetes Mellitus: Hemoglobin A1c Poor Control 28 Hypertension: blood pressure control 29 Cholesterol Management for Patients with Cardiovascular Conditions 30 Ischemic Vascular Disease: Use of Aspirin 31 Heart Failure: Beta-blocker therapy for left ventricular systolic dysfunction 32 Coronary Artery Disease (CAD): Drug Therapy for Lowering LDLCholesterol 33 Coronary Artery Disease (CAD): LDL level < 100 mg/dl 44
Sample Provider Scorecard Your Peers You Patient Satisfaction Child Immunization Rate CAD: LDL Medication Diabetes: HbA1C Screening Diabetes: LDL Screening Colorectal Cancer Screening Post Partum Screening Breast Cancer Screening 0% 20% 40% 60% 80% 45
Meeting with Physicians Review key information monthly Production vs. Goals Financials vs. Goals Billing Performance vs. Goal Practice improvement initiatives Clinical quality reporting Industry trends and future considerations (i.e., PCMH, ICD-10) 46
Presenting to Physicians 1. Present information that they will understand (for example, number of visits) 2. Establish monthly goals and compare to actual 3. Use graphics as opposed to spreadsheets 4. Share what is applicable to them and their practice 5. Create rapport and encourage open discussion 6. Co-develop an action plan for practice improvement 47
Value-Based Contracting
Organizational Self-Assessment Understand. What Do You Have to Offer Where Are You on Your Roadmap to Value-Based Contracting Know the Healthcare Needs in Your Market Existing and Needed Technology Full Cost of Care Financial Implications of New Reimbursement Methods 49
Market Background Assessment Payer Concentration in Market Limits Opportunities Existing Quality Programs Earning Incentive(s) Existing Contract(s) Potential Partnership Opportunity Narrow Network & Commercial HMO Risk Products 50
Payer Market Concentration Blue Cross/Blue Shield (23%) Commercial PPO & HMO Combined Humana Medicare Advantage (10%) United (7%) Aetna/Coventry (3.3%) Cigna (2.3%) Medicaid Managed Care (3.3%) 5 Payers Combined 51
Value-Based Payment Models FFS with Quality Incentives Shared Savings Narrow Networks Partial Capitation Full/Global Capitation Low Level of Risk High 52
Two Diverging Payment Paradigms Fee For Service Quality Driven Lack of Quality Indicators Volume Driven Fragmented Care Performance Payments for Chronic Care Management Goal to Reduce Fragmentation 53
Steps in Building the Payer Contracting Approach Build Preferred Contracting Strategy and Approach Patient Population Scope of Risk Assess Health Plans in Your Market Fee Know For the Service Different Care Delivery Needs Quality Driven Existing Payers, Products, Value-Based Performance Programs Lack of Quality Emerging Opportunities Payments for Indicators Chronic Care Leveraging Volume Driven CIN Value Management Build Fragmented a Value Care Proposition with Payers Goal to Reduce Based on Conversations with Payers, Begin to Build Fragmentation Comprehensive Program Measure Database 54
Steps in Building the Payer Contracting Approach (Cont.) Development of Clinical Programs and Outcomes is Foundation of Direct Contracting with Employers Build Model Language for Value-Based Contract Components Fee For Service Quality Driven Create a Financial Model Template to Help Organizational Leaders Understand the Potential Cost and Opportunities Lack of Quality Indicators Volume Driven Fragmented Care Performance Payments for Chronic Care Management Goal to Reduce Fragmentation Identify Physician, PHO (if applicable) & Hospital Contracting Concerns & Considerations 55
Illustration: Identifying Opportunity ACO Humana (Physician) Humana (Hospital) Fee For Service Quality Driven UHC (Physician) Lack of Quality UHC (Hospital) Indicators Volume Driven Fragmented Care BCBS (Physician) BCBS (Hospital) Performance Payments for Chronic Care Management Goal to Reduce Fragmentation Nov-13 Feb-14 May-14 Aug-14 Dec-14 Mar-15 Jun-15 Oct-15 Renewal Period 56
Comparison of Quality Measures Measure Title HUMANA BCBS NQF # PQRS 4 ACO 6 MU 5 HEDIS 7 Specialty Count Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control Yes Yes 729 2 23 Menu Yes 5 Diabetes Mellitus: Hemoglobin A1c Control (<8%) Yes Yes 729 NA 22 Menu Yes 0 Preventive Care and Screening: Breast Cancer Screening Yes 31 112 20 Menu Yes 7 Diabetes Mellitus: Medical Attention for Nephropathy Yes 62 119 NA Menu Yes 5 Preventive Care and Screening: Colorectal Cancer Screening Yes 34 113 19 Menu Yes 5 Diabetes Mellitus: Dilated Eye Exam Yes 55 117 NA Menu Yes 5 Fee For Service Quality Driven Glaucoma Screening Yes NA NA NA Yes 0 Mail Order Usage Yes NA NA NA NA 0 Lack of Quality Indicators Volume Driven Fragmented Care Performance Payments for Chronic Care Management Goal to Reduce Fragmentation Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention Yes 28 226 17 Menu Yes 16 Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic Yes 68 204 30 Menu Yes 7 Ischemic Vascular Disease (IVD): Complete Lipid Panel and Low Density Lipoprotein (LDL-C) Control Yes 75 241 29 Menu Yes 7 Hypertension (HTN): Controlling High Blood Pressure Yes 18 236 NA Core Yes 6 Diabetes Mellitus: High Blood Pressure Control Yes 729 3 24 Menu Yes 5 Ischemic Vascular Disease (IVD): Blood Pressure Management Yes 73 201 NA Menu Yes 4 Use of Emergency Care Yes NA NA NA Yes 0 Generic Drug Dispensing Rate Yes NA NA NA NA 0 Low Back Pain: Use of Imaging Studies Yes 52 NA NA Menu Yes 0 57
Summary Keep the WHY in the forefront of your plan to evaluate potential physician candidates Understand the importance of a concierge approach to onboarding to ensure long-term physician success Identify and track key performance indicators that are aligned with your strategy Understand the impact of healthcare reform 58
Contact Sabrina Burnett Vice President Health Directions, LLC 8310-1 Capital of Texas Hwy N., #390 Austin, TX 78731 Phone: 512-795-5500 sburnett@healthdirections.com www.healthdirections.com @HDirections 59