Trends In Care Delivery And Community Health

Trends in Care Delivery and Community HealthState Public Health Leadership WebinarDeloitte Consulting LLPJune 20, 2013CDC Disclaimer: This webinar is provided as a public service. Inclusion of information in this webinar does not constitute an endorsementof the materials by the Centers for Disease Control and Prevention (CDC) or the federal government, and none should be inferred. CDC isnot responsible for the content of materials not generated by CDC.

AgendaWelcomePaula Staley, MPA, RNSenior Advisor, Office for State, Tribal, Local andTerritorial Support, Centers for Disease Control andPreventionOverview of Changes in HealthcareDeliveryMike Van Den Eynde, MBADirector, Deloitte Consulting LLPBob Williams, MDDirector, Deloitte Consulting LLPOverview of Minnesota ExperienceEllen Benavides, MHAAssistant Commissioner, Minnesota Department ofHealthOverview of Massachusetts Experience John Auerbach, MBADirector, Institute on Urban Health Research andPracticeQuestion & Answer SessionAll

Overview of Changes in Healthcare DeliveryMike Van Den Eynde, MBADirector, Deloitte Consulting LLPBob Williams. MDDirector, Deloitte Consulting LLP

Table of ContentsIntroductionMarket Changes: Fee-for-service to performance-based modelsCurrent state of Accountable Care Organizations (ACOs) and trendsCurrent state of Patient-Centered Medical Homes (PCMHs) and trends

Introduction

Chronic Disease Model for Systematic Care ManagementThe goal of the webinar is to create a foundation of understanding upon which to discuss the role of statehealth agencies in new care models.The Wagner Model of Chronic Care was developed by the MacColl Institute.-6-

-7-Trends in Care Delivery and Community Health.pptxCurrent stakeholders face fundamental challenges

Market Changes – The Need for Value Based Care

iFHP/Kaiser Comparative Price Report-9-Trends in Care Delivery and Community Health.pptxUS healthcare prices are multiples more than the rest of the industrialized world.

Looking at the current environment, the status quo is unsustainableProvider Revenue as a % of Cost (FY2010)1(Sample Market)Estimated Enrollment Growth 2011-201(Sample Market)Key TakeawaysEst. Future Margins based on Enrollment Growth1(Sample Market) Continued fee for service (FFS) rate reduction putspressure on cross subsidization Exchanges increase individual enrollment and consumerexpectations Shift towards segments with lower reimbursement (e.g.Medicare, Medicaid) Hospital margins may continue to decline, requiringcapture of premium dollar through broader structures,e.g., extended networks, accountable care Operational cost reduction may not be sufficient1Basedon sample client data and proprietary health reform model- 10 -

Market regulatory forces are driving alignment of physicians and hospitalsIn many cases, hospitals are providing a “safe harbor” to physicians buffeted by industry forces.Industry DriversImplications Pressure on operating margins due to increasing growthin the cost of clinical supplies, malpractice insurance,and labor.The industry drivers will lead to three main models ofphysician and hospital alignment in the post-Reformenvironment. Growth in the Medicaid and uninsured populations andhigher out-of-pocket costs for the insured is leading to arisk of decreased reimbursement.1. Physicians are an individual entity and contract toprovide health care services. This is likely in marketswhere:– An existing group is receiving outside capital. Increased emphasis on care coordination in order to takeadvantage of quality based economic incentives.– Private equity firms are entering into the market topurchase and consolidate physician practices. Limited capital availability due to the recession to makemajor capital investments for electronic health recordsand infrastructure.2. Physician practices and health systems combine assetsto form a new entity, similar to a foundation model. Thenew entity would be managed similar to a not-for-profit. Changes in Stark law regulations limiting traditionalphysician and hospital relationships.3. Hospital is the integrator and utilizes a variety ofstructures (e.g. physician employment, contractinginnovations) in order to align with physicians.- 11 -

Hospital-owned physician practices will continue to increaseSource: AHA Rapid Response Survey, Telling the Hospital Story Survey, March 2010.- 12 -

Durable “Strategic Destinations”The health system will need to develop a clear value proposition to create market differentiation. In thefuture, there are likely to be a limited number of paths toward sustainable margin creation.Profitability LeversCommon Strategic Destinations Being PursuedDeliver superior outcomes/service to realizesuperior reimbursement (The Innovator)Monetize assets/capabilities and extendconsumer relationships to achieve a greater‘share of wallet’ (The Diversifier)Use actual and virtual scale to drive asustainable unit cost advantage (TheAggregator)Integrate care across the continuum todecrease utilization and total cost (The HealthCare Manager)- 13 -

Strategic “On-Ramps” for taking on performance riskProvider organizations are pursuing different models to gain experience in risk assumption. These modelsare substantial transformation efforts as they evolve established ways of delivering care.- 14 -

Provider Marketplace TrendsAssessment of the provider marketplace demonstrates that market is growing even though providers areat different points in their readiness to take on value-based care (VBC).Haven’t StartedEvaluating OptionsTaking on RiskAlready TransformedDescriptionHave resisted change;May be due to limitedmarket demand, a lackof ability or resources tobegin, or uncertainty offutureBeginning to consideropportunities to preparefor VBC and taking smallfirst steps to initiatechangeHave taken initial stepsin taking on risk andhave a high level plan toshift towards VBCIntegrated deliverysystem that have beenfunctioning as an VBCtype entitySampleGeographiesSouth-EastTX, NE, CO, AZIL, MA, MI Rest of the marketExamples% of HospitalMarket Tucson MedicalCenter Banner HealthOrlando HealthSetonBaylor HealthCarillion25%50%20%Level of VBC ReadinessSource: Leavitt Group, Healthleaders Media Industry Survey 2012 .- 15 -SoCal, WA, Twin-Cities Dean HealthIntermountainGeisingerKaiser5%

Accountable Care Organizations (ACOs)

Accountable Care Solution Goals and HallmarksAccountable Care Solution GoalsDrive the transformation to a patient-centered care model that promotes access, coordinationacross the continuum, wellness and prevention by collaborating with physicians, starting withprimary care, in ways that allows them to successfully manage the health of their patients andthrive in a value-based reimbursement environmentHallmarks of Accountable Care SolutionSupport for high riskpatientsShared decisionmaking andaccountability withpatients and theircaregiversCoordination of careacross the deliverysystemFacilitated andensured accessPromotion ofwellness andpreventionOutcomes andcompliance withevidence-basedguidelines ismeasured andmonitoredThe hallmarks of patient-centered care solution align with how of ‘AccountableCare Organizations’ have been defined by the industry.- 17 -

Projecting Financial Impact of Performance RiskACO models offer a strong long-term value proposition.- 18 -

Number of ACO Entities1The number of entities is growing with every Centers for Medicare & Medicaid Services ACO release.1Basedon March 2013 data- 19 -

Total Number of ACO Entities by State/Territory1State/TerritoryACO Entities #State/TerritoryACO Entities #State/TerritoryACO Entities 5Arizona6Massachusetts18Puerto Rico2Arkansas3Michigan6Rhode Island2California22Minnesota6South Carolina3Colorado7Mississippi2South 2Vermont4Hawaii0New Hampshire8Virginia6Idaho1New Jersey10Washington1Illinois10New Mexico3Washington, DC2Indiana10New York12West Virginia0Iowa7North Carolina6Wisconsin7Kansas1North asedon March 2013 data- 20 -

Value Based Care (VBC) ModelsProviders continue to implement varying types of VBC models to drive clinical integration and performancerisk.Models for Providing Value Based CareMedicare MSSPModelPayer / ProviderPartnershipsEmployee ModelExpanded RiskModelsComprehensive/ GlobalDegree of Risk and Clinical IntegrationLowHighDescription of Models Low downside option Largely Fee forService model with alayer of Pay forPerformance Shared savings /bonuses for clinicalprocess drivenimprovements anddefined measures ofclinical metrics Many of the hospitalsare starting withProvider Employeemodels A single payer andmultiple providersdevelop relationshipthat carries partial risk Hospital employerstaking on risk withtheir own employees Requires realignmentwithin a limitedpopulation or caredelivery innovation(e.g. PCMH models) Low expected level ofrisk, due to controlledpopulation but typicalhigh utilization (1015%) Could begin withlimited risk and canexpand to limited gainsharing Existing provider riskbearing entities looking toexpand risk pool Better understanding andexpectation of actuarialand financial risk-takingneeded Expanded clinical andpopulation managementstrategies A comprehensiveand full risk modelfor a largepopulation Could includeparticipation ofmultiple payers andmultiple providers Includes IntegratedDelivery SystemMarket Examples 189 MSSP (Hospitals andPhysician Groups)Pioneer ACO’s Seton, SLHS Idaho, BannerHealth Cigna and 50 other CareCoordination GroupsScott and White HealthCareAetna / Optimus HC- 21 - Tucson Arizona Intermountain, Kaiser, DeanHealth System

Key Components of VBC StrategyVBC strategies typically have one or more components: cost leadership, utilization management, and/orrevenue diversification.Utilization Managementand Alternative CareDelivery ModelsPopulation Managementand RevenueDiversificationUnit Cost LeadershipUnit Cost LeadershipUtilization Management andAlternative Care DeliveryModelsPopulation Management andRevenue DiversificationUse scale and select partnershipsto lower the cost of service, whilemaintaining superior qualityUtilize integration to improvehealth, reduce need for care / useof expensive resources, andassume risk for delivering valuebased careLeverage brand, reputationand relationships to extendinto new products and services Top quartile performance in unitcost and quality Profitable at/close to Medicarereimbursement Expanding care continuum Implementing new programs toimprove costs and revenueperformance Revenue base shifting towardsglobal/fixed payments over time Developing relationships withnew customers/segments- 22 -

VBC CapabilitiesSuccessful VBC models will require strong capabilities in six critical areas.Leadership and GovernanceInformation and Integration Services Governance system of accountability Physician leadership decision-making rights andresponsibilities Performance measures to inform clinical and businessdecisions Communications and change management approach Clinical informationsystems Data warehouses Analytics and businessintelligence Interoperability and datasharingClinical Integration Population healthreporting Secured healthinformationNetwork and Physician Alignment Care coordination and transition processes Clinical protocols and guidelines Tools/processes to support integration and carecoordination Quality, safety, and outcomes Population health management/ care management/disease management (vs. case management) Patient engagement/satisfaction High value network composition Physician alignment Community/public health programs and servicesengagement Provider evaluation and performance metrics Quality and performance reportingBusiness OperationsIncentive Alignment Process standardization Resource management Economic model Service operations Cost management Customer relationships Marketing and sales Value-based riskarrangements Rating and underwriting Legal and compliance Distribution model Performance improvement Revenue cycle- 23 - Compensation andincentives Third-party agreements