Implications of Healthcare
Reform on Hospitals and
Community Health Centers
Pennsylvania Association of
Community Health Centers
October 13, 2011
Susquehanna Health
Road Map for Discussion
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Susquehanna Health
SH & Community Health Centers
Past the Point of Incremental Change
Major Components of Health Care Reform
Achieving The New Performance Standard
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• Our Mission: to extend God’s healing love by
improving the health of those we serve
• Our Vision: to provide “world-class” patientcentered care
• Our Core Values: putting patients first, sharing
ownership and being servant leaders
Susquehanna Health
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Susquehanna Health
Williamsport Regional Medical Center
Clinical Institutes & Service Centers
OB/GYN/Level II Nursery
Surgical Services (I/P & O/P)
Heart & Vascular Center
Neuroscience Center
Advanced Orthopedic Care
Physical Medicine & Rehabilitation
Emergency Services
Divine Providence Hospital
Clinical Institutes & Service Centers
Center for Advanced Cancer Care
Surgical Services (O/P)
Home Care & Hospice
Sleep Disorders
GI Center
Behavioral Health (I/P & O/P)
Breast Health Center
Pain Management
Wound Healing
Diabetic Center
MRI Center
Sports Medicine Center
Employee Health
Occupational Health
Muncy Valley Hospital
Clinical Institutes & Service Centers
Medical/Surgical I/P (20 beds)
Long Term Care
Swing Beds
Surgical Services (I/P & O/P)
Emergency Services
Podiatric Care Center
Susquehanna Eye Center
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Susquehanna Health
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Faith-based three hospital system in Williamsport, PA
Williamsport Regional Medical Center
– 221 licensed beds
– 50,000 ED visits
– 11,000 admissions
– 1,100 births
– 800,000 O/P encounters
– Family Medicine Residency Program
Divine Providence Hospital
– Cancer Center, Home Health, Hospice, Behavioral Health, O/P Surgery
– 440,000 O/P encounters
Muncy Valley Hospital
– 20 bed CAH
– 138 attached SNF
– 600 admissions, 15,000 ED visits
– 200,000 O/P encounters
Susquehanna Health Medical Group
– Multi-specialty physician group employs 150 providers (60% of medical staff)
Susquehanna Health System Insurance Network
– Off-shore captive for medical liability insurance
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WRMC Achievements
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Thomson-Reuters Top 50 Cardiac Hospital
Qualify for VBP as of today
STEMI times 60 minutes or less 85% of time
JC Certified Stroke Center
BX Distinction for hips, knees, cardiac care
Best Place To Work for four years
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Regional Service Areas
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Top Priority: High Quality, Cost
Effective CARE for our Patients
Building loyal customers one patient
at a time.
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History of Relationship
between SH and SCH&DC
• 1994 – Community Health Needs Assessment Completed (LCHIC)
– Medical and Dental needs identified
• 1995 – DPH opened CHC &DC in former ED space
• 2006 – CHC&DC moved to strip mall located in the middle of the
population served
• 2011 – SH establishes independent 501(c)3; Susquehanna Community
Health and Dental Clinic (SCH&DC)
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Ensure sustainability of community health center
Create independent entity to be eligible for FQHC status
14 member board (55% of which are CHC clients)
Family practice physician with prior CHC experience is Chair
Applied for FQHC status
• NAP 330 (not approved, 8/13/2011)
• LAL (decision by 11/1/2011)
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SCH&DC Profile
• Visits
– Medical
– Dental
– Procedures
10,085
10,440
25,267
• Staff – full and part-time:
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Physicians – 5
APP – 3
Dentists – 3
Staff – 38
• Services
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Infectious disease
Behavioral health
Social services
Medical and dental
Family planning
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Why Does SH Support SCH&DC
• Acts as Primary Care provider
• Reduces pressure on local ED
• Discharged patients have the necessary
primary care follow-up
• PPACA – more important going forward
– Hospitals will not be paid for readmissions
– Avoid serving patients in higher-cost ED
– Chronic disease management
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Then and now…
1995
2011
$ 164 billion deficit
$1.5 trillion deficit
Coming off failed Clinton health care
reform initiative
Coming off bank/auto bailouts and great
recession
Followed “Contract with America”
Followed emergence of tea party
Broad consensus about scope of problem No broad consensus on scope of problem
Republicans controlled by the House and
Senate
Republicans control just the House
President Clinton
President Obama
Speaker Gingrich: grand renewal
Speaker Boehner: we’re broke
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Susquehanna Health
Past the Point of Incremental Change
• Facing Major Forces of Change
– Baby Boomers
– Information Revolution
– Public Health Crisis
– Health Reform
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Meet Your Newest Medicare Beneficiaries
Happy 65 th Birthday!
Donald Trump
Cher
Sylvester Stallone
Liza Minnelli
Dolly Parton
Pat Sajak
Susquehanna Health
Source: Health Care Advisory Board interviews and analysis.
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Baby Boomers
• Number of People 20-64 for Every Person >65
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1950
1980
2011
2050
7.2
5.1
4.1
2.1
• Life Expectancy
– 1940 – 77
– 2007 – 83
• New Medicare beneficiaries:
– 1995-2010 (each year) 623K
– 2010-2030 (each year) 1.6M
– In 2030, Medicare will have twice as many beneficiaries as 2010
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Information Revolution
• Increasing availability of information
– Universal service for computing - creates easy access to computers,
online resources
– Emergence of the “virtual” – sets baseline for increasing shift to
online information sharing, purchasing
– The Portable Internet – integrates into real-world decision making;
increases demand for rapid information; makes information
ubiquitous, 24/7
– Shift to the Cloud – enhances immediacy of data access; creates
virtually limitless space for data storage; promotes universal sharing of
data among individuals, across systems
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Public Health Crisis-The New
Global Epidemic
• Modern lifestyles taking a serious toll with chronic disease
the top public health concern
– 63% of deaths worldwide due to non-communicable diseases
– 7 0f 10 deaths in the U.S. attributed to chronic conditions
– 122M adults in U.S. with at least one chronic condition; almost 1
of every 2 U.S. adults
– World Health Organization Identifies Key Risk Factors
• Lifestyle Factors
– Tobacco use
– Physical inactivity
– Unhealthy diet
• Limited Health Care Access
– No preventative care
– Cost-effective interventions inaccessible
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Health Reform Changes the Rules of
the Game-Bringing an End to
Volume-Based Payment
• “Our proposal would change incentives so
that providers will give patients the best carenot just the most expensive care-which will
mean big savings over time.” President Barack Obama
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Patient Protection & Affordable
Care Act (PPACA)
• Major Components of PPACA
– Meaningful Use Requirements
– Value-Based Purchasing
– Accountable Care Organizations (ACO’s)
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Meaningful Use Requirements
• Definition: Incentives and penalties that encourage “meaningful use” of
EHR technology; providers must adopt certified EHR, meet performance
thresholds for defined objectives, report on clinical quality measures
• Purpose: Promote adoption and utilization of EHR in support of CMS’s
health outcomes and policy priorities
• Assessment: Overtime, all hospitals and doctors will implement, given
downside penalties; partially-funded mandate
• Role of CMMI: Investing in care design projects that support seamless and
coordinated care delivery
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Value-Based Purchasing
• Definition: pay-for-performance program differentially
rewards or punishes hospitals based on performance
against predefined process and outcomes performance
measures
• Purpose: create material link between hospital payments
and clinical quality, patient satisfaction scores
• Assessment: withhold-earnback model will put significant
dollars at risk for all providers, force immediate focus on
quality and experience metrics
• Role of CMMI: dedicating $500M to Partnership for
Patients, targeting hospital-acquired infections,
readmissions
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Picking Winners, Losers
Based on Performance
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Measure Performance
– CMS evaluates hospitals based on achievement and improvement on selected clinical care
and patient experience measures
– Based on weighted average of achievement and improvement scores, CMS calculates Total
Performance Scores (TPS) for each hospital (clinical measures 70%-patient experience 30%)
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Compare Hospitals
– Medicare ranks all hospitals based on TPS
– For achievement score, hospitals ranked below the 50th percentile do not receive points
towards TPS
– For improvement score, hospitals whose performance has not improved relative to a baseline
score do not receive points towards TPS
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Adjust Payments
– Medicare converts TPS into incentive payments
– Calculation will use linear exchange function
– Hospitals that receive higher TPS will receive higher incentive payments than those that
receive lower TPS
– CMS will notify hospitals of incentive payment for FY 2013 on November 1, 2012
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Accountable Care Organizations
(ACO’s)
• Definition: Network of providers collectively accountable for the
total cost and quality of care for a population of patients; ACOs are
reimbursed through total cost payment structures, such as the
shared savings model or capitation
• Purpose: reward providers for reducing total cost of care for
patients through prevention, disease management, coordination
• Assessment: long-range goal of CMS to migrate to risk contracting;
will spark industry-wide investment in primary care infrastructure
to gatekeep
• Role of CMMI: accepting providers’ proposals to test various
payment systems, including both shared savings and partial
capitation
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Biggest News of the Year?
• Program in Brief: Medicare Shared Savings Program:
– Program begins January 1, 2012; contracts to last minimum of
three years
– Physician groups and hospitals eligible to participate, but
primary care physicians must be included in any ACO group
– Participating ACOs must serve at least 5,000 Medicare
beneficiaries
– Bonus potential to depend on Medicare cost savings, quality
metrics
– Two options available: one with no downside risk until year
three, the second with downside risk in all three years
– Proposed rule available for comment until end of May; final rule
due later this year
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Proposed Rules for Medicare
Shared Savings
• Participants
– Minimum population size: 5,000 beneficiaries
– ACO Founders: PCPs, PCP IPAs, employed groups
– ACO Participants: Hospitals, specialists, PCPs with
<5,000 patients, Critical Access Hospitals, other
suppliers and providers
– ACO must be a legal entity with own tax
identification number, governance, management
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Proposed Rules for Medicare
Shared Savings
• Patient Attribution
– Retrospective based on plurality of primary care E&M billings by ACO provider
– Patients may not opt out of being counted against ACO performance measure
– Patients retain unrestricted choice of providers
• Quality and Reporting
– 65 quality measures (care coordination, patient safety, preventive health, and
metrics of quality of care for frail, elderly, and at-risk populations)
– Bonus payout to ACO is adjusted based on quality performance
– Significant transparency requirements around ACO operations and financing
• Antitrust
– New safety zone created for ACOs below 30% market share
– Modified Clinical Integration review for those Medicare ACO’s above 30%
market share
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ACO Participation Not a Practice Field
(Key Operational Risks for ACOs)
• Manage Utilization Risk
– Drive care to ambulatory medical network
– Reduce preventable acute care episodes
• Deliver Exceptional Quality
– Meet high standards for care quality across multiple
dimensions
– Demonstrate care coordination across sites of care over
time
• Operate Under Intense Transparency
– Provide all necessary documentation, data to CMS
– Manage communication to key stakeholders
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NO MORE CUTS TO HOSPITAL
CARE
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Making Delivery System Reform a Success
Three Keys to Delivery System Reform
Quality
Health
IT
Clinical
Integration
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Reform Implications for Hospital Leaders
1. Integrate the hospital and physician business
and culture.
2. Become proficient at high-quality, costefficient care that is safe and reliable.
3. Transparency.
4. Accelerate implementation and use of HIT;
real-time capture of outcome and cost data
that lead to improvement.
5. Make tough decisions regarding efficient use
of capital, reduction of fixed costs, and
services provided.
6. Focus on elimination of waste.
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Improving Quality of Care:
A Few Incentives and Many Penalties
 Value-Based Purchasing (VBP), 2013: Incentives for moving from paying
purely for volume, regardless of outcomes.
 Penalties:
 For Reductions In Payments For Hospital-Acquired Infections, 2015
 For High Readmissions, October 1, 2012.
 Medicaid Global Payment Demonstration Project, 2010: Allow 5
states to adjust FFS payment model for safety-net hospitals to a
global capitated payment structure.
 Medicaid Bundled Payment Demonstration Project, 2012: For 5 years in
8 states chosen by HHS.
 Bundled Payments National Pilot, 2013: Fixed bundled payment
for an episode of care beginning three days before hospitalization
and ending 30 days after discharge.
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Source: Standard & Poor’s, May 13, 2010
Implementation Concerns
How much of a concern are the following implementation issues?
88%
79%
75%
68%
61%
61%
54%
42%
35%
34%
Source: Commonwealth Fund/Modern Healthcare “Health Care Opinion Leaders Survey,”
April 2010
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Provider Success Factors
 Scale, size, and market essentiality.
 A strong position in the geographies
served.
 Multiple operations in a connected
geography.
 Brand identification and an effective service distribution strategy
that offers patient ease of access to a comprehensive “system of
care.”
 Integrated arrangements with physicians that promote care
quality and value.
Source: Kauffman Hall
Susquehanna Health
Provider Success Factors
 Sophisticated information
technology (IT) and electronic
health record capabilities.
 Managed care contracting expertise.
 A care, cost, and quality management
culture.
 Acute attention to operations and business portfolio
management.
 Readiness and ability to measure and manage clinical and
financial performance in exquisite detail.
Source: Kauffman Hall
Susquehanna Health
Achieving the New
Performance Standard
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Maximize Revenue Capture
Excel Under Performance Risk
Bend Labor Cost Curves
Standardize Clinical Care Pathways
Redesign Inpatient Care Models
Build Effective Capacity (physician providers,
APP)
• Deflect Demand of Less Profitable Services
• Leadership
• Scope and Size of Organization
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Maximize Revenue Capture
(Letting Nothing Slip Through the Cracks)
• Clinical documentation
• Invest in adequate staffing
• Hold staff accountable for productivity and
accuracy
• Leverage Electronic Medical Records
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Excel Under Performance Risk
(Quality Pays)
• Best-performing hospitals will benefit from VBP
• Cut cost growth, not just costs
– Curb labor cost growth
• Employee health
• Principled hiring
• Flexible staffing
– Standardize clinical care pathways
• Physician alignment
• Protocol design
• Decision support
– Redesign Care Models
• Team-based care
• Skill mix management
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Bend Labor Cost Curves
• Wages and salaries
– Flexible staffing reduces need for OT, agency
– Skill mix management better aligns labor expenses
to clinical needs
• Staffing levels
– Principled hiring counters FTE creep
– Unnecessary positions eliminated through
attrition
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Standardize Clinical Care Pathways
(Physician engagement, leadership must be major foci)
• Building a platform for alignment
– Identify physicians with shared strategic vision
– Formalize shared control in governance, management
– Include performance-based incentives in
compensation models
• Standardizing Protocols around best practice
– Establish consensus on best clinical practices
– Ensure continuous feedback
– Proactively mitigate physician, staff resistance
• Support Principled Decision-Making
– Escalate incentives from rewards to mandates
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Redesign Care Model
• Migrating toward top-of-license care
– Physicians
– RN’s
– Nurse Practitioners
– Physician Assistants
– LPN’s
– Medical Assistants
– Non-clinical staff
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Build Effective Capacity
(Making Room for Growth)
• Expediting patient throughput
– Creates more capacity
– Requires investment in better care pathways
• Ability to meet increased volumes from babyboomer generation
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How SH Can Be Successful…
1. Readiness Assessment
(scale of 1 to 10)
•Physician Integration 5
•Quality Care Protocols & Coordination 7
•Information System Sophistication 5
•Balanced Service Distribution System 5
•Managing to “value” 8
•Capital Capacity 2
•Cost Management 5
•Scale 3
Composite Position 5
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How SH Can Be Successful…
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Gain a robust understanding of how the transformation will
affect our hospitals, our physicians and our business
partners,
Establish a keen appreciation of our own competencies and
assets, then leverage these to take advantage of emerging
opportunities,
Develop a committed and aligned physician and hospital
leadership with a clear strategy for creating sustained
competitive advantage and the ability to respond rapidly
when circumstances dictate
Develop physicians , trustees, business leaders and
employee service partners who are master change agents
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How SH Can Be Successful…
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Reorganize our service distribution system to increase
access, improve care coordination, improve quality, increase
patient satisfaction and be effective competitors
Create more scale with vertical as well as horizontal
consolidation
Assure the availability of an IT platform that supports
clinical decision making, information management and
access by physicians, administrators and patients to assure
proper care management and decision making.
Use peer group benchmarks to assure the organizations
staffing, capital spend, supply chain cost structure can
breakeven on Medicare.
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Attributes of the New
Breed Health System
• Redefining the Footprint
– Gains operational efficiencies, market share through
partnership
– Achieves clinical advantage through affiliation
– Maps service footprint to population need
• Leveraging the Information Asset
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Operates within an integrated enterprise data network
Positions leader to merge data analytics with clinical care
Builds competitive advantage from full data transparency
Leverages robust patient data set to support proactive,
comprehensive care
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Attributes of the New
Breed Health System
• Transforming the Clinical Workforce
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Advances clinical care with next-generation technology
Merges local and virtual specialty talent to offer best-in-class care
Elevates PCP to “CEO” of care team
Leverages high-tech and high-touch approach to meet individual and
community needs
– Mobilizes community workforce to extend care team reach
• Realizing Our New Reach
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Overcomes non-clinical barriers to maximize health outcomes
Integrates patient’s values into care plan
Designs communication strategy to bridge health literacy gaps
Activates community stakeholders to connect patients with high-value
resources
– Expands reach beyond care continuum to anchor community health
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Achieving The New Performance
Standards
Community Health Centers
• Key in on community relationships
• Value to your local health care environment (follow-up
care, reduce readmissions, disease management)
• Meet higher quality standards at lower cost
• Patient access to avoid ED’s and inpatient admissions
• Understanding the critical role you play and what it
takes to make your organization successful in HC
reform
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Questions?
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