Engaging the C-suite to Advance
Pharmacy Practice
Providing quality patient care through
progressive pharmacy practice
Pharmacy and the C-suite: Managing the
Interface
The Evolving Health Care Model: Leading Change With The C-Suite
Philip E. Johnson, M.S., B.S.Pharm., FASHP
Oncology Director, Premier Inc.
Committee on Clinical Leadership, AHA
Learning Objectives
• Describe the evolving healthcare market and the
emerging challenges and opportunities for Pharmacy
to collaborate with the C-Suite
• Describe the priorities of C-Suite executives and
explain the relationship of these priorities to your
departmental goals.
• Define the emerging value proposition for Pharmacy
and how to sell it to senior executives.
Understanding the C-Suite
•
•
•
•
Who are they?
What do they worry about?
What do they expect?
What do they need to know?
C-Suite Composition
VP of Pharmacy
CIO
Chief Information Officer
CQO
THE CORE
Chief Quality Officer
CEO-Chief Executive Officer
COO-Chief Operating Officer
CFO-Chief Financial Officer
CMO-Chief Medical Officer
CNO-Chief Nursing Officer
CPO
Chief Purchasing Officer
Data on file from CEO interviews and PCAB Surveys.
OTHER
STAKEHOLDERS
CSO
Chief Safety Officer
C-Suite Focus
Financial Risk
More Patients, Less Money, Shifting Payment Models
Liability Risk
Patient Safety / Quality of Care / Reputation / Litigation
Acquisitions and Mergers
Job Security / Power Grid
Everything Else
Eight Things You Need To Know Today
To Engage The C-Suite
1. C-Suite priorities are:
a.
b.
c.
d.
Cost / Margins (Financial Risk)
Patient / Payer Satisfaction (Reputation and Market Share)
Quality and Safety (Litigation and Reputation)
Acquisitions and Mergers (Job Security vs Career Growth)
2. Is my team Engaged and Accountable?
a. Future leadership is #1 concern of American Hospital Association
b. Recognize rise in capability of Pharmacists / ASHP leadership training
3. US Healthcare model is not sustainable
a.
b.
c.
d.
Cost, Quality / Outcomes, Access, Inefficiency / Waste
Change is exponential, unpredictable, and a future model is not clear
New stakeholders and a shift in power
Acquisitions and Consolidations within all stakeholder groups
Eight Things You Need To Know Today
To Engage The C-Suite
4. Patients are increasingly medically informed, IT connected, and
demanding.
a.
How can we create patient responsibility and accountability?
5. Employers are increasingly driving decisions
a. Work and social productivity are measurable outcomes
b. Direct quality / at risk contracts with providers
6.
Information sharing, pertinent data are essential, but lacking today
a.
b.
c.
d.
7.
IT will not lead innovation, as long as we continue to pay for mediocrity
Cost of inefficiency and fragmentation must reflect IT value analysis
Providers cannot compete without relevant data
Providers cannot assume risk without relevant data
Drug and supply costs are rising at an unstainable rate
a.
b.
Value based / Risk shared payment models are inevitable
Pharma will not collaborate as long as we pay disproportionate prices
compared to the rest of the world
Eight Things You Need To Know Today
To Engage The C-Suite
8. Pharmacy has a strong value proposition
a.
b.
c.
Only if we quantify it
Are bold enough to assert it
Hold ourselves accountable.
Bottom Line: Providers cannot be at Risk if they aren’t equipped with
knowledge (data), with a method to guide decisions and analyze
outcomes, and a contract that rewards “doing the right thing”.
“Where does Pharmacy add Value” is the basic question behind
everything we do, and every new opportunity.
The Emerging World Order
The Pace of Change is Exponential
The Game Changers
• American Recovery and Reinvestment Act of 2009 (The
“Stimulus”)
– Requires Meaningful Use of Health Information Technology
• Affordable Care Act of 2010 (Obamacare)
– Medicaid Expansion
– Insurance Exchanges
– High Deductible Health Plans
– Guaranteed Health Insurance Promises
– Minimum Essential Benefits (Prevention, Maternity, Mental)
• Budget Control Act of 2011 (The Sequester)
– Reduces Medicare Payments to Hospitals
• American Taxpayer Relief Act of 2013 (The Fiscal Cliff)
– Reduces Medicare Payments to Hospitals, to Avoid Tax
Increases
• Government Power Shift from 2014 Election
• Change and controversy won’t stop, ever …………….. !
Batchelor, “Leadership and Culture: Building Highly Reliable Systems of Care”,
ASHP Leadership Conference, Oct 20, 2014, Chicago, IL
Deloitte: What To Expect – ACA Impact
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•
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Medicare will cut reimbursement to hospitals
Medicaid will expand dramatically
Employers become more active shoppers
Manufacturers create new deals with hospitals
– Value based
– Shared risk
• Bad debt increases as margins for patient care shrink
– Radical cost-reduction
– Risk management
– “Go big or get out” leading to a few very large groups
•
Insurers will play hardball with hospitals
– Some hospitals will “go at risk”
•
Physicians will seek cover
– New alignment with hospitals or large “group practices”
Paul Keckley, Deloitte Center for Health Solutions, 2014
Oncology As The Forerunning Model
ASCO Projections From 2010 To 2020
• 13.8 to 18.1 million cancer patients
– 45% increase in new cases annually
– Cancer becomes the leading cause of death in US
• $104 billion to $173 billion annual cost of cancer drugs
– Associated drug therapy costs rise 27%
– More than 400 drugs in oncology related pipeline
– Most new drugs are biologic with genetic target
• 20% to 65% Site of Care from MD Offices to Hospitals
• Therapy choice determined / paid differently
– From Protocols to Pathways to Genomic / Proteomic Testing
– From Fee For Service to Episodic Bundles to Population Health
• Many cancers have become a chronic disease
– 35% increase in number of survivors (18 million by 2022)
– Estimated cost of survivor year = $16,000
American Society of Clinical Oncology. J Oncol Pract. 2014; 10: 119-42.
Continuing Movement Towards Accountability and
Population Health Management
<2000
2008
EPISODIC COST ACCOUNTABILITY
Traditional
fee-forservice
Minimal
Pay-forperformance
2012
Long-term2017>
footprint
National scope
TOTAL COST ACCOUNTABILITY
Shared risk/
savings
Savings potential
Full risk /
bundled
payments
Substantial
Each step brings us along the journey of controlling cost, increasing quality
and improving the Patient experience
Fee For Service vs Episode:
Saves Money, Improves Outcomes
• Study:
– 5 groups treated breast, colon, lung
– 810 patients
– Quality and outcomes statistically similar
• Episode payment
–
–
–
–
Predicted cost based on fee structure = $98,121,388
Actual cost = $64,760,116 actual
Predicted cost of oncology drugs = $7,519,504
Actual cost = $20,979,417
• Overall cost decreased
• Paradoxical increase in oncology drug cost
Newcomer, LN et. al. J Oncol Pract. 2014; 10:322-6.
What Drives Therapy Decisions
and
Decision to Pay ?
Current Therapy Decision Cycle
CEO Must Understand and Leverage Each Component
Quality
of Data
Guidelines
and
Compendia
(NCCN, VIA)
Current Best
Knowledge
Genomics /
Proteonics
Value / Evidence
Based
Decision Model
Usage and
Payment
Criteria
(CMS, Aetna,
United)
Clinical Use and
Outcomes Data
(Provider Groups,
GPOs, Payers)
PATIENT
THERAPY
Decisions
(Providers)
Pre-Authorization /
Auto-Approval
The New Era of Personalized Care
Replacing population health whenever possible
• Specific patient’s unique clinical profile
• Traditional clinical metrics are still important
• Evidence rated Clinical Guidelines / Pathways
• Genomic profile
• 13 FDA Required Companion Diagnostics (8-6-2014)
• 150+ gene panels for < $1,000
• Therapy and Disease Considerations
• Co-morbidity / End-of-Life Guidelines
• Acuity Adjusted Patient Scale (AAPS)
• Impact of wellness programs and screening
• Informed Empowered Patients
• Patient Accountability is emerging in shared risk contracts !
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/InVitroDiagnostics/ucm301431.htm
Value and Risk
Fundamental Problem: Measuring Value
“… A fundamental and largely
unrecognized problem, we don’t
know what it costs to deliver health
care to individual patients, much
less how those costs compare to the
outcomes achieved.”
“Understanding costs could be the
single most powerful lever to
transform the value of health care.”
- Robert S. Kaplan & Michael E. Porter
McKenna, “Optimizing Outcomes Management: Leveraging Information to Lead Health System Organizations”
October 20, 2014, ASHP Leadership Conference, Chicago IL.
Pharmacy Value and Relevance
From 2 COOs at 2014 ASHP Leadership Conference
How Can Pharmacy Add More Value?
• Alignment – Support Value Equation
• Quality – Competitive Outcomes
• Employee Effectiveness – Simplify, Consistent
• Clinical Effectiveness – Process Redesign
• Financial Effectiveness – Leverage Pharmacy
C-suite Expectations
• Relevance, Relevance, Relevance ! ! !
– Understand the organization’s strategic priorities and challenges
– Why is the pharmacy relevant? Show me the numbers !
• Frame the conversation in stories they can relate to
• Recruit thought leader Champions
Payers Strategy is Fundamentally Same as C-Suite
• Drive efficient use of evidence-based medicine
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–
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Platform that provides content and workflows
Integrate into both payer and provider systems
Simplify the administrative processes for providers
Improve the care experience for the members with cancer
• Avoid waste and misuse of medical services
– Better provider alignment, which includes transparency & reporting
(e.g., Oncology Patient Centered Medical Home),
– Better network (narrow, tiered)
– Better decision support strategies
– Better patient support in active treatment and care transitions
• Leverage and integrate the many current (and future)
medical and pharmacy cancer-care initiatives
– Seamless, end to end cancer experience for members and providers
Fragmented Care in Most Systems
Who is the Gatekeeper / Patient Navigator? … Perhaps Pharmacy?
Physicians
Multiple
Sites of Care
• 2 primary , 5 specialists / ave. year
• No incentive to be the “Gatekeeper”
• Hospitals, MD offices, home care, retail
clinics, SNF
Pharmacies
• Hospital, Ambulatory, Retail, Specialty
Comorbid
diseases
• Chronic and Acute
Payers
• Primary and supplemental
• Member shift = 2.5 years
• Few incentives for “prevention”
Clinical Integration-The Key to Real Reform. Trend Watch. American Hospital Association. February 2010.
What is at Risk ?
– Provider financial margin
– Market share if “customer defined” standards
are not met
– Medical liability if “standards of practice” are
not met
Population Health Requires Embracing Risk
“Population based accountable care exposes
hospitals to many new operational and financial
challenges. Ignoring them may be the biggest
risk of all.”
•
•
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•
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Care management processes or programs
Predictive analytical tools to identify high risk patients
Case managers / Patient navigators
Post discharge continuity of care / End of life planning
Chronic care management programs: Multiple
conditions should be highest focus
How will you adapt to population health? http://www.hhnmag.com/display/HHN-newsarticle.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle/data/HHN/Magazine/2014/Oct/cov-riskaccountable care-population-health . Accessed 2014 Nov 14.
Value and Risk Dynamics
High Cost
Poor Outcomes
Inefficiency
Unnecessary Care
Patient Compliance
Value Based Business Model
High Value Therapy
Measurable Outcomes
Quality and Safety
Prevention / Detection
Who is at Risk ?
New Stakeholders … More Stakeholders … Each with Demands!
– Employers / Purchasers determine value
• Develop performance contracts with Payers / Providers
– Payer is shifting full burden of risk to Providers
– Providers were paid less for quality & performance
inadequacies
– Providers will be paid differently in the future:
• Fixed “capitated” for a specific stage of a specific disease
• Annual fee per “covered life” in a large population
– Manufacturers were rewarded for quantity of use
• Lab, Radiology, Pharma
– Manufacturers will be paid based on outcomes / value
• Incentivized to develop better diagnostic / predictive tools
• Consignment models on the rise
Employer
Will Eventual PRIMARY PROVIDER
Bundle Include ALL RISK ?
Payer
Patient
PRIMARY
PROVIDER at RISK
Secondary Provider
Outsource Services
Supplies
Infrastructure
How does a Risk Contract Work ?
• Quality penalties are not achieving desired results
• New Incentives for wellness, prevention, early detection
– Cheaper to prevent, than treat what was preventable
– Determine value of “health capital” as QOL and productivity
• Manufacturer costs must be honest and transparent
– Cost to get new drug to market: $125 million vs $1.3 billion
• Light (Harvard), Kantarjian (MD Anderson), AARP Bulletin, May, 2014, p22
– Enable provider “bundle” to be competitive
• Promote only appropriate use
– Guided evidence rated pathways / algorithms / guidelines / compendia
– Able to predict response rate
– Shared financial loss for failure to respond
• Missing essential IT tools
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–
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Process and communication effectiveness / efficiency
Consolidate versus fragment providers
Appropriate discrete metrics
Patient inclusion and accountability
Value / Risk Based Payer Contracts
• Performance Criteria
– Guideline Adherence = Predictable Outcomes/Costs
•
•
•
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1st, 2nd, 3rd line therapy
Supportive Care, Co-Morbid Disease, End of Life
Population Health (Prevention, Screening)
Patient adherence to therapy plan
• Reimbursement Incentives
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–
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Outcome / Cost / Value Data Exchanged
Authorization Process Waived / Expedited
Lower reimbursement contractual deduction
Faster payment ( < 30 days )
Preferred provider status
Value/Risk Based Purchasing Incentives
• Guideline adherence = committed volumes
• Tiered Price Incentives
• Adherence Metrics
• Therapeutic / Biosimilar Substitution
•
Single Class of Trade
• Oncology or IDN / ACO
•
Shared Risk Concepts
– Non-performance penalties
• ACO standards of care
– Clinical non-performance of drug
– Define ROI of each drug within a bundled payment
• Cost adjustment formula to ensure positive margins
• Shared Outcomes Data
• Optimize role of GPO
Metrics and Informatics
Traditional Metrics are Obsolete
• Pharmacy Expense as a Percentage of Net Revenue is
beyond control of supply chain, as are regional and
contractual differences in reimbursement
• Cost of therapy must include direct and indirect costs in the
emerging “episode” or “bundled” models
• Pharmacy Expense per Adjusted Patient Day doesn’t
consider LOS or re-admissions
• Case Mix Index (CMI) is based on reimbursement and not
clinical indicators.
• What will emerge to define value, efficiency, effectiveness,
and serve as peer benchmarks?
What Endpoints Does Manage Care “Care” About?
•
“Hard” outcomes versus “Soft”
– Heart attacks vs. blood pressure
– Overall survival vs. initial response
•
Cost of Outcomes
– Adverse events resulting in additional therapy vs. localized irritation
•
•
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Hospitalization or ER visit vs. outpatient office visit
–
Efficient delivery of care
Outcomes aligned with quality metrics and CMS programs
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Health Effectiveness Data and Information Set (HEDIS)
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Physician Quality Reporting System (PQRS)
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National Quality Measures Clearinghouse (NQMC)
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Hospital Inpatient VBP Program
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Hospital Readmissions Reduction Program
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Hospital OP and IP Quality Reporting (OQR and IQR) Programs
Evidence That Differentiates
Predictive Analytics: Metrics for the New Era
We will need to Treat More People …
… With Less Money and Shifting Payment Models
Predictive models can estimate the impact of variables on
specific products, services and states:
• Supply chain analytics can help to effectively take out production and
distribution costs to offset price reduction and protect margins
• Optimization analytics can help to make processes more efficient
• Price analytics can help brands determine appropriate levels of pricing and
promotion in changing market conditions
• Value chain analytics can help identify areas of price or cost reductions that
will have the least impact on quality of service and goods
http://www.kdnuggets.com/2014/09/predictive-analytics-health-care.html
Hospital EHRs Inadequate for Big Data
• Crossing the Omic Chasm. A Time for –Omic
Ancillary Systems
• EHR data systems are not sophisticated enough
to handle or store the amount of electronic
information created by currently available medical
technology.
• EHRs are not currently capable of integrating
genomics clinical decision support.
– Genomics, epigenomics, proteomics, and
metabolomics
• We need dynamic systems that can reanalyze and
reinterpret stored raw data as knowledge evolves,
and can incorporate genomic clinical decision
support.
http://labsoftnews.typepad.com/lab_soft_news/2013/04/justin-starren-specialized-systems.html
Starren J et al. JAMA. 2013; 309: 1237-8.
C Suite Game Plan
Critical Issues Identified by AHA
How Can Pharmacy Bring Value?
• Future Leadership
– Physician, Administration, Nursing
• ASHP / Pharmacy identified as “best practice”
– Acquisitions and Mergers = New Power Base
• Financial / Regulatory Change and the “Pace of Change”
– Quality / Safety / Population Health
– Value Based Payment Models / Audits
– Evolving Metrics / Insufficient Informatics
• Increasing Risk
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–
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Evolving Business / Practice Models
Cost of New Technology / Drugs in Capitated Payment Models
New competition (Foreign and Domestic)
New empowered stakeholders (Employers, Patients, and more)
Based on Phil Johnson’s observations as 6 year ASHP representative to
AHA Committee on Clinical Leadership, 2008 - 2014
What business models will gain traction?
Some health systems will be integrators of care
that put together all the management elements
for patient care, geographic reach, and financial
risk. But in most cases, individual organizations
will play a part in some larger system, providing
geographic coverage, or a unique array of
services that strengthen the larger system needs.
Rich Umbdenstock M.D., CEO AHA
R.Ph., CRITICAL Linking Pin
R.Ph. may be only person who FULLY
understands both CLINICAL and
FINANCIAL components of healthcare !
RPh
Clinical
Financial
Primary C-Suite Expectations for Pharmacy
Information, Metrics, and Accountability: No Surprises !
1. Are we buying drugs at the best possible advantage?
2. Are sound business principles and practices being applied to all
pharmacy operations? (i.e., Is the pharmacy business being
approached as the large business enterprise it has become?)
3. Are patient billing and revenue processes for pharmacy sound
and routinely monitored?
4. Are pharmacy resources, including drugs, supplies and
manpower, properly controlled and managed?
5. Are patient outcomes and medication safety concerns properly
balanced with financial considerations in the pharmacy
department?
6. Are all pharmacy entrepreneurial opportunities identified,
explored, and pursued when appropriate?
Redefining C-Suite Expectations
for Pharmacy
• Accountability for integrated distribution of products and
information across all points of care
• Clearly defined role for pharmacy expertise to be
available at the point of care
• Redefinition of the basic systems and services to meet
the changing organizational model and regulations
• Creative and innovative solutions that align with
organizational goals and direction
• “Balancing act” that requires collaboration and new
skills
What we can do “In the Box”
• Drug Expense and Supply
– Optimize contracts
– Optimize inventory management
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Leader in Health-System Efficiency Strategies
Revenue Cycle Optimization
Safety and Quality Expert
Education: Pharmacy, Institutional, Patient, Community
Optimize Informatics Systems
PPMI / Clinical Activities
– Multidisciplinary Team Leadership
– Therapy Management / Direct Patient Care
– Clinical guideline / pathway development
•
•
Positive Patient Satisfaction Scores
Positive Institutional Survey Scores
Inclusion Creates Advocates
What can we do “Outside the Box”
Re-defining “our box”
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Revenue cycle/ value based payer contracts
Risk sharing, secure access drug contracts
Legal and regulatory advocacy
Develop new business opportunities
Clinical and financial / economic Research
Community / population health initiatives
Pharmacy response to Institutional Strategic Plan
Inter-departmental Initiatives
– Define meaningful metrics / dashboards
– Informatics and Automation optimization
– Companion diagnostics
Transparency: Timing is Everything
Be proactive.
Don’t wait until
the last minute.
Don’t avoid
people or issues.
There will be good
days and bad days.
Keep things in
perspective.
uestions