UCSF Clinical Enterprise
Strategic Plan
Retreat 1
May 6, 2013
1
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
2
UCSFCE Strategic Planning Process – Project Overview
1. Engage USCF
Leadership to
Define UCSFCE’s
Vision & Strategic
Imperatives
February - April
2. Engage UCSF
Community to
Develop Strategies
& Tactics
May - July
3. Create
Implementation
Plan for Success
August - October
4. Clinical Enterprise Group &
Steering Committee Meetings
3
Leadership of the CE Strategic Planning Process
Executive Sponsors (M Laret,
S Hawgood)
Clinical Enterprise Group (CEG)
Clinical Enterprise Strategic Planning
(CESP) Steering Committee
Strategic Initiative Workgroups
1. Grow Complex Care Referrals Via Innovation &
Distinction
2. Lead a High Value System of Care
3. Build a Culture of Continuous Process
Improvement
4. Strengthen Fiscal Position & Resource the Plan
• Teams of 15 – 20 faculty and clinical
enterprise leaders that will recommend
strategies, tactics and requirements to
the CESP Steering Committee
• Teams will meet 5 times, between May –
late July
4
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
5
A Health Plan View of the
California Market
UCSF Clinical Enterprise
Strategic Planning Retreat
May 6, 2013
1
My Perspectives
 8 Years of Consulting, Physician Practice Management
 14 Years at Blue Shield of California
• Strategic Planning
• Network Contracting
• Employer Sales and Account Management
 Hill Physicians
• 3 Weeks as Chief Operating Officer
2
What’s Important
Three most important priorities for health plans
(and should be for the rest of the healthcare
delivery system)…
1) Affordability
2) Affordability
3) Affordability
We’ve been discussing this for years, but now it
is much, much more serious…
3
Drivers of Change
 Social/Political Tipping Point
•
•
•
•
Health reform put healthcare front and center
Visibility/transparency of prices in the exchange
Sticker shock driven by health reform impacts
Premium rate setting legislation is being proposed
 Employers are Struggling
• Health insurance costs are equal or greater than the profit
margins of many companies
• Health insurance costs = fully loaded salary of a software
programmer in India
• Companies that compete in global industries can’t afford it
4
Drivers of Change (cont’d.)
 The value proposition is not compelling
• Prices of health insurance rise ~10% per year the last 15 years…
• About the same networks
• About the same outcomes (that the system can show)
• Similar member experience
 One organization is providing a differentiated
product: Kaiser
•
•
•
•
More affordable
More integrated
More standardized
Attracting superior (healthier) risk
5
Erosion of Employer Based Coverage
Average
Premiums
71%
60%
%
of
employers
offering
health
coverage
2002 vs. 2012
+169.7%
Inflation
2002 vs. 2012
+32%
2002
2012
Political View: Health insurance inflation is the health plan’s fault
Reality: Health insurance inflation is due to health care cost inflation
6
Why will there be Sticker Shock?
 Individual policies in the exchange will be expensive
due to…
• Risk selection (a big unknown)
• 3:1 Age Rating
• Benefit levels (“essential” benefits)
 Employer premium may also rise due to…
• Age rating limitations
• Essential benefits
 Few people today understand what health
insurance costs – the exchange will make it much
more visible and politicians will react
7
The Challenge
 How can our system achieve dramatically
lower cost/trend and demonstrate quality and
outcomes, while maintaining the vitality and
innovation of individual provider organizations
working together?
 If we do not solve it, the government may try
to solve it for us.
8
Implications
 Plans/Hospitals/Physician Organizations must
find ways to work together in an integrated
manner…
•
•
•
•
•
•
•
Aligning incentives
Integrating data and using data to improve care
Building systems of care
Breaking down silos
Avoiding waste
Moving from reactive to proactive
Focusing on total cost of care for populations
9
Reasons for Optimism
 Sacramento ACO for CalPERS
•
•
•
•
•
•
Blue Shield, Dignity Health, Hill Physicians
0% trend year 1, dramatically lower trends years 2 and 3
Aligned incentives, focused attention
Leadership engaged at the highest level
Focusing on outcomes of system as a whole
Membership migration to the ACO
 Before the ACO
• 8-10% trends every year
• Loss of members to Kaiser.
10
Reasons for Optimism (cont’d.)
 ACO in San Francisco with Health Net, UCSF, Dignity
Health and Hill Physicians
•
•
•
•
•
Started 1/1/13
Promising engagement
Sharing data
Aligned incentives
Focusing on improving care while managing costs
• UCSF has been a great partner !
• Too early for results, but encouraging signs
11
Implications for Plans and Providers
 Work closely together with aligned incentives – make
decisions that drive a better overall outcome not maximize
the result for one party/department/facility/group
 Share and use data to move from fee-for-service
fragmented care to population health management
 Use new technologies and approaches to improve care,
such as team-based care, use of secure messaging,
in-home technologies
 Change organizational structure and decision making to
break down barriers and silos
 Work with plans to design benefits with meaningful
incentives for members to improve health status
12
Thoughts on UCSF
 Incredible reputation and brand for high quality (and expensive)
healthcare
 A magnet for higher risk patients (e.g. in The Exchange), and
very important to purchasers who are less price sensitive (e.g.
high-tech companies)
 Need to find a way to partner with others to combine broad-based
and cost effective care in the community with high quality tertiary
and quaternary care delivered by UCSF
 Requires a difficult shift away from “heads in beds” and expensive
clinical programs to finding ways to keep people healthy (and get
paid for it)
 Need to move away from cost shifting: compensating for
inadequate Medicare and MediCal reimbursements by increasing
margins on commercial insurance is killing the golden goose
Questions?
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
20
Academic Medicine for the Future
UCSF Clinical Enterprise Retreat
Tom Enders, Managing Director
Manatt Health Solutions
May 6, 2013
Despite dire predictions, the last two decades have been
excellent for academic medicine
22
1990
NIH Doubling
Excellent Clinical Margins
Philanthropy Boom
Stock Market
Bubble
2003 – 2008
Growth of the AMC Missions
Innovation in Medicine — Aging of the Population — Specialty Services Boom
Managed Care and
Capitation
1995
2000
2005
Health
Reform
NIH
Stimulus
2010
2015
Erosion!
23
Defenses
Relentless
Forces
AMC
The AMC Business Model….
AMC Sustainability
Talent
2
x Pricing Power x (Enterprise
Costs)
∫(Δ)(Technology Introduction - Diffusion)
(Regulation)
24
25
The Challenge of Change
Risk of change perceived as great
Connection to people who succeeded in the
old model
Fear of lacking the competence to succeed
Overload
Healthy skepticism about new ideas
The fear of hidden agendas
Feeling of personal threat from the changes
Genuine belief that “next generation” models
are a bad idea
26
27
Strategy
Options for AMCs
Population Health
Manager
Regionally distributed
health care system
Risk bearing
“population manager”
 Health Plan or payer
partnership to support
Clinically integrated
network of faculty and
community based
physicians
 $ Multi-Billion Scale
Merge / Affiliate
with Mega-System
Merge or establish
primary preferred
affiliation with large
health system and
become the “academic
brand” for the system
28
Specialized
Complex Care
Leader
Renown regional,
national, international for
a selected
comprehensive specialty
service (e.g. Cancer)
 Contractor to large
systems
 Expert at Complex
Care management
 Very strong Brand
promise
High Performance
Regional System
 Independent AMC
with tightly controlled
system of care in
attractive geography
 Market share leader
in an attractive “subregional” geography with
“must-have” status
 Strong brand promise
Clinical Strategies of Research Intensive AMCs
NIH RANK
1
2
3
4
5
6
7
8
9
10
INSTITUTION
JOHNS HOPKINS
UCSF
U MICHIGAN
U PENNSYLVANIA
U WASHINGTON
U PITTSBURGH
UCSD
WASHINGTON UNIVERSITY
YALE UNIVERSITY
UNC CHAPEL HILL
29
Some Consistent Themes
Sufficient scale to build a regional system of care
 Highly differentiated programs of excellence
with well integrated basic & clinical research
Economic alignment with physician, academic
and hospital partners
Increasing integration of clinical services
Primary care & ambulatory care expansion
Sophisticated analytics and IT infrastructure
Maximizing brand value
Quality: Measurable, Demonstrable, Superior
30
31
AMC
System
32
Strategy
Organization
Execution
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
33
Vision Questions
• What mission will our clinical enterprise meet?
• What will distinguish our clinical services and operating model
from Kaiser? From Sutter? From Stanford?
• If the distinctiveness is innovation, what does that mean?
• Who will be part of the clinical enterprise? At what scale will we
operate?
• Will we be independent or part of a system?
• What settings of care will be invested in?
• What payment model will we operate under and how will we
succeed with it?
34
Clinical Enterprise SWOT
Strength
Weakness
• Regional leader in select
tertiary/quaternary services
• Research innovator
• Talent and commitment
• Capital investment in plant, IT
• Nascent network development
Opportunity
Threat
35
Clinical Enterprise SWOT
Strength
• Regional leader in select
tertiary/quaternary services
• Research innovator
• Talent and commitment
• Capital investment in plant, IT
• Nascent network development
Opportunity
Weakness
•
•
•
•
•
Cost structure
Limited regional primary care
Hard to access specialists
Limited access to capital
Limited population health
experience or infrastructure
• Highly federated governance
Threat
36
Clinical Enterprise SWOT
Strength
• Regional leader in select
tertiary/quaternary services
• Research innovator
• Talent and commitment
• Capital investment in plant, IT
• Nascent network development
Weakness
•
•
•
•
•
Cost structure
Limited regional primary care
Hard to access specialists
Limited access to capital
Limited population health
experience or infrastructure
• Highly federated governance
• Provider consolidation and
competition
• Changing insurance models
• New world challenging to our
‘core’ identity & competencies
Opportunity
Threat
37
Clinical Enterprise SWOT
Strength
• Regional leader in select
tertiary/quaternary services
• Research innovator
• Talent and commitment
• Capital investment in plant, IT
• Nascent network development
•
•
•
•
Weakness
•
•
•
•
•
Cost structure
Limited regional primary care
Hard to access specialists
Limited access to capital
Limited population health
experience or infrastructure
• Highly federated governance
UCSF brand development
• Provider consolidation and
Trainer of the workforce
competition
Nascent ACO experience
• Changing insurance models
Regional relationships – getting to
• New world challenging to our
scale
‘core’ identity & competencies
Opportunity
Threat
38
Proposed Vision as Developed by the Clinical Enterprise
Group & Clinical Enterprise Strategic Planning Committee
UCSF will be Northern California’s preeminent high
value health system as defined by our success in
providing innovative, high-quality, cost-competitive
clinical services, and delivering an unparalleled
patient experience across the entire care continuum.
39
Vision:
UCSF as the Preeminent High-Value System in Northern California
Northern California System of Care
Leading Acute
Facilities
High-Value, Quality
Clinical Care
Cutting Edge
Research
World Class
Education
Specialist
Network
Strong Primary Care
Teams
UCSF
Long-Term Care
Strategic Regional
Expansion
Regional T/Q
Partnerships
Home & Sub-Acute
Care
Clinical Research
Implementation
40
Strategic Priority 1:
Grow Complex Care Referrals Via Innovation & Distinction
Patient Outcomes &
Breakthrough
Research
System of Care with
Referring Providers
Excellent Patient
Experience
41
Strategic Priority 2:
Lead A High Value System of Care
Existing UCSF
Distributed
Services
Physician Groups
(Hill, One
Medical, etc.)
Hospitals /
Systems
(Marin General,
UCSF oncology
affiliates etc.)
UCSF
Pediatric System
SCCIPA
Kaiser?
Existing Relationships On
Which To Build
Other?
Relationships Under
Development
Potential Transformation of
Existing Relationship
42
Strategic Priority 3:
Build a Culture of Continuous Process Improvement
Today:
Organization in
silos….
Tomorrow:
Integrated
organization that is
high-quality and
efficient
43
Enablers of UCSF’s Strategic Priorities and Vision
Develop Physician Services
Train and Recruit
The Next Generation
Apply Research to
Clinical Care
Lead in Precision Medicine
Establish Risk
Management Capability
Align Financial and
Administrative Operations
Build UCSF Brand
44
UCSFCE Vision
ENABLERS
STRATEGIC PRIORITIES
The preeminent high-value health
system in Northern California
Grow Complex Care
Referrals Via
Innovation &
Distinction
Lead A High Value
System of Care
 Build the UCSF Brand
 Lead in Precision Medicine
 Align Financial &
Administrative Operations
 Establish Risk Management
Capability
Build a Culture of
Continuous Process
Improvement
 Apply Research to Clinical
Care
 Train & Recruit the Next
Generation
 Develop Physician Services
45
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
46
UCSFCE Vision
STRATEGIC PRIORITIES
The Preeminent High-Value
Health System in Northern California
Grow Complex Care
Referrals Via Innovation
& Distinction
ENABLERS




Lead A High Value
System of Care
Develop Physician Services
Build the UCSF Brand
Lead in Precision Medicine
Establish Risk Management
Capability



Build a Culture of
Continuous Process
Improvement
Apply Research to Clinical Care
Train & Recruit the Next
Generation
Align Financial & Administrative
Operations
47
Imperatives
48
UCSF Market Position: Overall Bay Area Market Share - Adults
Adult IP Market Share – Bay Area
CY 2011; Market Discharges = 524,170
UCSF
3%
Stanford
4%
?
Kaiser
Hospitals
25%
Others
45%
Sutter
19%
Dignity
3%
Source: UCSF Data Reports and OSHPD; Excludes MS-DRG 795
Note: Counties included: San Francisco, Marin, Napa, Solano, Sonoma, San Mateo, Santa Clara, Alameda, Contra Costa
49
UCSF Overall Adult Market Share by County
Sutter is the second
major player in SF
County, and is very
strong in the East
Bay and Sacramento
Brown & Toland
has an approved
Knox Keene
license to manage
global risk
UCSF’s Strongest
Overall Market
Share
Kaiser dominates
the Bay area
markets and parts
of Sacramento
Filed Knox-Keene
license to become a
full service health plan
Dignity Health’s positioning
is strongest in the Far
North, Sacramento &
pockets of South Bay &
Central Valley markets
UCSF Overall
Market Share
by County
Stanford’s overall
modest market strength
remains mostly in the
South Bay and Central
Coast, but is aggressively
moving into the East Bay
50
Building on UCSF Regional Outreach
UCSF Overall
Tertiary/Quaternary
Market Share by
County
UCSF’s current outreach is
strongest in the SF, North & East
Bay markets and coastal areas of
Far Northern CA. There may be
opportunity to expand specialty
outreach to the south and east in
order to build T/Q referrals
51
Establishing a Robust, Clinically Integrated Physician Network
North Bay
• Marin General/PRIMA
and Marin IPA are good
partners and represent
significant opportunities
to build stronger ties
• Other regional
relationships (Queen of
the Valley and Santa
Rosa Memorial) could be
expanded further
South Bay – SCCIPA
• Develop medical group
and establish a strong
provider presence in the
South Bay
• Enhance MSO capability
Sacramento
Close Coordination with UC Davis
(and potentially Dignity) could
help establish more integrated
system in Sacramento, and across
far North and Central Valley
East Bay
• Children’s Oakland enhances
pediatric presence
• Additional adult physician
partners are needed – Alta
Bates and John Muir are well
established options
UCSF Overall
Market Share
by County
52
Ingredients of a High-Value System of Care
Patient
Centered
Care
Health
Information
Technology
Population
Health
Management
Governance
and
Partnerships
Analytics and
Reporting
UCSF
ACO
Risk Contracts
53
Strategies to Promote Clinical Integration
1. Rapidly developing primary care physician practices employed by
UCSFCE
2. Increasing the ability of the faculty practices to function in a highly
effective group practice mode
3. Enhancing the scope and scale of clinical affiliates that are aligned and
clinically integrated with the faculty practice and other employed UCSF
physicians.
4. Building the relationship with SCCIPA so that it flourishes and provides
UCSF a major position in the South Bay. Build stronger relationships
with other IPAs.
5. Integrating Children’s Oakland physicians, enhancing the ability of the
pediatric strategy to succeed
54
Measures of Success
High Quality
Accessible
- Medical Home
- Timely
- Patient-Centered
- Convenient
- Evidence-Based
- Affordable
High-Value
System of Care
Innovative
Efficient
- Continuous Improvement
- Information Driven
- Translating Discovery
- Right Care in the Right
Environment
Adapted from The Commonwealth Fund, Framework for a High Performance Health System for the United States, August 2006
55
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
56
Clinical Enterprise Financial View
UNDERSTAND & PROJECT THE
FINANCIAL PERFORMANCE OF THE
UCSF CLINICAL ENTERPRISE IN ITS
ENTIRETY
Integrate Finance with Strategy
Leverage scale of our Enterprise
Align assumptions, planning, and decision
making
Create new financial resources that will be
needed for investment in the strategy and
our missions of research and education
57
UCSF Clinical Enterprise Financial View
Institutional
& Technical
Revenue
Pro-Fee
Revenue
Expenses
Clinical Operating Margin
58
UCSF Clinical Enterprise Financial View
Clinical Operating
Margin
Medical Center
Clinical Departments
Research and
Education
Operating
Expenses/Program
Investments and
Reserves
Program and
Capital
Investments
Reserves
Debt
Non-Operating Revenue/Philanthropy
59
UCSF Clinical Enterprise Key Assumptions
FY 2013-FY22
(Medical Center and Medical Group)
Volume
Inpatient
Outpatient
Payor Mix
Net Revenue
Government
Commercial
0%-1.5% annually
2.3-3.7% annually
FY 2013 Budgeted Payor Mix: 0.5% shift
from Commercial to Government;
additional 1% shift to Government in FY
2020 (1)
0%-2.5% annually
4.0%-5.0% annually
Salaries (2)
3.0% annually (UCSF MG)
3.0-%-4.7% annually (UCSF MC)
UCRP Benefits
(Covered Comp Only)
12.8% in FY 2014
14.8% in FY 2015 and beyond
Net New Clinical Faculty
89 for FY 2013-FY 2023
Increase to 3.6M from 3M wRVUs
Notes:
(1) Base to be updated to the UCSF Medical Group historical payor mix
(2) Variance in salary rate increases are reasonable due to the difference in staffing mix between the
UCSF Medical Group and the Medical Center
60
UCSF Clinical Enterprise
FY 2012 Actuals
Dollars (000's)
UCSF Med
Group
Medical
Center
575,338
1,581,631
Labor Expense
312,164
846,429
Non Labor Expense
205,216
671,172
517,380
1,517,601
0
42,451
57,958
106,481
Total Operating Revenue
Total Operating Expenses
Nonoperating Revenue
Excess of Revenue over Expenses
Eliminating
Entries
Consolidated
Clinical
Enterprise
Non Medical
Group
2,030,243
1,327,037
1,158,593
822,135
(89,788)
786,600
531,519
(89,788)
1,945,193
1,353,654
42,451
0
(126,726)
0
0
(36,938)
127,501
(26,617)
Changes in Net Assets
Strategic Support - School of Medicine
0
(27,870)
27,870
0
0
Strategic Support - Cancer Center
0
(9,068)
9,068
0
0
Other Strategic Support
0
(22,546)
0
(22,546)
0
Total Changes in Net Assets
0
(59,484)
36,938
(22,546)
0
46,997
-
Excess Revenue after change in Net
Assets
Margin %
57,958
10%
7%
104,955
6%
(26,617)
-2%
61
UCSF Clinical Enterprise
Consolidated Income Statement
Revenue Minus Expenses
FY 2013 - FY2022
$120,000.00
$100,000.00
$104,660.00
$87,234.00
$77,535.00
Revenue Minus Expenses (000’s)
$80,000.00
$52,274.00
$60,000.00
$40,000.00
$25,469.00
$18,170.00
$20,000.00
$4,380.00
$-
$(3,457.00)
$(20,000.00)
$(26,019.00)
$(40,000.00)
$(60,000.00)
$(80,000.00)
$(75,916.00)
$(100,000.00)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
*Projections based on FY 2013 Budget
*Note: Medical Center margin is negative only in FY 2016; FY16-FY18 combined negative
margin takes into account strategic support to Medical Group.
62
Balance Sheet Details
UCSF Medical Center
2013
Net Income Margin % (1)
Debt Service Coverage (2)
Days Cash on Hand (2)
5%
2014
6%
2015
1%
2016
-2%
2017
0%
2018
1%
2019
2%
2020
2%
2021
3%
2022
3%
3.6
3.9
3.3
3.3
4.0
4.2
4.7
4.8
4.4
4.6
74
65
38
28
29
30
36
40
44
49
Notes:
(1) Clinical Enterprise Net Income Margin
(2) Medical Center Balance Sheet Indicators
63
UCSF Clinical Enterprise
Medical Center Net Income - Mitigation Strategies
Net Operating Income ($000's)
$150,000
$100,000
$50,000
$0
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
($50,000)
($100,000)
($150,000)
Net Income with Mitigation
Revenue Enhancements
Expense Reductions
FY 2013
8,000
11,300
19,300
FY 2014
16,700
44,300
61,000
Net Income without Mitigation
FY 2015
18,300
52,200
70,500
FY 2016
20,400
60,300
80,700
FY 2017
22,900
68,500
91,400
64
UCSF Clinical Enterprise
Medical Center Capital Allocation Proposal
FY 2013 FY 2014
FY 2015 FY 2018
Mission Bay Project (1)
APeX Electronic Medical Record (2)
Strategic Investments
734,626
21,815
10,000
327,132
160,531
Renewals and Replacements
Information Technology
Equipment
Construction (3)
Sub-Total
25,299
29,695
72,912
127,906
55,050
69,087
126,415
250,552
894,347
738,215
Dollars (000's)
Total
FY 2019 FY 2022 (4)
UCSFCE IS
CERTAIN
TO NEED
MORE!!
650,000
Notes:
(1) Total Mission Bay Project $1.5B
(2) Total APeX project $165M
(3) Includes Backfill projects
(4) Allocation among categories to be determined
65
UCSF Clinical Enterprise
A. Forecast Challenges
• Downward pressure on
reimbursement rates
(Medi-Cal, Medicare, DSH,
IME, insurance exchange)
• Pressure on professional
fee margin to support
sponsored research and
education
• High pension and retiree
health insurance rates
• Expanded fixed costs (i.e..
Mission Bay)
• State Budget impact
(specifically on education
and research)
• Philanthropy targets not
met
B. Needs
• Strategic & Program
Investment
• Capital demands for IT and
routine replacement and
infrastructure (i.e. nonclinical facilities needs)
• Capital investment issues
• Limited or no debt capacity
66
UCSF Clinical Enterprise
Balancing Sources and Uses
How much
cash?
Cash
Debt
Capital
Operations
How much
capital?
Philanthropy and
Other Sources?
How much
debt?
How much
profitability?
How should these tradeoffs be optimized
within an appropriate credit and risk context?
Source: Kaufman, Hall & Associates
67
67
Clinical Enterprise Financial View
Take-Aways:
Must anticipate significant investment
requirements our current economics will be
hard pressed to meet
We will need to increase the yield from
operations….
….while developing new & creative sources
of capital
68
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
69
Leadership of the CE Strategic Planning Process
Executive Sponsors (M Laret,
S Hawgood)
Clinical Enterprise Group (CEG)
Clinical Enterprise Strategic Planning
(CESP) Steering Committee
Strategic Initiative Workgroups
1. Grow Complex Care Referrals Via Innovation &
Distinction
2. Lead a High Value System of Care
3. Build a Culture of Continuous Process
Improvement
4. Strengthen Fiscal Position & Resource the Plan
• Teams of 15 – 20 faculty and clinical
enterprise leaders that will recommend
strategies, tactics and requirements to
the CESP Steering Committee
• Teams will meet 5 times, between May –
late July
70
Retreat Break-Out Groups
• Break-out groups’ findings will be used to provide content to
the CESP Work Groups
• Each break-out group will focus on one of 3 topics:
1. Grow Complex Care Referrals Via Innovation & Distinction
2. Lead a High Value System of Care
3. Build a Culture of Continuous Process Improvement
• Break-out groups will have approximately 60 minutes to
engage in discussion on an assigned set of questions.
• Group leaders have been assigned to each break-out group to
facilitate and share the group’s findings
71
Breakout Group Assignments
Topic
Tables
1 A: Grow Complex Care Referrals
Via Innovation & Distinction
3, 6
Mark Laret &
Talmadge King
Tom Enders
Conference
Room 1
1 B: Grow Complex Care Referrals
Via Innovation & Distinction
9, 10
Mike Hindery &
Peter Carroll
Alex Morin
Conference
Room 2
4, 5
Kevin Grumbach &
Bruce Wintroub
Jan Norris
Main
Conference
Room
2 B: Lead a High Value System of
Care
1, 2
Sam Hawgood &
Ron Arenson
Jonah Frohlich
Main
Conference
Room
3 A: Build a Culture of Continuous
Process Improvement
7, 8
Ken Jones & Jay
Harris
Min Zhu
Conference
Room 3
Megan Ingraham
Main
Conference
Room
2 A: Lead a High Value System of
Care
3 B: Build a Culture of Continuous
Process Improvement
11, 12
Facilitators
Barrie Strickland &
Tad Vail
Support
Location
72
Retreat Agenda
Time
8:00am – 8:30
8:30 – 9:20
9:20 – 9:45
9:45 – 10:00
10:00 – 10:30
10:30 – 11:10
11:10 – 11:40
11:40 – 11:55
11:55 – 1:15pm
1:15 – 2:00
Activity
Speaker
Welcome
Overview of Opportunities & Challenges Facing UCSFCE Mark Laret
Brief Summary of Planning Process
Jack Stobo
Perspectives on the Clinical Strategy
David Joyner,
A Health Plan View of the California Market
Hill COO, formerly of
Blue Shield
Academic Medicine for the Future
Tom Enders, Manatt
Break
-Emerging UCSFCE Vision & Draft Strategic Priorities
Sam Hawgood
Jonah Frohlich, Manatt
---Building a High Value System of Care in Northern
Mark Laret & Jay Harris
California
(Q&A)
Barrie Strickland &
Clinical Enterprise Economics: Challenges &
Mike Hindery
---Opportunities
Sam Hawgood (Q&A)
Break
Tom Enders
Boxed Lunches
Break to Tables
Retreat Participant Breakout Group Sessions
Participants
Groups Report Out; Q&A
M Laret, S Hawgood, T
Closing Discussion
Enders
73
Retreat Breakout Groups # 1 A & B:
Grow Complex Care Referrals Via Innovation & Distinction
For the next 5 years, specify the critical issues & solutions the
Complex Care Work Group should address to advance innovation
and build our complex care referrals
• What are the critical issues to be addressed?
• What break-through solutions should be put on the table
for further exploration?
74
Retreat Breakout Group # 2 A:
Lead a High Value System of Care
A “high value system of care” rests on the foundation of clinical
and financial integration between physicians and health service
providers across the community. With this in mind:
• How can we establish a strong foundation of clinical
integration between UCSFCE and community-based
physicians & other health care providers?
• What needs to change at UCSFCE in order to achieve a
“high value system of care” that can manage the health of
a population?
75
Retreat Breakout Group # 2 B:
Lead a High Value System of Care
How could the UCSF Medical Center and clinical practices work
together to accomplish building a true regional system of care?
• What strategic opportunities should be prioritized and
pursued?
• What needs to change at UCSFCE in order to address the
prioritized opportunities and successfully achieve a
regional system of care?
76
Retreat Breakout Groups # 3 A & B:
Build a Culture of Continuous Process Improvement
How can UCSFCE migrate to a culture where every single person
in UCSF shares the imperative to achieve and deliver world class
quality, cost, safety & patient experiences?
• How do we achieve the magnitude of change that will be
required across the enterprise in order for us to be
successful?
77
Appendix
78
UCSF Clinical Enterprise
Consolidated Income Statement
Dollars (000's)
Total Operating Revenue
Labor Expense
Non Labor Expense
Total Operating Expenses
Nonoperating Revenue
Excess of Revenue over Expenses
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2,121,245
2,180,007
2,255,421
2,371,033
2,487,320
2,597,608
2,706,395
2,801,507
2,919,776
3,041,681
1,227,878
1,246,167
1,343,528
1,415,589
1,454,522
1,503,343
1,550,529
1,598,576
1,647,654
1,716,619
812,153
838,151
911,936
1,032,080
1,057,421
1,093,899
1,133,924
1,173,870
1,216,352
1,244,177
2,040,031
2,084,318
2,255,464
2,447,669
2,511,943
2,597,242
2,684,453
2,772,446
2,864,006
2,960,795
31,661
30,663
26,769
23,470
21,777
19,794
20,311
20,979
21,586
22,268
112,875
126,352
26,725
(53,166)
(2,846)
20,160
42,254
50,040
77,355
103,153
(4,206)
(4,417)
Changes in Net Assets
Strategic Support - School of Medicine
(3,634)
Strategic Support - Cancer Center
Other Strategic Support
Total Changes in Net Assets
Excess Revenue after change in Net
Assets
Margin %
0
(3,815)
0
(4,006)
0
0
0
(4,637)
0
(4,869)
0
(5,113)
0
(5,368)
0
(5,637)
0
(22,008)
(17,876)
(18,340)
(18,544)
(18,757)
(18,979)
(19,213)
(19,458)
(19,714)
(19,983)
(25,641)
(21,692)
(22,346)
(22,750)
(23,173)
(23,617)
(24,083)
(24,571)
(25,082)
(25,619)
(75,915)
(26,019)
(3,456)
18,171
25,469
52,273
77,534
-2%
0%
1%
87,233
5%
104,660
6%
4,379
1%
2%
2%
3%
3%
Projections based on FY 2013 Budget
79
Workgroup 1: Grow Complex Care Referrals Via
Innovation & Distinction
Strategic Priority: Expand market position as a referral center for tertiary/
quaternary services* by achieving superior patient outcomes and efficiencies and
continuously introducing innovation in the delivery of complex care throughout the
UCSF health system
Objectives:
• Consider the future state market dynamics regarding T/Q care in Northern
California and beyond
• Define an approach that enables UCSF to deliver leading-edge, consistently
distinctive T/Q care to referral and network patients on an episode of care basis for
specific services, with the necessary care management and outpatient care to
achieve superior outcomes
• Consider how to succeed with bundles
• Define an approach to demonstrate services’ outcomes and cost-effectiveness to
purchasers and patients
• Consider how this model may align with an advanced partnership with Kaiser
Permanente
*Q/T services are defined based on the UC Health Tertiary / Quaternary Strategy, March 2013.
80
Workgroup 2: Lead a High Value System of Care
Strategic Priority: Transform health care delivery and partner with a network of Northern
Californian hospitals and providers to create a comprehensive health care system accountable
for a defined population’s health and providing a seamless continuum of coordinated, patientcentered, cost-effective care
Objectives:
• Establish health care principles for the UCSF Health System, defining what it will stand for
and its value proposition to potential purchasers, leveraging external perspective as
appropriate
• Define operating principles, the change management process, and accountability standards
for a redesigned care model, including transformation of primary care into patient-centered
medical homes, integration of care into service lines, and coordination across
primary/secondary/TQ services and between inpatient, ambulatory, and community
sectors.
• Define a regional network through partnership and outreach strategies, identifying specific
types of target physician, hospital and sub-acute care partners in each region, the primary
care capacity needed to care for the size of the targeted enrolled population for the health
system, and the organizational models for an expanded physician network.
• Establish clinical integration among UCSF affiliated physicians – faculty and community
physicians – for purposes of supporting value-based clinical practice, a lower-cost system of
care and common payer contracting
81
Workgroup 3: Build a Culture of Continuous Process
Improvement
Strategic Priority: Rigorously and unrelentingly apply data-driven process
improvement principles to reduce waste and improve safety and quality
Objectives:
• Define enterprise-wide principles to transform UCSFCE culture into one
committed to continuous process improvement and related
accountability
• Develop approach to identifying and rolling out efficient practices across
the enterprise
• Identify 2-3 process improvements to launch enterprise-wide as a pilot
over the next 18 months
82