Integrating the Integration: How to Successfully Manage the Challenges of Clinical and Financial Integration Steven M. Berkowitz, MD SMB Health Consulting Austin, TX 512-415-6095 steve@smbhealthconsulting.com Integrating the Integration: How to Successfully Manage the Challenges of Clinical and Financial Integration Steven M. Berkowitz, MD SMB Health Consulting Austin, TX 512-415-6095 steve@smbhealthconsulting.com 2012- 2013 Clients- Two Lessons Learned 2012- 2013 Clients- Two Lessons Learned Every System is unique. But… Every System is dealing with the same issues. So What’s New in Health Care Reform? Same old wine in a brand new bottle? Clinical Integration Vertical Integration Equity Model Integrated Delivery System Accountable Care Organizations Capitation U.S. Health Care Organizational Chart So What’s New in Health Care Reform? You can always count on Americans to do the right thing… …after they’ve exhausted all the other possibilities !!” Winston Churchill People do not change until the pain of staying the same… … exceeds the pain of changing. Anonymous The Health Care Team Medicine is a Team effort…. …..Why do we insist on playing Solo ! The Health Care Team Medicine is a Team effort…. …..Why do we insist on playing Silo ! The Evolution of Health Care Reform 1990’s-- Market Correction 2013-- Market Reconfiguration Remember, It’s Not Nice to Fool Mother Nature Health care must follow the same market rules as all other industries The Conundrum of Quality in Health Care “Never, ever think outside the box” What Does the Model Look Like? Form Follows Function Inputs Delivery System Processes Results What Does the Model Look Like? Form Follows Function Inputs Decreased payment: VALUE vs volume Some risk Increased demand: Greater volume Aging, chronic Delivery System Processes Clinical/ Operational Financial Infrastructure/ Governance Results Transparency of VALUE: Clinical Outcomes Patient Satisfaction Cost Effectiveness Thinking Like an Engineer The optimist: The glass is half full The pessimist: The glass is half empty Thinking Like an Engineer The optimist: The glass is half full The pessimist: The glass is half empty The Engineer: The glass is too big !! Winning the Game What is the best model for your organization? Any hand’s a winner…. Any hand’s a loser !! What Does the Model Look Like? Form Follows Function ALL MARKETS ARE UNIQUE !! What are the needs of the community that you serve? Quality, accessible, cost-effective care What are the needs of the physicians? Quality medical care Practice/ economic stability What are the needs of the hospitals? Quality, accessible, cost-effective care Partnership relationship with the medical staff Fundamental Requirements to be a Winner Clinical Integration Financial Integration Shared Infrastructure and Governance Fundamental Requirements to be a Winner X- ABC Health System X Clinical Integration X Financial Integration X Shared Infrastructure and Governance Engaging Hospitals and Physicians Insights and Actions for Results Integration ClinicalClinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration ◦ Enterprise-wide cost reduction ◦ Successful Management of Risk Shared Infrastructure and Governance ◦ An aligned, long term collaborative relationship Engaging Hospitals and Physicians Insights and Actions for Results Integration ClinicalClinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration ◦ Enterprise-wide cost reduction ◦ Successful Management of Risk Shared Infrastructure and Governance ◦ An aligned, long term collaborative relationship Clinical Integration The Continuum Clinical Integration Engaging Hospitals and Physicians Insights and Actions for Results Integration ClinicalClinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration ◦ Enterprise-wide cost reduction Shared Infrastructure and Governance ◦ An aligned, long term collaborative relationship Clinical Integration Imperatives 1. 2. 3. 4. Embrace Data Transparency Implement Evidence-based practices Excel at Pay for Performance Add the Secret Sauce !! Clinical Integration Imperatives 1. 2. 3. 4. Embrace Data Transparency Implement Evidence-based practices Excel at Pay for Performance Add the Secret Sauce !! Value Based Purchasing The increasingly informed consumer will make health care decisions on the basis of VALUE Value Based Purchasing The increasingly informed consumer will make health care decisions on the basis of VALUE VALUE = Outcomes + Satisfaction Cost Value Based Purchasing The increasingly informed consumer will make health care decisions on the basis of VALUE VALUE = Outcomes + Satisfaction Cost The CONSUMER ultimately determines which of the above elements constitute VALUE Read all about it !! April 2005 Pennsylvania Coronary Artery Bypass Surgery 2008 - 2009 Released: May 2011 CABG Mortality in Pennsylvania Results !! The New York State CABG Experience Chassin, Health Affairs, 2002 41% reduction in mortality in first four years Mortality higher in facilities with low volumes ◦ Reduction in hospitals doing CABG ◦ Reduction in physicians performing procedures 27 surgeons ceased operations in NY Their combined mortality was 11.9% ( NY state average 3.1% ) Wisconsin QualityCounts Report on the Safety of Hospital Care Released January 2003 Data Transparency That which is measured, tends to improve. That which is measured publicly, tends to improve faster. “What we concluded was that even when hospitals know their performance is not good, that's not sufficient motivation for them to do something. Making it public made a big difference in motivating them to improve.” Judith Hibbard, Health Affairs 2003 Core Measures: Heart Attack Heart Failure Pneumonia Surgical Care Improvement HCAHPS CMS Core Measures– the Top Decile 100% 99% 98% SCIP 97% AMI PN 96% 95% HF Core Measures: Heart Attack Heart Failure Pneumonia Surgical Care Improvement HCAHPS Core Measures: Heart Attack Heart Failure Pneumonia Surgical Care Improvement HCAHPS The problem with 99% of the lawyers is that they give the rest a bad name. Steven Wright Data Transparency and Accountability Transparency is the best thing that’s happened to quality since antibiotics... …by decreasing variance and improving results Exposure to and Use of Quality Information 30 Saw Acted 25 20 15 10 5 0 1996 2000 2004 2006 2008 Kaiser Family Foundation, October 2008 If the other guy’s getting better, then you’d better be getting better faster than that other guy’s getting better… …Or you’re getting worse. Tom Peters Data Transparency and Accountability Transparency is the best thing that’s happened to quality since antibiotics... …by decreasing variance and improving results As transparency matures, it will rewrite the book on: Who is your competitor? The Role of Transparency Price Transparency Quality Transparency The Role of Transparency Price Transparency Quality Transparency System Strategic Planning Who is Your Competitor…. The role of Transparency Stage I The “other guy” System Strategic Planning Who is Your Competitor…. The role of Transparency Stage II All hospitals in Arkansas Stage I The “other guy” System Strategic Planning Who is Your Competitor…. The role of Transparency Stage III The entire nation ? Stage II All hospitals in Arkansas Stage I The “other guy” System Strategic Planning Who is Your Competitor…. The role of Transparency Stage IV The whole world ?? Stage III The entire nation ? Stage II All hospitals in Arkansas Stage I The “other guy” Steve’s Three Rules of Data 1. The data is significant, whether it is significant or not. 2. A low score almost always points to a real issue. 3. The biggest gain in performance improvement occurs when going from NO data to ANY data. Involve ALL stakeholders in the performance improvement process Hospitals and Physicians Working as a Team Share the Data ! Decrease the Variance ! Hospitals and Physicians Working as a Team Large variances continue to exist amongst physicians and hospitals. Variances can and do lead to differences in management, treatment, and outcomes for the patient. Hospitals and Physicians Working as a Team Data , not an Indictment !! Data is NOT Diagnostic !! Hospitals and Physicians Working as a Team The great majority of “outlying” physicians are good, caring physicians who have developed a particular style of practice which can be improved ! The Role of Transparency Quality Transparency: Improved performance Decreased variance Price Transparency Quality Transparency The Role of Transparency Price Transparency Quality Transparency Steve has a URI symptoms and feels bad! Steve has great insurance but a $3,000 deductible What does he do? Treatment Options: Emergency Department Urgent Care PCP visit Local Pharmacy Self Treat.. rest, OTC meds... Approximate*: Out of Pocket Wait $ 300 2-3 hrs 150 1 hr 120 1 hr (if available) 80 30 min 10 ? none * The actual cost may not be known until the evaluation is completed The physician’s reimbursement for the visit The nurses reimbursement for the visit The cost of his treatment to the institution Any other contractual relationships ◦ Physicians ◦ Vendors ◦ Any other arrangements with the insurance company Just tell me: How Much Do I Need to Pay !! Questions for the Leadership Team Does your organization… … embrace data transparency ? Clinical Integration Imperatives 1. 2. 3. 4. Embrace Data Transparency Implement Evidence-based practices Excel at Pay for Performance Add the Secret Sauce !! Implementing Evidence-Based Medicine What Can we Learn from the Airline Industry ? What Can we Learn from the Airline Industry? Teamwork: Guidelines and Checklists Where Do We Find the Best Practices ? Examine Your Own Specialty Literature Where Do We Find the Best Practices ? Examine Your Own Specialty Literature Guidelines for Guidelines There will be MORE guidelines in clinical medicine Guidelines were NEVER intended to apply to all patients and do NOT take the place of individual physician judgment Expect physicians to occasionally deviate from guidelines in the daily practice of prudent medical care When so… … DOCUMENT In the medical record that: The patient was seen and evaluated The options were thoughtfully considered The best clinical judgment was used Discussed with the patient Guidelines for Guidelines There will be MORE guidelines in clinical medicine Guidelines were NEVER intended to apply to all patients and do NOT take the place of individual physician judgment Expect physicians to occasionally deviate from guidelines in the daily practice of prudent medical care When so… … DOCUMENT In the medical record that: The patient was seen and evaluated The options were thoughtfully considered The best clinical judgment was used Discussed with the patient What Can we Learn from the Airline Industry ? Elimination of Ambiguity “the elimination of ambiguity is consistently cited as a key factor in protocol success and safety” Degani and Weiner 1993 Most medical guidelines are based upon ambiguity as a guiding principle of protocol development Example “Any of the low or high dose regimens outlined in table 2 are appropriate” (0.5 – 6 mU/min every 15-40 min) “Each hospital’s OB/Gyn department should develop guidelines for preparation and administration of oxytocin” “The uterine contractions and fetal heart rate should be monitored closely” Example “ Women with post-term gestations who have unfavorable cervices can either undergo labor induction or be managed expectantly” “Delivery should be effected if there is evidence of fetal compromise….” How to Land a 747 in a Strong Cross Wind * *( Had it been Written by ACOG) Use any settings of the plane’s instruments you feel like Every airline and pilot can do it differently Be really careful as you get close to the ground Steve Clark, MD Do Guidelines Help or Hurt? “Yeah, but Pilots do not have to worry about Malpractice Suits” Obstetrician, Texas Do Guidelines Help or Hurt? “Yeah, but Pilots do not have to worry about Malpractice Suits” “You’re Right, We Just Die !!” Obstetrician, Texas Famous Pilot / Dog Do Guidelines Help or Hurt? We keep missing the point….. Simply put… Evidence-based guidelines: reduce adverse outcomes ! improve patient care ! Adverse Outcomes evidence based guidelines Adverse Outcomes Questions for the Leadership Team Does your organization… …implement best practices ? Clinical Integration Imperatives 1. 2. 3. 4. Embrace Data Transparency Implement Evidence-based practices Excel at Pay for Performance Add the Secret Sauce !! CMS Pay for Performance CMS Pay for Performance Hospitals Physicians CMS Pay for Performance What Pay for Performance is NOT: A increase in revenue A break-even with revenue What Pay for Performance IS: A way to partially recoup some of the REDUCTIONS we will see in revenue CMS Pay for Performance What Pay for Performance is NOT: A increase in revenue A break-even with revenue What Pay for Performance IS: Core Measures A way to partially recoup some of the REDUCTIONS we will see in HCAHPS revenue Re-admissions Hospital Acquired Conditions Meaningful Use CMS Pay for Performance What Pay for Performance is NOT: A increase in revenue A break-even with revenue What Pay for Performance IS: Core Measures A way to partially recoup some of the REDUCTIONS we will see in HCAHPS revenue Re-admissions Hospital Acquired Conditions Meaningful Use Complicated CMS Payment Schedule CMS Pay for Performance- 2013 and 2014 Domain Process of Care Core Measures Pt Experience of Care HCAHPS Survey Health Outcomes 30-day mortality Totals FFY 2013 Program FFY 2014 Program Measure Count Domain Weight Measure Count Domain Weight 12 70% 13 45% 1 (using 8 HCAHPS dimensions) N/A 13 (2 domains) 30% 1 (using 8 HCAHPS dimensions) 30% N/A 3 25% 100% 16 100% (3 domains) The Evolution of CMS Value Based Purchasing From Process Outcomes and Efficiency 100% 90% 80% Efficiency- Spending per Beneficiary Health Outcomes HCAHPS 70% 60% 50% 40% 30% Process Core 20% Measures 10% 0% 2013 2014 2015 2016* The Evolution of CMS Value Based Purchasing Specific Indicators CMS Pay for Performance- Physicians In 2015, CMS will begin applying a value modifier under the Medicare Physician Fee Schedule ◦ Quality ◦ Cost ◦ Value of Care By 2017, this modifier will be applied to all physicians who bill Medicare for services 1.5% at risk in 2015 2% in 2016 and beyond Questions for the Leadership Team Will your organization… …excel at pay for performance? Clinical Integration Imperatives 1. 2. 3. 4. Embrace Data Transparency Implement Evidence-based practices Excel at Pay for Performance Add the Secret Sauce !! The Disconnect between Process and Outcome What’s Missing ? Manufacturing Process Mapping Hardwiring Outcome The Disconnect between Process and Outcome What’s Missing ? Clinical Process Mapping Hardwiring X Outcome The Disconnect between Process and Outcome What’s Missing ? Clinical Process Mapping Hardwiring X Outcome Patients are NOT Toyotas ! The Disconnect between Process and Outcome What’s Missing ? Incomplete Medical Knowledge Clinical Process Mapping Hardwiring (P) Poor Protoplasm X Outcome The Disconnect between Process and Outcome What’s Missing ? The Disconnect between Process and Outcome What’s Missing ? Incomplete Medical Knowledge Clinical Process Mapping Hardwiring (P) Poor Protoplasm X Outcome The Disconnect between Process and Outcome What’s Missing ? Incomplete Medical Knowledge The Clinical Process Mapping HUMAN Hardwiring X Element !! (P) Poor Protoplasm Outcome The Secret Sauce… The HUMAN Element Communications Relationships Valuing the HUMAN side of Medicine The HUMAN Element !! Questions for the Leadership Team Does your organization… …value the Human side of medicine? The HUMAN Element !! Clinical Integration The Continuum Clinical Integration The Role of Information Systems Health Care Information Systems-- We are so far behind !!! 1 Zettabyte = 1,000,000,000,000,000,000,000 bytes = 10007 bytes = 1021 bytes The Role of Information Systems Health Care of the Future….. …. We can’t get there from here …. Without Information Systems !! The Role of Information Systems EMR and Evidence Based Order Sets are not just another IT initiative…. …. it is a Clinical Transformation to how we will be practicing better medicine in the future. The Role of Information Systems The EMR will do for health care What the assembly line did for manufacturing The Role of Information Systems Health Care of the Future….. …. We can’t get there from here …. Without Information Systems !! The Role of Information Systems EMR and Evidence Based Order Sets are not just another IT initiative…. …. it is a Clinical Transformation to how we will be practicing better medicine in the future. Fundamental Requirements to be a Winner Clinical/ Operational Integration Financial Integration Shared Infrastructure and Governance Financial Integration The Continuum Financial Integration Engaging Hospitals and Physicians Insights and Actions for Results Integration Clinical Clinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration Financial Integration ◦ Enterprise-wide cost reduction ◦ Management of Risk Shared Infrastructure and Governance Hospital Physician Partner ship ◦ An aligned, long term collaborative relationship Enterprise Wide Cost Reduction Job One !! There will be a focus on Cost Control like we have NEVER seen before in our careers Enterprise Wide Cost Reduction Job One !! Today’s Health Care Costs Admin Other Cost Reductions Post- Reform Health Care Costs Rx Hospital Physician ???? ? Enterprise Wide Cost Reduction Job One !! Today’s Health Care Costs Admin Other Cost Reductions Post- Reform Health Care Costs Rx Hospital Physician ???? ? Total Cost of Care- Hospitals Total Cost of Care- Hospitals Minimal Opportunity Total Cost of Care- Hospitals Minimal Opportunity More Opportunity Total Cost of Care- Hospitals Minimal Opportunity More Opportunity The Goal: Drive from Point A to Point B Road – 200 miles Point B Point A The Goal: Drive from Point A to Point B Cost Reduction Strategies Road – 200 miles Point B Point A Variables: 1. The cost of gas 2. The cost of the car 3. The cost of lunch on the way Cost Reduction Strategy: Negotiate better gas price Get a cheaper car with better MPG Eat at a fast food place The Goal: Drive from Point A to Point B What We Did NOT Consider Road – 200 miles Point B Point A Different Road – 100 miles Variables: 1. The cost of gas 2. The cost of the car 3. The cost of lunch on the way Cost Reduction Strategy: Half the amount of gas needed Get a cheaper car with better MPG Arrive before lunch The Goal: Drive from Point A to Point B Maybe We Can’t Get There from Here Road – 200 miles Point B Point A Different Road – 100 miles The best solution for cost reduction may be to get a better process, not necessarily reduce each individual unit cost of the existing process The Successful Management of Risk Types of Risk Products Total Health Care Costs Admin 3. Global with Incentives 4. Full Risk Cap Other Other Other Rx Rx Rx 1. Global 2. Bundling Hospital Hospital Hospital Hospital Hospital Physician Physician Physician Physician Physician The Successful Management of Risk Negotiated Rate First Cycle “Profit” Cost of Care The Successful Management of Risk Typical management tactics: Negotiated Rate First Cycle “Profit” Cost of Care Aggressive third party contracting Utilization management Concurrent financial review Staffing efficiencies Individual case reviews Care coordination/ transition mgmt Three Challenges with Management of Risk 1. Who Owns The “Profit” ? Negotiated Rate First Cycle “Profit” Cost of Care Three Challenges with Management of Risk 1. Who Owns The “Profit” ? Negotiated Rate First Cycle “Profit” Cost of Care Stakeholders: Physicians Hospital Employer Patient Others? Three Challenges with Management of Risk 2. What About Next Cycle’s Reimbursement ? Will rates go down? Negotiated Rate First Cycle Next Cycle “Profit” Cost of Care New Rate Three Challenges with Management of Risk 3. Paybacks are Heck !! Can you maintain your cost reduction? Negotiated Rate First Cycle Next Cycle “Profit” Cost of Care New Rate New Cost of Care The Successful Management of Risk Typical management tactics: Negotiated Rate First Cycle “Profit” Cost of Care Aggressive third party contracting Utilization management Concurrent financial review Staffing efficiencies Individual case reviews Care coordination/ transition mgmt Most of the tactics have a one time effect Fixed costs keep rising Three Challenges with Management of Risk 3. Paybacks are Heck !! Can you maintain your cost reduction? Negotiated Rate First Cycle Next Cycle “Profit” Cost of Care New Rate New Cost of Care Deficit !! Three Challenges with Management of Risk 3. Paybacks are Heck !! Can you maintain your cost reduction? Negotiated Rate First Cycle Next Cycle “Profit” Cost of Care New Cost of Care New Rate Deficit !! A previously profitable venture is now underwater Levels of Coordinated Systems of Care Risk = Exclusivity Levels of Coordinated Systems of Care Risk = Exclusivity The greater the risk… …the greater the reward The Roles of the Health Care System Delivery of Care Finance, Managing and Delivery of Care Are We an Insurance Company in Disguise? Delivery of Care Finance, Managing and Delivery of Care If it walks like a duck…….. Are We an Insurance Company in Disguise? Delivery of Care Finance, Managing and Delivery of Care If it walks like a duck…….. Bottom Line: We need to THINK more like an insurance company You should always go to other people's funerals, otherwise, they won't come to yours. Yogi Berra I never said most of the things I said. Yogi Berra Fundamental Requirements to be a Winner Integrating the Components of Health Care Delivery Financial Integration Clinical Integration Fundamental Requirements to be a Winner Integrating the Components of Health Care Delivery Financial Integration Clinical Integration Fundamental Requirements to be a Winner Integrating the Components of Health Care Delivery Financial Integration Governance/ Infrastructure Clinical Integration Fundamental Requirements to be a Winner Clinical/ Operational Integration Financial Integration Shared Infrastructure and Governance Engaging Hospitals and Physicians Insights and Actions for Results Clinical Integration Clinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration ◦ Enterprise-wide cost reduction ◦ Management of risk Shared Infrastructure and Governance ◦ An aligned, long term collaborative relationship Accountable Care Organizations Definition: An ACO is a health care provider organization that is accountable for meeting the health needs of a defined population, including the total cost of care and the quality and effectiveness of services. Accountable Care Organizations Lets get back to basics Definition: An ACO is a health care provider organization that is accountable for meeting the health needs of a defined population, including the total cost of care and the quality and effectiveness of services. Infrastructure- With Whom do you Partner ? Other Hospital Systems System Community Hospital Infrastructure- With Whom do you Partner ? Other Hospital Systems Tertiary Services Specialists Mgmt Expertise Mgmt Services Branding Capital System Community Hospital Infrastructure- With Whom do you Partner ? Other Hospital Systems Tertiary Services Specialists Mgmt Expertise Mgmt Services Branding Capital Community Hospital System Patients ! Infrastructure- With Whom do you Partner ? Other Hospital Systems Independent Infrastructure- With Whom do you Partner ? Other Hospital Systems Independent Affiliation Infrastructure- With Whom do you Partner ? Other Hospital Systems Independent Affiliation Joint Venture Infrastructure- With Whom do you Partner ? Other Hospital Systems Independent Affiliation Joint Venture Merge Infrastructure- With Whom do you Partner ? Other Hospital Systems Independent Affiliation Joint Venture Merge Close Down Infrastructure- With Whom do you Partner ? Other Hospital Systems Tertiary Services Specialists Mgmt Expertise Mgmt Services Branding Capital What is the LEAST disruptive solution Community System that will accomplish yourHospital needs Patients ! Infrastructure- With Whom do you Partner ? Physician Strategy Independent Affiliation Joint Venture Employ A Final Thought…. 1620- Somewhere in the Atlantic.… Fundamental Requirements to be a Winner Integrating the Components of Health Care Delivery Financial Integration Governance/ Infrastructure Clinical Integration Engaging Hospitals and Physicians Insights and Actions for Results Integration Clinical Clinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration Financial Integration ◦ Enterprise-wide cost reduction ◦ Management of Risk Infrastructure and Governance Shared Hospital Physician Partnership ◦ An aligned, long term collaborative relationship Opportunity is overlooked by most people because it is dressed in overalls and looks like work. Thomas Edison Engaging Hospitals and Physicians Insights and Actions for Results Integration Clinical Clinical Integration ◦ Embracing data transparency ◦ Implementing best practices ◦ Excel at Pay for Performance Financial Integration Financial Integration ◦ Enterprise-wide cost reduction Infrastructure and Governance Shared Hospital Physician Partnership ◦ An aligned, long term collaborative relationship Just when you think everything’s OK… ….You may find that… When you're finished changing, you're finished. Ben Franklin The Meaning of Commitment The Goal is to have Bacon and Eggs for Breakfast The chicken is motivated. The pig is committed !! To the world you may be just one person, But to one person you may just be the world. Unknown