Professional Documents
Culture Documents
Ben Umansky Carolinas Healthcare System Rehab Summit 11 6
Ben Umansky Carolinas Healthcare System Rehab Summit 11 6
U.S. Households
6.5% With Internet
But No Cable, 2013
Paying for More Than You Use
“This is the battle hymn of the cord cutter: You
are paying too much for television, and you
U.S. Adults Age 18-34 aren’t watching most of what you’re paying for.”
18.1% With Netflix or Hulu
But No Cable, 2013 Farhad Manjoo, The New York Times
Source: Experian Marketing Services, “Cross-Device Video Analysis,” April 17, 2014, available at: www.experian.com; Manjoo F, “Comcast vs. the
©2014 The Advisory Board Company • advisory.com • 28603A Cord Cutters,” The New York Times, February 15, 2014, available at: www.nytimes.com; Health Care Advisory Board interviews and analysis.
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149% 86%
Hospital Payment-to-Cost Hospital Payment-to-Cost
Ratio, Private Payer, 2012 Ratio, Medicare, 2012
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Medicare Reforms and the Transition to Risk 10
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
“Notwithstanding
($4B) recent favorable
($14B)
($21B)
($25B) developments…
($32B)
($42B)
Medicare still
($53B) faces a substantial
($64B) financial shortfall
($75B)
($86B)
that will need to be
addressed with
further legislation”
$260B $56B $151B Office of the
Hospital payment Reduced Medicare Reduced Medicare
and Medicaid DSH2 payments due to Actuary, CMS
rate cuts, payments, 2013-2022 sequestration and
2013-2022 2013 budget bill
1) Includes hospital, skilled nursing facility, hospice, and
home health services; excludes physician services. Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24,
2) Disproportionate Share Hospital. 2012; CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011;
CBO, “Bipartisan Budget Act of 2013,” December 11, 2013, all available at: www.cbo.gov; Health Care Advisory Board interviews and
©2014 The Advisory Board Company • advisory.com • 28603A analysis.
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1) Includes Value-Based Purchasing Program, Hospital Readmissions Source: The Advisory Board Company, “Mortality Rates Are Only One of Many VBP
Reduction Program, and Hospital-Acquired Conditions Program. Changes to Come,” December 4, 2013, available at: www.advisory.com; CMS, “Request for
Information on Specialty Practitioner Payment Model Opportunities,” February 2014,
©2014 The Advisory Board Company • advisory.com • 28603A available at: www.innovation.coms.gov; Health Care Advisory Board interviews and analysis.
12
123 375
Series1
2012
Pioneer
2012
MSSP1
2013
MSSP
2014
MSSP
Total
46M-52M
ACO Cohorts Cohort Cohort Patients treated by ACOs
Model as of April, 2014
1 in 10
Medicare FFS beneficiaries
attributed to an ACO
First-year performance
Second-year performance
Dropped out after program year -5.6%
(min)
Will beneficiaries be
attributed to ACOs
Shared savings earned by prospectively?
Bill in Brief:
“The ACO Improvement Act” The Bigger Question: What Should
• Bipartisan bill (H.R. 5558) introduced Medicare ACO Programs Be?
by Representatives Diane Black (R-
TN) and Peter Welch (D-VT) Permanent middle grounds between
fee-for-service, capitation?
Key Features
• ACOs would receive capitated Adaptive environments involving
payments, not shared-savings progressively more risk?
adjustments
• Patients would proactively select a
Training grounds for other risk models?
primary care provider rather than be
(e.g., Medicare Advantage)
retroactively attributed
• ACOs could discount primary care
services to encourage network loyalty
29.5% of 19.0M
Medicare Unambiguous incentive for
beneficiaries population health management
2009 2020
2013 Q3 2014 Q3
Insurance Medicaid Employer-sponsored
18.0% exchanges launch expansion
begins
coverage grows 13.4%
(highest on (lowest on
record) record)
$5.7B $14B
Reduction in
uncompensated
vs. ACA-related
reductions in Medicare
care, 2014 fee-for-service
payment, 2014
Source: Gallup, “In U.S., Uninsured Rate Holds at 13.4%,” http://www.gallup.com/poll/178100/uninsured-rate-holds.aspx; Department of Health and
Human Services, “Impact of Insurance Expansion on Hospital Uncompensated Care Costs in 2014,”
©2014 The Advisory Board Company • advisory.com • 28603A http://aspe.hhs.gov/health/reports/2014/UncompensatedCare/ib_UncompensatedCare.pdf; Health Care Advisory Board interviews and analysis.
Medicaid Expansion 18
“For-profit health
systems…report far better
financial returns through
the first half of the year
than expected, owed in
large part to expanded
Medicaid”
PricewaterhouseCoopers
Participating Not Currently Participating
8M1 5% 2.4%
Increase in Medicaid, Average Medicaid Advisory Board estimate of impact of
CHIP2 enrollment, enrollment increase across Medicaid expansion on typical hospital’s
October 2013-July 2014 non-expansion states 10-year operating margin projection
1) Estimate- does not include CT or ME. Source: The Advisory Board Company, “Where the States Stand on Medicaid Expansion,” September 4, 2014, available at: www.advisory.com; CMS,
2) Children’s Health Insurance Program. “Medicaid and CHIP: July 2014 Monthly Applications, Eligibility Determinations and Enrollment Report,” September 22 2014; HHS, “Health Insurance
Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” May 1, 2014; PricewaterhouseCoopers, “Medicaid 2.0: Health
©2014 The Advisory Board Company • advisory.com • 28603A System Haves and Have Nots,” Health Care Advisory Board interviews and analysis.
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Full Medicaid
Managed Care
E.g., Florida’s Statewide Medicaid
Managed Care Program
Provider-Led Care
Management
Traditional State- E.g., Oregon’s “Coordinated
Run Program Care Organizations”
Exchange-Based
Privatization
E.g., Arkansas’ “Private
Option”
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Source: Kaiser Family Foundation, “Medicaid Expansion in Arkansas,” October 8, 2014; Government Accountability
Office, “Medicaid Demonstrations: HHS’s Approval Process for Arkansas’s Medicaid Expansion Waiver Raises Cost
©2014 The Advisory Board Company • advisory.com • 28603A Concerns,” August 8, 2014; Health Care Advisory Board interviews and analysis.
Insurance Exchanges 21
2.1M
2.2M
25M Projected exchange
enrollment by 2018
1) Numbers do not add precisely due to rounding. Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” May 1, 2014; Cheney K
and Haberkorn J, “Obama: 8 Million Enrolled Under ACA,” Politico, April 17, 2014, available at: www.politico.com; Cheney K and Norman B, “Insurers
©2014 The Advisory Board Company • advisory.com • 28603A See Brighter Obamacare Skies,” Politico, April 15, 2014, available at: www.politico.com; Health Care Advisory Board interviews and analysis.
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39%$6,000+
$1,000-
$2,99916% Price-sensitive patients
more likely to seek lower-
cost options
30%
$3,000-$5,999
Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and
Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index
©2014 The Advisory Board Company • advisory.com • 28603A Report for Open Enrollment and Q1 2014,” May 2014; Health Care Advisory Board interviews and analysis.
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32
“Narrow” %
26%
Median premium reduction directly
attributable to network narrowing2
1) “Pathway X” bronze plans compared to leading PPO plan offering across nine states.
2) Comparing products by the same carrier of the same tier, across 7 carriers. Source: Gottleib S, “Hard Data On Trouble You’ll Have Finding Doctors in Obamacare,” Forbes, March 8, 2014,
available at: www.forbes.com; McKinsey & Company, “Hospital Networks: Configurations on the Exchange and
©2014 The Advisory Board Company • advisory.com • 28603A Their Impact on Premiums,” December 2013; Health Care Advisory Board interviews and analysis.
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Low Premiums Moving the Market… …but Perhaps Not the Right One
2013: 2014:
• PreferredOne offers • PreferredOne exits exchange
lowest Silver plan • Will still offer individual
premium in country; coverage through other
• wins massive market successful channels with
share on Minnesota different risk profile
exchange (MNsure)
Source: “UnitedHealth to Expand Exchange Presence as Profits Dip,” ModernHealthcare, April 17,
2014; Department of Health And Human Services, “Health Insurance Marketplace Will Have 25 Percent
©2014 The Advisory Board Company • advisory.com • 28603A More Issuers in 2015,” September 23, 2014; Health Care Advisory Board interviews and analysis.
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1 Enrollment:
• Are the technical glitches really fixed?
• Will higher individual mandate penalties change anyone’s mind?
• Will the young and healthy turn out in force?
3 Market Reaction:
• How aggressively will providers court the newly insured?
• Will employers dump workers onto the exchanges?
“Abdication” “Activation”
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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40M
30M
19M 172
9M Private exchange
3M operators as of
October, 2014
2014 2015 2016 2017 2018
Source: Accenture, “Are You Ready? Private Health Insurance Exchanges are Looming;”
©2014 The Advisory Board Company • advisory.com • 28603A privatehealthexchange.com; Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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70%
65%
61%
59%
60% Essential Health Guaranteed Issue
54% Benefits and Renewability
55%
49%
50%
45%
Intel-Presbyterian Partnership
Shared Accountability
Upside and downside risk for health care
spending compared to projected target
Case in Brief: Intel Corporation
Customized Care Offerings • Large multinational employer
Addition of depression screening into headquartered in Santa Clara, California
customary provider workflow • Entered into narrow-network contract
with Presbyterian Healthcare Services,
Infrastructure for Care Management an 8-hospital system in New Mexico, for
Conversion of Intel’s on-site clinic into full employees at Rio Rancho plant
service patient-centered medical home
Source: Intel Corporation, “Employer-Led Innovation for Healthcare Delivery and Payment Reform: Intel
1) Presbyterian Healthcare Services. Corporation and Presbyterian Healthcare Services,” Santa Clara, California; Evans M, “Slimming Options,” Modern
Healthcare, July 13, 2013, available at: www.modernhealthcare.com; Health Care Advisory Board interviews and
©2014 The Advisory Board Company • advisory.com • 28603A analysis.
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1 2
Secure Enrolled Lives Win Share of Volumes
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Constant employee
premium contribution, 5 Variable individual
premium contribution,
low deductibles Greater consumer cost exposure high deductibles
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Competitive Unit Total Cost Control Geographic Reach Clinical and Service
Prices and Clinical Scope Quality
Strategic Imperatives: Strategic Imperatives: Strategic Imperatives: Strategic Imperatives:
• Avoid reactive • Develop population • Match service • Present
position vis-a-vis health model to portfolios, footprints unimpeachable
price cuts, control cost trend to target purchasers clinical credentials to
transparency • Clearly • Explore partnership wholesale buyers
• Radically restructure communicate total strategies that • Emphasize access,
cost structures to cost advantage to strengthen market experience
sustain lower potential purchasers presence advantages to
unit prices individual consumers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Competitive Unit Total Cost Control Geographic Reach Clinical and Service
Prices and Clinical Scope Quality
Strategic Imperatives: Strategic Imperatives: Strategic Imperatives: Strategic Imperatives:
• Avoid reactive • Develop population • Match service • Present
position vis-a-vis health model to portfolios, footprints unimpeachable
price cuts, control cost trend to target purchasers clinical credentials to
transparency • Clearly • Explore partnership wholesale buyers
• Radically restructure communicate total strategies that • Emphasize access,
cost structures to cost advantage to strengthen market experience
sustain lower potential purchasers presence advantages to
unit prices individual consumers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Price Sensitivity at
Point of Care
Premium Sensitivity at
Point of Coverage
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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$6K
$900
$2K
$900 $1K $1,269
$150 $275 $400
• Price-sensitive shoppers
will be acutely aware
t
on
t
on
t
py
ry
si
si
en
un
ge
Vi
Vi
si
si
co
m
so
is
is
of price variation
r
e
ce
s
Su
is
dm
m
ar
do
a
al
la
ltr
Ad
C
ci
En
ct
ep
U
e
y
ra
re
R
ar
r
a
ilu
ilu
im
ip
at
Fa
Fa
H
C
$400 to $2,183
Pr
al
rt
ea
en
2) $2,086; based on KFF report of average HDHP Source: KFF, “2012 Employer Health Benefits Survey,” available at: www.kff.org; New Choice Health, “New Choice Health
deductible. Medical Cost Comparison,” available at: www.newchoicehealth.com; Healthcare Blue Book, “Healthcare Pricing,” available
3) $733; based on KFF report of average PPO deductible. at: www.healthcarebluebook.com; Kliff S, “How much does an MRI cost? In D.C., anywhere from $400 to $1,861,”
Washington Post, March 13, 2013, available at: www.washingtonpost.com; Health Care Advisory Board interviews and
©2014 The Advisory Board Company • advisory.com • 28603A analysis.
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Pricing:
“Our goal is to be the number
$4 For Walmart
employees $40 For Walmart
customers one health-care provider in
Hours: the industry.”
Labeed Diab
President of Health & Wellness
Weekdays Saturday Sunday
Walmart
8AM-8PM 8AM-5PM 10AM-6PM
Service:
• Two nurse practitioners provider 130M 150M
primary care services on site Annual emergency Weekly visits to
department visits Walmart stores
• Clinic refers to external
specialists, hospitals as
appropriate
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Pepsi Co.
In 2011, offered employees
free cardiac and complex
Walmart joint replacement surgery at
In 2013, expanded Johns Hopkins Medicine
Centers of Excellence
program to cover
cardiac, spine, and
hip/knee replacement
surgery
Lowe’s
In 2010, offered employees
free heart surgery at
Cleveland Clinic
30-50%
Of referred patients do
not undergo surgery
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Competitive Unit Total Cost Control Geographic Reach Clinical and Service
Prices and Clinical Scope Quality
Strategic Imperatives: Strategic Imperatives: Strategic Imperatives: Strategic Imperatives:
• Avoid reactive • Develop population • Match service • Present
position vis-a-vis health model to portfolios, footprints unimpeachable
price cuts, control cost trend to target purchasers clinical credentials to
transparency • Clearly • Explore partnership wholesale buyers
• Radically restructure communicate total strategies that • Emphasize access,
cost structures to cost advantage to strengthen market experience
sustain lower potential purchasers presence advantages to
unit prices individual consumers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Primary Care
Pediatric Care
Favorable Pricing Comprehensive
Structure Clinical Scope Imaging
Cardiovascular Care
Orthopedics
Physical Therapy and Rehab
Broad Provider 6-12 Months’ Experience
Inpatient Care
Geographic Footprint Under Performance Incentives
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Competitive Unit Total Cost Control Geographic Reach Clinical and Service
Prices and Clinical Scope Quality
Strategic Imperatives: Strategic Imperatives: Strategic Imperatives: Strategic Imperatives:
• Avoid reactive • Develop population • Match service • Present
position vis-a-vis health model to portfolios, footprints unimpeachable
price cuts, control cost trend to target purchasers clinical credentials to
transparency • Clearly • Explore partnership wholesale buyers
• Radically restructure communicate total strategies that • Emphasize access,
cost structures to cost advantage to strengthen market experience
sustain lower potential purchasers presence advantages to
unit prices individual consumers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Annual network
selection in fluid
Day 1 insurance market
Day 365 implies consistent
reevaluation of
network performance
Care Care
Decision Decision
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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All providers included in nearly all Employees have little choice of Most decisions made by
Traditional Market networks; only compete on price networks referring physician
negotiations
Threshold Differentiating
Factors Factors
Reach and • Broad geographic footprint • Inclusion of preferred • Proximity to access
Retail Market
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Strategic Advantage #1: Scale 61
Case in Brief:
Advocate NorthShore Health Partners Combined system’s
• 16-hospital merger of Advocate Health $6.5B expected annual
revenue
Care, NorthShore University HealthSystem
• Creates strong clinical, geographic
presence in Chicago area
Source: “Advocate and NorthShore Combine to Create Preeminent Health Care System,” Northshore
University Health System; Herman B, “Advocate-NorthShore merger continues trend toward regional
©2014 The Advisory Board Company • advisory.com • 28603A supersystems,” Modern Helathcare, Spetember 12, 2014; Health Care Advisory Board interviews and analysis.
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Allowances for Effective Coordination… …But Market Power Still a Red Flag
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Strategic Advantage #2: Integration 63
“What we are
Anthem
recognizing is that the Blue Cross
most effective delivery UCLA Health PIH Health
model is an integrated
delivery model. We can Cedars-
• 7 health systems Huntington
reduce waste, improve Sinai
Medical Memorial
• 14 hospitals
quality of care, provide Center Hospital
• 6,000 physicians
people access to the top
Good Torrance
facilities in the nation, Samaritan Memorial
frankly, and do that in an Hospital Health
MemorialCare
integrated way.” Health System
Pam Kehaly
Anthem Blue Cross
Source: “Anthem, Seven California Health Systems Team Up To Form HMO,“ California Healthline, September
17, 2014; Commins J, “Anthem Blue Cross, 7 CA Health Systems Create New Challenger, Business Model,”
©2014 The Advisory Board Company • advisory.com • 28603A HealthLeaders Media, September 18, 2014; Health Care Advisory Board interviews and analysis.
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Five SC systems
form cost saving
Initiant Healthcare
Collaborative
Two Systems form Georgia
Health Collaborative
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Strategic Advantage #3: Efficiency 65
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Health Care Advisory Board
Insecurity Abounds
Consolidation Dominating Industry Mindshare
SURVIVAL
OF THE
BIGGEST The End of Independence?
CHS-HMA merger
puts more pressure on “We want to stay independent. But when I
stand-alones to seek look at where things are going, I just don’t
partners see how we can compete without being part
-Page 6 of something bigger.”
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Five SC systems
form cost saving
Initiant Healthcare
Collaborative
Two Systems form Georgia
Health Collaborative
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Description Formal purchase of Collection of Independent entity, Flexible umbrella Typically bilateral
one organization’s hospitals owned by one or structure, often agreement to
assets by another, contracting several encompassing cooperate around
or the combination jointly in order to independent many independent a particular
of two organizations’ support organizations, that organizations of initiative or service
assets into a single improved accepts risk-based similar geography, line; may involve
entity coordination, contracts and that may serve as local or national
outcomes; distributes shared foundation for partners
modeled after savings further integration
physician CI
networks
Examples • Baylor Scott and • Long Island • Quality Health • Allspire Health • Evergreen
White Health Solutions (WI) Partners Healthcare with
• Community Network • Arizona Care • Stratus Virginia Mason
Health • Vanderbilt Network Healthcare • Mayo Clinic
Systems/Health Health • Accountable • BJC Care Network
Management Affiliated Care Alliance Collaborative • Cleveland Clinic
Associates Network • Noble Health Affiliate
• Trinity Alliance Program
Health/Catholic • Health
Healthcare East Innovations Ohio
• Tenet/Vanguard
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Size confers
Higher prices price leverage Lower prices
charged to payers paid to suppliers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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I II III
Winning Preference Through Lowering Unit Reducing Total
Clinical Scope and Prices Through Costs Through
Geographic Reach Operational Scale Population Health
Driving Network Assembly Leveraging Low-Price Care Sites Overcoming Financial Barriers
1. Comprehensive Network Product 3. Top-of-site Referral Partnerships 6. Jointly-Financed Infrastructure
Investment
Appealing to Network Assemblers Slimming Underlying Cost Structures
Breaking Down Information Silos
2. Portfolio-Enhancing Clinical 4. Clinical Footprint Rationalization
Partnerships 7. Continuum-Wide Data
5. Next-Generation Shared Services
Transparency
Hardwiring Mutual Accountability
8. Network-Enabled
Performance Incentives
©2014 The Advisory Board Company • advisory.com • 28603A Source: The Advisory Board Company interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Bra
i ng nd Questions for Every
act /Ide
ntr nti Partnership
Co ty
Independence
• Which strategic and operational
functions should be included in
Str
tise
at
Collaboration
egi
er
strategy?
cP
Exp
la n
centralize the function by
Centralization combining it with that of a
partner, or is it better to
collaborate with a partner while
ce
Ca
n
re
rna
versions of the same function?
Mo
ve
de
Go
• Does the legal structure of an
l
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Road Map
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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1 2
Comprehensive Portfolio-Enhancing
Open to
Network Product Clinical Partnerships
Collaboration
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Combined
geography
sufficient to TriHealth Local Employers
support large
Cincinnati
Healthcare
employers
Solutions Network
St. Elizabeth’s Public Payers
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Develop a Ensure
“We set out to form an extremely
Long-Term Vision Physician Support
durable and long-term
Contractual partnership Both partners demonstrate
partnership that allows us to
agreement spans 20 years, clinical quality and outcomes
ensuring both parties are fully
come together and create a
committed to partnership high-value network of care. To
do that, we forged a board-
driven, 20-year agreement that
ensures the partnership’s
strength and stability, ultimately
increasing the quality and value
Secure Track
of care available in our
Support Performance
community.”
Steering committee contains Quality dashboards track progress
equal representation from on clinical areas; partnership Gary Kaplan MD, CEO, Bob Malte, CEO,
both partners (CEOs, dashboard tracks progress on Virginia Mason EvergreenHealth
CMOs, COOs) priority activities aligned with
strategic partnership goals
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Tactic #2: Portfolio-Enhancing Clinical Partnerships 86
Source: Health Care Advisory Board interviews and analysis; Mayo Clinic Care
©2014 The Advisory Board Company • advisory.com • 28603A Network, available at: http://www.mayoclinic.org/about-mayo-clinic/care-network.
87
1) Pseudonym.
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis
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©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Key Takeaways
Winning Preference Through Clinical Scope and Geographic Reach
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis
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Comprehensive Portfolio-Enhancing
Model Comments
Network Product Clinical Partnerships
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Ideal Partners
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Struggling to offset
Difference in Average Price for expensive fixed cost
Common Imaging Procedures1 base
HOPD2 vs. Freestanding Imaging Facilities, 2011
Lack of back-office
57% lower efficiency
$779
$334
vs.
Streamlined focus on
narrow set of services
3 4 5
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Tactic #3:Top-of-Site Referral Partnerships 95
Urgent Pediatric
Care Urgent
Pediatric Care Tertiary
After
Hours Women’s 1 Hospital to
Clinic Community
Hospital
Chronic Full
Disease Worksite Emergency
Clinic Clinic
Department to
2 Urgent Care
Medical Mental Provider
Home Health
Urgent
Care Primary Care
Retail E-Visits 3 Office to
Clinic
Retail Clinic
Advanced School
Care Clinic
Center
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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Brigham Faulkner
and Women’s Hospital Proving the Point
BWH contracts with local HVMG received BWH able to retain contract
multispecialty group (Harvard attractive terms from by offering to shift more
Vanguard Medical Group) another local hospital lower-acuity volumes to
came up for renegotiation Faulkner at lower unit price
Co-branding Opportunity
1.46 M
1.36 M
$25-106K
78% 1.21 M Per bed when removing
1.08 M 0.98 M beds piecemeal, includes
0.95 M
70% reduction in supply and
66% 69% staff expenses
66%
68%
$580K
Per bed when closing
1980 1990 1995 2000 2008 2009 entire facilities, includes
facility, supply, and
Inpatient Beds Occupancy Rate staffing cost reductions
First, Do No Harm
Strategic Alignment Allows for More Efficient Planning for Future Capacity
Avoids Duplication of Services
within Shared Market
Northwest Metro Alliance
Combined Planning Process
Financial Alignment
• Agreed to sign PSA with Prevea
physicians ensuring physician
compensation at fair market value
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
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0% 25%
Loss in market-share Reduction in number of Cardio-
after consolidation Pulmonary Perfusionists needed
1) Pseudonym.
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Tactic #5: Next-Generation Shared Services 105
Treats operational units Strategy, functionality Focus on process Transfer of insight from
as clients, competes for driven by needs at standardization and high-performing units to
business vs. outside operational unit level continuous improvement low performing units
vendors
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106
Margin Improvement
1 • Improve margins from 6.5% to 9%
New Investments
• e.g. Two new 1.5 T MRI Scanners
2 • e.g. Four new 64 Slice CT scanners
• e.g. One new IMRT1 Machine
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
107
Key Takeaways
Lowering Unit Costs Through Operational Scale
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108
Next
Top-of-Site Clinical
Generation
Model Referral Footprint Comments
Shared
Partnerships Rationalization
Services
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109
Ideal Partners
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110
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Hig
h- Trade high-cost services for
low-cost management
Risk
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6 7 8
Jointly-Financed Continuum-Wide Data Network-Enabled
Infrastructure Investment Transparency Performance Standards
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Tactic #6: Jointly-Financed Infrastructure Investment 114
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.
Tactic #7: Continuum-Wide Data Transparency 116
1 2
z
12% 9%
Examination of region- Analytic tools reveal Reduction in 30-day acute
wide, cross-facility clinical, demographic myocardial infarction
utilization patterns trends among patients readmission rate at one member
reveals readmissions who had been hospital
as area of opportunity readmitted in the past
16% 12%
4 3 Reduction in 30-day
z pneumonia readmission
rate at one member hospital
Source: Chicago Tribune, available at: http://articles.chicagotribune.com, accessed October 1, 2012 ; Health Affairs, “Four Years Into
A Commercial ACO For CalPERS: Substantial Savings And Lessons Learned,”; HealthPartners and Allina Hospitals and Clinics,
1) Admission, Discharge, Transfer.
available at: https://www.healthpartners.com/ucm/groups/public/@hp/@public/documents/documents/cntrb_008919.pdf, accessed 3
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119
Source: Blue Shield of California, “An Accountable Care Organization Pilot: Lessons
Learned,” available at: https://www.blueshieldca.com/employer/documents/knowledge-
center/features/EKH_ACO%20Lessons%20Learned%20Case%20Study.pdf, accessed
©2014 The Advisory Board Company • advisory.com • 28603A 3 May 2014; Health Care Advisory Board interviews and analysis.
Tactic #8: Network-Enabled Performance Incentives 121
Candidates: Candidates:
• Hospital ACO partners • Clinical Integration Network
• Employed physicians • Post-Acute Care Providers
• Ancillary providers
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122
1) Clinical integration.
2) Pseudonym.
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6% 27%
11%
2%
13%
2010 2012
Source: Healthcare Financial Management Association, “Bridging Acute and Post-Acute Care,” available at:
http://www.hfma.org/acutepostacute/#120_Days_to_Launching_a_Continuing_Care_Network_for_Post-
©2014 The Advisory Board Company • advisory.com • 28603A Acute_Care, accessed May 3, 2014; Health Care Advisory Board interviews and analysis.
126
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127
Key Takeaways
Reducing Total Costs Through Population Health
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Ideal Partners
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130
Road Map
I II III
Winning Preference Lowering Unit Prices Reducing Total Costs
Through Clinical Scope Through Operational Scale Through Population Health
Degree of Market Advantage
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1 2 3
Clarity of Purpose Professionally Managed Pipeline Transactional Discipline
Intentional corporate strategy Partnership function should be Robust due diligence process
starts with well-formed, clearly an organized, routine process, prevents “partnership for the
articulated organizational purpose not an episodic activity sake of partnership”
4 5
Scientific Approach to Cultural Fit Integration as Core Competency
©2014 The Advisory Board Company • advisory.com • 28603A Source: Health Care Advisory Board interviews and analysis.