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2016 Trends
Managed Care and Beyond
February 4, 2016
HFMA and CHEF's Managed Care Meeting 2016
Updates on Changes and Challenges
135 South LaSalle Street, Suite 2750
Chicago, IL 60603
P 312.637.2500
F 312.637.2501
Introduction
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Consolidation will continue.
2 Providers will piece together the cost puzzle.
3 Data management will be key.
4 There will be a focus on patient engagement.
5 The consumer will become “the king.”
6 Access will take top priority.
7 Workforces will be retooled.
8 Population health will be defined.
9 IT efforts will move from implementation to optimization/interoperability.
1
10 Adjustments to the organization’s strategic framework will be necessary.
2016 Trends
Deal Volume Will Remain Strong
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“Five years after the Affordable Care Act helped set off a healthcare merger frenzy, the
pace of consolidation is accelerating, transforming the medical marketplace into a
land of giants.” – Wall Street Journal
50
66
86 89 98 95
106
40 45
20
45
67 57
76
2009 2010 2011 2012 2013 2014 Q32015A
Hospital Medical Group
Hospital and Medical Group M&A 3Activity4,5 Major Health Plan Transactions — 2015
Buyer Target
Estimated Incremental
Impact1
Enrollment
(millions)
Premium
Revenue
(billions)
Anthem Cigna2 ~ 2.9 $27.2
Aetna Humana2 ~ 9.3 $45.9
Centene HealthNet ~ 3.1 $13.3
1 United States Securities and Exchange Commission, Form 10-K statements,
as of June 2015. 2 Transaction is pending; expected to close in 2016. 3 M&A = mergers and acquisitions. 4 M. Gamble, “2014: The year of 95 hospital transactions,” Becker’s Hospital
Review, February 10, 2015, http://www.beckershospitalreview.com/hospital-
transactions-and-valuation/2014-the-year-of-95-hospital-transactions-and-
more-innovative-ones-at-that.html. 5 PwC, “Q3 2015 US health services deals insights,” November 2015,
https://www.pwc.com/us/en/healthcare/publications/assets/pwc-health-
services-deals-insights-q3-2015.pdf.
#1 CONSOLIDATION
WILL CONTINUE
Transaction volume will likely remain strong in
2016, as payors and providers pursue market
share as a pathway to operating efficiencies
and profitability.
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While M&A dominate headlines, a deeper trend of provider integration is under way.
Rise of Non-M&A Partnerships #1
CONSOLIDATION
WILL CONTINUE
In many markets/regions, the adoption of the
above tactics will likely solicit a defensive
response among competitors, spurring further
consolidation.
Clinical Affiliation
Regional
Collaborative
Joint
Venture
Joint
Operating Agreement
Acquisition/Member
Substitution
LESS AFFILIATED MORE AFFILIATED
N O N - M & A P A R T N E R S H I P S
» Establish forums to facilitate sharing of best practices.
» Boost purchasing power with vendors/suppliers and reduce
operating costs.
» Develop population health management capabilities in a more
coordinated manner.
» Organize to partner with payors and employers on value-based
arrangements.
C O M M O N O B J E C T I V E S R E C E N T E X A M P L E S
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Historically slow and methodical, the formation of large regional health systems
and collaboratives will force academic medical centers (AMCs) to be more
aggressive consolidators.
AMCs COMMUNITY PROVIDER
ORGANIZATIONS
Source: Adapted from M. Morris, M.D., et al., “Academic Medical Centers: Joining forces with community providers for broad benefits and positive outcomes,”
Deloitte, 2015, http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-dchs-amcs-final.pdf.
#1 CONSOLIDATION
WILL CONTINUE
Academic Medical Centers Will Be
More Proactive
Previous AMC-driven partnerships have proven
to yield significant strategic, financial, and
operational advantages in an increasingly
value-based environment.
AMC Challenges Partnership Objectives
T R A D I T I O N A L
E M E R G I N G
Tripartite
mission
Unfavorable
economics
Specialty-
care focus
Inpatient
orientation
Limited
provider
integration
New
competitors
Narrow
network
exclusion
Referral
pattern
disruption
Performance improvement (operational
efficiency, clinical quality, cost positioning)
Revenue diversification (new revenue streams,
referral sources for complex patients)
Narrow network participation, payor
partnerships, and enhanced provider networks
With new payment mechanisms being adopted by providers, hospitals and
physicians will begin to truly understand the cost of the services they provide.
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#2: PROVIDERS PIECE
TOGETHER THE
COST PUZZLE
New Payment Models Will Force
Providers to Understand Their Costs
» Establish better cost
allocation and
reporting systems.
» Create more robust
reporting capabilities.
BETTER REPORTING
» Identify high-cost
services.
» Implement changes
and achieve
efficiencies/savings.
ACHIEVE EFFICIENCIES
» Create pricing
flexibility.
» Establish pricing
transparency.
FLEXIBLE PRICING
Fee-for-
Service Medical
Home1
Bundled
Payment
Payment for
Episodes of Care
Gain
Sharing
Global Payment
With Financial Risk P4P
The Risk Continuum Associated With Existing
and Proposed Reimbursement Structures
Less
Risk
More
Risk
6
The demand for organizations to be more transparent with their pricing will
continue due to pressure from both patients and the government.
2.1
2.4
2.5
2.0
3.0
2.8
3.0
2.6
5.0
6.3
7.9
9.6
0.1
1.2
- 5.0 10.0 15.0 20.0
January 2010
January 2011
January 2012
January 2013
Individual Small Group Large Group Other Group Uncategorized
Growth of HSA — Qualified High-Deductible Health Plan
Enrollment, Covered Lives (Millions)
Pressure from patients, who are increasingly
carrying a greater burden of the costs
Source: AHIP Center for Policy and Research, 2005–2013 HAS/HDHP
Census Reports.
Pressure from CMS and state governments
forcing organizations to be more transparent
CMS has identified significant variation in pricing and
cost of care across the county and has released data
that shows what providers charge for common
services. This data includes information comparing
the charges for the 100 most common inpatient
services and 30 most common outpatient services.
0100.010\353039(pptx)-E2
#2: PROVIDERS PIECE
TOGETHER THE
COST PUZZLE
Price Transparency Will Be an
Organization-Wide Focus
7
With a better understanding of costs, providers will begin analyzing profitability
more extensively and begin to manage their organizational assets more akin to
other industries.
» Providers will begin to understand
not only which service lines are
profitable, but also which discreet
services within the service line drive
positive operating margins.
» Comparing financial performance
across regions and services will
influence key managerial decisions
related to consolidation or location of
services and deployment of real
estate.
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#2: PROVIDERS PIECE
TOGETHER THE
COST PUZZLE
Data-Driven Decision Making
8
Successful organizations will invest in data management to better enable
population health, care coordination, and value-based initiatives.
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#3 DATA MANAGEMENT
WILL BE KEY
Advanced Analytics Will Define
Successful Organizations …
Strategic planning will include developing enterprise analytics and data management plans to support value-based initiatives.
EVOLVING
ANALYTICS
STRATEGY
Available patient data, historical and across the continuum of care, will allow providers to develop personalized, integrated plans of care.
EMERGING
PERSONALIZED
CARE
Early adopters will move “beyond the EHR” to integrate data from multiple platforms and enable population health and value-based care.
CONNECTED
PLATFORMS
Organizations will develop new skill-sets, organically or through hiring, to support a data-driven culture.
NEW TALENT
TO SUPPORT A
NEW CULTURE
9
While the term “big data” is on everyone’s tongue, extracting actionable
intelligence remains difficult. Investment in advanced analytics will also be
directed at removing barriers.
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#3 DATA MANAGEMENT
WILL BE KEY
… But Data Challenges Will Impede
Progress for Many
Patient privacy concerns and related regulations inhibit the sharing of data and require investment in security capabilities and compliance.
PRIVACY AND
DATA SECURITY
CONCERNS
Analytics is often treated as a “nice-to-have” reporting function. A shift is required to become a truly data-driven organization.
CULTURAL
GAPS
Advanced analytics requires data integration and harmonization, yet important data is split across disparate data platforms.
DISPARATE
DATA
SOURCES
Valuable data sets are locked away in challenging formats, such as scanned information and free-text notes.
CHALLENGING
DATA
FORMATS
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Patient engagement
is crucial as
organizations seek
to demonstrate high
value care and
reduced costs. This
starts with
providers educating
and empowering
patients to become
active participants
in their care and
take the necessary
steps toward better
health.
Provide
Access Through
Multiple
Channels
Invest in the
Right
Technology, Both
EHR and Third
Party
Determine
What Is
Important
to Patients
Embrace
Mobile and
Wearable
Technology
Educate
Patients and
Providers
Constantly
Shift From
Providing
Content to
a Focus on the
Context of
Interaction
Employ
Analytics
to Collect and
Distribute
Information
Encourage
Frequent
Communication
PATIENT
ENGAGEMENT
The National e-Health Collaborative defines patient engagement as “actions
individuals must take to receive the most benefit from the health services available
to them.”
#4 FOCUS ON PATIENT
ENGAGEMENT
Patient Engagement May Be the Most
Important Factor in Impacting Value
The patient is not readmitted, and the provider
shares in the associated cost savings.
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In a 2014 Mayo
Clinic study, app
usage by cardiac
stent patients
reduced
readmissions
by 40%.1
1 Source: J. Comstock, “Mayo Clinic study finds app reduces cardiac readmissions by 40 percent,” mobi health news, April 1, 2014,
http://mobihealthnews.com/31580/mayo-clinic-study-finds-app-reduces-cardiac-readmissions-by-40-percent.
Imagine the potential benefits of communicating with and monitoring patients post-
discharge based on their preferred method of interaction.
#4 FOCUS ON PATIENT
ENGAGEMENT
Engaging Patients Will Require
New Approaches
E X A M P L E
» A provider asks the patient how he/she would like to be monitored post-
discharge, and the patient requests an app that can be accessed from his/her
phone.
» The provider prescribes the app and associated instructions for its use.
» The patient enjoys this method of tracking, is responsible for inputting the
requested data during treatment, and actively participates in care decisions with
the provider.
» The provider is able to monitor vital signs and activity levels and adjust treatment
in real time.
1
4
2
3
Outcome
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Historically, patients have been told how they can and cannot obtain care in a very
paternalist approach. For example:
#5 THE CONSUMER AS
KING
The Traditional Consumer Model
Just Won’t Cut it Anymore
WHICH INSURANCE PLAN(S) THEY CAN CHOOSE FROM
WHICH PROVIDER(S) THEY CAN SEE
WHICH PROCEDURE(S) THEY NEED TO HAVE
WHAT MEDICATION(S) TO TAKE
HOW MUCH THEY HAVE TO PAY WITH NO MENTION OF COST
With the shift to
consumerism,
providers and
health plans must
adopt a more
transparent and
collaborative
approach by asking
the patient what
he/she wants and
sharing decision-
making
responsibility with
the patient.
13 0100.010\353039(pptx)-E2
Because of shifting trends, organizations are adopting a patient-centered,
consumer-driven approach to delivering and financing healthcare.
#5 THE CONSUMER AS
KING
Consumers Will “Shop” Based on
Cost, Quality, and Convenience
E X A M P L E S Detailed demographics information, patient satisfaction surveys, and patient advisory boards
E X A M P L E S Retail clinics, urgent care, telemedicine, concierge medicine, and provider-based versus freestanding
E X A M P L E S Price and quality transparency tools, CMS Hospital Compare, online reviews, and other third-party
reviewers.
Healthcare organizations will need to identify the wants and needs of heterogeneous patient populations on an individual patient level.
Patients will look for services or products of varying quality and price.
Patients must be able to judge differences in the quality and price of services or products.
14 0100.010\353039(pptx)-E2
» Price transparency for services.
» Outcomes/quality reporting from providers.
» Online reviews from other patients.
» Enhanced customer service, from scheduling the appointment up to paying the
bill.
» Personalized visits, information, and health recommendations based on their
care needs and desires.
As a result, consumers wil l demand:
As costs are shifted to patients via high deductible health plans, increased out-of-
pocket responsibilities, and the implementation of reference pricing, patients will
increasingly “shop” for providers based on quality and cost.
#5 THE CONSUMER AS
KING
Benefit Design Will Also Fuel the
Consumer Revolution
Patients are shifting to active consumers of
care and will place greater pressure on
providers to earn their business.
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Traditional ways of delivering care are increasingly ineffective at meeting the
health needs and expectations of the population.
O L D PA R A D I G M N E W PA R A D I G M
#6 ACCESS TAKES TOP
PRIORITY
Patient Access Will Evolve to Meet
New Consumer Demands
MEDICAL CLINIC
DOCTOR/APC IN-PERSON VISITS
TELEMEDICINE
PHONE NURSE ADVICE
SECURE MESSAGING
RETAIL CLINICS/URGENT CARE
IN-HOME VISITS
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O P E R AT I O N A L E N A B L E R S N E W A C C E S S AV E N U E S
#6 ACCESS TAKES TOP
PRIORITY
Technology Will Lead the Way to
Opening Up New Access Channels
Innovation in patient care and engagement technologies is creating a renewed focus
on reaching patients virtually.
17 0100.010\353039(pptx)-E2
As providers continue to pursue the Triple Aim, patient access will emerge as a
pivotal strategic priority.
P O P U L AT I O N H E A L T H
» Patients need access to follow-up and preventive
care.
» Access to clinicians and health information helps
engage patients.
P E R C A P I TA C O S T
» Managing patient health by providing timely care
keeps patients out of high-cost settings.
» Optimizing patient access and throughput
increases efficiency and utilization of existing
resources.
E X P E R I E N C E O F C A R E
» Lack of access is the chief complaint reported by
patients who switch providers.
» Utilizing multiple avenues for patients to access
care is key to a patient-centric care model.
#6 ACCESS TAKES TOP
PRIORITY
Access Will Be Critical to Optimizing
Health System Performance
The IHI Triple Aim
POPULATION HEALTH
PER CAPITA
COST
EXPERIENCE OF
CARE
18 0100.010\353039(pptx)-E2
» Create new leadership positions.
» Fill leadership positions with candidates without traditional healthcare backgrounds.
» Ask current leadership to develop a broader set of business strategy and technical skills.
» Evaluate and review the composition of the Board.
» Add talent/grow capabilities across data analytics, nontraditional health partnerships,
innovation, population health management, and transformation and change management.
» Experiment with different organizational models.
CONNECTED,
ON-THE-GO,
AND
DEMANDING
CONSUMER
NEW AND
EMERGING
COMPETITORS
CONSOLIDATION/
PROVIDER
LEAD HEALTH
SYSTEMS
BIG DATA
NEW
REIMBURSEMENT
AND
COLLABORATION
MODEL
#7 WORKFORCES WILL
BE RETOOLED
Hospital Workforce Roles and Models Will Continue
to Evolve as We Move Toward a “Value-Based” Care
System
To promote collaboration, achieve strategic priorities, and foster a culture of
innovation, health systems will make changes in leadership, talent, and structure.
19 0100.010\353039(pptx)-E2
Board
Leadership
Enhance leadership team competencies by adding new roles:
» Population health management (e.g., chief population health officer)
» Change management and transformation (e.g., chief transformation
officer, head of cost containment)
» Data analytics (e.g., head of data analytics)
» Nontraditional health partnerships (e.g., chief partnership officer)
» Innovation (e.g., head of technology innovation/ chief digital officer)
» Consumerism (e.g., chief patient experience officer)
Evaluate composition and add expertise in consumer business, digital,
financial/risk management, payors, social media, and technology.
#7 WORKFORCES WILL
BE RETOOLED
Boards and Leadership Will Add New
Talent and Expertise
20 0100.010\353039(pptx)-E2
#7 WORKFORCES WILL
BE RETOOLED
Staff Will Be Asked to Expand Roles
and Develop New Skills
Leadership
» Think beyond the traditional hospital walls.
» Foster collaboration between the clinical and administrative staff.
Clinical Staff
» Continue to build quality and patient safety expertise.
» Focus on improving service and meeting consumer demands.
» Build skills and competencies around care coordination and health
information systems.
Administrative
(Nonclinical)
» Provide a positive experience and be “service” focused/oriented.
» Become the brand ambassadors.
21 0100.010\353039(pptx)-E2
Key Components of Functional Integration Performance Relative to Level of
Integration
#7 WORKFORCES WILL
BE RETOOLED
Organizations, Led by AMCs, Will Experiment
With Implementing Models That Promote
Greater Integration
An ECG study of academic medical center performance showed that more
integrated healthcare organizations outperform their less integrated peers across
multiple metrics.
0100.010\353039(pptx)-E2
» Process — The iterative process of strategically and
proactively managing clinical and financial opportunities
and resources for the patient population.
» Outcomes — Improve the health, experience, and cost
of care for the patient population, over time.
P O P U L AT I O N
H E A LT H
22
#8 POPULATION HEALTH
IS DEFINED
Population Health Will Be Defined by
Process and Outcomes
Population health, regardless of the definition,
continues to become increasingly prevalent as
the defined future-state goal for numerous
organizations nationwide.
23
H I GH R I SK | M A N A G E L OW R I SK | S C A L E R I S I N G R I SK | P R E V E N T
Segmenting your risk and addressing each population appropriately are essential for
success under population health, and necessary short- and long-term strategies.
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The result of this effort is to identify the
patients who require the most focus and
attention.
» Chronic Issues
» Acute Issues
» Episodes of Care Management
» Full Risk
» Performance Incentives
» Partial Risk
» Metric-Specific Incentives
» Age
» Disease Comorbidities
» Utilization History
» Social Issues (e.g., housing and
job status, insurance coverage,
nutrition, obesity)
R I S K F A C T O R S D I S E A S E S T A T E P A Y O R P R O G R A M
#8 POPULATION HEALTH
IS DEFINED
Organizations Will Have to Segment
Populations by Risk
P A T I E N T P O P U L A T I O N S
K E Y C O M P O N E N T S O F D E F I N I N G P A T I E N T P O P U L A T I O N S
24
Organizations will begin to gain the experience necessary to expand population
health programs to manage all high-, medium-, and low-risk patients.
» Data Integration
» Analysis
» Reporting
» Best Practices
» Physician Champion
» Communications
Identify
Care
Gaps
Define
Population
Stratify
Risks
Measure
Outcomes
Manage
Care
Distribute
Incentive
Payment
1
2
3
4
5
6
Engage
Patients
7
0100.010\353039(pptx)-E2
» Data drives any population
health strategy.
» Physician engagement is
critical to manage risk
appropriately.
» A flexible population health
approach must be developed.
» Patient engagement should be
supported.
» Ensure ongoing management
and improvement as patient
needs and risk levels change.
» Incentives in place should be
put in place.
K E Y E L E M E N T S
#8 POPULATION HEALTH
IS DEFINED
Organizations Will Cut Their Teeth
on Select Populations
» Patient demands and
increasing complexity will
place a premium on care
coordination and care
management efforts.
» With information and
experience, care teams will
be appropriately defined and
staffing models determined.
Optimal Care Team Example
T R E N D S
ECG believes organizations that are able to develop and apply care coordination and
care management principles effectively will be the most successful in transitioning
to total population health that is payor and program agnostic.
25 0100.010\353039(pptx)-E2
#8 POPULATION HEALTH
IS DEFINED
Total Population Health Requires a
Comprehensive Care Model
NURSE
PATIENT
NAVIGATOR/
HEALTH
COACH
PCP AND APC
CARE
MANAGERS/
COORDINATOR
OTHER
SOCIAL
WORKER SPECIALISTS
COMMUNITY/
VOLUNTEER
PATIENT
26
The transition to value-based care, supported by the Office of the National
Coordinator (ONC) for Health Information Technology’s 10-year interoperability
road map will change IT departments, not just their technology.
0100.010\353039(pptx)-E2
#9 IT OPTIMIZATION
New Models for a New Era
2016 will see healthcare organizations revising their IT strategy
and operating models to set the stage for value-based care. 1
Such thinking will require IT departments to change and:
» Adopt new organizational structures.
» Develop enterprise-based functions.
» Acquire new skill sets.
2
27
The 2016 healthcare IT solution landscape will see an increase in EHR replacement
and optimization.
0100.010\353039(pptx)-E2
#9 IT OPTIMIZATION
From Implementation to
Optimization and Interoperability
Optimization efforts will focus on interoperability and
connectivity with various platforms and data sources across the
continuum of care. 3
Organizations looking to replace legacy systems will have to
factor-in the needs of potential integrated care partners into the
selection process. 4
At the same time, smaller organizations in need of EHR
replacement may look into third-party arrangements with larger
partners. 5
Transition to FFV Should Frame
Every Strategic Decision
28 0100.010\353039(pptx)-E2
#10 ADJUSTING YOUR
STRATEGIC
FRAMEWORK
Each organization’s pacing to a FFV reimbursement environment will underpin
nearly every significant organizational decision, but the adoption of FFV will be
based on market-specific factors.
Factors
Impacting Pacing Implications
» Market competition
» Payor/employer interest level
» Nimbleness of organization
» Consumer demands
» Alignment level with providers
» Current reimbursement levels
» Current cost levels
» Planning frameworks need to be
recasted in light of FFV.
› Strategic
› Facility
› Medical staff development
» Traditional decision-making criteria
need to be updated.
› Population management
› Total cost of care
Market share, whether measured in terms of
volume or “lives,” will continue to be critical.
0100.010\353039(pptx)-E2 30
about ECG ECG partners with providers to create the strategies and solutions that are
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