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CONSOLIDATION IN HOSPITALS AND HEALTH SYSTEMSThe Impact on Quality, Accessibility and Cost of Care
Robert J. Henkel, FACHE
President and Chief Executive Officer, Ascension Health
Executive Vice President, Ascension
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PRESENTATION OUTLINE
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I. Ascension Overview
II. Healthcare Changes: Past, Present and Future
III. Healthcare Consolidation
IV. Ascension Consolidation
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OUR VISION CALLS US TO STRENGTHEN THE CATHOLIC HEALTH MINISTRY
OUR MISSION
Rooted in the loving ministry of Jesus as healer, we commit ourselves to serving all persons with special attention to those who are poor and vulnerable. Our Catholic health ministry is dedicated to spiritually centered, holistic care which sustains and improves the health of individuals and communities. We are advocates for a compassionate and just society through our actions and our words.
OUR VISION We envision a strong, vibrant Catholic health ministry in the United States which will lead to the transformation of healthcare. We will ensure service that is committed to health and well-being for our communities and that responds to the needs of individuals throughout the life cycle. We will expand the role of the laity, in both leadership and sponsorship, to ensure a Catholic health ministry of the future.
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OUR VALUES Service of the PoorGenerosity of spirit, especially for persons most in need
ReverenceRespect and compassion for the dignity of diversity of life
Integrity Inspiring trust through personal leadership
WisdomIntegrating excellence and stewardship
CreativityCourageous innovation
DedicationAffirming the hope and joy of our ministry
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ASCENSION’S CALL TO ACTION
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ASCENSION AND ITS DIRECT SUBSIDIARIES
Ascension Leader
Institute
ASCENSION SPONSOR
Ascension Information
Services
Ascension Investment
Management
The Resource
Group
Ascension Ventures
ASCENSION
AscensionHealth
Ascension Global Mission
Ascension Care
Management
Ascension Risk
Services
Ascension Holdings
Ascension Ministry
Service Center
AscensionHealth
At Home
AscensionHealth
Senior Care
Ascension Medical Group
Ascension Clinical
Holdings
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ASCENSION’S CARE DELIVERY MAP
9-17-15
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CHANGES IN HOW WE OPERATE
We’re making changes to our operating model and governance structure to support our
journey to operate effectively and efficiently in a changing environment – demonstrated
by further centralization of functions, standardization and adherence to best practices.
GovernanceStructure• Goal-setting set at System level; local boards monitor and provide oversight on System-wide goals
• Movement toward “quality-focused” local boards
• Strategic planning driven by System
• Flatter governance and committee structures
Delivery-wideClinical Service Units• Organized our Senior Care capabilities within Ascension Health Senior Care, second-largest non-profit long-term care provider
• Partnering with Evolution Health to create Ascension Health At Home, a joint venture focused on post-acute services including home care, hospice care and infusion therapy
Delivery-wide Support Units and Ministry-wide Functions• Establishing Delivery-wide Support Units in the areas of Care Excellence, Performance Excellence, Physician Services and Payer & Network Contracting
• Designing and implementing functional support across the System for areas of Mission Integration, Human Resources, Finance, Legal, Clinical and Communications
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GOVERNANCE CHANGES TO HELP USACHIEVE “THE QUADRUPLE AIM”
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HOSPITAL BOARD
ASCENSION HEALTH BOARD
MINISTRY MARKET BOARD
ASCENSION BOARD Improved Health Outcomes
Enhanced PatientCentered Experience
Enhanced Provider Experience
Lower OverallCost of Care
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CLINICALLY INTEGRATED SYSTEMS OF CARE
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Networks of physicians and other caregivers who work together systematically with other healthcare organizations and professionals to improve their collective ability to deliver high-quality, safe and valued care.
Ascension-managedCollaborative effort
Partnership model of clinically integrated system of care
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HEALTHCARE: PAST, PRESENT, FUTURE
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MINISTRY-WIDE FUNCTIONSEnhancing Capabilities and Expertise Across Ascension
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Delivery Services Solutions
Clinical
Communications
Finance
Human Resources
Legal
Mission Integration Currently organizing and implementing Centers of Expertise and other functional support across the System in the areasof these Ministry-wide functionsto increase standardization, collaboration and the level of expertise throughout Ascension
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HEALTHCARE REFORM
Affordable Care ActExpansion in coverage funded through less reimbursement per unit of service
Finance ReformInsurance reform and exchanges drive “individual insurance” products and consumer exposure
Innovative Payment ModelsNext generation ACOs, Value Based Purchasing, etc.
Payer/Provider Convergence Healthcare providers becoming payers; payers becoming providers, both seeking new sources of revenue
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WHAT IS THE FUTURE OF HEALTHCARE?
“The combination of economic and technological changes is creating much more of a empowered, informed consumer market.”
- McKinsey & Co.
“In 2020, informed and demanding patients are now partners in their own healthcare….Health data is pervasive – requiring new tools and provider models.”
- Deloitte
“Multiple, intersecting pressures will drive the transformation of health care delivery and financing from volume- to value-based payments over the next decade.”
- American Hospital Association
“All signs point to a retail market.”- Health Care Advisory Board
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HEALTHCARE CONSOLIDATION
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THE CHANGING HEALTHCARE LANDSCAPE IS DRIVING INDUSTRY CONSOLIDATION
Source: http://www.pwc.com/us/en/healthcare/publications/assets/pwc-health-services-deals-insights-q1-2015.pdf
1. Provider Consolidation Nationally, the trend of provider consolidation has continued to increase in both pace and scope. The traditional rationale of increased scale remains important and is further reinforced under new, value-based models. Those models have also led to innovative forms of consolidation moving beyond traditional M&A activity to multi-system collaboratives.
2. Payer Consolidation Like providers, payers are increasingly consolidating to spread risk through increased scale and to enhance product mix diversification.
3. IntegrationThe health care industry is experiencing increased convergence as providers seek to expand capabilities along the continuum of care to gain control of a larger proportion of health care spend. There is also vertical integration with both payers and companies from other segments (retail health) acting more like providers.
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PROVIDER CONSOLIDATION TRENDS
Hospitals Physician Practices
Source: http://www.pwc.com/us/en/healthcare/publications/assets/pwc-health-services-deals-insights-q1-2015.pdf
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PAYER CONSOLIDATION TRENDS
Managed Care (through 2015 Q2)
• Aetna to acquire Humana for $37B, announced July 2, 2015
• Will create largest Medicare managed care company and second largest managed care company in US with a combined 37.5M members and a combined $115B in revenue
• Anthem announced acquisition of Cigna for $48.3Bo Cigna: 14.5M medical
customers; $35B revenue
o Anthem: 38.5M medical customers; $73B operating revenue
Managed Care (2015 Q3 Highlights)
Source: http://www.pwc.com/us/en/healthcare/publications/assets/pwc-health-services-deals-insights-q1-2015.pdf
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TRENDS IN VERTIGAL INTEGRATIONThe lines among different players involved in healthcare delivery are increasingly blurring with payers and companies from other segments converging on the provider space.
Providers are becoming payers
Payers are becoming providers
Companies from other segments are becoming providers
“1 in 5 Health Systems to Become payers by 2018”1
Source: http://www.healthleadersmedia.com/content/HEP-295415/1-in-5-Health-Systems-to-Become-payors-by-2018##
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THE NUMBER OF INDEPENDENT HOSPITALS IN THE U.S. HAS DECLINED SIGNIFICANTLY SINCE 1999
1999 20130.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
50.9%
63.2%
49.1%
36.8%Hospitals in SystemsIndependent Hospitals
Source: http://www.aha.org/research/reports/tw/chartbook/ch2.shtml
N = 4,956 N = 4,974
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RURAL HOSPITAL CLOSURES, 2010-2015
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Red pins designate rural hospitals that have closed since 2010, according to the North Carolina Rural Health Research Program.
• The North Carolina Rural Health Research Program says that 57 rural hospitals have closed since 2010 – the majority in Southern states.
• A recent study by iVantage Health Analytics indicates that another 283 are vulnerable to future closures.
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ASCENSION CONSOLIDATION
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CONSOLIDATION/INTEGRATION ACTIVITY IN ASCENSION’S MARKETS
• Together Health Network• Integrated Health Network of
Wisconsin
• Abouthealth in WI• The Federation in MI• Baylor Quality Alliance in TX
• AMITA Health
• Baptist – Tenet in Birmingham
• Duke LifePoint – Portage Health in MI
• Crittenton in Michigan• Capella in Tennessee
• Beaumont, Oakwood and Botsford in MI
• Baylor – Scott & White in TX• Advocate – Northshore &
Cadence – Northwestern in IL• CHS – HMA in TN, OK• Trinity – St. Francis in CT• Providence – Kadlec in Pasco
Clinically Integrated Network
Joint Operating Agreement/Joint
Venture
Merger/Sale of Assets
Ascension Examples
Competitor Examples
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Statewide Access and Geographic Reach:• Approximately 75% of Michiganders will be
within 20 minutes of a Together Health Network provider.
• Includes 25 hospitals, numerous outpatient centers, and anticipated participation of more than 5,000 physicians statewide.
Population Health Focus:• Includes cross-continuum services• Hundreds of physician practices designated as
patient-centered medical homes (PCMH).
Value-Leading Network:• All hospitals received Joint Commission Gold
Seal of Approval™, including five recognized as a Top Performer on Key Quality Measures®.
• 96% or higher by The Commonwealth Fund in Overall Recommended Care for all hospitals
• Lower than average cost per Medicare beneficiary at Together Health Network hospitals23
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ASCENSION MEDICAL GROUP
• As One Ascension, we have committed to accelerate change, engage collaboratively and work together as one integrated ministry.
• The creation of the Ascension Medical Group is an essential part of this journey, as it will enable us to leverage our collective gifts and resources while providing the foundation to deliver high quality, low cost, person-centered care for those we serve.
• Our 5,900 employed providers are one of our ministry’s greatest resources; yet, our current structure and ways in which we work today will not enable our organization, our ministry markets and our providers to successfully make the transition to a fee-for-value, population health-focused world in the timeframe required.
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CMS HOSPITAL ENGAGEMENT NETWORK
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Through the dedicated efforts of our healthcare professionals and Ascension Health’s participation in the CMS Hospital Engagement Network contract, we are leading healthcare’s transformation.
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SYMPHONY INITIATIVE
The Symphony initiative is integral to Ascension Health’s Vision, providing knowledge on demand and making us a connected ministry
Symphony is a pioneering program for Ascension Health with Business Transformation, System Standardization, Centralization and multiple parallel deployments
Human Resources
Finance/Payroll
Supply Chain
23 Health Ministrieswith Disparate Systems
Ministry Intelligence Center
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COST SAVINGS: FISCAL YEARS 2009-2018
13.40%
16.23%
3.24%
3.46%
1.53%
62.14%
Position Efficiencies
Single Health Plan
Non Medical Benefits
Process Improvements
IT Hardware & Software Retirements
Strategic Sourcing/Contract Compliance
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CONSOLIDATION IN HOSPITALS AND HEALTH SYSTEMSThe Impact on Quality, Accessibility and Cost of Care
Robert J. Henkel, FACHE
President and Chief Executive Officer, Ascension Health
Executive Vice President, Ascension