implementation of cost effective strategies
TRANSCRIPT
Implementation of Cost Effective Strategies
Alternative Payment Models Incorporating Bundled
Payments in Radiation Oncology Leading to a Trifecta of
Wins for Payors, Providers & Patients
Business Plan Submission
Nadeem Khan, MS, DHA, DABR, FACRO, FAHM, FHIAS, FACMPE
July 19th, 2021
This paper is being submitted in partial fulfillment of the requirements of Fellowship in
the American College of Medical Practice Executives.
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Table of Contents
Project Summary ...........................................................................................................................3
Executive Summary
Company .............................................................................................................................4
Mission Statement ............................................................................................................... 4
Market Opportunity ............................................................................................................5
Management & Key Personnel ...........................................................................................5
Competitors .........................................................................................................................6
Business' Competitive Advantage ......................................................................................6
Financial Information.......................................................................................................... 7
Part I: The Organizational Plan
Summary Description of the Existing Business ..................................................................7
Brief Description of the Company ......................................................................... 7 SWOT Analysis of the Existing Business 8
SWOT Analysis of the Existing Business ...............................................................8
Strategy .................................................................................................................11
Strategic Relationships ..........................................................................................11
Key Stakeholders and Decision-Makers ................................................................12
Summary Description of the New Business .....................................................................13
Brief Description of the New Business ..................................................................13
SWOT Analysis of the New Business ..................................................................14
Strategy .................................................................................................................16
Strategic Relationships ..........................................................................................17
Key Stakeholders and Decision-Makers ............................................................... 18
Products or Services .......................................................................................................... 18
Administrative Plan ..........................................................................................................19
Three-year Operational Plan .............................................................................................21
Incorporation Strategy ......................................................................................................24
Regulatory and/or Accreditation Bodies ...........................................................................25
Exit Strategy.......................................................................................................................25
Part II: The Marketing Plan
Goals of the Marketing Strategy .......................................................................................26
Market Analysis ................................................................................................................ 28
Target Market and Audience ................................................................................28 Competition27
Competition ...........................................................................................................29
Market Trends ........................................................................................................29
Market Research ...................................................................................................30
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Marketing Strategy ............................................................................................................31
Description ............................................................................................................31
Relationship with Current Business ...................................................................... 32
Implementation of Marketing Strategy .............................................................................32
Mode and Methods for Marketing ........................................................................ 32
Part III: Financial Documents
Summary of Financial needs .............................................................................................33
Applying for Financing and Funding Sources ......................................................33
Need for Extra Capital ..........................................................................................33
Resource Costs Associated/Opportunity Costs .....................................................33
Costs Allocated from Original Business ...............................................................33
Expectations Around ROI .....................................................................................34
Pro Forma Cash Flow Statement (Budget) .......................................................................34
Three-year Income Projection........................................................................................... 35
Projected Balance Sheet .................................................................................................... 35
Break-even Analysis .........................................................................................................35
Difference in Revenue ......................................................................................................36
Profit & Loss Statement ....................................................................................................36
Balance Sheet ....................................................................................................................36
Financial Statement Analysis ............................................................................................36
Business Financial History ...............................................................................................37
Part IV: Innovative Elements and Expected Business Outcomes
Positive Impacts on Population and the Organization ......................................................38
Challenges to be Encountered ........................................................................................... 38
Next Steps .........................................................................................................................39
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PROJECT SUMMARY
Radiation Oncology is a specialized subfield of oncology that treats and provides care to
patients who have been diagnosed with cancer. Radiation Oncologists order dose
prescriptions based on different modalities and fractionation schemes to treat patients
based on published data, results from clinical trials and medical standards of care.
Reimbursement models in the field have traditionally been based on Fee-for-Service
(FFS) payment schemes. This mode of payment has been historically favored by
physicians as this involves minimal risk on their part. However, it has an inherent
weakness for the payors as the payment model does not carry any incentives for the
providers to strategize value over volume or to decrease the number of tests and services
that are ordered to maximize payments.
For the better part of this decade, payors have started slowly transitioning from a volume-
based reimbursement model to more value-based care (VBC). This has been on the
forefront since the Centers for Medicare and Medicaid Services (CMS) in 2014 started
looking at bundled payments within the Alternative Payment Models (APMs) for the
specialty. Commercial insurances were the first to start negotiating and implementing the
bundled payments approach with their clients based on episodes of care. CMS has
delayed its rollout with an expected date of January 2022 for a pre-selected group of
facilities that made the implementation list based on their zip codes.
This business proposal investigates the underlying principle for quality of care as
opposed to the volume of patients treated by using the VBC bundled payment model.
VBC advocates higher quality cost-effective treatments, expedited research on outcomes
from hypofractionated treatments, steerage consideration by payors, internal standardized
processes by providers and pre-determined overall costs for the patients. Several layers of
buy-in from payors, providers, patients, administration, management and the community
are needed for this strategy to be successful.
Organizational, marketing and financial strategies are closely examined to lay the
groundwork on the benefits of the bundled payment model. The organizational plan
discusses the strategy, SWOT analysis and strategic relationships to make a case for the
reimbursement model. The marketing plan looks closely at the areas to market,
stakeholders to approach, potential contracts to manage and exploit some prior
underutilized market. Financial discussion dives deeper into the monetary implications
with the newer reimbursement model in comparison to the current one in place to
demonstrate the positive revenue stream from the bundled payment model.
By having an agreed-upon bundled payment model (whether disease or modality-based)
all three entities - Payors, Providers and Patients can enter the process by accurately
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knowing the costs, quality and services associated with the proposed course of treatment.
Understanding the strengths of the payment model can enhance the organization's
effectiveness and by evaluating the inherent weakness in the institution pertinent to the
model, the organization can also elevate their programs to adapt according to the
stipulations placed by the payments.
Bundled payments can lead to better utilization of resources, enhance quality, efficient
workflows and less ambiguity on payments.
Executive Summary
Company
The organization will be referred to as the Oncology Centers (OC) was founded in 1984
and since then it has been serving over 25,000 cancer patients annually in the Greater
Cincinnati and the Tri-state area. Located ideally at the crossroads of Ohio, Kentucky and
Indiana, the healthcare organization draws patients from all three states in their clinics.
The physician-owned practice has more than fifty providers and close to four hundred
professionals working all over the city. The organization is the only independent cancer
group in the region and also one of the largest ones in the country. It has the distinction of
being the only radiation centers in the city that are accredited. OC has been accredited by
the American College of Radiology (ACR) after a thorough review and inspection
fulfilling the high- quality assurance requirements of the College.
OC treats all types of cancers and complex blood disorders across its nine sites. The
organization specializes in radiation, medical and gynecological oncology. This creates
an inclusive one-stop care for a majority of the patients in their state-of-the-art facilities.
In addition to the clinical services, there is an exceptionally active research department in
the organization. The department manages clinical trials and also facilitates enrolment
through various specialties.
Mission Statement
Lay the foundation for being the patient - preferred provider of cancer and blood disorder
treatments in the nation by:
-Building, measuring and effectively marketing OC’s unique system of patient
care; and
-By creating an environment where people love to come to work each
day allowing us to increase our non-traditional patient referrals and causing all
physicians and staff to see themselves as ambassadors of the OC Care Model.
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Market Opportunity
OC is the only independent oncology group in Cincinnati. This puts OC in an ideal
situation compared to the other three healthcare systems in the city that also house
radiation oncology services. The organization has a joint venture with a JV partner (JVP).
It also has a Managing Contract with a nationwide corporation affiliated with a Fortune
500 company.
The relative independence has been beneficial to the organization and has offered a fair
market share of referrals to the facilities. Programs such CAR T-cell therapy, bone
marrow transplant program and total body irradiation have brought national laurels to the
organization. These services are an essential tool in marketing the programs at OC
Bundled payments under the Alternative Payment Models (APMs) model stress on
quality and efficiency of services. The marketing plan can highlight the fact that three out
of the four radiation sites at OC have new machines that can deliver high dose rate
radiation beams to the patients allowing for fast delivery of treatments. These
hypofractionated treatments (higher dose in fewer fractions) are becoming standard of
care for certain disease sites benefiting APM model.
Cincinnati is a mid-sized American city with many mid-sized businesses. OC can market
a value-based bundled payment model directly to these businesses and establish Direct
Contracting for providing healthcare to their employees. The knowledge on
predetermined costs and the quality of care will be very attractive to these organizations
with 50-300 employees.
Furthermore, the organization can continue to market to referring physicians stressing on
the quality of treatments, efficiency of services and relatively quick initial consultation
appointments that are available to their patients. OC also has regular spots on the local
NPR radio station, a highly visible website and very active social media channels to
further promote the services.
Management & Key Personnel
The Board at OC is the main decision-making body of the organization. It includes seven
representatives of the physician leaders who are also shareholders in the company. The
President of OC is the leader of the organization while the Board is led by the Chair.
Next on the hierarchical chain is the Executive Committee (EC) comprising of twelve
leaders representing the various departments of OC. This committee oversees the
management team that has thirty members representing the next tier of leadership. Each
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clinical site also has practice administrators and leads that are on this tier of the
Management team and act as liaisons between the corporate office and front-line staff.
The EC chaired by the Executive Director has a very broad and encompassing decision-
making authority. The Board trusts the EC to manage the day-to-day activities and to
formulate policies. The representatives on the EC represent the following departments:
Clinical, Clinical Integration, Finance, Human resources, Laboratory, Marketing,
Pharmacy, Quality & Compliance, Radiation Oncology, Research and Operations. It is a
good mix between clinical and administrative staff.
Competitors
In reference to direct competitors, there are three major hospital networks in Cincinnati
that offer radiation oncology. All three are part of hospital systems that makes the cost of
treatment more expensive than treatments at private practices like OC. However, being
part of a healthcare system these sites do have more ancillary services, for instance, in-
house radiology available.
OC has the advantage of having the radiation sites located within two miles off of major
highways allowing patients quick in- and out- access. On the contrary, most of the
competitor's radiation clinics are further inroads leading patients to spend more time in
local traffic.
Negotiating bundled payment rates would be easier for OC than the competitors due to
the organization being smaller and having fewer bureaucratic red tape to navigate around.
In addition, OC also has a good working relationship with the payors and the clinical
integration team has regular monthly update calls with them.
Indirect competition is extended by an academic university located in Columbus. The
oncology services provided at the health-system are world-renowned. However, these
facilities are ninety minutes away from OC and do not provide any direct competition.
Business' Competitive Advantage
OC has an immense advantage over its competitors being the only accredited network of
radiation centers in the city. The seal of approval from the ACR certifies the high quality
of care that is delivered at the organization. This quality of care epitomizes safety,
efficiency and excellence that are hallmarks of the APM bundled payment model.
Advanced clinical trials have been a strong feature of the OC's clinical excellence
platform putting the organization's clinical program at an added advantage as well
creating more options for patient treatments. There have been several cutting-edge trials
that the organization participates in and provides a platform for OC physicians to work on
treatments for tomorrow.
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OC's affiliation with the Managing Partner (MP), a subsidiary of Fortune 500 company
creates name recognition in the field. In assistance with the MP, OC has a very informed
and dedicated clinical integration team. The MP's team is actively involved in
developing, negotiating and implementing APMs across the nation and brings years of
experience as opposed to the experience that is prevalent with the competitors.
Financial Information
The benefits of this business plan are a) there are no upfront capital costs, b) plan is an
extension under the existing infrastructure and c) bundled payment model is less
demanding on the resources. All these results in a more financially viable plan for the
organization.
Negotiations with the payors will be carried by the current staff and there won't be any
upfront costs or initial investments. The Electronic Health Record system is already in
compliance with the CMS interoperability requirements. Marketing promotion and
business discussions will be included with ongoing deliberations. Thus, there is no need
for any additional funds.
The long-term strategy would be to increase the number of members through the bundled
payments that will enroll with the payors and be treated at OC while transitioning
towards hypofractionated treatments. It is anticipated that in the second year of the
program the net revenue will be higher than the current plan. By third year, losses in
revenue will be recovered.
More extensive information is outlined in the financials section of the business plan.
PART I: THE ORGANIZATIONAL PLAN
The organizational plan is a detailed look at the old business and the new business
proposal, SWOT analysis, organizational chart and the relevant timelines with milestones
to achieve the goals listed out in the business plan.
Summary Description of Existing Business
The existing business will be referred to as Oncology Centers (OC) based in Cincinnati,
Ohio.
Brief Description of the company
Founded in 1984, Oncology Centers (OC) has been serving over 25,000 cancer patients
annually in the Greater Cincinnati and the Tri-state area. OC facilities are located ideally
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at the crossroads of Ohio, Kentucky and Indiana. Patients from all three states enroll for
treatments at OC clinics.
The physician-owned practice has more than fifty providers and close to four hundred
professionals working all over the city. The staffing spans clinical and non-clinical
employees that provide all the necessary services to the patients. Most of the staff live in
Greater Cincinnati area with a small number driving in from adjoining cities in the
neighboring states.
The organization is not only the lone independent cancer group in the region but also one
of the largest ones in the country. It has the distinction of being the only radiation cancer
centers in the city accredited by the American College of Radiology (ACR).
OC's research department is well regarded in the field and has been the center of several
cutting- edge and breakthrough trials in the recent past. This has complemented the
centers' bone marrow transplant program, radiopharmaceutical treatments, CAR T-cell
therapy and total body irradiation plans well.
Patients at OC get treated over one of the nine centers that are easily accessible off the
major highways in Cincinnati. Four of the sites have radiation oncology with medical
oncology easily available for the patients. This type of infrastructure creates for one-stop
comprehensive care for patients who are getting both types of treatments.
The pre-COVID model for OC was heavily dependent on on-site employment. During
the peak of the COVID crisis, the organization had encouraged remote work for the non-
essential staff. As the city and the state have passed through the crest of the crisis and the
greater population have started returning to some sort of normalcy, certain departments
like billing and research have many of their staff remain remote. The organization has
been having deliberations on the cost risk analysis for remote versus onsite work.
SWOT analysis of the Existing Business
SWOT analysis is an outstanding tool to understand the current status of the existing
business. The interaction between the different modules of the SWOT tool helps in
identifying strengths (internal) and opportunities (external) while recognizing the
weaknesses (internal) and threats (external).
Strengths
Accreditation: OC has the only radiation oncology centers in Cincinnati that have been
accredited. This has enhanced the perceived quality of care at the clinics and encouraged
OC to continue monitoring its quality metrics.
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Clinical Trials: The research department at the organization is very active and participates
in breakthrough trials. Patients are now able to have the opportunity to be enrolled in
these programs that might not be available anywhere else in the city.
Expense: The costs associated to get treatments at a free-standing non-hospital affiliated
facility are about 30% less expensive than getting treatments at a hospital. OC has the
advantage of having stand-alone radiation facilities that charge non-hospital rates.
Telehealth: OC developed and invested in its telehealth program after the modification in
the reimbursement policy by the insurance companies during the pandemic. This has
further extended their coverage and allowed for easy access to the patients. This is an
essential service even post-pandemic.
Manageable Size: OC is a physician-owned company that employs close to four hundred
employees. It is a relatively smaller size than the competition in the city. The size makes
it easier to manage staff, creating a community feel and also arrive at swift decisions
from both the Board and the Executive team.
Weaknesses
Mission/Vision/Value: This needs to be further developed as they have not been
evaluated in several years. The Executive team would have to initiate this with the Board
to verify the current practicality of the statements, modify if needed and chart out the
way to the future.
Post-COVID Life: Business life at OC is just getting back to normal after the COVID
crisis. Several unknowns are still prevalent including logistics of work, staffing numbers
and consistency in medical supplies that need to be streamlined and navigated.
Collaborative Strategy: OC's priority during the pandemic was to ensure continuity of
care for the patients and stress on the safety of the stakeholders including internal staff.
Collaborative strategies have been taken off the priority list during that duration only to
make a return recently.
Inefficiency in Processes: Inefficiency has been an inherent weakness in the organization
and it is evident from redundancy in the work that is done. This also creates inefficiencies
in downstream processes that create bottlenecks, incomplete tasks and missed deadlines.
Opportunities
Independent System: Being an independent radiation oncology group has several
advantages in building relationships with other practices and healthcare systems. These
can be in the form of collaborations or mergers.
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Managing Partner: Having a management contract with a Managing Partner (MP) enables
OC to refer to a plethora of resources available with this nationwide company. The MP's
parent company is a Fortune 500 company. This relationship can be developed further.
Marketing: OC has a very active marketing team and social media presence. There is an
enormous opportunity to continue building out the marketing portfolio to promote the
organization to external stakeholders.
New Treatment Modalities: OC's research department in cooperation with the MP is
continually working on clinical trials leading to new treatment plans. There are great
prospects for initiating new radiation treatments resulting in better outcomes.
Threats
Competition: The Cincinnati market is a very competitive one with fourteen radiation
cancers centers in the city. This does create a lot of pressure on the market to sustain
quality, elevate the presence and enhance collaborations between entities.
Professional Staff: The COVID crisis has resulted in a shortage of professional staff
available in the job market. This shortage combined with retiring members of the team
has made filling available positions a daunting challenge.
Reimbursement Plans: Hospitals have had different rules for certain aspects of the
reimbursement plans making a distinction between hospital-based and free-standing
radiation clinics. This creates a different set of stakes for OC.
Post-COVID Business Climate: The dust is settling post-COVID and it remains to be
seen how the business climate in the field of radiation oncology is going to transform to
accommodate the changes brought about by the pandemic. Some health centers might
flourish while others might run into financial trouble.
Strengths Weaknesses
Accreditation Clinical trials Expense Telehealth Manageable Size
Mission/Vision/Value Post-COVID Life Collaborative Strategy Inefficiency in Processes
Opportunities Threats
Independent System Managing Partner Marketing New Treatment Modalities
Competition Professional Staff Reimbursement Plans Post-COVID Business Climate
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Strategy
The strategy for the organization is divided into short-term, long-term and combination of
both.
Short-term
OC is focused on a) Partnerships: nurturing the current relationships with the referring
physicians and also developing new ones. This also applies to investigating partnerships
that can be developed to further expand the OC brand. b) Clinical Trials: These are a
huge differentiator for OC as to evaluate and enroll patients that cannot be enrolled
anywhere else in the city. There is also an opportunity in radiation oncology to explore
more hypofractionated treatments that could support Value-Based Care (VBC). c)
Quality of care: ACR accreditation requires the facilities to follow a certain standard of
quality. The centers will continue to surpass these quality standards to continue
maintaining the initiatives to sustain or elevate the standards of care.
Long-term
OC has planning strategies aligned with: a) Opportunities: OC continues to concentrate
on evaluating the current healthcare environment to see if there are any business
opportunities available for growth and further collaboration in the field of oncology. b)
Growth: The organization is always looking at regions of the Greater Cincinnati area to
grow or establish facilities to fill the void in cancer services for the community. c)
Ongoing Contract: OC has a good partnership with the MP. This can be further
developed and explored to gain maximum benefit through a symbiotic relationship for
both parties.
Hybrid (combination of both):
Staffing evaluation is an ongoing assessment that transcends both short- and long-term
strategies. This in combination with ensuring staff is working on top of the licensure is an
ongoing review for the organization.
Strategic Relationships
OC's has a current relationship with Joint Venture Partner (JVP) where the two
collaborate together on oncology services. This partnership has resulted in a good referral
base for the OC clinics and shared staffing in some cases.
Under the management contract with the MP, the partner manages all the business-related
activities of OC. This relationship allows OC to rely on several resources from the MP
and also apply their contract pricing with vendors to get competitive pricing.
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The majority of the equipment and products used in the clinic are manufactured by one
vendor. They are a strategic partner for OC in moving the needle on the future of the field
for the organization and there have been several collaborations on this front in the past.
OC is also exploring partnering with an university to expand their current set of treatment
modalities and also investigate being training centers for future healthcare professionals.
Key Stakeholder & Decision makers
The internal stakeholders incorporating the Board and the Executive Committee (EC) are
the decision makers. The external stakeholders play a role in the short-term and long-term
strategy.
Internal Stakeholders
The Board at OC is the main-decision making body for the organization comprising of
seven members. The President of OC is the leader of the organization. There is a chair of
the Board as well. The Board includes representatives of the physician leaders who are
also shareholders in the company. This is a nominated and elected position.
The EC is next on the hierarchical pyramid. The committee includes twelve members
representing various departments of OC. This group oversees the management team
comprising of thirty members that represent the third tier of leadership and are directly
involved on the site level with the front-line staff.
The Executive Director chairs the EC. The Board has trusted the EC with broad and
sweeping decision-making and implementing powers. The representatives on the EC
represent the following departments: Clinical, Clinical Integration/IT, Finance, Human
resources, Laboratory, Pharmacy, Marketing, Quality & Compliance, Radiation
Oncology. Research and Operations. This representation is a good mix between clinical
and administrative staff.
External Stakeholders
OC has a joint venture with JVP where OC provides oncology services for the healthcare
system. This partnership is beneficial to both parties. The management services that MP
provides to OC are valuable and allows them to collaborate with this nationwide
company with years of experience.
Patients are significant stakeholders to the everyday functioning of the clinics and the
quality of care extended to them is of paramount importance. Referring Physicians are
important external stakeholders that are the main providers of patients to OC. The wider
community in Cincinnati and the surrounding regions are also critical for OC's growth in
the area.
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Summary Description of the New Business
The new business line falls under the existing business and is a modification in the
current reimbursement model.
Brief Description of the New Business
Healthcare costs have been rising at an exorbitant rate. It has been estimated that sixteen
percent of the GDP in America is spent on healthcare. A good portion of this expenditure
is due to extra tests that are ordered due to lack of quality control by the payors and
reimbursements based on the Fee-for-Service (FFS) model leading to a lack of incentives
for providers to control cost.
There has been a transition towards a Value-Based Care (VBC) model. Centers for
Medicare and Medicaid Services (CMS) had started investigating this approach in 2014.
The commercial payors recognized the savings of this quality-based initiative to start
negotiating and implementing the bundled payments based on an episode of care.
The current business proposal is to propose negotiation for VBC bundled payment
models as described in the Alternative Payment Model (APM). OC's reimbursement is
primarily on FFS with some value component to it. The VBC model, if carefully
designed and implemented can work in favor of the providers by them leading the
streamlining of efficiency and the reduction of waste. This model promotes higher quality
cost-effective treatments that can lead to overall savings and lower expenditure of
healthcare
OC can have an added leverage by agreeing to have a bundled payment model. In doing
so, whether it is disease or modality-based, all three entities - Payors, Providers and
Patients can enter the process by accurately knowing the costs and services associated
with the proposed course of treatment. This model will also allude to a self-check
mechanism. Knowledge of the payment model can enhance the strengths of the
organization's effectiveness in certain aspects. On the contrary, OC can evaluate its
weaknesses and adapt according to the stipulations placed by the payment model.
VBC model also assists in elevating the quality of the overall healthcare climate. It can
lead to expedited research on outcomes from hypofractionated treatments and initiation
of internal standardized processes. The quality and cost-effective treatments can lead to
steerage consideration by payors and pre-determined costs for the patients enhance the
transparency associated with the treatments. They can transform many different areas.
Several layers of buy-in from payors, providers, patients, administration, management
and the community are needed for this strategy to be successful.
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SWOT Analysis of the New Business
The SWOT analysis for the new business stresses on the status of the organization based
solely on the business proposal for a cost controlled environment combined with a pre-
determined cost of treatment.
Strengths
1) Regular Interaction: The Clinical Integration team is in monthly one-on-one calls with
the payors. This regular communication has created an ongoing relationship with the
insurance companies and assisted the Clinical Integration team to navigate the insurance
process.
2) The Managing Partner Experience: OC has a very close partnership with the MP. The
partner has had several practices before OC that have gone through negotiations for
bundled payments under the APM. This business relationship will allow OC to rely on
that experience and expertise.
3) Continued Quality Treatments: Being accredited by ACR has led OC to ensure that all
clinical radiation treatments are of high quality and there is a certain level of
standardization across the sites. This is required under the value-based model.
4) The Analytics Team: OC has a very strong analytics team that will provide data as the
team prepares for the bundle payment negotiations. This team will play a crucial role to
present similar data as the organization continues its enrollment in VBC under the APM.
5) Value-Based Care: 60% of OC's patients have Medicare. The organization already has
experience participating in submitting quality metrics for these patients.
Weaknesses
1) Mission/Vision/Values: These founding principles and strategies for the future have
not been reviewed and updated for several years. The Board will need to review them as
there are long-term strategies including bundled payments that are being planned.
2) Internal Preparation: Since there is a strong reliance on support from the MP, the
organization is dependent on the partner on the availability of data and consultation at
each step before moving to the next one. Some of this work needs to be brought in-house
locally for easier access and quicker turnaround.
3) Newer Model: Bundled payments is a newer model that the internal mechanisms at OC
are not currently adequately set up to navigate around. Training needs to be initiated for
the staff to incorporate this new payment model.
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4) EHR system: The EHR is not being used to its full potential to track quality metrics.
This will become more relevant when the organization participates in the VBC as CMS
does require an intensive tracking of several quality metrics.
Opportunities
1) Post-COVID Climate: The healthcare environment after COVID-19 has been opened
to newer ideas. Reluctance like telehealth has become a strength and an opportunity now.
This payment model will fit in with the changes that have been implemented during the
Covid times.
2) Precedence Set: CMS has been proposing this strategy since 2014. Commercial payors
have been working and implementing this proposal for a few years now as well. This is
not a new payment model for the insurance companies with precedence that has been set
before.
3) Further Enhancement of Quality: Registration in this payment model would require
upkeep on quality initiatives and initiation of new ones as well. This will further elevate
the standard of care delivered to the patients.
4) Cutback on Wastage and Costs: The payment model is set up to encourage providers
on decreasing waste. Due to this eternal requirement of efficiency, there will be an
increase in efficiency and cut back on wasted services.
5) Non-site Specific: The current CMS rules favor hospital-based radiation services more
than free-standing ones. The payment model is site-independent thereby leveling the
playing field.
Threats
1) External Competition: There will be a significant increase in the competition in
Cincinnati when a majority of the providers contract through the bundled payment model.
The key would be which organizations can negotiate the best rates based on the optimum
quality they can commit.
2) Payor Customization: Each payor will have their own equation to calculate their
preferred reimbursement payments on the bundled model. Lack of standardization
amongst the payors will be tricky to implement on the organization side.
3) Changing Business Landscape: The business landscape has changed significantly
during and after the COVID pandemic. The population is still recovering in the aftermath
of this crisis. It will be interesting to see how this changing landscape threatens and
changes the current state of available opportunities.
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4) Payor Selection: There needs to be extensive work done on the payor base that might
be appropriate for the OC's first negotiation. This will depend on the results of data
collection by the analytics team. Picking the wrong first payor to commence discussions
might create bad precedence for future negotiations.
Strength Weaknesses
Regular Interaction Managing Partner Experience Continued Quality Treatments Analytics Team Value-Based Care
Mission/Vision/Value Internal Preparation Newer Model EHR System
Opportunities Threats
Post-COVID Climate Precedence Set Further Enhancement of Quality Cutback on Wastage and Costs Non-site Specific
External Competition Payor Customization Changing Business Landscape Payor Selection
Strategy
The strategy will be divided between short-term and long-term strategy to ensure
continuity of the program. The key to both strategies will be continuous monitoring and
ability to modify, if needed. Certain key policies will expand across both short- and long-
term timelines.
Short-term strategy
The short-term strategy will be involved in preparing and evaluating the new business
line. This will involve: a) Taskforce: Forming an Alternative Payment Model Taskforce
(APMT) that would be the primary think-tank group to lead the bundled payment
discussions with the payors. This group will need to have representations from radiation
oncology, finance, revenue cycle, data analytics, clinical integration (IT), marketing,
operations and management. b) Data collection: Gathering, studying and evaluating data
from the Data Analytics team would be an integral part of the short-term planning as
well. c) EHR Interoperability: OC informatics team should evaluate the current EHR
system to establish interoperability satisfying the requirement of the VBC. d) Training:
Staff should know of any change in processes. These should have new policies and
procedures written and the training should be adequately documented. e) Getting buy-in:
This is important from all levels of the organization starting with the physicians.
f) Marketing: The VBC model will also need to be marketed and promoted by the
marketing team to referring physicians and payors.
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Long-term strategy
The long-term strategy will involve expanding on the short-term plan. This will include:
a) Establishing efficiencies: This is paramount in the delivery of treatment through
cutting down costs for the episode of care and eliminating any waste in processes. b)
Staffing evaluation: Increased efficiency would also lead to staffing evaluation and
comparison to national data on staffing for similar-sized practices. c) New treatment
plans: Hypofractionated treatments for some clinical sites like breast, prostate and lung
have started to become standard of care. These treatments have published data and better
outcomes. These treatments might expand to other disease sites based on research and
trials. d) Contract length: OC would prefer to sign a 1-2 year contract with a commercial
payor, evaluate the agreement, understand the metrics and work on fine-tuning the
document for future renewals. e) Start small before expansion: The strategy would be to
start bundled payments model of reimbursement with one commercial payor and then
expand that to other payors and CMS over the next 1-3 years.
Hybrid (combination of both):
Tracking and enhancing quality metrics will be an ongoing strategy to maintain not only
the requirements as determined by the payors but also to continue keeping a high
standard of care as required by the ACR.
Strategic Relationships
Several important relations will be needed to be maintained for the VBC based bundled
payment to be successful. This includes a close relationship with referring physicians
who are the prime source of patients for the organization.
The JVP is an important partnership as three of the four radiation centers are in the joint
venture with the healthcare system. The MP's managing contract is vital to initiate and
expand the VBC bundled payment models due to their extensive experience.
The Vendor's partnership will be important to evaluate and develop OC's existing
equipment and software to optimize the quality and efficiency metrics to their maximum.
OC will need to nurture and develop the relationship with payors. This is already ongoing
with regular communication between the clinical integration team and the insurance
companies.
There is also an extended need to develop strategic relationships with mid-sized local
businesses with 50-300 employees and also with self-insured individuals. This will create
a direct relationship between the organization and the members.
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Key Stakeholder & Decision-makers
For this program to be successful both internal and external stakeholders will have to play
a role and have different levels of buy-in to the program.
Internal Stakeholders
As was the case for the current business, the OC Board is the main decision-making
body. The President is the leader of the organization. The Board has a Chair with
representatives from the physician leader making up the membership.
The Executive Committee (EC) is the decision implementing body overseeing day-to-day
activities and will be intricately involved in liaising with the APMT and the Board on
VBC bundled payments. The EC oversees the Management team that has direct
interaction with frontline staff. The APMT will spearhead negotiations with the Payors
and be responsible for presenting recommendations based on data from the organization.
External Stakeholders
A joint venture with the JV Partner is a vital relationship for OC as this is a good source
of referrals for the organization. The management services that the MP provides to OC
are valuable and allows them to collaborate with this nationwide company.
Patients are the most important entity for the functionality of the clinics and the quality of
care extended to them is of paramount significance. Referring physicians are critical
stakeholders providing patients to be treated at OC. Payors are an equally important
partner in this venture as the reimbursement model will be a joint program between the
payors and the providers.
OC will need to extend out to mid-sized local businesses to sign them up with the
organization through Direct Contracting for the VBC bundled payment. The same will
hold for self-insurers as well. The organization should reach out to the wider Cincinnati
community to establish a repertoire based on the new payment model with the local
population.
Products or Services
The essence of this business proposal is the ultimate product that the patients will be
receiving will be the same. They will be getting radiation treatment for their cancer
diagnosis. However, the differentiating factor would be the cost of treatment. The
payment plan will change from primarily a fee-for-service model to a bundled payment
one.
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This transition would be more transparent pricing for the cost of treatment associated
with the patients leading to a prospective payment model. Services will be extended
through the same state-of-the-art machines that are currently in use. The entire episode of
care will be monitored by quality metrics and subjected to continuous quality
improvement as required by VBC. This is quite prevalent in the organization today due to
the accreditation requirements by ACR.
The standard of care might transition to hypofractionated treatment leading to higher
doses and lower fractionation. However, these will only be initiated for disease sites with
proven clinical data and better outcomes than the traditional fractionation regimens. Due
to quicker completion of treatments with lower fractions, new patients might be able to
start sooner and this would reduce the wait time for patients to commence treatments.
The impact of the bundled payment model will be more far-reaching than the effects on
the immediate reimbursement and payment scheme. The VBC will lead to a decrease in
waste, increase in efficiency, improvement in care, smart utilization management,
compliance in technology and closer tracking of quality metrics.
Administrative Plan
The administrative plan will state the key people involved, the organizational chart for
the implementation, layout the timelines and a roadmap for the administrative side of the
realization of the plan.
Organizational Chart
The chart below details the organizational chart for OC.
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Alternative Payment Model Taskforce (APMT)
As detailed earlier in the report, The AMPT comprising of key members will be the team
leading the effort for background research, data analytics, negotiations, marketing and
final implementation including training.
The members of the task force will need to spearhead: a) understand and study the case-
rates, b) analyze the data based on modality and disease-site, c) financially determine at
what volume and at what rate does a bundled payment break-even, d) list out the value-
based metrics needed for payors, e) determine the interoperability of the EHR system to
track these metrics and f) devise a marketing plan.
The APMT will be the liaison between the OC leadership and the payors. The central role
played by the Executive Committee (EC) will be important as the liaisons between the
APMT and the Board.
Approval Plan
The approval process will incorporate a three-step process:
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Step 1: APMT will make recommendations to the EC on the suggested rates for bundled
payments and also the metrics associated with this payment model.
Step 2: The EC will study the recommendations evaluate the cost-risk analysis from the
business plan submitted by the APMT. If the EC has recommendations and amendments
to the plan they will send it back to the Task force. On the other hand, if they approve the
business plan the recommendations will be sent to the Board for final approval.
Step 3: The Board will receive the approved plan from the EC. If the Board agrees with
the recommendations they will endorse them and they will be ready for implementation
after signing of the contract between OC and the Payors. If the Board would like to make
recommendations on the plan, it will be sent back to EC for modifications and channeled
further down to the APMT for more analysis and evaluation.
Three-Year Operational Plan
The three-year operation plan will be implemented in steps with a constant evaluation of
the results and the processes at every major step. It is important to celebrate milestone
wins to continue the focus on the final goal.
*Please note the following abbreviations: Alternative Payment Model Taskforce (APMT)
and the Executive Committee (EC)
** Legend
Payor#1
Payor#2
Payor#3
2021
2022
2023
2024
1 08/21/21 APMT member selection
2 09/01/21 Initial Discussion between APMT and Payor#1
3 11/01/21 First draft of recommendations to EC (and then to Board)
comprising data analytics and research on case rates complete
First
Milestone
Recommendation Draft with payment rates, break-even analysis and
suggested modality versus disease based bundle payment
4 11/21/21 Approval by the Board and the EC for the APMT to present
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recommendations to Payors
5 12/01/21 Back and forth discussions between APMT and Payor#1
6 02/15/22 Second draft of recommendations submitted - Proposed payment
rates as negotiated between APMT and Payor#1
Second
Milestone
Negotiated rates as recommended by the Task Force based on
discussions with Payor#1
.
7 03/01/22 Approval by the Board and the EC for APMT to present
recommendations to Payor#1
8 03/15/22 Back and forth discussions between APMT and Payor#1
Third
Milestone
Final draft of recommendations that takes into account the last
proposal of the Board and the EC
9 04/01/22 Final recommendations and contract submitted to EC (and the
Board)
10 04/15/22 Board approves the recommendations, EC approves second and
passes the approval to the APMT
11 05/01/22 Contract signed between OC and Payor#1
Fourth
Milestone
Recommendations approved and the contract signed
12 11/01/22 Evaluation of the first 6-months by APMT of the VBC model with
Payor#1
13 11/15/22 Submission of the 6-month evaluation report for Payor#1 by the
APMT to the Board and the EC
Fifth
Milestone
Completion of the first 6-months of the VBC
14 01/01/23 Recommendations by the Board on future strategy on terms and
conditions for VBC contracts with other payors
15 01/15/23 Discussion with Payor#2
16 03/15/23 First draft of recommendations - Data analytics and research on case
rates complete for Payor#2 and submitted to the EC (& the Board)
17 05/01/23 1-year evaluation report on Payor#1 submitted to the Board and the
Executive Committee
Sixth
Milestone
1-year completion with Payor#1
18 04/01/23-
08/15/23
Repeat steps 4-10 for Payor#2
19 09/01/23 Contract signed between OC and Payor#2
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Seventh
Milestone
Completed negotiation with Payor#2
20 09/01/23 -
03/01/24
Repeat Steps 2-10 with Payor#3 and Payor#4
21 03/01/24 Contract signed between OC and Payor#3 & Payor#4
Eighth
Milestone
Completed negotiation with Payor#3 and Payor#4
22 03/01/24 Evaluation of 6-month of contract of the VBC model with Payor#2
23 03/05/24 Evaluation and recommendation report to the Board and the EC on
closing of 2-year contract completion of Payor#1
24 03/15/24 Feedback from the Board on terms to re-negotiate contract with
Payor#1
25 03/21/24 Submission of the 6-month evaluation report for Payor#2 by the
APMT to the Board and the EC
26 04/15/24 Final negotiated report for Payor#1 send to the Board and the
Executive committee
27 05/01/24 Report accepted and contract signed with Payor#1
Ninth
Milestone
6-month evaluation report for Payor#2
Completed re-negotiation with Payor#1
28 09/01/24 1-year evaluation report for Payor#2 submitted to the Board and the
Executive Committee
Tenth
Milestone
1-year completion with Payor#2
Possible Roadblocks
The team can be competent and prepare very well nevertheless, there might be some
unanticipated roadblocks on the completion of the three-year plan. Some of these might
be:
a) Fluctuation in Timeline: The timeline set above is very conservative with ample time
for discussions and negotiations between the APMT and the payor. However, there might
be certain blocks where discussions might take longer extending the timeline.
b) APMT Preparation: The Taskforce will have to be very well versed in bundled
payments before going into these discussions to achieve the goal they have set for
themselves and the organization. Lack of preparation can hinder the progress of the
discussions.
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c) Multiple discussions and negotiations: As the discussion progresses two things will
happen a) APMT will get more adept in these negotiations with payors, and b) There will
be multiple discussions happening at once with multiple payors causing the team to
possibly be overworked and underperformed. There should be constant checks at regular
intervals on the team's status.
d) Interest of the Payors: There are certain commercial payors who are not interested in
the VBC bundled payment model. Some payors might lose interest in the payment
scheme part way through discussions with APMT. This might cause delays in the
progression rate as described in the timeline.
Weaknesses and Threats
Weaknesses and threats, including the ones that have been discussed in the SWOT
analysis and the potential roadblocks to accomplish the timelines, can be overcome by
anticipating these issues and having solutions to alleviate them.
The three major challenges that can be anticipated are:
1) Internal Preparation: Lack of preparation by the APMT can result in delays or a sub-
optimal contracting plan with the payors. The composition of the task force and the
experience between them should be deep enough to have a competent and collaborative
approach towards gaining momentum in discussions.
2) Payors Participation: It is important to pick the right payors for discussions and
negotiations to ensure that the payors are genuinely interested in the VBC bundled
payment model. It will be waste of time and resources if the payors back out mid-way
through discussions due to lack of commitment and interest.
3) Adherence to timeline: The timeline with associated milestones between the payor and
the task force should be agreed upon at the initiation of the discussions. This will hold
both parties accountable for meeting these pre-set deadlines and also celebrate milestones
that are achieved at each of the stages.
4) Comfort with Bundled Payment model: This is very important to get internal buy-in
before any discussions with payors. VBC bundled payment will be a relatively newer
model for OC and it is important that internal stakeholders are committed to this project
to prevent any delays moving into the three-year plan.
Incorporation Strategy
The new business and the old business use the same facility and operate under the same
infrastructure. Since there isn't any capital investment in the project it makes the
implementation plan less complicated.
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However, there are changes whenever a new business model is introduced. The following
three changes will be evident with the new payment model:
a) Treatment Delivery: There has been a transition towards hypofractionated treatments
in the field of radiation oncology. Several body sites including breast, prostate and lung
have incorporated hyprofractionation as a standard of care for certain types of cancer
diagnoses.
b) Payment Models: OC has certain payment models that require value-based quality
reporting. However, the majority of the payment model is still FFS. The bundled model
would require training for staff putting in charges, knowledge and understanding from the
revenue cycle team and variation in notes dictated by the physician highlighting quality
metrics.
c) Tracking Quality Metrics: This is currently being done at OC due to the accreditation
by ACR and also due to the Medicare reimbursement models. However, this will have to
be done in greater detail, depth and numbers with more enrolments of patients in the
VBC bundled payments.
Overall, OC has already started going down this path by initiating quality metrics and
hypofractionated treatments for some patients.
Regulatory and/or Accreditation Bodies
There are no accreditation bodies that monitor bundle payments under VBC. However,
the commercial payors and CMS will track quality metrics and ensure compliance with
the requirements under the VBC payment mode.
ACR will continue to survey and verify that the radiation centers are following the
quality assurance procedures as required by the College. Ohio is an agreement state and
the Department of Health will maintain their onsite inspections to ensure agreement with
state regulations.
Exit Strategy
At the start of any contract it is important to have a short-termed contract to allow for any
modifications, editions or updates to the contract. This will allow for the experience to be
gained in that period. 1-2 years initial contract with the payor is likely to be an optimum
time for OC to study and understand if the contract is working well and if any changes
are needed.
A shorter-termed contract also gives the organization an exit strategy or an out-clause in
case the payment model is not working out and a complete redesign in the strategy is
needed.
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PART II: THE MARKETING PLAN
The overall marketing plan will be based on ensuring the 4 P's of marketing, namely
products, price, promotion and place, are fulfilled to allow for maximum marketability
with the best results.
Goals of the Marketing Strategy
The marketing strategy revolves around ensuring that the OC product is well-publicized,
recognized and understood amongst the major stakeholders - both internal and external.
The 4 Ps of marketing are critical in laying the foundation for a strong promotional
strategy for the VBC bundled payment model.
OC has a dynamic marketing department that has a robust team in a constant promotional
mode of OC products. The 4Ps of marketing are applicable in the current business
proposal as follows:
Products
Reimbursement models based on VBC bundled payments under the APM is the product
that is being advertised for the current business model. This value-based model leads to
treatment based on the latest clinical trials and standards of care. It also stresses more on
efficiency and coordination of resources for cost-effective treatment.
The marketing plan will highlight the fact that the efficiency in treatment can be
administered through the new state-of-the-art machines that are available at OC sites.
These machines can deliver high dose rate beams to patients for faster delivery of
treatment. The hypofractionated treatments are quickly becoming the standard of care for
certain disease sites.
Hypofractionated treatments - higher dose, lower fractionation - also open up valuable
treatment slots on the machine allowing for a quicker turnaround for on-treatment
patients and a faster start time for new patients. This is an enormous advantage of the
product that can be further marketed by the team.
Price
Bundled payment leads to a transparent payment scheme for patients. It also lowers the
cost, increases efficiency in patient treatment and experience and also uses a conservative
utilization of resources. The payment model, furthermore, stresses tracking quality
metrics.
The marketing team plans to highlight this fact to the referring physicians and also take
the opportunity to approach mid-sized businesses that might find this payment model
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attractive for their employees. Individuals or groups under the self-insured model will
also prefer the transparency associated with this payment model.
Being the only independent oncology group in Cincinnati, puts OC in an ideal situation
compared to the other three healthcare systems that are in competition with the
organization. The relative independence has been beneficial to the business and has
offered a fair market share of referrals to the facilities. Programs such CAR T-cell
therapy, bone marrow transplant program and total body irradiation have brought national
laurels to the organization. These services are an essential tool in marketing the programs
at OC.
Promotion
This is one of the most critical aspects of the marketing strategy. A product that is not
promoted stays an unknown entity. The promotion of bundled payments can highlight the
concept behind the model, the added benefits for patients and employers, the quality
metrics attached to the program and the transparency combined with the efficiency
associated with the strategy.
The most effective strategy for this product would be through one-on-one promotion to
referring physicians. They can discuss this with their patients and express the benefits
associated with this payment model and the effectiveness of treatments connected with
the VBC bundled payment at OC. The marketing team should also approach mid-sized
businesses for Direct Contracting along with those who are self-insured. Transparency in
payment at the beginning of the course of treatment is a calming feeling for patients.
OC's marketing department also has a very active social media presence. This can be
advertised through various outlets and also promoted on the organization's regular
promotional spots on NPR segments on the radio. This can be a strategy to be discussed
at various health expos that OC is represented as well.
Place
Location is one of the most important factors in promoting any item. Bundled payments
reimbursement model leads to treatments that not only lead to the transparency of
payments but also to further adeptness in asset management, efficient utilization of
services and less wasted resources for medical care.
The marketing team can have a hybrid approach in promoting this product stressing more
on the personalized reach. The team can have discussions with referring physicians in
their offices, mid-sized area businesses and with those who are self-insured. The team
can also highlight the benefits of the payment model to current patients as they can
spread this through word-of-mouth.
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The team can also engage JV partner who is the biggest referral base for OC and
advertise to them on the benefits associated with these bundled payments in radiation
oncology.
Following the strategy outlined above of following the 4Ps of marketing, OC will
establish product, service and brand recognition leading to more visibility for the new
payment model. It will be a trifecta of wins for payors, providers and patients. For
payors: it will be a set payment based on treatment/modality, providers: quality-based
bonuses and less hassle with insurers and patients: set price at the start of treatment and
no surprise expenses.
Market Analysis
This is critical to understand what the market wants and how to extend the product and
services they require. It is also important to be careful in utilizing resources to get the
maximum exposure for a given expense.
Target Market and Audience
The primary advantage of VBC bundled payments is that they are an intricate balance
between cost and quality. Costs are saved on the patient's end and providers are paid
based on the quality metrics. Hence, there is the incentive for the quality of care not to be
jeopardized by lower costs.
The major target markets to promote and advertise this payment model will be the
following:
a) Referring Physicians: They will need to know the benefits of the payment models and
also appreciate that due to hypofractionation some of their patients most likely will be
seen earlier by the radiation oncologist and start their treatments sooner than previous
encounters.
b) Mid-sized businesses: Businesses with 50-300 employees would be an ideal market for
OC to immerse in Direct Contracting. The bundled payments would be a preferred
method of coverage for these businesses that do not have high employee numbers but still
enough staff to manage the health plans.
c) Self-Insured: Individuals and businesses who are self-insured would be interested in
transparency of payments and exclude any surprises in treatment costs that are essential
parameters for the bundled payments. This entity can be a focused group for the
marketing team.
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d) Joint Venture: JV partner can align with OC on some of these promotional activities as
well since three out of four radiation oncology departments are part of the joint venture.
This joint venture relationship also brings in a lot of referrals to the organization.
e) Current Patients: The best advertising tool handy for any healthcare organization is
their current patients. The ones who have gone through treatments under the bundled
payment model can attest to the benefits associated with them and spread it through
word-of-mouth.
Competition
The main competitions in town are all part of major healthcare systems. In regards to
CMS, all of the radiation oncology centers are on the same playing field with none of the
zip codes under the CMS' Core-Based Statistical Areas (CBSA). There has not been a lot
of movement on the commercial payor side as well for value-based bundled payment
under the APM model.
The strength of the competition in this regard is the larger financial and managed care
teams available in these healthcare systems. The university hospitals have a strong
academic slant and the other two healthcare systems are part of a vast network of multi-
specialty facilities. These hospitals have constant interaction with payors.
The weaknesses mirror the strengths in that the large size creates priority issues and
dilutes the resources that are diverted towards radiation oncology which in most hospital
systems is not a prime service. Constant interaction with payors is spread over multiple
specialties and lacks the focused approach that comes with a smaller entity.
Market Trends
There is a reason that the United States is the global leader in the per capital expenditure
of $10,000 spent on health care. The trend of higher utilization of resources due to the
prevalent FFS payment model provides no incentives to curb costs rather reward
financially for more tests and services.
Payors have started transitioning to VBC highlighting payments on metrics and bundled
payments leaving the decision and mechanism to cut costs as a responsibility of the
providers. The value-based quality metrics are a check mechanism to ensure that the
providers are not under-managing the patients' care to protect their own payments.
CMS recognized this in 2014 when they started publishing reports on bundled payments
under APMs. In the clinics, there is a push towards hypofractionated treatments for
certain disease sites that have better clinical outcomes than traditional longer
fractionation schemes. The hypofractionated trends for OC are shown below over the last
three years.
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Year Patients
2018 94
2019 114
2020 135
As it can be seen from the table and the graph above that the number of patients is
increasing that are getting hypofractionated treatments. These treatment fractionations are
based on published clinical outcomes.
The bundled payments are beneficial to payors, providers and patients creating a trifecta
of wins for the three entities. Knowing the cost of treatments in advance gives more
psychological freedom for everyone involved.
Market Research
Methods
Surveys are an effective means to gauge the needs and wants of the market. These
surveys can take a plethora of different forms to extend to key players in the market.
It is imperative to first identify the group or entity that will be surveyed. The treatment-
related survey for the bundled payments will be extended to current and previous
patients. They will also be sent to future potential patients to gauge their interest in this
payment model. They can be done through paper, digital portals or a combination of the
two.
0
20
40
60
80
100
120
140
160
2018 2019 2020
OC Hypofractionated Treatments
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The surveys will be extended to the other external stakeholders, namely, the referring
physicians and mid-sized businesses to see if this payment model will be of interest to
them.
Gathering industry data and comparing them to OC data will be another effective way to
distinguish how the organization is performing compared to the competition in the city,
the state and nation-wide similar-sized facilities.. This data could be on the percentage of
hypofractionated treatments, percentage distribution of different payors and possibly
distribution of different disease sites.
Data Analysis
The data analysis on the surveys and the data gathered will be done in-house through the
Data Analytics team. The project will be spearheaded by the APMT.
This information will serve two purposes - a) It will create a foundation for OC on the
expectations of relevant stakeholders for marketing and promoting the bundled payments
product. b) It will also be useful information for the Board and the EC to gauge the short
and long-term goals of this project as this progresses through the different stages.
The report from the various data analysis will assist in securing a manageable expectation
level and refrain the organization from setting unreachable goals.
Marketing Strategy
The amount of money spend should equate with the expected Return on Investment
(ROI). The business decision should be based on both short-term and long-term returns.
Description
There are three main ways of promoting the bundled payments :
a) Meetings: This is with referring physicians, joint venture partners and new businesses.
There is minimal expenditure on this marketing strategy as these are part of regular
meetings that are coordinated by the physician liaison on a cyclical schedule. Meetings
with new businesses will be an addition. However, after establishing relationships this
will become a regular meeting as part of the liaison team's cycle.
b) Social media presence: There are no costs added to the marketing plan incorporating
any updates on the social media as OC has a marketing team that regularly updates on
various platforms. There will be no added cost associated with advertisements on the
radio as well since OC already has a paid slot for its current promotion.
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c) Educational Materials: VBC education will be added to the marketing brochures that
are regularly updated and produced for the promotion of services offered by the
organization. There will not be any added costs to this venture.
All the different marketing tactics used will incorporate existing platforms and will be an
add-on to the current marketing relationships. These strategies are already in place and
fully functional and do not require any added investments. ROI is not a concern since
there is no initial investment in this business proposal.
Relationship with the Current Business
The new business model for bundled payment will exist under the existing business. The
latest business strategy will complement OC's current business model and also enhance
relationships with external stakeholders. The key is gaining new partners by advertising
the benefits associated with the VBC bundled payment models.
OC will continue to treat cancer patients. The organization already participates in some
VBC and tracks quality metrics. The primary difference would be an increased number of
patients enrolled in VBC and the commencement of bundled payments.
Implementation of Marketing Strategy
A savvy marketing department always looks at the best value to spend the money
allocated to their department. It is vital for OC's marketing team to find the best ROI for
their strategy to promote bundled payments.
Modes and Methods for Marketing
This strategy can be divided into various steps to accomplish two tasks: a) inexpensive or
already implemented (free) resources are utilized and b) ROI on any expenses, if
applicable, is calculated. The underlying criteria for both of these tasks are to appreciate
that the resources used will further the marketing of the bundled payment model.
The following choreographed series of steps will ensure that the marketing team applies
their strategy in the best possible way:
Step 1 Marketing team can reach out to referring physicians who are one of the
biggest sources of referrals and discuss the VBC bundled payments
Step 2 Promotion on OC's website and social media can continue as this does not
cost OC any additional funds
Step 3 Marketing team will reach out to mid-sized business and self-insurers to
discuss the payment model and how this payment scheme is advantageous
Step 4 The team will have strategic discussion with JVP on the payment model
Step 5 The team will introduce the benefits of the VBC scheme in the regular OC
advertisement segment on NPR
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This strategic step-by-step process will ensure maximum exposure at the next step and
also set OC for greatest success.
PART III: FINANCIAL DOCUMENTS
This section discusses the financial aspects with the new business proposal. The results
from the financial documents will allude towards a viable financial business.
Summary of Financial Needs
This section relates to costs, risks and analysis on starting up the new business
opportunity under the existing business.
Applying for Financing and Funding Sources
The new business proposal of marketing and negotiating VBC bundled payments under
APMs is not using or requires building any new entities. It is using all of the following
existing ones, namely, a) infrastructure, b) team members who are on staff, c) liaison
meetings with external stakeholders, d) scheduled meetings between payors and clinical
integration team, e) ongoing existing marketing plans and f) EHR compliant with
interoperability requirements.
Hence, there is no necessity to apply for additional financial needs to start this new
business initiative as only the existing programs and entities in place are being used.
Need for Extra Capital
Since all the existing facilities, entities, team members and resources are being used,
there is no need for any extra capital to initiate this business proposal.
Resources Costs Associated/Opportunity Costs
Resources that are needed for initiating bundled payments include cancer center
infrastructure, treatment technology, oncology clinical team members, non-clinical staff,
IT personnel, management/administrative team, marketing and promotion team,
partnerships and VBC experienced staff. All of these are already pre-existing in the
current business and there will be no additional costs to acquire them.
Costs allocated from Original Business
In essence, there aren't any costs that are being allocated away from the original business.
All the resources and entities that are being used from the original business will continue
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to operate in that realm as well. The new business model of VBC bundled payments will
operate as a payment model under the original business setting.
Expectations around ROI
Since there aren't any funds being secured through loans, no new capital is required.
There aren't any costs associated with using resources or overheads allocated from the
original business. There is no ROI calculations required if initial capital or physical assets
are taken into account. The investments being made are entities or staff that already exist
in the realm being proposed and they are available either due to the existing
infrastructure, their job description or unused but available resources to initiate on this
project.
However, the ROI can also be looked from the loss of income between the old business
and new business. In this case, as per the Difference in Revenue sheet, there is a
$671,207 loss in Year 1, $544,566 and $910,325 gains in Years 2 and 3 respectively. It
will take Year 3 to recover the lost in revenue. In Year 2 there will be a overall loss of
$126,641 from the initial Year 1 loss of $671,207. Year 3 will result a gain in revenue of
$783,684 making up for the initial loss.
Pro Forma Cash Flow Statement
This is not required as the Three Year Income Projection indicates on the net income that
is projected for the first three years of this bundled payment model. The Cash Flow
Statement with the Operating, Investing and Financing cash flow will not provide any
substantial information that has already not been discussed under the Income Projection
and the Break-even Analysis.
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Three Year Income Projection
Year 1 Year 2 Year 3
Revenue $81,965,101 $84,007,237 $85,207,621
Any other Revenue $1,825,056 $1,843,306 $1,861,739
Total Gross
Revenue
$83,790,157 $85,850,543 $87,069,360
Total Contractual
Expense (Contractual
adjustments, Bad
Debts & Denials)
$61,999,236 $62,619,228 $63,245,420
Net Revenue $21,790,921 $23,231,315 $23,823,940
Expenses
Facility $1,472,397 $1,516,559 $1,562,056
Licensing Fee $8,408,940 $8,661,208 $8,921,044
Personnel Expense $3,334,357 $3,274,387 $3,292,619
General Admin $786,348 $809,938 $834,236
Total Expenses $14,002,042 $14,262,092 $14,609,955
Net Income (Loss) $7,788,879 $8,969,223 $9,213,985
Projected Balance Sheet
This is not relevant for the current business proposals as the assets do not change, offices
are not closed and the earnings have been addressed with the three year income
projection sheet.
Breakeven Analysis
Year 1 Year 2 Year 3
Net Revenue $21,790,921 $23,231,315 $23,823,940
Total Liabilities
and Expenses
$14,002,042 $14,262,092 $14,609,955
Break Even $7,788,879 $8,969,223 $9,213,985
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Difference in Revenue
Year 1 Year 2 Year 3
New Business Net
Revenue
$21,790,921 $23,231,315 $23,823,940
*Old Business Net
Revenue
$22,462,128 $22,686,749 $22,913,615
Difference ($671,207) $544,566 $910,325
Break-Even ($671,207) ($126,641) $783,684
*Based on 1% increase every year
Profit & Loss Statement
This is not required as the three Income Projection along with the Break-even analysis
gives a comprehensive look at the Profit & Loss outlook for the proposed business
proposal.
Balance Sheet
This is not required as the Three Year Income Projection indicates on the net income that
is projected for the first three years of this bundled payment model. Assets do not change
during this time duration as well.
Financial Statement Analysis
The principal benefit from the business proposal for VBC bundled payment model under
APMs is that there isn't any upfront capital or investment that is required for this proposal
to move forward. All the existing organizational, marketing and operational resources in
place will be used for the start-up and continuation of the bundle program.
It has been calculated on the Three Year Income Projection brings in the following Net
Income of Year 1: $7,788,879, Year 2: $8,969,223 and Year 3: $9,213,985. The bundled
payments are getting a profit for the organization.
This revenue associated with the net income is based on three projections:
a) Increase in Patient Load: It has been projected that there will be a10% increase in the
patient load in Year 2 and 5% increase in Year 3. This is based on the marketing strategy,
the benefits associated with bundled payments and the corporate push towards Direct
Contracting.
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b) Consolidation of Staff: Due to an industry push towards hyprofractionated treatments
for several disease sites, there is potential for a larger number of patients but fewer
fractionations. This delivery scheme will make it more viable to consolidate staff across
sites and treat all patients in either the morning or the afternoon shifts thereby moving
staff between locations. This will make it easier for cross-coverage across the
organization.
c) Price Drop: A 10% drop in price has been accounted for in bundled payments. This is
due to the fact that payors will not negotiate at the same price point for a bundled
package. The increase in patient load and consolidation in staff brings in the positive net
income.
The projected business plan shows that the proposal as calculated will surpass the
breakeven point in the first year. The Net Income will rise in subsequent years.
It has also been noted in comparison between the New and the Old (current) business
model, the new model will produce a loss of $671,207 in Year 1. However, in the
subsequent two years, the new model will bring in projected gains of $544,566 and
$910,325.
The loss in revenue between the New and the Old business in Year 1 will be recovered by
Year 3 with an in increase in revenue of $783,684.
Overall, the business model as projected is a profitable one compared to the current
model.
Business Financial History
The business financial history is not needed for this business proposal as it will not
provide any valuable information substantiating the financial data already presented in
the proposal.
Part IV INNOVATIVE ELEMENT AND EXPECTED BUSINESS
OUTCOMES
The Projected outcome based on all three sections - organizational, marketing and
financial are very positive. Bundled payments are a fair balance between cost and quality
for the field of radiation oncology.
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Positive Impact on Population and the Organization
The expected outcome and proposed result from the new business venture of VBC
bundled payments look very positive. The field of healthcare, in particular, a specialty
like radiation oncology is looking at cutting costs of treatment while not sacrificing the
value provided to the patients. CMS and commercial payors have been attempting to
transition in this direction for almost a decade now.
VBC bundled payments under APMs strike an intricate balance between cost and quality
parameters that has been a difficulty in the past where other treatment payment models
have not performed as well. FFS on one extreme of high cost and high utilization of
resources with capitation on the other end with low cost and low utilization of the same
services. There are quality cuts on every one of those payment models.
However, incorporating quality metrics and tracking these for value-based care ensures
that the patient is given excellent care but also puts the ownership on the providers to
manage the treatment plan. This results in the balance of the two objectives leading to
efficient utilization management but a higher quality of care.
This payment model benefits all three entities - payors, providers and patients in relevant
but different contexts. However, all lead to the same lower costs for higher quality
treatments resulting in a trifecta of wins for the three entities.
Payors benefit from this model as the providers already have a set amount of payment
predetermined based on each disease site. This removes the uncertainty of
preauthorization, denial administration and claims management. Administering these
steps of the revenue cycle takes significant staff time and by eliminating this insurers can
invest in other strategic operations.
OC as providers will benefit significantly on several fronts from the implementation of
the bundled payment model. There will be better efficiency in the supervision of care,
improved utilization management of resources and smoother standardized workflow.
Invested time to get preauthorization will be eliminated as well. Furthermore, due to a set
payment based on value metrics stress on quality will be paramount while curbing costs.
Patients would welcome transparency in costs before starting their treatments. This will
eliminate the ambiguity in costs associated with the clinical care and alleviate the
hesitancy on additional tests that are a result of the continuing episode of care.
Challenges to be Encountered
There are a few challenges that can be foreseen during the implementation of the VBC
bundled payment model as discussed below:
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a) Negotiating the contract: This will be one of the more difficult items during the
negotiation process to ensure that both the payor and provider are satisfied with the
amount discussed for bundled payments for each of the disease sites.
b) Provider satisfaction: Being a relatively newer payment model the providers will have
to be satisfied with the construct of the reimbursement scheme and the value metrics
needed to be tracked as part of the reimbursement strategy.
c) Value-based tracking: This will be a two-step challenge where the staff will first be
trained to track the metrics that are being used for VBC as per the payors' requirements.
The second step to this would be constant monitoring of these metrics to ensure that the
quality of care does not diminish while the metrics requested are being tracked for
payment.
d) Marketing the product: Having a product that is of elevated quality and in high
demand is only half the challenge. The other half is to ensure that this product is well
marketed so that the local community and the population recognize the value of the
product.
e) Building the business: Engaging the local businesses and self-insurers as discussed
under the Marketing Plan will be vital to ensuring that the VBC bundled payment model
is advertised explicitly and relationships are built to promote the product.
Next Steps
The next steps would be as outlined in the organizational timeline in the business
proposal. This will start with the forming of the VBC task force (APMT) to initiate
meetings and propose the different payment models and rates.
The timeline specifies the various steps involved in the stages of this project along with
major milestones. It will be a thorough, comprehensive and inclusive process requiring
completion of each task before moving to the next one.
Monitoring the VBC bundled payment model even after complete implementation will be
critical to ensure that the value-based model balances cost and quality, meets the needs of
the time and is flexible enough to be transformed as the discussions between payors and
providers evolve.