Integrated Governance & Management:

A Leadership Challenge!

Presented by:

Marc D. Halley, MBAChairman and CEO

The Halley Consulting Group, Inc.

Percival Kane, MHASVP & Network AdministratorNorth Oaks Physician Group

Healthcare Financial Management Association

Region 5

February 20, 2015

Discussion Topics

I. Our Business Imperatives

II. The Physician Integration Continuum

III. The Critical Role of Governance

IV. Management Styles and Power Bases

V. Vertical Governance: The Council Model

VI. Horizontal Governance

VII. Q&A

2

Our Business Imperatives

Strategic Imperatives – Organizations

Must Do These Things

Attract Market Share

Demonstrate Quality

Have Access to Capital

Be Productive

4

The Concept of “Value”

5

Clinical

Process

Clinical

Outcome

Patient

ExperienceEffective

Cost

Per

Unit

Utilization Efficient

The Physician Integration Continuum

Common Integration Options

(Multiple “Plugs”)In

tegra

tion

Sustainability/ Infrastructure

Medical Staff

PHO/IPA

Medical Directorships/

Co-management

Joint Venture

Independent Contractor/ PSA/SBS

Employee

H

HLHalley, Marc D. 2011. Owning Medical

Practices: Best Practices for Sustainable

Results. Chicago, IL: AHA Press. 67. 7

Physician Integration Economics –

Fee for Service

8

Capture &Retain

Market Share

Hospital Capital

Generator

Capital Preservation &

Investment

Market Manager

Potential

Capital Loss

Potential

Capital Drain

Potential

Capital Drain

Referral Path

8

© 2008 The Halley Consulting Group, LLC

Halley, Marc D. 2011. Owning

Medical Practices: Best Practices for

Sustainable Results. Chicago, IL:

AHA Press. 10.

Physician Integration Economics –

Risk Payment Model

Panel Size Access

Time & Materials

Hospital Risk Pool

Capital Potential

Capital Preservation &

Investment

Market Manager

Potential

Capital Loss

Potential

Capital Drain

Potential

Capital Drain

Referral Path

9

© 2008 The Halley Consulting Group, LLC

Halley, Marc D. 2011. Owning

Medical Practices: Best Practices for

Sustainable Results. Chicago, IL:

AHA Press. 10.

Moving Up the Integration Pyramid

PHM

Clinical Integration

Functional Integration

Structural Integration

• Population-centered care

• Personal accountability for healthy

behaviors and lifestyle

• Population health management

• Chronic disease prevention &

management

• Access and information = value

• Risk-based payment

• Choreographed care (Accountability)

• Improving process and outcomes

• Clinical quality commitments

• Transparent flow of clinical

information across care continuum

• Managing an episode of care or

chronic disease using clinical metrics

• Individual and joint accountability to

live by established metrics

• Collaborative care (Trust)

• PCMH & “Choice” Initiatives

• Vital behaviors

(“We”/“Our”)

• Service quality extension of

referring provider’s office

• Information lubricates the

Referral Path

• Referral management

• Coordinated care (Silos)

• Basic form of integration

• Legal

structure/Organization

chart

• Payroll silos (“Me”/“You”)

• Referral leakage

10

© 2013 The Halley Consulting Group, Inc.

The Critical Role of Governance

Fiduciary and Operational

Governance

• Select and evaluate

the chief executive

• Enterprise vision &

strategies

• Capital formation and

allocation

• Mergers & acquisitions

• Regulatory compliance

• Enterprise financial &

quality oversight

• Enterprise policy

• Etc.

• Sponsor, direct &

oversee

implementation

• Operating policies,

procedures

• Performance

improvement tactics

and timing

• Key stakeholder

engagement

• Performance

accountability12

Vertical Governance

(Formal Authority or Authorization)

13

Owners

Or

Fiduciaries

Employees

Management

Horizontal Governance

(Common Consent)

Patients*

Primary Care Physicians

and Providers

Specialty Physicians

and Providers

Ancillary Services

Departments

Hospital-Based

Providers

Acute Care Facilities

and Services

Post Acute Facilities

and ServicesPayers*

(* Potential future members)

Service Line Council (SLC)

Clinical Process Teams (CPT)

(Functional Integration)

(Clinical Integration)

14© 2014 The Halley Consulting Group, Inc.

Management Styles and Power Bases

“Knowledge Workers…”

• Own the means of production – unique knowledge and practiced skill

• Highly mobile

• Independent judgment (“professional”)

• Need tools of production – capital investment

• Exceptional clinical opportunities = loyalty

• Compensation “hygiene” factor

• Define their own level of contribution

• “Cannot be supervised effectively”Adapted from: Drucker, P. 1998. Peter

Drucker on the Profession of Management.

Boston: Harvard Business School

Publishing. 122-124.16

17

Power Bases

• Legal Power: official authority &

position

• Expert Power: knowledge, ability,

information

• Reverent Power: respect, personality,

charisma

• Reward Power: ability to give or

withhold incentives, capital, etc.

• Punitive Power: impose penalties

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Gilson Leadership ScaleWays Leaders Make Decisions

• Tell: Identify the problem, discern the

alternatives and make the decision

• Persuade: Add “sell” to above

• Discuss: Identify the problem, discern the

alternatives, propose a tentative solution,

gather input from those who will need to

implement the solution, make the final

decision

• Consult: Present the problem and background

to the group, solicit alternative ideas and

solutions from the group, leader makes the

final decision

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Gilson Leadership Scale (Continued)

Ways Leaders Make Decisions

• Join: Manager participates as a member of

the group in identifying the problem and

alternatives, while agreeing, in advance, to

carry out the decision of the group

20

Matching Leadership Styles and Power

Bases

• Tell Legal, Expert, Punitive

• Persuade Reverent, Reward

• Discuss Reverent, Reward

• Consult Expert, Reverent

• Join Expert, Reverent

The Council Model: “Partnership” Led

Network Operations Council (NOC)• Composition

– Physician Chair

– Physician representation from Primary Care Clinics,

Medical Specialty Clinics, Surgical Specialty Clinics &

Hospital-based Services

– Executive Team representation: Executive VP/COO,

SVP/Chief Legal Officer, SVP/CFO, SVP/CMO &

SVP/Network Executive

• Purpose

– Provide governance for overall physician network

– Determine the strategic direction of the physician

network

– Make clinical/quality, operational, financial, strategic &

policy decisions globally for the physician network

• Value

– Decision-making forum for the entire physician network

that inherently has credibility & buy-in from other

network providers

• Tools

– Agenda comprised of standing reports from subcommittee

chairs & SVP/Network Executive, a review of monthly

financial performance & new business.

– Supporting information: dashboards, Net 1, Net 2

Financials, action plans, policies, etc.

22

Network

Operations

Council

Practice

Operations

Council

Practice Operations Council (POC)• Composition

– Physicians within the practice

– Mid-level providers within the practice

– Practice Leadership Team: Practice Manager, Supervisor,

Regional Director & SVP/Network Executive

• Purpose

– Provide governance for the practice

– Determine the strategic direction of the practice

– Determine how to adopt & execute NOC-approved

directives

– Make clinical/quality, operational, financial & strategic

decisions for the practice

• Value

– Provider engagement with decision-making for the

operations of the practice

– Provider awareness: operations, policies, performance,

initiatives, challenges, etc.

– Accountability

• Tools

– Site-Specific Action Plans

– Net 1, Net 2 Financials

– Supporting materials: dashboards, policies, presentations,

etc.23

Network

Operations

Council

Practice

Operations

Council

Network Operations Council

Subcommittees

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•PURPOSE: Focuses on establishing & enforcing the expectations of being an employed provider within the physician network

•PURPOSE: Focuses on evaluating & improving the financial performance of the overall physician network

•PURPOSE: Focuses on enhancing our EMR system & its associated workflows & leveraging technology to provide optimal care

•PURPOSE: Focuses on achieving clinical compliance, ensuring quality & evaluating new clinical services

CLINICAL QUALITY & INNOVATION

SUBCOMMITTEE

AMBULATORY PHYSICIAN

INFORMATICS SUBCOMMITTEE

PERSONNEL RELATIONS

SUBCOMMITTEE

FINANCE SUBCOMMITTEE

The Extension of the Physician Governance

Model into General Operations

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Clinical Shared Governance Team

Employee Engagement Council

Managed Care Contracts Committee

North Oaks

Physician Group

Governance Structure

Horizontal Governance

The Limits of “Pay for Performance”

• Mind or heart?

• When you pay for everything you get,

you get only what you pay for…

• From incentive to entitlement

• Upping the ante…

• Stifles innovation

27

Horizontal Integration

• A common interest

– Chronic disease

– Episode of care

– Referrals

• Clear and compelling vision

– Common cause is the glue

– “An offer too good to refuse”

– Overcomes tactical disagreement

28

Horizontal Integration

• Shared tenets (ground rules)

– Clinical quality

– Service quality

– Productivity

– Collaboration

– Cost per unit

– Process efficiency

– Utilization

– Financial viability29

Horizontal Integration

• Working together

– Individual roles

– Shared commitments*

– Performance targets

– Performance management

– Individual accountability

– Joint accountability

– Appropriate incentives/rewards

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Shared Commitments…

• N,W,P’s

– Needs (clinical)

– Wants (preferences)

– Priorities (constraints)

• Written Service Commitments

– Extension of PCP

– Referring physicians/providers/staff

– “Their” patients

31

Shared Commitments…

• Clinical integration

– Chronic

– Complex Chronic

– Episode of Care

• Clinical protocols/processes

– Clinical Management Teams

– Care Management Teams

– Standards of care

– Best practices

32

Shared Commitments…

– “Certification”

• Clinical outcomes

– Effectiveness

– Efficiency

• Critical nature of self-reporting

33

Questions and Answers…

34