1. Originally presented March 2012

2. AGENDA Speaker Background Relevant Legislation New Buyers Solution Selling Executive Sales Applying Solution Selling to Hospice Organizational Implications 3. SPEAKER BACKGROUND Over 20 years in home care 35 years of experience in planning and marketing MBA from the Sloan School of Massachusetts Instituteof Technology President, Healthcare Market Resources, a marketintelligence providing customized market research tohome health agencies and hospices, includingMD/facility referral trends 4. PATIENT PROTECTION & AFFORDABLE CARE ACT Medicare Re-admission Penalties Three DRG sets subject to potential penalties in FY2013, basedon FY2012 results Acute Myocardial Infarction(AMI) Pneumonia Chronic Heart Failure Additional DRG sets in 2015 Chronic Obstructive Pulmonary Disease(COPD) Coronary Artery Bypass Graft(CABG) Percutaneous coronary intervention(PTCA) Vascular Procedures Hospitals judged by all hospital re-admissions in thirty(30)day period following discharge, regardless of hospital 5. PATIENT PROTECTION &AFFORDABLE CARE ACT Medicare Re-admission Penalties Worst-case Scenario 1% of ALL Medicare re-imbursement in 2013 2% of ALL Medicare re-imbursement in 2014 3% of ALL Medicare re-imbursement in 2015 Penalties based on prior year results 6. PATIENT PROTECTION &AFFORDABLE CARE ACT Bundled Payments Reimbursement of providers based on the basis of expected costs for clinically-defined episodes of care Medicare proposed 4 models only 2 involved post-discharge services Model 2 (inpatient stay plus post-discharge services): Hospitals andphysicians receive fee-for-service rates that are retrospectively reconciledwith a target price. CMS requires a 3% minimum discount to Medicare for30 to 89 days after discharge and a 2% discount for an episode that is 90days or longer. Model 3 (post-discharge services only): Hospitals and physicians receivefee-for-service rates that are retrospectively reconciled with a target price.The applicant proposes the discount amount to Medicare. Requests to participate has been oversubscribed versus expectations. Additional opportunities to submit proposals may be forthcoming 7. PATIENT PROTECTION &AFFORDABLE CARE ACT PPACA gave the Secy of HHS the ability to createAccountable Care Organizations(ACOs) ACOs are Local organizations Bring together physicians and hospitals, usually Better manage the costs and quality for at least 5K lives 8. PATIENT PROTECTION &AFFORDABLE CARE ACT Accountable Care Organizations Payment and delivery healthcare reform model Seeks to tie provider reimbursements to Quality metrics Reduction in total cost of care Managed care for an assigned population Usually led by a hospital-physician coalition 32 Pioneer ACOs started operation in Jan 2012 Many participants shied away from participating becauseof upfront costs Medicare will now subsidize this investment in exchange for smaller returns 9. PATIENT PROTECTION &AFFORDABLE CARE ACT Medicare Advantage Plans Saw a 15% reduction in per-member per month fees andmandated medical loss ratio Hospice Concurrent Care Demonstration Instructed HHS Secy to create a concurrent care hospicedemonstration project Include up to 15 hospices, both urban and rural Allow patients to receive hospice care while also beingtreated with other Medicare services 10. HEALTHCARE REFORM Key Concepts Value-Based Purchasing Tearing Down the Silos Outcomes-Based Reporting Post-Acute Integration 11. OLD SALES PROCESSSIMPLESales Referral 12. NEW SALES PROCESS COMPLEX Complex Buying Team Sales Referral 13. SIMPLE VS. COMPLEX SALE Numerous individuals to sell each with differentagendas Gaining access to decision participants or committeecan be difficult Fewer chances to sell; buyers collectivelycontrol/influence more business than an individual Communicating, getting feedbackand implementing decision can be more timeconsuming; need to work thru various layers of theorganization 14. DIFFERENCESSIMPLE COMPLEXRelationship Focused Solution focusedTarget Users Target Business PeopleProduct/Service EducationProduct UsageAsk for the Business Ask for the Next StepSingle Decision-makerMultiple Decision-makersSpontaneous Access Scheduled Gated AccessSingle AgendaDifferent Agendas & MotivationsCan make decision @ sales call Longer time frame for the decisionImplement decision with the next Work thru organization to implementpatient 15. 4 Ds OF THE SALES PROCESS Discover Diagnose Design Deliver 16. PRINCIPLES FOR SOLUTIONSELLING Sound Alikes Delegated to Diagnose before Prescription Gain Trust & Appear Competent Cant Sell Non-Buyers No Goal No Prospect Bad News Early is Good Self-Discovery is the Best Only the Buyer Can call It a Solution Equal then Different Emotional Decisions are justified by Value & Logic Dont Close before the Buyer is Ready 17. COMPLEX SALES MISTAKES Dancing with only the one that brought you to the dance Gain access to the other parties as early in the process aspossible Assuming the buying team has clearly defined needs Survey members to see if you can define the problem and solutions in their terms Dont forget the little folk and make friends with the Gatekeeper 18. QUESTIONS TO ASK Does your customer have a well-defineddecision/buying process? Is the approval process different from the buyingprocess? To what extent does your customer understand theproblem? To what degree do they understand your solution? What are the risks involved in implementing yoursolution and how can you mitigate them? 19. SELLING TO A COMMITTEE Know the history of the committee More Important to know who decided who will be onthe committee than knowing who to target Whoever invited you to the meeting is your de factochampion Find out the attitudes and real agenda beforehand Pre-survey and ask what concerns are the committeelikely to have 20. PRESENTATION TRAPS Too much focus on the vendor; discuss the client andtheir issues Lecture style usually means limited retention; engagein a dialogue Will your presentation be the same as yourcompetitors except for the name will be changed?Strive to be memorable and different Overcoming objections is an inherently negativeprocess; acknowledge concerns and their validity 21. CUSTOMER ROLES IN COMPLEXSALES PROCESS Final Call Authority Interested Parties Economic User/Functionality Integrator Power Broker Gatekeeper 22. CURRENT JOB DESCRIPTION Relationships/face-to-face contact-referral sources Budgetary responsibility-limited New program development-recommends Education/Background-Associate Deg/LPN Key Skills-Excellent Verbal communications Measurement Sales Calls & Referrals 23. EXECUTIVE SALES JOBDESCRIPTION Relationships/face-to-face contact Executive/C-level Budgetary responsibility-Account P&L New program development-Conceives & Develops Education/Background-Business Bachelors Degree Key Skills Independent thinker; able to manageprocess & account relationship Measurement Account Penetration 24. NEW BUYERS Hospital Administration Accountable Care Organization(ACO) Management Medicare Managed Care(MCO) ManagementTHESE ARE ECONOMIC BUYERS 25. REASONS NOT TO BUY HOSPICE Dont have time to explain Not sure if patient is hospice appropriate Dont want to deal with emotionality Palliative care is sufficient Need to fill my clinical trial Dont want to miss teaching opportunity forresidents/medical students 26. INFLUENCES ON THE BUYHOSPICE Dont have time to explain Not sure if patient is hospice appropriate Dont want to deal with emotionality Palliative care is sufficient Need to fill my clinical trial Dont want to miss teaching opportunity forresidents/medical students 27. HOSPITAL MORTALITY REPORTING In 2008, Medicare began public reporting of 30-day risk adjusted mortality rates for patients admitted to a hospital for 3 conditions: Heart attack(AMI) Heart failure(CHF) Simple pneumonia Will interested parties judge the hospital by publicly reported data? 28. HOSPITAL MORTALITY Research if institution has issue Hospital Compare State Dept of Health and Hospital Association Commercial firms Identify patients Expiring at rates greater than norm LOS longer than norms Probe key hospital officials to determine if problem isinternalizedChief Nursing Officer, Chief Medical Officer,Chief Operating Officer Calculate benefit in earlier discharge to hospice in terms oflower mortality rate and shorter LOS 29. HOSPITAL RE-ADMISSIONS Research if institution has issue Hospital Compare Commercial firms Identify patients Chronic Heart Failure Secondary Penalty DRGs -COPD Probe key hospital officials to determine if problem isinternalizedChief Nursing Officer, Chief FinancialOfficer, Chief Operating Officer Calculate benefit in eliminating re-admissions 30. HOSPITAL RE-ADMISSIONS Objection Its worth it to my institution to have the excess admissions and pay the penalty Response That may be true in the short term, but the size of penalties will rise over time This is an issue that cannot be solved overnight and it takes time to change institutional behavior Expect other payors to follow Medicares lead and institute similar penalties. 31. Quartiles will compress over time 32. HOSPITAL RE-ADMISSIONSSTRATEGY Hospitals are being measured by CMS as we speak Focus on CHF; worry about COPD next year Does the hospital have a problem? Quantify it. Hospice is only one of many solutions Explain how hospice prevents re-admissions Agree on how to identify terminally ill CHF patient 33. HOSPITAL RE-ADMISSIONSSTRATEGY Set up policies, procedures and protocols regardingthese patients. Offer to in-service cardiac unit physicians and nurseson terminal criteria Commit to be available for initial hospice consultwithin a given time frame. Must a clinician initiate theprocess? If unsuccessful initially, commit to follow up withpatient within 2 weeks 34. KEY TO ACOS All about behavior change Care about the patient across all settings of care Will make money by Reducing unnecessary services Substituting less expensive services The tail that directs the rest of the organizationsreferral flow 35. ACO STRATEGY Demonstrate cost savings for using hospice in lieu of curativecare Utilize Duke University Medicare End-of-Life to quantify savings Request names of primary care physicians, who are part of theACO, and specialists & determine who are under-utilizers ofhospice Agree to make joint sales calls with ACO representative to educate physicians about hospice Request ACO support in working with their network homehealth agencies in to jointly identify terminally ill Medicarepatients 60-70% of these patients could be transferred to hospice; less than 40% are Request real-time access to ACO patient managementdatabase to monitor for terminally ill patients 36. BUNDLED PAYMENT STRATEGY Focus on Model 2 Inpatient and Post Discharge Services Hospices value-eliminating costly, unnecessary hospitalizations Identify specific patient populations, where hospice isbeing under-utilized. Conduct literature review forsupport Aetna lung study Determine if potential hospital partner has sufficientvolume to warrant interest Position proposal as opportunity to learn about bundledpayments. 37. ROBERT WOOD JOHNSONFOUNDATION MONOGRAPH Promoting Excellence in End-of-Life Care Ireland Cancer Center & Hospice of Western Reserve program provided palliative transition to patients undergoing cancer treatment Hospitals admissions dropped 67% from 3,2 to 1.05 per patient Univ of Michigan & Hospice of Michigan did concurrentcancer treatment and hospice care in a randomized study Medicare costs were $7,059 less in study vs. control 38. ROBERT WOOD JOHNSONFOUNDATION MONOGRAPH Promoting Excellence in End-of-Life Care VA Greater Los Angeles offered a palliative care program to poor prognosis lung cancer, COPD and CHF patients, working with hospices and other home care providers Health care costs in the final month were $8605 less Mount Sinai, Franklin Health, BCBS Sc utilized existingcomplex case management system to deliver palliativecare In year 3 of program, savings calculated to be $33K per managed case 39. AETNA CONCURRENT HOSPICECARE Since 2004, Aetna has been allowing terminally ill patients with a 12 month prognosis to receive curative care and hospice care simultaneously Saw a reduction in medical costs on these patients by22% and a 70% increase in hospice admissions 40. MCOS Highmark created special unit to manage chronicterminally ill patients Independence Blue Cross hired disease managementfirm to mine its data to develop way of identifyingterminally ill patients A national hospice chains has a senior executive-VPManaged Care Sales TERMINALLY ILL PATIENTS ARE EXPENSIVE 41. MCOS Offer to assist MCO in getting their members to signliving wills and health care proxies Offer to educate health coaches on the benefits ofhospice Discuss concurrent care pilot with MCO to allowmembers to try hospice before committing and stillreceive curative care 42. HOSPICE IN MCOS Medicare Advantage plans(MCOs) lose money onterminally ill patients because of expensive re-hospitalizations An average ICU day costs $7,000-$15,000, dependingon the level of equipment and length of stay in theunit MCO generally pays hospital on a per-day basis Assist MCO in transferring patient to GIP bed 43. MCO SALES APPROACH Utilize hospice medical director to broach topic with MCO medical director Provide articles on success of concurrent care to makecase Determine if MCO has :complex case managementcapability and understand their scope Determine financially viable concurrent care servicespackage Goal is breakeven proposition pre-hospice election 44. ORGANIZATIONAL IMPLICATIONS Need to re-vision hospice from calling to an economicvehicle, which improves quality of life and lowers costs Required resources Rainmaker Research Complex Sales Process Operational flexibility-No Medicare mindset 45. CONCLUSIONS PPACA created the economic buyer for hospice This buyer will play a growing role regardless ofwhich direction healthcare reform takes It requires a different sales process to sell this buyer This buyer has the power to create systemic changeto encourage the increased use of hospice 46. CONTACT INFORMATIONRich ChesneyPresident, Healthcare Market Resourcesrchesney@healthmr.com215.657.7373215.657.0395(f)www.healthmr.com