Slide 1

American Association of HealthcareAdministrative ManagementRevenue Cycle Co-OpOctober 9, 2015Presented byDonna Katen-BahenskyPerspectives on the Wisconsin Healthcare MarketAbout HFMA 1

Good Morning and thank you for the invitation to join you today. Thanks to Carmen Wolf and her team for organizing, for my friend Laurie Benson as she introduced me to this group. I congratulate her for an outstanding presentation. No wonder she is so successful and has made so many others successful.

I am pleased to be part of an organization that wants to further leaders and in particular female leaders. I have found myself doing this my whole life. I look forward to the entire day and the panel discussion this afternoon.Before I start I want you to know that I welcome your questions at the end of my presentation and I believe I have left an adequate time to do so.1ObjectivesFocus on the Wisconsin Healthcare Environment and will include:Similarities and Unique features Changes occurring in the MarketChallenges and OpportunitiesCritical Stakeholders Necessary when Setting Strategies Getting Involved in the Process2Today my focus is looking at the Wisconsin Healthcare Environment within the context of what is occurring around the country as we all deal with the issues of health care reform.We will discuss the similarities and unique features of the Wisconsin market; changes occurring in the market where like other states the changes are happening very quickly. The challenges and opportunities for those in the Wisconsin market. I have tried to be sensitive to the fact that you are not all from Wisconsin but if you do not understand something, let me know. Finally as we are here to give you some advice and direction as you move forward I will discuss the critical stakeholders when you set future strategies and how best to position yourself to be at the table.

2 Wisconsin Health Care Market

WI HospitalsGMS 129CAH 58LTAC 6Rehab 2State MHI 2 AODA 13As you can see the State of Wisconsin has a fair number of hospitals most of them General Medical-Surgical Hospitals. What I also wanted to point out with this picture is how close we are to other markets Minnesota, Iowa, Michigan and Illinois. This presents a somewhat different dynamic and level of competition. These hospitals had over 2.7 million inpatient days and over 16 million outpatient days. Wisconsin hospitals employ more than 100,000 people and generate nearly $30 billion in economic activity3Changing Health Care Environment4

Changing Health Care Environment

Hospitals and systems across the country are experiencing the following changes:Migration of Payment to Value-Based ApproachesFirst reporting on Penalties Related to ReadmissionsEnd of Life Care and Coverage for Advance Care PlanningEmphasis on Volume and Rates Becoming too Risky Disclosure of CEO Pay Ratios New Non-Traditional Providers

5In the last 30 years of my health care leadership career I do not believe I have ever seen such significant change as we are seeing today. What we are seeing is a massive move from fee for service to value based approaches. This by itself is a remarkable move but we are still uncertain about how the value based approach will look and how we will ultimately be measured and paid.

On July 8 CMS released an announcement proposed rule to establish separate payment for advance care planning services and there will be expanded access to home-based palliative care services

A new Task Force made up of providers, insurers and employers has committed to shift 7%% of its members 'business into contracts with incentives for health outcomes, quality and cost management by Jan 2020.Medicare announced a goal to shift up to 50% of payments from FFS to quality of care model by 2018. The Medicare Access and CHIP Reauthorization Act permanently changes the way physicians are paid, holding them accountable for costs, quality and efficiency outcomes, starting in 2019.

Even with all the unknowns we cannot wait for all the answers because the world is moving today. Health care leaders should factor in slower revenue growth, declining inpatient use rates and flattening outpatient use rates.

In order to be ready for all those variables happening at one time we need to carefully move away from looking at volume and rate increases as the way of dealing with our future financials. We need to work off a risk based financial plan that becomes the baseline in looking at the future.This financial plan should look into the future and consider the variety of assumptions that will drive the bottom line and base our strategies on this plan.

Each market will look a little different when it comes to use rates. You need to know your own community and what is going on with the payers and providers. Outpatient activity may grow but the payments are likely to decline because most payers are figuring out that they are paying a wide range of costs depending on the provider and in some cases with hospital based clinics are also paying a facilities fee. I anticipate that this will change over timeWe must all learn a new set of competencies to make it in the future. Ability to track and measure outcomes of quality, safety, satisfaction and financial and staff performance. Ability to anticipate community needs and to track community wellnessOverseeing the development of a long term capital spending program for renovation and expansion of facilities, equipment, technologyLean management is one tool that almost has become a necessity. We must perform our work differently to save costs even when the volume is high.5Changing Health Care Environment6Data breaches/lack of confidence in Security of systemsMergers and Partnerships Continue Greater Federal ScrutinyEarly Results of the ACAMedicare ACO Results Direct Contracting Strategies/Narrow NetworksTechnology Applied to Care/OutcomesInsurance Premium Increases 10-40%

Numberous Non-Traditional Providers Retail clinics, for example CVS has over 7,800 retail stores; the Consumer Value Store; Minute ClinicsNew technologies that will expand the work of the health care providers out into the community but could also take a spot in directly caring for patients

6Changing Health Care Environment

Mandatory Bundling for Joint ReplacementMental Health ParityChanging supply of health professionalsHospital Acquired Conditions - CMS Star RatingsCloud Computing and Big DataInsurance MegamergersRequirement for all health care leaders and organizations to develop a New Set of Core Competencies

7Providers are consolidating and Wisconsin is no exception.Organizations are forming ACOs, informal networks, talking to out of state provider systems about potential partnership, out of state systems purchasing instate systems and formal mergers.

Competition if coming from all over but now with new faces CVS and their movement into health care; Walgreens; spas. Just today I read about the first urgent care franchise in Wisconsin called AFC/Doctors Express in Waukesha. It is being built to see 96 patients a day. Competition if coming frall other countries where services can be provided at a lower cost; large systems who are highest quality and lowest cost getting the franchise on certain types of care like Cleveland Clinic and heart surgery. As I have told many staff members and physicians when asked what do we do in light of this competition, new payment mechanisms, etc. I continue to remind them to keep their razor sharp focus on improving quality and efficiency.

You in your system need to look for the best strategy. It needs to fit your mission, community, needs and current and projected position.You can get some of this information by referring to Navigating the Gap Between Volume and Value produced by the AHA.7Health Care Transformation

8This is an easy to read transformation slide from the document I just referenced.It looks like it is easy to move from one to the other but this is 180degree change and difficult even for those who thrive on change.

Lets look at some of the most critical Fragmentation to Integration population health and value based payment is not possible without integration of the silos of health care.Episodic care is moving to population health Definition from David Kindig right here in Wisconsin has defined population health as the health outcomes of a group of individuals, including the distribution of such outcomes within the group. It is not public health, health promotion and social epidemiology.Consumers are increasingly in charge and nothing makes them want to be in charge more than when they have to pay all or part of their bill or even when they have to pay more of their insurance premium. They will want to know what they are getting, how much they must pay and how they can be assured they will get high quality care. Finally, the future will not be on buildings but the use of technology to care for patients EHRs, Diagnostic tools, home diagnostics (Cologuard),

During a recent community conversation one of the Hospital CEOs from another state said I used to feel like the hospital was the only kid on the block then realized I was just the most expensive kid on the block and now I am just another kid on the block.

8Evolution of Strategies

YesterdaysStrategy = Cost CuttingStrategy for Next 3 years = Value and OutcomesFactors placing the most pressure on hospitals today are:Cost Cutting 44%Cost of Upgrading or maintaining IT Systems 41%High-end medical technology costs 37%Rising Drug Costs 33%Imaging Costs 22%Healthcare Reform Initiatives 21%Factors driving strategy for the next 3 years are:

Cost Cutting 37%Cost of Upgrading or maintaining IT Systems 40%High end medical technology costs 38%Rising Drug Costs 27%Imaging Costs 12%Healthcare Reform initiatives 34%

Source: Ernst & Youngs 2014 Report Pulse of the industry: Differentiating Differently, Oct, 2014.9This slide is somewhat confusing but Ernst and Young did their 2014 report/survey results on the Pulse of the Industry. In it they asked administrators, finance officers, etc what would be the factors that are placing the most pressures on hospitals today.As you can see todays percentages look very different as you look forward 3 years. Today is about cost cutting and maintaining Itsystems. Tomorrows is about healthcare reform initiatives.9What Now?10The ACA has set the stage:Extending health care coverage through Medicaid expansion and subsidies on newly established private insurance marketplacesChanging the way in which health care is delivered and experiencedDeveloping structural changes that lead to improvement for patients and families or .The Triple AimThe Triple Aim11What is it?The simultaneous pursuit of better care for individuals, better health for populations and lower per capita costs of health careAre we really making progress?Declines in Hospital Readmission RateImprovements in Patient SafetySlowest Rise of Medicare costs in decades

Yet, insufficient to accelerate delivery system reform to the level needed Change from the Inside Out Health Care Leaders Taking the Helm.Donald Berwick, Derek Feeley and Saranya LoehrerJournal of the American Medical Association, JAMA NetworkMarch 26, 2015Reform Strategies 12

Healthcare Reform Initiatives Require Changes in StrategiesRelentless pursuit of Value

Patient and Family Engagement

Primary Care as the Foundation for Care

Coordination of Care Across the Continuum

Response to Changing Demographics

Use of Telemedicine and other Technologies13The following are some of the health care reform initiatives that require providers to make changes in their strategiesAs I tell others first and foremost engage patients and families. With engagement you can expect meaningful differences over time. Engaging patients and families in decision making can result in more positive outcomes, higher levels of satisfaction with the experience, increased compliance with the care plan, medications and follow up.

One of, if not the most significant problem in health care today is the lack of coordination between providers and sometimes even in the same organization. The Primary Care team is the most logical and appropriate team to oversee and coordinate the care along with the patient and family

Patients with Chronic conditions represent more difficult cases with co-morbidities and they are often more costly. Ultimately if not dealt with appropriately they can negatively impact the health of the population being servedWe all know that there are some 10,000 individuals becoming eligible for Medicare on a daily basis. These are consumers who will need care and the numbers could become overwhelming. Keeping these individuals healthy, out of the ED and inpatient beds will be difficult. Goes back once again to patient engagement.

Our population is becoming more diverse and there are potentially specific needs and challenges in making sure all individuals are getting the care they need, care they want and how they want it.

Telemedicine and other technologies have the greatest potential in changing the way we provide care. Reimbursement for telemedicine is still an issue but in a model based on population health we will use telemedicine more regularly regardless of reimbursement.

Just recently Health Resources and Services Administration (HRSA) awarded the Rural Wisconsin Health Cooperative a 3 year $897,000 grant to establish a behavioral telehealth network. This definitely is a step in the right direction for an area of great need and where access is critical. 13Other Provider StrategiesMergers, Acquisitions and Partnerships

Commitment of Resources for Mental Health

Significantly Reduced Costs to the System = Ensured future for Medicare and Medicaid

Cost and Quality Transparency

Chronic Care Management

14Everywhere you look organizations are merging, partnering, forming networks, and acquiring. The very organizations who may not have been talking to each other previously may well be talking to each other today.

Not sure where this is going. The stated purpose is for better coordination of care, learning best practices from each other, reducing unnecessary duplication and cutting costs. Not sure where it will lead. Research to date on the effects of consolidation on prices has been limited and inconclusive.

In terms of behavioral health the data shows us that 20-25% of patients may have some form of behavioral health issue. If not deal with can increase the costs of care; exacerbate medical problems; leave many to fall through the cracks.

Some providers are making the commitment to resolve this problem through adding more resources and integrating behavioral health into primary care.

Reducing costs and doing so in a significant fashion is the only way we can ensure the future of Medicare and Medicaid.

Get ready for the world of transparency and be willing to cooperate and not fight it. The world is expecting greater transparency of outcomes; costs; hospital acquired concitions.14More Provider StrategiesElectronic Health Record and Sharing of Care Data

Population Management

Palliative Medicine and End of Life Care

Team-Based Care

Meet Future Health Care Workforce Needs15We all have made investments in the electronic health record and the needs for updating and upgrading will not be going away any time soon. But with the EHR and the willingness to share data comes the ability to coordinate care and provide higher quality without duplicating services.

Sorry this should be population health management. We should take advantage of our world renowned Population Health institute and the work of Karen Timberlake. She and the institute have launched a website detailing community health needs assessments and implementation plans of hospitals and health departments across the state.

Lately a lot of focus on this area of end of life care. Some of it is about reducing costs and others reflect the belief that we should worry about the quality of the end of life.

To be high quality and low cost and ultimately to achieve the Triple Aim care must be coordinated and team based.

Team based care takes people. With the change in demographics and the complexities of care more people are needed to maintain access and quality. Even though this is a more dramatic problem, the VA has recently announced that they will need to recruit 28,000 health care workers for their patients. This state has an older than average demographic projection for the future and we need more health care professionals in certain parts of the state.

15Changes in Wisconsin16

Wisconsin Providers Are Making Positive Changes Examples of Positive Changes being made in WisconsinQuality Improvement Ranked 2rd in the Country for QualityFive Wisconsin Health Plans ranked in the Top 50 for QualityBellin-ThedaCare Healthcare Partners top in ACO Quality Costs of CareAbility to Assume Risk/ACO ResultsPrograms to Increase Health Care ProfessionalsMedical School/Nursing School/Pharmacy EnrollmentNew Health Care Professional Schools-Osteopathic College and Pharmacy School

17We have much to be proud of in Wisconsin

We are highly ranked in the country in terms of quality. For the last three years we have been in the top 3 in the country for quality.The health plans in Wiconsin are also ranked quite high. Costs have traditionally been lower and Medicare spending in hospitals is lower than other states. We actually have systems in the State whose costs have only increased 37% cumulatively over the last decade.

Unlike many states in the US, Wisconsin has been able to provide we can assume risk. Systems accept capitated payments, they have joint ventured with payors for pay for performance programs and have proven themselves success in some of the shared savings ACOs

There is a recognition that more health care professionals are needed in the future. New campuses are being discussed., Pharmacy school, expanded enrollment in Schools of Medicine and Nursing and discussion of a School of Osteopathic Medicine1718

WisconsinDashboard on Health Care Quality Compared to All StatesOverall Health Care QualityPositive Changes Being made in WisconsinPopulation Health ManagementStatewide database documenting health care needsTwo academic medical centers with expertise in Public HealthRecognition by systems that health of the community criticalLow Percentage of UninsuredRanked 13th in the nation in 2014 (Sixth in 2013)TransparencyWisconsin Collaborative for Healthcare Quality (WCHQ) since 2003Electronic Health RecordsLarge percentage of hospitals -Epic EHR19Many positive changes are being made in Wisconsin. I have already discussed the population health management tools but we also two academic medical centers with tremendous expertise in looking at populations.

Wisconsin has the sixth lowest percentage of uninsured individuals in 2013 in the nation and the third lowest in the upper Midwest We are committed to care for the poor and have given back to our communities in a very significant way.

Transparency, ACOs and Networks. In terms of ACOs we have one shared savings ACO who has saved Medicare $17.7 million and will receive an $8.7 million bonus.

19Further Positive Changes in WisconsinValue Based PurchasingNumerous Experiments being implementedAlliance and QualityPath HospitalsUse of Lean ManagementTheda Care the states early leader but many utilizing Lean toolsEnd of Life CareLaCrosse known nationally for community wide inititaiveHonoring Choices Wisconsin Medical SocietyImproving Mental Health ServicesMultiple communities working togetherMoving Mental Health Care into Primary Care 20The Alliance has organized and implemented a program called Quality Path that identifies physicians, hospitals that meet proven standards for delivering quality care for less cost for total hip replacement, total knee replacement and coronary artery bypass graft.

LaCrosse has become the poster child for end of life care. In 2009 96% of those individuals who died in LaCrosse County had an advance directive which is more than 3 times higher than the national average. The average cost for a patients last two years is $26,000 or more. The average cost in LaCrosse is just $18, 159.The really positive impact is not measured in dollars but in the peace of mind and reduction of emotional stress for patients and their families.

The Wisconsin Medical Society has used that model in a program called Honoring Choices Wisconsin by training groups in participating organizations to have facilitated conversations to encourage advance directives.20Strategies with Unknown/Neutral ImpactOut of State Systems Moving into the StateUse of Telemedicine Formation of Multi-Health System Networks/PartnershipsMerger of Large Commercial InsurersProvider Based HMOsPurchasing physician practicesNarrow Networks

21This slide represents the strategies that we have seen in Wisconsin and in other states with inconclusive evidence or data to say they are going to work or they have not been fully implemented for a variety of reasons.

Out of State systems are purchasing Wisconsin hospitals and systems. No real evidence that these will succeed or make a difference in quality or outcomes. My hope is that they will.Telemedicine experiments need to move beyond a few research pilots to full implementation across the state and providers to really see the impact. For example the Stroke Network has moved to a broader base and real evidence is there but it is still a small number.

The formation of networks is a good move to share best practices, to benchmark or to take on large expenditures/technology rationalize care appropriatelly.

But if you look at Illinois Blue Cross they have said they will not negotiate reimbursement rates with affiliations created by separate health systems that clinically integrate and do not assume common ownership.

We have a state where insurance plans that are provider based and very large commercial insurers have co-existed. It remains to be seen if in a new post reform world they can co-exist in a positive manner.

There are still a fairly large number of independent hospitals and physicians. Not sure if this is positive or not. This remains to be seen as also we need to see if it is positive to purchase physician practices in terms of coordination of care, cost reduction and increasing quality.

21Opportunities and Challenges 22

Strategic Opportunities for WisconsinImproving Cost TransparencyReducing Racial and Ethnic DisparitiesFilling the Gaps in Mental Health ServicesReducing Projected Shortages of Health Care WorkforceUtilizing the skills of all in Interdisciplinary TeamsIncreasing Standardization of Practice/Rationalization of CareUsing Technologies invented and marketed in WISupporting Medical Schools with Strong Research Programs

23We have yet to see with the recent election if the expansion of Medicaid will occur here or in other states. 73% of those who responded on election day say they favor expanding Medicaid.

There is a life expectancy gap between blacks and whites. Wisconsin is the only state in which the life expectancy gap between blacks and whites has grown, particularly for women. This was from a study published in the journal Health Affairs. For women the gap increased by 1.6 years from 4.9 years to 6.4. Black womens life expectancy in Wisconsin barely improved increasing by 0.4 years.

Two Medical Schools with Strong Research programs Both schools are making great strides in things like stem cell transplants for multiple diseases; genomic work; diabetes research; use of new technologies to detect infection; Madison has become a hub for new innovation and companies.

An Interdisciplinary Team will not be fully functional until we are utilizing health care providers in the way they are trained and licensed. They must be allowed to practice at the highest level of their license and work together with others to get the job done. This is being done sporadically across the state.23Challenges for WisconsinLack of continuity and coordinationLarge Percentage of Population over age 65 and 85Silos that exist across all the Hospitals and SystemsUneven distribution of Primary Care providersLack of public awareness and understanding of how to access and move through the systemsProjected Inadequate Number of Health Care ProvidersObesity as #1 Health IssueAbility to Reduce Cost and Add Value24Many of these problems would be solved with more of the right appropriate and geographically distributed health care providers and a real emphasis on patient and family engagement.24Challenges for WisconsinLack of cost transparency Tremendous Geographic Differences/DistanceInconsistent Practices Across the StateAbility to Take Risk Varies Across SystemsLargely Fee for Service historically positive contractsSuccess largely based on Competition and Market DominanceCost ReductionRural Communities and Mental Health Care Needs25Health Care disparitiesThe amount of obesity in the state Wisconsin is just two-tenths of a percentage point away from an obesity milestone that was unimaginable a decade ago. (Robert Wood Johnson Foundation)Large geographic distances from one end of the state to the other both east and west and north-south

Reimbursement historically has been higher than in some states and have been based on fee for service. Moving from that to a risk based typpayment will be difficult in some parts of the state and some type of providers. Success is still seen as ability to beat out the competition and dominate the market. The future will be based on successfully keeping the population healthy which is a very different model

The costs are already low how do we take dollars out when we are already efficient25Community Solutions will Require a New ApproachSuccess will only be possible if all critical stakeholders are involved in designing and implementing strategies

Patients and Families

Community Leaders/Agencies/Non-Profits

Physicians, Both Primary Care and specialty

Nurses/Nurse Practioners

Finance

Information Technology

Case Managers/Chronic Disease managers

26Cannot be solved from the inside looking out or the outside looking in. All members and more of both the community, political leaders, employers, health care providers all need to be at the table together.26Other Critical StakeholdersThere are other critical stakeholders that must be part of setting and implementing strategies:Marketing

Social Media specialists/Entrepreneurs

Industrial Engineers

Schools/Colleges/Universities

Local political leaders/City Planners

27Collaboration is key. Collaboration and partnership mean that no one hospital or health system has to be all things to all patients.When the patients best interest is the primary focus, silos of care that exist both within a hospital or a health system as well as with other community stakeholders can begin to be broken down and allow for better coordination and health outcomes.It will take this and the local will to ensure services are available in the community27How do You Get Involved?Constantly Watch for OpportunitiesLook for Signals in the External EnvironmentApproach the design of Strategies like a MarketerThink Outside the BoxUse the Community Needs Assessment to Focus InitiativesConsider Partners to take advantage of OpportunitiesAsk to be at the Table and then Show Your WorthBring the Patient and Family Perspective

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Engaging patients, families and communities has the potential to be a game changer in the transformation of the health care system in the United States. American Hospital Association, 201329Action Steps30Learn about what is going on in the State of Wisconsin Learn what is going on in other statesMake connections with others and learn from themInnovate in your own organizationRemember this is a time to experimentShare Best PracticesRemember we are all in this together WE CAN IMPROVE HEALTH CARE!

Step up, have courage, nobody has all the answers including the leaders at the top. They need all of you to bring forward ideas.Nobody has done this before so what do you have to lose. We all are in this together, we desperately need an improved health care system and we can do it!30Thank you from Wisconsin!

Any Questions?31

Thank you for your time. As you can see from these pictures and what you have heard I am proud of our State and what we have accomplished.I hope you notice from these pictures the weather is spectacular (these are the types of pictures I have used to recruit top notch folks and companies to Wisconsin.

Questions?31