managed care contracting strategy

L E A D E R S H I P P R O B L E M SO L V I N G V A L U E C R E A T I O N

Copyright 2010. Alvarez & Marsal. All Rights Reserved.

2010 Arizona HFMA SpringConference(Chandler, AZ)

Managed Care Contracting Strategy

and Emerging Business Models:

Physician Practice Perspective

March 18, 2010

Christopher J. Kalkhof, FACHE

Director, Healthcare Industry Group

(New York Office)

Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.

Presentation Agenda

I. Payer Physician Networks

Basic Payer Goals

Participation vs. Non-Participation and Implicationsfor Practice

Payer Contracting Options and Products

Trends in Marketplace Impacting Practice Revenues

II. Patient Steerage – How Does it Really Work?

III. Managed Care Contracting Strategies andDifferent Negotiating Techniques

Key Questions to Ask Before Signing Any PayerAgreement

IV. Physician Alignment and Integration:Evolving and Emerging Business Models

V. Questions & Answers

(1)


Presentation Agenda


Basic Payer Goals









(2)

© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (3)

Profitability.

Membership Growth (traditional, new product, M&A).

Unit Cost Control (<= 4%-8%; slow loss of discount value).

Utilization Management/Disease Management Improvements.

Improve Operational Efficiency (SCR and provider network).

Metrics Management (scorecards, templates).

Customer Satisfaction, Consumerism and Product Value.

Compliance (DOI, DOH, CMS, NCQA, DOJ, etc.).

Accessible, Quality Oriented, Price Competitive, Stable long

term Fixed contractual relationships with providers which

represent Efficient, Stable and Predictable relationships.

Payer Business Goals


HOW DOES THE ABOVE IMPACT YOUR STRATEGY?

© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.

Pros and Cons of Being a Par/Non-Par Practice

Potential upside participation issues (w/favorable contract):

Increased patient volume through physician referral management.

Opportunity to negotiate higher than “norm” reimbursements.

Inclusion on payer participating provider lists/websites.

Retention of your patients which are payer members.

Electronic claims payment and accelerated cash flow.

Payer product benefit plan designs often provide members with

financial incentives to use in-network physicians vs. out-of-network

physicians… resulting potential incremental patient volume.

Potentially competitive reimbursement.. highs and lows depending

on specific payer products… HMO/POS insured, rental PPO, etc.

Variable practice management tools.

(4)



Potential downside participation issues:

Reduced control and independence on pricing strategy and patient caretreatment (charges less important, many payment rules to follow).

Unavoidable increase in contract compliance and administrative costs.

Changed referral patterns with physicians and hospitals.

Future procedure payment reductions and margin yield when marketdynamics change… with little to no say on reimbursement changes.

Increased economic risk exposure… e.g., Capitation, P-4-P and ValuePurchasing programs such as bundled episodes of care payments.

A potential unfavorable change in practice service/profitability mix.

Quality rating potential exclusion from specific product networks.

Pressure to par with “All Payer Products” with a specific payer.

Price transparency and A/R challenges… retroactive payment re-coupments/audits w/high appeal costs… reduced cash flows.


(5)



If a Practice Chooses to Not Become a Participating

Practice with a Specific Payer or is Excluded:

Develop and execute strategies and tactics to maintain

patient volume, service mix and net patient revenues.

When a non-par… a potential exists for:

– Loss of patients to competitors.

– Changes in traditional physician referral patterns.

– Increased collection challenges with patients and payers

(e.g., for non-coverage/O-O-N payment allowances).

– A net unfavorable economic impact on the practice.


(6)



If a Practice Chooses to Not Become a Participating

Practice with a Specific Payer or is Excluded:

Panels open at present may be closed in future.

Track market changes… erosion of traditional F-F-S

medicine into increased enrollments in Medicare

Advantage, Managed Medicaid/CHIP/FHP and Universal

Coverage plans…further payer market consolidation…

retail shopping chains entering primary care market, etc…

can all impact practice economics.

Look into business models for hospital collaboration.

Alternate physician group practice/employment delivery

models to strategically position practice.


(7)



Traditional and Newer Payer Products and Networks

(8)

PPO

POS

HMO

Tiered

Indemnity

Evolving and expanding payer products has increased the complexity and

administrative requirements between physicians and payers.

Most payer products are out of synch with new payment methodologies.


Products-Provider NetworksPayer Core Products (price and

utilization control driven)

No PCPs - open networkNo utilization managementDeductibles & coinsurance

No PCPs - contracted networkReduced out-of-network benefitsLimited utilization mgmt.Deductibles, coinsurance & co-pays

PCPs - contracted networkReduced out-of-network benefitsHMO style utilization protocolsPrimarily co-pays

PCPs - limited network, localized areaNo non-emergent out-of-network benefitsTight medical management protocolsPrimarily co-pays

PCPs - selected subset networks withrestrictive protocolsNo non-emergent out-of-network benefitsPreferential pricingPrimarily co-pays


CMS Sustainable Growth Rate (SGR) Payment Reductions

How will CMS changes impact Medicare, Medicaid& Commercial plan fee schedules, pay-for-

performance and new payment methodologies?

The SGR formula calls for21% fee schedule cutsstarting 1-1-10… delayedagain but unresolved for 2010.

This 21% cut will grow toabout 40% in cumulative cutsby 2016 unless Congress actssoon to permanently reformMedicare’s physician paymentsystem.

EMR requirements to stay inMedicare/Medicaid addunbudgeted operationalexpenses to practices.


(9)

CMS: Medicare Payment Levels


Medicaid-to-Medicare Fee Index, 2008 (Medicaid & CHIP)

State Budgets: Medicaid Vs. Medicare Payment Levels

(10)


What willhappen to StateMedicaid if…

– CMS SGRcuts areapplied?

– Budget deficitscontinue?

– Universalcoverage isimplemented?

– Enrollmentexpands?


Payer Reimbursement Variation Within Different Product Classes

(11)

Source: A&M analysis and payer reimbursement negotiations outcome experience. Low ranges are generally forproviders who accept payer “market rates” with little question or negotiation on price.

1) Unless otherwise noted, reimbursement ranges are benchmarked against Medicare RVRBS reimbursement. Illustratedreimbursement ranges are representative of urban market settings around the country.

2) Provider business model, capacity/demand/size/brand as well as network participation… impact upper payment levels.

3) Significant price variability exists in a single market between hospital based and freestanding ASCs… business model,capacity/demand/size/brand as well as network participation all factor into the pricing strategy and negotiationsoutcomes.

IllustrativeProviderClasses

Variable Payer Negotiation Outcomes: Low & High Ranges (1)

Large CommercialHMO/POS/PPO

Network RentalPPOs

Medicare Advantage Managed Medicaid

Physicians(PCPs &

Specialists)

65%-175% (2)

(% of Medicare)

90%-200% (2)

(% of Medicare)

70%-150% (2)

(% of Medicare)

35%-120% (2)

(% of Medicare)

Amb Surg(Hospital based& Freestanding)

75%-400%(2,3)

(% of Medicare)

100%-500%(2,3)

(% of Medicare)

70%-120%(2,3)

(% of Medicare)

35%-250%(2,3)

(% of Medicare)

What Does “Market” Really Mean? Why Do Prices Vary?



Multiple stakeholder and customer groups… little customer

loyalty… patient volume strategies largely shifted to retention.

Practice models which provide little too no leverage with payers...

– Reduced net revenue realization across largest payer contracts.

– P-4-P programs and physician efficiency measurement reporting as

well as tiered-network payer products.

– Continued erosion of fee-for-service to managed care and new

payment methodologies.

– Continued payer market consolidation and State and Federal

contracting with payers can result in an unfavorable practice payer mix

revenue portfolio.

Increased competition for less dollars and the same patients.

Longer hours, higher expenses and less net income/physician.

Physician Practice Current and Emerging Challenges

(12)



Physician Practice Current and Emerging Challenges


Increasingly difficult to recruit/retain good clinical and

administrative staff.

Less time with patients and more paperwork.

More regulatory/payer compliance/costs and increasing lawsuits.

External parties trying to control the patient-physician relationship.

Price transparency and consumer-driven healthcare.

Lack of capital to support needed investment in technology

No resolution of CMS sustainable growth rate impact on CMS fee

schedule… many national health plans index fees to CMS.

Questionable ability to maintain historical compensation levels.

CMS requirement for EMRs as a condition of continued Medicare

participation.

State and Federal Healthcare Reform.


WHAT IF… 80%+ of practice revenues came from

your payer contracts? How would this impact your…

– Short-term and long-term strategic planning?

– Capital planning?

– Alignment and integration strategies?

– Collaboration or lack thereof with select payers?

– Business and service development and/or divestiture?

– Staff recruitment/retention strategies and policies?

– Information technology needs, planning and implementation?

– Relationships with patients and referring physicians?

– Formation of provider networks… e.g., IPAs, Physician-Hospital Organizations, clinical integration models,acquisitions of physician practices or practice mergers?

(14)

Managed Care Strategy Development Process



Presentation Agenda


Basic Payer Goals









(15)


Third Party Payer Roles in Patient Steerage

“Potential access” to payer members through participation.

Health benefit plan design (e.g., group and Medicare

Advantage products) can provide financial incentives to

members to use participating providers.

Practice name, physician name(s), specialty and location

listed in payer electronic and print media.

Provider contracts which encourage/require referrals to

participating network providers.

No Active Steerage by the Payer... Why?... “LIABILITY!”

Validate above from your practice data. What areyour business reasons for participating with a payer?

II. Patient Steerage – How Does It Really Work?

(16)


Payer UM Controls - Impact on Referrals

"REFERRALIMPACT"

145 - 370 SPECIALIST Referrals

(HOSPITALS)

InpatientProcedures

50 - 150I/P Admissions

95 - 135Amb. Surgeries50 - 85

Amb. Surgeries 25 - 90I/P Admissions

InpatientProcedures

Specialists435 - 1,100

Amb. Visits/Yr.

Primary Care Physician4,200 - 5,100Amb. Visits/Yr.

145 - 220Outpatient

Surgeries/Yr.

75 - 240Hospital

Admissions/Yr.

165 - 530Inpatient

Procedures

Variables: Managed care penetration…

practice business model… managed care

strategy… practice business strategy.(17)



Hospital Role in Patient Steerage

General… Participation status of hospital and medical staffinfluences patient choice on elective or self-directed referrals…perceived quality of the service interactions influences repeatbusiness and brand… both impact physician referrals.

Hospital Employed… Patients access the hospital through electiveand non-elective means… some number of patients return forfollow-up care... hospital brand in market and marketing effortshave an impact.

Hospital Based or a FPP… Variable impact depending on type ofpractice and emergent/urgent or elective nature of visit… marketbrand/reputation of hospital and physicians… marketing efforts.

Integrated PHO or IPA… Delegated credentialing… contractingpractices… deployed market strategies.

Hospital-Physician Joint Ventures… Variable factors.


(18)


Your Practice’s Role in Patient Steerage

Ensuring consistent patient/care giver satisfaction with

your practice’s clinical quality and service quality

– Do not underestimate the power of favorable clinical and service

quality… i.e., the patient service experience… on the success of

your practice and your payer strategy.

– Ensuring you have a “customer” oriented culture?

– Deploying strategies and resources to attract and retain patients

and employees?

– (Customer Service Leadership + Service/Clinical Quality

Improvement) x (Staff Knowledge, Skills, Abilities) =

Improved Quality of Care, Patient Safety and Profitability…

better payer leverage… reduced operating expense and risk

exposure… more satisfied patient/customers.


(19)


Your Practice’s Role in Patient Steerage

The clinical quality/cost efficiency of your practice… factors

which are increasingly being considered by payers for tiered

networks.

Business growth/revenue diversification initiatives and

inclusiveness/exclusiveness with other providers… don’t wait

for the other shoe to drop!

Your physician referral relationships, participation in Physician

Organizations as well as your relationships with your affiliated

hospital… all impact patient steerage.

Your practice’s growth, marketing and referral

strategies drive patient volume… not payers!


(20)


Practice Business Value Chain and Patient Steerage

The “customer value” concept, common in retail businesses, does

not work under a managed care network management model.

Practice financial health and profitability is determined by how

effective and efficient the Practice is in the overall delivery of

services… clinical and non-clinical… and the value of these

services to the patient customer as well as referring physicians.


(21)

Patient REVISITS… new healthcareissues or continued health problems

Patient Encounter& Services

Delivery

All ActivitiesThat Lead To A

Patient Visit

Post Visit PatientOutcomes &Satisfaction


Presentation Agenda


Basic Payer Goals









(22)


III. Managed Care Contracting Strategies and Different Negotiating Approaches

(23)

The payer contracting process should be integrated with the practice’s

strategic financial planning process to allow management to better determine

their short-term/long-term financial targets, link financial targets to

operational strategies and also align operational plans to financial targets.

A&M’s Three Phase Contracting Approach

Implement Contracts

• Prepare Work Plan to Ensure Accuracyof Contract Load, P-4-P and CareManagement Program Implementation

• Integrate Contract into Patient Access,Charge Capture & Patient Accounting

• Payer Relationship Management

• Revenue Recovery and DenialManagement (ongoing process)

• Integrate with Payer Portfolio, PhysicianReferral Management & NetworkDevelopment /Integration Strategies

• Monitor Payer Contract Performance

• Train Staff

• Implement Outsourced Services (ifapplicable)

Negotiate Contracts

• Initiate Contracting Strategy/ProposalProcess with each Payer (new or priorto contract renewal)

• Collect Data on Practice Cash Issuesand Include in Negotiations Process(i.e., for a concurrent resolution)

• Counter Proposal Process and RateSensitivity Modeling Analyses

• Review and Finalize Contract/RateAmendment

• If no Acceptable Contract… PrepareTermination Disruption Analysis,Patient Retention/ExternalCommunications Strategy andTerminate Contract

Develop Managed CareContracting Strategy & Financial

Planning Analyses

• Internal Assessment – Payer ContractPerformance, Modeling, CurrentPractice Margin Gap, Net RevenueOpportunity Assessment & Validation

• External Market Assessment – PayerSWOT Analysis, Market Review,Product Share, Physician Referrals,Reimbursement & Alliance Options

• Develop Overall and Payer SpecificContracting/Pricing Strategies, Tactics,Goals and Objectives

• Standardize Contracting Process,Pricing/Proposal Templates & PracticeNegotiations Team

As part of the strategy formulation process, aleadership planning retreat is recommended


TraditionalMarketDriven{Small

Practice}

EnhancedMarketDrive{Group

Practice}

RedefiningCost Plus

{ClinicallyIntegrated}

ModifiedCost Plus

{PHO-IPA-Hospital}

WHICH APPROACH FAVORS THE PAYER? THE PRACTICE? WITH EMERGING

PROVIDER BUSINESS MODELS… WHAT WILL YOU NEED TO PREPARE FOR?

Payer Contracting: Negotiating Process/Approaches

Practice Negotiating Models

Low Risk, LowInvestment, MinimalPerformance… Payer

Defined MarketPayments and

Process… MostCommon w/Practices

Moderate Risk, SomeInvestment, EnhancedPerformance and Linkto Strategy… Largely

Favors the Payer

Higher Risk, StrategyDrives Process,

Moderate Investments,Better than AveragePerformance… moreBalanced Outcomes,

Higher Termination Risk

High Risk/High Return,Strategy Drives Process,Alignment w/Physicians,Significant Investments,

Best Practices…Redefined Relationships

with Payers, HighTermination Risk




Payer Physician Contract Outline - Best Practices

(25)

Understand What You Are Agreeing To!!!



Payer Contract Negotiations – Key Questions

How does the practice’s relationship with each key payerrelate to its overall business goals and objectives?

Does the practice’s business goals and objectives with keypayers drive its pricing and negotiating strategy?

Is the practice making or losing money on its key payercontracts? How does the practice know?

– Can the practice improve its net revenues?

Does the practice’s relationships with payers help thepractice to be more competitive in the marketplace?

Patient loyalty is to… the practice or the payer?

What will happen to some payer reimbursements if Gov. cutspayer plan payments… are fee schedules linked?




How are the practice’s top line services impacted by its payer

contracts? Protections from silent PPOs?

How are the practice’s competitors using payer contracts to

their… Advantage? Disadvantage?

Practice’s patient service market share by payer product?

How do the practice’s contracts impact operational/capital

planning?

How will the practice’s decisions on key payer contracts impact

patient referrals to/from the practice?

What staffing and technology capabilities does the practicerequire to optimize its payer revenues?

What is the practice’s compelling value proposition for payers?

What are you committing to in the contract?




What is the reimbursement relative to practice charges, cost andto Medicare?

What are the administrative requirements under the payercontract? What pre-authorizations are required for what specificservices, and how will they impact current referral patterns?

Who determines medical necessity and how is it defined?

What are the specific eligibility determination requirements andhow are retroactive terminations handled?

What are your appeal rights, how many levels of internal andexternal appeals are allowed and how are disputes resolved?

How are underpayments and overpayments to be handled?

Is the practice required to accept the payer contract under anoverall “all payer” contract with the payer?



Is the agreement an evergreen agreement and what are theterm/termination provisions?

What is the annual inflation factor?

How and where has the payer modified the reimbursement feeschedule from traditional Medicare?

–Is the fee schedule provided?

How are non-par referrals/coverages handled?

What P-4-P incentives are involved and what are the specificmechanics to obtain? Realistic? Meaningful?

If capitation or bundled payments are involved, what is allowedas a billable service outside the capitation? Risk adjustments?

How are new services/new technology added and reimbursed?

What are the payment timelines? Guarantees?



Presentation Agenda


Basic Payer Goals









(30)


Emerging Provider Business Models

Physician alignment with hospital clinical care

operations is critical for…

– Better managing the care delivery process.

– Gaining added resource efficiencies.

– Expanding profitable patient service volume.

– Improving bed management turnover and ALOS.

– Optimizing managed care net revenue potential.

– Developing a sustainable competitive advantage over

primary competitors.

IV. Physician Alignment and Integration: Evolving and Emerging Business Models


Cooperation

• Medical Directorships• On-Call Coverage

Employment

• Employment• Independent

Contractors

Purchase

• Asset Purchase• Non-Competes

• Employment

Joint Venture

• PHO/IPA/PO• MSO/PSO

• Surgery, Urgent &Imaging Centers

• Hospital Syndication& Ownership

ClinicallyIntegrated IDS

• Clinically IntegratedPHO/IPA/PO• Contractual and/or

Ownership Stake• Asset Purchase &

Employment/MedicalGroup Foundation

• Joint Ventures

PhysicianIntegrationContinuum

Low…Alignmentof

Risk & Return

High…AlignmentofRisk & Return

(32)

How will your practice address

physician alignment and integration?

Emerging Provider Business Models: Physician Integration



Full GlobalCapitation

Acct Care Orgs(Physician Model)

Global HospitalCapitation

Episodes of Care &Gainsharing

Deg

ree

ofF

inan

cial

Ris

k

Global HospitalCase Rates

Low

High

Risk Withholds& P-4-P

Hospital PPS (IP/OP)

FFS Charges

Degree of Clinical integration

Medical Homes

High

Low

Continuum of Financial/Clinical Integration

Emerging Provider Business Models and Payments

The degree of

provider

integration and

alignment of

financial incentives

across the care

continuum, will

determine the

ability of providers

to accept

risk/reward based

payments, while

remaining

financially viable.



Clinical Integration

1996 Department of Justice and Federal Trade

Commission Statements of Antitrust Enforcement

Policy in Health Care

– "[A]n active and ongoing program to evaluate

and modify practice patterns by the network's

physician participants and create a high degree

of interdependence and cooperation among the

physicians to control costs and ensure quality."

Provider Business Models: Clinical Integration

(*) Note: Above is excerpted/summarized information and does not represent a legal opinion.



Cost of Care Drivers: Insurance Vs. Performance Risk

Insurance Risk – How sick or

well patients are… providers have

no control over this. Capitation

models in the 1990s contained

insurance and performance risk,

which caused major financial

performance challenges for many

providers.

Performance Risk – Once a

patient has an illness or condition

and enters the healthcare system

for treatment, it is appropriate for

providers to be held accountable

for their performance in delivering

care, the quality of the care and

the cost of the care.

Breaking Down An Episode ofCare and Associated Costs

Payer cost containment through price, payment

rules and utilization controls accomplishes little

with respect to quality or volume of care provided.

Wtd. Cost/ SpecificEpisode of Care/

Person =

No. SpecificClinical Episodes/

Person (times)

No. Episodes ofCare/Specific

Clinical Episode(times)

No. & Type ofServices

Provided/SpecificEpisode of Care

(times)

No. of CareProcesses

Provided/Service(times)

Cost/Process forEach Service

Provided

Provider Performance RiskP

rovid

er

Perf

orm

an

ce

Ris

k

Insura

nce

Ris

k


© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (36)Source: Paths to Healthcare Payment Reform, Center for Healthcare Quality & Payment Reform (www.paymentreform.com)

Episodes of Care Payment Methodology Elements

Key Variables

Length of

time EoC

applies to.

Services to

be bundled

into an EoC

payment.

Tech Issues

Yours?

Key

Payers?

CurrentEoC TypePayments




(37)

Market Conditions Favorable for Clinical Integration

Traditional F-F-S and managed care payment sources are looking

to slow payment growth, freeze or reduce payment levels to

providers.

Increasingly difficult to the sustain traditional business models.

Technology has become a key factor for remaining competitive…

clinical and administrative.

Major purchasers of healthcare are demanding evidence of

improved quality, cost controls and utilization efficiency. Managed

care health plans are increasingly expected to do more for less

money, which will also impact payments to providers.

Practice economics are declining and physicians are overworked.



Market Conditions Favorable for Clinical Integration

Costs of care delivery are perceived or viewed as being too high.

Quality is perceived as mediocre and there is much variation in

practice patterns among physicians.

Very little meaningful coordination of inpatient/outpatient/

ambulatory/chronic care services across the care continuum.

Decreased cooperation between hospitals and physicians with

increased competition between both with each other… i.e., both

going after the same fixed piece of the pie vs. looking to work

together to increase the size of the pie piece.

Provider organizations best positioned in future state market

environments will be those organizations which can effectively

attract and retain patients.




Value Proposition for Hospitals and Physicians?

Allows for “pooling” of data and information across payers.

Provides for common standards and enforcement mechanisms

that are not readily achievable by payers in the marketplace.

Provides a single efficient vehicle for physicians to interface with a

large number of health plans.

Provides important vehicle for the hospital to achieve quality and

community mandates with physician participation.

Enables efficiencies and quality enhancement that cannot be

achieved by physicians and/or hospitals working independently.

Recognizes that physicians in a non-risk health plan environment

can achieve efficiencies (cost and quality) without having to merge

their practices or enter into a hospital employment model.





Value Proposition for Hospitals and Physicians?

Allows Hospital, Other Network Facility and Ancillary ServicesProviders to achieve efficiencies and clinical integration withnetwork physicians and affiliated physician organizations.

Improves the value for the health care purchaser and the patient.

Employs significant financial incentives and other aspects offinancial integration.

Collects relevant outcome data for consumers.

Increase access to market share and a more favorable payer mix.

Prepares providers for future payment methodologies that will holdthem accountable for performance risk.

Is any of the above materially inconsistent with the goals of

both providers and payers for care and cost management?

III. Clinical Integration as a Better Model for Managed Care Contracting


1. Development and Organization

Clinical Integration Readiness Assessment

Management/Clinical Development Team

Analysis of Current Legal Structure

Physician Alignment and Training

Analysis of Current Payer Contracting

IT Technology/Data Warehouse

2. Initiate Clinical Integration Activities

Data Collection for Clinical Programs

Common Patient Registry

Network Refinement/Recruitment

Disease Management, EBM ClinicalProtocols, and EMRs

Training and Physician Leadership

3. Regulatory Compliance and GroupContracting

FTC Guidelines/Approval

Standardize and Integrate Protocols

Clinical Integration Network Contracting

Measure, Monitor, Report, and Educate

(41)

Clinical Integration

Development Process




How will payers and

non-clinically

integrated providers

respond to clinically

integrated, multi-

provider

aggregations which

can do joint

contracting?

Illustration: Clinically IntegratedCommunity PHO Network Model



Acute Care Full Service Hospitaland Related Services

Affiliated/Community-BasedPhysicians, Mid-Level Practitioners

& Allied Health Providers

General and AdvancedMedical Home Networks

Other Rehab, Sub-Acute,Behavioral Health & Ancillary

Services Facilities

Other Acute & Specialty Hospitals(e.g., Children’s & Cancer Hospitals)


There is no one-size-fits-all approach.

Providers need to invest more in affiliations rather than less…

traditional “cooperation” models are ineffective.

A shared culture, common vision, and operational support

drive success more than economic incentives.

A defined business strategy should drive physician integration

decisions.

– Will the traditional practice business model be a viable and

sustainable business model in your market in 3 to 5 years?

Balanced risk/reward compensation models work best with

and for physicians.

Evolving payment models favor more integration vs. less.

Physician - Hospital IntegrationIV. Physician Alignment and Integration: Evolving and Emerging Business Models


Presentation Agenda


Basic Payer Goals









(44)


Christopher Kalkhof,FACHE

Director

Office

(347) 254-2433

Mobile

(716) 912-0309

E-Mail

ckalkhof@

alvarezandmarsal.com

Website

www.alvarezandmarsal.com

Christopher Kalkhof

V. Contact Information and Speaker Bio

(45)

▲ Christopher Kalkhof is a Director with Alvarez & Marsal’s Healthcare Industry Group based out of New York, with morethan 24 years of diverse healthcare and managed care management experience. He specializes in managed carestrategy development and contract negotiations; contract implementation and integration with revenue cycle; provider-payer collaborations; physician alignment and integration; strategic planning and new product development.

▲ Over the last several years, Mr. Kalkhof has spent much of his time assisting provider clients to optimize their netmanaged care revenue potential, resulting in net rate increases and revenue improvements in excess of $435 million.Over the span of his career he has gained managed care related work experience in over 20 states and has directlynegotiated over 240 payer agreements for clients which have included hospital, behavioral health, physician, IPA/PHO,home care, hospice and skilled nursing facility contracts. He has also reviewed hundreds of additional payer contracts.

▲ Current, recent and prior projects include:

– Developing a broad-based managed care strategy and leading a contract rebasing/negotiations process, involvingover 50 payer product contracts; inclusive of select payer collaborations and employer marketing.

– Conducting a managed care revenue improvement assessment for a health system in a debt covenant violationwith its creditors, to determine net revenue improvement opportunities.

– Managing a group health benefit payer selection process and building a tier-1 benefit provider network wrappedaround a hospital and its medical staff.

– Conducting a risk mitigation/EBIDA improvement opportunity assessment as part of a due diligence “clean team”review of an acquisition candidate hospital, which also included a for profit, clinically integrated PHO joint venture.

– Evaluating a hospital’s current contracting strategy, contract content and physician-clinical integration options.

– Managing contracting process for a health system with 1,400 employed physicians/mid-level practitioners.

▲ Prior to joining A&M, Mr. Kalkhof was as a Director in a Big 4 firm’s provider revenue cycle consulting practice and alsoserved as their national managed care lead. Earlier, he served in a number of interim management and consultingroles including: SVP of Payer Relations for a nine hospital health system; VP of Managed Care for a communityhospital after the hospital’s separation from its parent health system; and as a functional Director of Managed Care fora community hospital while in bankruptcy and post-bankruptcy emergence. Mr. Kalkhof has also held managementpositions in a practice management firm, a health insurer, a HMO and a LTC facility.

▲ Mr. Kalkhof received his Master of Health Administration degree from Tulane University and his Bachelor of Science,degree from Allegheny College. He is a Fellow in the American College of Healthcare Executives and a frequentpresenter on managed care revenue improvement topics for the HFMA, ACHE, MGMA, WRG and other professionalgroups. In 2008, Mr. Kalkhof served as a member of the New York State Office of Medicaid Inspector General’sMedicaid Managed Care Compliance Program Guidance Advisory Committee.

Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved. 4646

www.alvarezandmarsal.com

The Alvarez &Marsal Advantage

Founded in 1983, Alvarez & Marsal (“A&M”) is a leading independent global professional services firm with more than 1,700 professionalsbased in North America, Europe, Asia and Latin America.

Currently 39 offices globally with headquarters in New York, London, and Hong Kong.

Offer deep financial, tax, operational and industry expertise.

Deep bench of talent across industries with the unique ability to transition between financial, operational and advisory roles to meet client’schanging business needs.

A&M is the leading, independent global professional services firm which excels at leadership, problem solving and value creation. A&M’sHealthcare Industry Group practice represents an assembled team of healthcare professionals who bring a significant track record of workingwith management, boards of directors and stakeholders of both investor-owned and non-profit providers, payers and suppliers to improveoperational, financial and clinical performance.

A&M’s managed care consultants and interim management professionals bring deep best practices expertise in the development of managedcare contracting and physician alignment strategies, payer contract negotiations, and the implementation / integration of contracting andphysician alignment strategies into an organization’s overall clinical and business operations.

Our managed care services are aligned with your contract management cycle and can be tailored to meet your specific needs and marketenvironment. We work with your team, serving in advisory or interim management roles, to ensure your success with your overall payercontracting strategy.

managed care contracting strategy

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