Monica E. Oss, Chief Executive Officer, OPEN MINDS

Arizona State University

July 19, 2012

• Why the demand for “coordinated care”? What factors are shaping emerging models?

• What are the emerging “coordinated care” models? What management practices are needed to assure both good performance and financial sustainability?

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I. Why The Demand For “Coordinated Care”? What Factors Are Shaping Emerging Models?

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1. Federal and state deficits

2. Insurers and managed care plans under price pressure

3. Consumers paying more out of pocket

4. Rising cost per person – aging population, longer life expectancies, new technologies

5. High proportion of population uninsured and uncertain future about implementation of reform

6. All ‘easy’ cost savings have been made

Payer focus is moving to the costs of care for consumers using largest proportion of resources. Driving interest in “coordinated” care

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•$11,487 per person 5% of U.S. population

account for half (49%)

of health care spending

•$664 per person 50% of population

account for only 3% of

spending

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• Services to support chronic illnesses contribute to 75% of the $2 trillion in U.S. annual spending

• Patients with co-morbid chronic conditions costs 7x as much as patients with one chronic condition

Nine Highest-Cost Chronic Conditions

1. Arthritis 2. Cancer 3. Chronic pain 4. Dementia 5. Depression 6. Diabetes 7. Schizophrenia 8. Post traumatic conditions 9. Vision/hearing loss

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Condition No Behavioral

Health Disorder

With Mental Illness And/Or

Addiction

Asthma/COPD $8,000 $24,598

Congestive Heart Failure

$9,488 $24,927

Coronary Heart Disease

$8,788 $24,443

Diabetes $9,498 $36,730

Hypertension $15,691 $35,840

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Total private

insurer

medical costs

for children

with autism is

3 to 7 times

greater than

for those

children

without

autism. . .

Rhonda

Robinson-Beale,

M.D., Optum

• Multiple specialists (and multiple prescriptions)

◦ Consumers with 5 or more chronic conditions see 16 physicians a year with 37 office visits

◦ Fill 50 prescriptions per year

• Poor follow-up from ER visits and hospitalizations ◦ 20% of Medicare hospitalizations are

followed by readmission within 30 days

◦ Among <65 Medicaid patients, 10% were readmitted within 30 days

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Readmissions add $15 billion in annual Medicaid and Medicare payments

Integration of

Primary Care &

Chronic Disease

Management

Integration of

Primary Care

& Behavioral

Health

Integration of Primary Care & Behavioral Health Coordination of behavioral health services and primary care services to improve consumer services and outcomes

Integration of Primary Care & Chronic Disease Management Coordination of services to manage and address multiple chronic disease states within or parallel to primary care

“Care coordination”

the key element in integrated

models

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22%

49%

64%

80%

97%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Top 1% Top 5% Top 10% Top 20% Top 50% Bottom 50%

Perc

en

t of Tota

l E

xpen

ditu

res

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• Management via ACOs, medical homes, and primary care

• Specialist role is secondary

• Focus on prevention and wellness

• Consumer self-care and consumer convenience is key

• Web presence (optimization, reputation, etc.) critical for consumer referrals

• Health information exchange a requirement

Primary care relationships with clearly defined specialty service

Consumer ‘experience’ (and preference) critical

Web presence key referral mechanism

Health information exchange capabilities

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• Coordination of medical, behavioral, and social service needs by specialty group within larger system

◦ Health homes

◦ Waiver-based HCB programs

◦ PACE programs

◦ Specialty care management programs

• Assumption of performance risk (with or without financial risk)

Cross-specialty and cross-system care coordination capability

EHR system and HIE with real-time care management metrics

Performance-based contracting and risk-based contracting capabilities

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New

Financing &

Service

Delivery

Models

New Tech

For

Treatment &

Service

Delivery

Less FFS More P4P

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More Organizations Are “Rating” Performance In Health Care

CMS Quality Initiatives

National Committee for Quality Assurance (NCQA)

National Quality Forum (NQF)

Substance Abuse and Mental Health Services Administration (SAMHSA)

The Joint Commission

Center For Excellence in Assisted Living

Care management organizations (HMOs, MCOs, PPOs, ACOs, etc.)

Consumer-driven open-source rating organizations

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reserved. 17

OPEN MINDS © 2012. All rights

reserved. 18

FFS Financing

Payer (or MCO) maintains risk for unit cost

and quantity of services used

Consumers request services

Provider organizations deliver services

and are reimbursed based on volume

Beyond FFS Financing

Payer (or MCO) contracts with provider

organizations to deliver services to a

population for a fixed amount of dollars

Consumers request services

Provider organizations determine type and

amount of service, delivers service, and

manage pool of dollars

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MCO “approves” service

OPEN MINDS © 2012. All rights

reserved. 20

Synergistic Environmental Factors In Current Market

Emerging Developments in

Neuroscience New Health Data Systems

& Informatics

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New Functionality In Telecommunications

Ability to monitor

brain functionality and

changes

Changing theory of

brain development

and maturity –

longer and later

Identification of genetic and

epigenetic factors in behavioral

and cognitive disability

Better understanding of

brain chemistry

Discovery of

possibility of brain

cell regeneration

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Emerging Developments in Neuroscience

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New Functionality In Telecommunications

Telehealth

Telecare & Assistive

Technology ehealth

Smart home Technology

Tech-assisted cognitive retraining

Companion robots

Remote monitoring

systems

Remote vital sign sensors

Wearable wireless devices

mhealth

Smartphone applications

Text message

alerts

Telehealth

Real-time consultation

Remote audio/video

therapy

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Bioconnectivity

Single Real-Time Clinical, Admin, &

Cost Data Set

EMRs & EMR Data (NHIN of the future)

Clinical Metrics From

Telehealth

Connection of & Access To All Data Sets Via Web Tools -- For Consumers,

Professionals, Health Systems

Clinical Data From

New Diagnostics

& Neurotech

New Health Data Systems & Informatics

Electronic health

recordkeeping

systems

Computer-assisted

treatment planning

and clinical expert

systems

Predictive clinical

analytics

Remote monitoring

and smart homes

Web-based consumer

interaction and

consumer self-

management

Telehealth, virtual and

alternate reality

technologies, and web-

based treatment

management

Neurotech devices

and computer-based

cognitive retraining

tools

New pharmacological

delivery systems - smart drug delivery systems:

patches, injectibles,

microchips, etc.

New diagnostics –

scans, biologic

testing, web-based

assessments, etc.

Integrated performance metrics monitoring – clinical, HR, financial, marketing

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New

Technologies

Allow Greater (&

More Effective)

Integration &

Coordination Of

Care

Telehealth and virtual

consultation

Interoperable

electronic

recordkeeping

systems

Smartphone and other

technologies for

consumer-directed

disease management

Participation

in health

information

exchange

programs

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Integrated care is a model

of health care delivery that

engages people in the full

range of physical,

behavioral, preventive and

therapeutic services to

support a healthy life.

In an integrated care

setting, behavioral

health and medical

providers work together to

coordinate treatment and

follow-up of a person’s

health care.

II. What Are The Strategies To Assure Good Performance & Financial Sustainability?

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1. Payers and consumers want “coordinated care” models – for different reasons

2. Coordinated care models – if done well – can meet the objectives of both payers and consumers

3. Initial evaluation data on “coordinated care” models is positive but not definitive

Despite this, the sustainability of coordinated care models is questionable. The question – how to support the performance of these new models – and make them financially sustainable?

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• Treatment of depression in primary care setting

• Standardized assessment questionnaire for PCPs

• Clinical care manager for patient education and psychiatrist for team consult

• 4,862 depression screenings (PHQ9) at 80 clinics over a three year period from March 2008-2011

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Consumer Outcomes

Before After

Depression remission

30% of patients after 6 months

53% of patients after 12 months

Depression response

40% of patients after 6 months

70% of patients after 12 months

OPEN MINDS © 2012. All Rights Reserved

• 22 clinical locations in 15 Tennessee counties ◦ Sites including primary care clinics, schools and Head Start Centers

• Behavioral health consultant (BHC) embedded, as full -time member of the primary care team

• Psychiatrist is available by telephone for consults

• Primary Care Provider (PCP) “hands off” the patient to the BHC for assessment or intervention.

OPEN MINDS © 2012. All Rights Reserved

System Performance

28% decrease in medical utilization for Medicaid patients Medicaid patients

20% decrease in medical utilization for commercially‐‐insured patients

27% decrease in psychiatry visits

34% decrease in psychotherapy sessions

48% decrease in mobile crisis team encounters

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Sources of Funding For Integrated Care Programs

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Funding Obstacles For Sustainability Of Integrated Care Programs

1. Define the coordinated care business model

2. Develop a financial sustainability plan for the business model

3. Establish key performance metrics to track both clinical performance and financial performance

4. Adopt metrics-based management practices to manage to the metrics and assure on-going success

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Structural

Financing

Model

Service

Delivery

Model

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Structural Financing Options Reimbursement Options

ACO partner (FFS P4P Or risk-based) FFS, FFS with P4P, risk-based

Specialty ACO provider or partner FFS, FFS with P4P, risk-based

Medical home provider FFS, FFS with P4P, risk-based

Medical home partner FFS, FFS with P4P

Health home provider FFS, FFS with P4P, risk-based

Health home partner FFS, FFS with P4P

Case rate-reimbursed specialty program (by population)

Case rate, episodic payment, etc.

High-performing network provider and/or “Center Of Excellence”

FFS, FFS with P4P, case rate

Network provider FFS

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Characteristic Delivery System Elements

Services Delivered

• Service unit by professional type

Reimbursement • $ reimbursement per service unit (FFS, within case rate, etc.)

Service Volume • Referral generation (if FFS) • Utilization of population (if case rate or capitation)

Location • Physically co-located • Tech-enabled co-location • Coordination between separate sites

Organizational Affiliations

• Single legal organization • Co-owned legal organization • Exclusive contractual relationship • Contractual relationship

Information System Platform

• Same EHR system • EHR connected via HIE with integrated data • EHR connected via HIE with non-integrated data

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Conduct a

breakeven

analysis

Develop

profit/loss

projections

Business model

to imbed in

organizational

strategic plan,

operating plans,

and final budget

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• Breakeven analysis answers question ‘at what level of revenue will the program break even”?

• Breakeven analysis is a supply side (i.e. costs only) analysis – does not address revenue side of the equation

• Construct breakeven analysis for the specific coordinated care business model both with and without organizational overhead

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• Key breakeven analysis factors: ◦ Annual yield/productivity of service

units (by type) per direct service (billable) clinical team member

◦ Average annual total compensation cost per direct service (billable) clinical team member

• Assumptions in breakeven analysis: ◦ Constant fixed costs

◦ Average variable costs with assumptions

◦ Relationship of revenue to variable expense in assumptions

◦ Factors affecting assumption of yield/productivity of team members

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• Financial statement summarizing revenues (with associated costs and expenses) incurred during a specific period of time

• Illustrate the ability of the program to generate a margin by increasing revenue and reducing costs

• Revenue projections – and assumptions – are key element of P/L projections

• Typically, revenue projections in health and human services are created by payer/contract

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• All services provided (and paid) in

integrated care setting (assessment codes, etc.) Address same-day billing

restrictions of specific payers • Number of annual unique

consumers by payer • Number of annual service units

(by type) per consumer by payer • Negotiated contract rate for each

service unit by type and by payer • Billing and collections yield (% of

total units billed that are collected) by payer

• If P4P bonuses or penalties, the projected performance on each P4P performance measure

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Key issues include:

• Relationship of new program models to overall service portfolio

• Allocation of organizational overhead by program and/or payer contract

• Allocation of organizational marketing expenses

Business model should provide executive team with:

• Capital investment requirements

• Cash needs for start-up

• Cash needed until breakeven point achieved

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If you don’t measure it, you can’t manage it

Whatever gets measured...

Gets attention

Gets done

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Having a plan is not enough – tracking and managing performance of plan is key . . .

• Assess timing of the market changes

• Facilitate operational improvement

• Assure sound financial management

• Make strategic course corrections

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Management Dashboards & Alerts

Benchmarking & Performance Targets

Key Performance Indicators

Routine Operational & Management Reports

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• Key performance indicators (KPIs) are financial and non-financial measures used by the management team to ensure that the agency is moving forward in achieving its strategic and organizational objectives

• Driven by structured data from the information system, the KPIs represent those data points that measure the “health” of your organization

• Indicator utility: ◦ Lagging indicator

◦ Coincident indicator

◦ Leading indicator

• KPIs are typically tied to an organization's strategy using concepts or techniques such as the Balanced Scorecard

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Vision

&

Strategy

Customer "To achieve our

vision, how

should we

appear to our

customers?"

Ob

jective

s

Me

asu

res

Ta

rge

ts

Initia

tive

s

Financial "To succeed

financially, how

should we

appear to our

shareholders?"

Ob

jective

s

Me

asu

res

Ta

rge

ts

Initia

tive

s

Growth &

Innovation "To achieve our

vision, how will we

sustain our ability

to change and

improve?

Ob

jective

s

Me

asu

res

Ta

rge

ts

Initia

tive

s

Internal Business

Processes

Ob

jective

s

Me

asu

res

Ta

rge

ts

Initia

tive

s

"To satisfy our

shareholders and

customers, what

business

processes must

we excel at?"

The Balanced Scorecard Concept

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• Use benchmarks and performance targets to challenge and drive continuous improvement in service quality and operations

• Benchmark benefits ◦ To compare with other organizations

◦ To develop cross-industry comparisons

◦ To develop points of reference or standards of practice

◦ To make best-in-class determinations

◦ To develop best practices

Beware the “benchmarking mediocrity” trap!!

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Dashboard -- A computer interface that organizes key performance indicators in an easy to read format, displaying the information that executives need to run an organization

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Operating Unit

Performance Indicators

Organization Strategic

Plan & Objectives

Operating Unit Plan

& Objectives

Program Plan

& Objectives

Overall Agency

Performance

Organization-Wide

Performance

Indicators

Program-Specific

Performance Indicators

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Once you have the plan and the tools, it’s all about execution

• Achieving required operational excellence for operating in risk-based environment

• Managing to the metrics – assumptions in the strategy

• Discipline to achieve those metrics

Which brings us to metrics-based management

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Metrics-based management is a performance management system that relies on three components, each of which must be quantitatively and qualitatively expressed.

• Current State: Baseline measures of your organization’s current performance

• Desired State: Where your organization wants to be regarding key priorities

• Bridging the Gaps: A definitive plan for how you'll move your organization to achieve the desired performance

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Learning about

markets,

customers,

competitors, and

processes

Measure the

metric

Analyze the

metrics against

budget and

benchmarks

Identify

improvement

opportunities

Design and

develop the

improvement

Launch the

improvement

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Optimization What’s the best that can happen?

Predictive Modeling What will happen next?

Forecasting / Extrapolation What if these trends continue?

Statistical Analysis Why is this happening?

Alerts What actions are needed?

Query / Drill Down Where exactly is the problem?

Ad hoc reports How many, how often, where?

Standard Reports What happened?

Degree of Intelligence

Co

mp

eti

tive A

dvan

tag

e

• Executive team and board interaction

• Business unit manager accountabilities

• Supervisory positions and their reports

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• Cultural shift toward accountability for performance metrics – executive team, program managers, and supervisors

• Role of the manager is to ensure the targets are met – planning, human capital, processes, policies, etc.

• Metrics should be integral part of individual performance evaluations and compensation

• In risk-base environments, managing to the metrics is essential to success

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Moving

From

Strategy To

Future

Success

Mission Focus &

Living Values

Culture of

Responsibility

&

Accountability

Building

Entrepreneurship

Dynamic &

Engaged

Leadership

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