Building Your Digestive Health Network Strategy...Service Line Strategy Advisor Building Your...

Service Line Strategy Advisor

Building Your Digestive Health

Network Strategy

Vik Srinivasan

Senior Analyst


[email protected]

©2014 The Advisory Board Company • advisory.com

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Building Your Digestive Health

Network Strategy

Vik Srinivasan

Senior Analyst


[email protected]


5

Introducing Service Line Strategy Advisor

Deep Bench of Experts Serve as an Extension of Your Staff

Program in Brief

Service Line Strategy Advisor provides service line, business development, planning, and operational leaders comprehensive

planning support through customized projects and unlimited consultation from a team of 35 dedicated experts. Our

mission is to drive successful service line planning, investment, and growth strategy for our members facing new rules of

competition in a value-based market.

Consultative Support for Strategic Planning Endeavors

“What investments will grow

our market share?”

“What service gaps do we need to

fill to compete across the

continuum?”

“How do we restructure service

lines

to win patients on value?”

• 360-Degree Technology

Investment Assessment

• Capital Investment

Prioritization Plan

• Service Line Growth Playbooks

• COE/Institute Development

Plan

• Service Line Gap Analysis

• Outmigration Opportunity

Assessment

• Service Rationalization

Assessment

• Service Line Footprint Analysis

• Organizational Performance

Audit

• Disease Center Assessment

• Population Health Readiness

Audit

Acute Care Focus Outpatient Focus Network Focus


6

Common Planning Questions

Core Service Lines and Strategic Goals we Support

• What growth and revenue priorities

should I pursue?

Grow Market

Share

Defend Against

Competition

• How can I differentiate myself when

faced with aggressive competitors?

• What is the root cause of my poor

performance and how can I fix this?

• How can I better engage physicians?

• Which outpatient opportunities

should we prioritize?

• What should my ambulatory strategy

be?

Capture New

Outpatient

Opportunity

Rationalize Service

Footprint

• How do I improve patient access

without duplicating scarce

resources?

• How do I principally invest in clinical

technologies for value-based care?

Transform for Population

Health

• Which continuum investments help

me compete both today and

tomorrow?

• How can I best position my program

to appeal to consumers?

Optimize

Performance

System

Strategy

Cardio-

vascular

Diagnostic

Imaging

General

Surgery

Neuro-

sciences

Oncology Orthopedics Women’s

Health


7

2

3

1

Road Map

Understanding the Landscape for GI Growth

Identifying the Right Physician Partners

Narrowing Your GI Program Strategy


8 State of the Union

1) Basic General Surgery category includes appendectomy, breast,

cholecystectomy, hernia; Complex General Surgery category includes

adhesions, endocrine, skin, splenectomy, tracheostomy, transplant, trauma.

Aging Population, Cancer Rates Drive GI Growth

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14%

FY

20

13

IP

Me

dic

are

Co

ntr

ibu

tio

n P

rofit

Pe

r C

ase

Opportunity Comparison for General Surgery-Related Services

Bubble Size Equals National Inpatient Volumes, 2013

5-Year Growth

Source: Advisory Board Inpatient and Outpatient Market Estimators;

Service Line Strategy Advisor Research and Analysis

Complexity of Oncologic Cases Attracts Favorable Reimbursement

GI Surgery

Bariatric

Complex GS

Urology Gynecology

Basic GS


9

Efficacy of Screenings Fuels Growth, Rising Demand

Patient

Demographics

Health Care

Reform

Continued Efficacy

of Endoscopy

• Aging population,

colorectal cancer rates

increase screening and

diagnostic procedures

• Increased prevalence of

reflux drive volumes for

GERD treatment

• Through cost sharing

reform, ACA promotes

greater utilization of

preventative screenings

in more accessible

ambulatory settings

• Endoscopy remains

highly effective

diagnostic and

therapeutic tool

State of the Union



ACA Amplifies Importance of Screening Access

Projections of Outpatient Shift for Endoscopy Services

Five-year projected growth

rate for outpatient GI

endoscopy services

15% Number of outpatient GI

endoscopies performed in

the U.S. in 2013

18M Growth in U.S. ambulatory

surgery centers since 2011

7.1%

Drivers of Increasing Demand for GI Screenings


10

Endoscopy Volumes Split Across Care Settings

State of the Union



Despite Ambulatory Shift, Favorable HOPD Reimbursement Persists

Increasing Role of

ASCs in GI Care

“All GI should be

done in the

ambulatory setting…

Billions have been

saved by patients

and Medicare by

moving routine cases

to ASCs.”

- ASC Administrator in

Florida

+11%

+12%

+18%

+21%

+22%

+23%

+25%

+11%

-2%

+8%

-4%

-3%

+7%

ERCP

Enteroscopy

Other GI Diagnostics

GERD Testing

EGD

Esophagoscopy

Colonoscopy

non-HOPD Growth

HOPD Growth

Positive non-HOPD

Growth

Positive HOPD

Growth

Volume Growth Projections for GI

Endoscopy, 2013-2018

+13%


11

Cost Pressures Mobilizing Shift to ASCs

State of the Union

Increasing Demand Requires Ambulatory Site Efficiencies

Source: http://www.beckershospitalreview.com/finance/oig-says-

bring-down-hopd-rates-for-surgery-to-asc-rates-cms-disagrees-11-

things-to-know.html; Service Line Strategy Advisor Research and

Analysis

Factors Motivating Shift Away From Hospital-Based GI Care

1 2 3 4 5

Need for Improved

Efficiencies

Hospital units

stretched by

growing demand

Cost

Pressures

Lower costs to

provider and

patient at ASCs

Importance of

Expanded Access

Access critical to

retain and

compete for PCP

referrals

GI Group

Consolidation

Economies of

scale for

launching

ventures

Viability of ASC

Investment

Proliferation of

ASCs for

multiple use-

cases across

specialties

Estimated Medicare Savings from ASC Use

Office of Inspector General found that

Medicare saved $7 billion from 2007 to

2012 due to the use of ASCs

$7B

http://www.beckershospitalreview.com/finance/oig-says-bring-down-hopd-rates-for-surgery-to-asc-rates-cms-disagrees-11-things-to-know.html



































12

ASC Growth Disrupts Hospital-Based Care Continuum

State of the Union

Defensive Posture for GI Poses High Risk of Volume Loss

Source: Service Line Strategy Advisor Research and Analysis

Digestive Health Care Continuum

Disruptions

Case in Brief: Hitching Hospital1

• Hitching has a shortage of PCPs and

general GI physicians, resulting in a

narrow referral base and consequently

decreased downstream volumes

• Rising competition in Hitching’s

metropolitan area may further erode

Hitching’s interventional endoscopy

volumes unless Hitching broadens its

referral base

1

2

Hospital at risk of losing

high margin GI inpatient

surgical referrals

Hospital at risk of losing HOPD

endoscopy volumes due to

increasing ASC competition

1) Pseudonym


13

GI Care Requires Cross-Continuum Strategy

State of the Union

Growing Opportunity Heightens Competitive Market


Three Key Takeaways

Lucrative Cross-

Continuum

Opportunity

Highly

Competitive

Market

New Strategy

Required

• Digestive health

poised for significant

five-year growth

across inpatient and

outpatient settings

1 2 3

• Growth in ASCs

accommodates rising

patient sensitivity to

price, access

• Hospitals must adopt

a new strategy for

digestive health to

plan around

ambulatory shift


14

2

3

1

Road Map





15

Patient Access is the Centerpiece of Changing Dynamics


Source: Service Line Strategy Advisor research and analysis.

Partnership Depends on Stakeholder Engagement

Physicians Payers

Patients

Digestive

Health Program

• Patients seek convenient

care site

• Healthy patients see

endoscopy as

commoditized service

• Physicians seek high-

throughput environment

to meet rising demand

• Center ownership allows

doctors to capture facility

fees

• Increasing co-pays

drives patients to lower

cost site of care

• Providers compete to

offer lower-cost care

Priorities of Key GI Program Constituent Groups


16

Inefficient Hospital Throughput Limits Ability to Serve Rising Demand

Sources: Service Line Strategy Advisor research and analysis;

Advisory Board Outpatient Market Estimators.

1) Becker’s Hospital Review, January 2012.

2) Becker’s ASC Review, October 2013.

Lucrative Business Supports GI’s Independence

25 - 35

7 - 10 Minutes on average for

procedure room turnover at

ASCs2

Minutes on average for

hospital room turnover1 16%

37%

11%

28%

2013 2018 2023

Colonoscopy and EGD

Other OP GI

GI Outpatient Market Growth Projections Advisory Board Company Market Estimators,

2013-2023

Average Room Turnover for Hospitals

and ASCs


Colonoscopy and

EGD account for

75% of outpatient

GI volume

http://www.beckershospitalreview.com/or-efficiencies/7-of-the-most-important-metrics-for-measuring-or-efficiency.html

http://www.beckersasc.com/lists/100-surgery-center-benchmarks-statistics-to-know.html


17

Source: Service Line Strategy Advisor research and analysis

Partnerships Mitigate Upfront Costs and Risks


Smaller GI Groups Need Help to Scale

Partnership Incentives for GI Groups by Size

1) Length of Stay

Smaller GI

Groups

(0-5 Physicians)

Medium-Sized GI

Groups

(6-20 Physicians)

Large-Sized GI

Groups

(20+ Physicians)

+ Access to hospital-affiliated

PCP base

+ Capital expense of ASC

investment

+ Access to hospital-based

capital technology

- Long-established

independent physician

culture


PCP base

+ Capital expense of ASC

investment

- Inefficiencies from hospital

management


PCP base

- Inefficiencies from hospital

management

- Benefits of alignment

unclear for screening


18

Joint Venture Models Reflect Diversity of Partnership Approaches



Partnership No Longer About “If,” but “How”

Spectrum of Hospital-GI Group Partnership Models

Joint Venture

• Hospital cedes

screening business,

secures complex care

referrals

GIs

Employed

GIs

Run Own

Endoscopy

Centers

• Hospital captures

facility and physician

fee for screenings

• Care primarily based

out of hospital facilities • Models highly variable

• Hospital may take share of facility fee

• Hospital secures referrals for complex

care

Third Party

Management

Company

Brought In

GI Group Owns

Majority Stake

Hospital Owns

Majority Stake

Other Models


19

Acute GI Care Naturally Aligns with Hospital Strengths



1) “Strengths, Weaknesses, Opportunities, Threats”

Cede Screening, Secure Referrals for Complex Care

Decision Process for Collaborating with

Independent GI Endoscopy Centers

1

Evaluate State of

Hospital GI Services

• Assess scope of

services

• Scan competitor

landscape

• Conduct SWOT

analysis1

2

Engage GI Groups

• Understand GI group

priorities

• Identify overlap in

needs

• Elevate group

leadership’s concerns

in hospital

3

Define Terms of

Partnership

• Consider formalizing

referral relationships

• Set formal clinical

guidelines around sites of

service


20

Third Party Management Can Ensure Efficient Processes



Hospital Supplies Capital, Care Pathway Under JVs

Division of Responsibility Under Third Party Management of

Joint Venture Endoscopy Center

Hospital

• Covers plurality

or majority of

facility cost

GI Group

• Perform procedures

• Holds some equity stake

3rd Party

• Handles billing

• May employ office

staff

• Conducts day-to-day

office management,

facilitates efficient

processes


21

Retain Productivity Incentives Under Employment



Employment Delicate, Competes with Referring GIs

Case in Brief: West

River Community

Hospital

• Community hospital

loses GI physician,

employs

replacement with

generous tuition

reimbursement

provisions

• Weekly productivity

drops, reflecting

weak incentives

• Hospital concerned

about losing

physician

Weak Incentive Structure Fails to Encourage

Employed GI Productivity

Weekly procedures at

surgery center for

previous GI physician

17.1 Weekly procedures at

surgery center for new

GI physician

12.4

Employ new GI with end of year bonus

Need for short-term

incentive to shift

volume growth


22

Rural, Community Hospitals Face Less Pressure



Population Dense Markets See Greater ASC Shift

Relationship Between Provider Density and Pressure for GI Ambulatory Shift P

ressure

to S

hift S

cre

enin

gs

Out of H

ospital

Geographic Provider Density

Rural

Hospital

Community

Hospital

Suburban

Hospital

Urban Health

System


23

2

3

1

Road Map





24

Assess Primary Care Footprint, Current GI Resources



GI Strategy Must Follow System Vision

A Multi-Step Process for Identifying Ideal Physician Partners

Size PCP Referral

Base 1

Assess Current GI

Resources 2

Scan Competitive

Landscape 3

Formulate GI Strategy 4

• Size referring base for GI

services and alignment with

hospital, competitors

• Identify subservices with greatest

referral leakage and assess

opportunity to recoup business

from competitors

• Prioritize key GI subservices

for investment, growth

• Understand scope of current

services


25

Evaluate Current Alignment of Regional Groups Prior to Discussions



Competitive Scan Identifies Partnership Candidates

Process for Identifying Best-Fit Partnership Candidates

Isolate Top

Partnership

Candidates

• Formalize

vision for

success of

short-term and

long-term

partnership

• Ensure group

alignment with

system goals

Rank Best-Fit

Partners

• Conduct

preliminary

discussions

with groups

• Compare

overlaps

between group

incentives and

institutional

goals

Understand GI

Group

Priorities

• Evaluate

market

positioning of

independent

GI groups

• Assess size

of regional GI

groups,

access to

capital

Define

Competitive

Environment

• Identify top

competitors

• Assess GI group

alignment with

competitor

institutions

• Understand your

institution’s

bargaining

position


26

Align Incentives to Sustain Long-Term Partnership



Early Communication Can Surmount Politics

Independent GI

Group

Hospital

Digestive Health

Service Line

Medical

Director

of GI Group

Hospital Taps GI

Group Leader as

Service Line Director

Build and Manage

Partnership Through Medical

Director

Case Study: Hospital Integrates Independent Group President Into

Service Line Leadership


27

Continued Inpatient GI Needs Can Strengthen Relationship



1) Pseudonym

Be Wary of Partnership with Misaligned Incentives

Capital Technology Still an

Effective Tool for Enticing

Physicians

• Ridgemont Hospital1 was

unable to partner with its GI

physicians around screening

business

• Ridgemont instead invested

in capital technology to make

the hospital a more attractive

place for independent GIs to

bring cases

Case Study: Hospital Charts Gradual Strategy for Closer Alignment

Hospital invests in

endoscopic ultrasound

to increase share of

business performed at

hospital

Hospital

Endoscopy

Center

Hospital and GI

Group Directly

Competing for

Screenings

Hospital Invests in

Technology to

Entice Physicians


28

Strategies Span PCP Alignment, Specialist Engagement



Open Dialogue Facilitates Clear-Eyed Partnership

• Leverage PCP assets

to base GI program

strategy, shift GI

incentives

• Let referring geography

set framework for

strategy

1

PCP Alignment

2

Specialist Engagement

• Create incentives for

closer ties

• Set near- and long-term

institutional objectives to

guide partnership

Strategies for Identifying Physician Partners


29

Shift Not Always Desirable or Necessary

Case Profiles – Strategic Drivers

Cross-Setting Parity in Cost and Efficiency Eliminates Shift Incentives


Case Study: Royal Health System1 Experiences No Payer Pressure and

Thus No Ambulatory Shift

Common Drivers of Shift Limited for Royal

Health System

Royal Health System GI

Growth Strategy

1

2

GI care is reimbursed at a lower rate

in ambulatory settings than in

hospital-based sites

Volumes are declining due to a highly

saturated market with multiple

competing ASCs

Healthy system’s capacity is tested

by rising demand for digestive health

services

Maintain efficiency in

hospital to preempt

competition that may arise in

future

Build additional capacity

within system to

accommodate rising demand

pressures and alleviate long

wait times for GI services

1) Pseudonym


30

Prioritizing Cost Reduction Over Margin Opportunity

Case Profiles – Strategic Drivers

For Large Systems, OP Presence Key to Population Health Management


Case Study: For Franklin Health1, Ambulatory Investment in GI Presents

Opportunity to Reduce Preventable Care and Costs

Fee-For-Service

Model

Value-Based

Payment Model ACA reform prompting Franklin

Health to pursue a GI strategy

leading to improved outcomes at

lower costs

Outpatient Expansion Aligns Strategically With

Different Payment Models

Increase Capture

Grow market share;

feed downstream IP

business

Improve Quality

Cover care

continuum; improve

patient satisfaction,

outcomes

Minimize Costs

Capitalize on more

efficient, specialized

site with lower

overhead

1) Pseudonym


31

PCP Proximity a Proxy for Access

Case Profiles – PCP Alignment

Network Expansion Makes GI Strategy Reactive to Primary Care Needs


Case Study: Marion Hospital’s Digestive Health Growth

Strategy Hinges on Primary Care

Key Considerations for Developing Marion’s Outpatient Endoscopy Facility

Primary

Care

Independent

GIs

Ambulatory

Endoscopy Center

Hospital-Based

Site

High priority for UCLA’s GI strategy

Key

Medium priority for UCLA’s GI strategy

Referral

Generation

Place OP facility near

PCPs to tap large

number of GI referrals

Cost

Structure

Weigh opportunity for

reduced costs at ASC

against opportunity for

higher HOPD

reimbursement

Site

Ownership

Evaluate financial,

operational

considerations of JV

model versus hospital-

owned ASC 1) Pseudonym


32

Facility Construction Not Always Needed For Access


Embedded GI Physician in PCP Clinic Expands Access Channels


Case Study: Skyfall Healthcare1 Captures Referrals Early in the Continuum

Key Steps for Determining Whether Placing GIs in PCP

Practices is a Viable Strategy

1 Evaluate GI Provider

Capacity

Review surgeon’s

employment agreement and

assess capacity to split time

between clinic and hospital

2 Determine Referral

Potential

Analyze expected number of

referrals to ensure primary

care site generates sufficient

numbers to merit GI

placement

3 Compare Workflows for

Compatibility

Align schedules and

workflows for GI and PCP

buy-in

1) Pseudonym


33

PCP Base Creates Partnership Incentive for GIs



Case Study: Hopper Hospital1 Leverages Strong PCP Relations to Win GI

Partners

Strategic Advantages Afforded by Provider Partners

Segmented by Provider Type

Hospital

Hospital-owned ASC

Independent GI Groups

PCPs

Provides backstop for patients seeking

more acute, complex GI interventions

Offers a cost efficient, high throughput,

and accessible site for patients and

providers

Expands access to screening and clinic-

based services, further widening a health

system’s referral base

Expands referral base for hospital and GI

groups; strong hospital-PCP relations

can incentivize independent GI groups to

partner 1) Pseudonym


34

Patients More Brand-Sensitive for Interventional Care


Partnership With AMC Improves Upstream Care Coverage


Case Study: Foley Health1 Addresses Brand Sensitivity through AMC

Affiliate

Level of

Procedure

Commoditization

Degree of Provider Brand Sensitivity by Procedure

High Low

Therapeutic

procedures

Colonoscopy

screenings Complex

Interventions

Foley Health estimates that it can accommodate

85% of its digestive health procedures while 15% of

cases are referred out to a large academic medical

center for more complex, subspecialized care

1) Pseudonym


35

Resources, Referral Base Outweigh Cost-Efficiencies

Case Profiles – Specialist Engagement

Profitability of Ancillary Services Can Limit Large Group Alignment


Case Study: East Ridge Health Center1 Increasingly Vulnerable to Hospital

Partnership, Purchasing

Benefits of Maintaining

Independence Benefits of Partnering

with Hospital

+ GIs at large centers profit from

ancillary services, such as

anesthesiology

+ Hospital takes on administrative

burden, including HR and billing

+ Operational efficiencies can

create a high margin for ASCs

+ Hospital gives GIs access to

wider referral base in

increasingly competitive market

+ As reimbursement decreases,

smaller groups experience

difficulty in managing business

1) Pseudonym


36

Align Physician Relationship With Rising Demand

Case Profiles – Specialist Engagement

Preserve Physician Volume Incentives Under Employment


Case Study: Gibson Health Made Employment a Reality at its ASC Through

Shared Incentives

Example GI Employment

Agreement

Gibson’s Employment

Agreement for Volume

Growth

Salary ($)

Above a

certain

volume

threshold,

GI receives

salary

bonus

Salary ($)

Advantages:

• Motivates volume stability and

growth more effectively than mere

bonus volume threshold

• Shared incentives drive physician

employment with collaboration

Volume

thresholds

are

graduated

and more

integrated

into GIs total

salary

1) Pseudonym


37

Shift Can Compromise Inpatient Performance

Case Profiles – Lost Volumes

Failure to Proactively Engage GIs Leads to Volume Loss


Case Study: Failure to Adapt to Changing Ambulatory Dynamics Led to

Decreased Market Share for Starboard Hospital1

GI Care Continuum Disruption:

Proactive GI Strategy:

Inpatient GI

volumes

decline

GIs leave

hospital for

competing

ASCs

Broken referral

pathway,

resulting in

further volume

loss

Evaluate inpatient

performance for GI

Services

Identify strategies for

retaining GIs through

new contracts and

ASC development

Robust Digestive

Health Network

Strengthen referral

pathways through GI

specialist

engagement, PCP

alignment 1) Pseudonym


38

Hasty Shift Can Alienate GI Partners

Case Profiles – Lost Volumes

Proactive Communication, Political Awareness Necessary for Buy-In


Case Study: Parker Health1 Demonstrates Importance of Maintaining

Physician Buy-In Throughout Shift Process

Threats to Maintaining Buy-In Tactics to Address Threats

Shifting to the ambulatory space with

a higher throughput environment can

result in physician issues with

compensation level

• Proactively gauge physician

interest in shift with keen focus on

physician compensation; explore

possibility for joint venture model

with GIs

Endoscopic technologies at ASC are

not up-to-date, resulting in physicians

taking their book of business to a

competitor freestanding ASC

• Consider advanced technology

investments, as well as staff

training to support the use of new

endoscopic equipment in order to

ensure physician retention

1) Pseudonym


39

How Service Line Strategy Advisor Can Help

How Service Line Strategy Advisor Can Help


1) Pseudonym

Service Line Strategy Advisor Extends Help For Digestive Health Growth

Digestive Health

Market Opportunity

Assessment

• Evaluate historical market

performance and future

growth projections

• Identify core challenges in

current GI program;

recommend strategies to

support growth

Decision Guide for

Outpatient Facility

Placement

• Highlight key considerations

when deciding where to

place an ambulatory surgery

center

• Provide insight into the

decision making process

through various case studies

Digestive Health

Technology Scan

• Benchmark technology

capabilities within a hospital

or health system to regional

competitors and national

trends

• Outline strategy to

differentiate offerings


40

Any Questions?


For Questions, Contact:

Vik Srinivasan

[email protected]


41

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41

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