13th Annual Monterey Bay Regional Heart Symposium

“Healthcare Reform – What it Means to Your Practice: A Perspective from the Trenches”p

May 18, 2012 

By Ronald N Riner MD FACCBy Ronald N. Riner, MD, FACC

The Riner Group

No Disclosures to Declare

The End (at The Beginning)

Transactional transformational activities Transactional                transformational activities

Working toward shared aspirations

Providing value

Staying grounded and patient focused

International Comparison of Spending on Health, 1980‐2009

8,000

16

18

Average spending on health per capita ($US PPP*)

Total expenditures on health as percent of GDP

6,000

7,000 United States

Canada

Germany

France 12

14

16

4,000

5,000France

Australia

United Kingdom

8

10

12

2,000

3,000

4

6

8

United States Canada

0

1,000

0 4 6 8 0 4 6 8 0 4 6 8

0

2Germany France

United Kingdom Australia

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

3

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

*PPP=Purchasing Power ParityData: OECD Health data 2011 (database), version 6/2011Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011

ORGANIZATIONAL CHART OF THE HOUSE DEMOCRATS’ HEALTH PLAN

President U.S. Congress

Treasury Dept.

Health/Human Srvs. Dept.

Veteran’s Admin.

Defense Dept. Labor Dept.

Institute of

Medicine

IRS

Nurse education &

training

Public Health

Workforce

CMS

MedicaidIndi id al ta ret rn information

Dept. Srvs. Dept. Admin. Dept.IRS

CER Trust

Clinical Preventive Services Task

Force

National Health Service CorpsPublic Health

Investment

Health Benefits

Health Insurance Exchange Trust Fund

Corps.

Medicare

mun

ity

alth

&

Cen

ters

NPDB

S-CHIP

National Coordinator for

Comparative Effectiveness

Research Commissions

Ombudsman

Individual tax return information Trust Fund

Investment FundAdvisory

Committee

Advisory Committee on Mandate

BuySurgeon General

National Center for Health Workforce Analysis

Com

mH

eaC

are

C

AHRQ

Health IT

Office of Civil Rights

Office of

CCER Advisory PanelTaxes

Health Workforce & Evaluation

Buy Insurance

Health Affordability

Credits

HIPDSBUREAU OF

HEALTH INFORMATION STATES

Regulations, Mandates,

General

Office of Minority Health

Consumers

Physician

Federal Mandates for Website Design

Inspector

Center for Quality Improvement

Low-Income Subsidy families ith 4 t l l

Mandate P id

State Health Agencies, State Health Information

Exchanges

Language Demonstration

program

Accountable Care

Organization

National P i iti fHEALTH CHOICES

Private Insurers

Traditional HEALTH INSURANCE

Quality Reporting Initiative Healthcare

Providers

Generalwith 4x poverty levelProvide Insurance

Reinsurance Program

Benefit Levels

Financial disclosure reports. Any Cultural &

linguistic

Priorities for Performance Improvement

HEALTH CHOICES ADMINISTRATION

HCA COMMISSIONER

Traditional

Health

Insurance

Plans

EXCHANGE

Public Plan Ombudsman

Special HE Inspector Generalource: Joint Economic Committee, Republican Staff 

Small Business

Tax Credits

Qualified Health Benefit

Plan

Public Health Plan

Levels p ytransfers between

providers & supplierslinguistic

competence training

Healthcare Goods & ServicesEmployers4

Estimated Increases in National Health Expenditures Under Patient Protection & Affordable Care Act (PPACA)

22

21

GDP

19

20

entage of G

18

19

Perce

172010 2011 2012 2013 2014 2015 2016 2017 2018 2019

5

Source:  Richard S. Foster, chief actuary, Centers for Medicare & Medicaid Services, “Estimated Financial Effects of the Patient Protection & Affordable Care Act,” as Amended 4/22/10

Spending Projections Under PPACA

80

90

HEALTHCARE SPENDING FROM PPACA

60

70

P

HEALTHCARE SPENDING FROM PPACA

40

50

cent of G

DP

MEDICAID

20

30

40

Perc

INTEREST / OTHER SPENDING

0

10

20

MEDICARESOCIAL SECUIRTY

02009 2020 2035 2050 2080

6Author’s (Michael D. Tanner) calculations based on Congressional Budget Office, 

“Long‐Term Outlook for Medicare, Medicaid, and Total Healthcare Spending”

The HITECH AgendaThe healthcare reform law has  a number of new requirements, including hospitals’ transition to the electronic health record (EHR) by 2014.  “Meaningful use” regulations were announced in July 2010 that dictate the standard of practice for EHR.

2009 2011 2013 2015

Stimulus Bill signed into law February 2009: 

$27 billion over 10 years

Stimulus payments begin

Penalties begin

HIT‐Enabled Health Reform

2009 2011 2013 2015

HITECHHITECHPolicies 2011 Meaningful 

Use CriteriaCapture/share 

2013 Meaningful Use Criteria

Ad d

2015 Meaningful Use Criteria

7

data Advanced care processes with decision support

Use CriteriaImproved outcomes

Note:  HITECH = Health Information Technology for Economic and Clinical Health ActSource: Kimberly Lewis, CIO, TriStar Division, HCA)

Healthcare Reform Rollout:  What Happens When

2010• Young adults allowed to remain on parents’ healthplans until age 26

2010 •Medicare Part D Beneficiaries who reach the coverage gap (“doughnut hole”)

2014•Mandate requiring all individuals to carry minimal essential health insurancehealth plans until age 26

• Insurers prohibited from excluding children from coverage due to pre‐existing conditions

•Group health plans and insurance i idi f i di id l

the coverage gap ( doughnut hole ) become eligible for $250 rebate•Patient out‐of‐pocket expenses are eliminated for proven preventive care services under Medicare and private plans

G bli h i i

minimal essential health insurance coverage goes into effect•Insurance carriers required to accept every individual who applies for coverage and prohibited from rating on the basis of health statuscompanies providing group of individual 

coverage prohibited from rescinding coverage of existing enrollees

• Small businesses (including medical practices become eligible for tax credits to ff h i f idi

•Grants to establish primary care extension programs begin

2011•Medicare Part D beneficiaries in the d h th l b li ibl f 50%

health status•Deadline for states to establish insurance exchanges for individuals and companies with 50 to 100 employees

•Subsidiesbecome available to help i di id l d f ili i boffset the premium costs of providing 

health insurance to employees 

•People with pre‐existing conditions become eligible for subsidized coverage through a national high‐risk insurance pool.

doughnut hole become eligible for a 50% discount on all brand‐name drugs

•Center for Medicare and Medicaid Innovation to be established

2012

individuals and families earning between 133% and 400% of the poverty level to purchase insurance through exchanges•Out‐of‐pocket limits for low‐ and moderate‐income individuals and families 

i ff• States can begin covering parents and adults without children up to 130% of the poverty level and receive matching federal contributions to pay for additional coverage 

2012•Patient‐Centered Outcomes Research Institute begins issuing grants to fund comparative effectiveness studies

go into effect

•Deadline for states to expand Medicaid eligibility to all adults and children up to 133% of poverty level

8

Source:  Medical Economics, 5/21,2010

In Addition to HHS and States, Three New Entities Will Play Key Roles in Implementationy y p

Independent Payment Advisory Board (IPAB)

Th i t d

Patient‐Centered Outcomes Research Institute (PCORI)

B d f h

CMS Center for Medicare and Medicaid Innovation 

Test innovation payment The purpose is to reduce the per capita rate of growth in Medicare spending

Operates independently of

Broad scope of research (Drugs, devices, procedures, delivery system) with a focus on clinical effectiveness research

Test innovation payment and service delivery models

Broad authority to determine what models  Operates independently of 

MedPAC Recommendations take 

effect absent Congressional action

research

Findings are not coverage/payment recommendations, but can be used by HHS to inform

will be tested, in what populations, and for how long, with a preference for models that address deficits in care leading to g

May recommend changes to Part D to generate required savings

used by HHS to inform coverage

deficits in care leading to poor clinical outcomes or potentially avoidable expenditures

Patient‐Centered Outcomes Research Trust fund Created

CMS Innovation Center Established

IPAB Begins to Propose Change to Limit Medicare Spending

2010                     2011                    2012                     2013                    2014

Source: Deloitte.

9

Evolving From ‐ To

From To

Fee‐for‐Service

Pay for Procedures

Fee‐for‐Value

Case rates/budgetsPay for Procedures

More facilities/capacity

Case rates/budgets

Better access to appropriate 

Physicians acting 

settings

Physicians collaborating and y gindependently

Hospital centric

y g“at risk” together

Population centricHospital centric Population centric

10

Physician‐Hospital Integration Models: Driving the Value Proposition

High

ACO IDS/

lue Bundled

Payments Cli i l I t ti

ACO S/Health Plan

Narrow NetworkH lth Pl

t on Val

Managed CareShared Risk

Payments Clinical Integration

Medical FoundationMedical Home

Health Plan Products

Impact SpecialtyCo‐management

Medical FoundationPhysician Employment

Physician ownedCOE/SpecialtyInstitutes

Physician-ownedHospital

11

IntegrationLimited FullLow

Sample Cardiovascular Co‐Management Structure

PhysicianGroup/Venture

Hospitalp/

HospitalCEO/COO/VP

ExecutivePhysician

Service Line/Departme

Cardiovascular Clinical Co‐managementA

dvisors

Director/ p

nt DirectorCo‐management 

CommitteeUtilizationCall coverageOR scheduleQuality assurance

Non‐physician staffing BudgetingPurchasing/Inventory

Physician A

Clinical and cost goalsBusiness development

CT Surgery  Noninvasive Cath Lab Intervention EP Vascular

Clinical standardsResearch

LicensingDatabase tracking

12

Clinical Council

DiagnosisCouncil

Cath Lab Council 

Intervention  Council 

EP Council 

Vascular Council 

Hospital are Seeking Physician Alignment Solutions

Concerns Solutions

Economics

Subsidy of affiliated physicians ($80K to $100K) Improve management of hospital‐affiliated practicesSubs dy o a ated p ys c a s ($80 to $ 00 )

Readiness for bundled payments and accountable care organizations

Primary care base to feed specialists

Pay for physicians’ time

p o e a age e t o osp ta a ated p act ces

Restructure physician organizational model (e.g., clinical integration, accountable care delivery systems)

Revenue cycle redesign/improvements/leverage

Pay for physicians’ time

Physician Leadership

Engagement on quality initiatives Defined leadership path for emerging leaders (e.g., d ti d i ) Engagement on cost initiatives

Collaboration on practice operations improvements

Leaders to guide/expand physician‐hospital 

education and experience)

Meaningful involvement of physicians in decision‐making (e.g., governance, co‐management)

Redesign of physician leader incentive compensation ( )relationships (e.g., cost, quality)

Physician Retention

Succession planning for aging medical staff

l f h

Expanded affiliation model (e.g., employment, foundation)

13

Loyalty of private practice physicians foundation)

CI strategy

Nurture culture of mutual respect

Physician Structures

Physician Organization(Independent vs. Health System Entity)

IndependentIndependentPhysician Owners Health System

Health SystemMD MD MD

PhysicianOrganization Physician 

Organization

Contracted

Organization

Contracted

14

MD MD MD MD MD MD

Physician Structures –Mixed Employment Models

Physician‐Hospital Organization

Physicians Hospital

OwnershipOwnership

Joint VentureContracting withPayers

MD MD Other

Contracted

15

Physician Members

Foundation/Clinic Models

Critical for Success Pros Cons Medical and administrative 

leadership

Strong practice management 

Provides distinct entity to focus on physician practices

Creates an entity to support a “seamless” system: information systems, strategic development, and growth

Requires commitment and expertise in physician practice management

Requires new entity(ies) to be capabilities

Long‐term commitment to group practice development

Incentives to assure physician engagement

Hospital able to provide management and financial support; minimizes regulatory barriers to supporting infrastructure (EMR) and growth

Enables joint payer contracting between hospital and wholly‐owned foundation

established

Resource intensive ($/people/time)

Foundation must coordinate capital requests and determine sources of capital with the Hospital.p y g g y p p

Hospital

Medical Foundation MSA (Optional)

Research Physicians MSO

PSA

16

– IPAs– Medical Groups– Individual physicians

– Non‐provider Staffing– Billing/Collections– Information Technology– Finance– Contracting

– Clinical

Strategy Check List

Operating costs:– Reduce operating costs (target Medicare)

– Higher throughput, expanded hours of availability

– Optimize current and in process investments

Ph i i li ( i d Physician alignment: (access points and cost management– Primary care preferred (access points, primary care clinics)y p ( p p y )

– Specialist (think bundled payments)

– Co‐management agreements

– Involve physicians in leadership

New delivery models (ACOs, CI, BP, Medical Home)Population management– Population management

– Delivering superior value

17

Strategy Check List (continued)

Clinical performance: patient safety and quality– Effectiveness of case management, hospitalist, and intensivist 

programsprograms– Clinical integration/care continuum (e.g., handoffs)– Set targets and measure performance

Reduce readmission rates– Reduce readmission rates– Maximize P4P– Value‐based purchasing program

I f i h l Information technology:– Ambulatory electronic medical record (aEMR)– Electronic medical record (EMR)– Computerized physician order entry (CPOE)– Enterprise data warehouse (EDW)– Health information exchange (HIE)– Target meaningful use compliance– ICD‐10

18

Strategy Check List (continued)

Build Brand

i l Capital:

– Fundraising/shareholders

– Measure against targeted  credit rating

– Sufficient IT prioritization and IT tools

– Invest to manage the population’s health and extend life of current assets

Market share:  Of what?

– Increase: Period

19

Key Elements of Healthcare Business Model Change

The Old Medicare Business Model

The New “Postreform” Business Model

Value proposition More marketshare more Best possible quality at lowest price

g

Value proposition More marketshare, more patients, more services, more revenue

Best possible quality at lowest price

Direction of price Upward – Saks Fifth Avenue Downward – Wal‐Mart

Cost environment Cost management Cost structure

Direction of utilization Always up since 1966; growth industry

Flat/maybe down? Mature industry

Relationship between hospital and doctors

Parallel play Highly coordinated and integrated

Payment Fee for service Something else

/System of care Patient services Patient/population management

Organizing for value creation

One patient at a time Comprehensive healthcare for covered population

Importance of scale Small and medium hospitals Big bigger biggestImportance of scale Small and medium hospitals could survive

Big, bigger, biggest

Source: Kaufman, Hall & Associates, Inc; American College of Healthcare Executives; SHCSMD FutureScan 2012

20

Challenges and Realities 

21

Continuance of Provider Risk‐Bearing

Provider minimal risk

Provider insurance risk

Provider performance riskrisk insurance riskperformance risk

Payor

nancial R

isk

Fin

C t FFS P di P E i d C it ti

Provider

Cost FFS Per diem Per case Episode Capitation

Source: Journal of Ambulatory Care Management, 3/1022

Fact ‐ Realities

Medicine is NOT like mathematics – there is frequently no one tcorrect answer

Many contrary opinions about best practices

Research shows that the more patients understand the risks and benefits of treatments, the more varied are their choices

Technology and treatments have had major impact

Patient Advocacy is different than Population Advocacy

23

Tension ‐ Standardization

Reduces variation and costBUT

Can reduce professionals to being mere technicians following protocols or algorithms

Loss of autonomy in doing what one feels is professionally sound Loss of autonomy in doing what one feels is professionally sound

Focused predominantly on saving money based on statistical averages rather than the personal nature of a patient’s problems

Limits clinical choices and freedoms on the part of patients and clinicains 

Touts evidenced based medicine without appreciating the rapidity with which the evidence changes (thousands of publications annually)the evidence changes (thousands of publications annually)

Ignores different cultures, practice styles and socioeconmic demands in different parts of the country or world

24

Quality from a Patient’s Perspective

Speed

Convenience

Customization

AffordabilityAffordability

Personalized and skill          for the major illnesses

Outcome

25

Balances & TensionsThe Clinical Vantage Pointg

Healing as a covenant Business contract

Dictates of healing Canons of commerce

Caring for afflicted human beingsD li i h i d i l lDealing with industrial complexes

Right to choose Restrictions

All i h i C L lAllegiance to the patient Corporate Loyalty

Compassion and caring Deal making

Financial success as a consequenceFinancial success as a consequence Financial success and incentives as a focus

26

Benchmarking ‐ Issues

Excellence vs. mediocrity

The irony of “median”

Whose benchmark and how was it validated?

27

Healthcare FutureHealthcare Future

A function of the past d th tand the present

28

Where We Are

Complex environment

N th i t ith t di l li i l t i i– Numerous theorists without medical or clinical training

– Competing philosophies and businesses

– Costs – a real problem

– Entitlement mentality in setting of true poverty for some peoplepeople

– Slowly recovering economy

T f i f l– Transformation of place

– Payment experimentation

29

The test of a first‐rate intelligence is the abilityThe test of a first‐rate intelligence is the ability to hold two opposed ideas in the mind at the 

same time and still retain the ability to functionsame time, and still retain the ability to function.

‐ Francis Scott Fitzgerald“The Crack‐Up”

30

Suggested Stance

Keep an open mind

Educate yourself and those who depend on your leadershipy p y p

Cultivate physician relationships and strategic alliances– Importance of physician‐nursing leadership

– Physician – hospital contracting capabilities

Understand each community is different– One size won’t fit allOne size won t fit all

Challenge status quo thinking– Environmental evolution?

– How do we innovate?

– Where do we invest?

Keep the anchors that are at the core of what we do Keep the anchors that are at the core of what we do– Mission, Values

31

Strategic Considerations to Improve Competitive Advantage

Move beyond health reformMove beyond health reform

Look to coordinate the uncoordinated

Pl th h th t iti k Play through the transitions – seek new opportunities beside traditional business formats

C hi f hi ld Create something new from something old or de Novo – Innovate

Be very good at what you do

32

Tradition is aTradition is a persuasive teacher.persuasive teacher.

33

Your Ability to Compete in the Future New Business Models

tgagemen

t Building Active Partnership and Systems of care

Developing an

evel of E

ng

Developing an Experience

Creating a l i hi

Commodity Differentiated

Le

Executing a transaction

Relationship

Commodity Differentiated Service or 

Relationship

Leadership Needs Made Simple

It’s about managing context and relationships

Top down/hierarchical          not the motif for success in healthcare future

Future:  Explicitly defined, shared purpose and values

– Being able to adapt

– Feeling comfortable with the unknowng

The Brass Ring

Integrated Care?

Or 

Coordinated, Connected Care?

36

Concept of TeamworkConcept of TeamworkConcept of TeamworkConcept of Teamwork

37

Tensions

Individualism vs. collaboration

Individual good (the patient vs. population good cohort)

My practice vs. my group

Our practice vs our hospitalOur practice vs. our hospital

My stats vs. our stats

38

AS IP Use Rates Decline in Select Service Lines, Look to Alternative Growth Sources

10‐Year Inpatient Use Rate Growth

10‐Year Outpatient Use Rate GrowthRate Growth

11%

‐11%

Rate Growth

Overall

Orthopedics

Overall

27%

21%

Cancer

‐1%

0%

11%Orthopedics

Neurosciences

Cancer 22%

23%

27%Cancer

Gen Med/Gen Surg

Neurosciences

‐10%

‐6%

/

Spine

Gynecology

13%

15%

19%Cardiovascular

Spine

O th di

‐27%

‐10%

30% 15% 0% 15%

Gen Med/Gen Surg

Cardiovascular 9%

13%

0% 10% 20% 30%

Orthopedics

Gynecology

‐30% ‐15% 0% 15%

39

0% 10% 20% 30%

Forecast excludes 0‐17 age group and psychiatry and obstetrics servicelines. Gen Med/Gen Surg=general medicine/general surgerySources: Impact of Change® v10.0; NIS; Pharmetrics; CMS; Sg2 Analysis, 2011Adapted from SG2

Growth and Value Strategies for Coronary Heart Disease

New Business Expand prevention and early diagnosis to physician 

offices and reduce future ED visits for problemsoffices and reduce future ED visits for problems relating to heart disease

Grow programs that encourage lifestyle modification  Direct high‐risk patients to the appropriate physicians

Care Transitions Complete transitions for HF Afib and CHD patients

ValueGrowth Complete transitions for HF, Afib and CHD patients 

out of hospital, avoiding readmissions and PAAs Realign incentives around cost savings and value

E l f M f S i S S ttiExamples of Measure of Success in Some Settings Increase two‐fold the number of cardiac caths 

performed in the outpatient setting in the next year Reduce percentage of patients not achieving treatment 

goals for blood pressure and lipids by 50%40

Paradigm Shift? – Cardiovascular Services 

Volume (Old) Value (New)( ) Focus on high‐margin 

inpatient procedures (e.g., CBG, PCI and EP)

( ) Focus on managing chronic 

disease (e.g., CHD, HF Afib) Target patient experience and 

Target clinical processes Aggressively recruit 

interventionalists

g p poutcomes

Invest in multidisciplinary behavioral programs, d ti l t Address specialists’ demands 

for cutting‐edge technologies Reduce cost and length of stay 

in cardiac ICU

educational support Build capacity to capture 

volume expansion due to OP shiftin cardiac ICU

Focus on inpatient services Advocate treatment

shift Coordinate with PCPs to 

reduce readmissions Advocate preventionp

41

Afib=atrial fibrillation; CABG=coronary artery bypass graft; CHD=coronary heart disease; CV=cardiovascular; HF=heart failure; ICU=intensive care unit; OP=outpatient; PCI=percutaneous coronary intervention; PCP=primary care physician

The End

Transactional transformational activities Transactional                transformational activities

Working toward shared aspirations

Providing value

Staying grounded and patient focused