Overview

Innovation Nation

July 12, 2012Presented by Kathryn Alexandrei

Learning Objectives

1. Understanding what is meant by

innovation in behavioral healthcare

2. Developing an Innovation

Framework

3. Becoming conversant with new

models like Accountable Care

Organizations (ACOs)

4. Next Steps – Your Innovation Cycle

5 Reasons to Innovate Now

1. Advent of health care reforms (Affordable Care Act)

2. Cycle of breakthrough in research and brain science

3. Prevalence of psychiatric and substance use disorders

4. Co-morbidity with chronic medical conditions and explosion of diabetes, asthma, autism, obesity

5. Availability of consumer and provider-friendly technologies

What Drives

Innovation?

Market Structure

Ancillary Markets

Skills and

Abilities

R & D

What is Innovation?Two Types:

– Sustaining Innovations (correction ribbon, lighted refrigerator, bucket seats)

• allow you to make incremental changes in order to do what you’ve been doing more efficiently

• or to produce a better outcome doing it. • Also allows you to maintain market share.

– Disruptive Innovations (NetFlix, Craigslist, Amazon)• fostered by outsiders who want to upend markets and the way

things are done • totally transforming the business model

Elements of Disruptive Innovation

• Technology simplifies what had previously been complicated and cumbersome

• Lower-cost financial model

• Value Network is economically coherent (mutually reinforcing)

Source: Clayton Christensen

Advantage Innovation

• Innovation for sake of novelty

• Innovation for sake of change

• Innovation to gain strategic advantage over competition

Progressive Innovations

• Solution Shop – expertise to diagnose and solve problems (you, lawyers, consultants). Charge for cost of expert time. Focus on diagnosis.

• Value-Add Process – assembling solutions of higher value (retailers, auto-makers). Charge for value of assembled products and services. Focus on treatment after diagnosis.

• Facilitated Networks – models wherein people exchange things with one another (insurance, mutual funds, eBay and WebMD are examples). WebMD has begun building communities of people with certain chronic conditions like diabetes. These models harness vast amounts of data and technology architecture.

From

To

Source: C. Christensen

Conditions Ripe for Innovation?• Organizational – do you have formal or informal

teams with a Charter to improve and innovate your services? Is it safe to try and fail? Really?

• Do you conduct focus groups with your customers? Do you ask your customers what they need and how they want it?

• Measures – do you measure:– new product revenue?– spending on R&D?– time to market?

Conditions

• Is the political, legislative and regulatory environment stimulating change in the market (YES!)

• Is government supporting the diffusion of innovations (YES!)

• Has the economy performed at a level that is impacting consumer behavior and pricing? (YES!)

• Are social and cultural dimensions of the market supportive of new approaches? (YES!)

• Is technology supporting innovations? (YES!)

Examples of Health Care Innovations

• Reforming health care financing (pricing, premiums, policies, coinsurance, financial eligibility, FFS, capitation, episode and case rates, etc.)

• Health information technology (EMR, HIE, MU, PHR, etc.)

• Internet and facilitated networks

• Pharmaceuticals and medical devices

• Medical education (behavioral medicine)

Examples of Health Care Innovations

• Neuro-Tech• Bio-Tech• Mobile Devices• Retail (Minute-Clinics, Wal-Mart)• Tele-Medicine• Web-based Providers

Innovations in Health Insurance• Personal Spending Accounts (debit cards)

• Hospital and Provider Cost & Quality Comparisons online

• Personal Health Records (PHR)

• Coverage, Treatment and Cost Advisors

• Health Risk Assessments with Incentives ($)

• Disease Management Programs

• Choice of Networks

• Exclusive Provider Networks

• Prevention Benefits and Services

• Accountable Care Organizations

• Patient-Centered Medical Homes

• Value-Based Insurance Design (VBID)

Top 10 Issues/Opportunities 2011-2014

1.  Administrative Mandates (HIPAA 5010, ICD-10, etc.)  

2.  Care Management, Data Analytics, and Informatics.  

3.  Health Insurance Exchanges and Individual Markets.

4.  New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.)

5.  Bending the Cost Curve.

6.  Medicare and Medicaid.

7.  Health Information Exchanges and EMRs.

8.  Consumer's Role in the Modernization of Healthcare (social networking, incentives, CDHP, etc.)

9.  Reform Uncertainties.

10.Payer / Provider Interoperability.

(Source: Managed Care Executives Group, March, 2011)

Innovation Framework

What is Desirable?

What is Possible?

What is Viable?

Innovation Framework• Research – better understanding the market, unmet demand,

customers and their preferences, pricing and profit models, the cutting-edge of science and technology, and value networks across our partners and supply chain. – Review existing product-line and previous attempts at innovations

– Survey payers, customers, partners, line-staff and leadership team

– Analyze customer pain points

– Assign Innovation Instigators across the ranks

– Conduct key informant interviews

– Conduct environmental scan and literature review

– Conduct market research and competitive intelligence

– Review financials and other business intelligence

Innovation Framework

• Development – identifying a more effective and efficient way to promote and manage disruptive innovations, pilot programs, demonstrate viability and bring new products to market – Product Development and Innovation Process

• Inventory assumptions about the way it is• Learning to ask disruptive questions• Looking for natural product bundling opportunities• Observing how customers interact with services today to detect opportunities

for improvement• Investigating and experimenting with new ways of doing things• Networking and associating with people, technologies, and ideas from

diverse backgrounds

Innovation Framework

– Identifying:• Gaps, voids and opportunities• Market compatibility • Quality and compliance standards• Key performance indicators, forecasts and

projections• Potential issues and risks• Early-stage business operating and/or

financial models and their implications

Innovation Framework

– Critiquing the proposal• Is the proposal overly optimistic or too cautious? • Is quality assured? • Were there contrary opinions on the Team? • Are there credible alternatives to the proposed solution?• Is there sufficient data to support the decision? Valid

sources?• Is there an assumption of success with the pilot based on

past performance elsewhere? Where?

• Is planning overconfident? Is the worst case awful enough?

Innovation Framework– Prototype and Pilot

• Develop the product/service in its entirety, ready to test

 •Execution – planning and deploying new products with adequate resources and management, reporting progress, remaining accountable, capturing lessons-learned, and knowing when and how to say “No”

– Develop proof of concept model and parameters – Decide whether to pilot prototype internally, to out-source it, or to

spin it off under its own brand– Implement the strategy, develop and test the product/service– Manage expectations, people and outcomes

Innovation Framework

• Evaluation – measuring the impact of the new product and the success of the implementation team– Actual costs, revenues, and profits– Return-on-Investment – Customer, Employee and Payer Satisfaction– Customer Experience– Quality– Outcomes– Market demand

Health Care Reform

The Act Does Several Things:

•Expands Insurance Coverage

•Institutes Insurance Reforms

•Builds Infrastructure to Provide Improved Health Outcomes

•Puts In Motion Structural Changes to how Healthcare Delivery is Structured & Financed

Goals of the Act:

•Increase Access

•Provide Comprehensive Care Better Health Outcomes

•Control Costs

Patient Protection and Affordable Care Act (ACA)

Phased Implementation Is Needed To:Build Needed Infrastructure

Plan and Implement Provisions Well

Changes To Benefits and Insurance Reforms Began To Be Implemented In 2010

Major Coverage Expansion Occurs in 2014

Health Insurance Exchanges

Medicaid Expansion (in approx. half of states)

Longer-term Benefits Result From Sum of Structural and Cultural Changes

Go Live 2014

Insurance Coverage Expands From 83% to 94%

Individual Mandate is Constitutional

Subsidies For Those Under 400% FPL

Medicaid Eligibility Set At 133% FPL and Includes Single, Childless Adults in Expansion Category

Medicaid Expands by 8-22 Million

25 Million Americans to Get Insurance Through State Exchanges

Expanded Health Insurance Coverage - 2014

Result of Change in Coverage for non-elderly individuals (by 2019)

158 M will have coverage through employers

50 M will have coverage through Medicaid/CHIP

25 M will have coverage through exchanges

26 M will have coverage through non-group plans

26 M will remain uninsured

Source: Congressional Budget Office (CBO)

Market Results of Coverage Expansion

Impact of Affordable Care Act Focus on coordination between primary care and specialty

care:

Significant enhancements to primary care Workforce enhancements Increased funding to SAMHSA, HRSA and IHS Bi-directional

MH/SUD in primary care through FQHCs Primary care in MH/SUD settings through CMHCs and other

agencies Services and technical assistance

Health Homes and Accountable Care Organizations

Implications For States & Providers

Need For Infrastructure To Work With InsuranceGrant Funds Re-conceptualized in order not to Duplicate

Insured Benefits (look for braiding and blending)Medicaid Changes and State Insurance MandatesIntegration of MH/SUD with Primary CareHealth Homes and Accountable Care OrganizationsElectronic Health RecordsPayment Reform Pilot ProgramsEvidence Based PracticesLicensure and Credentialing Standards

What are the Opportunities for Innovation in the Market Today?

1. Managing Multiple Chronic Conditions (MCC)

2. Educating the Public

3. Medication Assisted Treatment

4. Population Mgmt

5. Accountable Care Organizations (ACO)

6. Patient-Centered Medical Home and Health Home Models (PCMH) – Focus on Primary Care Integration

What are the Opportunities for Innovation in the Market Today?

1. Value-Based Insurance Design (VBID) Promoting Evidence-Based Practices (EBPs) with Lower Coinsurance When Patients See Higher Performing Providers

2. Behavioral Medicine

3. Pay-for-Recovery Outcomes/Quality/Value

4. Prevention

5. “Blending and Braiding” Systems of Care

6. Joint Ventures and Affiliations

Accountable Care OrganizationWhat is an Accountable Care Organization (ACO)?• A group that would include a hospital, primary care

physicians, specialists, and possibly others involved in coordinating care for shared (Medicare, Medicaid, or other insurance) patients.

• The ACO's goal would be to ensure that the care provided meets or exceeds quality benchmarks within the fee-for-service structure.

• ACO members would share in resulting cost savings.

Goals & Objectives

Improve InpatientCare Efficiency

Use Lower CostTreatments

Reduce Adverse Events

Reduce PreventableReadmissions

Improve Prevention& Early

Diagnosis

Improve PracticeEfficiencies

Reduce Unnecessary

Testing & Referrals

Reduce PreventableER Visits &Admissions

Hospitals & Specialists

Primary Care

Improve Management of Complex Cases

Use Lowest-CostSettings and

Providers

Lower TotalHealthcare

Costs

Improve HealthOutcomes

ACO: Reimbursement Innovations

• Revised Capitation (Global Payment Systems or Comprehensive Care Payment Systems)

• Episode of Care Payment System• Administrative Fees• Net Savings• Hybrid Models

Population Health Management

• ACOs must develop a process for:

– identifying patients who have complex needs (multiple chronic conditions)

– or those who are at high risk of developing such needs

– and provide them with wellness and prevention programs,

– disease management,

– and complex case management, as needed

• ACOs must make available or support providers’ use of electronic prescribing, electronic health records systems, registries, and self-management tools

ACO Readiness and Capabilities• Financial Infrastructure – Ability to track performance and payments

• Reporting Infrastructure – Interface with Case Managers, Primary

Care, and Care Coordinators

• Performance Management – Access to disease-specific dashboards,

baselines, benchmarks and adherence to best practices

• Data Aggregation – Data warehouse, clinical decision support, and

disease registry capabilities

• Health Information Exchange – Interoperability and Meaningful Use

Establishing Readiness and Capabilities for Market Innovations

Information Technology Components

• EMR, EHR • Pervasive

Connectivity/Networking• Data Analytics and Predictive

Modeling• Disease and Case Management

Software Applications

Next Steps• Enable your organization for change

A. Develop a strategic plan, business plan, and *especially* a marketing plan that enables innovation based on knowledge of market forces and market structural changes

B. Commit capital, develop a budget, and/or find investors or partners if you need them

C. Address staffing and the need for periodic expertise where innovation is concerned

D. Align innovation with your IT plans

E. Commit to Performance Mgmt framework

Next Steps

• Manage your organization through changeA. Executives set the course and the mood

B. Establish and measure your expectations

C. Keep distractions and competing priorities to a minimum

D. Hold people (including yourselves) accountable

E. Align efforts so time and energy are not wasted

F. Provide reinforcements, encouragement and rewards (recognition)

Next Steps• Manage your organization through change

A. Become Learning Organizations (there is a lot to learn!)

B. Recruit, retain and train the right people in administrative as well as clinical areas

C. Leverage your Core Competencies

D. Encourage some risk-taking, experimentation and tolerate mistakes. Ask “What if…?” ALOT

E. Conduct market research – what you don’t know can hurt you

F. Invest in your brand image and dress the part of innovator

G. Use thoughtful scenario-based business modeling and business case methods to pilot your innovations

Thank You! Questions and Contact

Kathryn Alexandrei

AHP Healthcare Solutions

kalexandrei@ahpnet.com