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Key Considerations for Rural Healthcare Leaders and the Role of State Offices of Rural Health
October 2019
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 2
AGENDA
The Rural Health Safety Net
Hospital Closure Crisis
Key Considerations for Rural Providers
Health Systems and Affiliations
National Rural Health Day
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 3
Rural Populations are Older, Less Healthy, Less Affluent and Have Limited Access to Multiple Types of Care
Sources: CMS Service Area File 2015, Robert Wood Johnson Foundation/University Wisconsin Population Health Institute 2016 County Health Rankings and National Center for Veterans Analysis and Statistics 2016.
Source: The Chartis Center for Rural Health
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 4
Convergence of Multiple Pressure Points
Local and national pressure points creating downward pressure on rural providers.
Healthcare Policies
Population Migration
Health Disparities
Recruitment/Retention
Economic Policy
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 5
48% of all Rural Providers have a Negative Operating Margin
AK
CA
HI
ME
MA
RI
NH
CT
NJ
DC
NY
OH
VT
PA
DE
MI
MD
NC
SC
WI
FL
GA
VA
WV
INIL
KY
TN
ALMSLATX
AZ AROKNM
NV UT CO KS MO
SDWA
OR
NDMT
ID
MN
IAWY NE
State-level percentage of rural hospitals with negative operating margin.
0-20 21-40 41-60 61-80 81-100Source: The Chartis Center for Rural Health, 2019.
NA
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 6
Hospital Operating Margins:Medicaid Expansion and Non-Expansion States
Expansion State Non-Expansion State
1.5% -0.2%
41% 51%
Median Operating Margin
% with Negative Operating Margin
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 7
The Rural Hospital Closure Crisis
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 8
Hospital Closures – 113 and counting
AK
CA
HI
ME
MA
RI
NH
CT
NJ
DC
NY
OH
VT
PA
DE
MI
MD
NC
SC
WI
FL
GA
VA
WV
INIL
KY
TN
ALMSLATX
AZ AROKNM
NV UT CO KS MO
SDWA
OR
NDMT
ID
MN
IAWY NE
Source: Sheps Center, UNC
Number of rural hospitals closed since 2010.
1-2 3 4 5-8 10+0
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 9
Rural Closures and Impact on Access to Care
Residents of 68 communities must now drive 30 minutes more to reach the nearest hospital.
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 10
Offsetting Revenue Pressure:The Decline of Access to OB Services in Rural America
Rural hospitals dropping OB since 2011:
Rural hospitals offering OB that have closed:
134
21
155Rural communities that have lost access to OB since 2011.
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 11
The Tipping Point Emerges at 12 Months Prior to Closure
Magnitude of change
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 12
Rural Hospital Vulnerability
AK
CA
HI
ME
MA
RI
NH
CT
NJ
DC
NY
OH
VT
PA
DE
MI
MD
NC
SC
WI
FL
GA
VA
WV
INIL
KY
TN
ALMSLATX
AZ AROKNM
NV UT CO KS MO
SDWA
OR
NDMT
ID
MN
IAWY NE
Percentage of State Rural Hospitals Determined to be Vulnerable
1%-9% 10%-15% 16%-20% 21%-25%0 26+
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 13
The ‘Most Vulnerable’
AK
CA
HI
ME
MA
RI
NH
CT
NJ
DC
NY
OH
VT
PA
DE
MI
MD
NC
SC
WI
FL
GA
VA
WV
INIL
KY
TN
ALMSLATX
AZ AROKNM
NV UT CO KS MO
SDWA
OR
NDMT
ID
MN
IAWY NE
1%-9% 10%-15% 16%-20% 21%-25%0
Percentage of State Rural Hospitals Determined to be ‘Most Vulnerable’
26+
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 14
7 Factors with Greatest Impact on Sustainability
Case Mix Index
Government Control Status
% Capital Efficiency
% Occupancy
% Outpatient Revenue
% Total Revenue
Medicaid Expansion Status
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 15
Key Considerations for Rural Providers
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 16
Engaging Rural Hospital Leadership Teams Across the Country
500+ healthcare executivesand their trustees.
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 17
Key Considerations for Rural Hospitals
Remote geography presents both opportunities and challenges for rural providers
Physician recruitment, retention, retirement, and burnout are significant patient barriers to access in rural healthcare
Reliance on government reimbursement disproportionately impacts the rural health safety net
Improving access and quality of care requires clinical integration
EHR integration is critical to effective clinical partnerships
Virtual care may improve access and patient experience at low cost, but may be a disruptor to current care delivery and payment models
Value is incentivized by alternative payment models, under which strong performance is essential to secure bonus revenues
Investment in primary care networks by rural acute care providers is critical
Population health management demands high-value, coordinated care, incentivized by alternative payment models that reward improved community health
Strategic governance must be informed by the latest rural-relevant research
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 18
Survey Response: Top 3 considerations
69%
69%
46%
23%
Geographic Remoteness
Physician Recruitment, Retention
Workforce (non-Dr.) Recruitment, Retention
Reliance on Govt. Reimbursement
Improving Clinical Partnerships
Potential for Virtual Care
Emergence of Alternative Models
Increase Investment in Primary Care Models
High-value, Coordinated Care for Pop Health
Strategic Governance using Rural Metrics
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 19
Sample Questions and Challenges Facing Key Stakeholder Groups
Hospitals and Healthcare Systems
Physicians/Clinicians and Medical Groups
• How do we attract more commercial patients to improve margins near-term? How do we optimize revenue?
• How can we better understand and control our costs? • Where do we get access to capital?• How can we grow our physician group? • What services will be needed in the future? • What IT systems should we invest in?• How do we break into digital health? Where do we begin?• Do we need a partner?
• Can I survive as an independent practice? How do I keep costs down? How can I grow my revenue? Should I combine with another practice, group or health system? Should I retire early?
• What new capabilities do I need, by when, and how will I afford them? Where do I find them? How do I implement them?
• Do we have the right leadership in place to guide us into the future?• What do my patients want and how do I provide it?• How do I tackle all of this and stay abreast of new medical advancements, billing and
coding, continuing medical education – and avoid burnout?
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 20
Evolution of Care Delivery, Payment, Disrupters & Innovations
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 21
Proliferation of Value Based Models with Varying Degrees of Risk & Reward
Fee For Service (FFS)
Bundled Payments
Pay for Performance
Partial or Full Capitation (ACO
Model)Shared Savings (ACO Model)
Quality andExperience
Cost
Value-Based Payment Models
Volume of Services Provided
Volume (Services, Episodes and/or Attributed Lives) + Outcomes and Cost Effectiveness
Value is being embedded in traditional models –
through benefits design, value- based purchasing,
and reference based pricing
Portion of reimbursement tied to performance on
specific metrics. -typically on top of a FFS base
Fixed reimbursement for an episode of care -
providers take responsibility for managing costs
Actual spending compared to target for
defined population over a set period.
Providers and payors share in any savings
Provider groups receive prospective fixed payment and take responsibility for managing all associated costs.
While the private sector continues to expand and test a range of value-based payment models, CMS has already transitioned 85% of FFS payments to value based purchasing categories.
Increasing Degree of Risk/Reward
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 22
A Shift in Focus – from Treating Individuals to Managing a Population
Key capabilities required:• Providers with clinical capabilities• A mix of services that the population
demands, generally of your choosing• Facilities, equipment, supplies• Some IT platforms• Billing and coding department• Administrative infrastructure
Key capabilities required:• Everything to the left, plus:
• Full range of services, owned or via partnership• Population risk stratification• Actuarial capabilities to examine costs• Advanced data informatics capabilities• Disease management programs and
interventions• Care coordination• Clinical integration• Extensive quality improvement programs• Patient attraction and retention strategies
FOCUS ON TREATING INDIVIDUALS FOCUS ON MANAGING A POPULATION
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 23
Health Disparity in Arkansas: Opioids and Primary Care Access
80-100%ile
60-80%ile
40-60%ile
20-40%ile
0-20%ile
Population Health Status
Opioids PCP Access
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 24
Pop Health: OB Access in the Southeast
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 26
Case Study: VBP Analysis and Action
State-wide network VBP initiative
Identified $1.1M in ‘at risk’ revenue ~$200K HCAHPS performance
~$500K Outcomes performance
~$350K Efficiency performance
CAH example ($10,500 HCAHPS opportunity)
Baseline Period10/14-9/15
Performance Period7/16-6/17
Performance Period1/16-12/16
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 28
The Lines Begin to Blur Across the Healthcare Landscape
Providers are becoming payors
Payors are becoming providers
Companies from other segments are becoming providers
New players are getting into the risk business
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 29
Disruptors May Upend Healthcare as We Know It
• These companies are moving into healthcare because they see opportunity: a broken healthcare system hampered by legacy assets, business models, and payment systems
• They bring with them elements that traditional healthcare providers and start-ups don’t have, including: tons of cash, large customer bases, distribution networks, advanced data tracking and analysis capabilities, artificial intelligence experience
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 30
Employers Continue to Test New and Innovative Models to Contain Costs
72%
28%Of employers:
healthcare delivery payment reform is
part of current strategy
“In the private sector, escalating [healthcare] costs have eroded the
bottom line ...purchasers simply cannot afford the status quo”
2012 IOM executive roundtable findings
SEEKINGNATIONALCONTRACTS
SHIFTING RISKTO DEFINED
CONTRIBUTION
CAPPINGPAYMENTS
SPREADINGMODELS
Reference pricing
Purchaser consortium
Private exchange
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 31
‘’System-ness” – The Power of Affiliation and Partnership
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 32
Why Do Health Systems Affiliate with CAHs?
Mission Bring care to communities with unmet needs and deliver services that local providers may not otherwise support
HIT Integrate technology platforms
Referral Patterns Develop a hub-and-spoke network to drive care for the right patient for the right procedure to the right place for the right price.
Population HealthCoordinate care across the continuum of service providers and geographies (including rural) and develop interventions upstream of acute care providers to meet the Triple Aim
ACOs and Alternative Payment Systems
Deliver superior value by providing high-quality, coordinated care in a cost-efficient manner
Corporate Allocations and Cost Report Optimization
Optimize cost-based reimbursement for investments in shared services across CAHs
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 33
System-Affiliated Rural Hospitals Generally Outperform Peers
System-affiliated rural hospitals tend to see higher operating margins (based on INDEX).
1 AHA Data Viewer, 20152 Healthcare Cost Report Information System (HCRIS) Q3 2017
53% of Rural Hospitals
are System-Affiliated1
29% Of these facilities are Contract-Managed1
47% of Rural Hospitals are
Freestanding1
2.9%
0.6%
0.0%
1.3%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
System-Affiliated (incl.Contract Mgd)
Contract-Managed Freestanding
Med
ian R
ural
Hosp
ital
Ope
ratin
g Pr
ofit
Mar
gin2
Median Operating Profit Margin All Rural Median
52%ile 52%ile49%ile 50%ile
40
45
50
55
60
System-Affiliated (incl.Contract Mgd)
Contract-Managed Freestanding
Med
ian IN
DEX
Scor
e
Median INDEX Score All Rural Median
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 34
Articulating Goals & Partnership RequirementsEstablishing an open dialogue across the enterprise that facilitates a candid discussion of needs and the associated trade-offs is essential to defining overall strategic direction and objectives.
Rural Affiliates Health System
Articulating Goals
What services or technologies would be helpful in delivering care to your local
communities?
What are they system’s goals and expectations from better alignment with
rural affiliates?
Considerations & Trade-Offs
What level of control would be acceptable to share in order to access
this suite of services/technology?
What level of control would be acceptable to share to gain tighter
alignment with rural affiliates?
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 36
National Rural Health Day Recognitions
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 40
Performance Spans Market, Value, and Finance
Market
Inpatient Market Share
Inpatient Market Share
Outpatient Market Share
Diagnostic Tests Market Share
Drugs Market Share
Emergency Market Share
Procedures Market Share
Radiology Market Share
Visits & Consultations Market Share
Value
Quality
Emergency (ED)
Outpatient (OP)
Immunization (IMM)
Outcomes
HF Readmission
PN Readmission
HF Mortality
PN Mortality
Hospital-Wide Readmission
Proprietary Mortality Score
Patient Perspective
All Domains
Cost
Adjusted IP Costs
Adjusted OP Costs
Charges
Adjusted IP Charges
Adjusted OP Charges
Finance
Financial Efficiency
Capital Efficiency
What level of care are patients receiving?
Is a facility capturing a sufficient volume within
its home market?
Are costs under control? Are charges
too high/low?
How strong is a facility at
generating revenue?
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 41
Performance Pillars Span Market, Value, and Finance
Market
Inpatient Market Share
Inpatient Market Share
Outpatient Market Share
Diagnostic Tests Market Share
Drugs Market Share
Emergency Market Share
Procedures Market Share
Radiology Market Share
Visits & Consultations Market Share
Value
Quality
Emergency (ED)
Outpatient (OP)
Immunization (IMM)
Outcomes
HF Readmission
PN Readmission
HF Mortality
PN Mortality
Hospital-Wide Readmission
Proprietary Mortality Score
Patient Perspective
All Domains
Cost
Adjusted IP Costs
Adjusted OP Costs
Charges
Adjusted IP Charges
Adjusted OP Charges
Finance
Financial Stability
Capital Efficiency
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 42
CO WV
KS
MI
MT
ID
TX
UTOH
NC
ME
MA
NH
VT
WY
2019 Top 100 Critical Access Hospitals
15
8/9
6/7
1/2
3/4
IL
INNE
SD
OR MN
WI
ND
IA
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 43
CO
ME
GA
2019 Top 100 Rural & Community Hospitals
7/8
6
5
4
1/2
3
WA
MS
NY
VT
WV
NM
NE
ORMT
SD
PA
TX
MD
KS
OK
NC
AR
UT IL
MI
OH
MNWI
IN KY
MO
9
WY
IA
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 44
How the 2019 Top 100 CAHs Measure Up to Rural Peers
0
10
20
30
40
50
60
70
80
90
100
Inpatient Market Share
Outpatient Market Share
Quality Outcomes Patient Perspective
Cost Charge Financial Stability
Top 100 CAH Median
IND
EX P
erce
ntile
2019 All CAH Median
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 45
Save the Dates
National Rural Health Day (Nov. 21) Performance Leadership Awards
Top 100 (February 2020)
© 2019 The Chartis Group, LLC. All Rights Reserved. Page 48
Michael TopchikNational Leader, The Chartis Center for Rural [email protected]
Troy BrownClient Services Manager, The Chartis Center for Rural [email protected]
Thank You For Your Time and Attention