Leading the Change Solutions for Today’s Healthcare Challenges Melinda S. Hancock, FHFMA, CPA Partner, Dixon Hughes Goodman LLP and 2014-15 Chair-Elect,

Leading the Change Solutions for Todays Healthcare Challenges Melinda S. Hancock, FHFMA, CPA Partner, Dixon Hughes Goodman LLP and 2014-15 Chair-Elect, HFMA Women in Healthcare: Lead #likeagirl November 14, 2014

"If your actions inspire others to dream more, learn more, do more, and become more, you are a leader. John Quincy Adams

Presentation Overview Organizational Performance Cost Reductions Business Analytics Payment Reform & Value-Based Purchasing Population Health & the Care Continuum Capital Access Revenue Cycle Leadership What does it really mean? 3

4 Cost Reduction The need for rigorous cost management is clear. Accelerated by unsustainable growth in national healthcare costs, the emerging value-based business model and healthcare reform will push hospitals and health systems to improve quality, access, and outcomes, while reducing expenses. From hfm, March 2012, Kaufman Hall

AMAs Cost Reduction Strategies The American Medical Association identified four broad strategies to contain healthcare costs and get the most for our dollars: 1.Reduce the burden of preventable disease 2.Make healthcare delivery more efficient 3.Reduce nonclinical health system costs that do not contribute to patient care 4.Promote value-based decision making at all levels. Source: Getting the most for our health care dollars, AMA. 5

Cost of Chronic Care 2003-2023 Source: http://www.good.is/posts/the-cost-of-treating-chronic-disease 6

Are We Efficient? U.S. Ranks Last 7 7

9 Basic Premise: By many estimates the reduction must reach 20%-30% of total cost structure by 2015 to be able to confront a lean, health-reformed environment. Why? Reductions from government payers, pressures from lower commercial rates, pricing transparency, narrow networks all equate to shrinking revenue base. Deloittes Radical Cost Reduction Source: http://www.deloitte.com/assets/Dcom- Singapore/Local%20Assets/Documents/Industries/2012/Life%20Sciences%20and%20Health%20Care/Health%20Care/Radical%20Cost%20Reduction.pdf

Operational vs. Strategic Approach 1. Top down 2. Changes underlying delivery and profit model 3. Derives value from making the organization different Strategic 1. Bottom up 2. Looks to drive incremental change 3. Derives value from making organization better than peers Operational Source: http://www.deloitte.com/assets/Dcom- Singapore/Local%20Assets/Documents/Industries/2012/Life%20Sciences%20and%20Health%20Care/Health%20Care/Radical%20Cost%20Reduction.pdf 10

How Much Is Enough? Capital needs and related shortfalls Medicare breakeven analysis Current and desired bond rating Market dynamics Current negotiations and at-risk contracts The impact of transparency and benefit design 11

Tool For Readiness Assessment Source: A Guide to Strategic Cost Transformation in Hospitals and Health Systems, March 2012 12

How to Approach Cost Management Understand readiness Define goals based on capital shortfall Use benchmarks to identify sources of savings Drill down on staffing methods Focus on key drivers of staffing & productivity problems Supplement with other data analytics Streamline overhead functions Ensure targets are integrated with plans & budgets 13 http://www.beckershospitalreview.com/racs-/icd-9-/icd-10/8-strategies-for-hospitals-to-approach-cost-management Bob Herman, June 14, 2012

14 Business Analytics We developed the concepts in this work from the data we gathered, building a framework from the ground up. We followed an iterative approach, generating ideas inspired by the data, testing those ideas against the evidence, watching them bend and buckle under the weight of evidence, replacing them with new ideas, revising, testing, revising yet again, until all the concepts squared the evidence. From Great by Choice, Jim Collins 2011

Business Analytics Needs in an Era of Change Source: Building Value-Driving Capabilities: Business Intelligence. An HFMA Value Project report. 2012. www.hfma.org/valueproject 15

Untapped Potential of Business Analytics in Health Care 36% 20% 44% Not measuring Measuring Managing Source: HFMA Value Project, June 2011 16 Costs of adverse events Margin impact of readmissions Cost of waste in care processes Analytics are available but few are measuringand even fewer are managing to the metrics.

How to Apply Data Mining to Everyday Clinical Practice Standardizes knowledge work Systematically applies evidence-based best practices to care delivery Content System Drives change through new organizational structures, especially teams Requires true organizational change to drive adoption of best practices throughout an organization Deployment System Aggregates clinical, patient satisfaction, and other data Enables analysts to identify patterns that can inform decisions Enterprise Data Warehouse (Analytic System) 17

Harnessing Data to Improve Physician Performance Source: Moving Toward Population Health. Leadership. Spring 2014. Available at hfma.org/leadership.

19 Payment Reform & Value Based Purchasing Payment reform is changing health care, bringing with it the need for new competencies for success. Healthcare leaders need innovative strategies to integrate with physicians, manage risk, reduce cost and price bundled services, and enhance quality while lowering cost. Business as usual is not an option. Healthcare Payment Reform Accelerating Success, HFMA

Goals of Payment Reform 20 Source: http://www.rand.org/pubs/periodicals/health-quarterly/issues/v1/n1/03.html

Estimated Gains from ACA: $64B Amounts in Billions 21

Source: Health Care Advisory Board, 2012 How CMS Views The Programs 22

The Continuum of Risk 23 Source: http://www.athenahealth.com/knowledge-hub/ACO/accountable- care-organizations.php Source: Hancock, M., Hannah, B. Determining Your Organizations Risk Capability, hfm, May 2014.

The Mandatory Programs under ACA 24 VBPRRPHAC Payment TypeBonus/PenaltyPenalty All or None Penalty % of Medicare Inpatient $s 1% 2013 1.25% 2014 1.5% 2015 1.75% 2016 2% 2017+ 1% 2013 2% 2014 3% 2015+ 1% 2015+ Description of Metrics Addition of domains through 2015 with dynamic metrics every year Three core diagnoses with additional 2 in 2015 and more to be added in later years Two domains: Safety and Infections with infections weighted higher and additional infections added

Maximizing & Protecting 25

VBP Shifting of Domain Weights Outcomes Patient Experience Efficiency (MSPB) Core Measures 26

New NQS Based Domains for FY 2017 27 HCAHPS = 25% Safety = 20% MSPB = 25% Clinical Care - Process = 5% Clinical Care - Outcomes = 25%

Readmission Reduction Program 3 Performance periods in play at a time 3% penalty of Medicare Reimbursement at risk each program year Measured Populations 30 days from DISCHARGE AMI, HF, PN, COPD, THA & TKA CABG is added in FY 2017 which is in play now Performance Periods: 3 Year Rolling Program FY15: July 1, 2010 June 30, 2013 3% FY16: July 1, 2011 June 30, 2014 3% FY17: July 1, 2012 June 30, 2015 3% FY18: July 1, 2013 June 30, 2016 3% FY19: July 1, 2014 June 30, 2017 3% Currently participating in 3 performance periods simultaneously 28

Hospital Acquired Conditions: FY 2017 First Domain: PSIsSecond Domain: CDC Pressure Ulcer RateCLABSI Foreign Object Left in BodyCAUTI Iatrogenic Pneumothorax RateSSI Following Colon Surgery (FY 2016) Postoperative Physiologic and Metabolic Derangement Rate SSI Following Abdominal Hysterectomy (FY 2016) Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017) Accidental Puncture and Laceration Rate Clostridium Difficile (FY 2017)

Where Are the First Cohort of Bundles? 30 Source: Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.

Early Results of BPCI Cohort 2 Tremendous increase in the number of applications in the most recent open enrollment in April 2014: Nearly Triple! Models 2,3,4 were open for enrollment Currently in the Phase 1 period which is the non risk, decision making period. Phase 2 is when the Episode Initiator starts to accept risk

Where Are the MSSPs? As of January 2014, there are 23 Pioneer ACOs and 351 Shared Savings ACOs. Source: The Advisory Board 32

Geographical Dispersion of MSSPs Represents Assigned Patient Population for 2012-2014 Cohorts Source: MLN Webinar 4/8/14 www.cms.gov/NPC 33

Pioneer ACOs: 32 Participants All participants met quality goals 25 of the 32 reduced readmission rates >1/3 reduced costs, over $87M 2 providers lost money, $4M 13 providers or 40% getting distributions 2012 MSSP Cohort: 114 Participants 54 (47%) reduced spending with 29 (25%) sharing in savings $126M in distribution to the 29 providers 60 were not able to reduce spending: 2 of which were 2-sided model 109 reported quality measures satisfactorily: 2 of the 5 who did not were eligible for $ Early Results 34

How to Manage to the Tipping Point 35 Revenue Time How do local market conditions impact timing considerations? Can market-changing events create an urgent paradigm shift? What is my step-change business model risk? Do I have the financial tools to adequately analyze relevant states? Source: DHG Healthcare

The Changing Healthcare Landscape 36 Source: Leavitt Partners, LLC

Bear financial risk for the measured health of a population Align incentives to encourage the production of high-quality health outcomes Oversee the provision of clinical care Coordinate the provision of care across the continuum of health services Invest in and learn to use appropriate IT to manage population health Improve the individual experience of care Improve population health Reduce the cost of health care for populations Processes Outcomes Structure What Is Accountable Care? Source: Leavitt Partners, LLC 37

What They Did Results They Achieved Partnering for Success Under Value-Based Payment Source: Partnering Around Value-Based Payment, Leadership, Summer 2014, available at hfma.org/leadership Who Collaborated Aetna Consultants in Medical Oncology and Hematology, a 9-physician practice in Southeastern Pennsylvania Collaborated on a patient-centered medical home model for oncology Used a common medical home approach: management fee plus shared savings 71% fewer ED visits and 51% fewer hospitalizations for chemotherapy patients in 2012, compared to national benchmarks 38

39 Population Health The Care Continuum Improving the heath of populations is one of three dimensions that make up the Institute of Healthcare Improvements Triple Aim.

Advancing Population Health Management Best Health, Best Care, Best Experience Care Delivery Models Care Coordination Patient Engagement Information Technology and Analytics Alignment of Incentives Source: Sharp Healthcare, San Diego, CA 40

Care Management Programs Hospital Care Management Complex Case Management Disease Management End-of-Life Care Management Skilled Nursing Care Management Out-of-Network Care Management Source: Sharp Healthcare, San Diego, CA 41

Transitions Program 42 Pre Transitions*During Transitionsp Hospitalizations, n 71 33 Hospitalizations per patient, mean (SD).46(.84).21(.55)< 0.01 Hospitalization rate32%17%(26)< 0.01 ED visits, n157 67 ED visits per patient, mean (SD)1.01(1.3).43(.78)< 0.01 ED visit rate57%(88)31%< 0.01 Total Cost of Care, (SD)$73,025($109,708)$46,588($81,616)< 0.01 *Transitions LOS is unique for each patient: pre-Transitions LOS = During-Transitions LOS Source: Sharp Healthcare, San Diego, CA

Health & Wellness Disease Management Education and support customized to the patients level of health, allowing them to self-manage their chronic medical condition, promote wellness and prevent complications. Disease Managers/Coordinators Diabetes Asthma CAD Obesity/Sleep Apnea Heart Failure COPD Pharmacy Focus on medication therapy management and improved patient adherence. Lipid Clinic Refill Clinic Medication Reconciliation Chronic Care Nurses Provide patient support in the Primary Care Offices. The RN supports and reinforces the treatment plan prescribed by the physician. 5 or more chronic medical conditions 4 or more ER visits in the last 12 months 4 or more hospital admissions in the last 12 months Coordination and assessment of care and services for members who have experienced a critical event or diagnosis that requires the extensive use of resources and system navigation in order to facilitate appropriate delivery of care & services. Who Is Eligible? Promotion of knowledge, healthy attitudes, and practices to help our patients achieve their personal best health. Healthier Living- Chronic Disease Self Management Weight Management Dietician Consultation Heart Failure Healthy Hearts Asthma Stress Management Strength Training Smoking Cessation Complex Case Management Source: Sharp Rees-Stealy, Sharp Healthcare, San Diego, CA 43

Disease Management (Ongoing) Evidence based targeted educational mailings Personalized Face to Face and Telephonic Assessments with collaborative Goal Setting Regular telephone consultations and follow- up with a registered nurse Provision of self-management tools and support Referral, care coordination and communication with Healthcare providers Pharmacy (Ongoing) Physician/Patient support Medication Therapy Management Personalized Telephonic Assessments Resource Care Coordination Chronic Care Nursing (30-90 days) Personalized Face to Face Assessments with collaborative Goal Setting Regular office and telephone consultations and follow-up with a registered nurse Provision of self-management tools, education and support Attend Senior post Hospital discharge and post Emergency Department follow-up visits 44 Complex Case Management (3-6 months) Evidence based targeted education Personalized Telephonic Assessments with plan of care and collaborative Goal Setting Frequent telephone consultations and follow- up with a registered nurse Provision of authorization and coordination of services Referral, care coordination and communication with healthcare providers What Do Patients Receive? Health & Wellness (Ongoing) Source: Sharp Rees-Stealy, Sharp Healthcare, San Diego, CA Group Classes 1 on 1 Evaluation Telephonic/Web Education

45 Capital Access In an era of healthcare reform, with declining payment, concerns about reducing costs, and exploration of new organizational structures to improve accountability for population health, uncertainty abounds among healthcare providers. Considerable investment and reinvestments are critical to the profitability and survival of hospitals and health systems today. Bond Financing in Volatile Times, HFMA, March 3, 2014, Gould & Blanda

46 Healthcare Issuance Down in 2013 Source: John Hanley, Managing Director, Head of Healthcare, Ziegler, Is Capital Available? Presentation at HFMAs Capital Conference, April 10, 2014.

47 Source: Martin Arrick, Managing Director, Standard & Poors Not-for-Profit Health Group. U.S. Not-for-Profit Health Care Sector Outlook. Presentation at HFMA Capital Conference, April 10, 2014.

48 Revenue Cycle The revenue cycle presents unique opportunities for bottom- line improvement. As payment continues to decline, hospitals should take a renewed interest in improving their financial performance through the revenue cycle. HFMA

Revenue Cycle The New Norm - Basic Expectations Efficient Low cost work flows.. Exception based processing Automation through EDI Patient Self Service Options Accurate Get it right the first time! Right Insurance, Right Authorization Right Patient Responsibility at Time of Service Mandate Real Time Concurrent Review, Open EMR Timely Introduce expectations early in cycle Patient and payers timely payment expectations 49

Revenue Cycle More Than Efficiency Its an Experience! Revenue Cycle Leaders Should Consider the Service Differentiation.. Employee Satisfaction Why will the best and the brightest want to work for you? Efficiency How is your Revenue Cycle team creating intuitively accurate processes? How does the Revenue Cycle team create patient loyalty? Patient Satisfaction 50

Embrace the Insurance Exchanges Assist with Securing Coverage Certified Enrollment Counselors Patient Advocates 51

Its a New Era in Revenue Cycle Price Transparency, New Payment Methodologies and Patient Liabilities Cost Based Chargemasters Self Pay Initiatives Bundled Payments 52

Leveraging Technology Work from Home Expanding EDI Patient Self Service Payer Interfaces with Hospital Systems Front end solutions to guide patients through the Exchange and Medicaid options Priceline Price Quotes Game Industry Productivity Monitoring Tools Patient Preference Lists Facetime Chat with a Customer Service Rep 53

54 HFMA Resources My goal each year is to introduce promising young professionals and colleagues to HFMA and help integrate them within the organization. The HFMA network enhances their careers, strengthens our chapter, and allows us to follow their success. My chapter leaders did it for me, and I want to pass it on. It's a win- win! Debbie Teesdale Executive Director of Corporate Development Paragon Hospital Services, LLC

Improve the Billing and Payment Experience for Patients 55 hfma.org/dollars

Discover Revenue Cycle Strategies That Work Strategies used by MAP award winners and other high- performing organizations Innovative practices designed to drive revenue cycle performance Nov. 2-4, Las Vegas hfma.org/mapevent 56

Take Advantage of Other Educational & Career Development Opportunities 57 Certification ANI: HFMA National Institute Virtual Conferences Seminars Webinars eLearning HFMA onsite programs

Stay Up to Date with Online Resources hfma.org Daily and weekly online news Social media Facebook LinkedIn Twitter HFMA Forums 58

Add HFMA Publications to Your Reading List hfm magazine The #1 publication for healthcare CFOs Leadership publication Reaches all levels of the C-suite Newsletters Revenue Cycle Strategist Healthcare Cost Containment Strategic Financial Planning 59

Earn CPEs by Reading Newsletter Articles 60

61 Leadership What does it really mean? Leadership has nothing to do with titles; it has everything to do with, Do you inspire other people? Do they want to follow you? Do they want to be with you? -Tom Atchison, author of Followership: A Practical Guide to Aligning Leaders and Followers

Collaboration Success Stories Source: HFMAs Leadership e-Bulletin, available at www.hfma.org/leadership. Transforming Revenue Cycle (Providence Health & Services CA region): Oct. 2010 issue. Funding a Capital Project (Beatrice Community Hospital/NE) : Dec. 2010 issue. Redesigning Primary Care (Fairview Health Services.MN): Nov. 2010 issue.www.hfma.org/leadership. 62 WITHIN A HEALTHCARE SYSTEM A California healthcare system created core revenue cycle teams with representatives from 10 departments across all system hospitals. Improvement: $9.4 M HOSPITAL & COMMUNITY Community banks and residents bought 38% of the $45M in bonds that a rural Nebraska critical access hospital used to fund construction of a replacement facility. PAYER & PROVIDER A payer funded an initiative to make a Minnesota healthcare systems primary care clinics more efficient and patient-centered. Physicians, nurses and other clinicians provided the ideas. 62

Anchor Change in Corporate Culture Company cultures are like country cultures. Never try to change one. Try, instead, to work with what youve got. -Peter Drucker 63

The people who really succeed in this field have a vision. They have a high degree of motivation, and they are out to make things betterto do good and to change the world on whatever scale they can. They work hard, they have an end in mind, and they will acquire whatever skills and training and knowledge they need to get there. Mary Stefl, professor and chair of the department of healthcare administration, Trinity University, San Antonio, Texas, and a consultant for the Healthcare Leadership Alliance Competency Model 64

Create Short-Term Wins A journey of a thousand miles begins with a single step. - Lao-tzu, Ancient Chinese philosopher 65 Dont be afraid to start small. - Marty Manning, Advocate Physician Partners 65

... a leader needs to k You cannot lead without knowing the needs of your peoplewhat drives them, what makes them do what they do of the psychology of that, then you can give them opportunities to succeed based on their own psychology of success. Kerry Gillespie, FHFMA, vice president, operations, Community Health System, Inc., Brentwood, TN, and a member of HFMAs Tennessee Chapter 66

Everyone Is a Leader. Everyone in this room is a leader. Im asking each of you to renew your commitment to leading our industry forward, to ensuring its long term viability and quality. Together, we CAN improve health care. Together, we can and we must Mentor young professionals as we have been mentored, Rise above the uncertainty and frustration of today, and Work in partnership with our colleagues throughout the industry to lead the change. Kari Cornicelli HFMA National Chair 2014/2015 67