WHAT LIES AHEAD IN PHYSICIAN – HOSPITAL …...(PPACA) establishes and maintains quality-related initiatives Mar 23, 2010 CMS adds Outpatient Data to Hospital Compare Website Jul

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WHAT LIES AHEAD IN PHYSICIAN – HOSPITAL

ALIGNMENT? William F. Jessee, MD, FACMPE

and Kevin Haeberle

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To achieve improved care coordination Enhanced quality / safety More efficiency Increased patient satisfaction

Changing payment mechanisms Changing value systems in the workforce Secure / expand market position for key services Strengthen referral base

Why Physician Alignment Is Important

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2

Payment Reform and Quality

•The new paradigm for reimbursement •Transforming roles from passive payer to active purchaser of high value health care •Examples:

– Hospital quality reporting – Value based purchasing – Hospital acquired conditions – Readmissions – PQRS – Incentives and disincentives


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Payment Reform Focused on Incentives for Quality & Efficiency

CMS=Centers for Medicare & Medicaid Services; DRA=Deficit Reduction Act; IOM=Institute of Medicine; MMS=Medicare Prescription Drug, Improvement and Modernization Act; QI=Quality Improvement;

Health Care and Education Reconciliation Act of 2010

amends PPACA

Mar 30, 2010

Patient Protection and Affordable Care Act (PPACA) establishes

and maintains quality-related initiatives

Mar 23, 2010

CMS adds Outpatient Data to Hospital Compare

Website

Jul 8, 2010

EHR Registration begins

Jan 3, 2011

CMS to launch Physician

Compare Website

Jan 3, 2011

HAC Expanded to Medicaid

Jul 1, 2011

Physician Resource Use Reporting to

begin

2012

2013 2011 2012 2014 2010 2015

Payment Reductions for Re-admissions to

begin

Oct 2012

Medicare VBP to begin

2013

Public Reporting to begin of HACs where payment

was denied

2014

EHR Meaningful Use must be achieved or

Medicare Reimbursement

Penalties

Jan 2015

CMS goal to have EHR interoperable

2014

Value Based Payment Modifier to Physician Fee

Schedule

Jan 2015


The Message Is Clear…

• Healthcare today DEMANDS measurable performance • Quality, safety, efficiency, patient satisfaction

• Performance REQUIRES alignment, engagement and integration of the work force—and a CULTURE committed to performance

• The “work force” INCLUDES physicians, other clinicians, management, support staff, volunteers and trustees

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Employment Exclusive contracts with physicians or physician groups Service contracts for specific physician services to the hospital Provision of MSO services to independent physicians Hospital – physician integrated health plan contracting vehicles Formation and operation of ACOs, IPAs, PHOs and clinically integrated networks Joint ventures

Options for Physician Integration

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Options Available to Hospitals

PSA Gainsharing Tax Exempt

Affiliate Employment

Service Line Co-

Management

“Pay For Quality”

PAP Financial or Clinical

Integration

(PHO)

ACO

Level of Integration

Less Effective More Effective


Can preserve autonomy of private practices Shared risks and shared rewards Difficult (and expensive) to form Difficult to manage Questions re long term stability Nonetheless, lots of hospitals AND some medical groups are taking the plunge…… Legal and compliance issues

ACOs, IPAs, PHOs, OWAs

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No one really knows, but there are a lot more than there used to be ©Almost 45% of physicians are now employees ©About 55% of physicians under age 40 ©ACC estimates 75% of cardiologists work for

hospitals ©AHA estimates 25% of practicing physicians were

hospital employees in 2010

There will be more tomorrow than there are today.

How Many Hospital-Owned Practices Are There?

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•Economic pressures on physician practices •To prepare for reform and integrated clinical care •Generational changes in the physician workforce •Improved negotiating clout with payers •“Because the doctors wanted us to…” •“If I don’t, my competitor might…”

Why Are Hospitals Employing Physicians? (directly or indirectly…)

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Economic Pressures

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-5.4% -3.8% -2.4%

-0.9% -0.9% -0.9% -0.4% 0.6% 2.9% 2.9%

-25.4%

0.0% 1.6% 3.9%

6.7% 10.3%

13.8% 17.1%

21.6% 21.1% 23.1% 23.1% 23.1%

13.8% 16.6%

20.6%

30.0% 34.0%

44.5%

50.2% 53.1%

49.3% 50.9% 51.1%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012*

Cumulative Percent Change Since 2001 for the Medicare Conversion Factor, Not Hospital/IDS-Owned Multispecialty Group Operating Cost, and the Consumer Price Index

Medicare Conversion Factor CPI Total Operating Cost per FTE Physician

* 2010, 2011, and 2012 median operating cost values are three year moving average projections of previous years'data. * 2010, 2011, and 2012 CPI figures are the July 2010 semiannual figure. * 2011 MCF figure illustrates the estimated net impact of the 12/2010 legislation.

Projected


Physicians ■Currently 40% women; by 2020, a majority ■Gen X and Gen Y values ■Large number of (male, Baby Boomer) physicians approaching retirement ■Almost 40% of physician work force is 55 or older ■Younger physicians are employees, rather than owners ■Primary care / specialist imbalance

Changing Demographics

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No single “right” approach Most organizations will use multiple approaches for different parts of their physician population Among the factors driving choice of options are: Urban / suburban / rural location Physician specialty Group practice size Practice culture / hospital culture Hospital strategic objectives Physician preference / objectives

Employment NOT the Only Option

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Legal and Regulatory Issues

Anti-trust laws -- “Market Power” (size and concentration) and “Joint Action” (“integration”) concerns Stark – Physician financial and referral relationship with “designated health service” entity Anti-kickback – No offer, payment etc. of any “remuneration” in exchange for, or to influence referrals. Statute and safe harbor compliance Civil Monetary Penalties (CMP) – Gainshare and beneficiary inducement

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Legal and Regulatory Legal Issues

Medical Practice Act/Form of Entity -- Corporate practice of medicine and legal form Tax and Tax-Exempt Organization -- Tax treatment of transaction and under new relationship; charitable purposes and exempt organization control Contract and Related terms -- Exclusivity, non-competes, term of agreement, unwind rights, benefit plans

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Fairness, reasonableness, and equity in compensation arrangements (including benefits) is essential Standard HR policies, with Board physician compensation committee to oversee and approve any variances Clarity on supervision and reporting relationships Clear expectations of time devoted to work, productivity and performance requirements, etc. Be willing to terminate if necessary Avoid “over-employing” and “under-using” Legal and compliance issues

Considerations in Physician Employment

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Key Takeaways

• Physician/Hospital collaboration will continue

• Structural and cultural dimensions – frequently with different goals/perceptions depending on who’s asked

• Goals:

• Stability/certainty with autonomy vs. align to achieve quality/ efficiency vs. hybrid

• Without collective understanding and buy-in (physicians, hospitals and boards), hospitals face significant losses:

– Value Based Purchasing, HAC reductions, readmission

– Getting into deals that should not be created


Physician employment will continue to rise But there are other options There is no “one size fits all” solution Most organizations will use multiple integration strategies Align the strategy with strategic goals---of both the hospital and the physicians Be very careful to require performance standards and to assure legal / regulatory compliance

The Bottom Line

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•A national survey of CEOs and CMOs •Asked to rank the importance of each of 25 possible characteristics of an effective CMO

•Results showed generally good alignment between CEO and CMO expectations---but some areas of significant difference

•The list can be a useful tool to achieve CEO / CMO alignment

What Do CEOs Expect from CMOs?

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Qualities of Effective CMOs

CEO Responses 1. Passionate about patient

safety and quality 2. Encourages teamwork

and collaboration among physicians

3. Committed to the organization’s mission and values

4. Committed to evidence-based medicine

5. Able to lead standardization of care processes

CMO Responses

1. Good problem-solving skills

2. Passionate about patient safety and quality

3. Inspires respect by peers and staff

4. Good listener 5. Advocate for patients

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Top Five Responses from CEOs and CMOs


Qualities of Effective CMOs

CEOs 21. Disagreement with strategy or tactics is voiced only in private 22. Advocate for physicians 23. Capable in budget development and expense management 24. Prior management/administration experience 25. Effective manager for employed physicians

CMOs 21. Recognizes the CEO is in charge and he/she must follow the CEO's lead 22. Disagreement with strategy or tactics is voiced only in private 23. Strong disciplinarian—enforces standards for behavior and technical performance 24. Effective manager for employed physicians 25. Capable in budget development and expense management

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And the bottom five…


The full list…

1. Highly respected clinician 2. Good problem-solving skills 3. Amiable personality 4. Good listener 5. Advocate for physicians 6. Passionate about patient safety and quality 7. Passionate about patient satisfaction 8. Committed to evidence-based medicine 9. Strong disciplinarian—enforces standards for behavior and technical performance 10. Inspires respect by peers and staff 11. Team player 12. Committed to the organization’s mission and values

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The full list (cont.)

13. Recognizes the CEO is in charge and he/she must follow the CEO's lead 14. Disagreement with strategy or tactics is voiced only in private 15. Advocate for patients 16. Leader in efforts to improve efficiency, reduce costs 17. Effective public spokesperson for the organization 18. Effective manager for employed physicians 19. Skilled in motivating physicians and staff to give their best effort 20. Capable in budget development and expense management 21. Able to lead standardization of care processes 22. Champion for EHR implementation and use 23. Encourages teamwork and collaboration among physicians 24. Prior management/administration experience 25. Prior medical staff leadership experience

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Locations and Contact

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Contacts William F. Jessee, MD, FACMPE Kevin Haeberle [email protected] [email protected] 612-339-0919 817-303-2178 Company 1.800.327.9335 | [email protected] www.INTEGRATEDHealthcareStrategies.com Locations Dallas | Kansas City | Minneapolis | Palm Springs Connect

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WHAT LIES AHEAD IN PHYSICIAN – HOSPITAL …...(PPACA) establishes and maintains quality-related initiatives Mar 23, 2010 CMS adds Outpatient Data to Hospital Compare Website Jul