Information Strategy Route MapOutcomes-based Contracting

Presented by: Ken Barrette of Optimity AdvisorsCopyright © 2015

Today’s PresentationTopics:1. Understand Concept of Outcomes-based Contracting 2. Data Discussion and Opportunity3. Case Study4. Delivery Framework

Key Learnings:5. Outcomes-based Contracting6. Importance of Data Framework / Informatics7. Appreciation of Collaboration and Time to Implement

Outcomes-based Contracting

Rolls Royce pioneered concept Outcomes-based Contracting - ‘Power by the Hour©’*

• Shifted traditional engine sales and service (paying for unit, activity, and parts) to pay for keeping planes ‘healthy’ and operational in the air

• Aligned performance measures to outcomes expected

• Transformed reactive service and maintenance to predictive prevention

• Provided immediate value to customers through:Predictable costsReduced upfront capital investmentPrevented catastrophic eventsImproved aircraft value (‘health’) over time Happy customers – increased market share

*Source: https://en.wikipedia.org/wiki/Power_by_the_Hour

Outcomes-based Contracting

What is Outcomes Based Contracting?

KEY CHARACTERISTICS:• A focus on business outcomes

rather than activities and tasks• The use of measurable

performance standards that are tied to the required outcomes.

• Structure, Process Outcomes

• A pricing model that comprises or includes rewards and risks

Traditional Model

Outcomes-based Model

Value (Over Time)

Collaborative, Shared Accountability

Contract for Results

Shared Accountability

Fees for Service (Point in Time)

Referral-based, Individualized

Contract for Rendered Services

Source: http://outcomesbasedhealthcare.com/Contracting_for_Outcomes.pdfSource: Donabedian, A. (2005). Evaluating the quality of medical care. The Millbank Quarterly, 83, 4, 691-729.

What Opportunity Does Outcomes-based Contracting Address?

Healthcare costs are growing faster than the available budgets. This is not sustainable in the future.

Valu

e ($

)

Time

Healthcare Costs

Healthcare Budget

Budgetary Gap

Aligning Data Across Complex Health Ecosystems

Developing and implementing Outcomes-based Contracting program requires strong data and technology coordination across stakeholders.

Information Management EvolvingIndustry standards and efforts are aligning to make Outcomes-based Contracting ‘practical’.

Digital Maturity

Patient Experience

and outcomes

National Standards

Powerful Analytical Solutions

Quality of Reporting

Technology Integration

Behavioral Insights

Cost reduction

Components of a Outcomes-based Contracting Model

• Business Intelligence (data and information)• Performance Against Outcomes Metrics• Payment and Reimbursement Modeling• System Readiness for Change• Governance

Establishing an Outcomes-based reimbursement contract requires a systematic approach to planning and realization.

Quality

-Outcomes-Safety

-Experience

Payment

-Cost for all health care

delivery

Value÷

Source: HFMA 2011 – Value in Healthcare: Current State and Future Directions

Data Discussion

Growth of Health Care Quality Measures

The health quality measures inventory is growing.

U.S. Health Department of Health and Human Services

Measures Inventory

National Quality Measures Clearing House

Source: AHRQ

Measuring Quality

Regulatory-driven Measures/Reporting Industry Standards

NCQA-HEDIS

Meaningful Use

AMA-PCPI

Stars

QRS

CQM

PQMP-CHIPRA

IHI-Whole System Measures

OQR

IPR

PQRS

HIQRP

Structured and Unstructured Data Structured Data

(Claims, Electronic Medical Record, Financial/Actuary, Utilization, Biometrics Lab,

Pharma, etc.)

Unstructured(Social Media, Health Monitoring, Research, Mobile Apps, Patient

Voice, etc.) Data Attributes

(Syntax, Format, Definition, Situation, Relationship, Metadata

Taxonomy)

Data Attributes(Distributed Network, Hashtag,

Emoticon, Wiki-Collective, Social, Patient Health Records)

PROMURAC

PQA Performance

Data Capture, Aggregation, AnalysisBusiness Informatics

Outcomes-based Contracting Opportunities

MACRA/MIPS

Basic Data FrameworkDeveloping a Value-based Outcomes arrangement requires data aggregation and analysis across multiple data types and measures.

Identify the treatments and the patients that drive costs

Quantitative Data Qualitative Data

Activity-Level DataMedical/EncounterPrescribing PatternsSupplies/Equipment

Financial DataYear of CareCost per OccurrenceOther financial variables e.g.

- Rebates - Excess Risk

Indicators- Risk adj. payments

Clinical QualityReadmissionLOSMedical Adherence

SafetyNever Events/ExclusionsMedical Adherence

Patient ExperienceSimplificationLower out of pocketQuality of LifeSatisfaction

One-time set-up costData Monitoring Technology

Population Identification:• Conditions• Risk scores/stratification• Personal data (age, gender,

ethnicity, etc.)• Bio-physical data• Socio-economic indicators

Construct the Episodic/Treatment Groupers

Beyond Traditional Data Standards

Healthcare has been traditionally focused on interoperable, fixed data layouts and definitions. We have a unique opportunity to develop informatics that use metadata, distributed networks research, and social/wiki conventions (#hashtags, emoticons)

Data

Collection

Archiving

Sharing

Networking

Analysis

Linked Data

Patient Stories

Emoticons

Hashtags

Conversational Context

Case Study

Case example: London-based Clinical Commissioner

A 10 year journey to population level Outcomes-based Payment• A membership organization of 44 Group Practices (GPs) across a

London borough commissions health services for a population of around 310,600

• 2015-16 healthcare budget allocation of $575MM• Key Demographic Variables

– Urban deprivation is higher than the average– Population profile is younger than the UK average– Population is highly ethnically diverse– Life expectancy is below that of London and England, for both males and

females• The combination of increasing demand for healthcare and cost inflation

in excess of income growth results in a real terms financial challenge - in a “no change” scenario, it is estimated that this is a “gap” of about $20MM million in 2014/15 and $15MM million in 2015/16.

• Add to this the reduction in social care budget from $130MM in 2013/14 by $10 MM in 2014/15 and a further $11MM in 2015/16

The journeyMoving from current reimbursement (bundled payments) to population-based outcome contracting.

Source: Need to Nurture: Outcomes-based commissioning in the NHS, Health Foundation, 2015

• Identify data sources

• Finance and activity data for current delivery model

Initial target group baseline data analysis and assessment

• Full baseline data set

• Define and cost the activity in the new care delivery model

Full population baseline data

analysis• Full baseline for

full population• Model system

impacts• Model upfront

investments

Model new care delivery model

costs and volumes

• Design outcome metrics

• Model potential benefits for risk and gainsharing

Alternative payment and

reimbursement mechanisms

Outcomes-based Model Approach

The data and information Optimity Advisors is using to support the roadmap development.

The 10 year roadmap Using data and information to shape the journey

Identify sourcesAssure comparability and data

qualityIdentify gaps

Determine information system interoperability

Develop new data requirements to support outcomes

measurementDesign an integrated information

system architectureRun new systems on contract

performance monitoring

Decision support dashboards for contract performance monitoring

Baseline•Population •Finance•Activity•Quality and performance

Years 1-3•Risk stratification•Cost* versus price•Activity shift incentivised•Outcome contracts for 2-3 population cohorts

Years 4-10•Population health system analytics (commissioner)

•Decision support tools•Performance monitoring•Risk and gain share based on outcomes (commissioners and providers)

*Patient level and actual cost not bundled payments

Enabling Outcomes-based Contracting

Short term intensive baseline and setup support and long-term performance management support

Baseline for outcomes contractingSetting up the integrated system for real time decisionsPerformance reporting

Example Technology Target State

The target technology architecture comprises of 4 key outputs:

CACI Database

LivedashWaiting times

Standard ReportsPerformance vs

Planned

1 2

WS ETL - UP

Data

M

art

Fron

t End

Business Schema

MS SQL Server

Livedash

MS SQL Server

KPICustomer

Centric Financial

Enterprise Data Warehouse

LaaS

Big Data Analytic Environment

Inte

grati

on &

Dat

a W

areh

ouse

File Storage

ETLLivedash

One repository where data is collected

ETL - IN

Clinical datadB and excel

CommunityRio

Non ClinicaldB

iCaredB

Loca

l Env

ironm

ent

Data

So

urce

sUnstructured data

Emails etc.

ANALYTICS

Combined analyticsPredictions

1 2

Loca

lLo

cal

Distributed Processing Cluster

NoSQLData Store

MODELLING

Population modelling

1 2 big

Service DataPerformance

RTTsDaily sit reps

Commissioners’ reportsService Line Reports

Delivery Framework

Outcomes-based Contracting Delivery Framework

Our approach to transformation and out performance emphasizes collaborative business engagement, rapid and iterative implementation, focused communication and change management to result in desired ROI

Discovery - Critical Success Factors: Participation and accountability cross strategy,

operations and implementation teams Business engagement and shared accountability for

business case, scope prioritization/sequencing and budget

Upfront agreement on success measurements

Implementation - Critical Success Factors: Deep and shared understanding of the strategic goals and business

rationale and sustained business sponsorship and engagement Holistic portfolio/program/product and change management approach Effective benefit realization measurement and reporting

Strategy Definition

Time-Boxed DiscoveryINFORM

Project initiation Strategy review and intent Opportunities analysis and research Current State & Operational Pain Points Gap and priority analysis Business Case & Success Criteria Future State Vision, Scope & Roadmap Budget & Organization Plan Roles identification to support ongoing

innovation

Discovery

Iterative Initiative Implementation

Business process, role and technology architecture design Proof of concept Rapid Interactive Elaboration, Design & Prototyping Output/Product Prioritisation & Ownership Data Architecture, Mining, Design, Development and

Visualization Change Management and Training Planning and Execution Program/Project, Vendor and Communication Management

throughout

Business Process

Data & Architecture

Design

Roll Out &

Change Manage

ment

Management & Oversight

Iterative Elaboration, Build and Test Cycles

ROI / Benefits

Realization

Measurement and

continuous improvementOUTPERFORM

What You Need to Know• Delivery on Results is One Component of a Successful Shared

Collaboration in Outcomes-based Contracting

• The Dawn of Using Unstructured Data is Here 

• Importance of Business Informatics (vs. data warehouse)

• Define Denominator (Quality) Clearly – Identify Performance Measures

• Start Now – Leverage Quality Measures, Episodic Groupings, Pharma as Critical Components and Understand Iterating and Time to Mature

• Leverage Global Health Intellectual Property/Processes/Knowledge Sharing 

Thanks for Participating

Questions?Ken Barrette PartnerWashington, DC | Brussels | London | Los Angeles | New York | Zurich1600 K Street NW, Suite 200, Washington DC 20006d: 202.341.2651 t:202.540.9222e: ken.barrette@optimityadvisors.com www.optimityadvisors.comtwitter.com/optimity www.linkedin/company/optimity-advisors