Creating a Value-Based Medical Group

Creating a Value-Based Medical
Group
2013 MGMA Annual Conference
October 7, 2013
John A. Lutz, FACMPE, Managing Director, Huron Healthcare

Agenda
I.

Learning Objectives

II.

Why Create a Value-Based Medical Group?

III. Key Components for Success
IV. Examples
V. Necessary Competencies
VI. Patient Centered Medical Homes/Practices
VII. Challenges and Opportunities – Next Steps
VIII. Q & A

© 2013 Huron Consulting Group. All rights reserved. Proprietary & Confidential.

2

Learning Objectives

 Understand the strong practice framework necessary for enabling
improved efficiency, care effectiveness, and profitability.
 Identify key operational drivers and opportunities for enhanced capacity
and productivity.
 Implement the operational changes that improve profitability and support
long-term medical group practice goals.


3

QUESTION:
As you think about the future, what about your group practice
keeps you awake at night?
A. Uncertainty
B. Independence
C. Stability
D. Income Preservation
E. Staffing, reduced hours, work/life balance
F. All of the above

Why Create a Value-Based Medical Group?
A Dynamic Environment

 Accountable Care Act:
• Focus on population health and covered lives
• Value-based payment models continue to grow
 Federal and commercial reimbursement reductions and changes:
• Reduced payment per procedure
• Continuous SGR threat
• Bundled payment initiatives
• The reality of transitioning payment from procedure to value (e.g.,
bundles)


6

 Physician groups must take a proactive approach to improving operational
efficiency to be optimally positioned to thrive

 Physician succession and supply/demand deficits
 Physician compliance with evidence-based guidelines for chronic diseases
and acute conditions

 Research and technology advances
 Patient and referring physician satisfaction
 It’s the right thing for our patients!


7

Key Components
for Creating a Successful
Value-Based, High Performing Medical Group

What Defines a High Performing Medical Group?
Characteristics

Definition:

1) Providing ready access to the
right mix of primary and
specialty care providers; and
2) Supporting clinical staff in the
right place and within welldefined clinical quality, revenue,
and expense parameters.



Physician leadership in medical care and shared responsibility for
non-clinical activities.



Uses defined policies and processes for quality measurement and
improvement activities across sites of care and between patient
visits.



Shared financial and regulatory responsibility and accountability for
successfully managing the cost of health care, improving the patient
care experience, and improving the health of its respective
populations.



Uses a team-based approach that supports collaboration and
communication among the patient, physician, and licensed or
certified medical professionals across medical specialties and health
care settings.



Use of interoperable information technology and comparative
analytics.



A high performing medical group is
able to meet the clinical demands of
its target patient market and its
partner institution(s) by:

Use of compensation structures that provide incentives to physicians
and licensed Advanced Practice Professionals (APPs) to leverage
physician time, improve outcomes and manage expense.

Source: American Medical Group Association


9

Financial Characteristics
Key Financial Metric

2012 Median
Performance

2013 Median
Performance

Median total medical revenue per FTE

$538,803

$569,935

Median total operating cost per FTE

$387,586

$413,334

$32,895

$34,108

Median total physician compensation/benefits per FTE

$299,853

$322,274

Median total financial support per FTE

$150,903

$82,683

Average practice overhead is ~35% of net patient
revenue

Internal Huron
Benchmarks

Internal Huron
Benchmarks

Total provider compensation is ~50% of net patient
revenue

Internal Huron
Benchmarks

Internal Huron
Benchmarks

Median total non-physician (comp/benefits) per FTE

Source: MGMA Physician Compensation and Production Survey: 2012 Report Based on 2011 Data & 2013 Report Based on 2012 Data (with
appropriate MGMA resource).Used with permission from the Medical Group Management Association, 104 Inverness Terrace East,
Englewood, Colorado 80112. www.mgma.com.
Notes: While hospital ownership is a growing component (~50% in 2012), independent groups still report higher median performance
characteristics. Median compensation variances substantially by specialty.
FTE = Full-Time Equivalent Physician
© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.

10

Direction: What is your strategic plan?

We (the group) must know (and agree on) what we want, the
direction, and how to achieve it (together) in order for us to
accomplish it (by objective measurement) and be successful
(defined up front) in the future (time period).


11

Creating Success:
FIVE KEY COMPONENTS

HIGH PERFORMING MEDICAL GROUP

CLINICAL
INTEGRATION

FINANCIAL
STABILITY

OPERATIONAL
EFFICIENCY

CLINICAL
EFFECTIVENESS

There are five key components
that must be optimized in order for
a group to be high-performing,
value-based, and successful under
evolving payment models.

ACCESS & CAPACITY
MANAGEMENT


12

Clinical Integration:
 Right care, right time, right place,
most appropriate cost.
CLINICAL
CLINICAL
INTEGRATION
INTEGRATION

 “Triple Aim” commitment
 Governance and leadership
 IT
 Medical management
 Payer contracting
 Compliance
 Provider network
 Financial strength

 Defined population


13

Operational Efficiency:
 Optimizing provider & staff productivity
 Management control processes

 Open scheduling
 Ready patient access
 Trained & proficient staff
OPERATIONAL
EFFICIENCY

 Maximum technology utilization - EHR
 Measurement – actual to benchmarks
 Care coordination – PCMH
 Referral management


14

Access & Capacity Management:
 Patient access to physicians,
staff, & facilities

 Succession planning
 Strategic partnerships
 Appropriate contracted services
 Revenue growth potential

 Market share
 Care coordination
ACCESS & CAPACITY
MANAGEMENT


 Referral management

15

Financial Stability:
 Realistic goals
 Revenue & expense controls
FINANCIAL
STABILITY

 Effective revenue cycle
 Actual to budget performance
 Variance analysis & benchmarking
 Progressive physician compensation
 Downstream revenue management
 Payer contracting audits
 Shared rewards for success


16

Clinical Effectiveness:

CLINICAL
EFFECTIVENESS


 Quality management
 Patient centered – Outcomes focused
(PCMH)
 Interdisciplinary care coordination
 Performance dashboard
 Care variation management
 Member retention & growth
 Downstream services contribution
 Governance & leadership
 Continuous improvement

17

QUESTIONS:

Does your group practice have a strategic plan?
Does your group practice currently utilize these five key
components?

Necessary Competencies for Value-Based Groups
 Realistic goals
 Physician commitment
 Administrative leadership
 Staff proficiency
 Information technology
 Aligned incentives

 Expense management
 Care management (From episodic to longitudinal care models)
 Aligned “partnerships”


20

Clinical Effectiveness
IMPROVEMENT AREAS
Ensures patients access the
right care setting at the right
time to improve outcomes and
maximize the use of valuable
resources.

Patient
Access

Clinical practice redesign that
improves the reliability, quality,
and safety of patient care by
integrating medical, nursing,
and ancillary practice while
decreasing process variation.

Care
Variation
Management


Case
Management

Proactive management of
patients across the
continuum, driving quality and
cost effective care. Strong case
management reduces avoidable
admissions and minimizes
delays in clinical settings (e.g.
PCMH).

Interdisciplinary
Care Coordination
Increases communication
with the care
team, ensures continuity of
care, provides seamless
transitions for your
patients.
21

Clinical Operations
A COMPREHENSIVE APPROACH
Stockamp
Patient Progression® Solution
Current Hallmark Discharge Process

Standardized
Processes

Patient is identified
as a pending
discharge

Are the
discharge
orders written?

Does the
physician utilize
SCM to notify
nurses of
discharge?

Yes

Yes

Discharge orders
are entered into
SCM

Orders print out at
nursing station

Unit secretary
periodically checks
the printer for
orders

No

Does the patient
require
prescriptions?

A

Nurse waits for
physician to write
orders, as day
progresses

MD must find beside or
charge nurse to
communicate the DC orders
are now complete

Written discharge orders are
placed in chart

Nurse writes the
discharge
instructions

No

•

Unit Secretary
distributes orders
into floor nurse's
boxes
Floor nurses check
boxes once an
hour for discharge
orders

No
Nurse pages
MD to
complete the
orders

A

Nurse notifies patient that
their discharge is definite

•
•

Yes
Are prescriptions
written and placed
in chart?

How is the
patient
leaving?

Yes

Process Improvement

Self

Patient given
discharge
instructions

Family

No

Physician or
patient, if capable,
notifies family

Floor nurse will
page physician for
prescription

Patient Discharges

No
No
Does the
physician
respond to page?
Is notification
successful?

Yes
Physician writes
prescription

Yes

Family arrives
at hospital

Patient/Family are
given discharge
instructions

Physician verbally notifies
nurse that the prescriptions
have been written or leaves
them in the chart

©2002-2005, Stockamp & Associates, Inc. (Stockamp)
USE SUBJECT TO LICENSE FROM STOCKAMP
AND PAYER, COMPLIANCE, AND OTHER REQUIREMENTS

CONFIDENTIAL AND PROPRIETARY

Page 1 of 1
Current Discharge Hallmark Process.vsd
Last Printed: 12/06/05 9:07 PM

Status
Communication

Optimize
Technology

•
•

Operational Transparency
Collective
Ownership

Accountability
Structure

Accountable Culture

Establish consistent processes that minimize artificial
variability
Clarify individual roles and performance expectations
Improve timeliness and effectiveness of communication
(e.g., tools, key medical record inputs, policies)

•

•
•
Executive
Reporting

•

End-to-end process visibility allows staff to see beyond
their unit
Establish goals and trend metrics across functions and
departments
Integrate tools to support best practices (e.g., reporting,
bed board)

Institute governance structure and collaboration forums
Use metrics to support decision making and monitor
performance
Individual accountability through performance monitoring
and feedback

Sustained Operational Improvement | Increased Patient & Staff Satisfaction | Recurring Financial Benefit

22

Patient-Centered Medical Home (PCMH)
Patients are cared for in a Medical Home by a multi-disciplinary team. A Navigator or Health Coach works with
the patient to engage the patient, assess health risks, and develop a Health Plan. Self-care management is
enabled through tools, processes, and benefit design.
Process
• Health Planning: Periodic assessment of a patient’s specific health risks and development of a customized Health Plan. The Health Plan
incorporates age/sex-appropriate wellness monitoring and interventions (e.g., mammograms, immunizations).
• Health Management: Monitoring the patient’s health (e.g., hospitalizations), updating the Health Plan, monitoring compliance, and initiating
reminders based on triggers to ensure patients stay on track with Physician’s orders. Includes coordinating care across the continuum (e.g., referral
specialists, emergency care, hospital admissions, therapeutic care, skilled nursing facilities, home care). Includes medication reconciliation. Self-care
management is supported and patients are provided with tools to proactively manage their health.
• Health Education: Providing patient self-management information about managing existing health conditions as well as preventative care.

People
• Medical Home Team: Multidisciplinary team including participants
such as Health Coach, Primary Care Physician, Nurse
Practitioners, Dietician, Social Worker (provides integrated
behavioral health clinical services and linkage to other communitybased services), Physical Therapist, etc.
• Care Manager: Supports Medical Home Team


Tools/Systems/Enablers
• Health Risk Assessment Tool: Used to identify health risks
• Patient Self-Care & Education Tools: Multiple vehicles such as 24x7
care line staffed by RNs, online/ interactive tools, social media, brochures
(e.g., on Urgent Care Clinic availability), etc.
• Benefit designs promoting self-care: e.g., no co-pays for office visits.
• Rewards for activities: such as joining a smoking cessation program.
• EMR / Personal Health Record: Medical history, medications, recent
hospitalizations, emergency or urgent care visits, health maintenance.
• Advance Directives
• Patient registries, referral protocols, medication adherence
guidelines
• Community resources
24

Next Steps
Operational Challenges & Opportunities

 Identification of goals and specific needs:
• Existing patients
• Community served
• Group owners
• Employees/payers
 Resource capabilities:
• Physicians/APPs
• Administrative leadership
• Other staff members
• IT
• Medical management
• Connectivity
• Capital

26










Third party partnerships
Measurement and evaluation capabilities
Third party contracting
Continuous performance improvement and strategic planning
Incentives and rewards for measurable improvement
“Go slow to go fast”
OPC - Outcomes/Processes/Connections


27

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