ambulatory facility strategy in the reform era

© 2011 The Advisory Board Company • www.advisory.com

Ambulatory Facility Strategy in the Reform Era

FACILITY PLANNING FORUM

Michael HubbleSenior DirectorThe Advisory Board [email protected]


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Road Map for Discussion

Playing by Different Rules

Rethinking Ambulatory Facility Strategy

Rethinking Ambulatory Facility Design

Migrating to a Patient-Centered Model


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Health Systems Placing Big Bets on Ambulatory Expansion

Hospital Outpatient Strategy circa 2007

Source: Bank of America, “Health Care Facilities,” Equities Research, July 2007: Advisory Board interviews and analysis.

Planned Hospital Expansions Within Next Two Years

n=199

Principal Drivers of Outpatient Investment

34%

46%

4%

16%

Neither

InpatientOutpatient

Both80% of hospitals were planning outpatient expansion

Capturing profitable outpatient business in new markets

Blunting competition from physician-owned facilities

Building a platform for a future inpatient facility

Creating new feeders for the inpatient enterprise


4

From Health Care Reform to Payment Reform

Hard to Believe It Was Just 2 Years Ago…

Source: Health Care Advisory Board interviews and analysis.

Major Reform Milestones

Patient Protection and Affordable Care Act (PPACA) passes House of Representatives

HHS releases Meaningful Use regulations

CMS releases proposed rule for Medicare Shared Savings Program

HHS releases Medicare Value-Based Purchasing Program final rule

VA Attorney General files first lawsuit against individual mandate

President Obama repeals 1099 reporting requirement from PPACA

CMS issues provisions to Hospital Readmissions Reduction Program


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Massachusetts Universal Coverage Initiative

Virtually Eliminating the UninsuredHealth Insurance Reform

Massachusetts Coverage Expansion

Cumulative Increase in Insured Massachusetts Residents

Thousands

114

202

367425 421

• Implemented July 1, 2006; reduced uninsured rate to 2.6%

• Individual and employer mandates established• Individual penalty initially set at $219 with

monthly incremental increases• Employer penalty at $295 annually per employee • Individual and small group markets merged,

managed through online “exchange”• New publicly managed insurance options created• Charity care funds reallocated from

disproportionate share payments to coverage subsidies87% of coverage expansion achieved by January

2008, one year after exchange became available

Source: Division of Health Care Finance and Policy, “Health Care Indicators in Massachusetts,” November 2009; Health Care Advisory Board interviews and analysis.


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Preventive Care Utilization Has Increased…

Utilization of Specific Services, Massachusetts AdultsBased on Self-Reported Data, 2006-2009

Fall 2006 Fall 2007 Fall 2008 Fall 2009

70%78%

51% 53%

55% 58%

34% 34%

Preventive Care Specialist VisitTook Any Rx Drugs Any ED Visit

n = 13,150

Preventive Care

Took Any DrugSpecialist Visit

Percent Change in Utilization

9.6%Preventive Care

4.1%Took Any Drug

5.5%Specialist Visit

ED Visit

(0.5%)ED Visit

Source: Long S and Stockley K, “Sustaining Health Reform in a Recession: An Update on Massachusetts as of Fall 2009,” Health Affairs, June 2010 29:6 1234-1240; Health Care Advisory Board interviews and analysis.


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Building Accountability through Experiments in Payment

Toward Accountable CarePayment Reform


Degree of Shared Risk

Care Continuum

Pay-for-Performance

Hospital-Physician Bundling

Episodic Bundling

Capitation/Shared-Savings Models


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Medicare Shared Savings Program Holding Providers Accountable

Biggest News of the Year?

Shared Savings Payment Cycle

2

BillingProviders bill normally, receive standard fee-for-service payments

1Assignment

Patients assigned to ACO based on terms of contract

3Target Actual

ComparisonTotal cost of care for assigned population compared to risk-adjusted target expenditures

4

BonusIf total expenses less than target, portion of savings returned to ACO

5

DistributionACO responsible for dividing bonus payments among stakeholders

Program in Brief: Medicare Shared Savings Program• Program begins January 1, 2012; contracts

to last minimum of three years• Physician groups and hospitals eligible to

participate, but primary care physicians must be included in any ACO group

• Participating ACOs must serve at least 5,000 Medicare beneficiaries

• Bonus potential to depend on Medicare cost savings, quality metrics

• Two options available: one with no downside risk until year three, the second with downside risk in all three years

• Proposed rule available for comment until end of May; final rule due later this year



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Reform Accelerates Trend of Practice Acquisition by Hospitals

Shifting from Competitors to Collaborators

Source: Harris G, “More Doctors Giving Up Private Practices,” New York Times, March 25, 2010; Health Care Advisory Board 2008 Survey on Physician Employment; Advisory Board interviews and analysis.

2002 - 2008Physician Practice Ownership

2000 2004 2008 2012 (E)

5%8%

15%

24%

18%22%

31%

40%

Specialists PCPs

Percentage of “Active” Physicians Employed by Hospital

2002 2003 2004 2005 2006 2007 20080%

25%

50%

75%

100%

Physicians Hospitals


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Robust Ambulatory Network Central to ACO Ambition

Source: Advisory Board interviews and analysis.

ACO Medical Management Investments

Remote Monitoring

Electronic Medical Records

Medical Home Infrastructure

Primary Care Access

Population Health Analytics

Patient Activation

Post-Acute Alignment

Disease Management Programs


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The New Imperatives for Ambulatory Facility Strategy

Expand the Front End of the Delivery System

Imperative #2Reinforce the Disease

Management Enterprise

Imperative #1Rationalize Procedural and Imaging Capacity

Imperative #3

• Developing low-cost, accessible primary care settings

• Linking patients and providers via virtual clinics

• Shifting emergency care out to satellite facilities

• Experimenting with freestanding observation units

• Consolidating imaging sites to maximize asset utilization

• Parsing out the “nice-to have” versus “must-have” imaging modalities

• Preparing ASCs for the next wave of outmigration

• Creating a short-stay surgical facility

• Installing the bricks-and-mortar infrastructure for medical homes

• Developing outpatient “one-stop shops” for the chronically ill

• Bringing the care continuum to the patient’s home

• Engineering “smart homes” for the elderly


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13Strategic Imperative #1 – Expanding Access to Primary Care

Source: Advisory Board interviews and analysis.Note: Image courtesy of Kaiser Permanente.

Kaiser Permanente Micro-Clinic• Small family practice offering 80% of services available at typical primary care office• ~1,800 SF core model; optional add-on pharmacy, lab, basic imaging, and consult room

expand clinic up to 5,000 SF total

Kaiser Permanente Micro-Clinic Core Model

Kaiser Permanente Embracing New PCP Practice Model

Micro-Clinics – Coming to a Storefront Near You

2-3 providers (mix of MDs, NPs or PAs) plus receptionist

No imaging, pharmacy, lab, consult (optional add-ons)

4 exam rooms, waiting room, clean utility room

On-Site Providers

Clinic Space

Limited Ancillary Services


14Assessing Prospects for Evolving Urgent-Emergent Care Models

Source: Advisory Board research and analysis.

Routine Primary Care

Virtual Clinic Retail Clinic Micro-Clinic Urgent Care Clinic

Hybrid Urgent-Emergent

Freestanding ED

Description

• On-demand virtual consultation

• Staffed by emergency-trained providers

• Small, walk-in clinics located in retail stores treat simple illnesses, provide preventative services

• Typically staffed by NPs or PAs

• Small primary care practice in leased retail space• Service scope covers

80% of typical primary care• Staffed by 2-3

providers

• Standalone facility offering walk-in, extended hour access for acute illness and injury care

• Staffing varies by location

• UCC with ED-level diagnostic capabilities to treat emergent conditions

• Staffed by emergency physicians

• Satellite full-service emergency department providing full gamut of emergency care• Staffed by emergency

physicians

Opportunitie

s

• Augment same-day, after-hours access

• Low capital costs• Potential to foster

better provider-patient communication

• Augment same-day, after-hours access

• Feed referrals• Potential to support

disease management services

• Compressed time to open, startup costs • Potential to foster

better provider-patient communication• Recruit new patients

in underserved areas

• Offload volumes from congested ED• Faster, more pleasant

patient experience• Lower cost setting• Potential to

incorporate into accountable care organization strategy

• Offload volumes from congested ED

• More efficient throughput than ED

• Market entry strategy

• Offload volumes from congested ED• Expand market share

in both ED volumes and downstream admissions

• Improve payer mix

Challenge

s

• Potential quality concerns• Service scope may be

limited

• Questionable profitability

• Providers must weigh benefits, drawbacks of direct ownership vs. partnerships

• Subscale model• Difficult to scale up• Certain patients will

still need to travel for select ancillary services

• Profitability can be ambiguous

• Patient confusion when selecting appropriate care setting

• Overcome skepticism around patient safety

• Generate sufficient emergent volumes to offset additional costs

• Overcome skepticism around patient safety• Competitive concerns• Legislation spurred by

cost, overcapacity concerns

Future

Prospects

• Robust growth forecast as payers cover services and technology advances

• Strong growth prospects in light of PCP shortage, ACOs, enhanced quality and convenience

• Moderately positive outlook primarily due to subscale operating costs

• Clear market need but economics still not attractive

• Conservative growth outlook given safety and cost concerns

• Healthy growth opportunity

• Potential for oversaturation in some markets

Emergent CareContinuum of Urgent-Emergent Care Models


15Strategic Imperative #2 – Rationalizing Procedural Capacity

Source: MedPAC Data Book, June 2010; “Ambulatory Surgery Centers: Annual Survey Shows Growth Continues to Slow,” Deutsche Bank, February 4, 2008.

Allowing Demand to Catch Up with Supply

Total Number of Medicare-Certified ASCs2002-2009

Once Dominant Surgery Centers Looking More Vulnerable

Fewer Ambulatory Surgery Centers Coming On Line

“[W]e would expect little upside to organic growth expectations. Rather, we believe that consolidation via M&A will be an ever-increasing avenue for growth, and new capacity growth will have to be curtailed to allow supply/demand to become more balanced.”

Deutsche BankFebruary 2008

2002 2003 2004 2005 2006 2007 2008 2009

305 367 369 355 332 347 273

3,5123,814

4,1064,404

4,6544,932 5,151 5,260

7.7%8.6%

167

7.4% 7.3%5.7% 6.0%

4.4%

2.1%

New Centers

Existing Centers

Net percent growth from previous year


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Source: Center for the Health Professions, “The Special Care Center – A Joint Venture to Address Chronic Disease,” available at http://www.futurehealth.ucsf.edu/Content/29/201011_The_Special_Care_Center_A_Joint_Venture_to_Address_Chronic_Disease.pdf, accessed March 28, 2011.

Case in Brief: AtlantiCare Regional Medical Center•Nonprofit health system located in Atlantic City, New Jersey

• Special Care Centers (SCC) are patient-centered medical homes focused on chronic diseases•SCC is a partnership between a local union and AtlantiCare

Co-Locating Services at AtlantiCare’s Special Care Centers

Building a Medical Home for Chronic Patients

Patient Profile• Chronic illness such as

diabetes, heart disease, obesity, or asthma

• Employees of union partnering with AtlantiCare or hospital staff

• 1,200 patients• Plans to expand to uninsured

population

Services Provided• Health coach manages

patients’ care• PCPs serve as program leaders• On-site specialists include

cardiology and psychiatry• Co-located with retail

pharmacy, lab, radiology, and after hours primary care

Strategic Imperative #3 – Reinforce the Disease Management Enterprise

http://www.futurehealth.ucsf.edu/Content/29/201011_The_Special_Care_Center_A_Joint_Venture_to_

http://www.futurehealth.ucsf.edu/Content/29/2010-11_The_Special_Care_Center_A_Joint_Venture_to_Address_Chronic_Disease.pdf


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Three Goals of Ambulatory Facility Design

Improving Clinic Design from Front to Back


2 Optimize Clinic Design

• Encourage staff/clinician communication through shared workspaces

• Remove physician offices to encourage collaboration

• Build the appropriate number of exam rooms per provider

1 Streamline Front End Operations

• Improve patient arrival and registration process

• Utilize technology to speed patient visit

• Streamline patient rooming system

3 Design the Exam Room of the Future

• Build the right size exam room

• Facilitate high quality care delivery through room layout

• Ensure patient and caregiver involvement in care process


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1 Beyond registration counter, without framing structure2 In front of registration counter, showcased in prominent structure

University of Wisconsin Hospitals and Clinics, West Cl inic• Hospital-based outpatient clinic located in Madison, WI• Installed 2 kiosks in 2007; timing aligned with migration to Epic• Original location led patients to encounter registration staff first, new location is front

and center, eliminating lines for registration counter

Kiosk Utilization Rates

Strategic Placement and Human Support Keys to Success

Kiosks Streamlining Patient Check-In

3%

30%

1 2

Registration Staff Spaces

Without Kiosks

With 2 Kiosks

Goal

6

4

2


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Patient checks in at central registration

Receptionist enters patient arrival and room assignment in tracking system, care team notified

Patient receives color-coded card with room number (or pager if no room available)

Patient directed by color-coded signs to neighborhood, then exam room


Park Nicollet Cl inic – Chanhassen• 56,000 SF multispecialty clinic located in Chanhassen, MN• Opened new facility in 2005 designed around patient self-rooming , easy wayfinding, care

neighborhoods, and patient locator system

Self-Rooming Patient Flow Map

Self-Rooming Process Streamlines Front-End Operations

Patient, Room Thyself

#12

Clinician promptly meets patient in exam room

Check-In Notify Team Coded Card Easy Wayfinding Room Arrival


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Source: BWBR Architects; Advisory Board interviews and analysis.Note: Image courtesy of BWBR Architects.

Chanhassen Clinic First Floor Plan

Self-Rooming Significantly Downsizing Waiting Rooms

0.5

1.5

1

Minimized waiting room square footage

Waiting Area Seats per Exam Room


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23Caregivers at the Core

Source: The Neenan Group, www.neenan.com; Advisory Board interviews and analysis.

Case in Brief: St. John’s Cl inic, Rolla• Integrated physician arm of Mercy St. John’s Health System, located in Missouri• Clinic has more than 180,000 visits per year• 550 physicians, 70 offices, 40 locations• Opened redesigned clinic in 2009 with goals of improving patient experience and

efficiency and achieving a team-based care model

A Collaborative Work Environment at St. John’s Clinic

Facilitating Team-Based Care

• Five to seven physicians per module

• Upstaffed from one to two nurses per physician

• Nurses have taken over many physician tasks, including taking patient histories and care coordination

• LPNs and MAs trained to advanced competencies and work with all physicians

The Care Team Module

http://www.neenan.com/


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Workstations Co-Located in Central Bullpen

Caregivers Working Side-By-Side

Source: Anshen+Allen, a part of Stantec; St. John’s Clinic, Rolla; Advisory Board interviews and analysis.

Advantages of Bullpen

Enhances communication and camaraderie among staff

Maintains sight lines to exam rooms

Reduces clinical staff footsteps, time spent tracking down colleagues

Image courtesy of Anshen+Allen, a part of Stantec. Image courtesy of St. John’s Clinic, Rolla.


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Encouraging Collaboration via Shared Work Spaces at St. John’s

Abolishing the Private Physician Office

Behind Closed Doors

Physicians isolated in individual offices

Used for dictation, charting, meetings, private phone calls

Typically 150 SF

Out in the Open

Replaced private physician offices with shared lounges consisting of 4 work stations, book shelves, and TV; provide “touchdown” spaces in clinic hallways

Accommodate physicians’ needs for privacy through use of consult rooms, “do not enter” signs on lounge

Reduced clinic footprint by 4,000 square feet through elimination of private physician offices

Private Physician Office Shared Staff Lounge Touchdown Space


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Case in Brief: Massachusetts General Hospital• “Ambulatory Practice of the Future” primary care clinic opened in 2010 in new

facility adjacent to main hospital• Care model relies on collaboration among multi-disciplinary care teams• Clinic is approximately 7,000 SF with 15 exam rooms

A 5 to 1 Exam Room Ratio at Mass General

Expanded Care Team Enables Clinic to Run More Rooms

Pushing toward the New Standard

Five exam rooms per care team

Nurse practitioners share patient panel with physicians

MA escorts patient to room and initiates visit; nurse and case manager provide support

Nurse Practitioner Physician

Nurse Medical Assistant

Case Manager


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5 to 1

Leveraging the Care Team to Improve Efficiency

A Sum Greater Than Its Parts


1 to 1

2.5-3.0 to 1

Time

Exam Room to Physician

Ratio

Consolidation of practicesRise in patient visits due to aging

population and increase in chronic conditions

Primary care physician shortage

Transition to team-based approach to care

All clinicians working at top of license

Select physician tasks off-loaded to LPNs and MAs

A Bygone Era Today’s Standard A Worthy Goal


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Team-Based, Patient-Centered Care Creating a Tight Fit

Exam Rooms Bursting at the SeamsRightsizing the Exam Room


More People…

PCPNP/PA

RN

LPN/MA

Health Coach

Nutritionist

Social Worker

Family Members

…and More Stuff

Printer to enable in-room checkout

Wide monitor for patient education and information sharing

Large table for inclusive, side-by-side interaction

Mobile diagnostics to reduce patient shuffling

Special equipment carts ECHO, EKG, phlebotomy, casting and splinting, etc.

Scale to reduce patient movement and enhance privacy

Clinicians and Caregivers IT and Clinical Equipment


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110-120 Square Feet Ideal for Universal Exam Room

Finding the “Sweet Spot”


Exam Room Size Assessment

<90 SF

“An Anachronism”

Inflexible; limited “wiggle room” to accommodate extra care team member, caregiver, mobile equipment and side-by-side consult

100 SF

“A Tight Fit”

Currently sufficient for most visits but limited flexibility to accommodate team-based care, electronic information sharing

110–120 SF

“The Sweet Spot”

Comfortably accommodates three distinct zones for provider, patient and family, as well as clinical and IT equipment

150+ SF

“Unnecessary for Most”

Financially challenging for most practices, used primarily for consult-intensive specialties such as oncology


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Distinct Zones Facilitate Patient-Centric EncounterOptimal Exam Room Layout

Source: SmithGroup; HKS Architects; Advisory Board research and analysis.

Patient-Centric Exam Room Zones

12’

10’

Supply/Hand Washing Zone• Separate area for clinical

supply storage

Computer/Charting Zone• Large monitor(s) mounted

on desk/wall enables equal information sharing

• Table shape/size facilitates exam triangle

• Moveable seating to accommodate patient and caregiver

• Optional in-room printer

Exam Zone• Room must be

large enough to allow space around the exam table

Family Zone• Ample seating to

accommodate caregiver(s)

• Separate from supply zone to avoid interference with clinician workflow

Image courtesy of HKS Architects

Image courtesy of SmithGroup


32Exam Room Alternatives

Source: Southcentral Foundation; NBBJ; Advisory Board interviews and analysis.

Note: Floorplan courtesy of SouthCentral Foundation and NBBJ.

Southcentral Foundation “Talking Rooms”

“Talking Rooms” as Multi-Purpose, Flexible Spaces

Exam room dimensions and location enable

ability to flex space into exam

room

“Talking Room” Functions

• Less clinical setting for visits that do not require exam table

• Side-by-side consults that promote greater family participation

• Private clinician-clinician interactions

• Patient-clinician phone calls• Accommodate waiting families

Southcentral Foundation, Anchorage Native Primary Care Center• 75,000 SF outpatient facility of Alaska-native owned, nonprofit health system• Designed to be responsive to unique needs and values of the native community• Reflects effort to shift care to where it is most appropriately performed, reduce patient

anxiety and include extended family in care plans


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Source: Boulder Associates Architects; Advisory Board interviews and analysis.

1 4,790 patients seen in 862 group visits, individual visit slots equivalent of 3,625.Note: Floor plan courtesy of Boulder Associates Architects.

Case in Brief: Cl inica Campesina• Piloted group visits in 2001 after diabetes patients no-showing for one-on-one visits but continuing

enrollment in health education class; currently 1,000 group visits annually• Visit efficiency maximized through team-based care; PCP present for only 50-75% of group visit slot

Consolidated Patient Encounters Maximize Provider Productivity

Group Visits Enhancing Capacity, Gaining Popularity

Clinica Campesina Thornton Clinic Floor Plan

Single Group Visit

Multiple Individual Visits32%

Increase in provider productivity during group visit activity in 20101

85%Patients electing to continue group visits


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Source: Chen C, et al, “The Kaiser Permanente Electronic Health Record: Transforming and Streamlining Modalities Of Care,” Health Affairs, 28:2, March/April 2009; Advisory Board interviews and analysis.

Case in Brief: Kaiser Permanente Hawaii• In 2004, Implemented KP HealthConnect EHR and patient portal system in outpatient setting • By 2007, scheduled phone visits increased more than eightfold; secure online patient-provider

messaging by nearly sixfold; office visits decreased by 26%• Care quality and patient satisfaction levels remained consistent

E-Mail and Phone Contact on the Rise

Virtual Visits Potentially Decreasing Room Demand

26%Decrease in office visits

Distribution of Ambulatory Care EncountersKaiser Permanente Hawaii Members

1999 2007

66%

30%Office Visits~100%Phone Visits

E-Mail

4%

8%Increase in interactions with doctor


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Average Square Footage by Facility AgeHealth Care REIT Ambulatory Facilities

Source: Health Care REIT.

n = 380-5 Years 6-10 Years 11-20 Years 20+ Years

88,973

56,39350,088

42,889

Industry Migrating to Larger Ambulatory Boxes

n = 29 n = 64 n = 26


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Hospital and Physician Concerns Dominated Previous Eras

Putting the Patient at the Center of Facility Strategy

Source: Advisory Board research and analysis.

Hospital-Centric Era Physician-Centric Era Patient-Centric Era

1980 2010

Distribution of Ambulatory

Services

Concentrated

Dispersed

• OP surgery, diagnostics delivered in the hospital

• MOB space clustered around inpatient facilities

• Technological innovation, shifting incentives push care to freestanding centers

• Physician ownership of facilities fuels outmigration to the suburbs

• Rising demand for primary care fueling increase of small-scale sites

• Re-aggregating OP care to achieve economies of scale, promote collaboration, and offer “one-stop shopping”


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Expanding the Portfolio at Both Ends of the Spectrum

Source: Advisory Board interviews and analysis. 1 Pseudonymed 7-hospital system in the Northeast.

Outpatient Facility Prototypes at Cassavetes Health1

“Nurse in a Box”

Barebones PCP Office

MOB Plus

Comprehensive Multispecialty

Center

“Hospital Without Beds”

Services Offered

Ave. SizeAve. Cost

•Mid-level practitioner•Low-acuity

urgent care•Flu shots•School

physicals

•2-5 PCPs providing comprehensive primary care•Basic Lab•Basic imaging

•5-10 PCPs and specialists•Basic Lab•Basic imaging•Limited Rehab

•10-15 PCPs and specialists•Full-scale Lab•Advanced imaging•Rehab•Urgent care•ASC

•30+ PCPs and specialists•Advanced imaging•Rehab•Urgent care•ASC•Oncology services•Freestanding ED•Observation unit•Wellness

Under 2,000 SF Under 10,000 SF 10,000 - 15,000 SF 15,000 - 50,000 SF 50,000 - 100,000 SF

$350K - $375K Under $2.5M $15M - $18M $22M - $25M $45M - $70M


Ambulatory Facility Strategy in the Reform Era

FACILITY PLANNING FORUM

Michael HubbleSenior DirectorThe Advisory Board [email protected]

ambulatory facility strategy in the reform era

Documents

advisory board company

health care reform

health care facilities

health care indicators

health reform

care utilization

health affairs

affordable care act