how to thrive in the new value based care delivery world

© 2015 Health Catalystwww.healthcatalyst.comProprietary and Confidential

c

Webinar - December 2, 2015

How to Thrive in the New

Value-Based Care Delivery World

Tom BurtonExecutive Vice President, Health CatalystCo-founded Health Catalyst 2008Intermountain Healthcare – 2002-2008


Learning Objectives1. Understand how to use analytics to

manage at risk contracts in value-based care delivery

2. Understand network optimization through provider selection and leakage reduction

3. Understand a balanced approach to care management

4. Understand the three capabilities required for systematic population health management


Population Health Components

3

Clinical Quality Improvement(Broad Processes & Workflow)

Care Management(Patient Specific)

Enterprise Data Warehouse(Enables Data Integration and Interpretation)

Financial Claims EMRs Other(Social/Economic)

Cost

Population HealthShared & At Risk

Management & Administration

1) Manage at risk contracts

2) Network optimization

4) Systematic improvement

3) Balanced care management

© 2015 Health Catalystwww.healthcatalyst.comProprietary and Confidential 4

Fee for Service Fee for Value

The Common Denominator: Reduce Costs, Improve Quality

CostPayment

CostPayment


Balancing Short-Term Imperatives

with Long-Term Transformation Short-term goal:

Successfully Manage At-Risk ContractsOwner: Accountable Care Team

Long-term goal:Transform the Care Delivery System

Owner: Care Delivery TeamCost

Accountable Care

Population Health Management



Understand how to use analytics to manage at risk contracts in value-based care delivery

6


Come on down!


Lowest bid, but still make money

Last Years PMPM Payment 180 180 180 180

PMPM BID 175 182 165 170

- Actual PMPM Cost -170 -170 -170 -170

PMPM Margin 5 12 -5 0


Diabetes Population to Bid on

• 15,000 Diabetes Patients

• Total claims paid last year for this patient group was $45 Million, or payments of $250 PMPM

• Readmission Rate of 15.1%

• Number of inpatient days last year was 9,014

• This is a condition capitation arrangement with the payer for primary or secondary diagnosis of diabetes

What is your PMPM (per member per month) bid?Remember the winner is the lowest bid, but still make money



Last Years PMPM Payment 250 250 250 250

PMPM BID 245 249 235 240

- Actual PMPM Cost -240 240 240 240

PMPM Margin 5 9 -5 0


Need for Improved CostingVariable Expenses

Labor Supplies Total

Unit Charge Qty RCC RCC RCCHip Implant - Device $8,500 1 $1,000 $3,000 $4,000Hip Implant - OR Time $9,600 1 $3,300 $1,500 $4,800

All other expenses $5,000Total cost $13,800

RCC

Costi

ng

Unit Charge Qty RVU Avg Cost RVU + AvgHip Implant - Device $8,500 1 200.0 $4,000 $4,200OR Level 2 Per Minute $200 120 3.5 $12 $5,640


RVU

Cos

ting

Unit Charge Qty ABCAcquisition

CostABC +

AcquisitionHip Implant - Uber Max $8,500 1 $400 $5,000 $5,400OR Level 2 Per Minute $200 120 $50 $13 $7,560


Activ

ity-B

ased

Co

sting

Bundled payment of $15,000

Yes

Maybe

No – unless actual cost can

be reduced to < $15 K


Data Capture Data AnalysisResultsEMRs

HR Supplies

Data Provisioning

Enterprise Data

Warehouse

• Ratio of Cost to Charges• Volumes• Relative Value Units• Duration Based• Explicit (e.g. Drugs)

More Allocated

More Explicit

2) Attach costs to Patients• Not just by charge items

but by more explicit activities

Prioritized cost reduction opportunities based on actual workflow variation

Less Expensive Staffing Models through predictive activity based algorithms

Informed payer contracting by understanding true PMPM costs for specific populations

1) Attach costs to Drivers usingbest available costing method:

3) Custom groupers of like patients to identify opportunities

• Bundled Payments• Payer negotiations• Outsource decisions on

specialty care

Rx Blood

Allocations of costs to activities

How an Activity Based Costing Solutions works:

General Ledger

Real-Time Location Services (RTLS)

Cost Center Manager User Interface

http://www.healthcatalyst.com/


Retrospective AnalyticsMonth-Over-Month PMPM Performance

Principle: Know what’s driving your PMPM payments AND costs


PMPM Trend, ContinuedTop Contributors to the Overall Trend


Poll QuestionWhat kind of costing capabilities does your organization have?

A) Just Starting: We are still in a fee-for-service mindset – most clinicians have no idea what it costs to deliver care

B) Mid-Journey: We use rudimentary costing techniques such as Cost to Charge Ratios or Relative Value Units – some clinicians understand the cost of care they deliver

C) Mature: We have a robust Activity Based Costing system. Every clinician knows precisely what it costs to delivery care for each individual patient


Back & Neck Pain Population

• 12,000 Back & Neck Pain Patients

• Total claims paid last year for this patient group was $9 Million

• Last years actual cost was $114 PMPM, payment was $125 PMPM


• This is a condition capitation arrangement with the payer for primary or secondary diagnosis of neck and back pain

What is your PMPM (per member per month) bid?

Remember the winner is the lowest bid, but still make money



Last Years PMPM Cost 114 114 114 114

PMPM BID 115 119 124 120

- Actual PMPM Cost -118 -118 -118 -118

PMPM Margin -3 1 6 2


Predictive AnalyticsPredictive model for rising risk patients

Principle: Use data beyond traditional claims to predict rising risk in populations


Poll QuestionHow is your organization at predicting rising risk?

A) Just Starting: We are just now realizing this may be important in a value-based care delivery world

B) Mid-Journey: We have a few analysts in our finance department who manually calculate rising risk in spreadsheets as we prepare for negotiations with payers

C) Mature: We use robust predicative analytics to measure the rising risks in populations and clinicians can access predictive risk models for each individual patients to attempt to prevent bad clinical and cost outcomes.


Full Capitation Population

• 175,000 Members

• Total claims paid last year for this patient group was $500 Million

• Last years payments were $238 PMPM and next years predicted cost are $225 PMPM using rising risk models


• This is full capitation arrangement with the payer

What is your PMPM (per member per month) bid?Remember the winner is the lowest bid, but still make money



Predictive Cost 225 225 225 225

PMPM BID 230 190 220 215

- Actual PMPM Cost -200 -200 -200 -200

PMPM Margin 30 -10 20 15


Improvement Prioritization

22

Care Process Families by Resources Consumed (High to Low)

Tota

l Res

ourc

es C

onsu

med

Top 10 Care Process Families account for 34%

of the opportunity

Top 40 Care Process Families account for 80%

of the opportunity


The Long-Term Vision: Transforming Care Delivery

Short-term goal:Successfully Manage At-Risk Contracts

Owner: Accountable Care Team

Long-term goal:Transform the Care Delivery System

Owner: Care Delivery TeamCost

Accountable Care

Population Health Management


Outlier Management

# of Cases

Current Condition: Significant Volume and Variation

# of Cases

Option 1: “Punish the Outliers” or “Cut Off the Tail”

Mean

Focus on MinimumStandard

Metric

Excellent OutcomesPoor Outcomes Excellent OutcomesPoor Outcomes

Outlier Management• Set a minimum standard of quality• Focus improvement effort on those not meeting the minimum standard


Excellent OutcomesPoor Outcomes

# of Cases

Excellent Outcomes

# of Cases

Option 2: Identify Best Practice “Narrow the curve and shift it to the right”

Mean

Poor Outcomes

Inlier Management (Focus on Better Care)

Inlier Management• Identify evidenced based “Shared Baseline”• Focus improvement effort on reducing variation• Often those performing the best make the greatest improvements

Current Condition: Significant Volume and Variation


Prescriptive AnalyticsOpportunity analysis can focus efforts

Principle: Use variation and volume key process analysis to identify opportunities likely to produce significant savings

Total Variable Cost

Sev

erity

Adj

uste

d C

oeffi

cien

t of V

aria

tion


Learning Objective Review• Understand how to use analytics to

manage at risk contracts in value-based care delivery

Retrospective Analytics – Know your historic costs PMPM (Per Member Per Month)

Predictive Analytics – Gain the ability to predict future costs – especially in rising risk patients

Prescriptive Analytics – Use analytics to prioritized opportunities to eliminate waste from care delivery



Understand network optimization through provider selection and leakage reduction

28



29





Cost








Network ManagementMoving Beyond our Four Walls

How do I reduce costs? How do I improve referral patterns?

Who are my best (lowest cost, highest quality) partners?

How do I reduce leakage?

Partners

Out-of-Network

In Network

ManageLeverage data on leakage and referrals to pinpoint

opportunities to improve the performance of your

provider network.

OptimizeOverlay information about your patient population’s needs and your provider

population (including accessibility, cost, and

quality) to identify gaps.


Network Optimization Game

Polarity Principle:• Reduce inappropriate utilization costs AND

reduce out of network leakage

Analogy:• Include anywhere from 1 to all 10 providers• Must reach target of <10% leakage AND

PMPM must be less than $240 PMPM


3

8

4 5

10

9

6 7

2

1


Sample Results:• If you included all MDs

Leakage = 0% (every MD is “In-Network”)

… But, PMPM costs may be very high

• If you include only a few MDs (you guess at low cost providers)

Your PMPM cost may be much lower

… But, your leakage may be a high % (patient may not want to travel long distances to see MD)

Solution: Use analytics to help design your network


Network coverage optimizationService Area Definition

Dartmouth AtlasHospital Referral Regions

(boundaries based on cardiac surgery and neurosurgery)

Central Place Theory (boundaries based on distribution of medical

specialties)

Venn overlap of Health Referral Regions and

Central Place Theory boundaries


Example: Leakage


Where do your patients live?


Where are your patients receiving care?Network overlay on population density


How far is it to drive to your PCP?Network drive time isochrones


3

8

4 5

10

9

6 7

2

1


Poll QuestionHow well do you feel your organization is at designing an effective network?

A) Just Starting: We are not using data analysis to help design our network or monitor leakage, referrals are based primarily on physician relationships

B) Mid-Journey: We use rudimentary provider cost and quality metrics to evaluate who should be included in our network

C) Mature: We have a robust geospatial analytics which help us overlay cost, quality and experience data with drive time, population density and other useful information to create ideal network design


Principle Review Network Optimization• Designing a care delivery network should include the following

considerations

Who are the low cost providers? (you want them in your network)

Where does your population live?

What are the natural barriers geographically (rivers, freeways, train tracks)? This can cause leakage

ACTION: remove and add providers to your network to minimize leakage AND achieve the lowest appropriate cost



Understand a balanced approach to care management

45



46





Cost








Care Management Basics

Population Health

Care Mgmt.

Case/ Disease Mgmt.

Sometimes referred to as Care Coordination

Broader than traditional Case or Disease Management.

More narrow than full Population Health

Source: Frost & Sullivan 2015

• Only the health plan had Incentives for care management in a “Fee-For-Service” model

• “At-Risk” reimbursement aligns the incentive with care providers


Care Coordination Reduces Costs


Five Core Capabilities for Care Mgmt


Data Integration (EDW)

Patient Stratification & Refinement

Care Coordination Patient Engagement

Performance Measurement

Key Components of Effective Care Management


51

Patient Stratification & Care Strategy

5%

30% Rising Risk

65% Latent/Lower Risk

Complex, Acute & High Risk

Car

e M

anag

emen

tC

ondi

tion/

Dis

ease

M

anag

emen

t

• Personal Relationship• Comorbidity Management• Cross Continuum

• Risk of Escalation• Self Management• Condition/Disease Focused

• Self Service• Preventive• Coaching


52

Balloon Dart Board AnalogyPick your darts (care plans) you have $100 to spend

$25 for red darts $10 for yellow darts$5 for green darts

Preventative / Latent Risk Rising Risk High CostHigh Risk

Hit a green balloon

get $10 back

Hit a yellow balloon

get $25 back

Hit a red balloon

get $ 65 back


Poll questionsHow many of each type of dart do you want?

• A) 4 red darts• B) 3 red darts, 2 yellow darts, 2 green darts• C) 2 red darts, 3 yellow darts, 4 green darts• D) 1 red dart, 6 yellow darts, 3 green darts


54

So what is the correct answer?Pick your darts (care plans) you have $100 to spend

$25 for red darts $10 for yellow darts$5 for green darts

Preventative / Latent Risk Rising Risk High CostHigh Risk

Hit a green balloon

get $10 back

Hit a green balloon

get $25 back

Hit a green balloon

get $ 65 back

D) 1 red dart, 6 yellow darts, 3 green darts

163Here’s why…..


Actual Opportunity Dart BoardPreventative / Latent Risk Rising Risk High Cost

High Risk


Identify High-Risk, High-Cost PatientsData

Integration

Patient Stratification

& Refinement

Care Coordination

Patient Engagement



Patient Stratification AnalyticsData

Integration


& Refinement

Care Coordination

Patient Engagement


Key Take-away: Use Analytics to assign the right patients, to the right care program with the right care team


Care Management Detail

AB

A

BA

AB

A

BA

A

A

A

AA

AB

ACare Program A

Care Program B

Claims Clinical

EDW

Population Under at Risk

Contract

Configurable Patient Complexity Score &

Stratification

Configurable cut point and initial;

program, PCP, and team attribution

Pre-enrollment patient list refinement (add/remove)

Final attribution to Care Program

Fina

l attr

ibut

ion

to C

are

Team

and

PC

P

Data Integration


& Refinement

Care Coordination

Patient Engagement



Data Integration


& Refinement

Care Coordination

Patient Engagement


Care Coordination & Patient Engagement

Agreement on:- Patient Centered Goals- Tasks to drive to Goals

Initial tasks are prioritized, scheduled, and dispersed

On an ongoing basis;- Goals are modified- Tasks are modified- Tasks are re-assigned- Alerts are created and sent based on

task- Extended care team members are

added (or removed) as needed- Secure SMS communication between

all playersTypes of tasks for patients include;- Education materials to be reviewed- PROM surveys to be completed- Daily activity and measurements to be

enteredTypes of tasks for care team include;- Active medications review- Follow up appointment creation- Identify local resource/support for

patient

Patient “discharged” from care program

© 2015 Health Catalystwww.healthcatalyst.comProprietary and Confidential62

Manage CM Team WorkflowData

Integration


& Refinement

Care Coordination

Patient Engagement



Review Patients ProgressData

Integration


& Refinement

Care Coordination

Patient Engagement



64

Communications is Critical to the Circle of Care

http://www.ahrq.gov/professionals/prevention-chronic-care/improve/coordination/atlas2014/index.html

Patient

Care Coordinator

Provider Team

Primary Care

Pharmacist

FamilyHomeCare

Acute Care

Mental Health

CommunityResources

SpecialtyCare

Two Key Factors:1. Single platform for

secure communications across the continuum

2. Work hand in hand with EMRs

Source: Lori Evans Bernstein, President GSI Health in Health IT News, Dec 2013


Engage Patients with Mobile technologies

Data Integration


& Refinement

Care Coordination

Patient Engagement



Communicate frequently with patients

Data Integration


& Refinement

Care Coordination

Patient Engagement







Evaluate Care Management Effectiveness


Data Integration


& Refinement

Care Coordination

Patient Engagement

Performance MeasurementMonitor Care Management ROI


Evaluate Care Plan EffectivenessData

Integration


& Refinement

Care Coordination

Patient Engagement



Measure Engagement by Care PlanData

Integration


& Refinement

Care Coordination

Patient Engagement



Project Cost Savings Data

Integration


& Refinement

Care Coordination

Patient Engagement







Review: Key Components of Effective Care Management


Principle ReviewCare ManagementTraditional Process – Very Rare that this produces an ROI

List High Risk, High Cost Patients – perform a bunch of interventions to attempt to lower costs in the short term

Balanced Approach – Greater chance for long term ROI

Involve more stakeholders – better Patient Engagement

Choose the right interventions for the right patients

Play to win Long Term – ounce of Prevention, pound of cure



Understand the three capabilities required for systematic population health management

74



75





Cost








Three Core Capabilities for Systematic Improvement

76


Questions the 3 Systems answer

77

What should we be doing? How are we doing?

How do we transform?


Capabilities the 3 systems provide

78

• Enterprise Data Warehouse• Actionable Metrics• Predictive Models

• Checklists• Protocols• Interventions

• Adaptive Leadership• Data Governance• Improvement Teams

• Clinical Outcomes• Cost Outcomes• Experience Outcomes


Key Principles

79

• Prioritize using Key Process Analysis• Data Quality Assurance• Designing Data Systems• Understanding Variation

• Gather Best Practice Knowledge Asset • Pick one Asset to standardize first• Protocol Design – make it easy to do

the right thing

• Start with the Why• Diffusion of Innovation• Fingerprinting and Adaptive Leadership• Permanent Teams• Iterative Design• Aim and Goal Selection• Team Interaction and Implementation


Information System Centric

“If we build it they will come.” Focus on

reducing information request queue.

No real outcomes improve.

What if only 1/3 Systems is present?


Research Centric

Academic ideas with no practical

application. Lots of published papers.




Motivational Speaker Centric

Management “Flavor of the month”

Most clinicians disengage if best practice and

analytics are both missing




Automation Centric

“Paved Cow Paths”

Process is electronic but NOT improved –

many EMR “analytics” deployments

Limited Improvement.

What if only 2/3 Systems are present?


LEAN Centric

Un-sustainable Improvements. Can’t manually

measure after 2 or 3 projects.




Science Project Centric

Pockets of excellence, Limited

roll-out of improvement

across all units and facilities




Principle Review: Three Capabilities for Scalable Outcomes Improvement

86

What should we be doing? How are we doing?

How do we transform?

• Clinical Outcomes• Cost Outcomes• Experience Outcomes


Thriving in a Value-Based Care Delivery World

87





Cost








Today’s Lessons LearnedManage At Risk Contracting

Retrospective Analytics – know your historic costs before you go at risk Predictive Analytics – anticipate rising risk Prescriptive Analytics – let data point to outcomes improvement opportunities

Network Optimization Know where your patients live Be aware of natural boundaries thru geo-spatial analytics Include lowest cost providers in your network

Balanced Care Management Increase patient engagement with more stakeholders Match interventions to patients using analytics Have balanced care management strategy (more than claims based CM)

Systematic Outcomes Improvement Analytics, Best Practices AND Adoption produce Outcomes Improvement If you are missing one or two of these three systems then results are limited


Thank You

89


Appendix