Partnering for Success —Part 1: Laying the GroundworkPart 1: Laying the Groundwork

3:30 – 5:00 pm

Geoff Kaufmann FACHEGeoff Kaufmann, FACHEAmerican Red Cross

Partnering for SuccessLaying the Groundwork

Geoff Kaufmann- FACHECEO, NCBS- American Red Cross

Outline of This Presentation

1 R f Aff t i R l M k t1. Reform Affects in Rural Markets2. The Building Blocks of a Successful

F R l H l h SFuture Rural Healthcare System3. Health — Future Vision — Microsoft4. Reality Check in California5. Necessary Next Steps in Successful y p

Collaboration

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Healthcare in Rural Markets

Let’s start with a systems overview Let s start with a systems overview What does “Reform” do for/to us?

h h h ll f l h i l What are the challenges for rural hospitals and providers?

Systems Overview

What the New Healthcare SystemWhat the New Healthcare System Will Look Like

Total National Health Expenditures (NHE), 2009–2020 Current Projection and Alternative Scenarios

NHE in trillions

Cumulative reduction in NHE through 2020: $3 trillion

Note: GDP = Gross Domestic Product. Data: Estimates by The Lewin Group for The Commonwealth Fund.Source: Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way (New York: The Commonwealth Fund, Feb. 2009).

Health Care Costs Concentrated in Sick Few — Sickest 10 Percent Account for 64 Percent of Expenses

Distribution of health expenditures for the U.S. population,by magnitude of expenditure, 2003 Expenditureby magnitude of expenditure, 2003 Expenditure

threshold (2003 dollars)1%

5%10%

49%

24% $36,280

$64%

50% $12,046

$6,992

97%$715

Source: The Commonwealth Fund. Data from S. H. Zuvekas and J. W. Cohen, “Prescription Drugs and the Changing Concentration of Health Care Expenditures,” Health Affairs, Jan./Feb. 2007 26(1):249–57.

Variation in Per Capita Medicare Spending by Hospital Referral Region, 2000y p g ,

Source: The Commonwealth Fund, from Eliot Fisher, presentation at Academy Health Annual Research Meeting, June 2006.

Total Health System Model

Facilities

Medical

Health Care Workers

Information

Information Market/Clinical

Financial resources & goals

Medical Technology

Information Technology

Past Experience –Personal, networks

Consumer BehaviorTools – Dx & Rx

Financing S & E i t

Professional - PatientSources & Structure

Environment:- Air, food, water

-Economic

Illness BurdenKnowledge Employers

GovernmentContinuing Education

- Cultural

Primary EducationIndividuals

Genetics of the Individual

Research

Lowest Cost Site

$$$$Hospital ICU

Inpatient Hospital

$$$$

Inpatient Hospital

Routine Outpatient Care

Intensive Ambulatory Care (Surgery)

Long Term Care

Home Care

Prevention and Wellness

Supportive Communities $

Reform’s Impact on Stakeholders

Providers ? Government ?

Insurance Companiesp

Gain 30 million new customers Cease most underwriting practices Participate in state-based insurance exchanges No change with large employers Agree to standardization

Benefits Payment systems

Overhead less than 20%, 15% Become more retail-and consumer-oriented

Government

Federal Enforce Insurance mandate Implement new Medicare payment policies Implement Insurance Exchange (State’s or Fed’s) Continue to fund HIT, Comparative Effectiveness Research Implement Medicare pilots (value purchasing, etc.) Raise taxes Implement fraud prevention

States Expand Medicaid eligibility Operate Exchanges

Direct Providers of Care

Reduced uncompensated carep Bundled payments – value

purchasing Incentives to form larger

groups and structures Increased transparency and reporting Reduction in growth of hospital paymentsg p p y Incentives to purchase HIT Higher payment for primary careg p y p y Changes in payment due to geographic variation (?)

Consumers

Negatives Short-term insurance rate increases Insurance mandate Higher taxes for some Access issues to primary care

P itiPositives Improved access to health insurance Lowering of health care inflationLowering of health care inflation Elimination in Medicare donut hole Improved information about system and provider performancep y p p Eliminates job lock for entrepreneurs

Timingg

Currently in placey p High-risk pool with federal subsidies Tax credits to small employers No lifetime limits on insurance Dependent coverage to age 26

2011 – 2013 System changes phased iny g p

2014 Individual mandate and employer fine for no insurance Insurance exchanges become active with subsidiesInsurance exchanges become active with subsidies Medicaid expanded to 133% of FPL and becomes non categorical

2015 – 2020 Cadillac taxes on high cost health plans Cadillac taxes on high cost health plans Donut hole closed

Current Issues

Individual and employer mandate Individual and employer mandate to have health insurance (State Attorney Generals)( y ) State’s ability to control health

insurance rate increases Temporary high risk pools No pre-existing conditions for childrenNo pre existing conditions for children Payment to firms for early retirement coverage Continuing health care inflationContinuing health care inflation

Changes Possibleg

Insurance mandate methodsInsurance mandate methods Open enrollment Part D penalties Part D penalties

Standard benefitsS M di id f di i State Medicaid funding increases Comparative effectiveness research Independent payment advisory boardMalpractice reformp State waivers (e.g., public option in Vermont)

Unlikely to changey g

Health insurance exchangesHealth insurance exchanges QualityWorkforce improvementsWorkforce improvements

Primary care

Fraud prevention Fraud prevention Prevention and wellness Chronic disease management Chronic disease management

ACOs, bundled payments, medical home

Total repeal: due to provider/health plan resistance Total repeal: due to provider/health plan resistance

“AmericansAmericans always do h t i i htwhat is right, but only y

after trying everythingeverything

else.”Winston Churchill

Opportunities for Collaboration in Reformin Reform

Insurance — new enrollees in exchanges and Medicaidg Revenue and cost sharing, bundled payments

Government — access to exchanges, HIT and other grantsg , g Providers — form larger groups for contracting risk,

including MD groups, other hospitals and post-acute providers

Community — promote better health through partnerships ith h l i ti d h lth l bwith schools, associations and health clubs

We will address these opportunities later as wellWe will address these opportunities later as well

The Top Rural Healthcare Reform IssuesReform Issues

Self-employed and small business economy Larger dependence on governmental insurance Financially-stressed care systems Provider shortagesg Aging and less mobile population

The Top Rural Healthcare Reform IssuesReform Issues

A i k d t i k iti A sicker and more at-risk citizenry Little preventive or wellness resources Lack of mental health services Slower adoption of technology Fragmented emergency medical services

The Pluses of Reform for Rurals

C i th h t t Coverage expansion through state insurance exchanges

i f di id Expansion of Medicaid Increases in rural clinic funding Telehealth and EMR support Training grants for providersg g p Higher payments for primary care

Challenges for Rural Hospitals and Providersand Providers

First and foremost Rural Hospitals are anchors forFirst and foremost Rural Hospitals are anchors for the health-related services in their communities Structural and financial backbone for MDs clinics Structural and financial backbone for MDs, clinics,

post-acute and LTC services They are also critical components of the region’s They are also critical components of the region s

economic and social fabric Large employer highly skilled jobs Large employer, highly skilled jobs Adds to the attractiveness of a community to settle,

locate a business or retirelocate a business or retire In other words … no one wants you to fail!

Challenges for Rural Hospitals and Providersand Providers

They shoulder more problems than their urban counterpartsThey shoulder more problems than their urban counterparts Burdened with uninsured, lower incomes, older and less healthy

populations, more chronic disease, outmigration of youth, longer travel to care, patients delay seeking care, few economies of scale Provide more ambulatory care, home care and LTC- these

i ll h l i h i iservices all have lower margins than inpatient care More vulnerable to national and state policy changes as 60% or

more of revenues come from governmental payers — there are nomore of revenues come from governmental payers there are no places to shift costs to other payers Likely to see increased demand as Medicaid enrollees increase

under reform — poor payer and staff shortages to care for this new volume

Rural Hospital Assistancep

Sole Community Hospital (N=395)Sole Community Hospital (N 395) Medicare-Dependent Hospital (N=195) R l R f l C t (N 125) Rural Referral Center (N=125) Critical Access Hospital (N=1,325)

All programs focused on gaining more reimbursement

Insufficient Access to Capitalp

Most CAHs are over 40 years oldMost CAHs are over 40 years old Limited ability to adopt HIT to address quality,

safety and efficiencysafety and efficiency A significant percentage are partnering with

other similar providers (Networks like CCAHNother similar providers (Networks like CCAHN, or other similar networks) or with urban hospitals to get capital for improvementshospitals to get capital for improvements

Limited Supply of Providerspp y

Primary care also provided by mid-levelsPrimary care also provided by mid levels Specialty shortages across the board M h l hi d l t f More scholarships and loan repayment for

primary care in HPSAsM f i b d b l Money for community-based ambulatory patient centers — need to operate a primary

idcare residency program How can rural markets access these

id ? N t il !residency programs? Not easily!

ACOs in Rural Markets?

Insufficient numbers of patients to qualify Insufficient staff capacity, data analytics,

b l h d i lbalance sheet, and access to capital to manage bundled paymentsL t f d i ti k diff i Lots of random variation make differences in quality and cost hard to manage

Think ACO-like!

What You Should All Be Asking Your Elected OfficialsYour Elected Officials

What avenues exist for rural care innovation andWhat avenues exist for rural care innovation and care delivery? How will rural healthcare systems compete for

needed providers? What support will be available to care for the

l ll d M di id ti t d th ACAnewly enrolled Medicaid patients under the ACA How can payment systems be created to meet

rural market needs?rural market needs? How can rural ACOs be created that are

economically viable?y

The Building Blocks of a Successful Rural Health SystemRural Health System

Th t j it f thThe vast majority of the necessary requirements for success in a rural market are network related and include theare network-related and include the elements of quality, HIT infrastructure, and broad community supportbroad community support

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The Building Blocks of a Successful Rural Healthcare SystemRural Healthcare System

Community and provider collaboration Community and provider collaboration Participation in rural provider networks Access to technology both clinical and HIT Access to technology, both clinical and HIT Strong quality focus Access to capitalAccess to capital A strong voice in legislative bodies Broad based education for providers andBroad based education for providers and

the public

The Building Blocks of a Successful Rural Healthcare System

Primary care providers and extenders

Rural Healthcare System

y p Partnerships with post-acute providers Engaged payers who will reward quality Engaged payers who will reward quality Supportive community structures in social

and mental healthand mental health Broad based education for providers and

th blithe public Linkages for care through HIT

Health — Future Vision

Mi ft VidMicrosoft VideoFrom the Industry Innovations Group

This is a view of a cyber-health world where all medical knowledge and transactions are handledmedical knowledge and transactions are handled electronically and many of them in the cloud.

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Healthcare — Future Vision

Vid P i Di iVideo Presentation — Discussion What about this presentation struck you? What components are realistic for rural

America? Why or why not? What structural systems need to be in place

for any of this to be achievable in rural ymarkets?

Where are the current and future gaps?g p

Change Exercisesg

If you have a watch, attach it to your opposite wrist

If you have tie-shoes, cross your hands and tie the laces

Reality Check in Californiay

N t k lik CCAHN h l d li h d Networks like CCAHN have already accomplished so much

Many of the current initiatives are helping toMany of the current initiatives are helping to improve quality, lower costs and enhance revenue

You are focusing on “ACO-type” reforms without g ypthe millstone of the moniker Workforce, changes in reimbursement, population

h lth IT i thealth, IT requirements Other rural hospitals should highly consider the

opportunities and benefits of joining a network

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opportunities and benefits of joining a network

Rural Hospital Survey Resultsp y

A f f th ti i t h it l h A survey of many of the participant hospitals here today was performed about a month ago inquiring about reform, competition, and sharing of best , p , gpractices

While not scientifically valid, the results are indicative of the diversity of opinions regarding the readiness for reform’s effects

M l h it l f l h t t th f Many rural hospitals feel somewhat at the mercy of payers and government as shapers of their futures

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Survey Resultsy

Equal numbers of respondents believe that they will beEqual numbers of respondents believe that they will be exempted from reform, must follow the rules and regulations, or are positioning themselves for success under reform

Most hospitals (62%) wish to collaborate with other local rural hospitals in their market

The remainder compete and some feel advantaged by belonging to a networkO 80% f d t ith d t h h t th id Over 80% of respondents either do not have what they consider best practices or would not be willing to share them

Many are seeking best practice knowledgeMany are seeking best practice knowledge Several hospitals are willing to share in non-competitive situations

You Have Choices

Join a regional integrated system Join a regional, integrated system Avera and Sanford in SD and ND Mayo system in MN, IA and WI Mayo system in MN, IA and WI

Become a high tech ambulatory care center Focus on a continuum of services for theFocus on a continuum of services for the

chronically ill and aged Become a rural consortium of care servicesBecome a rural consortium of care services

under a network or similar vehicle

From Ian Morrison, January 3, 2012 Health and Hospital Network article

The Geographic Challenges of CAg p g

Long and thin mountains valleys and other Long and thin, mountains, valleys and other natural barriers

Demographic and industrial differencesDemographic and industrial differences Urban and rural disparities “Have and have not” areas and health care Have and have not areas and health care

systems Multiple languagesMultiple languages Others

Rural Hospital Challengesp g

What might be some of the pre conditions to What might be some of the pre-conditions to meaningful collaboration?

How can those pre-conditions best be createdHow can those pre-conditions best be created and enforced?

If this were one year from today, how far wouldIf this were one year from today, how far would you have advanced the ball? Is your vision expansive enough?

What can CCAHN do to facilitate the necessary collaboration for survival and success?

Necessary Next Steps in CollaborationCollaboration

The next set of slides addresses the logical steps in the evolution of California rural hospitals as they consider the development of rural regional care systems

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Necessary Next Steps in Successful CollaborationSuccessful Collaboration

Willi t ll b t d h b t ti d Willingness to collaborate and share best practices and programs among between “competitors” including methods for saving costs and preserving qualityg p g q y

Payer partnerships that recognize a need for provider revenue and reasonable margins

Community linkages that can serve as health sites and wellness partners (e.g., immunizations in schools, asthma mgt. in

h l i k li i i j t /l f b i )schools, quick clinics in major stores/locus of businesses) Consideration of consolidation of services to generate volumes

necessary to be profitable: cross- hospital service linesnecessary to be profitable: cross- hospital service lines

Necessary Next Steps in Successful Collaboration

Provide assistance for Medicaid enrollment to

Successful Collaboration

area agencies Seek local, regional and national grants for system

d h ( C i SAsupport and change (F-CHIP in Montana , HRSA grant to develop new delivery models)

Understand and begin movement to “healthcare Understand and begin movement to healthcare home” model which combines providers into teams to serve populations (study Kaiser)

Enlist the support of local legislators for bills that support new rural delivery models, provider

i d i i b li f drecruitment and retention, reimbursement relief and rural “ACO” accommodation

Clinical Collaboration —The Next FrontierThe Next Frontier

This is where you will recognize your utmost potential Sharing “best practices” – start by creating a list of what

thi k ll d llyou think you all do well Think about strategically locating “Centers of

Excellence” and shared operations — taking intoExcellence and shared operations taking into account geography

Develop shared protocols and order sets Develop pre- and post-acute linkages with shared

incentives for care management Share clinical experts across the membership Examine additional “Make vs. Buy” partnerships

What are the Collaboration Options?Options?

Models in IndustryModels in Industry Elite Circle — One member selects the participants,

picks the issue and chooses the solution Innovation Mall — One member posts a need and any

member can propose a solution Innovation Community Any member can post a Innovation Community — Any member can post a

need, propose solutions and decide what to do Consortium — Members jointly select needs, decide j y ,

how to conduct the process and jointly choose solutions

Characteristics of the Consortium

The knowledge domain from which to choose The knowledge domain from which to choose solutions is mostly known The problems/issues are large and interconnectedThe problems/issues are large and interconnected Having a large array of experts is important and

they exist within the groupthey exist within the group There is shared power All participate to the extent they are benefittedAll participate to the extent they are benefitted All are free to act on the results

Bringing It Homeg g

There are too many conferences where you are askedThere are too many conferences where you are asked to do something when you get home, then reality sets in and you do nothing — sound familiar?

Think about it … your future in rural healthcare depends on the future success of the organization that

lemploys you The stakes for you and your organizations are high

S h ’ th d l t t i hb d t ll So here’s the deal: turn to your neighbor and tell them one thing that you are going to do to better position your organization for survival, then bring p y g , gthis idea to tomorrow’s session

Here is the Hard Part

Copy me on that idea Copy me on that ideakaufmanngl@usa.redcross.org And copy PeggyAnd copy Peggy

pwheeler@calhospital.org We promise to hold you accountable for thisWe promise to hold you accountable for this

assignment and to pester you if you don’t complete it And you thought you were going to get away

without any follow-up work!

Become Comfortable with Being UncomfortableBeing Uncomfortable

Keep one foot in separate canoesKeep one foot in separate canoes Incremental approach is practical Develop a transformative agenda for changep g g Organize for the long-term, but focus on the core

business in the short-term Focus on quality, outcomes and customer-centered

practices Be open to new partnerships but improve due diligenceBe open to new partnerships, but improve due diligence Measure your progress and results Embrace the “need for speed”p Cycle times for decision-making will be shorter

Become Comfortable with Being Uncomfortable

E i t d i t ith ti

Being Uncomfortable

Experiment and innovate with care practices Realize that customers do not understand our metrics Focus on results and cost reduction strategies Focus on results and cost reduction strategies Examine the inclusion of other providers in the “system” Communicate like crazy both internally and externally Communicate like crazy, both internally and externally Do your own thing, don’t necessarily copy others Focus on what is right for your community not just theFocus on what is right for your community, not just the

hospital or providers

Thank youy

Geoff KaufmannAmerican Red Cross(651) 291-6764k f l@ dkaufmanngl@usa.redcross.org