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Partnering for Success —Part 1: Laying the Groundwork

3:30 – 5:00 pm

Geoff Kaufmann, FACHEAmerican Red Cross

Partnering for SuccessLaying the Groundwork

Geoff Kaufmann- FACHECEO, NCBS- American Red Cross

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Outline of This Presentation

1. Reform Affects in Rural Markets

2. The Building Blocks of a Successful Future Rural Healthcare System

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3. Health — Future Vision — Microsoft

4. Reality Check in California

5. Necessary Next Steps in Successful Collaboration

Healthcare in Rural Markets

Let’s start with a systems overview

What does “Reform” do for/to us?

What are the challenges for rural hospitals d id ?and providers?

Systems Overview

What the New Healthcare System Will Look Like

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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 Expenditure

threshold (2003 dollars)1%

5%10%

24% $36,280

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.

49%

64%50%

97%

$12,046

$6,992

$715

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

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

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Total Health System Model

Consumer BehaviorTools – Dx & Rx

Facilities

Medical Technology

Health Care Workers

Information Technology

Past Experience –Personal, networks

Information Market/Clinical

Financial resources & goals

Professional - Patient

Illness BurdenKnowledge

Financing Sources & Structure

Primary EducationIndividuals

Employers

GovernmentContinuing Education

Genetics of the Individual

Environment:- Air, food, water

-Economic

- Cultural

Research

Lowest Cost Site

Hospital ICU

Inpatient Hospital

R ti O t ti t C

$$$$

Intensive Ambulatory Care (Surgery)

Routine Outpatient Care

Home Care

Long Term Care

Supportive Communities

Prevention and Wellness

$

Reform’s Impact on Stakeholders

Providers ? Government ?

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Insurance Companies

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 care

Bundled payments – value purchasing

Incentives to form largerggroups and structures

Increased transparency and reporting

Reduction in growth of hospital payments

Incentives to purchase HIT

Higher payment for primary care

Changes in payment due to geographic variation (?)

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Consumers

Negatives

Short-term insurance rate increases

Insurance mandate

Higher taxes for some

A i i Access issues to primary care

Positives

Improved access to health insurance

Lowering of health care inflation

Elimination in Medicare donut hole

Improved information about system and provider performance

Eliminates job lock for entrepreneurs

Timing

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

2011 20132011 – 2013 System changes phased in

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

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

Current Issues

Individual and employer mandate to have health insurance (State Attorney Generals)

State’s ability to control healthState s ability to control health insurance rate increases

Temporary high risk pools

No pre-existing conditions for children

Payment to firms for early retirement coverage

Continuing health care inflation

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Changes Possible

Insurance mandate methods

Open enrollment

Part D penalties

Standard benefits Standard benefits

State Medicaid funding increases

Comparative effectiveness research

Independent payment advisory board

Malpractice reform

State waivers (e.g., public option in Vermont)

Unlikely to change

Health insurance exchanges

Quality

Workforce improvements

Primary care Primary care

Fraud prevention

Prevention and wellness

Chronic disease management

ACOs, bundled payments, medical home

Total repeal: due to provider/health plan resistance

“Americans always do

what is right, but only

after trying everything

else.”Winston Churchill

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Opportunities for Collaboration in Reform

Insurance — new enrollees in exchanges and Medicaid

Revenue and cost sharing, bundled payments

Government — access to exchanges, HIT and other grants

Providers — form larger groups for contracting risk, g g p gincluding MD groups, other hospitals and post-acute providers

Community — promote better health through partnerships with schools, associations and health clubs

We will address these opportunities later as well

The Top Rural Healthcare Reform Issues

Self-employed and small business economy

Larger dependence on governmental insurance

Financially-stressed care systems

Provider shortages

Aging and less mobile population

The Top Rural Healthcare Reform Issues

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

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The Pluses of Reform for Rurals

Coverage expansion through state insurance exchanges

Expansion of Medicaid

Increases in rural clinic funding

Telehealth and EMR support

Training grants for providers

Higher payments for primary care

Challenges for Rural Hospitals and Providers

First and foremost Rural Hospitals are anchors for the health-related services in their communities

Structural and financial backbone for MDs, clinics, post-acute and LTC servicespost-acute and LTC services

They are also critical components of the region’s economic and social fabric

Large employer, highly skilled jobs

Adds to the attractiveness of a community to settle, locate a business or retire

In other words … no one wants you to fail!

Challenges for Rural Hospitals and Providers

They 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 services 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 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

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Rural Hospital Assistance

Sole Community Hospital (N=395)

Medicare-Dependent Hospital (N=195)

Rural Referral Center (N=125)

C i i l A i l ( 1 32 ) Critical Access Hospital (N=1,325)

All programs focused on gaining more reimbursement

Insufficient Access to Capital

Most CAHs are over 40 years old

Limited ability to adopt HIT to address quality, safety and efficiency

A significant percentage are partnering with A significant percentage are partnering with other similar providers (Networks like CCAHN, or other similar networks) or with urban hospitals to get capital for improvements

Limited Supply of Providers

Primary care also provided by mid-levels

Specialty shortages across the board

More scholarships and loan repayment for primary care in HPSAsprimary care in HPSAs

Money for community-based ambulatory patient centers — need to operate a primary care residency program

How can rural markets access these residency programs? Not easily!

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ACOs in Rural Markets?

Insufficient numbers of patients to qualify

Insufficient staff capacity, data analytics, balance sheet, and access to capital to manage b dl d tbundled payments

Lots of random variation make differences in quality and cost hard to manage

Think ACO-like!

What You Should All Be Asking Your Elected Officials

What 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 newly enrolled Medicaid patients under the ACA

How can payment systems be created to meet rural market needs?

How can rural ACOs be created that are economically viable?

The Building Blocks of a Successful Rural Health System

The vast majority of the necessary requirements for success in a rural market are network-related and include the elements of quality HIT infrastructure and

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elements of quality, HIT infrastructure, and broad community support

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The Building Blocks of a Successful Rural Healthcare System

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

the public

Primary care providers and extenders

Partnerships with post-acute providers

Engaged payers who will reward quality

S pporti e comm nit str ct res in social

The Building Blocks of a Successful Rural Healthcare System

Supportive community structures in social and mental health

Broad based education for providers and the public

Linkages for care through HIT

Health — Future Vision

Microsoft Video

From the Industry Innovations Group

This is a view of a cyber health world where all

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

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Healthcare — Future Vision

Video 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 markets?

Where are the current and future gaps?

Change Exercises

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 California

Networks like CCAHN have already accomplished so much

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

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p q y,

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

health, IT requirements

Other rural hospitals should highly consider the opportunities and benefits of joining a network

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Rural Hospital Survey Results

A survey of many of the participant hospitals here today was performed about a month ago inquiring about reform, competition, and sharing of best practices

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

Many rural hospitals feel somewhat at the mercy of payers and government as shapers of their futures

Survey Results

Equal 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 network

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 knowledge

Several hospitals are willing to share in non-competitive situations

You Have Choices

Join a regional, integrated system Avera and Sanford in SD and ND

Mayo system in MN, IA and WI

Become a high tech ambulatory care centerBecome a high tech ambulatory care center

Focus on a continuum of services for the chronically ill and aged

Become a rural consortium of care services under a network or similar vehicle

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

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The Geographic Challenges of CA

Long and thin, mountains, valleys and other natural barriers

Demographic and industrial differences

Urban and rural disparities Urban and rural disparities

“Have and have not” areas and health care systems

Multiple languages

Others

Rural Hospital Challenges

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

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

If 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 Collaboration

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

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of rural regional care systems

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Necessary Next Steps in Successful Collaboration

Willingness to collaborate and share best practices and programs among between “competitors” including methods for saving costs and preserving quality

Payer partnerships that recognize a need for provider revenue y p p g pand reasonable margins

Community linkages that can serve as health sites and wellness partners (e.g., immunizations in schools, asthma mgt. in schools, quick clinics in major stores/locus of businesses)

Consideration of consolidation of services to generate volumes necessary to be profitable: cross- hospital service lines

Provide assistance for Medicaid enrollment to area agencies

Seek local, regional and national grants for system support and change (F-CHIP in Montana , HRSA grant to develop new delivery models)

Necessary Next Steps in Successful Collaboration

grant to develop new delivery models)

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 recruitment and retention, reimbursement relief and rural “ACO” accommodation

Clinical Collaboration —The Next Frontier

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

you think you all do well

Think about strategically locating “Centers of Think about strategically locating Centers of Excellence” 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

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What are the Collaboration Options?

Models 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 b l imember can propose a solution

Innovation Community — Any member can post a need, propose solutions and decide what to do

Consortium — Members jointly select needs, decide how to conduct the process and jointly choose solutions

Characteristics of the Consortium

The knowledge domain from which to choose solutions is mostly known

The problems/issues are large and interconnected

Having a large array of experts is important and Having a large array of experts is important and they exist within the group

There is shared power

All participate to the extent they are benefitted

All are free to act on the results

Bringing It Home

There 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 employs you

The stakes for you and your organizations are high

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 this idea to tomorrow’s session

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Here is the Hard Part

Copy me on that ideakaufmanngl@usa.redcross.org

And copy Peggypwheeler@calhospital.orgpwheeler@calhospital.org

We 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 Uncomfortable

Keep one foot in separate canoes

Incremental approach is practical

Develop a transformative agenda for change

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 diligence

Measure your progress and results

Embrace the “need for speed”

Cycle times for decision-making will be shorter

Experiment and innovate with care practices

Realize that customers do not understand our metrics

Focus on results and cost reduction strategies

Examine the inclusion of other providers in the “system”

Become Comfortable with Being Uncomfortable

Examine the inclusion of other providers in the system

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 the hospital or providers

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Thank you

Geoff KaufmannAmerican Red Cross(651) 291-6764kaufmanngl@usa.redcross.org

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.