what's a physician to do?

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www.sage-growth.com What’s a Physician To Do? Chicago Health System Presented by: Sage Growth Partners November 6, 2014

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What’s  a  Physician  To  Do?        Chicago  Health  System    Presented  by:  Sage  Growth  Partners  November  6,  2014  

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About  Us  

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A  Growing  Client  Roster  

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Hypothesis  I:  Health  Care  Will  be  Disrupted  

 There  is  an  overwhelming  confluence  of    

interests,  incen9ves,  and  macro-­‐environmental  forces  that  will  disrupt  the  industry  and  drive    

real  change  –  Payment  model  redesign  will  be  a  core  catalyst  for  

change    

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A  Step  Further  

•  Even  if  no  net-­‐new,  domes9c  U.S.  HC  is  a  $1T  arbitrage  opportunity  –  and  its  largely  in  facili9es,  specialists,  transi9ons,  and  chronic  care  management  

•  Health  care  will  experience  its  industrial  revolu9on  –  Transparency  –  Standards  –  Focus  on  efficiency  

•  In  an  industrial  model  –  community  organizers/entrepreneurs  (PCPs)  are  very  well  suited  to  assume  the  mantle  of  leadership  

•  The  garage  is  coming  to  health  care  •  Incen9ves  are  aligned  between  payers  and  enlightened  providers  beRer  

then  ever  –  economics  and  ACA  are  driving  payers  to  shiT  risk  

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Hypothesis  II  

 The  Medical  Prac9ce  Business  Model  will  have  to  

change    

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Elements  of  the  New  Paradigm  

•  All  healthcare  is  local  but  the  ecosystem  needs  to  be  beRer  defined  

•  Will  have  to  master  (at  least  survive)    “foot  in  two  canoes”  •  PCP  as  the  QB  of  the  healthcare  team    

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PCP  as  QB  –  Industrializing  Healthcare  

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Logistics

Telemetry

Supply Chain

Performance Management

Interoperability

Workflow & Business Process Redesign

Change Management

Practice Transformation

Capabilities

Requirements

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Lots  of  QuesTons  

•  The  role  of  physicians  -­‐  How  do  I  stay  independent?  •  The  role  of  hospitals  and  health  systems  •  The  role  of  subs9tutes  -­‐  IoT  •  The  pace  of  migra9on  to  VBP  •  The  pace  of  provider/payer  convergence  

• WHAT  IS  A  PHYSICIAN  TO  DO?  

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The  Three  Dominant  Strategies  

Best  Care  

Dominant  Delivery  

Organiza9on(s)  

Dominant  Delivery  Network  

Dominant  Enabling  Business  Plaform  

Best  Health  Status   Best  Value  

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THE  EVIDENCE  

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Financial  realiTes  are  changing  

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Volume  to  value:  Reasons  for  the  shiX  Risk  ShiX  

Payer  Value  Based  PorZolio  

0  

20  

40  

60  

80  

100  

1990   2000   2010   2020   2030   2040   2050   2060   2070   2080  

Medicare   Medicaid   Private  Health  Insurance  

Driver:  Public  Reimbursement  as  %  of  Commercial    

ACO  Growth  

687  Medicaid  MCOs  2013  

Porter  Research  Study  2013   *Including  SGR  rate  cuts  CMS  Office  of  the  Actuary  May  2012  

LeaviR  Partners  2014  

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Private  Health  Insurance  Benefits    by  Spending  Category  

18%    current    OUTPATIENT  

32%    current    INPATIENT  

32%    current  

PHYSICIAN  

4%    current  

OTHER  

15%    current    DRUGS  

Fastest  Growth  2007  -­‐  2012  

Slowest  Growth  2007-­‐2012  

8.2%  Growth  

10%  Growth  

8%  Growth  

6.1%  Growth  

5.4%  Growth  

Source:  Price  Waterhouse  Coopers  Medical  Cost  Trend:  Behind  the  Numbers  2013  “Other”  category  includes  services  such  as  ambulance,  home  health  and  durable  medical  equipment   15  

PCP  =  6%  

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NEW  (?)  PAYMENT  MODELS  

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IncenTves  Drive  (bad)  Behavior  

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Trust  but  Verify  Explore  New  OpTons  

Build  for  the  Future  

Legacy  Payer  RelaTonships   Partner  with  Plans/Purchasers   DIY  

Fee-­‐for-­‐Service  Contract  

P4P  Contract  

Shared  Savings  Contract  

Full  Cap/  Global  Budget  Contract  

Private-­‐  Label  

Product  Partnership  

Provider  Sponsored  Health  Plan  

-­‐  Outsourced  Services  

Provider  Sponsored  Health  Plan  

Lower   Risk  /  Reward  Tradeoffs   Higher  

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Why  VBP?  

•  Purchasers  are  demanding  more  accountability  around  quality  and  cost  

•  Medicare  and  Medicaid  need  the  “stop  loss”  •  Its  a  way  to  take  and  grow  share  •  It  allows  a  focus  on  “industrial  improvement”  

•  Its  working  in  key  markets  -­‐  Its  driving  quality  outcomes  

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BUILDING  CAPABILITIES  TO  ADDRESS  MARKET  NEEDS  

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Revenue  Cycle  Redesign  &  Alignment  is  CriTcal  •  Hospitals  who  have  financial  rela9onships  with  physicians  will  

be  changed  as  the  reimbursement  methodologies  change  •  Volume-­‐based  methodologies  will  transi9on  to  more  specific  

clinical  and  cost  metrics  –  Risk-­‐based  purchasing  –  Reducing  readmissions  &  HAI/HAC  

•  These  new  methodologies  will  need  to  be  documented  in  new  contracts  with  hospitals  and  physicians  –  This  will  be  PAINFUL  

•  Foot  in  two  canoes  will  require  new  system  capabili9es  

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Which  Service  Lines  Will  you  Focus  On  Over  the  Next  12-­‐18  Months?  

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Perc

enta

ge o

f Pay

er C

omm

unity

77%

54%

46%

44%

5%

EMPLOYER  GROUP  PLANS  

MEDICARE  PLANS  

MEDICAID  PLANS  

INDIVIDUAL  PLANS  

OTHER  

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ImplicaTons  of  a  Clinically  Integrated  Network  •  Expecta9ons  Have  Changed:  – Payors  will  be  expec9ng  hospitals  to  behave  in  a  different  way  

– Hospitals  will  be  expec9ng  physicians  to  behave  in  a  different  way  

– Physicians  and  pa9ents  will  be  expected  to  be  more  engaged  and  informed  and  to  work  together  more  closely  

– Popula9on  health  management  

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The  (really)  lean  health  plan    

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CITI  research1    Framework  for  managing  populaTon  health  

1Source:  Popula9on  Health  Management-­‐Hill’s  Handbook  to  the  Next  Decade  in  Healthcare  Technology,  14  May  2013  

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Build,  Buy,  Partner  

Dominant  Delivery  

Organiza9on(s)  

Dominant  Delivery  Network  

Dominant  Enabling  Business  Plaform  

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If  I  were  a  physician,  I’d  be  thinking  about…  

•  Business  Model  ConsideraTons  –  Running  through  walls  to  enhance/aggregate  primary  care  –  Build  a  new  economic  model  –  “the  era  of  3x”  –  Scope  of  the  “New  PCP”  –  Telemetry,  monitoring,  driving  

interven9ons,  building  supply  chains  (trading  partners)  –  Employment  op9ons  –  Find  the  MD  entrepreneurs  

•  PopulaTon  Health  –  let’s  define  –  Where  do  I  fit?  –  ARribu9on/iden9fica9on  –  Surveillance  –  Risk  assessment  –  Risk  stra9fica9on  –  what’s  our  triangle  look  like?  –  Gap  assessment  –  Coordinate/drive  interven9ons  

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If  I  were  a  physician,  I’d  be  thinking  about…  •  Becoming  part  of  value-­‐added  network  and  aggressively  courTng  

Payers/Purchasers  (Insurers,  TPA/ASO,  Employers,  Unions,  Purchasing  Groups)  –  Make  something  different  happen  –  Get  out  and  talk  early  and  oTen  –  Don’t  make  assump9ons  and  don’t  ignore  purchasers  –  How  to  do  this  

•  Embracing  transparency  wholeheartedly  –  Prices,  Costs,  Quality    

•  Plan  the  Ecosystem  –  Do  I  have  the  Right  Partners?  –  Technologies:  Rev  Cycle,  Messaging,  CDS,  PH,  PI,  Retail,  remote  

monitoring,  etc.  etc.  etc.  –  Trading  partners  –  Interoperability  –  Plaform  Partners  

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Contact:    Sage  Growth  Partners  3500  Boston  Street,  Suite  435  Bal3more,  Maryland  21224  410.534.1161  

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