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Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen Pruet Matthew Roberts / Nexsen Pruet

evaluating physician affiliation & network integration: a conversation for boards & administration. Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen Pruet Matthew Roberts / Nexsen Pruet. agenda. Drivers Models Lessons Learned What hasn’t worked? What’s working now?

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Kevin Locke / Dixon Hughes Goodman Tim Hewson / Nexsen Pruet Matthew Roberts / Nexsen Pruet

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  1. evaluating physician affiliation & network integration: a conversation for boards & administration Kevin Locke / Dixon Hughes Goodman Tim Hewson / NexsenPruet Matthew Roberts / NexsenPruet

  2. agenda • Drivers • Models • Lessons Learned • What hasn’t worked? • What’s working now? • Action Planning

  3. drivers • Market Dynamics • Regulatory and Payment Reform • Continuum of Care

  4. market dynamics accelerating physician affiliation and network integration More Care (32M uninsured, Baby Boomers, Chronic Disease) Higher Quality (P4P, Shared Savings, Core Measures) Less Money ($240B Cuts, $90B Penalties) “Bottom line, if you attempt to use the same care delivery model moving forward, faced with the magnitude of reductions in forecasted revenue, you will go out of business.” ~ Michael Sachs, Sg2

  5. payment reform accelerating physician affiliation and network integration Global Payments / Capitation Shared Savings Pay-for-Performance Value-Based Purchasing Bundled Payments Fee for Service All Providers Accountability Integration Alignment Independent Payers Source: PricewaterhouseCoopers

  6. continuum of care accelerating physician affiliation and network integration Source: Sg2

  7. potential models for physician integration • Employment • Direct • Through wholly owned subsidiary or affiliate entity • Exclusive Contracts/Independent Contractor Agreements • Co-Management/Medical Director Agreements • Clinically Integrated Networks

  8. one size does not fit all… • Situational strategies must be developed. • Hospital and physicians must understand the collective strategic objective and the type of integration must incentivize attempts to achieve that objective. • Lower cost/improved quality are objectives that are supported by the federal government and private payors.

  9. broad spectrum of models to consider ACO High CIN or IPN PCMH HEP Employed Physician Enterprise Relocation Support/Income Guarantee System Resources Required Co-Management Gainsharing Paying for Call Co-Marketing Directorships Voluntary Medical Staff Low Venture Arrangement Independent Strategic Alliance Integration Degree of Alignment Source: Sg2

  10. clinically integrated models are accelerating Proposed ACO Structure Readmission Risk/Penalties Co-Management $ Other Providers Primary Care Physicians Specialists Post-Acute Care Acute Care Hospital $ CIN PCMH Proposed Bundled Payment Initiatives Patient Centered Medical Home (PCMH): Primary care approach that supports comprehensive, team based care, improved patient access and engagement; serves as “hub” of care coordination; focuses on chronic disease management Clinically Integrated Network (CIN): Acute care hospital, multispecialty physician network and other providers committed to quality and cost improvement, with support from joint negotiated commercial contracts Accountable Care Organization (ACO): Model to promote accountability for a patient population by improving care coordination, encouraging investment in infrastructure, and redesigning the care continuum around quality Co-Management: Model to align physician incentives around quality, cost and satisfaction with fair market compensation Source: The Advisory Board | Dixon Hughes Goodman

  11. what hasn’t worked? • Make physicians an offer they can’t refuse • One-sided arrangements • Command control management style • Lack of physician participation in strategic planning process • Lack of physician engagement and/or leadership • Failure to educate physician on compliance and business objectives • Failure to define and measure quality improvements or cost reductions

  12. what’s working now? • Include physician in governance and management • Transparency in affiliation and integration • Continuing education of physicians of what hospitals can and will do vs can’t and won’t do • Joint strategic plan which physicians buy into, understand, and are responsible for implementing

  13. what’s working now? • Cultural integration • Clear definition of goals, metrics and expectations • IT systems to track, measure and report performance • Clinical/financial accountability • Customizing/aligning compensation to organizational goals • Developing physician leadership

  14. co-management model Governance Committees Management Fee Distributions FMV Compensation Physician LLC Physicians Hospital Management Services Investment Fixed Duties Performance Metrics • Committee Involvement • Day-to-Day Management • Strategic Plan Development • Clinical Care Management • Quality Improvement • Staff Oversight • Materials Management • Budget Development Equipment* Staffing* Supplies • Clinical Outcomes • Patient Safety • Satisfaction • Operational Processes • Financial Performance *Only one of two may be included Source: Dixon Hughes Goodman

  15. clinically integrated network (CIN) Payers and Employers Private Practice Physicians Health System CIN Employed Medical Group Ambulatory Facilities Employee Health Plan Hospital Hospital ONE Network that can Demonstrate Value

  16. clinically integrated network (CIN) • Clinically Integrated Network (CIN) is commonly defined as a health network working together, using proven protocols and measures, to improve patient care, decrease costs and demonstrate value to the market • Generally, the FTC considers a program to be clinically integrated if it performs the following: • Establishes mechanisms to reduce cost and improve quality (enhance value) of healthcare services • Selectively chooses network physicians who are likely to further the value objectives • Invests human and financial capital to accomplish defined objectives

  17. CIN key components Legal Structure & Governance Flow of Funds Infrastructure Clinically Integrated Network Contracting Participation Criteria Information Technology Performance Objectives Physician Leadership

  18. CIN value proposition Health System Clinical Integration (CI) Network Physicians Payers Membership Contracting Information Technology Care Redesign Quality The Value of Clinical Integration to… Source: DHG

  19. managing risk • Parties must discuss business risk • To hospital • To physician • Parties must discuss legal/compliance • Risk is equally shared

  20. forecasting future developments • Role of medical staff • Employed versus independent physicians • Changes in laws to make integration easier • New reimbursement methodologies • New and integrated alignment models

  21. action planning for your leadership team • Strategic, cultural, and economic assessment of your market • Clear definition of objectives and win-win criteria • Thoughtful consideration of alternative models • Disciplined plan and process for integration

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