California State Rural Health Association

1. California State Rural Health Association Michael Kaminaka President and Chief Executive Officer Mike@mmiplan.com MMI Initiative

2. What you will learn in this session: • “Mind Food” for Participants • Healthcare/Health Insurance Reform – Impact on the Industry • Cost Reduction Plan • How to Develop Alternative Revenue Sources for your Organization • Recruitment and Retention of Healthcare Providers • Participants to be bring back new ideas to create a program of their own or to incorporate new initiatives in your existing program to innovate and stimulate its healthcare community.

4. 43% of small employers still offer healthcare coverage Expect double digit increases in premiums The “Free Rider” Penalty The COOP idea will catch on (Alternative Revenue Source – Discuss Later) COOP’s were rural traditions that caught on in urban industry niches 10 Million People in California belong to COOPs 120 Million in the US Several Branded COOPs: Ace Hardware Blue Diamond Growers CarpetOne Florida's Natural Land O' Lakes Sun-Diamond Impact on Rural Health Based Providers Healthcare Reform Impact

5. Current Revenue Base Shrinking or Expanding? Reimbursement Rates Higher or Lower? Aging Providers – 3 to 5 Year exit Plan Recruitment and Retention of Quality Providers Regardless of what the final Healthcare Reform will be, the healthcare providers need to do something different and the “status quo” attitude will be the demise of many providers that don’t make a change in the way they conduct business. Impact on Rural Health Based Providers Healthcare Reform Impact - Continued

6. Ideas to Consider Opportunities Exist Make it Happen It’s not all Doom and Gloom

7. Generating Alternative Revenue Sources

8. Goal: Leverage your “Network” of providers to generate new sources of revenue Consumer Owned and Operated Plan (COOP) and Self Insured Groups Employer Groups need the help to reduce their Health Insurance Costs Many Self-Insured Employers are in your market Employer Groups are paying too much for access to provider panels and administration fees for their health program What to do? Create a marketing plan Identify self-insured employers and COOPs in your community Conduct meetings with key Executives to understand issues Who, What, Where and Why GEO access requirements to service the employees Form a COOP of your providers Build or Join? Action Plan Alternative Revenue Sources

9. Form a COOP with your providers Example of Physicians Health Association A Non-Profit Association of Physicians Multiple Employer Group operating under the DOL/ERISA Under ERISA, allows the group to create a self-insured program to effectively negotiate better terms (GPO model) Created a Trust based Health Benefit Plan Requires extensive actuarial studies Formation of an EPO and a “Wrap” Network By-Laws A Peer-to-Peer Program to formalize a fee schedule A Costly and Time Consuming Endeavor A much needed solution Build or Join? Action Plan - Continued Alternative Revenue Sources

10. 43% of small employers still offer healthcare coverage Expect double digit increases in premiums The “Free Rider” Penalty The CO-OP idea will catch on (Alternative Revenue Source – Discuss Later) In many rural area, CO-OPs already exists 300 across the Country Several Branded CO-Ops: Ace Hardware Blue Diamond Growers CarpetOne Florida's Natural Land O' Lakes Sun-Diamond Impact on Rural Health Based Providers COOPs in the United StatesSource:National Cooperative Business Association

11. Cost Cutting

12. Create or Join a Provider based COOP Consumer Owned and Operated Plan Employer groups band together to create a Not for Profit Association Options: Work with a commercial insurance carrier Self-Insured and Re-insured by a Large Assurance Organization Physicians based COOP Peer-to-Peer Service Based Create an Exclusive Provider Organization (EPO) to provide services at a discounted reimbursement rate. Drive alternative revenue from COOPs in your market Expected Results Insurance Based COOP – 10% to 15% Savings Self-Insured Based COOP – 30% to 45% Savings Action Plan Cost Cutting Plan

13. Insurance Companies are heavily regulated with burdensome items MLR Insurance Product Coverage Requirements Insurance Company Profits (There is nothing wrong with this model but it needs to change) Retail Fees to Consumers, Wholesale Rates to Providers How can we lower the Cost of Healthcare Benefits? Review the inefficiencies of the Industry Cost Cutting Plan

14. Eliminate commercial insurance company profits             (7% to 10%) The plan is not subject to small group reform (5% to 15%) Lower expenses from reduced Premium Tax                    (2% to 3%) Physician to Physician COOP                                            (10% to 15%) Only Federal mandates are required. Many state Department of Insurance agencies, including California, require health insurance plans to carry ancillary and costly products that inflate the cost of offering insurance. Regulated by the Department of Labor – ERISA                                                           (4% to 6%) Total of stabilizing Rate Structures:                      (28% to 49%) Savings through A Trust Based COOP Solution Cost Cutting Plan

15. Forward Thinking Deliverable Solution: Physicians Health Benefit Trust is comprised of an efficient up front business model and progressive back end “smart utilization” strategies. The goal is to not only show members current savings, but eventually help stabilize future costs. Physicians Health Benefit Trust Front End Savings Percentage of Contribution Physicians Health Benefit Trust Long term Cost Containment Percentage of Contribution Example * * This is a final quote for a current client. It has been fully underwritten and based PHN network pricing.

16. Marketing and Network Development

17. Physicians (Healthcare Providers) Recruitment/Retention Program Identify Assets of your Community; identify reasons to live “Here” Why did you move here? Ask Physicians why they live in your community Work with your Chamber of Commerce Recreation Life Style Action Plan Marketing and Business Development

18. Physicians (Healthcare Providers) Recruitment/Retention Program Offer Providers the Health Benefit solution as one of the tools to recruit them to your community Your Community Health Benefits Alternative Revenue Sources Association Benefits Workers Compensation Solution Succession Plan for Physicians Action Plan Marketing and Business Development Physician Healthcare

19. Timely Physician Alignment Strategies Retention & Goodwill: The cost of Health insurance and its double digit renewal increases are the number one concerns for practices today. Whether healthcare continues to be offered through the employer based model or is eventually forced onto a national platform, physicians will strongly value an unsolicited solution to a seemingly unsolvable problem today. • Reaffirms Leadership • Proactive community Leader in Healthcare Reform • Taking Unsolicited Action • Connecting physicians to Your Healthcare System Long Term • Creates Loyalty • Understanding your client’s situation • Taking their concerns seriously • Advocate vs. Adversary • The infrastructure can also be used to bundle other physician alignment strategies Physician Overhead Expenses Premiums Paid Order of Concern -Aon Risk Services

20. Timely Physician Alignment Strategies • Retention & Goodwill • Recruitment and Market share • Cost Effective

21. Summary Each of us in the Healthcare Industry can contribute to impact our community by taking action to change Healthcare, and it can be done, one community at a time. • Change is coming and we will have significant challenges • Reimbursement • Medicare and Medi-Cal • Commercial Health Plans Healthcare Reform • Implement Programs to help your organization and your community of Healthcare Providers • .Create Programs to reduce operating costs for Providers in your community • Health Benefits • GPO/Collective Bargaining, etc. • Workers Compensation and Medical Malpractice Insurance Cost Reduction Plan • Target Self-Insured Employer Groups and Trust Based Plans • Win-Win Situation • Lower their Costs • Improved Reimbursement for the Providers • Cut out the “Middlemen” Create Alternative Revenue Sources Provider Recruitment & Retention • Attract New Providers to your Community • Replace Aging Physicians with “New Blood” • Everyone Benefits! • Access to Awesome Providers • Your Community – The Diamond in the Rough!

22. Become an Evangelist for Healthcare…If you’re not one already.

23. Thank you! Questions and your Comments