Network-based Business Models in Behavioral Healthcare-Horizontal and Vertical Integration June 7, 2012. Charles G. Ray. Why Network-based Business Models?. Reform. Meaningful Use. Medicaid Expansion. Managed Care. Certified EHR. Health Insurance Exchange. Parity.
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Network-based Business Models in Behavioral Healthcare-Horizontal and Vertical Integration
June 7, 2012
Charles G. Ray
1. Administrative Mandates (HIPAA 5010, ICD-10, etc.) Healthcare-Horizontal and Vertical Integration
2. Care Management, Data Analytics, and Informatics.
3. Health Insurance Exchanges and Individual Markets.
4. New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.)
5. Bending the Cost Curve.
6. Medicare and Medicaid.
7. Health Information Exchanges and EMRs.
8. Consumer's Role in the Modernization of Healthcare (social networking, incentives, CDHP, etc.)
9. Reform Uncertainties.
10. Payer/Provider Interoperability.
We’re Not AloneTop 10 Issues: Managed Care Executives Group
1. Be Strategic with Health Insurance Exchanges Healthcare-Horizontal and Vertical Integration
2. Regulate Commercial Health Insurance Market Effectively
3. Simplify and Integrate Eligibility Systems
4. Expand Provider and Health System Capacity
5. Attend to Benefit Design
6. Focus on the Dually Eligible
7. Use Data Meaningfully
8. Pursue Population Health Goals
9. Engage the Public in Policy Development and Implementation
10.Demand Quality and Efficiency from the Health Care System
We’re Not Alone10 Priorities: National Academy for State Health Policy
Stronger business acumen Healthcare-Horizontal and Vertical Integration
Aggressive strategic planning
Accelerated business modeling
Subject Matter Expertise
Affiliation, Joint Ventures and Mergers & Acquisitions – Strength in Numbers!
Resources and Capabilities to Execute
Vertical Integration Healthcare-Horizontal and Vertical Integration
Unify the supply chain under one roof (single owner)
Each “link” produces a market-specific servicethat satisfies a common need, coming together for a single service experience
Examples? Professional Education + Prevention + Treatment + Case Mgmt + insurance
Strategy for increasing market share by associating with, merging with or acquiring like companies in adjacent or overlapping markets
Unifying marketing capabilities to present a common brand image
Complexity and Variation: multiple payer systems, enforcing disparate code-sets and applying different business rules with varying approaches to reimbursement
Changing business and regulatory environments
Increased competition and medicalization
Demand for integration and consolidation
Selecting and implementing IT
Access to sufficient subject matter expertise
Access to capital
What Problems Should We be Solving?
Discontinuity and Disruption disparate code-sets and applying different business rules with varying approaches to reimbursement(P. Druker)
Instability (A. Toffler)
Decay and Irrelevance (G. Hammel)
Tipping Point (M. Gladwell)
Strategic Inflection Point (A. Grove)
Value Migration (A. Slywotzky)
Disruptive Innovation (C. Christensen)
Key Concepts for Today
Some business models assemble providers in self-directed groups within a geographic region to invent and implement healthcare solutions, form collaborative efforts to implement these solutions, and to exert political influence upward within the medical and payer communities to effect positive change.
Shared services can include facilities, personnel, supplies, services, technology, and professional services including credentialing, billing, marketing, legal and accounting.
IPA, MSO, TSO - Some network models are primarily concerned with shared services, especially billing and IT. The entity’s revenues come from its members.
ASO, CBHO, IPA - Some are more concerned with managed care contracting and may assume financial risk in capitation, sub-cap and carve-out models
These models develop additional centralized capacity for network management, utilization review, quality assurance, claims re-pricing and processing
Revenues come from payers
PPN - Others desire to contract at discounted fee-for-service rates with many payers, owning as much of the market share as possible while centralizing credentialing. Revenues also come from payers.
Getting Paid with shared services, especially billing and IT. The entity’s revenues come from its members.
Critical Success Factors with shared services, especially billing and IT. The entity’s revenues come from its members.
Credibility and reputation of participants
Trust and collegial relationships
Alignment of financial incentives
Adequate time for implementation
Professional management and access to expertise
Financial Plan and access to capital
Deep understanding of market & niche
Core Functions with shared services, especially billing and IT. The entity’s revenues come from its members.
Centralized Practice Management Services
Marketing and Contracting (avoiding price fixing!)
Technical Support, Training and Education
Professional Services (consultants, legal, accounting)
Common Features with shared services, especially billing and IT. The entity’s revenues come from its members.
Common Benefits with shared services, especially billing and IT. The entity’s revenues come from its members.
Markets with shared services, especially billing and IT. The entity’s revenues come from its members.
Performance Measures with shared services, especially billing and IT. The entity’s revenues come from its members.
Common Concerns with shared services, especially billing and IT. The entity’s revenues come from its members.
To provide members a foundation to continuously improve upon their business practices, administrative efficiency, quality of care, and clinical outcomes through enhanced deployment and utilization of information technology
Enhance revenue through improved operational efficiencies
Capitalize on economies of scale and technical expertise
Achieve greater reliability and stability in data management and information exchange
Assist providers in improving care and outcomes
Trading Partners and Payers
Key benefits include expert applications support, system configuration management, help desk management and software upgrade support.
Software Maintenance – Application configuration, DBMS management, management of software patches and major software upgrades for hosted PSO-standard applications
User Support – Problem resolution and vendor liaison support for hosted PSO-standard applications
Application Training – End user training for hosted PSO-standard applications
Implementation Support – Project management associated with the installation and implementation of hosted PSO-standard applications
Report Development – Analysis, design and development of application based reports for hosted PSO-standard applications
Key benefits include access to a central technology and support organization to implement and manage health information exchange activities.
Data Integration Management – Planning, management, implementation and on-going monitoring of interfaces and data integration tools including interface engines and ETL tools
Data Warehousing – Development of data warehouse/repositories and associated interfaces/extracts
RHIO Administration – Coordination and planning with data sharing partners
Transaction Processing – On-going operations, management, monitoring, maintenance and problem resolution for EDI/HIE transactions
Business Intelligence– Analysis, design and development of reports, portals and BI tools
Key benefits include access to more cost-effective IT professionals on an as-needed basis to enhance members’ existing IT resources
Planning – Strategic planning, needs assessment and product evaluation
Operations Improvement – Business reengineering and operations improvement associated with PSO-standard applications
Help Desk Support – Receipt, triaging, logging, dispatch and tracking of service requests
E-Mail Support – Administration and maintenance of email accounts
Office Automation Support – Administration and end user support for hosted office automation applications (e.g., word processing, spread sheets and publication software)
Project Management – Planning and oversight of IT related projects (e.g., product selection and implementation)
Community Health Access Network (CHAN)
CHCs in New Hampshire
Technical and application support services for e-mail, Internet access and 3 software applications: EMR, PMS, Finance
Health Choice Network (HCN)
Florida-based, CHCs and other providers in 10 states
Strategic Planning, application hosting, network administration and various other IT services.
Council of Community Clinics (CCC)
CHCs in San Diego and Imperial Counties
Project management, application hosting, network administration and various other IT services
Oregon Community Health Information Network (OCHIN)
State of Oregon, CHCs in Oregon/California, CareOregon, and HRSA
ASP support for EPIC EMR and other IT services
Community Health Center Association of NY State (CHCANYS)
More than 50 CHCs throughout New York State
Funding advocacy, best practice collaboration, vendor coordination, and IT leadership and direction of New York Health Choice Network (NY HCN)
For-Profit / Not-for-Profit
Subscription/Membership Monthly Dues
Joint Venture Ownership/Shared Cost of Doing Business
Assess Level of Interest Among Allies
Assess Needs, Capabilities and Commitment
Readiness and Capabilities Assessment
Conduct Regulatory Analysis
Conduct Market Analysis
Determine size of potential market and demand for offering
Assess capacity to reach decision-makers and close deals
Develop a Multi-Year Financial Plan
Determine capital available and capital required
Determine ability to absorb risk
Determine ROI goals
Develop feasible and sustainable business model
Market and demand
Business and Strategic Plans
Staffing Plan (Recruitment & Retention)
Key Business Decisions
Feasible and Sustainable Market
Type of Entity
Ownership Structure and Governance Models
Meet Resource Requirements – personnel, technology, professional, and financial
Engage Subject Matter Experts
Develop Implementation Plan