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Innovation Nation July 12, 2012 Presented by Kathryn Alexandrei. Overview. Understanding what is meant by innovation in behavioral healthcare Developing an Innovation Framework Becoming conversant with new models like Accountable Care Organizations (ACOs)

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Innovation Nation

July 12, 2012

Presented by Kathryn Alexandrei


Learning objectives

Understanding what is meant by innovation in behavioral healthcare

Developing an Innovation Framework

Becoming conversant with new models like Accountable Care Organizations (ACOs)

Next Steps – Your Innovation Cycle

Learning Objectives

5 reasons to innovate now

5 Reasons to Innovate Now

  • Advent of health care reforms (Affordable Care Act)

  • Cycle of breakthrough in research and brain science

  • Prevalence of psychiatric and substance use disorders

  • Co-morbidity with chronic medical conditions and explosion of diabetes, asthma, autism, obesity

  • Availability of consumer and provider-friendly technologies

What drives innovation

R & D

What Drives Innovation?

Skills and Abilities

Market Structure

Ancillary Markets

What is innovation

Two Types:

Sustaining Innovations (correction ribbon, lighted refrigerator, bucket seats)

allow you to make incremental changes in order to do what you’ve been doing more efficiently

or to produce a better outcome doing it.

Also allows you to maintain market share.

Disruptive Innovations (NetFlix, Craigslist, Amazon)

fostered by outsiders who want to upend markets and the way things are done

totally transforming the business model

What is Innovation?

Elements of disruptive innovation

Technology simplifies what had previously been complicated and cumbersome

Lower-cost financial model

Value Network is economically coherent (mutually reinforcing)

Elements of Disruptive Innovation

Source: Clayton Christensen

Advantage innovation

Advantage Innovation

  • Innovation for sake of novelty

  • Innovation for sake of change

  • Innovation to gain strategic advantage over competition

Progressive innovations

Solution Shop – expertise to diagnose and solve problems (you, lawyers, consultants). Charge for cost of expert time. Focus on diagnosis.

Value-Add Process – assembling solutions of higher value (retailers, auto-makers). Charge for value of assembled products and services. Focus on treatment after diagnosis.

Facilitated Networks – models wherein people exchange things with one another (insurance, mutual funds, eBay and WebMD are examples). WebMD has begun building communities of people with certain chronic conditions like diabetes. These models harness vast amounts of data and technology architecture.

Progressive Innovations



Source: C. Christensen

Conditions ripe for innovation

Conditions Ripe for Innovation?

  • Organizational – do you have formal or informal teams with a Charter to improve and innovate your services? Is it safe to try and fail? Really?

  • Do you conduct focus groups with your customers? Do you ask your customers what they need and how they want it?

  • Measures – do you measure:

    • new product revenue?

    • spending on R&D?

    • time to market?



  • Is the political, legislative and regulatory environment stimulating change in the market (YES!)

  • Is government supporting the diffusion of innovations (YES!)

  • Has the economy performed at a level that is impacting consumer behavior and pricing? (YES!)

  • Are social and cultural dimensions of the market supportive of new approaches? (YES!)

  • Is technology supporting innovations? (YES!)

Examples of health care innovations

Reforming health care financing (pricing, premiums, policies, coinsurance, financial eligibility, FFS, capitation, episode and case rates, etc.)

Health information technology (EMR, HIE, MU, PHR, etc.)

Internet and facilitated networks

Pharmaceuticals and medical devices

Medical education (behavioral medicine)

Examples of Health Care Innovations

Examples of health care innovations1



Mobile Devices

Retail (Minute-Clinics, Wal-Mart)


Web-based Providers

Examples of Health Care Innovations

Innovations in health insurance

Innovations in Health Insurance

Personal Spending Accounts (debit cards)

Hospital and Provider Cost & Quality Comparisons online

Personal Health Records (PHR)

Coverage, Treatment and Cost Advisors

Health Risk Assessments with Incentives ($)

Disease Management Programs

Choice of Networks

Exclusive Provider Networks

Prevention Benefits and Services

Accountable Care Organizations

Patient-Centered Medical Homes

Value-Based Insurance Design (VBID)

Top 10 issues opportunities 2011 2014

1.  Administrative Mandates (HIPAA 5010, ICD-10, etc.)  

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.

Top 10 Issues/Opportunities2011-2014

(Source: Managed Care Executives Group, March, 2011)

Innovation framework

What is Desirable?

What is Possible?

What is Viable?

Innovation Framework

Innovation framework1

Innovation Framework

  • Research – better understanding the market, unmet demand, customers and their preferences, pricing and profit models, the cutting-edge of science and technology, and value networks across our partners and supply chain.

    • Review existing product-line and previous attempts at innovations

    • Survey payers, customers, partners, line-staff and leadership team

    • Analyze customer pain points

    • Assign Innovation Instigators across the ranks

    • Conduct key informant interviews

    • Conduct environmental scan and literature review

    • Conduct market research and competitive intelligence

    • Review financials and other business intelligence

Innovation framework2

Innovation Framework

  • Development – identifying a more effective and efficient way to promote and manage disruptive innovations, pilot programs, demonstrate viability and bring new products to market

    • Product Development and Innovation Process

      • Inventory assumptions about the way it is

      • Learning to ask disruptive questions

      • Looking for natural product bundling opportunities

      • Observing how customers interact with services today to detect opportunities for improvement

      • Investigating and experimenting with new ways of doing things

      • Networking and associating withpeople, technologies, and ideas from diverse backgrounds

Innovation framework3

Innovation Framework

  • Identifying:

    • Gaps, voids and opportunities

    • Market compatibility

    • Quality and compliance standards

    • Key performance indicators, forecasts and projections

    • Potential issues and risks

    • Early-stage business operating and/or financial models and their implications

Innovation framework4

Innovation Framework

  • Critiquing the proposal

    • Is the proposal overly optimistic or too cautious?

    • Is quality assured?

    • Were there contrary opinions on the Team?

    • Are there credible alternatives to the proposed solution?

    • Is there sufficient data to support the decision? Valid sources?

    • Is there an assumption of success with the pilot based on past performance elsewhere? Where?

  • Is planning overconfident? Is the worst case awful enough?

  • Innovation framework5

    Innovation Framework

    • Prototype and Pilot

      • Develop the product/service in its entirety, ready to test

  • Execution – planning and deploying new products with adequate resources and management, reporting progress, remaining accountable, capturing lessons-learned, and knowing when and how to say “No”

    • Develop proof of concept model and parameters

    • Decide whether to pilot prototype internally, to out-source it, or to spin it off under its own brand

    • Implement the strategy, develop and test the product/service

    • Manage expectations, people and outcomes

  • Innovation framework6

    Innovation Framework

    • Evaluation – measuring the impact of the new product and the success of the implementation team

      • Actual costs, revenues, and profits

      • Return-on-Investment

      • Customer, Employee and Payer Satisfaction

      • Customer Experience

      • Quality

      • Outcomes

      • Market demand

    Health care reform

    Health Care Reform


    Patient Protection and Affordable Care Act (ACA)

    • The Act Does Several Things:

    • Expands Insurance Coverage

    • Institutes Insurance Reforms

    • Builds Infrastructure to Provide Improved Health Outcomes

    • Puts In Motion Structural Changes to how Healthcare Delivery is Structured & Financed

    • Goals of the Act:

    • Increase Access

    • Provide Comprehensive Care  Better Health Outcomes

    • Control Costs


    Go Live 2014

    • Phased Implementation Is Needed To:

      • Build Needed Infrastructure

      • Plan and Implement Provisions Well

    • Changes To Benefits and Insurance Reforms Began To Be Implemented In 2010

    • Major Coverage Expansion Occurs in 2014

      • Health Insurance Exchanges

      • Medicaid Expansion (in approx. half of states)

    • Longer-term Benefits Result From Sum of Structural and Cultural Changes


    Expanded Health Insurance Coverage - 2014

    • Insurance Coverage Expands From 83% to 94%

    • Individual Mandate is Constitutional

    • Subsidies For Those Under 400% FPL

    • Medicaid Eligibility Set At 133% FPL and Includes Single, Childless Adults in Expansion Category

    • Medicaid Expands by 8-22 Million

    • 25 Million Americans to Get Insurance Through State Exchanges


    Market Results of Coverage Expansion

    • Result of Change in Coverage for non-elderly individuals (by 2019)

      • 158 M will have coverage through employers

      • 50 M will have coverage through Medicaid/CHIP

      • 25 M will have coverage through exchanges

      • 26 M will have coverage through non-group plans

      • 26 M will remain uninsured

        Source: Congressional Budget Office (CBO)


    Impact of Affordable Care Act

    Focus on coordination between primary care and specialty care:

    • Significant enhancements to primary care

      • Workforce enhancements

      • Increased funding to SAMHSA, HRSA and IHS

      • Bi-directional

        • MH/SUD in primary care through FQHCs

        • Primary care in MH/SUD settings through CMHCs and other agencies

        • Services and technical assistance

    • Health Homes and Accountable Care Organizations


    Implications For States & Providers

    • Need For Infrastructure To Work With Insurance

    • Grant Funds Re-conceptualized in order not to Duplicate Insured Benefits (look for braiding and blending)

    • Medicaid Changes and State Insurance Mandates

    • Integration of MH/SUD with Primary Care

    • Health Homes and Accountable Care Organizations

    • Electronic Health Records

    • Payment Reform Pilot Programs

    • Evidence Based Practices

    • Licensure and Credentialing Standards

    What are the opportunities for innovation in the market today

    Managing Multiple Chronic Conditions (MCC)

    Educating the Public

    Medication Assisted Treatment

    Population Mgmt

    Accountable Care Organizations (ACO)

    Patient-Centered Medical Home and Health Home Models (PCMH) – Focus on Primary Care Integration

    What are the Opportunities for Innovation in the Market Today?

    What are the opportunities for innovation in the market today1

    Value-Based Insurance Design (VBID) Promoting Evidence-Based Practices (EBPs) with Lower Coinsurance When Patients See Higher Performing Providers

    Behavioral Medicine

    Pay-for-Recovery Outcomes/Quality/Value


    “Blending and Braiding” Systems of Care

    Joint Ventures and Affiliations

    What are the Opportunities for Innovation in the Market Today?

    Accountable care organization

    Accountable Care Organization

    What is an Accountable Care Organization (ACO)?

    A group that would include a hospital, primary care physicians, specialists, and possibly others involved in coordinating care for shared (Medicare, Medicaid, or other insurance) patients.

    The ACO's goal would be to ensure that the care provided meets or exceeds quality benchmarks within the fee-for-service structure.

    ACO members would share in resulting cost savings.

    Goals objectives

    Goals & Objectives

    Improve Inpatient

    Care Efficiency

    Use Lower Cost


    Improve Health



    Adverse Events


    Management of

    Complex Cases

    Hospitals & Specialists

    Reduce Preventable


    Reduce Preventable

    ER Visits &


    Lower Total



    Use Lowest-Cost

    Settings and


    Primary Care



    Testing & Referrals

    Improve Practice


    Improve Prevention

    & Early


    Aco reimbursement innovations

    ACO: Reimbursement Innovations

    Revised Capitation (Global Payment Systems or Comprehensive Care Payment Systems)

    Episode of Care Payment System

    Administrative Fees

    Net Savings

    Hybrid Models

    Population health management

    Population Health Management

    ACOs must develop a process for:

    identifying patients who have complex needs (multiple chronic conditions)

    or those who are at high risk of developing such needs

    and provide them with wellness and prevention programs,

    disease management,

    and complex case management, as needed

    ACOs must make available or support providers’ use of electronic prescribing, electronic health records systems, registries, and self-management tools

    Aco readiness and capabilities

    Financial Infrastructure – Ability to track performance and payments

    Reporting Infrastructure – Interface with Case Managers, Primary Care, and Care Coordinators

    Performance Management – Access to disease-specific dashboards, baselines, benchmarks and adherence to best practices

    Data Aggregation – Data warehouse, clinical decision support, and disease registry capabilities

    Health Information Exchange – Interoperability and Meaningful Use

    ACO Readiness and Capabilities

    Establishing readiness and capabilities for market innovations

    Information Technology Components

    EMR, EHR

    Pervasive Connectivity/Networking

    Data Analytics and Predictive Modeling

    Disease and Case Management Software Applications

    Establishing Readiness and Capabilities for Market Innovations

    Next steps

    Enable your organization for change

    Develop a strategic plan, business plan, and *especially* a marketing plan that enables innovation based on knowledge of market forces and market structural changes

    Commit capital, develop a budget, and/or find investors or partners if you need them

    Address staffing and the need for periodic expertise where innovation is concerned

    Align innovation with your IT plans

    Commit to Performance Mgmt framework

    Next Steps

    Next steps1

    Manage your organization through change

    Executives set the course and the mood

    Establish and measure your expectations

    Keep distractions and competing priorities to a minimum

    Hold people (including yourselves) accountable

    Align efforts so time and energy are not wasted

    Provide reinforcements, encouragement and rewards (recognition)

    Next Steps

    Next steps2

    Manage your organization through change

    Become Learning Organizations (there is a lot to learn!)

    Recruit, retain and train the right people in administrative as well as clinical areas

    Leverage your Core Competencies

    Encourage some risk-taking, experimentation and tolerate mistakes. Ask “What if…?”ALOT

    Conduct market research – what you don’t know can hurt you

    Invest in your brand image and dress the part of innovator

    Use thoughtful scenario-based business modeling and business case methods to pilot your innovations

    Next Steps

    Thank you questions and contact

    Thank You! Questions and Contact

    Kathryn Alexandrei

    AHP Healthcare Solutions

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