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Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era. Steve Hudson Director of Strategic and Physician Development, Northside Hospital-Cherokee . Max Reiboldt, CPA President/CEO, Coker Group. Disclaimer.

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breaking it down building it up the health system of tomorrow in the accountable care era

Breaking It Down-Building It Up: The Health System of Tomorrow in the Accountable Care Era

Steve Hudson

Director of Strategic and Physician Development, Northside Hospital-Cherokee

Max Reiboldt, CPA

President/CEO, Coker Group

disclaimer
Disclaimer

Coker Group and Northside Hospital have produced this material as an informational reference for conference attendees. The contents of this presentation represent the views of the authors and presenters and do not necessarily reflect the views of Becker’s Hospital Review.

contents
Contents
  • Current Industry Trends
  • Stage I: Strategic Alignment
      • Physician-to-Hospital Models
        • Joint Ventures
        • Clinical Co-Management Agreements
        • Professional Services Agreements
        • Collaboratives
  • Stage II: Clinical Integration
  • The Overall Integration/Accountable Care Strategy for Private Physicians
  • Q & A
  • Glossary of Terms
  • Appendix: Strategic Alignment Case Studies
comparative look at 2013 and 2014
Comparative Look at 2013 and 2014

2014 Projections

2013 Trends

*Processes furthered during the year; still early-on in development

Preparatory year for ACA’s “Full Implementation Year”

Increasing efforts toward alignment and integration

Shift in reimbursement methodologies (from volume to value)*

Care process delivery transformation initiatives*

Progress within ACO/CIN development/population health management (“PHM”) efforts

Primary care development efforts to combat workforce shortages

  • Major ACA provisions rolled out January 1, 2014
    • Individual mandate
    • Comprehensive insurance plans/coverage
    • Medicaid expansion
    • Meaningful Use Stage II
  • Accelerated movement within 2013 trends
  • Big year for information technology (“IT”)
    • ICD – 10 (potential 2015 implementation)
    • PHM solutions
    • On-premise to cloud-based systems
  • Growth of clinically integrated networks
hospital provider concerns in 2013
Hospital Provider Concerns in 2013

Please rate the following factors in regard to the strategic concerns of your facility.

Source: Merritt Hawkins and Trinity University Department of Healthcare Administration, “2013 Survey of Alumni Satisfaction and Health System Trends”

Reimbursement and alignment rated as the top two most important concerns of a health system

Alignment is still considered a primary strategic response to the continuing financial challenges

Alignment is also Stage I of an organization’s accountable care strategy (without alignment, clinical integration is highly unlikely)

provider concerns in 2013 cont d
Provider Concerns in 2013 (cont’d)

10 Most Pressing Career Concerns for Physicians

1. Compensation and/or reimbursement — 53.9 percent2. Work/life balance — 45.2 percent3. Work-related burnout and stress — 22.1 percent4. Impact of healthcare reform — 16.6 percent*5. Lack of autonomy or control in my practice — 11.8 percent6. Quality of healthcare — 10.8 percent*7. Finding a new practice opportunity — 7.3 percent8. Malpractice issues — 6.7 percent9. Patient-physician relationships — 5.2 percent 10. Implementing electronic medical records — 5 percent*

*Likely to significantly rise in priority within 2014

Source: Becker’s Hospital Review, “10 Most Pressing Career Concerns for Physicians,” July 12, 2013

provider concerns in 2013 cont d1
Provider Concerns in 2013 (cont’d)

Five Alignment Trends of 2014

  • As 2014 is a mid-term election year, we can expect more debate on the PPACA and potential political fallout.
  • "Alignment" in advanced stages of accountable care structures will continue, analogous to what we have termed as “Stage II”.
  • Compensation and pay plans for physicians within alignment structures will be continuing to move away from fee-for-volume to fee-for-value.
  • Bundling and shared savings programs will continue to increase; thus, measuring values among participating providers will become a greater issue.
  • More of the same regarding physician-hospital alignment will continuewith the number of transactions consummated increasing within 2014. As a result, physician-hospital alignment will be one of the most prominent initiatives on all providers' "to-do" lists for years to come.

Source: Becker’s Hospital Review, “Physician-Hospital Alignment in 2013: 17 Trends,” August 30, 2013

driving forces for change paradigm shifts
Driving Forces for Change: Paradigm Shifts

Traditional healthcare delivery model

Disjointed provider base

Fragmented care management treating primarily sick people

Episodes of care; utilization management

Production (volume)/Fee-for-service payments

Integrated care management focusing on preventative care

Coordinated delivery of care rendering appropriate services at appropriate place and time

Performance (value); Quality/cost control; bundled payments; capitation; risk-based

Collaboratives: ACOs/CINs/PCMHs/ QCs

Accountable care era health care delivery

it all culminates to value
It All Culminates to Value…

Quality Enhancement (Outcomes)

  • Develop quality initiatives for safety, outcome and satisfaction
  • Engage physicians in metric development process
    • Process andtrue outcomes measures
  • Practice evidence-based medicine
    • Establish protocols and best practices
  • Patient-centered at all times
  • Utilize a population-health mindset
  • Accurately measured and attributed
  • You can’t change what you can’t measure
  • True costs, not proxies (e.g. ratio of costs to charges)
    • Activity-based costs of providing care for common clinical conditions (e.g. heart failure)
  • Proactive tracking of medical/personnel utilization
  • You can’t change what you can’t measure

Higher Value

=

Cost Reduction

the ultimate provider challenge
The Ultimate Provider Challenge
  • High quality clinical care delivery
  • Cost efficient clinical care delivery
  • Population health management
    • -Providers must do all simultaneously
    • to deliver value (Outcomes / Cost )
    • all with limited funds
using alignment to further integration
Using Alignment to Further Integration*
  • Stage I: Alignment
    • Common goals and objectives
    • More structural than functional
      • Medical staff membership
      • CCMA
      • PSA
      • Employment
    • Tied together by legal and economic connections
  • Stage II: (Clinical) Integration
    • Merged clinical and business models
    • More functional than structural
      • PCMH
      • ACO
      • Quality collaborative
      • CIN
    • Tied together by clinical and cultural connections

*Can be via both physician-hospital and physician-physician strategies

ii stage i strategic alignment

II. Stage I: Strategic Alignment

Two Tracks: Physician-Hospital or Physician-Physician Alignment

spectrum of alignment models
Spectrum of Alignment Models

Models that Fall Short of Employment

Independence

Private Practice Alignment Model Options

Hospital Employment

Increasing Integration

Employment is not the only viable option but some form of alignment with a hospital is essential!

traditional alignment model descriptions
Traditional Alignment Model Descriptions

Limited Integration

Moderate Integration

Full Integration

Service Line Management: Management of all specialty services within the hospital

Managed Care Networks (Independent Practice Associations, Physician Hospital Organizations):Loose alliances for contracting purposes

ACO/CIN/QC: Participation in an organization focused on improving quality/cost of care for governmental or non-governmental payers; may be driven by practices or hospital/groups

MSO/ISO: Ties hospitals to physician’s business

Recruitment/Incubation:Economic assistance for new physicians

Employment “Lite”: Professional services agreements (PSAs) and other similar models (such as the practice management arrangement) through which hospital engages physicians as contractors

Clinical Co-Management: Physicians become actively engaged in clinical operations and oversight of applicable service line at the hospital

Group (Legal-Only) Merger: Unites parties under common legal entity without an operational merger

Equity Group Assimilation: Ties entities via legal agreement; joint practice ownership

Call Coverage Stipends:Pay for unassigned ED call

Employment*: Strongest alignment; minimizes economic risk for physicians;

Group (Legal and Operational) Merger: Unites parties under common legal entity with full integration of operations

Medical Directorships: Specific clinical oversight duties

Joint Ventures: Unites parties under common enterprise; difficult to structure; legal hurdles

Typically Physician-to-Physician

Typically Physician-to-Hospital

Either Physician-Physician or Physician-Hospital

*Includes the Physician Enterprise Model (PEM) and the Group Practice Subsidiary (GPS) model both of which allow the practice entity to remain intact even after employment of the physicians by the hospital.

joint ventures1
Joint Ventures

“Laws” to Consider

  • Stark
  • Anti-Kickback
  • Reimbursement
  • Tax Implications
  • State Law

Structures*

  • Specialty Hospitals
  • Management Services Arrangements
  • Under-Arrangement Arrangements
  • Freestanding Centers
  • Pay for Performance
  • Block Leases
  • Medical Directorships

*Physician-to-physician (as well as physician-to-third party investor) joint ventures are also possible and subject to similar laws. These types of transactions are usually project-driven and intended for the development of new capital structures (e.g., a new building).

Source: Healthcare Financial Management Association

joint ventures cont d1
Joint Ventures (cont’d)
  • Increasingly complex regulatory landscape are creating significant challenges for those providers considering Hospital-Physician JVs
    • May be JVs with surgery centers or equipment
      • ASC ventures have specific requirements for physicians
        • 1/3 of physician’s medical practice income from all sources for previous fiscal/12 month period must be derived from performance of Medicare list of ASC covered procedures
        • 1/3 of procedures performed by each physician for previous fiscal/12 month period must be performed at ASC
    • Various fair market value considerations, including but not limited to such things as:
      • Returns to investors must be commensurate with their level(s) of risk assumed (i.e., amount of capital invested)
      • Payment (cash and non-cash) cannotbe based on volume of referrals (Stark and Anti-Kickback laws)
    • As hospital-physician transactions increase in the market, federal regulators are increasing their scrutiny for compliance purposes

Source: Dixon Hughes

ccma description
CCMA Description

CCMA Logistics

Service Line Arrangement

Structure

  • The purpose of the arrangement is to reward physicians for their efforts in developing, managing and improving the quality and efficiency of the hospital’s service line
  • A contractual relationship between the hospital and the management entity results
  • Compensation is in part performance-based, tied to achievement of specific quality objectives
  • Some shared cost savings initiatives may also be included
  • Clinical co-management agreements offer an alternative to employment or a professional services agreement (i.e. employment “lite”) relationship, but still serve as a form of moderate alignment between two parties
  • CCMAs offer a way for hospitals to align with providers within its service line
  • CCMAs can also be in conjunction with a full alignment transaction in the form of a “wraparound”
ccma example gastroenterology service line
CCMA Example: Gastroenterology Service Line*

ERCP

Bronchoscopy

Colonoscopy

Surgery

Clinical

Co-Management Agreement for Oversight of GI Services

Hospital

Practice

Fixed Fee

Contingent Fee

Management Committee Representatives

and Medical Director

Management Committee Representatives

*Each service line/specialty can have its own CCMA, which can be included as a singular alignment strategy or as a “wraparound” (i.e., add-on) to another, major alignment strategy

professional services agreements overview
Professional Services Agreements - Overview

PURPOSE

  • Achieve clinical and financial integration without employment
  • Contracted services, multiple options
    • Clinical (Professional) Services
    • Wraparounds (administrative, call, quality, etc.)
  • Typically paid on a top-line basis per wRVU. Wraparounds can take other forms of payment for services, if included.

RELATIONSHIP

SERVICES

REMUNERATION

four popular psa models
Four Popular PSA Models

PSA Offerings

Four Possible Scenarios of PSA Model

  • Traditional PSA: Hospital contracts with physicians for professional services; Hospital employs staff and “owns” administrative structure
  • Global Payment PSA: Hospital contracts with practice for Global Payment; practice retains all management responsibilities
  • Practice Management Arrangement: Practice entity retained and contracts with Hospital; administrative management and staff not employed by Hospital, but physicians are employed
  • Hybrid Model: Hospital employs/contracts with physicians; practice entity spun-off into a jointly-owned MSO/ISO
  • Flexibility in structure
  • Opportunity to increase and enhance bottom-line for both Hospital and the Practice
  • Stability in relationship with Hospital
  • Bonus opportunities for exceptional performance
  • Opportunities to expand services together without being fully aligned (i.e., employment and/or clinical integration)
  • Easier segue to full employment for physicians and staff
1 psa traditional model
1. PSA – Traditional Model
  • PRACTICE
  • Contracted by Hospital to provide professional services
  • Practice providers(but not support staff) remain employees of the Practice
  • Payment to Practice for professional services equal to net collections less direct costs paid by Hospital (and any fixed payments for ancillaries) or a rate per wRVU for production by Practice providers

Independent Contractor

2 psa global payment model
2. PSA – Global Payment Model*
  • Membership
  • Compensation

Hospital Board

Practice Board

Professional Services**

& Non-compete Agreement

Hospital

(Integrated with Physician Division Infrastructure)

Practice

(For-Profit Entity)

PSA

  • Global Fee:
  • Fixed Overhead
  • Variable Overhead
  • Rate per wRVU
  • Group Governance
  • Physician Hiring/Termination
  • Income Distribution
  • Clinical Practice/Quality
  • Malpractice
  • Management and Staffing
  • IT Support
  • Physicians and staff remain employed by Practice
  • Asset Ownership/Lease
  • Payer Contracting
  • A/R Owned
  • Billing***
  • Establishes fee structure

PSA Management Committee

  • Approves Strategy/Finances
  • Oversees Operations/Business Planning
  • Establishes Compensation Principles
  • Achieves Value-Exchange Objectives
  • Is Typically Split 50/50 Between Hospital and Medical Group

*Could be a portion of the Practice

**Services to be provided can include: diagnostic and procedural services; clinical management and coordination; administrative, supervisory teaching and research functions; complete service line and clinical co-management; cost savings; quality incentives, etc.

***Billing could be performed by the Practice as a third-party agent.

2 psa global payment model economic components
2. PSA – Global Payment Model: Economic Components*

*Totals represent annual figures

Global Payment

PSA

Example – For Illustration Purposes Only

Practice Overhead:

  • Covers Practice’s prof. expenses
  • Pass-through from Hospital
  • Based on budgeted expenses
  • Variable expenses per wRVU
  • Exclusive of phys comp & benefits
  • Only for professional component

(not technical component, if appl.)

Practice

Overhead

Physician

Compensation and Benefits

Example

Fixed Overhead: $6.0M

Variable Overhead: $6/wRVU

Example

$50/wRVU

Physician Compensation and Benefits:

  • Covers physicians’ compensation/benefits
  • Based on rate per wRVU
  • Based on historical comp & FMV
  • Compared against past comp/wRVU
  • Room for annual increases included
  • Same as employment model
  • Comp payments made to practice

(can distribute how MD’s choose)

PSA Rates per wRVU

converted to Dollars

based on wRVU pool

Example

Total Practice wRVUs = 120,000

Fixed Overhead Portion = $6,000,000

Variable Overhead Portion = $720,000

Phys Comp/Ben Portion = $6,000,000

GLOBAL PSA FEE = $12,720,000

3 psa practice management arrangement
3. PSA – Practice Management Arrangement
  • Physicians retain ownership of their Practice infrastructure
  • Physicians operate as the managers of the Practice, providing all administrative services, space, equipment, and support staff
  • The Hospital contracts with the Practice entity for these services and pays a fair market value (FMV) fee
  • The compensation structure for the employed physicians is a productivity-based system
  • The arrangement can be easily dissolved, as the Practice entity stays outside the Hospital control structure

Hospital

Employment

Practice Physicians

  • Compensation
  • Benefits

Ownership

Practice

Infrastructure

  • Practice Management
  • Billing/Collections
employment vs employment lite comparison
Employment vs. Employment “Lite” Comparison

Employment

Employment “Lite”: PSA

  • Hospital purchases all Practice assets including all ancillaries
  • Practice entity dissolves; Practice becomes subsidiary of the Hospital
  • All Practice providers and staff become employees of the Hospital
  • Practice physicians achieve the highest level of integration with the Hospital and ensure stability but lose a significant amount of independence and autonomy
  • Easy segue to clinical integration and Hospital’s accountable care era strategy
  • Comprehensive alignment strategy requiring less integration than employment
  • Multiple options (including hybrid models) which allow for a greater level of customization
  • Practice entity retains its structure
  • Hospital strengthens its service line while the Practice realizes some financial benefits
  • Practice physicians remain independent
  • Easier segue to clinical integration and deployment of accountable care era strategy
accountable care era private practice decision
Accountable Care Era: Private Practice Decision
  • With rising financial pressures, some independent physicians are seeking shelter through employment or integration with large hospital/healthcare systems
  • Other physician innovators and entrepreneurs are becoming “trailblazers” by using the current challenges as an opportunity to improve patient care and the practice environment for themselves
the ipa model
The IPA Model

Example – For Illustration Purposes Only

This Could Be the “Look” for an IPA Entity

CMS

PAYERS

Multi-Specialty IPA (Joint Contracting Entity)*

Office-Based Practice #1

Office-Based Practice #2

Office-Based Practice #3

Contracted Specialists

Contracted PCPs

*Can consist of as many private practices as desired by the participating parties; must be clinically integrated.

The IPA is increasingly serving as the foundation for providers to work toward growth and clinical integration

collaborative structure
Collaborative Structure
  • As provider-based QCs/CINs continue to develop, the future of hospital-provider relationships could potentially “look” like this:
  • Multiple alignment and integration strategies co-existing and interacting with each other
  • Multiple provider types partnering/affiliating with each other
  • The hospital-physician dynamic is shifting

CMS

PAYERS

PHO/IPA

CIN/ACO

Hosp/Systems

Hosp/Systems

Hosp/Systems

Hosp/Systems

Contracted PCPs*

Contracted Specialists*

* Physicians could be owners of the QC plus some contracted

goal of clinical integration population health management
Goal of Clinical Integration: Population Health Management

Effective clinically integrated facilities meet the goals of the Institute for Healthcare Improvement’s Triple Aim:

  • Enhance the patient experience of care (including quality, access and reliability)
  • Improve the health of the population
  • Reduce (or control) the per capita cost of care
a clinically integrated care delivery model
A Clinically Integrated Care Delivery Model
  • Primary focus of a CIN/CIO is to create a high degree of interdependence among participating providers through care coordination and data transfer/sharing/application
  • Network of interdependent healthcare facilities and providers that collaboratively develop and sustain clinical initiatives and performance metrics/goals on an ongoing basis through a centralized, coordinated strategy
    • Patient-centric
    • Structures may vary from provider to provider
    • Heavily reliant on robust IT infrastructure
  • Centralized contracting is an essential element of a CIN program

Typical Hospital-Based CIN Structure

Payers

Aligned Network of Providers

Care Practitioners; Provider Groups

Care Process Transformation

Hospital/

Health System

future directions the business of healthcare
Future Directions: The Business of Healthcare
  • We are in the midst of a significant cultural shift
  • The business of healthcare is rapidly becoming the business of population health management
  • The engagement of physicians will help lead the way to change for hospitals and health systems:
    • Significant clinical buy-in will be necessary to re-tool a care delivery process
    • Physicians are arguably the most equipped to influence change amongst medical staff, physician and non-physician caregivers
    • Stable and sustainable provider bases will facilitate the overall integration process
  • Despite the structural model, new delivery systems will necessitate HEAVY buy-in from participating providers in order to be functional
the alignment and clinical integration strategy
The Alignment and (Clinical) Integration Strategy
  • Alignment is Stage One and (Clinical) Integration (with a care delivery system development process) is Stage Two
    • Forming a clinically integrated/accountable care organization will require significant collaboration amongst many different stakeholders, and often times among competitors
    • A go-forward alignment strategy is ultimately the best way to ensure successful integration for collaborative models, particularly between distinct private groups
    • Whether amongst medical groups or with a hospital partner, without sufficient alignment, quality of care and population health management are likely to suffer
    • While clinical integration and care delivery transformation are the “end game” goals, initial alignment is its primary vehicle
the alignment and clinical integration strategy cont d
The Alignment and (Clinical) Integration Strategy (cont’d)

Stage I: Alignment & Integration*

  • Initial alignment deals assessed
  • Consider/pursue a range of alternative alignment models (limited to moderate to full)
  • Potential expansion of outpatient access
  • Ongoing alignment transactions being considered and concluded
  • Development of an aligned entity via legal incorporation (or effectuation of a legally binding contract)
  • Medicare ACO (or commercial payer CIN) participation
  • Interoperable IT solutions providing communications across all providers and facilities
  • Possible expansion of network as the consolidated/aligned organization pursues new alignment deals with high-performing physicians and/or outpatient facilities
  • Operational integration, including revenue cycle mgmt, personnel, compliance, financial mgmt, etc.
  • Official recognition from federal government as a CIN
  • Continued focus on solidifying market share within primary market; not competing outside
  • Engaging in payer contracting/reimbursement as a CIN based upon a combination of FFS, management assistance and at-risk (i.e., shared savings, etc.) reimbursement methodologies

Stage II: “Accountable Care Era” Strategies & Implementation*

*A staged approach has proven an effective strategy for numerous health systems and private consortiums’ clinical integration and ACO/CIN ventures; Stages I and II typically run concurrently after the initial period (i.e., 1-3 years) of successful alignment transactions

the alignment and clinical integration strategy cont d1
The Alignment and (Clinical) Integration Strategy (cont’d)
  • Continue to address Stage I alignment efforts to grow the physician network
  • Continue to address and improve infrastructure (either independently or through alignment initiatives)
  • Continue refining/developing an internal distribution methodology that includes payment for services at more than FFS (but still a lot of the total at FFS) plus bundled reimbursement
  • Consider the development of a care process design system (i.e., a system that offers the ability to systematically design, monitor, adjust and produce high value care delivery on an on-going basis)

Next Steps and Future Strategies

slide50

Steve Hudson

Director of Strategic and Physician Development

Northside Hospital - Cherokee

T: 404-851-6500

Steve.hudson@northside.com

Max Reiboldt, CPA

President & CEO

Coker Group Holdings, LLC

T: 678-832-2007 mreiboldt@cokergroup.com

glossary of terms
Glossary of Terms
  • accountable care organization (ACO)—a group of coordinated health care providers that care for all or some of the health care needs of a defined Medicare patient population. This business model generally focuses on moving away from fee-for-service by creating payment and delivery reforms that tie provider reimbursements to quality metrics, reductions in the total cost of care, and patient satisfaction.
  • Affordable Care Act (ACA) –a US federal statute, also known as the Patient Protection and Affordable Care Act (PPACA) and/or "Obamacare,“ signed into law by President Barack Obama on March 23, 2010 with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government.
  • Alignment –a form of (contractual) affiliation between two parties that entails some form of economic and legal ties intended to develop a certain level of partnership via common goals and objectives.
  • bundled payments—a payment methodology where a provider agrees to manage a defined group of services for a specified price. Already common within hospital payment as a DRG, current bundle payment initiatives are looking to expand services to additional hospital services and post-acute for an episode of care as a means of driving improved clinical integration and transitions management.  
  • Care process delivery system –a care delivery system that methodically designs, monitors, adjusts and produces high value care delivery on an on-going basis
glossary of terms1
Glossary of Terms
  • Clinical Co-Management Agreement (CCMA) –a moderate form of alignment between a hospital and physicians that compensate the providers for their management oversight of another entity and/or a service line with economic incentives/rewards for quality improvement and cost reduction efforts
  • Clinical Integration(CI)–a type of operational integration that enables patients to receive a variety of health services from the same organization or entity, which streamlines administrative processes and increases the potential for the delivery of high-quality healthcare.
  • Clinically Integrated Network (CIN) –a group of coordinated health care providers that care for all or some of the health care needs of a defined patient population through the meaningful use of information technology, data sharing and reporting. CINs typically entail commercial payer sponsorship.
  • coordinated care—a care model approach that emphasizes a patient-centered, team-based strategy for delivering coordinated health care services.
  • electronic health record / electronic medical record (EHR/EMR)—an electronic record of patient health information that may be stored on a computer or in the cloud, and can be retrieved by anyone who has access to the system. They are a critical component in building the integration needed to operate an ACO.
glossary of terms2
Glossary of Terms
  • evidence-based medicine (EBM)—aims to apply the best available evidence gained from the scientific method to clinical decision making. It seeks to assess the strength of evidence of the risks and benefits of treatments (including lack of treatment) and diagnostic tests. EBM is identified through published best practices, clinical standards, and claims data to help clinicians learn whether or not any treatment will do more good than harm. When a community is connected within an ACO, this can be a powerful tool.
  • health information exchange (HIE)—the mobilization of health care information electronically across organizations within a region, community, or hospital system. HIE provides the capability to electronically move clinical information among disparate health care information systems while maintaining the meaning of the information being exchanged. An HIE is a foundational piece of the ACO because it provides a way for EMRs to exchange information across different types of medical records.
  • Independent Practice Association (IPA) -an association of independent physicians, or other organizations that contract with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis
  • patient-centered medical home (PCMH)—an approach to providing comprehensive primary care for patients by facilitating partnerships between patients and their primary care provider (PCPs). It is designed to encourage the PCP to coordinate, but not necessarily directly provide, all aspects of a patient’s care, including emergency room and post-discharge care.
glossary of terms3
Glossary of Terms
  • Physician Hospital Organization (PHO) - legal (or perhaps informal) organizations that bond hospitals and their attending medical staffvia joint ownership of a new legal entity. PHOs are frequently developed for the purpose of contracting with managed care plans
  • Pioneer ACO— a CMMI initiative designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. This model is designed to allow these providers to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP. There are currently 32 systems that have been chosen to participate as Pioneer ACOs across the nation, and these systems will have a portion of their compensation tied to quality measures and their ability to manage per member per month.
  • population health management (PHM)—the health of a defined population which includes not only the amount of services they receive, but the general well-being of that group.
glossary of terms4
Glossary of Terms
  • Professional Services Agreement (PSA) – a full integration strategic alignment model that does not entail employment.
    • Traditional PSA – Hospital contracts with physicians for professional services; hospital employs the practice’s support staff and “owns” the practice’s administrative structure
    • Global Payment PSA - Hospital contracts with physicians for professional services and compensates the practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilities
    • Practice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employees
    • Hybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.
  • Quality Collaborative – another form of an integrated delivery network that functions similarly to a CIN (i.e., same goals, IT requirements, etc.) made up of a group of interdependent providers working toward the improvement of the quality of care.
  • triple aim —CMS and The Institute for Healthcare Improvement (IHI) devised goals for improving the health care system by delivering care more efficiently. The three critical objectives include: improve the health of the population; enhance the patient experience of care (including quality, access, and reliability); and reduce, or at least control, the per capita cost of care.
glossary of terms5
Glossary of Terms
  • Pioneer ACO— a CMMI initiative designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. This model is designed to allow these providers to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP. There are currently 32 systems that have been chosen to participate as Pioneer ACOs across the nation, and these systems will have a portion of their compensation tied to quality measures and their ability to manage per member per month.
  • population health management (PHM)—the health of a defined population which includes not only the amount of services they receive, but the general well-being of that group.
  • Professional Services Agreement (PSA) – a full integration strategic alignment model that does not entail employment.
    • Traditional PSA – Hospital contracts with physicians for professional services; hospital employs the practice’s support staff and “owns” the practice’s administrative structure
    • Global Payment PSA - Hospital contracts with physicians for professional services and compensates the practice via a Global Payment (includes providers’ professional services and benefits); practice retains all management responsibilities
    • Practice Management Arrangement – Practice entity, support staff and management are retained and contracted by the hospital but the physicians become hospital employees
    • Hybrid Model – numerous options available that can mix and match the above PSA models with management services organizations, etc.
vii appendix

VII. Appendix

Strategic Alignment Case Studies

ccma case study the organization
CCMA Case Study: The Organization
  • A small (<10 providers) orthopedic surgery private practice in the Midwest (“Organization A”)
  • Offers comprehensive orthopedic services with no ancillaries
  • Has two main hospital affiliations:
    • Hospital #1 is the region’s major health system with numerous orthopedic service line alignment/integration initiatives underway
      • Its employed orthopedic group is the only other large single group in the area aside from Organization A
    • Hospital #2 is a smaller health system
      • A major competitor of Hospital #1 but with fewer alignment/integration initiatives
ccma case study the impetus
CCMA Case Study: The Impetus
  • Organization A, desiring to remain independent but improve its financial health over the long-term, decided to discuss alignment options with its hospital affiliates
  • As Hospital #1 continued to develop its alignment/integration strategies, it approached Organization A with the potential to moderately align via a CCMA
  • Primary motivations for Organization A’s decision to accept Hospital #1’s offer:
    • Opportunity to realize an additional stream of revenue from Hospital #1’s quality/cost control initiatives that are inherent to the CCMA
    • Ability to segue more easily into a more full form of alignment/integration (i.e., a professional services agreement, clinical integration or even employment) with Hospital #1, if so desired
    • Ability to continue providing services at Hospital #2
ccma case study what took place
CCMA Case Study: What Took Place?
  • Key physician and administrative leaders from both Hospital #1 and Organization A met via a series of Working Group meetings to discuss CCMA models and corresponding performance metrics
  • Parties also discussed prospective cost reduction initiatives (including a surgical implant standardization effort)
  • Hospital #1 included Organization A’s physicians into the overall Management Services Agreement that memorializes the CCMA’s key terms and conditions
  • Organization A’s physicians and Hospital #1’s orthopedic surgeons collaborating to improve the value proposition for Hospital #1’s orthopedic service line

*Coker’s role was to serve as the lead transaction advisor to Hospital #1, which included facilitating the working group meetings, structuring the CCMA and the appropriate performance metrics/rewards, conducting the due diligence and financial analyses related to the deal, collaborating with legal counsel to develop definitive agreements and overall management of the transaction’s processes.

psa case study the organization
PSA Case Study: The Organization
  • A large (>10 providers) primary care private practice in the South (“Organization B”)
  • Represents the region’s largest and chief primary care facility with multiple ancillary services including an acute care center
  • Has two main hospital affiliations:
    • Hospital #1 is the region’s major health system with an established CIN and substantially more wherewithal than Hospital #2
    • Hospital #2 is a smaller health system engaging in several alignment/clinical integration efforts
  • Due to its long-standing reputation in the community as well as its strong primary care nature, Organization B is a highly coveted private practice partner for both Hospitals (and for their CINs, in particular)
psa case study the impetus
PSA Case Study: The Impetus
  • Organization B, desiring to remain independent but improve its financial health over the long-term, decided to discuss alignment options with its hospital affiliates
  • Organization B approached both Hospitals #1 and #2 with the potential for a GPPSA wherein the Hospitals contract for the practice’s professional services in exchange for a global payment rate
    • The Practice entity remains intact
    • The Practice physicians and support staff remain employed by the Practice
  • Primary motivations for Organization B’s decision to pursue the PSA:
    • Opportunity to significantly improve its bottom line without being employed
    • Off-loading of administrative burdens (i.e., real estate lease, overhead costs, etc.) to Hospital (and thereby, realizing a reduction in its cost structure)
    • Ability to return to unaligned private practice or segue more easily into a more full form of alignment/integration (i.e., clinical integration or even employment) with the Hospital, if so desired
psa case study what took place
PSA Case Study: What Took Place?*
  • Organization B presented the GPPSA model to both Hospitals #1 and #2, both of which expressed great interest
  • During negotiations, Hospital #2 was given exclusivity over Hospital #1 (with the ability to resume discussions with Hospital #1) due to its better reputation amongst the physician community as well as its slightly better offer
  • During the exclusive negotiations, Hospital #2 counteroffered with the Traditional PSA (the main difference being the employment of the Practice support staff)
    • Organization B accepted this change primarily because of Hospital #2’s better employment benefits package
    • Organization B would be able to re-hire these individuals upon PSA termination
  • Hospital #2 purchased all of Organization B’s ancillary services (under the condition that the Practice will be able to repurchase them at the then current fair market value upon PSA termination)

*Coker’s role was to serve as the lead transaction advisor to Organization B, which included structuring the deal(s), conducting the due diligence and financial analyses related to the deal(s), negotiating the transactions and overall management of the transaction’s processes.