HFMA Region 5: Dixie Institute 2009 Mary Beth Briscoe, FHFMA, FACHE, CPA CFO, University Hospital, UAB Health System, Bi

1. HFMA Region 5: Dixie Institute 2009Mary Beth Briscoe, FHFMA, FACHE, CPACFO, University Hospital, UAB Health System,Birmingham, ALPast HFMA Chairman (2007-08)February 18, 2009 Thank the person who introduces you and thank the chapter/organization for the invitation to speak. For chapters: If you have had an opportunity to learn an anecdote about the chapter or a chapter leader, share it here. Note the importance of the chapters� work to the success of the HFMA. In particular, you might want to recognize (1) the volunteer efforts of the chapter�s leadership, and (2) how those efforts represent the dedication of healthcare finance professionals to serving a greater good. Thank the person who introduces you and thank the chapter/organization for the invitation to speak. For chapters: If you have had an opportunity to learn an anecdote about the chapter or a chapter leader, share it here. Note the importance of the chapters� work to the success of the HFMA. In particular, you might want to recognize (1) the volunteer efforts of the chapter�s leadership, and (2) how those efforts represent the dedication of healthcare finance professionals to serving a greater good.

2. 2 Overview Current issues and actions affecting key drivers of business success Long-term goal of national healthcare payment reform How HFMA can help Begin by describing the main challenges facing healthcare finance and the nation�s healthcare system, which will be the focus of your presentation. On the one hand is the need of healthcare providers to address current challenges on numerous fronts, while planning for an uncertain future. On the other hand is the need for--and likelihood of--reform of the nation�s healthcare system. Whatever shape this reform takes, it will inevitably affect healthcare finance. You will first discuss current issues and actions in healthcare finance, and then address the long-term need for healthcare payment reform. You will conclude with a brief summary of HFMA programs and resources that can help your audience meet both current and long-term challenges. Begin by describing the main challenges facing healthcare finance and the nation�s healthcare system, which will be the focus of your presentation. On the one hand is the need of healthcare providers to address current challenges on numerous fronts, while planning for an uncertain future. On the other hand is the need for--and likelihood of--reform of the nation�s healthcare system. Whatever shape this reform takes, it will inevitably affect healthcare finance. You will first discuss current issues and actions in healthcare finance, and then address the long-term need for healthcare payment reform. You will conclude with a brief summary of HFMA programs and resources that can help your audience meet both current and long-term challenges.

3. 3 Drivers of Business Success: Volume Cost Pricing and Payment Capital HFMA looks at four key drivers of business success for healthcare providers to discuss the challenges facing healthcare finance professionals: Volume Cost Pricing and Payment Capital Audience Participation Option: Ask audience members to define the biggest challenges or risks to these drivers of business success that their organizations face today. Answers will vary. As audience members answer the question, also ask them to identify which of the four business drivers is most affected by the challenge or risk they identify. [Note: Depending on the setting, you might want to capture the audience comments on a flipchart. Then, as you move through your discussion of current issues, look for opportunities to connect the risks highlighted in the presentation with the risks that audience members have identified.]HFMA looks at four key drivers of business success for healthcare providers to discuss the challenges facing healthcare finance professionals: Volume Cost Pricing and Payment Capital Audience Participation Option: Ask audience members to define the biggest challenges or risks to these drivers of business success that their organizations face today. Answers will vary. As audience members answer the question, also ask them to identify which of the four business drivers is most affected by the challenge or risk they identify. [Note: Depending on the setting, you might want to capture the audience comments on a flipchart. Then, as you move through your discussion of current issues, look for opportunities to connect the risks highlighted in the presentation with the risks that audience members have identified.]

4. 4 Volume

5. 5 Factors Affecting Volume Shift to non-hospital facilities Disruptive innovations Physician integration Economic downturn Note: For each of the four business drivers, the first slide will show key factors affecting that driver. These factors include those identified in HFMA�s Healthcare Finance Outlook, 2008-2013 as well as factors that have come to the fore in the wake of the economic downturn. Note: For each of the four business drivers, the first slide will show key factors affecting that driver. These factors include those identified in HFMA�s Healthcare Finance Outlook, 2008-2013 as well as factors that have come to the fore in the wake of the economic downturn.

6. 6 The shift to non-hospital treatment in recent years has had a significant affect on hospital volumes. Although the volume of outpatient surgeries has increased, the share of this volume for hospital-based facilities has decreased.The shift to non-hospital treatment in recent years has had a significant affect on hospital volumes. Although the volume of outpatient surgeries has increased, the share of this volume for hospital-based facilities has decreased.

7. 7 Retail Clinics 16% had used 44% comfortable with accuracy, safety, and quality of care Medical Tourism 3% had used 39% would consider an elective procedure in a foreign country Technology-Enabled Home-Based Care 46% interested in using software or website to create personal health record 88% interested in using a self-monitoring device at home for conditions requiring constant monitoring Top reason for interest in home-based self-monitoring device was eliminating trips to doctor�s office (75%) The emergence of �disruptive innovations� is a new trend that we should all be watching closely. Audience members may have read recent reports that private insurers are beginning to pay for certain �medical tourism� procedures performed abroad. Retail clinics and technology-enabled home-based care also have the potential to affect hospital volumes.The emergence of �disruptive innovations� is a new trend that we should all be watching closely. Audience members may have read recent reports that private insurers are beginning to pay for certain �medical tourism� procedures performed abroad. Retail clinics and technology-enabled home-based care also have the potential to affect hospital volumes.

8. Growing competition from non-hospital treatments is one of the chief factors driving physician integration to the top of the list for volume. There are also reports that more physicians are seeking hospital employment as they are squeezed by the financial fallout of the past year. Physician integration is a topic that has been around for some time, but the fact that it remains a key factor shows that the question of how best to accomplish physician integration remains unresolved. The pie chart shows healthcare leaders heavily in support of integration. The other graphic (bar chart) identifies some major barriers to integration�particularly a culture of physician autonomy and a lack of financial incentives. Growing competition from non-hospital treatments is one of the chief factors driving physician integration to the top of the list for volume. There are also reports that more physicians are seeking hospital employment as they are squeezed by the financial fallout of the past year. Physician integration is a topic that has been around for some time, but the fact that it remains a key factor shows that the question of how best to accomplish physician integration remains unresolved. The pie chart shows healthcare leaders heavily in support of integration. The other graphic (bar chart) identifies some major barriers to integration�particularly a culture of physician autonomy and a lack of financial incentives.

9. 9 Effects of Economic Downturn on Volume The current recession is proving that the notion of a health care as a �recession-proof� industry is a myth. Higher deductibles and copays and the growing number of under- and uninsured individuals are hitting volume for elective procedures particularly hard. The graph, showing results of HFMA�s Financial Health of U.S. Hospitals and Health Systems survey, indicates that just over 50% of all hospitals experienced volume declines in the second half of 2008, with midsize hospitals (301-500 beds) being hit especially hard. Note that many hospitals reported an end-of-year volume spike, attributed to patients who had paid their deductibles coming in for elective procedures before a new year�s deductible kicked in. The current recession is proving that the notion of a health care as a �recession-proof� industry is a myth. Higher deductibles and copays and the growing number of under- and uninsured individuals are hitting volume for elective procedures particularly hard. The graph, showing results of HFMA�s Financial Health of U.S. Hospitals and Health Systems survey, indicates that just over 50% of all hospitals experienced volume declines in the second half of 2008, with midsize hospitals (301-500 beds) being hit especially hard. Note that many hospitals reported an end-of-year volume spike, attributed to patients who had paid their deductibles coming in for elective procedures before a new year�s deductible kicked in.

10. 10 Cost

11. 11 Factors Affecting Cost Expense Growth Labor costs Additional cost factors For your discussion of the Cost driver, you�ll be focusing on overall expense growth, labor and benefit costs, and additional cost factors. Many hospitals are experiencing increased capital costs as well; these will be discussed as part of the Capital business driver.For your discussion of the Cost driver, you�ll be focusing on overall expense growth, labor and benefit costs, and additional cost factors. Many hospitals are experiencing increased capital costs as well; these will be discussed as part of the Capital business driver.

12. The chart on this slide shows a remarkable occurrence in 2005-2006. For the first time this decade, expense growth outpaced revenue growth for hospitals rated by Moody�s. This indicates the huge challenges hospitals are facing controlling their costs. The good news, however, is that the most recent data from Moody�s show that the gap between expense growth and revenue growth is closing.The chart on this slide shows a remarkable occurrence in 2005-2006. For the first time this decade, expense growth outpaced revenue growth for hospitals rated by Moody�s. This indicates the huge challenges hospitals are facing controlling their costs. The good news, however, is that the most recent data from Moody�s show that the gap between expense growth and revenue growth is closing.

13. 13 Labor Cost Issues Increased regulatory compliance costs Defined-benefit plans: �Plan assets will be lower due to the very weak investment markets in the second half of 2008. . .As asset values fall, the funding shortfall will rise. We expect that some hospitals will struggle to make higher contributions, because of soft operating results and the liquidity decline that started in 2008.� (Standard & Poor�s, �Pension Relief Act May Fall Short Of Solving Some U.S. Not-For-Profit Health Systems' Funding Problems,� January 2009). Regulatory compliance. As the HFMA Outlook notes, �nothing is quite as inevitable as the fact that lawmakers will continue to make laws.� With a new administration and Congress intent on healthcare reform, more compliance issues are likely to be heading our way. Defined benefit plans. Pension plans have reemerged as an issue, despite emergency pension relief legislation that passed in December 2008, because pension plan asset values have declined so substantially with the general decline in investment portfolios. Regulatory compliance. As the HFMA Outlook notes, �nothing is quite as inevitable as the fact that lawmakers will continue to make laws.� With a new administration and Congress intent on healthcare reform, more compliance issues are likely to be heading our way. Defined benefit plans. Pension plans have reemerged as an issue, despite emergency pension relief legislation that passed in December 2008, because pension plan asset values have declined so substantially with the general decline in investment portfolios.

14. 14 Additional Cost Factors �[W]e expect that. . .hospital operators will continue to see cost pressures related to the high cost of. . .medical devices and pharmaceuticals. Additionally, we expect that the trend toward employment of physicians will further add to costs in the near term.� (Dean Diaz, VP/Sr. Credit Officer, Moody�s Investors Service, �US For-Profit Hospital Sector Outlook Revised to Negative from Stable,� Nov. 08) In addition to increased wage and benefit costs, Moody�s pointed to continuing equipment and pharmaceutical cost pressures and a trend toward greater physician employment as factors in its downgrade of hospital sectors (both for-profit and not-for-profit) to negative.In addition to increased wage and benefit costs, Moody�s pointed to continuing equipment and pharmaceutical cost pressures and a trend toward greater physician employment as factors in its downgrade of hospital sectors (both for-profit and not-for-profit) to negative.

15. 15 Pricing andPayment

16. 16 Factors Affecting Pricing and Payment Unsustainable growth in Medicare payments Rising employee deductibles/copays Rising numbers of uninsured & underinsured Mounting pressure on Medicaid In the area of pricing and payment, the two trends among these factors are: Unsustainable growth and pressures on Medicare & Medicaid payment rates Growing levels of consumer/patient responsibility for paymentIn the area of pricing and payment, the two trends among these factors are: Unsustainable growth and pressures on Medicare & Medicaid payment rates Growing levels of consumer/patient responsibility for payment

17. 17 Recent estimates, which account for the economic downturn, now suggest that insolvency of the trust fund for Medicare Part A could come as early as 2016 unless Medicare spending slows. Pushback from employers on insurance companies, and the resulting pushback from insurance companies on providers, will minimize opportunities for cost shifting as Medicare spending slows. One area of payment growth under Medicare will likely be the use of incentives for high-quality outcomes, such as pay for performance programs.Recent estimates, which account for the economic downturn, now suggest that insolvency of the trust fund for Medicare Part A could come as early as 2016 unless Medicare spending slows. Pushback from employers on insurance companies, and the resulting pushback from insurance companies on providers, will minimize opportunities for cost shifting as Medicare spending slows. One area of payment growth under Medicare will likely be the use of incentives for high-quality outcomes, such as pay for performance programs.

18. 18 The percentage of small firm (3-199 employees) workers enrolled in a plan with a deductible of $1,000 or more has increased from 16% to 35% from 2006 to 2008. The percentage of workers in all firms enrolled in such plans has increased from 10% to 18% from 2006 to 2008. According to the Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2008: As employees are asked to take on higher copays and deductibles, hospitals can expect payment issues to increase (delayed payments, bad debt, etc.) and for consumers to become much more sensitive to pricing (perhaps already seen in recent volume declines for elective procedures). As employees are asked to take on higher copays and deductibles, hospitals can expect payment issues to increase (delayed payments, bad debt, etc.) and for consumers to become much more sensitive to pricing (perhaps already seen in recent volume declines for elective procedures).

19. 19 Note that although uninsured numbers dropped slightly from 2006 to 2007, the growth in coverage resulted almost exclusively from movement of people to Medicare and Medicaid. The percentage of people enrolled in private insurance actually eroded slightly.Note that although uninsured numbers dropped slightly from 2006 to 2007, the growth in coverage resulted almost exclusively from movement of people to Medicare and Medicaid. The percentage of people enrolled in private insurance actually eroded slightly.

20. 20 Unemployment Trends Rapidly rising unemployment rates are likely to further swell the numbers of the uninsured.Rapidly rising unemployment rates are likely to further swell the numbers of the uninsured.

21. 21 Effects of Increased Unemployment The Kaiser Commission on Medicaid and the Uninsured indicates that a 1 percent rise in unemployment results in 1 million more enrollees in Medicaid & SCHIP and 1.1 million more uninsured. The cost to state and federal governments of this 1 percent increase is $3.4 billion. As of December 2008, the unemployment rate had risen 2.3 percent since the start of the recession in December 2007. Good news is that a new economic stimulus package may provide between $80 and $90 billion in Medicaid funding to the states, relieving pressures on states to delay payment or cut back Medicaid spending.The Kaiser Commission on Medicaid and the Uninsured indicates that a 1 percent rise in unemployment results in 1 million more enrollees in Medicaid & SCHIP and 1.1 million more uninsured. The cost to state and federal governments of this 1 percent increase is $3.4 billion. As of December 2008, the unemployment rate had risen 2.3 percent since the start of the recession in December 2007. Good news is that a new economic stimulus package may provide between $80 and $90 billion in Medicaid funding to the states, relieving pressures on states to delay payment or cut back Medicaid spending.

23. 23 Factors Affecting Capital Rating agencies� negative outlook on healthcare sector Limited access to capital markets Declining investment portfolios Credit ratings will become much more significant in access to capital, but the ratings outlook has switched from stable to negative. Both �have� and �have not� hospitals are experiencing difficulties accessing capital. Declining investment portfolios are having an impact on several fronts.Credit ratings will become much more significant in access to capital, but the ratings outlook has switched from stable to negative. Both �have� and �have not� hospitals are experiencing difficulties accessing capital. Declining investment portfolios are having an impact on several fronts.

24. 24 Negative Healthcare Sector Outlooks For-profit Declining volume growth Restricted pricing growth possibilities (Medicaid rate pressures, payer mix changes, Medicare funding uncertainty) Increasing bad debt exposure �However, we continue to believe that the U.S. for-profit hospital sector is less directly impacted by the economic environment than other corporate sectors.� (Moody�s, Nov. 08) Not-for-profit Same as 1st three bullet points above Limited access to tax-exempt markets Increasing charity care/bad debt � tax-exempt status scrutiny Independent hospitals may have insufficient size to survive Major rating agencies have issued negative outlooks for both for-profit and not-for-profit hospital sectors. Issues for the two sectors overlap significantly. Not-for-profits have also experienced difficulty accessing tax-exempt municipal bond markets and face increasing charity care/bad debt expenses, along with increased scrutiny of tax-exempt status. As the bullet in the �for-profit hospital� list indicates, however, hospitals are still better positioned than many industries in this current downturn.Major rating agencies have issued negative outlooks for both for-profit and not-for-profit hospital sectors. Issues for the two sectors overlap significantly. Not-for-profits have also experienced difficulty accessing tax-exempt municipal bond markets and face increasing charity care/bad debt expenses, along with increased scrutiny of tax-exempt status. As the bullet in the �for-profit hospital� list indicates, however, hospitals are still better positioned than many industries in this current downturn.

25. 25 Limited Access to Capital HMFA�s recent survey on The Financial Health of U.S. Hospitals and Health Systems illustrates difficulties both �have� and �have not� hospitals have experienced in recent months in trying to access capital. Note that around 20 - 30% of hospitals that have enjoyed broad access to capital (the �haves�) are reporting substantial increases in cost of debt, withdrawn or delayed bond issues, and difficulty securing a liquidity facility.HMFA�s recent survey on The Financial Health of U.S. Hospitals and Health Systems illustrates difficulties both �have� and �have not� hospitals have experienced in recent months in trying to access capital. Note that around 20 - 30% of hospitals that have enjoyed broad access to capital (the �haves�) are reporting substantial increases in cost of debt, withdrawn or delayed bond issues, and difficulty securing a liquidity facility.

26. 26 Investment Portfolio Declines These are graphic illustrators of the market collapse last September. Falling investment portfolios are affecting: Pension fund asset values Non-operating revenue Philanthropic contributionsThese are graphic illustrators of the market collapse last September. Falling investment portfolios are affecting: Pension fund asset values Non-operating revenue Philanthropic contributions

27. 27 Actions You Can Take Today Physician Integration Cost Containment Strategies Amend Strategic and Capital Plans Connect with Quality Prepare for Healthcare Payment Reform So what can be done? Quite a lot.So what can be done? Quite a lot.

28. 28 Physician Integration Key Considerations: Identify the appropriate business relationship (e.g., employment, joint ventures) Identify the right financial incentives, with a focus on quality and physician productivity Identify technology connections Find common ground: quality and service Hospitals may well find physicians more open to discussions of integration strategies, including employment. The key is finding the appropriate business model and incentives within a rapidly changing environment.Hospitals may well find physicians more open to discussions of integration strategies, including employment. The key is finding the appropriate business model and incentives within a rapidly changing environment.

29. 29 Cost Containment Key Considerations: Identify as key strategic issue Be aggressive but thoughtful (be wary of across-the-board cuts) Look beyond the usual suspects (labor & supplies) to process efficiencies (including clinical processes) Be collaborative � cost containment needs the support of staff across the organization Keep an eye on quality Containing costs is more important than ever. Remember, however, that cost-cutting cannot compromise quality or the mission of your organization. It also requires staff collaboration, buy-in, and support.Containing costs is more important than ever. Remember, however, that cost-cutting cannot compromise quality or the mission of your organization. It also requires staff collaboration, buy-in, and support.

30. 30 Key Considerations: Credit ratings are critical Maximize your cash position Emphasize conservative visioning � do not count on plans that require complete coordination of capital markets Seek diversification � especially in capital finance and capital structure Understand enterprise risk (Source: 2008 Kaufman Hall Financial Leadership Conference) Strategic and Capital Plans Be conservative, maximize cash, diversify, and understand enterprise risk. Remember that credit ratings will take on heightened importance, and rating agencies will be looking closely at your organization.Be conservative, maximize cash, diversify, and understand enterprise risk. Remember that credit ratings will take on heightened importance, and rating agencies will be looking closely at your organization.

31. 31 Connect with Quality �I see many financial managers who know that they�re part of the quality system and want to make a difference. That gives me optimism. . . . I think they want to help, and I think their help is badly needed to improve the quality of care.� � Donald Berwick, president and CEO of the Institute for Healthcare Improvement, hfm Magazine (Oct. 2008) It is essential that the quality message of recent years not be lost. Quality will continue to affect how much (and whether) hospitals receive payment, and the focus on quality outcomes is likely to intensify under proposed healthcare reform legislation.It is essential that the quality message of recent years not be lost. Quality will continue to affect how much (and whether) hospitals receive payment, and the focus on quality outcomes is likely to intensify under proposed healthcare reform legislation.

32. 32 �Payment reform is the surgical instrument to accomplish overall transformation of health care toward an individual-centered, provider friendly, knowledge-driven, more consumer-oriented model.� � Former Senate Majority Leader Bill Frist, MD, in hfm Magazine (Sept. 2008) This slide transitions to your discussion of HFMA�s payment reform initiative. The key message is to prepare for payment reform. It is almost certainly coming. HFMA has been working for the past several years to define and create consensus around key goals and principles for payment reform.This slide transitions to your discussion of HFMA�s payment reform initiative. The key message is to prepare for payment reform. It is almost certainly coming. HFMA has been working for the past several years to define and create consensus around key goals and principles for payment reform.

33. 33 National Healthcare Goals: High-quality care Access to care Promotion of wellness Financially sound healthcare system Turn first to the issue of the nation�s healthcare goals. Note that although there is vigorous debate over how best to achieve these goals, there is broad consensus on what these goals are. A number of national initiatives have defined the goals as: Quality care Access to care Promotion of wellness Financially sound healthcare systemTurn first to the issue of the nation�s healthcare goals. Note that although there is vigorous debate over how best to achieve these goals, there is broad consensus on what these goals are. A number of national initiatives have defined the goals as: Quality care Access to care Promotion of wellness Financially sound healthcare system

34. 34 Quality � reward quality, evidence-based care Alignment � align incentives among stakeholders Fairness/Sustainability � recognize appropriate costs for quality care Simplification � make processes simple, standard, and transparent Societal Benefit � make benefits provided explicit, and compensate for accordingly Five Reform Principles In September 2007, HFMA sponsored a �Building a New Payment System� retreat that brought together representatives of all major stakeholders in the healthcare payment system, including providers, payers, employers, and consumers. Emerging from that retreat was consensus on a set of principles for reform of the payment system. Quality: Payments reward quality, evidence-based care, and discourage medical error and ineffective care. Alignment: Payments align incentives among all stakeholders, promoting evidence-based care and encouraging healthful behavioral choices. Fairness/Sustainability: Payments recognize appropriate costs for quality, evidence-based care. They encourage consumers to seek needed services while discouraging unnecessary or inefficient services. Finally, the payment system provides a stable funding stream in the face of competing demands on public and private capital. Simplification: Payment processes are simple, standard, and transparent. Societal Benefit: Benefits of medical and public education, research, and care for the disenfranchised or uninsured are made explicit and are paid for accordingly.In September 2007, HFMA sponsored a �Building a New Payment System� retreat that brought together representatives of all major stakeholders in the healthcare payment system, including providers, payers, employers, and consumers. Emerging from that retreat was consensus on a set of principles for reform of the payment system. Quality: Payments reward quality, evidence-based care, and discourage medical error and ineffective care. Alignment: Payments align incentives among all stakeholders, promoting evidence-based care and encouraging healthful behavioral choices. Fairness/Sustainability: Payments recognize appropriate costs for quality, evidence-based care. They encourage consumers to seek needed services while discouraging unnecessary or inefficient services. Finally, the payment system provides a stable funding stream in the face of competing demands on public and private capital. Simplification: Payment processes are simple, standard, and transparent. Societal Benefit: Benefits of medical and public education, research, and care for the disenfranchised or uninsured are made explicit and are paid for accordingly.

35. 35 The five reform principles support the nation�s health goals. The principles for healthcare payment reform will not benefit the healthcare finance industry alone. A key factor in support of these principles is their close connection with the nation�s goals for the healthcare system. Rewarding evidence-based care and healthful behavioral choices through an emphasis on quality and alignment of incentives supports both wellness and high-quality care. Making societal benefits explicit--and being paid accordingly--promotes access to care. And all these principles�truly rewarding healthcare providers for efficiently giving the public what it needs from the healthcare system�promote the stability of that system. The principles for healthcare payment reform will not benefit the healthcare finance industry alone. A key factor in support of these principles is their close connection with the nation�s goals for the healthcare system. Rewarding evidence-based care and healthful behavioral choices through an emphasis on quality and alignment of incentives supports both wellness and high-quality care. Making societal benefits explicit--and being paid accordingly--promotes access to care. And all these principles�truly rewarding healthcare providers for efficiently giving the public what it needs from the healthcare system�promote the stability of that system.

36. 36 Stakeholder Consensus Broadest support on following principles: Quality Alignment of incentives Simplification Clear consensus on accountability, efficiency, shared responsibility, and use of evidence-based care. Shared support for consumers to select healthy alternatives. Note again the wide range of stakeholders who have contributed to HFMA�s health payment reform effort�hospitals, physicians, payers, consumers, and employers. While all five of the principles were supported, three of the five principles�quality, alignment of incentives, and simplification�received the broadest support. Note again the wide range of stakeholders who have contributed to HFMA�s health payment reform effort�hospitals, physicians, payers, consumers, and employers. While all five of the principles were supported, three of the five principles�quality, alignment of incentives, and simplification�received the broadest support.

37. 37 Stakeholder Concerns Coming to agreement on outcome/quality measures Cost and speed of transitioning to new system Fostering a sense of urgency to change Revenue shifts from one group of stakeholders to another Defining and apportioning of societal benefits Behavioral changes in how consumers and providers view and practice health care Many of the concerns over payment reform come down to questions of �how�: How to define a �quality outcome.� How to fairly apportion system costs among various stakeholders. How to define societal benefits and apportion their costs. Many of the concerns over payment reform come down to questions of �how�: How to define a �quality outcome.� How to fairly apportion system costs among various stakeholders. How to define societal benefits and apportion their costs.

38. 38 Turning Principles into Actions The next step will be to work with all stakeholders to create the key building blocks for reform, including: Agreed upon evidence-based processes. Robust modeling to evaluate the success rate of different payment methodologies. Gainsharing arrangements that ensure all stakeholders share equally in the benefits of aligned, efficient, quality care. A transition path to minimize the cost of creating financial incentives for preventive care. A determination of how to apportion responsibility for societal benefits. A second retreat was held last fall (Sept. 08) to once again bring together stakeholders to begin the process of turning principles to actions. This retreat has generated specific proposals that address the �how to� of achieving reform that are currently being circulated among stakeholder organizations to achieve consensus. The next step will be to work with all stakeholders to create the key building blocks for reform, including: Agreed upon evidence-based processes. Robust modeling to evaluate the success rate of different payment methodologies. Gainsharing arrangements that ensure all stakeholders share equally in the benefits of aligned, efficient, quality care. A transition path to minimize the cost of creating financial incentives for preventive care. A determination of how to apportion responsibility for societal benefits. A second retreat was held last fall (Sept. 08) to once again bring together stakeholders to begin the process of turning principles to actions. This retreat has generated specific proposals that address the �how to� of achieving reform that are currently being circulated among stakeholder organizations to achieve consensus.

39. 39 Supported by: American Hospital Association Commonwealth Fund DMAA: The Care Continuum Alliance Medical Group Management Association National Business Group on Health HFMA will also work to secure support of the principles of healthcare payment reform. Already, these groups have supported the white paper on reform. American Hospital Association Commonwealth Fund DMAA: The Care Continuum Alliance (physicians involved in disease management) Medical Group Management Association (physicians) National Business Group on Health (employers)HFMA will also work to secure support of the principles of healthcare payment reform. Already, these groups have supported the white paper on reform. American Hospital Association Commonwealth Fund DMAA: The Care Continuum Alliance (physicians involved in disease management) Medical Group Management Association (physicians) National Business Group on Health (employers)

40. 40 What You Can Do Today Emphasize Quality Communicate Simplify Connect Healthcare payment reform is complex, and will not happen quickly. But there is much that healthcare providers can do today to build the case for reform: Emphasize quality. Be perceived as an indispensable asset and a focus of community pride. Communicate. Share the successes of your organization with your community and make sure it is aware of the societal benefits you provide. Simplify. Strive to make your billing statements and client communications as clear as possible. Connect. Connect with stakeholders inside and outside your organization to promote and advocate for payment reform. Be seen as an organization that is trying to be part of the solution, not part of the problem.Healthcare payment reform is complex, and will not happen quickly. But there is much that healthcare providers can do today to build the case for reform: Emphasize quality. Be perceived as an indispensable asset and a focus of community pride. Communicate. Share the successes of your organization with your community and make sure it is aware of the societal benefits you provide. Simplify. Strive to make your billing statements and client communications as clear as possible. Connect. Connect with stakeholders inside and outside your organization to promote and advocate for payment reform. Be seen as an organization that is trying to be part of the solution, not part of the problem.

41. 41 Connecting with Content Website Publications Educational Programs Thought Leadership The healthcare finance industry faces many challenges, both current and long-term. HFMA is there to help you meet those challenges with connections to the information and resources you need. [Corresponding slides will show cover art, screen shots, photos of resources, conferences, etc.] Connecting with Content Website Publications Educational Programs Thought LeadershipThe healthcare finance industry faces many challenges, both current and long-term. HFMA is there to help you meet those challenges with connections to the information and resources you need. [Corresponding slides will show cover art, screen shots, photos of resources, conferences, etc.] Connecting with Content Website Publications Educational Programs Thought Leadership

42. 42 Connecting with Colleagues Chapters Conferences Special Interest Forums Connecting with Colleagues Chapters Conferences Special interest forumsConnecting with Colleagues Chapters Conferences Special interest forums

43. 43 Connecting with Other Stakeholders Healthcare Payment Reform: From Principles to Action PATIENT FRIENDLY BILLING� Project Input on Revised Form 990 Documentation Requirements Connecting with Other Stakeholders Healthcare Payment Reform: From Principles to Action PATIENT FRIENDLY BILLING� Project HFMA input on IRS revised Form 990 documentation requirementsConnecting with Other Stakeholders Healthcare Payment Reform: From Principles to Action PATIENT FRIENDLY BILLING� Project HFMA input on IRS revised Form 990 documentation requirements

44. 44 Providing healthcare is a mission. It is an endeavor that is crucial for our society and makes the lives of those around us better. . . .That will always be a reason to be optimistic about progress toward a better healthcare system. � HFMA�s Healthcare Finance Outlook: 2008-2013 In concluding, share two final thoughts: The connection between HFMA and the chapters runs both ways. Just as HFMA hopes the chapters look to the national office for the resources they need, the national office looks to the chapters for the information it needs to best serve and grow the Association�s membership. For example, the chapters are on the front line of new member recruitment. As the national office works to develop a generational membership strategy, the chapters can provide vital information on �who and where� are the Association�s future leaders. Healthcare finance is a complex and at times frustrating industry and it faces many challenges. At the same time, it is an industry that makes a difference in the lives of everyone in our society. Those who choose healthcare finance are inspired by this mission of making a difference. As the quote on the screen states, �That will always be a reason to be optimistic about progress toward a better healthcare system.�In concluding, share two final thoughts: The connection between HFMA and the chapters runs both ways. Just as HFMA hopes the chapters look to the national office for the resources they need, the national office looks to the chapters for the information it needs to best serve and grow the Association�s membership. For example, the chapters are on the front line of new member recruitment. As the national office works to develop a generational membership strategy, the chapters can provide vital information on �who and where� are the Association�s future leaders. Healthcare finance is a complex and at times frustrating industry and it faces many challenges. At the same time, it is an industry that makes a difference in the lives of everyone in our society. Those who choose healthcare finance are inspired by this mission of making a difference. As the quote on the screen states, �That will always be a reason to be optimistic about progress toward a better healthcare system.�

45. 45 Summary Current issues and actions affecting key drivers of business success Long-term goal of healthcare payment reform How HFMA can help