Network-based Business Models in Behavioral Healthcare-Horizontal and Vertical Integration
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Network-based Business Models in Behavioral Healthcare-Horizontal and Vertical Integration June 7, 2012. Charles G. Ray. Why Network-based Business Models?. Reform. Meaningful Use. Medicaid Expansion. Managed Care. Certified EHR. Health Insurance Exchange. Parity.

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Network-based Business Models in Behavioral Healthcare-Horizontal and Vertical Integration

June 7, 2012

Charles G. Ray


Why network based business models
Why Network-based Business Models? Healthcare-Horizontal and Vertical Integration

Reform

Meaningful

Use

Medicaid

Expansion

Managed

Care

Certified

EHR

Health

Insurance

Exchange

Parity

Recession &

State Budgets

HIPAA 5010

PCMH

ACOs

ICD-10

Integration

DSM-V

Workforce

Recruitment

& Retention


1.  Administrative Mandates (HIPAA 5010, ICD-10, etc.)   Healthcare-Horizontal and Vertical Integration

2.  Care Management, Data Analytics, and Informatics.  

3.  Health Insurance Exchanges and Individual Markets.

4.  New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.)

5.  Bending the Cost Curve.

6.  Medicare and Medicaid.

7.  Health Information Exchanges and EMRs.

8.  Consumer's Role in the Modernization of Healthcare (social networking, incentives, CDHP, etc.)

9.  Reform Uncertainties.

10. Payer/Provider Interoperability.

We’re Not AloneTop 10 Issues: Managed Care Executives Group


1.  Be Strategic with Health Insurance Exchanges   Healthcare-Horizontal and Vertical Integration

2.  Regulate Commercial Health Insurance Market Effectively  

3.  Simplify and Integrate Eligibility Systems

4.  Expand Provider and Health System Capacity

5.  Attend to Benefit Design

6.  Focus on the Dually Eligible

7. Use Data Meaningfully

8. Pursue Population Health Goals

9. Engage the Public in Policy Development and Implementation

10.Demand Quality and Efficiency from the Health Care System

We’re Not Alone10 Priorities: National Academy for State Health Policy


What to expect more
What to Expect? Healthcare-Horizontal and Vertical IntegrationMore…

  • Emphasis on mission-critical IT infrastructure, certified systems, and Meaningful Use

  • Aggressive contracting with commercial payers and discounts

  • Managed care and utilization review

  • Medication assisted treatment (MAT)

  • ACOs and Patient-Centered Medical Home (health home) models (integration and consolidation)

  • Care Coordination and Medical Case Mgmt

  • Standardization of practice guidelines


More… Healthcare-Horizontal and Vertical Integration

  • Complex coding and electronic billing (EDI)

  • Demand for data management and reporting

  • Competition

  • Integration

  • Merger & Acquisition


Stronger business acumen Healthcare-Horizontal and Vertical Integration

Aggressive strategic planning

Accelerated business modeling

Subject Matter Expertise

Affiliation, Joint Ventures and Mergers & Acquisitions – Strength in Numbers!

Resources and Capabilities to Execute

Demand for…


Vertical Integration Healthcare-Horizontal and Vertical Integration

Unify the supply chain under one roof (single owner)

Each “link” produces a market-specific servicethat satisfies a common need, coming together for a single service experience

Examples? Professional Education + Prevention + Treatment + Case Mgmt + insurance

Horizontal Integration

Strategy for increasing market share by associating with, merging with or acquiring like companies in adjacent or overlapping markets

Unifying marketing capabilities to present a common brand image

Integration


Complexity and Variation: multiple payer systems, enforcing disparate code-sets and applying different business rules with varying approaches to reimbursement

Changing business and regulatory environments

Increased competition and medicalization

Demand for integration and consolidation

Selecting and implementing IT

Access to sufficient subject matter expertise

Access to capital

What Problems Should We be Solving?


Discontinuity and Disruption disparate code-sets and applying different business rules with varying approaches to reimbursement(P. Druker)

Instability (A. Toffler)

Decay and Irrelevance (G. Hammel)

Tipping Point (M. Gladwell)

Strategic Inflection Point (A. Grove)

Value Migration (A. Slywotzky)

Disruptive Innovation (C. Christensen)

Key Concepts for Today


Provider network models
Provider Network Models disparate code-sets and applying different business rules with varying approaches to reimbursement

  • Independent Practice Association (IPA)

  • Management Services Organization (MSO)

  • Administrative Services Organization (ASO)

  • Technology Services Organization (TSO)

  • Community Behavioral Health Organization (CBHO)

  • Specialty Preferred Provider Networks


Some business models assemble providers in self-directed groups within a geographic region to invent and implement healthcare solutions, form collaborative efforts to implement these solutions, and to exert political influence upward within the medical and payer communities to effect positive change.

Shared services can include facilities, personnel, supplies, services, technology, and professional services including credentialing, billing, marketing, legal and accounting.

Definition


IPA, MSO, TSO - Some network models are primarily concerned with shared services, especially billing and IT. The entity’s revenues come from its members.

ASO, CBHO, IPA - Some are more concerned with managed care contracting and may assume financial risk in capitation, sub-cap and carve-out models

These models develop additional centralized capacity for network management, utilization review, quality assurance, claims re-pricing and processing

Revenues come from payers

PPN - Others desire to contract at discounted fee-for-service rates with many payers, owning as much of the market share as possible while centralizing credentialing. Revenues also come from payers.

Definition


Getting Paid with shared services, especially billing and IT. The entity’s revenues come from its members.

By Payers

  • Network Access Fees (“rental” or “lease” models) based on numbers of “lives” served

  • Recurring administrative service fees

  • Percent of savings

  • Capitation profit model

    By Providers

  • Recurring administrative fees

  • Distinct service fees


Critical Success Factors with shared services, especially billing and IT. The entity’s revenues come from its members.

Credibility and reputation of participants

Trust and collegial relationships

Alignment of financial incentives

Adequate time for implementation

Professional management and access to expertise

Financial Plan and access to capital

Deep understanding of market & niche


Core Functions with shared services, especially billing and IT. The entity’s revenues come from its members.

Centralized Practice Management Services

Marketing and Contracting (avoiding price fixing!)

Technical Support, Training and Education

Billing Operations

Information Technology

Procurement

Professional Services (consultants, legal, accounting)


Common Features with shared services, especially billing and IT. The entity’s revenues come from its members.

  • Provider owned and operated entities developed to provide access to infrastructure and core capabilities for the benefit of members.

  • Includes formal organizational structure, mission, governance, management, staff, budget, policies, procedures, infrastructure and core services


Common Benefits with shared services, especially billing and IT. The entity’s revenues come from its members.

  • Increases funding opportunities

  • Enhances revenue management and cash flow

  • Provides a centralized, reliable source of expertise and dedicated IT support

  • Enhances purchasing power and allied representation

  • Promotes industry standard operating procedures and Best Practices

  • Improves capacity to respond to change

  • Increases user satisfaction among clinic staff and providers

  • Creates economies of scale and strength in numbers – critical assets in the new business environment


Markets with shared services, especially billing and IT. The entity’s revenues come from its members.

  • Self-insured employers

  • Health plans

  • Managed care organizations

  • Publicly-funded programs

  • Medicaid managed care plans

  • Managed behavioral health organizations


Performance Measures with shared services, especially billing and IT. The entity’s revenues come from its members.

  • Accreditation (NCQA, URAC)

  • Claims throughput and accuracy

  • Customer service

  • Access to services

  • Network’s quality of care

  • Outcomes

  • Patient Satisfaction with network

  • Overall savings accrued to payers (claims and admin)


Common Concerns with shared services, especially billing and IT. The entity’s revenues come from its members.

  • Insurance Laws (being careful not have to become a licensed HMO)

  • Anti-Kick-Back Laws (and anti-referral laws)

  • Anti-Trust Laws (observing price-fixing and monopolies)

  • Reimbursement (cannot bill for centralized services)

  • Discontinuing relationships (survivability of contracts)


Mission goals pso sample
Mission & Goals (PSO Sample) with shared services, especially billing and IT. The entity’s revenues come from its members.

Mission

To provide members a foundation to continuously improve upon their business practices, administrative efficiency, quality of care, and clinical outcomes through enhanced deployment and utilization of information technology

Goals

Enhance revenue through improved operational efficiencies

Capitalize on economies of scale and technical expertise

Achieve greater reliability and stability in data management and information exchange

Assist providers in improving care and outcomes


Pso model
PSO Model with shared services, especially billing and IT. The entity’s revenues come from its members.


Pso model1
PSO Model with shared services, especially billing and IT. The entity’s revenues come from its members.

Non-Members

Members

Trading Partners and Payers


Asp services
ASP Services with shared services, especially billing and IT. The entity’s revenues come from its members.

Key benefits include expert applications support, system configuration management, help desk management and software upgrade support.

Sample Services:

Software Maintenance – Application configuration, DBMS management, management of software patches and major software upgrades for hosted PSO-standard applications

User Support – Problem resolution and vendor liaison support for hosted PSO-standard applications

Application Training – End user training for hosted PSO-standard applications

Implementation Support – Project management associated with the installation and implementation of hosted PSO-standard applications

Report Development – Analysis, design and development of application based reports for hosted PSO-standard applications


Edi hie services
EDI/HIE Services with shared services, especially billing and IT. The entity’s revenues come from its members.

Key benefits include access to a central technology and support organization to implement and manage health information exchange activities.

Sample Services:

Data Integration Management – Planning, management, implementation and on-going monitoring of interfaces and data integration tools including interface engines and ETL tools

Data Warehousing – Development of data warehouse/repositories and associated interfaces/extracts

RHIO Administration – Coordination and planning with data sharing partners

Transaction Processing – On-going operations, management, monitoring, maintenance and problem resolution for EDI/HIE transactions

Business Intelligence– Analysis, design and development of reports, portals and BI tools


Consulting services
Consulting Services with shared services, especially billing and IT. The entity’s revenues come from its members.

Key benefits include access to more cost-effective IT professionals on an as-needed basis to enhance members’ existing IT resources

Sample Services:

Planning – Strategic planning, needs assessment and product evaluation

Operations Improvement – Business reengineering and operations improvement associated with PSO-standard applications

Help Desk Support – Receipt, triaging, logging, dispatch and tracking of service requests

E-Mail Support – Administration and maintenance of email accounts

Office Automation Support – Administration and end user support for hosted office automation applications (e.g., word processing, spread sheets and publication software)

Project Management – Planning and oversight of IT related projects (e.g., product selection and implementation)


Examples
Examples with shared services, especially billing and IT. The entity’s revenues come from its members.

Community Health Access Network (CHAN)

CHCs in New Hampshire

Technical and application support services for e-mail, Internet access and 3 software applications: EMR, PMS, Finance

Health Choice Network (HCN)

Florida-based, CHCs and other providers in 10 states

Strategic Planning, application hosting, network administration and various other IT services.

Council of Community Clinics (CCC)

CHCs in San Diego and Imperial Counties

Project management, application hosting, network administration and various other IT services

Oregon Community Health Information Network (OCHIN)

State of Oregon, CHCs in Oregon/California, CareOregon, and HRSA

ASP support for EPIC EMR and other IT services

Community Health Center Association of NY State (CHCANYS)

More than 50 CHCs throughout New York State

Funding advocacy, best practice collaboration, vendor coordination, and IT leadership and direction of New York Health Choice Network (NY HCN)


Financial models
Financial Models with shared services, especially billing and IT. The entity’s revenues come from its members.

For-Profit / Not-for-Profit

Subscription/Membership Monthly Dues

Access Fee

Transaction Fee

Joint Venture Ownership/Shared Cost of Doing Business


Next steps
Next Steps with shared services, especially billing and IT. The entity’s revenues come from its members.

Assess Level of Interest Among Allies

Assess Needs, Capabilities and Commitment

Gap Analysis

Cost/Benefit Analysis

Readiness and Capabilities Assessment

Conduct Regulatory Analysis

Conduct Market Analysis

Determine size of potential market and demand for offering

Assess capacity to reach decision-makers and close deals

Develop a Multi-Year Financial Plan

Determine capital available and capital required

Determine ability to absorb risk

Determine ROI goals

Develop feasible and sustainable business model


Assessment
Assessment with shared services, especially billing and IT. The entity’s revenues come from its members.

Market and demand

Business and Strategic Plans

Leadership Team

Board

Staffing

Performance

Financials

IT Infrastructure

Alliances

Regulations


Planning
Planning with shared services, especially billing and IT. The entity’s revenues come from its members.

Business Plan

Financial Plan

Strategic Plan

Marketing Plan

Contingency Plan

IT Plan

Implementation Plan

Product/Service Development

Staffing Plan (Recruitment & Retention)


Review
Review with shared services, especially billing and IT. The entity’s revenues come from its members.

Key Business Decisions

Feasible and Sustainable Market

Type of Entity

Ownership Structure and Governance Models

Meet Resource Requirements – personnel, technology, professional, and financial

Engage Subject Matter Experts

Develop Implementation Plan


Thank you
Thank You with shared services, especially billing and IT. The entity’s revenues come from its members.

Charles G. Ray

AHP Healthcare Solutions

[email protected]

[email protected]

www.BehavioralHealthToday.com


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