HCM-401 Kemal Erkan, FACHE

Operations Management in Healthcare Organizations HCM-401 Kemal Erkan, FACHE

HCM-401 Week III • Group Project • Progress So Far • Budget • Organizational Structure • Pre-test III • John Donnelly • Shared Saving Plan (SSP) • Kyle Bain • Tort Reform • Week III presentation by Kemal Erkan • CCHS 2010 Annual Financial Report • Case Studies • Break Even Analysis • Pay for Performance • Physician Extender Analysis Changing the Behavior

Changing The Behavior of Responsible Parties Changing the Behavior

Medicare Shared Savings Program Presented by John Donnelly For Kemal Erkan HCM-401 Course Changing the Behavior for Efficient Population Health Management

Healthcare Reform & the Transformation of Reimbursements • Payments will be increasingly linked to performance • “Performance risk” will be increasingly transitioned to providers • Payers and consumers will become accountable; and a greater value will be placed on maintaining individual health

Accountable Care Organizations • ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the patients they serve • When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will have the opportunity to share in the savings it achieves

Shared Savings Program • The Affordable Care Act, signed by President Obama in March of 2010, requires CMS to establish a shared savings program in order to: • Facilitate coordination and cooperation among providers • Improve quality of care • Reduce unnecessary costs

Medicare Shared Savings Program • The Shared Savings Program is designed to improve outcomes & increase value of care by: • Promoting accountability for the care of Medicare FFS beneficiaries • Requiring coordinated care for all services provided under Medicare FFS • Encouraging investment in infrastructure and redesigned care processes

Requirements • Form a legal structure to receive and distribute shared savings to participating providers • 3-year agreement • Have a minimum of 5,000 Medicare beneficiaries • Report Quality Measures

Timeline • CMS will begin accepting applications for the Shared Savings Program on January 1st, 2012 • First ACO agreements start on April 1st, 2012 and July 1st, 2012 • First performance year will be 18 or 21 months

Quality Measures • Quality Assessments will be calculated based on 33 measures from the following 4 domains; • Patient Experience • Care Coordination and Patient Safety • Preventive Health • Caring for at-risk populations

Payment Models • One-Sided Model • Share up to 50% of any savings they achieve compared to target spending • Two-Sided Model • Share up to 60% of the savings, but will also be accountable for losses

Issues • Upfront Expenses • Final rule did create the “Advanced Payment Model” that provides upfront funds. This money would be recovered from any future shared savings achieved by the team of providers • Legal Issues • Stark & Anti-Kickback • HHS estimates that ACOs could save Medicare up to $940 million in the first 4 years • Far less than 1% of Medicare spending during that time period

Shared Savings Program Questions?

Tort - Reform Presented by Kyle Bain For Kemal Erkan HCM-401 Course Changing the Behavior for Efficient Population Health Management

Presentation Outline • Definition • Famous McDonalds Case • Reasoning • Pros and Cons Changing the Behavior

Definition • Tort: A “Civil Crime” – One that is illegal but not criminal • Most Common example, Car Accidents or Medical Malpractice • Not intended to Reward victims but to Punish wrongdoers • Tort-Reform: Effort to “reform” lawsuits to prevent verdicts that range in the millions of dollars • Total Healthcare spending was $2.3 Trillion in 2008 • Expected $4.7 Trillion by 2020 • $714 Billion 1990 • $253 Billion in 1980 Changing the Behavior

McDonald’s Coffee Case Stella liebeck McDonald's Negligence 700 people complained about burns. Admitted impossible to consume directly after purchase 140 v. 190 degrees. 2 Reasons Refills Construction Workers • Stella Liebeck, 63 year old woman spilled coffee at a McDonalds drive through. • 3rd degree burns to groin, thighs, & privates. • Skin graphs, years of treatments • Originally $20,000 – McDonalds refused • $2.7 Million equal to 2 days profit from coffee sales Changing the Behavior

Reasons for Malpractice Tort-Reform • The cost of Healthcare is rising at an alarming rate. • Reduce the amount of wasted money physicians spend only to avoid lawsuits • Save the Patients Time and Money. • Reduce the amount of excessive Jury awards Changing the Behavior

Pros of Tort - Reform • Reduction in amount of unnecessary tests. • “80% of Physicians admitted ordering more tests than necessary” • “18-28% Tests, Procedures, Referrals, and Consults were to avoid Lawsuits • “13% Hospitalizations were to avoid Lawsuits” • “Roughly $625 -$850 Billion Annually” – *Avoidable Expenses • (~$250 Billion Defensive medicine) • 1990 – Total Healthcare Spending was $714 Billion • Patients waste less Time and Money on tests, procedures, etc resulting in faster and more efficient recoveries. Changing the Behavior

Cons of Tort - Reform • Alternative Solutions may have greater impact • Electronic Medical Records • Improving Quality and Efficiency • Adjust Provider Reimbursement • Government Regulation • Prevention • Consumer Involvement • Tax preferences • It may be less expensive to get sued a few times than change the practice/product. • Ex. Firestone Defective Tires- Maximum fine of $900,000. Would have cost over $250Million for recall. Changing the Behavior

Sources • Justice.org • http://www.justice.org/cps/rde/xchg/justice/hs.xsl/2011.htm • ProCon.org • http://healthcarereform.procon.org/view.answers.php?questionID=001536 • Kaiseredu.org • http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx • (Hickson et al. 1994) Changing the Behavior

Break Even Analysis Changing the Behavior

Changing the Behavior

Pay for Performance Changing the Behavior

Physician Extender Analysis Changing the Behavior

HCM-401 Kemal Erkan, FACHE