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Maximizing the Financial Performance of Employed Physicians


Maximizing the Financial Performance of Employed Physicians Presented by: Health Directions, LLC Sabrina Burnett, Vice President HFMA Kentucky Chapter Summer ... – PowerPoint PPT presentation

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Title: Maximizing the Financial Performance of Employed Physicians

Maximizing the Financial Performance of Employed
  • Presented by Health Directions, LLC
  • Sabrina Burnett, Vice President
  • HFMA Kentucky Chapter Summer Institute, July
    24, 2014

About Health Directions, LLC
  • A premier healthcare consulting firm that
    delivers a national perspective to regional
    provider organizations
  • Assists healthcare organizations in improving
    their financial performance, physician
    satisfaction, health IT optimization, and
    strategic positioning
  • Delivers a range of health care consulting
    services through an experienced team of
  • ACO Strategy and Development
  • Managed Care Strategy
  • Clinical Integration
  • EMR Implementation Optimization
  • Health Information Technology
  • Physician On-Boarding and Enrollment
  • Strategic Planning

Todays Objectives
  • Provide an overview of the industry trends and
    physician integration strategies
  • Introduce a concierge approach for successfully
    onboarding physicians
  • Present key performance indicators for employed
  • Provide an overview of value-based contracting

Healthcare Trends and Challenges
Trends and Challenges
  • Aging demographics
  • Chronic disease 75 of healthcare spending
  • Preventable Diseases consume 80 of spending
  • Rising costs
  • Consumer demands
  • Technologic Advances

Changing Healthcare Landscape
  • Payment Reform
  • Fee-for-service versus Pay-for-performance
  • Healthcare Technology
  • Drives connected care
  • Accountable Care
  • Growth of ACOs accelerates
  • Patient Satisfaction
  • Patient-provider communication and relationship
    critical to economic success

Fundamental Shifts in Care Delivery
From To
Silo Care Management Enterprise Care Management
Episodes of Care Coordination of Care
Hospital Centric Patient Centric
Episodic Reimbursement Financial Incentives based on outcomes and care coordination
Discharges Transitions
Utilization Management Proactive care at the right place, right time
Caring for the sick Focus on prevention and wellness
Production (volume) Performance (value)
Options For Physicians Organizations
  • Create Provider-Driven Medical Home Model
  • Coordinate care within practice s population
  • Establish value around chronic disease outcomes
  • Use outcomes to create value with payers
  • Clinically Integrate Care
  • Track quality across continuum
  • Establish a patient longitudinal record
  • Prepare for value-based contracting

Physicians Level of Collaboration
  • Develop Hospital Coordinated Care Model
  • Focus on cost reduction
  • Invest in health information technology
  • Connect providers to acute care setting
  • Do Nothing
  • Maintain FFS Model
  • Negotiate contracts under current strategy
  • Tolerate fee schedule reductions

Organizations Level of Collaboration
Physician Integration
Strategy Becomes Your First Filter
Objectives of the Hospital
  • Positive hospital/physician relationships
  • Increased referrals
  • Market positioning
  • Services and payer mix
  • Enhanced managed care contracting
  • Positioning for healthcare reform
  • Developing an integrated care network

Physician Integration Models
  • Employment
  • Co-Management
  • Clinically Integrated Network
  • Practice Support Services (i.e., MSO, EHR)
  • Payor Contracting

Employed Physicians
Hospitals are employing physicians Out of 193
surveyed hospitals, 94 have employed physicians
(Modern Healthcare and Press Ganey)
Source Clinical Transformation New Business
Models for a New Era in Healthcare, Accenture,
Oct. 31 (link)
Top Concerns for Physicians Considering Employment
  • 87 - business expenses
  • 61 - managed care
  • 53 - EHR requirements
  • 53 - maintaining and managing staff
  • 39 - number of patients required to break even

Source Clinical Transformation New Business
Models for a New Era in Healthcare, Accenture,
Oct. 31 (link)
Reasons Physicians Stay Independent
  • Control over practice decisions/autonomy
  • Protection of staff
  • Job security (termination, covenant)
  • Personalities
  • Entrepreneurship
  • Outside income sources
  • Locations and hours of work
  • Relationship with patients

Challenges for Hospital Leaders
  • Identifying the value that the physician
    practices bring
  • Specialty network
  • Patient longitudinal record
  • Comprehensive managed care contracting
  • Identifying ROI and/or minimizing the losses
  • Managing a physician practice is different than
    managing a hospital
  • Managed care contracts / Revenue cycle management
    / Business metrics
  • IT support systems

Measure Twice, Employ Once
  • Start with Strategy as first line filter
  • Ensure prospect aligns with organizational goals
  • Create a sound financial pro forma of practice
  • Evaluate data carefully
  • Use industry metrics and benchmarks for
  • Interview/evaluate for culture fitsoft costs

4 Key Pro-Forma Areas
Ancillary Revenue Growth
  • Better performing practices generate greater than
    15 of physician income from ancillary revenue
  • Average physician collects 50,000 in ancillary
  • Growth of vertically integrated group practices

Compensation Link between Productivity and Pay
  • Compensation plans need to be based on
  • Understand the guarantee or short-term incentives
  • Evaluate work RVUs and bonus incentives
  • What makes sense for one specialty may not make
    sense across the board (strategy)
  • Evaluate Employment vs. Provider Services
    Agreement based on strategy
  • Benchmark comparisons apples to apples

Technology Strike a Balance on EHR
  • Evaluate system compatibility and
    interoperability and current use
  • Overhaul practice workflows
  • Perform Meaningful Use and other Clinical Data
    Gap Analysis

Staffing Evaluate the Internal Team
  • Staffing model in current state
  • Skill sets of existing team members
  • Duplication of effort in consolidated model (too
    many office managers?)

Sample Pro-Forma
Employment Process
  • Complete due diligence and qualification process
  • Create 1-page employment summary prior to the
    employment agreement
  • Illustrate compensation, bonus and benefits using
  • Negotiate terms, then draft employment agreement
  • Encourage involvement of legal counselearly
  • Execute agreement and deploy on-boarding plan

Physician On-Boarding
Why a Concierge Approach?
  • Concierge services are offered to those who need
    assistance whether it be for pleasure or out of
    necessity. From hotel guests who want a specific
    meal not listed on the menu to senior citizens
    who need companionship, concierge services are
    available to take care of specific needs.
  • During the employment transition cycle,
    physicians have specific needs that a hospital
    organization structure may not address.

On-boarding Program
Phase 1 Discovery Checklist
Task Point Person/Dept Duration Status / Completion Date Trigger
Confidentiality Agreement PM 15 days
Pro-Forma Preparation Planning 15 days Signed Confidentiality Agreement
IT/IS Discovery Assessment IT 15 days Discovery PMO after Signed Conf Agrmt
Operational/Practice Assessment Operations Director 15 days Signed Confidentiality Agreement
Valuation of Assets 30 days Signed Confidentiality Agreement
Physician Interviews TBD
DECISION TO HIRE PM 30 - 60 days Proforma, Executive Sign Off, Physician Data Sheet and CV required before moving to Phase II
Physician Data Sheet, CV
Sample Discovery Checklist
Phase 2 Checklist
Task Point Person/Dept Duration Status / Completion Date
Plan for IT Installation/Implementation IT/IS Telecom 90 days
Practice Start-Up Checklist Project Manager 5 days
Employment Letter Legal 30 days
Offer Letter HR 30 days
Position Posted in Position Mgmt Operations Director 10 days
Credentialing Checklist/Intro Package Business Office 15 days
Contracting Contracting Dept 60 days
Hospital Privileges Med Staff 30 days
Malpractice Risk Management 30 days
Cost center, Banking Finance 60 days
Collateral Development Marketing 45 days
Staff Offer Letters Human Resources 30 days
EHR Templates IT 60 days
Medical Malpractice Risk Management 30 days
Office Furniture Facilities 60 days
Hospital Tours Physician Relations 30 days
Credit Card Machine CBO 30 days
Sample Phase II Checklist
Provider Enrollment
45-180 Days
Provider Enrollment Tools
  • Credentialing Software
  • Manages credentialing status
  • Populates applications, forms and letters
  • Reporting Tool
  • Tracking Module
  • Alert System
  • Imaging Module

Benefits of Centralized Credentialing
  • Improved Provider Relationships
  • Staffing Cost Reduction
  • Service Improvement
  • Revenue Cycle Optimization

Final Transition (Duration 7 30 days)
Prepare a Toolkit
  • Practice Acquisition Checklist
  • Acquisition Document Requests
  • Pro-forma Methodologytied to strategy
  • Practice Project Plan Checklist
  • On-boarding Tracking Tool (summary of milestones)
  • Department Work Plans leverage your existing
    infrastructure to support physician employment

Key Performance Indicators
Continuous Success Requires Measurement
  • Financial and outcome indicators help define
    practice priorities and evaluate success
  • Evaluate performance based on strategy (value
    proposition of why we became partners)
  • Incorporate dashboard reports that are simple and
    easily understood by managers, physicians and

Physician Key Performance Indicators
The Revenue Cycle
Front-End Key Indicators
Measure Best Practice
Front-end edits 1-3
Office charge lag lt1 day
Hospital charge lag 1-3 days
Co-pay collection 90-98
Time-of-service payments 85
Percentage of cancellations / no shows 5
Back-End Key Indicators
Measure Best Practice
Charge Capture Rate 100
Claim Submission Frequency 1 day
Edit Rate 4
Denial Rate 5
Days in A/R 37
Bad debt 1.5
Patient AR over 120 days 7
AR over 120 days 9
Value of Benchmarking
  • Allows you to measure and track performance
    against peers
  • Gives you whats reasonable as well as whats
    possible scenarios
  • Helps to quickly identify issues and proactively
    address them
  • Insight into what others in the industry are doing

If you cant measure it, you cant manage
it. -Norton Kaplan
New Generation KPIs
  • Financial metrics are important to running a
    successful business, but there is a next
    generation of indicators that involve clinical
    performance, quality, patient satisfaction/engagem
    ent and cost of care
  • Meaningful Use Dashboard
  • Clinical quality scorecard
  • Value of connectivity and data

Meaningful Use Dashboard
ACO Measures
ACO Measure Title
1 Patient Experience Survey
2 Patient Experience Survey
3 Patient Experience Survey
4 Patient Experience Survey
5 Patient Experience Survey
6 Patient Experience Survey
7 Health Status Survey
8 Hospital readmissions
9 Ambulatory Sensitive Conditions Admissions Chronic obstructive pulmonary disease
10 Admissions congestive heart failure
11 of all PCPs meeting stage 1 of meaningful use
12 Post Discharge 65 and older medication reconciliation
13 Falls Screening for Fall Risk
14 Influenza Immunization
15 Pneumococcal Vaccination
16 Adult Weight Screening and Follow-up
17 Tobacco Use Assessment and Tobacco Cessation Intervention
18 Depression Screening
19 Colorectal Cancer Screening
20 Mammography Screening
21 Blood Pressure Measurement
22 Diabetes Composite Hemoglobin A1c
23 Diabetes Mellitus Low Density Lipoprotein Control in Diabetes Mellitus
24 Diabetes Mellitus High blood pressure control in diabetes mellitus
25 Diabetes Composite Tobacco Non Use
26 Diabetes Mellitus Aspirin Use
27 Diabetes Mellitus Hemoglobin A1c Poor Control
28 Hypertension blood pressure control
29 Cholesterol Management for Patients with Cardiovascular Conditions
30 Ischemic Vascular Disease Use of Aspirin
31 Heart Failure Beta-blocker therapy for left ventricular systolic dysfunction
32 Coronary Artery Disease (CAD) Drug Therapy for Lowering LDLCholesterol
33 Coronary Artery Disease (CAD) LDL level lt 100 mg/dl
Sample Provider Scorecard
Meeting with Physicians
  • Review key information monthly
  • Production vs. Goals
  • Financials vs. Goals
  • Billing Performance vs. Goal
  • Practice improvement initiatives
  • Clinical quality reporting
  • Industry trends and future considerations (i.e.,
    PCMH, ICD-10)

Presenting to Physicians
  • Present information that they will understand
    (for example, number of visits)
  • Establish monthly goals and compare to actual
  • Use graphics as opposed to spreadsheets
  • Share what is applicable to them and their
  • Create rapport and encourage open discussion
  • Co-develop an action plan for practice

Value-Based Contracting
Organizational Self-Assessment
  • Understand.
  • What Do You Have to Offer
  • Where Are You on Your Roadmap to Value-Based
  • Know the Healthcare Needs in Your Market
  • Existing and Needed Technology
  • Full Cost of Care
  • Financial Implications of New Reimbursement

Market Background Assessment
  • Payer Concentration in Market Limits
  • Existing Quality Programs
  • Earning Incentive(s) Existing Contract(s)
  • Potential Partnership Opportunity
  • Narrow Network Commercial HMO Risk Products

Payer Market Concentration
  • Blue Cross/Blue Shield (23)
  • Commercial PPO HMO Combined
  • Humana Medicare Advantage (10)
  • United (7)
  • Aetna/Coventry (3.3)
  • Cigna (2.3)
  • Medicaid Managed Care (3.3)
  • 5 Payers Combined

Value-Based Payment Models
FFS with Quality Incentives
Shared Savings
Narrow Networks
Partial Capitation
Full/Global Capitation
Level of Risk
Two Diverging Payment Paradigms
Fee For Service
  • Quality Driven
  • Performance Payments for Chronic Care Management
  • Goal to Reduce Fragmentation
  • Lack of Quality Indicators
  • Volume Driven
  • Fragmented Care

Steps in Building the Payer Contracting Approach
  • Build Preferred Contracting Strategy and Approach
  • Patient Population
  • Scope of Risk
  • Assess Health Plans in Your Market
  • Know the Different Care Delivery Needs
  • Existing Payers, Products, Value-Based Programs
  • Emerging Opportunities
  • Leveraging CIN Value
  • Build a Value Proposition with Payers
  • Based on Conversations with Payers, Begin to
    Build Comprehensive Program Measure Database

Fee For Service
  • Quality Driven
  • Performance Payments for Chronic Care Management
  • Goal to Reduce Fragmentation
  • Lack of Quality Indicators
  • Volume Driven
  • Fragmented Care

Steps in Building the Payer Contracting Approach
  • Development of Clinical Programs and Outcomes is
    Foundation of Direct Contracting with Employers
  • Build Model Language for Value-Based Contract
  • Create a Financial Model Template to Help
    Organizational Leaders Understand the Potential
    Cost and Opportunities
  • Identify Physician, PHO (if applicable)
    Hospital Contracting Concerns Considerations

Fee For Service
  • Quality Driven
  • Performance Payments for Chronic Care Management
  • Goal to Reduce Fragmentation
  • Lack of Quality Indicators
  • Volume Driven
  • Fragmented Care

Illustration Identifying Opportunity
Fee For Service
  • Quality Driven
  • Performance Payments for Chronic Care Management
  • Goal to Reduce Fragmentation
  • Lack of Quality Indicators
  • Volume Driven
  • Fragmented Care

Comparison of Quality Measures
Measure Title HUMANA BCBS NQF PQRS4 ACO6 MU5 HEDIS7 Specialty Count
Diabetes Mellitus Low Density Lipoprotein (LDL-C) Control Yes Yes 729 2 23 Menu Yes 5
Diabetes Mellitus Hemoglobin A1c Control (lt8) Yes Yes 729 NA 22 Menu Yes 0
Preventive Care and Screening Breast Cancer Screening Yes   31 112 20 Menu Yes 7
Diabetes Mellitus Medical Attention for Nephropathy Yes   62 119 NA Menu Yes 5
Preventive Care and Screening Colorectal Cancer Screening Yes   34 113 19 Menu Yes 5
Diabetes Mellitus Dilated Eye Exam Yes   55 117 NA Menu Yes 5
Glaucoma Screening Yes     NA NA NA Yes 0
Mail Order Usage Yes     NA NA NA NA 0
Preventive Care and Screening Tobacco Use Screening and Cessation Intervention   Yes 28 226 17 Menu Yes 16
Ischemic Vascular Disease (IVD) Use of Aspirin or Another Antithrombotic   Yes 68 204 30 Menu Yes 7
Ischemic Vascular Disease (IVD) Complete Lipid Panel and Low Density Lipoprotein (LDL-C) Control   Yes 75 241 29 Menu Yes 7
Hypertension (HTN) Controlling High Blood Pressure   Yes 18 236 NA Core Yes 6
Diabetes Mellitus High Blood Pressure Control   Yes 729 3 24 Menu Yes 5
Ischemic Vascular Disease (IVD) Blood Pressure Management   Yes 73 201 NA Menu Yes 4
Use of Emergency Care   Yes   NA NA NA Yes 0
Generic Drug Dispensing Rate   Yes   NA NA NA NA 0
Low Back Pain Use of Imaging Studies   Yes 52 NA NA Menu Yes 0
Fee For Service
  • Quality Driven
  • Performance Payments for Chronic Care Management
  • Goal to Reduce Fragmentation
  • Lack of Quality Indicators
  • Volume Driven
  • Fragmented Care

  • Keep the WHY in the forefront of your plan to
    evaluate potential physician candidates
  • Understand the importance of a concierge approach
    to onboarding to ensure long-term physician
  • Identify and track key performance indicators
    that are aligned with your strategy
  • Understand the impact of healthcare reform

Sabrina Burnett Vice President Health Directions,
LLC 8310-1 Capital of Texas Hwy N., 390 Austin,
TX 78731 Phone 512-795-5500 sburnett_at_healthdirec
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