Population Health Management

Transcription

1 Population Health Management

2 Population Health Management Today we are primarily in the business of delivering care one patient at a time. By contrast, a population health practitioner is concerned with achieving healthy outcomes for an entire population. Steven Lefar, Sg2 President and CEO

3 Population Health Management Population Health Management The marketplace is full of talk about the next big thing in health care: population health management (PHM). And there s more than just talk: Most organizations have already begun investing in PHM capabilities or are planning to do so in the near future. But despite the enthusiasm, there s also a lot of confusion about PHM. Some common misconceptions: All health systems will be population health organizations. PHM is a strategy. Every market is ready for population health. PHM is just more of what we ve already been doing. PHM can be done on a small scale I just need to figure out the math first. In fact, PHM is a sophisticated care delivery model that requires competencies not found in most health systems today. Unfamiliar skills, from risk stratification to actuarial proficiency, pose a steep learning curve organizations will need to climb to execute PHM effectively. Even more daunting, significant changes in culture, major financial investment, novel payment models and major upgrades to health information technology will also be needed. Scale at least 40,000 to 50,000 covered lives just to maintain a stable risk pool will drive return on investment (ROI), and organizations should not expect positive financial returns for multiple years. As a result, the vast majority of health systems do not have the financial resources, population base, operating scale and cultural characteristics needed to undertake a comprehensive PHM program on their own. Clearly, not everyone should be a population health organization. But all health care leaders should understand PHM and thoughtfully consider whether and how it fits into their enterprise strategy. When the decision is made to move into PHM, organizations must act deliberately but quickly to build competencies and scale, realize economic benefits, and make rapid course corrections. This Sg2 report is designed to answer critical questions surrounding PHM: What is population health management? Is my market ready for PHM? Is my organization? Which organization types are best equipped for PHM? What are the key components and competencies of PHM? How should my organization get started with PHM? What metrics can be used to evaluate program impact? Confidential and Proprietary 2013 Sg2 1

4 What Is Population Health Management? PHM is a sophisticated care delivery model that involves a systematic effort to assess the health needs of a target population and proactively provides services to maintain and improve the health of that population. The target population can be defined in a variety of ways (eg, a health system s pool of Medicaid patients or the panel of patients in a primary care practice). However, formal PHM programs are typically developed for populations defined by a payer source. Q A How does PHM work? PHM programs encompass a portfolio of services commonly called interventions for individuals across the health continuum, including those with no or low health risks. A Framework for Population Health Management Population Identification Health Assessment Risk Stratification Health Continuum Low or No Risk Moderate Risk High Risk Portfolio of Health Management Interventions* Preventive Services Lifestyle Coaching Transitional Care Complex Care Management Palliative and End-of-Life Care *This list is illustrative only and is not meant to be comprehensive. Framework adapted from Care Continuum Alliance s Achieving Accountable Care: Essential Population Health Management Tools for ACOs, April PHM is very different from what most health systems do today. Organizations involved in population health must be concerned with all the determinants of health environmental, social, economic and individual. Most of these factors fall outside the realm of traditional medicine, and there is no organization with the administrative, financial and clinical resources to address them all. Therefore, PHM must occur across a System of CARE a broad network of alliances, partners and complementary organizations. CARE = Clinical Alignment and Resource Effectiveness. 2 Confidential and Proprietary 2013 Sg2

5 Population Health Management Q A What are the essential components of a comprehensive PHM program? PHM programs go beyond smoking cessation and weight loss programs or health fairs and community educational presentations. While these programs and services are important, the activities of a comprehensive PHM program are much broader and deeper. Comprehensive PHM programs encompass a number of components (outlined on pages 8 to 12), but the must haves include: Care delivery Infrastructure Health management interventions Advanced workforce models Engagement techniques Innovative care delivery models Robust primary care network Technology Infrastructure Informatics infrastructure Risk stratification Talent and Culture Culture of innovation Effective physician leadership Risk-contracting expertise to design payment models Q A Do we need supporting payment systems for PHM? Yes. There are some entry-level activities that health systems can perform without supporting payment mechanisms, and full-scope PHM capabilities are not required for many value-based payment structures (eg, upside-only shared savings or procedural bundled payments). However, organizations that are truly interested in moving into PHM must quickly pursue commensurate payment models to capture the value of their investments. And they must seek other forms of support, such as payer funding of technical infrastructure or health professional resources. Perhaps the single most promising aspect of PHM is the movement toward value-based payment systems, which can support activities that are not historically covered in the fee-for-service model, such as care coordination, prevention and wellness. Confidential and Proprietary 2013 Sg2 3

6 What Is Population Health Management? (Cont d) Q A Q A Q A What is the relationship between ACOs and PHM? An ACO can t be successful without practicing PHM PHM s principles are vital to any organization entering into an ACO or a population-based risk contract. In contrast, PHM can be practiced without an ACO. While the two share many conceptual underpinnings (eg, care coordination), an ACO is an organizing framework for provider organizations, while PHM is an advanced approach to delivering health care services. What do the economics look like? The financials are a function of scale, and there are a variety of opinions on the required number of covered lives to make the math work. As a starting point, organizations need at least 40,000 to 50,000 plan beneficiaries just to maintain a stable risk pool. At the high end, a number of large health systems have estimated that they will need 1 million covered lives to justify their financial investments. Full-scope PHM efforts require upfront investments, whose monetary returns may be unknown or realized several years after deployment. The economic burden is compounded by the fact that health systems will likely lose inpatient and ED volumes as a result of their activities. Financial gains should not be one of the near-term goals of a PHM effort. Rather, organizations should aim to build the required competencies, learn the day-to-day work of PHM and achieve the cultural change required to make this care delivery approach work. Will PHM work? Fallacy I can do this on a small scale I just need to figure out the math first. Fact A safe bet is to aim to ramp up to a minimum of 250,000 to 500,000 covered lives. It s too early to tell. While the level of interest in PHM has grown in the last few years and many of its components have been separately evaluated, the supporting research literature is just emerging. Moreover, there is no consensus on program design, and the next five years will be marked by experimentation and redesign. A cohort of 5% of all health systems organizations participating in managed Medicare or Medicaid programs and national projects such as the Medicare Physician Group Practice Demonstration and Pioneer ACO initiative will determine the eventual PHM model and its success. A number of early wins point to the long-term potential of PHM. Transitional care interventions for chronically ill populations clearly cut readmission rates and costs. Research has shown palliative care can improve symptom control, reduce unnecessary utilization and lower costs. Telephone-based education, a core activity of many PHM programs, can promote patient self-care and satisfaction. ACO = accountable care organization; ED = emergency department. Sources: Felt-Lisk S and Higgins T. Exploring the Promise of Population Health Management Programs to Improve Health. Mathematica Policy Research. August 2011; Care Continuum Alliance. Achieving Accountable Care: Essential Population Health Management Tools for ACOs. April 2011; Naylor MD et al. Health Aff (Millwood). 2011;30: ; Health Policy Brief: Improving Care Transitions. Health Affairs. September 13, 2012; Institute for Clinical Systems Improvement. A Business Case for Providing Palliative Care Services Across the Continuum; Cantlupe J. Hospitals opting for palliative care. HealthLeaders Media. August 6, 2012; Canadian Hospice Palliative Care Association. Cost-Effectiveness of Palliative Care: A Review of the Literature. December Confidential and Proprietary 2013 Sg2

7 Population Health Management Q A Emerging technology and care models also show promise. Remote patient monitoring technology appears to be effective in managing chronic disease and in overcoming the lack of timely data. These devices, such as glucose and blood pressure monitors, provide real-time information on health status and indicate if an intervention is needed. Social networks may be one solution to the persistent challenge of patient accountability. Organizations like Weight Watchers and Alcoholics Anonymous have shown how peer-to-peer support groups can shape behavior. Online diseasespecific communities may enhance patients understanding of their condition and improve treatment compliance. While the overall financial impact of patient-centered medical homes (PCMHs) has been modest, research has revealed improved quality, patient experience, care coordination and access, as well as reduced ED visits and admissions. Should my organization build a comprehensive PHM program? Most likely not. PHM takes a significant commitment of financial resources, management time and energy, and considerable cultural change. The reality is that smaller organizations do not have the required resources to build and maintain PHM competencies and will likely have to opt into the PHM program of a larger organization. There are several reasons so many health care leaders are interested in PHM. Some view it as an offensive strategy a means of cementing or growing market share. Others consider it a defensive strategy. Marketplace competitors are quickly entering into risk-based contracts, and they don t want to be left behind. Fallacy Population health management is a strategy. Fact PHM is a sophisticated care delivery model that requires competencies not found in most health systems today. However, PHM is not a strategy. It s a sophisticated model for delivering health care. PHM program goals and scope must be aligned with the organization s mission, vision and strategic priorities. And in nearly every case, organizations should initiate PHM because they are planning to engage in a payment system that rewards it. Full-scope PHM programs will not make strategic sense for many organizations. The following pages present criteria for judging market and organizational readiness for PHM, along with the strengths and challenges different types of organizations bring to PHM. Pages 14 and 15 of this report outline natural stages for stepping into the PHM arena. Sources: Agency for Healthcare Research and Quality. Early Evidence on the Patient-Centered Medical Home. February 2012; Fox S. Peer-to-Peer Healthcare. Pew Research Center s Internet & American Life Project. February 2011; Maeng DD et al. Reducing long-term cost by transforming primary care: evidence from Geisinger s medical home model. Am J Manag Care. 2012;18: Confidential and Proprietary 2013 Sg2 5

8 Is My Market Ready for PHM? Is My Organization? Just as leaders must consider market and organizational factors in charting a course for payment reform, so too must they do so when considering their involvement in PHM. This requires an understanding of local market factors, as well as an honest assessment of enterprise capabilities, experience and barriers to success. There are a number of guideposts that suggest PHM adoption may be possible. Many of these are organization-specific intangibles. Others are market characteristics that must shape an organization s approach and timing. Enterprise Characteristics Factors Suggesting Readiness for PHM Market Health plans interested in funding care delivery innovations and providing PHM infrastructure support Presence of self-insured employers who are willing to partner on population-based payment models Provider partners (eg, PCP groups and PAC entities) willing and able to collaborate Favorable population density and long-term growth rates Availability of clinical expertise and technical resources in the marketplace Organizational Organizational culture that is willing to experiment and learn from mistakes Leadership team well versed in change management Physicians and nurses interested in innovative care delivery and workforce models Physician leaders who believe in the Triple Aim (improving the care experience; improving the health of populations; reducing costs of care) and are high performers in their respective area Robust, strategically aligned primary care network well integrated via IT Prior experience with managed Medicare and Medicaid programs The IT infrastructure to track metrics of population health History of strong financial performance and capacity to make ongoing investments Fallacy Every market is ready for population health. Fact Key factors such as partner availability and risk contracting activity will vary from market to market. Use the accompanying Population Health Management: Organizational Self-Assessment to perform an in-depth evaluation of your readiness for PHM. PCP = primary care physician; PAC = post-acute care; IT = information technology. Source: Berwick DM at al. Health Aff (Millwood). 2008;27: Confidential and Proprietary 2013 Sg2

9 Population Health Management Which Organization Types Are Best Equipped for PHM? Independent community hospitals and sole community providers will likely not have the operating or population scale to engage in PHM. These organizations will have to seek partnerships with larger health systems. Integrated health systems have a strong head start in their quest to build PHM competencies, but each institutional profile will have its share of assets and obstacles. Key Considerations by Organizational Profile Profile Strengths Challenges Integrated Health Systems Regional Systems Academic Medical Centers Independent Community Hospitals Sole Community Providers Robust primary care network Early adopter of PHM tools, such as registries and medical home models Advanced technology infrastructure and analytic capabilities Experimentation with care delivery, payment and engagement models facilitated by health plan ownership Access to a broad population base Comprehensive System of CARE through ownership or partnership Ability to scale technology and workforce investments Embedded culture of innovation that can drive care model experimentation Access to capital and sufficient cash flow to fund ongoing investments Well-established brand strength to act as a market maker and aggregator Centralized leadership models Close links with self-insured employers and other community organizations Common culture allowing faster changes in practices and processes Less complex leadership structures Well-established relationships with public agencies and local businesses Strong leadership position to shape market direction Vested interest by the local community in long-term health system success Management of a multifaceted health enterprise with distinct business models Increasing competition as other health systems, physician groups and payers seek to form partnerships Being viewed as a competitive threat by other plans (if own health plan) Decentralized leadership Cultural diversity across system entities Multiple physician groups and alignment models Siloed clinical departments within a complex political environment Limited PCP base and integration with post-acute care resources Decentralized governing structures that may slow efforts to redefine strategy and business model Broader strategic issues concerning market positioning and financial viability Lack of geographic coverage and access to requisite population base Insufficient operating size to drive scale economies in key areas Insufficient population growth and density to support operating scale Limited financial resources to invest in technology and workforce Narrow local health care infrastructure to support a full System of CARE Limited clinical and expert resources Confidential and Proprietary 2013 Sg2 7

10 What Are the Key Components and Competencies of PHM? PHM must be a core competency for health systems engaging in or considering population-based risk contracts. However, PHM is different from running a health system. New skills and competencies in risk assessment, care delivery and technology are needed. Infrastructure, systems, partnerships and networks must be built or expanded. PHM will demand new talent, novel leadership structures and meaningful cultural change. Care Delivery Infrastructure Behavioral Health These services are an underdeveloped and undervalued segment of the industry. Approximately 25% of adults in the US have a mental illness and only 41% of those with a disorder receive some form of support. Advanced PHM programs place a renewed emphasis in this area, including establishing inpatient behavioral health teams (eg, psychiatrists, mental health nurses and pharmacists), implementing partial hospitalization (in which patients receive care in the hospital during the day and return home to a supervising caregiver overnight) and outpatient behavioral health programs, and embedding behavioral health specialists (eg, licensed clinical psychologists and social workers) in primary care teams. Care Coordination This intervention is the focal point of most PHM programs, but there are a number of different model variations, including complex care management and transitional care programs. In the complex care management model, care managers typically nurses support a primary care team by managing highrisk subpopulations. Care managers can have a broad range of responsibilities, including aligning care with other providers, managing medication, ensuring the use of evidence-based care and providing self-care education. Advanced programs physically embed care managers in PCP practices, where they are considered an integral part of the care team. Care Team Models PHM requires physicians especially PCPs to perform additional activities and expand their patient panels. PHM programs scale their time and optimize their capacity with team-based care models. Advanced practitioners (nurse practitioners and physician assistants), pharmacists, behavioral health specialists, medical assistants and health coaches help to deliver routine care and address care gaps. Community Infrastructure Many social determinants of health are beyond the reach of the traditional health care delivery and public health systems. In an effort to broaden their sphere of influence, PHM programs seek diverse partners including social service agencies, religious institutions, charitable organizations, youth groups, local businesses, schools and transportation authorities to implement community health improvement plans. Shaping health policy to improve access, quality and safety, and lower cost is a key activity of PHM programs. Evidence-Based Care Following evidence-based care pathways and clinical protocols is necessary to reduce clinical variation, unnecessary care and potentially harmful practices. However, despite decades of effort by the medical community to promote the use of evidence-based care, widespread adoption by physicians remains low. One study found that only 55% of PCPs enrolled in a pay-for-performance collaboration adhered to evidence-based clinical guidelines. PHM programs develop and deploy a standard approach to clinical practice across care sites, providers and partners. Sources: Waddimba AC. Provider attitudes associated with adherence to evidence-based clinical guidelines in a managed-care setting. Medical Care Research and Review. February 2010; National Institute of Mental Health. Any Disorder Among Adults. shtml. Accessed March Confidential and Proprietary 2013 Sg2

11 Population Health Management Health Promotion and Wellness These activities focus on shaping individual behavior and can be directed across the health continuum. While the scope of this intervention is broad, the activities are designed for the specific risks found in a target population. Activities can include one-on-one health coaching, routine screenings (eg, cholesterol and blood pressure) and lifestyle management programs (eg, weight and stress management). These activities can be delivered by a health professional nurse, pharmacist, physical therapist, dietitian or social worker or by a layperson with oversight by a health professional. Health Risk Assessments These are survey instruments used to gather a target population s self-reported information on health behaviors and risks. The resulting data in conjunction with medical claims, pharmacy and laboratory data are used to assess a population s health status, direct risk stratification and guide the development of interventions. Fallacy All I need is an electronic medical record and a disease registry to pull this thing off. Fact In addition to a robust technology infrastructure, PHM programs will need to add new components to their care delivery infrastructure, recruit new talent, and develop a culture of innovation and experimentation. Palliative Care Even as the focus of health care shifts to the front end of the spectrum (ie, prevention and wellness), PHM programs are also expanding the role of palliative care. Leading programs are extending their inpatient consult service into primary care and post-acute care settings and encouraging providers to initiate discussions on advance directives and care preferences (eg, the Physician Orders for Life- Sustaining Treatment, or POLST, paradigm). Population Engagement Techniques These are a set of tools used to empower and motivate individuals to take an active role in their health. Programs use classic techniques, such as comprehensive discharge planning and educational programs and materials, as well as contemporary approaches, including shared treatment decision making, peer-topeer networks, patient portals, mobile health applications and personal health records (PHRs). Advanced programs deploy these techniques across the care continuum. Primary Care Network The primary care setting is where much of the work of a PHM program takes place. PCP-led care coordination models, such as the PCMH, are the fundamental building block of a PHM program. These new patient-centered care delivery models embedded across a robust primary care network offer an effective means of promoting care coordination, prevention, early intervention and patient engagement. System of CARE PHM programs maintain a network of community-based, acute and post-acute care resources to provide a full spectrum of services and ensure care is delivered in the most cost-efficient and clinically appropriate setting. A high-functioning System of CARE seamlessly coordinates information flow, clinical decisions, operations and logistics across a variety of care settings and providers. Population health represents a far-reaching shift, and it entails much more than just taking on risk in payment. Michael Sachs, Sg2 Chairman Confidential and Proprietary 2013 Sg2 9

12 Technology Infrastructure Electronic Medical Records The meaningful use program will continue to spur adoption and advancement of EMR systems; however, interoperability with other IT systems and data dispersion across multiple sites of care will continue to challenge PHM programs in the near-term. Moreover, most commercially available EMRs were not designed to support PHM. For example, some systems cannot stratify populations into subgroups or perform multivariable queries to identify care gaps. Health Information Networks The deployment of health information exchanges and regional health information organizations is expected to begin to address the fragmentation of data sources in the delivery system. This information continuity will help providers track longitudinal care and identify care gaps. Mobile Health Applications A recent study revealed 45% of US adults own a smartphone. More than half of these owners use their device to gather health information, and nearly 20% have a health application. The most popular applications were used to manage exercise, diet and weight. This will be a key engagement mechanism going forward. Patient Portals Highlighting the evolving nature of the PHM literature, a study by Kaiser Permanente found that in contrast to prior studies patients with access to their portal used the delivery system more than those without. The researchers noted while this may increase costs in the short-term, it may also promote early intervention. Early wins in this area have mainly come from large health systems with mature EMRs. Personal Health Records A 2012 survey found that 10% of US adults maintained an electronic PHR. The California HealthCare Foundation (CHCF) found consumers with PHRs pay more attention to their health. In the CHCF analysis, one-third of PHR users reported using the tool to take a specific action to improve their health. Registries As one of PHM s foundational tools, a registry tracks services rendered across a population and identifies care gaps using advanced query and reporting capabilities. Some registries can include clinical decision support functionality and generate automated messaging for both patients (eg, reminders for an annual physical) and providers (eg, alerts for patients missing follow-up care). EMR = electronic medical record. Sources: Cusack CM et al. Practice-Based Population Health: Information Technology to Support Transformation to Proactive Primary Care. Agency for Healthcare Research and Quality Publication No EF. July 2010; Fox S and Duggan M. Mobile Health Pew Research Center s Internet & American Life Project. November 8, 2012; Palen TE et al. JAMA. 2012;308: ; Keckley PH and Coughlin S. Deloitte 2012 Survey of US Health Care Consumers. 2012; CHCF. New national survey finds PHRs motivate consumers to improve their health [press release]. Published April Confidential and Proprietary 2013 Sg2

13 Population Health Management Risk Stratification and Predictive Modeling Applications Risk stratification is the process of segmenting a population into meaningful subgroups using health risk in order to understand needs and deliver targeted interventions. Predictive modeling tools use statistical methods to forecast the likelihood of a future result, such as an individual s health care costs or ED utilization. Once only the domain of health plans, health systems have recently used these advanced analytics to identify patients at risk for readmission. This is where the real scientific underpinnings of PHM reside. Telehealth Platforms Although the concept has existed for decades, coverage restrictions and regulatory barriers have prevented widespread diffusion. However, the technology has broad applications (eg, as a delivery channel and decision support tool) and continues to become more sophisticated and less expensive (eg, remote biometric devices). The provision of real-time physiological data to trigger early intervention is its greatest contribution to PHM. A PHM program needs a good IT system, but it doesn t need to be perfect. Senior Vice President, East Coast Health System Source: Care Continuum Alliance. Achieving Accountable Care: Essential Population Health Management Tools for ACOs. April Confidential and Proprietary 2013 Sg2 11

14 Talent and Culture Culture of Learning and Innovation Advanced programs build a culture that embraces the risk of failure, employs successful innovation diffusion principles and techniques, and believes in continuous improvement. PHM programs take an industry leadership position in developing pioneering care delivery models, population engagement techniques and accountable payment mechanisms. Expert and Technical Resources From epidemiologists and statisticians to health coaches and community health organizers, the work of a PHM program is different from traditional health care and so are the resources required. Other examples of new talent include risk management experts (eg, actuaries) and IT professionals (eg, database administrators). Partnership Management PHM programs build and manage a portfolio of partnerships and maintain a willingness to build innovative or unconventional partnerships. The list of potential partners is far-reaching, including traditional providers (eg, medical groups and post-acute care providers), nontraditional health care entities (eg, complementary and alternative medicine providers) and other market players (eg, health plans, employers and local governments). Physician Leadership From experimenting with interventions to reconfiguring office workflow to delegating more responsibility to an extended care team, physicians must reengineer much of what has been hardwired into their current practices. In addition, the relationships between PCPs and specialists must also grow and mature. A team of physician champions dedicated to PHM help oversee this seismic cultural shift in the approach to clinical care. Risk Contracting PHM programs must have an advanced capability in designing and experimenting with accountable payment models. Whether with a payer or self-insured employer, PHM programs need to design payment mechanisms that offset the investments necessary to conduct PHM and reward the program for enhanced performance on access, cost, quality and patient satisfaction measures. Fallacy PHM is just more of what we ve already been doing. Fact PHM entails a set of competencies that have little to do with running a hospital. Many of the factors that affect the health of a population extend beyond the realm of traditional medicine. Source: American Medical Group Association. ACOs and Population Health Management: How Physician Practices Must Change to Effectively Manage Patient Populations. 12 Confidential and Proprietary 2013 Sg2

15 Population Health Management How Should My Organization Get Started With PHM? While PHM is a complex undertaking, there is a logical process for stepping into it. Increasing levels of organizational commitment in care delivery, IT infrastructure, expertise, leadership, culture and financial investment allow health systems to make the transition from patient-based health care to population health incrementally. However, in this case incrementally should not mean slowly or tentatively. Once the organization has started down this path, there are advantages to moving expeditiously. JJ J J Follow a Staged Approach to Development The table on the next two pages lays out five stages of PHM, from preparation and foundation building to developing advanced capabilities. While it is not meant to be exhaustive, the table highlights and sequences core PHM activities to aid organizations in setting their PHM priorities. Hospitals and health systems should be able to complete stages 1 and 2 independently. Stage 3 begins a more significant commitment to building PHM components and competencies. Stages 4 and 5 entail escalating investment in program resources and rising financial risk. But Move Decisively and Learn Quickly Health systems moving into PHM should act deliberately but rapidly for several reasons. Even under the best scenario it will be hard to realize a positive ROI in a timely fashion, and a prolonged timeline won t help. Also, moving from stage 2 to stage 3 is a big step. That is, the increasing investment of time, energy and resources is no longer gradual and represents a commitment to transforming how the organization operates and gets paid. Finally, if you re going to fail, you want to fail fast, learn faster, and then refocus and recharge your efforts. You can t dabble in population health. Senior Vice President, East Coast Health System Confidential and Proprietary 2013 Sg2 13

16 Stepping Into Population Health Management Key Actions Care Delivery Infrastructure Initiatives (See pages 8 and 9.) Technology Infrastructure Initiatives (See pages 10 and 11.) Stage 1 Prepare for PHM Complete the accompanying Sg2 PHM: Organizational Self-Assessment. Begin to consider the timing and extent of the shift from volume-based to value-based payment. Align PHM program goals with mission, vision and strategic priorities. Use community needs health assessment to shape program vision and scope. Evaluate need for larger partner in PHM implementation. Identify physician, nursing and administrative champions to lead program design and implementation. Estimate required capital and create a formal financial plan. Define EMR and broader information system needs, including data requirements. Stage 2 Build the Basic Program Foundation Consider how the PHM approach will coordinate with the organization s physician alignment model. Close System of CARE gaps through ownership or partnerships (eg, postacute care). Expand the primary care network. Establish outpatient behavioral health presence. Expand palliative care and end-of-life services across the care continuum. Develop cross-continuum care paths and treatment protocols for chronic diseases. Create a postdischarge transitional care program. Adopt disease-based registries for select chronic conditions. Talent and Culture Initiatives (See page 12.) Define clinical workforce requirements and create formal recruitment plan. Begin deploying advanced practitioners and the care team concept in key areas (eg, ED and primary care). Capstone Activities Complete board of trustee education and obtain commitment to building program. Educate broader medical staff on PHM program efforts. Reaffirm understanding of the degree to which the organization and market are ready for risk-based contracting. (See page 6.) Revenue at Risk None None 14 Confidential and Proprietary 2013 Sg2

17 Population Health Management Stage 3 Experiment and Begin Organizational Transformation Formally engage community organizations in PHM efforts (eg, partnerships with public health agencies and youth organizations). Refine the financial plan and seek additional financial resources, including grant funding. Stage 4 Deploy Core PHM Capabilities Scale ability to use claims, EMR and health risk assessment data. Stage 5 Develop Advanced Capabilities Determine the timing of the final transition from volume-based to value-based payment. Pilot the PCMH model at selected sites with the goal of achieving NCQA Level 3 accreditation. Test a care management model in primary care sites. Test population engagement tools. Implement risk stratification process for target populations (eg, ED). Deploy predictive model for patients at risk for readmission. Begin mining EMR data to refine care management processes. Work with third-party administrator for claims processing, audit support and payment distribution. Create a formal leadership structure and build a PHM staff (eg, business analysts, clinical researchers). Assign analytical resources to aggregate and report longitudinal cost and utilization data (ie, claims). Deploy program interventions to a target population, including health system employees. Pilot a shared savings or risk contract for a target population. <10% Expand PCMH and care management programs and engagement tools. Embed behavioral health and select specialists into primary care sites. Deploy health promotion and wellness services. Build population-wide registries. Develop sophisticated risk stratification and predictive modeling applications. Expand use of virtual visits, mobile health applications and clinical telehealth solutions. Consider acquiring in-house epidemiological and actuarial expertise. Expand shared savings and risk contracts. Contract with several local self-insured employers. 10% to 25% Use detailed analysis of precise subpopulations (eg, patients with heart and renal failure) to refine care pathways and resource deployment. Accelerate utilization of patient portals and PHRs. Integrate systems with regional information exchanges. Create a formal innovation lab for care delivery models and engagement techniques. Market narrow network insurance option independently or with a partner. >25%* *May be much higher for some organizations or markets. NCQA = National Committee for Quality Assurance. Confidential and Proprietary 2013 Sg2 15

18 What Metrics Can Be Used to Evaluate Program Impact? In the end, a population health organization s success will hinge on its ability to demonstrate marketplace competitiveness based on total cost of care and quality to purchasers. For internal purposes, it will also have to measure the effectiveness and ROI of program interventions. Fortunately, the last five years have seen performance measurement rapidly mature as multiple organizations (eg, AHRQ, CMS, NCQA and NQF) have worked to promulgate the first generation of value metrics. However, room for growth remains. For example, much of the focus has been on the outcomes of chronic conditions (eg, 30-day readmission rates for heart failure) and on care process measures (eg, childhood immunization rates). While these are important, broader measures of health status, care coordination, population engagement and intervention effectiveness are also of interest. Perhaps most challenging, numerous and disparate data systems and structures will be a significant barrier to creating the intelligence platform needed to accurately and completely understand longitudinal metrics. PHM programs will have to create new metrics customized to their objectives and activities to measure success and establish new processes to support data collection. Performance Measures by Developmental Stage 1. Prepare for PHM 2. Build the Basic Program Foundation Focus on traditional cost, quality and utilization metrics, such as: Unnecessary ED visit rate or ED utilization per 1,000 population Readmission rates by disease and source of admission (eg, skilled nursing facility or long-term acute care hospital) Potentially avoidable admission rate or admissions per 1,000 population 3. Experiment and Begin Organizational Transformation Deploy first-generation PHM metrics, such as: Basic measures of intervention effectiveness, for example, percentage of: Diabetic adults with hemoglobin A1c levels <8% Adults with body mass index >25 with a documented follow-up plan Measures of population engagement (eg, Patient Activation Measure ) Screening rates for colorectal and breast cancer, tobacco use, depression 4. Deploy Core PHM Capabilities Master managing to longitudinal metrics, such as: PMPM payment vs total cost of care Total resource (inpatient and outpatient) use and cost for key chronic conditions Out-of-network utilization (ie, network leakage) 5. Develop Advanced Capabilities Track refined measures of PHM performance, such as: Quality of life, functional assessments Custom metrics for intervention effectiveness and ROI Multiyear analysis of observed vs expected cost, utilization by population and subpopulation Share of Care the wallet share by payer for groups of attributed lives AHRQ = Agency for Healthcare Research and Quality; CMS = Centers for Medicare & Medicaid Services; NQF = National Quality Forum; PMPM = per member per month. Source: NQF. Accessed March Confidential and Proprietary 2013 Sg2

19 Delve Deeper Into PHM With Self-Assessment Accompanying this report is Population Health Management: Organizational Self-Assessment, which is designed to guide health systems through a detailed analysis of their readiness to undertake PHM. Using the self-assessment, administrative and clinical leadership teams can examine overarching factors such as strategic alignment and organizational experience, along with PHM capabilities in the domains of care delivery infrastructure, technology infrastructure, and talent and culture. Enterprise Characteristics 1. Strategic Alignment 2. Prior Organizational Experience Care Delivery Infrastructure 3. Care Delivery Model 4. Behavioral Health Infrastructure 5. Workforce Model 6. Population Engagement Techniques Technology Infrastructure 7. Technology Tools and Supporting Processes 8. Analytical Tools and Expertise Talent and Culture 9. Governance Model 10. Physician Leadership and Commitment Population health represents an important way of rethinking health care. Steven Lefar, Sg2 President and CEO

20 From the Sg2 Centers for Performance Strategy and Strategic Planning Anticipate the Impact of Change Sg2 s analytics-based health care expertise helps hospitals and health systems integrate, prioritize and drive growth and performance across the continuum of care. Over 1,200 organizations around the world rely on Sg2 s analytics, intelligence, consulting and educational services Old Orchard Road Skokie, Illinois Sg2-389