POPULATION HEALTH COLLABORATIVES Agenda Based on Evolving Trends

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1 POPULATION HEALTH COLLABORATIVES 2015 Agenda Based on Evolving Trends

2 ABOUT THE ACADEMY HURON INSTITUTE Innovation and time to market define success for today s Top-100 healthcare organizations. To accelerate the use of best practices, The Academy Huron Institute (The Institute) designed the first Top-100 health system-based shared learning process. The Academy Huron Institute provides a fast-track way for health system peers to hone in on and respond to specific emerging issues. Multi-disciplinary teams enable Top-100 health systems to consider, respond, and implement changes in rapid succession. The Institute was formed in 2012 with a partnership between The Health Management Academy and Huron Healthcare. ABOUT THE POPULATION HEALTH COLLABORATIVES Beginning in 2013, The Academy Huron Institute started the Population Health Collaboratives with focuses on Population Health Infrastructure, Managing Population Risk, and Physician Alignment. In 2014, The Population Health Collaboratives successfully completed a second year. Eighteen of the Nation s Leading Health Systems and 4 industry-leading corporate partners participated in the 2014 Population Health Collaboratives. Participating health systems provide a significant amount of healthcare delivered in the United States, offering healthcare services in 32 states, and earning close to 9% of net patient revenue nationwide. Given the collective size and influence of participating organizations, there is an opportunity to progress healthcare and population health management through the Collaborative model in a meaningful way. ABOUT THE HEALTH MANAGEMENT ACADEMY The Academy provides unique, executive peer learning, complemented with rigorous and highly targeted research and advisory services to executives of Top-100 health systems. These services enable health system and industry members to cultivate the relationships, perspective, and knowledge not found anywhere else. The Academy has created the first and only knowledge network exclusively focused on Top-100 health systems. This learning model is based on a proven approach refined over 17 years working side-by-side with members. ABOUT HURON HEALTHCARE Huron Healthcare is the premier provider of performance improvement and clinical transformation solutions for hospitals and health systems. By partnering with clients, Huron delivers strategy and solutions that improve quality, increase revenue, reduce expenses, and enhance physician, patient, and employee satisfaction across the healthcare enterprise. Clients include leading national and regional integrated healthcare systems, academic medical centers, community hospitals and physician practices Population Health Collaboratives

3 CONTENTS Population Health Collaboratives: 2015 Agenda Based on Evolving Trends 4 The 2015 Population Health Collaboratives Plan 4 Informing 2015 Objectives with Lessons Learned in the 2014 Collaboratives 4 Three Overarching Trends in Population Health 5 Shift in the Healthcare Provider Market toward the Assumption of Risk 5 Fee-For-Service versus Value-Based Revenues 5 Growth in Risk-Based Revenues 5 The Provider, Insurer, and Employer Relationship 6 The Rise of the Active Healthcare Consumer 7 Health Systems Organizational Commitment to Population Health Management 7 Budget and Spending for Population Health 7 Health System Strategic Priorities 8 Development of Physician Compensation Models 8 Developments in Infrastructure to Manage Risk 9 Summary Population Health Collaboratives 3

4 POPULATION HEALTH COLLABORATIVES: 2015 AGENDA BASED ON EVOLVING TRENDS Throughout 2014, The Academy Huron Institute, with the guidance of The Health Management Academy, Academy Executives-in-Residence and Huron Healthcare, collected insight from subject matter experts, participant workshops, and peer discussions. This report shares the interesting findings, important lessons, and defining trends uncovered during the 2014 Population Health Collaboratives, and The Institute will use this information to gather insight for the Collaborative agenda in THE 2015 POPULATION HEALTH COLLABORATIVES PLAN Until recently, The US Department Health and Human Services has advanced value-based transformation through the sponsorship of experiments in provider management of risk-based agreements through programs such as Accountable Care Organizations and the Bundled Payments for Care Improvement initiative. With a new timeline for transformation announced in late January, HHS is expecting 30 percent of all payments from the Centers for Medicare & Medicaid come through alternative payments models by 2016, and 50 percent by This announcement will require providers to dramatically accelerate plans to integrate value-based payments into their revenue streams. This year will be pivotal in the development of population health initiatives. Many health systems have focused on building foundations for population health over the past two years, but this year there is likely to be a dramatic shift toward the use of risk-based agreements and execution of population health management. The Academy Huron Institute has developed a curriculum to address three major areas of population health preparedness: Developing Population Health, Managing Population Health, and Delivering Population Health. Each of the three areas will be addressed at meetings throughout the year (see meeting dates at end of paper), and content will correspond with health system participant s 2015 population health objectives as delivered during the closing meeting of the 2014 Population Health Collaboratives, as well as emerging trends and regulatory news such as the announcement from HHS mentioned above. In 2015, the goals of The Academy Huron Institute for the Population Health Collaboratives are to: Continuously evolve the population health Collaborative model to anticipate the needs of health system participants; Identify health system gaps in performance and capabilities, and work together to overcome identified challenges; and, Fully understand how to integrate new Health & Human Services initiatives into health system population health strategies. INFORMING 2015 OBJECTIVES WITH LESSONS LEARNED IN THE 2014 COLLABORATIVES The market for value-based care is growing rapidly, as evidenced by the shift in conversation at Population Health Collaborative meetings from strategies for future growth and preparedness to action plans and progress reports. The three overarching trends observed at The 2014 Population Health Collaboratives were: The shift in the healthcare provider market toward the assumption of risk; Health systems organizational commitment to population health; and, Health system continued developments in infrastructure, particularly in analytics, for managing risk. Supporting the findings of The Population Health Collaboratives are results from surveys completed by The Academy Research and The Academy Consumer Analytics. Please use this report to inform your population health strategy, and as an overview of trends observed at The Nation s Leading Health Systems in Population Health Collaboratives

5 THREE OVERARCHING TRENDS IN POPULATION HEALTH SHIFT IN THE HEALTHCARE PROVIDER MARKET TOWARD THE ASSUMPTION OF RISK FEE-FOR-SERVICE VERSUS VALUE-BASED REVENUES 2014 marked another year of change and development for healthcare providers looking to gain a stable foothold in the value-based care and risk-based environment while still maintaining a solid business in the fee-for-service world. According to survey research conducted by The Academy Research, the Nation s Leading Health Systems currently earn 85% of their care delivery revenues in a fee-for-service model, and 15% of their business in various forms of value-based or at-risk alternative payment models. Many health systems will continue to progress with population health and earn increasing shares of their revenue in the value-based environment during Surveyed members of The Health Management Academy believe the shift of fee-for-service to value-based care revenues will move approximately 6% throughout the next year with some regional variance. Figure 1. Percentage of Fee-For-Service Care Delivery Revenue. 100% 90% 80% 70% 60% 85% 79% 72% 61% 90% 85% 90% 86% 50% 40% 30% 20% 10% 0% Overall West Central East Current 12 Months Source: The Health Management Academy Report: The Academy H2C Strategic Survey. Survey 1: Q GROWTH IN RISK-BASED REVENUES At The Academy Huron Institute (The Institute) Population Health Collaboratives meeting in December 2014, participating health systems in the Managing Population Risk Collaborative were asked to place themselves along a continuum to connote their current level of revenue at-risk, and also place themselves where they believed their organization s revenue at-risk will be in In Figure 2, the results of this exercise show that while early work is being done to generate revenue in an at-risk environment, almost all expect substantial progress to take place before the end of the decade. Figure 2. Health System Risk-Based Revenues in 2014 and Expected Risk-Based Revenues in Avg Avg. 0% 100% Source: The Academy Huron Institute Population Health Collaborative. December Population Health Collaboratives 5

6 While many of the Nation s Leading Health Systems anticipate progress to be made in the shift toward value-based revenues, there is considerable variance in how or where these revenues will be generated. In some instances, more established or advanced performers in the value-based care and population health management space take on risk by starting or acquiring a provider-owned health plan. However, many health systems anticipate growing their at-risk revenues by utilizing other methods and agreements. In a survey conducted by The Health Management Academy on shared risk strategies among Leading Health Systems, the most common at-risk revenue growth channels are identified. (Figure 3) Most health systems surveyed (76%) identify commercial shared savings (Commercial Incentives) as one of channels they will use to assume risk, while partnership with a health plan and bundling were also common responses. Figure 3. Beyond provider-owned health plans, other ways in which health systems are taking on more risk. 100% 90% 80% 70% 60% 50% 76% 40% 60% 64% 30% 20% 36% 38% 40% 10% 0% Commercial Incentives Bundling Medicare ACO/ Pioneer ACO Partial Capitation Full Capitation Partnership with a Health Plan Source:TheHealthManagementAcademyReport:SharedRiskStrategiesamongLeadingHealthSystems:Provider-ownedHealthPlans.January2014. THE PROVIDER, INSURER, AND EMPLOYER RELATIONSHIP In order for at-risk agreements to work, healthcare providers, insurers, and/or employers all must have the necessary tools to manage risk, and must be willing to engage in risk-based agreements. This means that a specific market s ability to engage in risk-based agreements may be stifled if one of the parties is unwilling or unable to participate. According to discussion and peer presentations at The Institute Population Health Collaboratives December meeting, most participating health systems believed their ability to manage risk is ahead of their market (as defined by employers and insurers in the provider s market). This may mean that leading health systems are developing necessary infrastructures and abilities to manage risk-based contracts at a faster rate than their market s insurers or employers. Furthermore, as discussed at The Institute Population Health Collaborative December meeting, many participating health systems believe the insurers and employers in their markets were in the early stages of willingness and/or ability to engage in risk-based contracts. (Figure 4) Figure 4. Health System Perception of Employer and Insurer Readiness for Risk-Based Agreements. Health System Employers/ Insurers EARLY-STAGE ADVANCED 2014 Source: The Academy Huron Institute Population Health Collaborative. September and December Population Health Collaboratives

7 THE RISE OF THE ACTIVE HEALTHCARE CONSUMER In addition to the shifting environment being created between providers, insurers and employers, health systems must also balance the expectation of consumers. Patients have increasingly become active consumers of their healthcare, are utilizing numerous tools, and expect more information to be available to them to assist in healthcare decision-making. Health systems are responding by creating and executing strategies to engage and communicate with consumers. At The Institute Population Health Collaboratives meeting in June 2014, participating health systems discussed their engagement strategies with a group of their peers. An array of strategies and experience indicates that the healthcare industry is in the early stages of engaging customers when compared to other consumer-facing industries. Health systems with advanced consumer engagement strategies are characterized by the use of centralized resources to help patients navigate the myriad services and disparate systems used. Resources may include a patient portal with a personal medical record, centralized scheduling, or on-call patient support. These services are provided with the end goal of achieving both improved health outcomes through intelligent utilization and access, as well as better patient experience. Health systems and governing bodies are also making progress in offering tools that estimate the cost of patient care. Many consumers are still unaware of price transparency efforts made by providers and insurers, however. The Institute Population Health Collaborative participants have discussed price transparency throughout 2014, and many participating health systems have evolved and improved upon pricing and shopping estimator tools within the past year. Insurers and state governments are also involved in creating price transparency tools, with some releasing reimbursement rates on the most common DRGs or services at area facilities. HEALTH SYSTEMS ORGANIZATIONAL COMMITMENT TO POPULATION HEALTH MANAGEMENT BUDGET AND SPENDING FOR POPULATION HEALTH In addition to market shifts and a willingness to take on risk, health systems are also rapidly developing the infrastructure to manage population health. The organizational commitment shown by many health systems in The Institute Population Health Collaborative is evident in budget and spending increases in the coming year. At the December meeting, health systems from the Managing Population Health Collaborative laid out their organization s planned spending for population health for 2014 and 2015, and although big jumps in at-risk revenues aren t planned for the coming year, the peer presentation workshop showed a significantly greater level of investment for population health will be made during (Figure 5) It is clear that organizations are making investments now to prepare for a significant shift toward risk-based business in the future. Figure 5. Health System Budget and Spending for Population Health. SMALL INVESTMENT LARGE Source: The Academy Huron Institute Population Health Collaborative. December Population Health Collaboratives 7

8 HEALTH SYSTEM STRATEGIC PRIORITIES To further confirm a change in organizational commitment and an increased level of preparation for population health among the Nation s Leading Health Systems, a survey was conducted by The Academy Research on strategic priorities both now and in three years. In 2014, top strategic priorities reported were cost containment, population health, and physician network strategy development. In three years, health systems anticipate their priorities will reflect an enhanced importance of population health and population risk management, with top priorities listed as population health, establishment or growth of provider-owned health plan, and patient and consumer experience. DEVELOPMENT OF PHYSICIAN COMPENSATION MODELS The emergence of risk-based agreements and value-based care creates a need for providers to realign physician compensation and incentives to new payment models. Participating health systems in The Institute Physician Alignment Collaborative held continuous discussions on compensation models throughout 2014, and many indicate they are piloting and expanding new models. Within new physician compensation models, participating health systems include metrics on service-based areas such as patient experience, education, and access, on quality-based metrics such as health outcomes and safety, and on efficiency-based factors like utilization and total cost of care. Although many health systems made progress in creating, testing, and employing new compensation models in 2014, and will continue growth in 2015, initial reactions to the steady emergence of these models is tempered by their limited usage to date. Provider focus is still firmly rooted in generating revenue in a fee-forservice environment while making incremental advancements in value-based care. As business shifts toward value-based care and a greater percentage of revenues are derived from risk-based agreements, growth in the use of value-based compensation models will follow. At The Institute Population Health Collaboratives December meeting, the Physician Alignment Collaborative participated in a peer presentation workshop to discuss their use of value-based physician compensation models. Figure 6 shows the results of the workshop, detailing how health systems view their advancement in this area from 2014 to The incremental rate of change tracks closely with advancements in risk-based revenue discussed above. Figure 6. Health System Use of Value-Based Physician Compensation Models. Employed Physicians Independent Physicians EARLY-STAGE ADVANCED Source: The Academy Huron Institute Population Health Collaborative. December Population Health Collaboratives

9 DEVELOPMENTS IN INFRASTRUCTURE TO MANAGE RISK With increased budgets for population health-based advancements, health systems continue to make developments in infrastructure to manage risk. This is readily apparent in improvements made (current and planned) in analytics. The creation and capture of new data sources has accelerated greatly with the proliferation of electronic medical records, and provider organizations are working to enhance analytical capabilities to assist in managing new risk-based business. At the foundation of an effective infrastructure for managing risk is a stable and invested leadership, and a strong culture for analytics. At the December 2014 meeting of The Institute Big Data Collaborative, participating health systems participated in a peer presentation workshop, paired with facilitator-led discussion, to assess themselves along a continuum in various capacities of analytics. It was apparent that the organizations willing to invest in the improvement of enterprise-wide analytics solutions were also organizations with a strong perceived enterprise leadership and culture for analytics, and that top-level buy-in was critical to early successes in the emerging space. At The Institute Big Data Collaborative, teams also completed self-assessments in the following areas: enterprise analytics, staffing and organizational structure, tools and technology, and data. Health systems are making commitments and investments to improve enterprise analytics, but are in various stages of development and maturity. This is expected given the recent emergence of big data and advanced analytics in the mainstream of healthcare delivery. However, the future of managing risk will be largely dependent on the ability of health systems to collect and synthesize large amounts of data into actionable improvements in care delivery. SUMMARY While many interesting take-aways, lessons learned, and emerging trends were identified during the 2014 Academy Huron Institute Population Health Collaboratives, insights can be condensed into three main areas. First, there is a steady and deliberate shift in the market toward the assumption of risk and the development of risk-based programs. While the appropriateness of the rate of change can be debated, health systems can be sure that transformation has started and population health management is the future of healthcare delivery. Second, health systems are making an organizational commitment to population health by increasing budgets, building strategic priorities, evolving payer relationships, and creating new ways of paying caregivers all in the interest of advancing population health. Third, health systems continue to make developments in infrastructure to manage risk with strong enterprise leadership and cultures for advanced analytics. Meeting dates for the 2015 Population Health Collaboratives are: April 15-17, 2015 Dallas, TX September 14-16, 2015 Chicago, IL November 18-20, 2015 Chicago, IL For comment, or information on the 2015 Population Health Collaboratives, please contact Grant Patterson 2015 Population Health Collaboratives 9

10 The Academy The Health Management Academy 2015 THE HEALTH MANAGEMENT ACADEMY 515 Wythe Street, Alexandria, VA (703) huronconsultinggroup.com/healthcare

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