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SUCCESS IN THE POST ACA ENVIRONMENT
OWNING OUR DESTINY IN THE MIDST
OF RAPID AND COMPLEX CHANGE
California Ambulatory Surgery Association
What we will cover
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California State Market Trends
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Transformative Business Drivers
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Execution – Controlling your Own
Destiny
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California Market Trends
& Strategies
The Market has been busy
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Exchange (Covered CA), Medi-Cal expansion and aging of Baby
Boomers into Medicare well underway – huge expansion of
managed care lives (50% choice for MA by new seniors)
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Duals demo has launched– meanwhile IPAs and health plans have
not been waiting
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Multiple IPAs and hospital systems pursuing/expanding restricted
Knox Keene licenses
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Hospital, Health Plan and IPA mergers and acquisition activity very
high – growth in large for-profit and publicly traded companies in
the market
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Large hospital organizations are in constant competition and
conversations about best partners for growth in the large LA market
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Everyone rushing to capture large populations to manage - well
Trends in the Delegated Model
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200+ capitated medical groups & IPAs – more and more
acquisitions and consolidations
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Responsible for the care of approx. 13-14 M lives
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Medicare Advantage revenue is leaning out and ability to
profit on duals in demo is dubious
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Plans will utilize higher-performing, narrower networks to
maintain high STAR rankings
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This will increase the divide between the “have” and “have
not” physician groups
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While enrollment is increasing, volume may not make up for
decreased revenue
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Hospitals may survive Medi-Cal expansion with DSH and provider
fee, not so much physicians and others
Delegated Groups Payment
Trends
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Medicare Advantage - Has been the best-paying
capitated payment source & has funded care
management infrastructure in delegated model groups
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Medi-Cal Managed Care: Lowest cost structure of all
three major payer sources, but fastest growth
Cal Medi-Connect: Capitation rate underpayment
similar to the prior SPD experience?
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Commercial – Trending as a less significant part of
business
Trends in Payment – FFS/PPO vs
Capitation/Risk
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Continued erosion of employer-sponsored HMO
enrollment - when will feds kick in employer
mandate?
Uncertain policy in Covered California, excepting
narrow networks, which are under fire again
Revenue cuts with loss of cross-subsidization between
product lines -November 2014 Rate Review Ballot
Measure
Overshadowed by MA enrollment growth
Need for evolution of model – everyone looking for
solutions that are measurable and consistent in
quality and experience
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Transformative Business
Drivers
What’s old is new, what’s
new changes the rules
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Checklists
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Behavioral Economics
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Patient Portals
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Payment Innovations
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Evidence Based Decision Making
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Accountable Care Organizations
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Regenerative Medicine
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Virtual Visits
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Genetics enters practice
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Surgical Robotics
Source: Innovations from Harvard Business Review
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Medicare & Medicaid
Financially Unsustainable
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Medicare costs are growing at a rapid rate and
will take a growing share of the federal budget
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Medicaid costs are growing faster than revenues,
putting fiscal pressure on states (26% of state
budgets nationally)
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California – 2014/2015
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The state budget projects an increase to 11.5
million covered individuals (30% of population),
$75.4 billion in costs and $17.6 billion in state
General Fund match
Perspectives:
Patients/Members
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Increase in covered population, but also more skin in
the game may drive elective decisions
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Increased diversity and aging population
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Increased choice + empowerment
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Demand for value, ease of use + positive experience
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Expect access to health information
Perspectives: Providers
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Want to be at the front of the food line for $$$
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How do I improve patient/member experience?
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Trying to “capture” lives and taking more risk – New Restricted
Knox Keene and growth in affiliated IPAs
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Increasing competition + consolidation - cost reduction and
rate leverage
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Transition from hospital-based to ambulatory care and moving
into more home visits and care models
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More aggressive care management programs
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Traditional physician practices
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Teams practicing at top of license
PCMH
Standardized guidelines, e-consult, telemedicine, centralized
processes + tools
Increased expectation for reporting and documentation to
support RAF scores and demonstrate value/quality
Perspectives: Health Plans
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Bigger players, more lives, more power, more
needs/demands from providers
Quality + performance metrics & reporting – shift
from risk factors to customer experience for
payment
Large integrated delivery networks - Health Plans
are happy to push down clinical risk, especially with
delegated groups because those groups admin
costs don’t count toward MLR.
Perspectives:
Top of the Food Chain
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Hey, we really like this whole idea of having a budget and
projections that are more consistent rather than wondering
what fee for service claims will look like…
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And by the way, we want to share in the savings you
members, providers and health plans are generating
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Shift in payment toward member experience and quality
outcomes, less weight for complexity
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Increased focus on fraud and abuse
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Incentivizing, and sometimes partnering on, innovations
Key Takeaways
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Fewer dollars, major transition from fee for service to managed
care, care coordination and ability to manage population
health
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Reimbursements will be more closely tied to quality and costeffective care delivery – member experience and consistent
high quality performance matter!
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Fierce competition amongst health plans, hospitals and
medical groups to cover new managed care lives
Providers will need to have the competencies and capacity to
manage the health and total cost of a population – or prove their
values to help others do so - to effectively compete in the new
market
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Execution and Performance
SO, SO WHAT?
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"It is not the strongest of the
species that survives, nor the
most intelligent that survives. It
is the one that is the most
adaptable to change.”
-Charles Darwin
IDS and Population Health Critical Success Factors
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Delivery System Re-Design: Focus on patient centered
medical homes, co-management and coordination with
specialists, reduced avoidable utilization of expensive services
such as hospitals
Financial Incentive Re-Design: Demand for value, a focus on
outcomes and critically, a written arrangement between
providers & at least one major payer aligning financial
incentives
Healthcare Information Technology: Development of
electronic health records, registries and information sharing
across care continuum- strategy for use of data to undertake
advanced performance improvement
Member Engagement: Easy, local access, enhanced not
only patient, but member experience – including cultural and
linguistic sensitivity
Strategic Management: Focused on the customer’s
expectations and needs; always measuring and improving its
performance; adaptable to a rapidly changing environment
A Unique Opportunity…
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New round of Exchange enrollment about to launch – are you
prepared to be the provider of choice for surgery center
services?
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Large aging, diversifying population – massive growth in
Medicare Advantage, duals and Medicare fee for service – stay
tuned for immigration, we don’t have enough babies
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Will employer mandate be activated?
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New 1115 Medicaid Waiver coming to California – adding
District Hospitals
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The trend is to reduce hospital admissions, period, in NY
required 25% decrease over 5 years for Medicaid – how do
surgery centers carve out an evidence based role and get paid
for this critical work?
What is your value and role?
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Define your Customers
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Patients/members – by payer type
Payers
Provider partners
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Hospitals
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Physician Organizations and Community Physicians
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Community Clinics
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Others?
Questions 
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How are value and experience defined from their
perspective?
How would we rate ourselves, how do they rate us?
How do our services and expertise add value to integrated
delivery systems and a managed care market?
A Course of Action…
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Three frogs sat on a log.
One decided to jump
off.
How many
frogs remained
on the log?
A Course of Action!
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Three! Deciding is not the
same as doing.
A strategy is only as good as the plan and actions
taken to achieve it
How do we…
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Decide what we want to be, develop a clear vision for
our value proposition and role?
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Decide how to achieve our vision, our strategy?
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Ensure our decisions, initiatives and daily activities align
with our organizational strategy and vision?
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Develop the competencies and capacity to transform
and continuously improve operations and patient care?
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Effectively measure performance and ensure progress
toward our strategy and vision at all levels?
Strategic Planning
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Strategic Planning Methodologies aim to focus
improvement efforts on the most value enhancing
areas of opportunity and align each and every
member of an organization towards those priorities.
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Focuses improvement efforts on a few Must Win Battles
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Identifies the key drivers to affect those areas
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Focuses metrics around those key drivers
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Identifies initiatives focused on improving those metrics
Must Win
Battle
Key
Drivers
Metrics/
KPI’s
Improvement
Initiatives
Strategic Planning Ensures Initiatives Directly Impact Our Must
Win Battles
Qualities of a Good Strategic
Plan
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Focused: should focus on a few key areas; you can’t do
everything at once
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Balanced: not limited to profit and growth, should include
customers, employees and processes
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Measurable: need to be able to objectively measure progress
against targets
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Accountable: everyone understands their contribution to
achieving strategic goals and responsibility for the initiatives to
achieve them is assigned
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Iterative: a living document that should actively managed,
not put on a shelf
Keys to Successful Strategic
Management
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Commitment from the owners, physicians and
executive team
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Defined metrics tied to vision, strategy and annual
milestones to direct and manage performance and
resources
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Management and accountability structure to
promote continuous quality improvement from the
ground up
Nothing Good Comes Easy
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Resolve who will be the champion and “own” the work –
Physicians and other clinical leaders need to step up and lead,
not just follow
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Embrace discipline, accountability and measure results
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Prioritize and build a strong foundation/infrastructure around
consistent high quality execution first before focusing on
expansion and riskier initiatives
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Culture and building blocks of change are fundamental prerequisites in launching any organizational change and was
considered a critical factor for success by every successful
organization
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Persevere – don’t give up
Questions?
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Allen Miller, CEO
COPE Health Solutions
[email protected]
www.COPEHealthSolutions.org