In This Issue:

Going Digital with Patients: Managing Potential Liability Risks of Patient-Generated Electronic Health Information

Authors: Robert Belfort, Partner, Healthcare Industry, Manatt, Phelps & Phillips, LLP | Helen Pfister, Partner, Healthcare Industry, Manatt, Phelps & Phillips, LLP | Susan Ingargiola, Director, Manatt Health Solutions

Editor’s Note: Mobile health technologies are increasingly valuable tools for improving the quality and efficiency of healthcare. The Robert Wood Johnson Foundation’s Project HealthDesign is an important research project that is exploring the use of personal health applications to promote better decision making by both patients and providers. In the most recent research phase, Project HealthDesign provided patients with smartphones for sharing “observations of daily living” (ODLs), along with other information that would give important indicators of patients’ health to providers through personal health record applications. Some physicians, however, had professional liability concerns around receiving digital data from patients.

In a new article published in the “Journal of Participatory Medicine,” the Manatt Health team, along with co-author Deven McGraw of the Center for Democracy and Technology, discuss the professional liability issues that providers expressed and the steps Project HealthDesign took to manage them. The article provides key insights for providers seeking to engage patients in their own care through technology. A summary of key points is below. To read the full article, click here.

Patients are increasingly using new electronic tools, such as personal health records and mobile applications, to track details about their health and share those details with physicians—often in real time and wholly separate from traditional office visits. Some physicians, however, are reluctant to receive digital data from patients due to professional liability concerns.

Project HealthDesign, a program of the Robert Wood Johnson Foundation’s Pioneer Portfolio, recently studied patients collecting information through personal health apps. The most recent phase of the program involved incorporating patient-generated, digital information into clinical care. The research teams documented the professional liability worries voiced by physicians, as well as the steps taken to manage them. Although Project HealthDesign is a research project, it is likely that care models integrating electronic patient-generated data will become the norm in the near future, as pressure to improve outcomes and lower costs continue to increase.

Project Overview

Project HealthDesign consisted of five research teams that created personal apps to help patients better manage their health and keep track of “observations of daily living” (ODLs)—patient-recorded feelings, thoughts, behaviors and environmental factors that are meaningful and provide health cues. It tested the hypothsis that capturing ODLs in real time enables patients to provide physicians and other clinicians with more specific health information. The theory is that by combining patient-provided information with clinical data, physicians will be able to give patients better guidance in managing chronic illnesses and improving outcomes.

Liability Concerns

The physicians and other clinicians participating in Project HealthDesign expressed the following liability-related concerns:

  • Timeliness and adequacy of responses. Key issues were around when physicians become liable for clinical issues related to information communicated through personal health records (PHRs) or apps, whether they have an obligation to share information with specialists, and whether they are responsible, if support staff fails to respond or inaccurately interprets data.

  • Volume of data. Major areas of concern were about data that is unstructured and/or so voluminous that it’s impossible to respond to in a timely manner.

  • Accuracy. Providers worried both about trusting the accuracy of patient information and about accidental deletions or other inadvertent actions that could compromise data integrity.

It’s important to note that, in general, to succeed in a professional liability claim, a plaintiff must prove the physician failed to meet the applicable “standard of care.” Since models based on electronically-communicated, patient-generated health information are new, professional customs are still forming, and physicians have no clear standards of care to guide them.

Strategies for Managing Risk

In the absence of clear guidance, the five Project HealthDesign teams each developed their own strategies for managing which ODLs would be sent to the clinical care team and how they would be handled. Each team set clear expectations around the “who, what, when, where and how” for electronic information sharing, ensuring data flows were tightly managed:

  • Who: Who on the team will receive the patient information? To what extent will it be shared with others? With whom will it be shared if it indicates a medical emergency?

  • What: What specific information will the patient share with the clinical care team?

  • When: When (how often and at what times) will providers receive and review the information?

  • Where: Where exactly will the information be collected? (For example, will it remain on the patient’s mobile device until the care team accesses it?) Under what circumstances, if any, will the information flow into the physician’s electronic health record?

  • How: How will the information be formatted, so the care team can act on it? How will patients be educated on their rights and responsibilities?

Key Takeaways

To manage liability, the Project HealthDesign teams took one or more of the following steps. Providers seeking to engage patients using digital technologies should consider implementing these strategies:

  • Work with patients to achieve a common understanding of the types of information patients would share, how the sharing would take place, which members of the clinical team would review the information and how often. Providers seeking to incorporate patient-generated, electronic health information may want to document this common understanding through an agreement signed by the physician and the patient. It’s critical that this “deal” be consistently honored by both parties.

  • Designate and train a member of the clinical care team to monitor incoming data and triage, as necessary. Some teams learned that it increased efficiency to have non-physician staff view the information first, so physicians only had to review data that was clinically relevant or as part of a patient visit. Because physicians may be held liable for staff member negligence, it is important that non-physician employees be well trained to review and respond to electronic, patient-generated data.

  • Put a medical emergency protocol into place. Some research teams were careful to instruct patients about using traditional emergency communications channels, when needed—and not to count on information collected through digital tools to be viewed on a real-time basis. These teams also developed emergency communications plans that were triggered when non-physician staff identified a potential medical emergency while reviewing data.

  • Use appropriate judgment in deciding when patient-generated electronic health information will be included in the physician’s legal medical record. A physician’s legal medical record is “the documentation of healthcare services provided to an individual during any aspect of healthcare delivery in any type of healthcare organization.”1 The growth of electronic communication tools has made defining legal medical records more complex. For the study, patient-generated electronic health data did not automatically flow into the physician’s electronic health record. Instead, the decision to include the information was either made in advance by the research teams or on a case-by-case basis by physicians and clinical care teams.

Conclusions

Project HealthDesign demonstrates that physicians can take steps to mitigate their liability risks, such as setting clear expectations for what information patients will share, how the sharing takes place, which members of the clinical team will review the information and how often. Through these and similar approaches, physicians can ease their liability concerns and incorporate electronic, patient-generated information to deliver more patient-centered, effective and cost-efficient care.

1. Haugen, MB, Tegen A., WarnerD. “Fundamentals of the Legal Health Record and Designated Record Set.” J AHIMA. 2011;82 (2)44-49.

Early Lessons from Five State Marketplaces: What Are the Secrets to Success?

Authors: Patricia Boozang, Managing Director, Manatt Health Solutions | Deborah Bachrach, Partner, Healthcare Industry, Manatt, Phelps & Phillips, LLP | Melinda Dutton, Partner, Healthcare Industry, Manatt, Phelps & Phillips, LLP | Jocelyn Guyer, Director, Manatt Health Solutions

Editor’s Note: While the problems with the federal model have dominated the headlines, many state Marketplaces are functioning well and fulfilling the vision of the ACA. In a new report for the Robert Wood Johnson Foundation’s State Health Reform Assistance Network—“Early Observations about Successful State Marketplaces”—Manatt Health reveals what we can learn from those clearly getting it right. Below is a summary of findings. Click here to download the full report, including interviews with state leadership.

On October 1, 2013, 16 states and the District of Columbia launched their health insurance Marketplaces. While the federal Marketplace has faltered, many states are off to a strong start. Although they are still evolving, they are largely functioning well—yet their success remains an untold story of the ACA’s launch.

In the article below, we explore the early achievements of five state Marketplaces—and share some of the reasons behind their success:

  • Kynect (Kentucky)

  • New York State of Health (New York)

  • MNSure (Minnesota)

  • HealthSource RI (Rhode Island)

  • The Washington Health Benefit Exchange (Washington State)

Integrated Eligibility and Enrollment Systems

All five states have fully-integrated eligibility and enrollment systems across all insurance affordability programs (Medicaid, CHIP, APTCs/CSRs) and Qualified Health Plans (QHPs). They all rank the decision to integrate their eligibility systems—rather than relying on account transfers among the systems—as one of the most important drivers of their implementation success.

Integrated eligibility and enrollment systems fulfill a major goal of the ACA—a single, streamlined process through which all consumers can apply, receive a determination for and enroll in the health insurance coverage for which they are eligible. The five states embraced the requirements of the law by building integrated “rules engines” to determine eligibility for Medicaid, CHIP, APTCs/CSRs and QHPs; interfacing with the federal data services hub and state data sources needed to verify application information; and generating real-time eligibility determinations.

The benefits of integration are evident. Online application processes for all take only from 10 minutes for a single applicant to 45 minutes for a complex family application. Consumers report positive experiences applying for coverage. Building on their success, all five states plan to extend their integrated eligibility function to other Medicaid and social services programs.

Being “Nimble”

Critically important to success was the ability to be nimble—to respond quickly and decisively to day-to-day questions and curve balls. Leading up to the October 1 launch, the states convened their teams and vendors with increasing frequency—in most cases daily by the summer of 2013—to keep pace with implementation requirements, many of which changed in the eleventh hour.

States’ ability to be nimble has been equally critical in the early days of operations. States all point to the fact that they have been prioritizing and fixing issues during launch and the initial days of impleme2ntation. Some are caused by system glitches. For example, most states report experiencing higher than anticipated volume in their first days, creating server capacity and other problems. All of these states executed fast, effective solutions that kept their websites operating smoothly.

The states also continue to make system fixes to improve the consumer experience. As they learn where consumers aren’t responding as anticipated or applications lack clarity, they are addressing those issues quickly, either through system changes or by educating call centers and assistors, or both.

Prioritizing Critical Functionality and Deferring the “Bells and Whistles”

With a three-year timeline to design, develop and implement the complex information technology necessary to support their Marketplaces, the states realized early on that prioritization was essential for success. Each recognized that the more “bells and whistles” they tried to build, the more opportunities there were for their systems to go awry. As a result, they are “phasing in” their full, functional systems.

Cohesive Teams with Clear Lines of Authority

States uniformly cited the importance of leveraging state leadership, infrastructure and staff. Through this approach, they could expedite project start and development, as well as establish clear lines of decision-making authority right from the beginning.

States benefited from pulling their teams together from existing state agencies, with prior working relationships and a firsthand understanding of how to navigate the state’s bureaucracy. By building cohesive and collaborative teams, they were able to stick to their vision and work plan—and drive timely and effective decision making.

Finally, committed leadership empowered to make hard decisions quickly is essential. When team members persuasively argue both sides of an issue, a strong leader can objectively consider the whole project, timeline and ramifications.

Connections to Stakeholders on the Ground

Successful states report a close connection to their “on the ground” stakeholders, including consumers, navigators/assistors, agents/brokers, call centers and health plans. They have leveraged these resources for pre-launch testing, as well as for identifying and resolving issues after launch.

Marketplace call centers have been particularly critical in issue identification and resolution in the early days of operations. States have established formal call center reporting to track indicators, such as call volume, spikes and complaints. They also are using call centers, as well as social media, for qualitative feedback loops.

Challenges and Future Priorities for State Marketplaces

When asked about challenges and priorities for functional improvements, common themes emerge among the states:

  • The federal data services hub. Frequent hub downtime during the first two months of open enrollment impeded states’ operations. In July 2013, HHS issued guidance that Marketplaces must hold applications for one day when the federal hub is down, making a second attempt at electronic verification before requesting paper documentation. Some states report this guidance came too late, as they already had locked-in system designs that defaulted immediately to paper documentation when the hub was down. These states plan to upgrade their systems to comply with the federal regulations to relieve consumers of the burden of providing paper documents.

  • Consumer decision support in plan selection. States highlight their plan selection processes as a high priority for improvement. They acknowledge that consumers want functionality “like the airlines have,” where they enter a few pieces of information and get a short list of plans that meet their criteria.

  • SHOP. Several states note that one focus of upcoming improvements will be SHOP Marketplaces, which are functional, but basic, in most states.

Conclusion

Healthcare is local. State insurance commissioners regulate health insurance in their states. Medicaid and CHIP commissioners manage their programs. Elected officials set policy goals for their states’ healthcare systems. Recognizing this local control, Congress decided to implement the ACA’s coverage expansions through the states. As our five successful examples prove, this vision was sound. Executing the new coverage paradigm is incredibly complex. But leading states are demonstrating it can be done!

Hospital Operations--No Longer Business as Usual

Author: Naomi Newman, Senior Manager, Manatt Health Solutions

It’s not an easy time to be a hospital or health system. Between declining reimbursement rates from Medicare and Medicaid, pressure for greater transparency on cost and quality, and a potential surge in demand as a result of the Affordable Care Act (ACA), many hospitals are realizing that their old operating model just won’t work in the post-reform landscape.

In addition to reducing payments to hospitals and increasing the rolls of the insured, the ACA is also putting pressure on the hospital industry to shift from its traditional fee-for-service economic model to a value-based one. The goal is to incentivize coordinated patient management and improved health outcomes.

As a result of these and other pressures, there has been a surge in consolidation in the market. In fact, there were more than 100 hospital Merger & Acquisition (M&A) deals in 2012, twice as many as in 2009. Moreover, more hospitals are reporting considering alignment with other hospitals or health systems as part of their strategic plans.

It’s worth noting that this consolidation is not just horizontal--i.e., hospitals affiliating with other hospitals. It also is vertical, i.e., hospitals affiliating with other types of providers (e.g., medical groups, rehabilitation facilities and retail clinics), and with entities that provide support functions essential for hospital management (e.g. revenue cycle and supply chain services). As a result, we’re seeing the emergence and expansion of regional and even national health systems, with services that go beyond traditional inpatient care in a local geography.

Some health systems are pursuing “extreme vertical integration”--not just expanding their patient care capabilities and administrative support capabilities but entering into new, though related, businesses, such as health insurance, health IT consulting, and medical product/device development and investment. They are, in essence, diversifying their revenue base.

With mounting pressure to change the traditional economic and operating models of care and so much movement in the market, there’s the potential for a radical transformation of our care delivery system. This transformation brings opportunities to improve the alignment of incentives and operating margins within the healthcare industry. This would allow for investment in preventive care, active management of chronic conditions, reductions in unnecessary utilization, rationalization of care delivery and innovation. There are also potential economies of scale and scope in back-office functions, which would translate into savings not just for hospitals but also for patients, payers, employers and taxpayers.

Hospitals will need to think strategically about what will best enable them to survive and even thrive in the post-reform landscape, including whether affiliating with another entity is part of that equation. Reflecting on a few targeted questions can help re-orient hospitals to put them on a more sustainable trajectory.

Market Pressures: Are They at a Boiling Point?

While hospitals are subject to different local market pressures, they all will need to deal with the following three issues, regardless of their location. For each of these issues, an affiliation strategy may offer ways to mitigate the pressure.

  • Declining reimbursements for Medicare and Medicaid patients: With scheduled cuts to Medicare and the financial squeeze on state, and by extension, Medicaid budgets, hospitals are feeling top-line pressure more acutely than in the recent past. As a result, hospitals will have to do more with less–i.e., find ways to operate more efficiently and strengthen their other revenue base: commercial insurance. An affiliation strategy could help achieve economies of scale and drive down the unit cost of care delivery. It also could help strengthen a hospital’s market position and its negotiating power with insurers. In addition, an affiliation could enable diversification into other, more attractive markets.

  • Increasing insured population: The passage of the ACA will increase the number of people with insurance. It provides access to care for those who could not access it before due to their unattractive risk profile to insurers. It also expands the risk pool by incentivizing young and healthy consumers to participate. This could be a mixed blessing for hospitals. On one hand, it could translate into reimbursement for services that previously had to be written off as charitable care. It also could increase demand for revenue-generating procedures that may have been postponed due to lack of coverage. On the other hand, the expansion of health coverage could put intense pressure on hospitals to stretch their capabilities, so they serve more people.

    The net impact on hospital operations of a larger insured population is hard to predict and highly dependent on the insurance coverage of the population that the hospital serves. Given this uncertainty, hospitals will need to find ways to hedge their risk. For example, they might consider affiliating with hospitals in their markets to strengthen their position with insurers, as well as diversifying into other markets to access more favorable reimbursement environments, or into other areas of care provision (e.g., outpatient services or post-acute care services).

  • Pressure to shift from fee-for-service to accountable care: Decreasing reimbursement and variations in demand are problems that hospitals deal with regularly. They are just acutely accentuated at this time. The pressure placed on hospitals by the ACA, however, to change their fundamental economic model is one that they haven’t confronted since the managed care movement in the early to mid-1990s. One important distinction between past efforts to promote managed care and today’s efforts to promote accountable care (a more holistic approach to managing health that aligns doctors, hospitals and other providers to coordinate care, focus on prevention, reduce unnecessary utilization and demonstrate high-quality outcomes) is the advent of the electronic medical record (EMR) and “big data.”

    The revolution in data warehousing, mining and analytics has made possible insights into care delivery and outcomes of that care that were never before available. While quality is still somewhat elusive to define in some areas of medicine, evidence-based process and outcomes metrics are emerging that enable us to hold organizations accountable for the quality of the services they provide. These metrics also enable hospitals and health systems to point to quality as a differentiator.

    Figuring out how to transition from a volume-driven model to an accountable care model will be the major strategic challenge for hospitals in the near future. To meet the challenge will demand two behaviors: (1) demonstrating high-quality, cost-effective outcomes that are attractive to have in an ACO network and (2) expanding along the care continuum to play a greater role in total patient management versus just inpatient management. An affiliation strategy could help with both of these needs.

To Affiliate or Not to Affiliate?

Hospitals play different roles for their communities. The majority are focused on providing “bread-and-butter” inpatient care. To unleash greater value, they need to focus on driving down cost and driving up quality of care. In today’s ACO environment, quality is migrating beyond the four walls of hospitals, requiring tighter alignment with upstream providers (e.g., medical groups) and downstream providers (e.g., post-acute care providers).

The prominent academic medical centers (AMCs) of the country focus on delivering higher-end care for complex conditions that community hospitals don’t have the experience, equipment or expertise to handle. AMCs have the added goals of training the next generation of providers and driving research to accelerate the deployment of new and better prevention, diagnostic, treatment and care management practices. For them, doing what they do better means ensuring they have the volume required to maintain expertise on complex care, to train the next generation of providers and to innovate. AMCs, like everyone else, will need to focus on driving down the cost of care delivery.

Other hospitals serve a safety net function for under-served communities, receiving significant public and private support essentially to correct for a market failure. For these hospitals, doing what they do better means serving more patients more cost-effectively, finding ways to shift care upstream to lower-cost settings (e.g., outpatient clinics), and finding other ways to balance their payer mix.

An affiliation strategy likely will be part of the solution for advancing the core value proposition of these entities. In considering the questions below, hospital leaders need to acknowledge that capitalizing on the potential synergies of M&A and other affiliation arrangements is often harder in practice than on paper.

1st Question: Am I exposed? Is my viability threatened? Hospitals’ and health systems’ operating models will be threatened, if they can’t generate sufficient revenues to cover costs. If a hospital is feeling top-line pressure, partnering with another hospital in its market, can strengthen the combined negotiating power of both entities vis-à-vis payers. Assessing the level of concentration in the market can indicate whether an affiliation actually will lead to a boost in revenues without risking anti-trust violations.

Partnering with a non-hospital entity--whether a medical group, a post-acute care provider or a support function provider--can help diversify the revenue base and mitigate the drop in reimbursement. If the goal of the ACA is to drive patients to the lowest-cost care setting, hospitals should explore partnering with organizations that know how to achieve that objective. A recent example of that kind of partnering is Dignity’s acquisition of U.S. Healthworks--a provider of occupational health services and urgent care clinics.

If a hospital is most concerned about escalating expenses and bottom line pressure, both horizontal integration and vertical integration offer opportunities to achieve economies of scale. That said, hospital leaders should appreciate that cost savings are often easier to estimate than actualize. The questions hospitals should ask themselves are:

  • Have we independently achieved lean operations, so affiliating may not actually yield significant benefits?

  • Does one of us have best practices that could be leveraged by the other?

  • Do our organization and our potential partner have the operating discipline required to actualize these economies?

  • Are outsourcing or insourcing (i.e., vertical integration) attractive options?

A hospital also should play out the “do-nothing” scenario. Are its brand and value proposition strong enough to maintain independence in a consolidating market? While the answer may be yes in the short term, it’s unlikely to remain so in the long run.

2nd Question: Do I want to be a driver or a passenger in the ACO movement? If a hospital wants to take a leadership role in the development of an ACO, affiliation is inevitable. Hospitals cannot control the ACO premium dollar unless they align with physician groups responsible for managing patient care. Additionally, owning or aligning with other care providers along the continuum (for instance, post-acute services) can help the ACO better coordinate care and manage costs.

The business of managing care, however, is very different from the business of providing inpatient care. While it may be attractive to move upstream and have more control over the premium dollar, it will require changes to the operating model that may be challenging. Additionally, while there’s strong market momentum in support of ACOs, it’s unclear that they will be successful in the near term. Initial findings from a Medicare pilot program revealed that some organizations chose to drop out of the program, because they were unable to generate cost savings.

As a result of the challenges and uncertainty in the ACO market, some hospitals may want to avoid entering into the fray and instead focus on strengthening their core service offering by lowering costs and enhancing quality, making them attractive participants for all insurance models--ACO or other. In this case, vertical integration with medical groups likely will be less attractive than horizontal integration, vertical integration with a back-office function provider, or no affiliation at all.

3rd Question: How can I ensure a successful transaction, and more importantly, a successful long-term partnership? Explore your options--the obvious ones and the not-so-obvious ones. Financially strong entities will have more ability to do outright acquisitions. Those with fewer reserves likely will need to consider mergers, JVs or other forms of affiliation. Struggling hospitals may want to search proactively for suitors before they enter more dire financial straits.

With the emergence of regional and even national health systems, the best option may not be located in a hospital’s market--and may not be another hospital or health system. In addition to the trend of large health systems moving toward vertical integration, we’re also seeing the emergence of interesting bedfellows, such as the acquisition of HealthCare Partners, an owner of physician groups in Southern California, Nevada and Florida, by DaVita, a dialysis service provider. Hospitals should cast wide nets--both in terms of potential partners and types of affiliations. Greater alignment does not necessarily require an M&A transaction. Those who are looking to align with other entities should remember the following:

  • Seek expert counsel to help with the due diligence process—including lawyers on anti-trust issues, consultants on market analysis and business strategy, and bankers on deal financing. Having experienced advisors can help hospitals avoid common pitfalls and ensure favorable deal outcomes.

  • Don’t underestimate the importance of cultural fit. Profit and non-profit, religious and secular, community and academic: All share a common goal of delivering quality inpatient care, but how they do it and how they prioritize it vs. other goals (e.g., generating a profit for shareholders or ensuring alignment with a religious order) can vary significantly. Ensuring alignment of mission, vision and values across two potential partners can’t be short-changed. This does not preclude the affiliation of two hospitals or health systems of different types from being successful. In fact, we’re seeing more affiliations between religious and secular hospitals--for instance, the affiliation between Swedish Health Services (secular) and Providence Health & Services (religious).

    It’s critical to remember, however, that healthcare delivery is still a people-driven business. Culture change and behavior change (for instance, getting providers to adopt best practices) is hard enough within one organization, let alone across two separate entities. Organizations will want to develop a common framework for implementing changes, making important decisions, monitoring performance and holding people accountable.

  • Conduct regular sanity checks: As the transaction process evolves, continually ask: “Will this enable us to better serve our communities? How will it improve access to care? How will it improve quality of care? How will it enable the more rapid deployment of best practices in this market?” If the answers become fuzzier over time, then it’s likely a hospital or health system is pursuing the transaction for the wrong reasons. Once the process is closed, hospitals should continue to check in on all of these important indicators, not just financial performance metrics, to assess the value of the transaction not only to its bottom line but to the community it serves.

Figure 1: Recent Examples of Horizontal & Vertical Integration:

Type

Sub-type

Participants & Highlights

Horizontal Integration

Local

Mount Sinai merger with Continuum Health Partners, New York City (Sept. 2013)

Regional

Providence Health & Services affiliation with Swedish Health Services, Washington State (Feb 2012)

National

  • Tenet acquisition of Vanguard ($4.3B acquisition, Oct. 2013)

    • 77 acute care hospitals  in 14 states

  • Community Health Systems & Health Management Associates ($7.6B, in process, expected 1st quarter 2014)

    • 135 hospitals in 29 states (CHS) + 71 hospitals in 15 states (HMA)

Vertical Integration

Support Functions

  • Joint Venture between Dignity Health & United’s Optum group to launch revenue management firm, Optum 360 (Oct 2013)

  • CHI & Conifer entered into strategic partnership, whereby Conifer (a Tenet-owned subsidiary) provides revenue cycle services to 56 of CHI’s hospitals and CHI transferred its revenue cycle employees to Conifer (May 2012)

  • Ascension Health, the nation’s largest non-profit health system, owns 7% of Accretive – a revenue cycle/debt collection management company

Care Continuum

  • Dignity Health acquired U.S. Healthworks, a provider of occupational health & urgent care clinics (Aug 2012)

  • DaVita, a provider of dialysis and kidney care services, bought HealthCare Partners, owner of physician groups in Southern California, Nevada and Florida (May 2012)

Insurance

  • Catholic Health Initiatives acquired a controlling interest in physician-owned health plan with 16K members in WA state (March 2013)

Conclusion

Though it’s not an easy time to be a hospital or health system, it’s certainly an exciting one. Hospitals have the opportunity to re-align their operating model with the broader public health goals of ensuring greater coordination across sites and care providers, promoting upstream prevention and disease management over downstream hospitalizations and procedures, and achieving efficiencies in back-office functions, which can translate into more cost-effective care. They are also positioned to play a driving role in the ACO movement.

To survive and even thrive in the post-reform environment, hospitals will need to consider affiliating with other hospitals, as well as with medical groups, other service providers along the care continuum, and groups that can help them actualize economies of scale and scope. As part of their strategic planning processes, hospitals and health systems should think about their affiliation options proactively, versus risking having to respond reactively, once their position has weakened and their options have narrowed.

The options for, and benefits of, affiliation will vary significantly based on a hospital’s market and current financial performance. A thorough analysis of the current threats to a hospital’s viability, coupled with a deep understanding of its core value proposition, a decision about the role it wants to play in the ACO world, and a realistic appreciation for the challenges of capitalizing on the synergies between two affiliated entities, will enable it to pursue the affiliation strategy that best positions it for long-term viability.

Collaborative Care before Accountable Care: Achieving Low-Cost, High-Quality Care through a Regional Collaborative in Florida

Author: Alex Morin, Senior Analyst, Manatt Health Solutions

Editor’s Note: The University of Florida Health Science Center and Shands Teaching Hospital and Clinics have found a unique and innovative way to address the complex needs of patients while being conscious of cost constraints: a regional collaborative with Orlando Health. A new article in the “American Journal of Accountable Care” provides an overview of the approach and its implications. The article below summarizes some key highlights. Click here to download the full article.

In this era of health reform, health systems are struggling to provide the right balance between quality and cost efficiency. Accountable Care Organizations (ACOs) hold promise as a solution, as evidenced by the dramatic increase in ACO activity. Together, private sector ACOs and Medicare programs put the national total of operating or planned ACOs at over 200.

Many organizations, however, are not yet prepared to pursue a full ACO contract with a payer. They are looking for innovative intermediate steps that can begin to achieve some of the goals of the ACO model—particularly better patient care at a lower cost.

The University of Florida Health Science Center and Shands Teaching Hospital and Clinics, Inc. (University of Florida and Shands) have come up with a unique and creative approach to meeting patients’ needs while limiting costs: a regional collaborative with Orlando Health. The article below summarizes its three-phase approach that is allowing both organizations to offer better, more efficient care.

An Opportunity for Collaboration

The University of Florida and Shands collectively form a $2.7 billion organization that operates across two campuses—Gainesville and Jacksonville. It serves a disproportionately impoverished population, with more than one-third covered by Medicaid and 9% with no insurance.

Its partner, Orlando Health, is an approximately $2 billion not-for-profit corporation, with 1,738 beds in 6 hospitals. One of Florida’s most comprehensive medical systems, it serves about 1.8 million residents in central Florida.

The two institutions operate in contiguous and almost entirely non-competitive markets. More than two years ago, the concept of a partnership to deliver better care materialized into an action plan. In May 2011, the University of Florida and Shands agreed with Orlando Health leadership to a model of regional clinical integration that would improve quality and constrain costs. The model has been extended to form a formal clinical integration network (CIN) governing joint activities across four key areas: clinical integration, data analytics, contracting and operations.

Phase 1: Identifying Opportunities for Collaboration

Early on, the leaders of both institutions identified 11 areas for collaboration, covering a range of health and clinical services, combining institutional efforts and leveraging each other’s expertise. The following collaborative activities have been implemented and are starting to show results for both organizations:

  • The ability to pool expensive physician manpower in pediatric orthopedics through shared staffing and resources

  • The ability of Orlando Health to rely on the University of Florida and Shands for transplant services, eliminating the cost of pursuing its own program

  • A regional heart failure program at Orlando Health run by Orlando Health cardiologists trained by the University of Florida and Shands, eliminating the need to recruit an additional heart failure medical director at Orlando Health

  • The establishment of weekly teleconferences for heart failure patients between Orlando Health and the University of Florida and Shands, enabling patients to get a second opinion with minimal effort and allowing Orlando-based patients to remain in Orlando for heart failure care until a transfer is deemed necessary

  • A joint ventricular assist device (VAD) program that enables the organizations to purchase and share expensive equipment for high-cost procedures

  • Improved ability to meet patient care demands and disseminate best practices in mental healthcare by sharing the nationally-recognized addiction medicine program at the University of Florida and Shands, as well as the staffing of outpatient clinics

  • Improved bed capacity and staffing resources through the novel use of telemedicine to help University of Florida psychiatrists better triage mental patients in the emergency room

  • Millions of dollars in savings for both organizations for joint purchasing of the same supplies or similar supplies (agreeing on a single product rather than buying multiple similar products)

Phase 2: Establishing a CIN

The CIN is responsible for expanding the collaboration. Jointly governed by both organizations, it is focused on four pillars that will drive care improvements and cost reductions:

  1. Clinical integration: Establish patient registries and integrate patient data into a common electronic health record platform via a health information exchange to support expanded care coordination, facilitate care transitions, improve patient management and ensure efficient referrals across institutions.

  2. Data analytics: Create a new data warehouse and analytical platform that will push quality and performance metrics, as well as clinical data, onto scorecards and reports used to identify care variations and drive best practices.

  3. Contracting: Develop a contract management platform to enable risk profiling and risk management, position the organizations to engage in risk-based contracting with third parties, and realize shared savings through bundled payment distribution contracts.

  4. Operations: Plan to merge and streamline operations around supply chain management, pharmaceutical management, durable medical equipment, home and long-term healthcare and tertiary care. The plan enables joint purchasing, consolidation of post-acute care services and streamlined tertiary procedures that share rather than duplicate resources.

Phase 3: Laying the Foundation for an ACO

The work to date between the University of Florida and Shands and Orlando Health has laid the foundation for an ACO that spans their two regions. A centralized office staffed by administrators from both organizations provides oversight, prioritization and project management. The two organizations have created a kind of “pre-ACO” that focuses on the critical elements needed to transition and manage a patient population. Collaborative efforts around clinical integration are creating a provider culture that pushes for coordination across the care continuum, leverages expertise for specific procedures and uses innovative delivery systems, such as telemedicine, enhanced home health and community-based patient management.

Conclusions and Implications

The innovative approach that the University of Florida and Shands and Orlando Health have taken is a viable path for transitioning to a more accountable payment and delivery model through a formal ACO in the future. Organizations contemplating their own path toward accountable care can learn from the approach of first developing a regional collaboration. Policymakers and health services researchers also can benefit from studying the Florida example to gain a better understanding of the elements of accountable care and how they can be harmonized with other delivery system reforms, such as bundled payments, patient-centered medical homes and value-based purchasing. The collaboration is a novel example of how provider organizations can work together to gain both short-term efficiencies and long-term strategic transformation.

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