Mountain View Case Study
Issues addressed in this case study include: Physician governance within a health system Integrating physician practice and other components of the management team Experiments in identifying population segments and tailoring approaching and resources to these segments Managing the cost/benefit ratio as
The two case studies offered in this toolkit address increasingly common situations in physician relations. Both are composite case studies based on the experiences of several actual systems and medical groups. In both instances, the organizations are moving aggressively toward accepting and managing more population health risk: Mountain Health System seeks to take its multispecialty physician group to a new level Seaside Medical Group facilitates a partnership and clinically integrated network involving several other organizations
FY15 IPPS Final Rule Overview
This document highlights important updates to the 2015 payment rates to hospitals under the FY15 Inpatient Prospective Payment System final rule.
CY15 Medicare Physician Fee Schedule Proposed Rule Fact Sheet
This document summarizes the revised policies pertaining to payment policies under the Medicare physician fee schedule for calendar year 2015 (CY15).
HFMA comments to CMS on the 2015 Medicare OPPS Proposed Rule
HFMA comments the 2015 Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated With Submitted Data; Proposed Rule (hereafter referred to as the 2015 OPPS Proposed Rule) published in the July 14, 2014, Federal Register.
CY15 OPPS Proposed Rule Fact Sheet
This document provides an overview of the CY15 proposed changes to payment rates under the outpatient prospective payment system (OPPS).
Moving Forward The steps toward finalizing an acquisition or affiliation will differ depending on the degree of integration involved. A basic road map for moving forward is provided below. Initial Actions Engage legal counsel. Regardless of the degree of integration you seek, all acquisition and affiliation approaches can raise legal issues involving antitrust, fraud and abuse, and other state and federal laws and regulations. Approach/engage your potential partners. If your organization seeks to be acquired by another organization in a competitive process, it may engage an advisory firm that will seek detailed proposals from potential acquiring organizations. Less fully integrated affiliation models may be initiated through conversations between leaders of the potential partner organizations, often with the assistance of an advisory firm. Consider the need for a confidentiality agreement in early discussions with potential partners. Commit to going forward. If a merger is involved, the parties will likely sign a letter of intent or memorandum of understanding on the proposed merger. Depending on the size and market impacts of the acquisition or affiliation, a Hart-Scott-Rodino premerger notification filing with the Federal Trade Commission and Department of Justice may be required. The deal will not be able to close until the federally prescribed waiting period has expired or the government grants early termination of the waiting period. State/local laws and regulations may also apply. Due Diligence The degree of due diligence required will vary by approach. A merger will require the greatest extent of access to books and records to confirm the financial viability/desirability of the acquisition. “Cultural” due diligence is also important. If there are significant potential cultural incompatibilities between organizations, their chances of working effectively together, whether as a merged entity or as collaborative partners, can be significantly diminished. Internal Communications Rumors and gossip that can spread among staff in any acquisition or affiliation strategy can easily delay progress or derail the activity altogether. Once your organization has committed to moving forward, it is critical to inform staff on possible impacts of the acquisition or affiliation activity. The two PowerPoint templates below outline key discussion points in fully integrated and less than fully integrated acquisition and affiliation models. Tool: Communicating with Staff: Full Integration Tool: Communicating with Staff: Less than Full Integration Business Planning While due diligence proceeds, the management teams of the partner organizations should develop: Vision statement Organizational structure Capitalization plan Governance model (powers, roles and responsibilities, reserved powers, voting rights, etc.) Management structure (including, in the case of a merger, the transition team) Early initiatives and priorities Financial projections (including scenarios related to the rate of movement towards value-based payments) Final Agreement The partners should now be ready to negotiate their final acquisition or affiliation agreement. Use the following scenarios to see how different organizations might work through the steps toward an acquisition or affiliation. A stand-alone hospital determines its acquisition and affiliation approach An academic medical center aims for long-term sustainability A multi-hospital pursues a regional strategy and system-wide economies of scale
Determining Your Options: Identifying Potential Partners
Determining Your Options: Identifying Potential Partners With a sense of how your organization’s goals and approaches align, assess which organizations are the best candidates for potential acquisition or affiliation partners. Identifying partnership needs and options What organizations might be potentially interested in partnering? Does your organization require more than one kind of partner? Why? Weighing the options With respect to each potential partner, consider: How would a partnership with this organization change your organization’s current situation? Which needs would they meet? Which needs of the potential partner organization would your organization meet for them? What is the comfort level between your organization’s leadership team and the leadership team of the potential partner organization? Do you see any challenges or disadvantages in partnering with this organization? Is it possible to develop high-level financial projections of the impact of this partnership? Would a partnership with this organization have an impact (positive or negative) on your organization’s: Image or brand? Efforts at physician integration? Culture? Relations with patients, employers, governmental entities, or other community interests? After evaluating each potential partner organization, consider: How do the potential options differ from each other? What does examination of the detailed elements of each option reveal in terms of comparative pros and cons? Of all of the characteristics of the available options, which are the most important to your organization (e.g., governance, capital needs, impact on financial performances, ease of change, physician structures, etc.) ? Why? Based on this comparison, what appear to be viable options? Which is the best option, and which is the next best (i.e., best alternative to a negotiated agreement)?
Determining Your Options: Common Acquisition and Affiliation Approaches
Determining Your Options: Common Acquisition and Affiliation Approaches Now that you understand your organization’s goals and needs, consider whether some form of acquisition or affiliation activity can help your organization reach its goals. Common acquisition and affiliation approaches are defined below. This is just a representative listing; new approaches to acquisition and affiliation continue to emerge. As you review these approaches, consider the following questions: Does vertical or horizontal expansion, or both, best align with your organization’s strategic priorities? How would these be prioritized? Why? How important is diversification as a strategy vis-à-vis traditional market expansion? Are there certain approaches that seem like a better fit for your organization? Why? Would any of these options allow your organization to stop owning certain resources, and instead obtain them through partnership or outsourcing? Does partnership with a health plan offer your organization something strategically important and distinct from other forms of affiliation? In what ways? Tool: Matching Goals with Options Common Approaches Merger of a not-for-profit (NFP) hospital into a NFP system. Usually the merger parent board assumes all assets and liabilities of the newly merged organization. In some cases, the local board continues to exist and may have selected responsibilities such as quality, credentialing, or community need. Merger of an NFP hospital into a for-profit (FP) system. This is typically an acquisition. The acquired NFP is valued, and the value (net of liabilities) often becomes a community foundation. Merger of a NFP hospital into a FP/NFP joint venture. Some transactions involve less than a 100 percent purchase, with the local entity continuing as a joint venture partner. Merger of a NFP into a FP system plus a “quality partner.” FP systems sometimes link with an academic medical center or other organization known for its quality. The “quality partner” may be a joint venture owner of the acquired hospital. Contractual system. Not all consolidated systems are merged entities. For example, local boards within the system might retain all fiduciary powers. The top leaders of the local hospital or system are employed by the larger system in order to coordinate strategies; however, the overall arrangement may be a renewable contractual relationship. Collaborative partnerships. Health systems are increasingly joining, often through contractual joint ventures, to address selected issues together – such as revenue cycle, supply chain, or regional network formation. Examples include the BJC Collaborative, AllSpire Health Partners, and the Integrated Health Network of Wisconsin. “Super” accountable care organization/clinically integrated network (ACO/CIN). Increasingly, clinically integrated networks recognize the opportunity to achieve economies (e.g., sharing population health infrastructure and expertise) by combining with each other. Health plan/provider partnership. These “vertical consolidations” take many forms. In some cases, a health plan, physician group(s), and hospital systems enter a joint venture relationship to serve a large employer. In some cases, health plans have acquired physician groups. Employer/provider partnership. These contractual relationships, usually involving very large employers or a group of large employers, relate directly with provider networks.
Assessing Your Situation – Common Acquisition and Affiliation Goals
Assessing Your Situation: Common Acquisition and Affiliation Goals The answers to questions about your organization and its market in should help define the goals of an acquisition or affiliation strategy. Note that your organization may have multiple goals, which may suggest multiple approaches to acquisition or affiliation. Common goals include: Favorable access to capital. If the investments your organization needs to make to reach its goals exceed its financial resources, a full merger (e.g., one that consolidates balance sheets and fiduciary responsibilities between the merging organizations) may offer access to superior borrowing terms and rates. System-wide economies. If your organization is struggling to find further opportunities for cost reductions, it might benefit from system-wide economies that can come from increased size and scale. Some of these (e.g., supply chain, revenue cycle, specialized expertise) are not dependent on physical proximity of the affiliating organizations, while others (e.g., service line or asset rationalization) do require closer physical proximity. Primary care aggregation. If your organization needs to support specialty and acute-care services, it is important to connect/integrate more primary care physicians with the system. A strong patient referral network is even more critical since inpatient and even outpatient facility utilization per patient will likely decrease. Population health expertise. Your organization may want to affiliate with another organization that is farther along the path to population health. Note that an organization with multiple needs (e.g., improved capital access and population health expertise) may choose different partners and different methods of affiliation to meet these needs. Population health infrastructure. The costs of developing an infrastructure to manage population health can be significant. Collaborative development of this infrastructure with other partners (including interoperable EHRs, other IT and business intelligence tools, clinical benchmarks and care pathways) may make more sense than going it alone. ACO/CIN formation. Organizations need not merge in order to amass the large populations that are desirable to manage care efficiently. Time will tell whether merged or affiliated CINs perform most effectively. Other regional economies. Many health systems are working now to aggregate an efficient, cross-continuum regional delivery system: from primary care, to specialist and acute services, to pre- and post-acute care options, and beyond. Other payment initiatives. Vertical integration between providers and insurers, employers, and other payers can leapfrog capabilities for the aggressive health system that wants to participate in managing the premium dollar. These benefits may or may not require other forms of consolidation (such as mergers).