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IPA: The Quest for Competitive Advantage Enterprise Modeling and Business Planning
ASAP NY – October 2014
Patrick Gauthier
Director, AHP Healthcare Solutions,
a division of Advocates for Human
Potential
PAGE 2
Objectives
• Understand that Nobody is Immune to Transformation and System Redesign
• Explore Integrated Delivery Systems
• Share Vision
• Explore Enterprise Modeling
PAGE 3
The Call
• Health Care Reforms
• State System Redesign
• De-Institutionalization
• Consolidation
• Preservation of your field, your assets, your mission
• Market significance and bargaining position
• Economies of scale
• Ownership and prosperity
PAGE 4
PAGE 5
Source Jim Lytle, Partner, Manatt, Phelps and Phillips, 5-19-2014, ACL Conference
PAGE 6
• Members lack capital, skills, or other resources
necessary to develop and implement the
proposed business on their own;
• The proposed venture requires a customer
base or operating scale greater than the
members can achieve on their own; or
• The degree of financial and organizational risk
of the proposed venture is so great that it is
more appropriate for the members to pursue it
collectively.
Reasons to Network
PAGE 7
Providers Wooing Managed Care
Desirable Less Attractive
• Comprehensive services
• Familiarity with MC processes
(UM, QM, etc.)
• IT, EHR capability
• Strong quality processes
• + Reputation with regulators,
Community
• Wide coverage area
• Brand recognition & customer
loyalty
• Competitive pricing
• Narrow service array
• Paper records, limited billing
capacity
• Community “invisibility”
• Quality and/or regulatory
concerns
• Small geographic scope
• Cost outlier
• Hostility to MC
PAGE 11
Emerging Behavioral Healthcare System
Managed
Care
Maturity
Phases &
Models
1
2
3
• Statewide full continuum network
• Primary Care Integration
• Case Mgmt. • Wellness
• Common admin. Systems
• E-Billing /coding
• Info. mgmt. infrastructure
• Active CQI • HEDIS
reporting capable
• Some P4P
• Discounted FFS (re-pricing)
• Some P4P • Admin Fees
• Add depth • Chronic
Disease Mgmt.
• Integrated Case Mgmt.
• UM guidelines, clinical pathways
• ACO compatible
• Behavioral Medicine
• EBPs • Social
Services continuum
• Eligibility file mgmt.
• Call center, UM/UR
• Credentialing • Data
warehouse /data marts
• PCMH reporting
• ACO reporting
• NQF reporting
• QA/QI Dashboards
• Partial cap, claims corridors
• Incentives (P4P)
• Financial mgmt. IS
• ACO, Health Home, PCMH capable
• Registry • Integrated
HIE • MCO
business units
• Meaningful Use
• Fully accredited (URAC or NCQA as necessary)
• Claims processing
• Capitation /shared savings
• Financial Dashboards real-time
Clinical Operational
&
Technology
Quality Financial
9 Mos.
36
Mos.
PAGE 12
Managed Care Organization Hierarchy
1.Owner(s) of an MCO
2. Part of a Risk-Bearing IPA
3. Management Services Organization (MSO)
• 4. Health Home
• 5. Provider
Control of Financial Risk
Higher Risk
Lower Risk
PAGE 13
Network Life-Cycle
Formative Evolving Mature
Planning and
evaluation
Performance
benchmarking
Credentialing
Network resources and
manual
Joint marketing
Shared services
Common treasury
Clinical service
extension
Administrative
consolidation
Clinical service
extension
New lines of business
Common resource
planning and budgeting
PAGE 14
Critical Path
1. Assess the environment(s)
2. Assess our capabilities and resources
3. Develop our purpose and mission
4. Identify and organize strategic business and organizational alternatives
5. Select options for further development and test for financial and organizational feasibility
6. Develop implementation plan
PAGE 15
Defining the Market
• How large is the market? Is it growing or shrinking?
• What factors are causing major disruptions in the market?
• Is it a step toward better distribution of health resources?
• Will it improve physician, payer, and/or plan relations?
• Is it consistent with board decisions and commitments?
• Does it compliment the business activities of members?
• Do we have enough control of results to be successful?
PAGE 16
Key Financial Questions
• How much capital is needed to start?
• Where will the capital come from?
• How much revenue (net of allowances) will be generated at a given level of volume?
• How much profit is estimated at a given level of volume?
• What are the cash flow implications of starting the business?
• How long until the business is profitable?
PAGE 17
Your Considerations
• The benefits of cooperation
• The resources contributed
• The costs of cooperation
• The need to cooperate
• Next Best Alternative
PAGE 18
Special Considerations
• Motivating and Maintaining Member Interest
• Building Trust Among Members
• Balancing Strategy and Action
• Making Decisions and Reaching Conclusions
PAGE 19
Special Considerations
• Enterprise Model
• For-Profit or Not-for-Profit: Tax Implications
• Licensing and Regulatory Barriers
• Anti-Trust Considerations
• Allocation of Profits and Losses
PAGE 20
Internal Organization Key Components
• Structure
– Lines of authority & communication
– Role of committees, etc.
• Systems
– Budgeting, planning, information
• People
– Skills, experience
• Culture
– What are the shared values & norms?
• Strategy
– Markets, products, partners, pricing, competition?
PAGE 21
In order to progress, what issues
must we overcome?
• Can we decide what we need to do?
• Can we allocate resources?
• Can we incent and hold accountable the Team directing the change?
• Can we recruit the assets we need for success?
• Can we successfully conduct the internal education to support the incorporation of change?
• Can we overcome the internal resistance to change?
PAGE 22
IPA
Enterprise Model:
PAGE 23
Why an IPA or Integrated Delivery System
Developed Widely by PCPs in ‘70s as Response to New HMO Legislation & Managed Care Inevitability
• Enables Participation in Larger Group without Abandonment of Individual Organizational Identities
• By Virtue of Scale & Geographic & Programmatic Scope, Offers Greater Bargaining Power in Negotiations with MCOs/Other Payers
PAGE 24
Why an IPA or Integrated Delivery System
• Allows for Scale of Investment in Common Infrastructure Needs of Members
• Provides a Vehicle to Overcome Antitrust Restrictions
• Enables Taking Financial Risk / Enjoying Rewards
• Customizable to Market Conditions
(Exclusive to One or Available to Multiple Payers)
PAGE 25
Drivers Affecting Target Audiences
• ACA Triple Aim of
Improving Quality of Care
Improving Health Outcomes
Reducing Costs
• Integration of Health Providers
• Population Health Mgmt. & Social Determinants of Health
• New York’s Medicaid Reform
DSRIP
BIP
PAGE 26
• Time Frame
• Regulatory Approval
• Cost of Start-Up
• Scope of Operating Practice and MSO Functions
IPA Downsides
PAGE 27
Drivers Affecting Target Audiences
• Technology
EHR
Health Information Exchange
• Revenue Cycle Management Expectations
• Consolidation, Scale & Rate of Change/Disruption
• Conclusion:
Solitary Providers’ Viability at Risk
PAGE 28
Requirements
Health Outcomes Improvement of Whole Person Through Integration of
Disciplines
Focus on Health Delivery / Outsourcing Non Core Processes
Reimbursement Reward Moving to Savings in Health Care Costs
Transparency / Connectivity of Medical Records
PAGE 29
Core Processes
Support Processes
Governing Processes Provide
Process
Infrastructure
Vision
Related
Processes
Enabling
Processes
Enterprise Modeling
PAGE 30
Strategic Vision Elements
• Improve the Health of the Whole Person
• Reduce the Cost of Delivery by Integration of Medical, Behavioral Health, Developmental Disabled, Pharmacological, Testing, & Other Disciplines
• Develop Strategic Alliances with Local Health Providers Providing Best Care to the Whole Individual
• Organization of Professionals Focused on Ensuring Their Clients Achieve the Best Outcomes
• Generate Sustainable Revenue & Financial Strength
PAGE 31
Enterprise Model Strategic Plan
Strategic Plan
I Executive Summary II The Population(s) Health Market
III Vision & Strategy
IV Enterprise Model
V Product Strategy
VI Infrastructure Requirements
VII Proforma Financials
PAGE 32
Core Processes to Deliver Vision
• Design Services / Products
• Manage Shared Services
• Contracting
• Utilization Management / Quality (basis of risk sharing)
• Alliances (Hospitals, ACOs)
• Workforce Development
PAGE 33
Support Processes
• Credentialing
• Billing and Collections
• Information Technology
• Quality Management and Reporting
• Practice Management
• Strategic Planning and Marketing
• HR Services (compensation, payroll, benefits)
• Finance
PAGE 34
Enterprise Model
Vision Core Processes Support Processes Strategic Plan
Whole Person Health Design Services / Products Credentialing I Executive Summary
Integrate Care / Reduce Cost Manage Shared Services Billing & Collections II The Population(s) Health Market
Strategic Alliances Contracting Information Technology III Vision & Strategy
Client Outcomes Utilization / Quality Quality Management & Reporting IV Enterprise Model
Sustainable Revenue Alliances Practice Management V Product Strategy
Workforce Development Strategic Planning & Marketing VI Infrastructure Requirements
HR Services VII Proforma Financials
Finance
Enterprise Modeling Flow
