Key Considerations for Rural Healthcare Leaders and the ... › wp-content › uploads › 2019 › 10 › Key...Physician recruitment, retention, retirement, and burnout are significant

Key Considerations for Rural Healthcare Leaders and the Role of State Offices of Rural Health

October 2019

© 2019 The Chartis Group, LLC. All Rights Reserved. Page 2

AGENDA

The Rural Health Safety Net

Hospital Closure Crisis

Key Considerations for Rural Providers

Health Systems and Affiliations

National Rural Health Day


Rural Populations are Older, Less Healthy, Less Affluent and Have Limited Access to Multiple Types of Care

Sources: CMS Service Area File 2015, Robert Wood Johnson Foundation/University Wisconsin Population Health Institute 2016 County Health Rankings and National Center for Veterans Analysis and Statistics 2016.

Source: The Chartis Center for Rural Health


Convergence of Multiple Pressure Points

Local and national pressure points creating downward pressure on rural providers.

Healthcare Policies

Population Migration

Health Disparities

Recruitment/Retention

Economic Policy


48% of all Rural Providers have a Negative Operating Margin

AK

CA

HI

ME

MA

RI

NH

CT

NJ

DC

NY

OH

VT

PA

DE

MI

MD

NC

SC

WI

FL

GA

VA

WV

INIL

KY

TN

ALMSLATX

AZ AROKNM

NV UT CO KS MO

SDWA

OR

NDMT

ID

MN

IAWY NE

State-level percentage of rural hospitals with negative operating margin.

0-20 21-40 41-60 61-80 81-100Source: The Chartis Center for Rural Health, 2019.

NA


Hospital Operating Margins:Medicaid Expansion and Non-Expansion States

Expansion State Non-Expansion State

1.5% -0.2%

41% 51%

Median Operating Margin

% with Negative Operating Margin


The Rural Hospital Closure Crisis


Hospital Closures – 113 and counting

AK

CA

HI

ME

MA

RI

NH

CT

NJ

DC

NY

OH

VT

PA

DE

MI

MD

NC

SC

WI

FL

GA

VA

WV

INIL

KY

TN

ALMSLATX

AZ AROKNM

NV UT CO KS MO

SDWA

OR

NDMT

ID

MN

IAWY NE

Source: Sheps Center, UNC

Number of rural hospitals closed since 2010.

1-2 3 4 5-8 10+0


Rural Closures and Impact on Access to Care

Residents of 68 communities must now drive 30 minutes more to reach the nearest hospital.


Offsetting Revenue Pressure:The Decline of Access to OB Services in Rural America

Rural hospitals dropping OB since 2011:

Rural hospitals offering OB that have closed:

134

21

155Rural communities that have lost access to OB since 2011.


The Tipping Point Emerges at 12 Months Prior to Closure

Magnitude of change


Rural Hospital Vulnerability

AK

CA

HI

ME

MA

RI

NH

CT

NJ

DC

NY

OH

VT

PA

DE

MI

MD

NC

SC

WI

FL

GA

VA

WV

INIL

KY

TN

ALMSLATX

AZ AROKNM

NV UT CO KS MO

SDWA

OR

NDMT

ID

MN

IAWY NE

Percentage of State Rural Hospitals Determined to be Vulnerable

1%-9% 10%-15% 16%-20% 21%-25%0 26+


The ‘Most Vulnerable’

AK

CA

HI

ME

MA

RI

NH

CT

NJ

DC

NY

OH

VT

PA

DE

MI

MD

NC

SC

WI

FL

GA

VA

WV

INIL

KY

TN

ALMSLATX

AZ AROKNM

NV UT CO KS MO

SDWA

OR

NDMT

ID

MN

IAWY NE

1%-9% 10%-15% 16%-20% 21%-25%0

Percentage of State Rural Hospitals Determined to be ‘Most Vulnerable’

26+


7 Factors with Greatest Impact on Sustainability

Case Mix Index

Government Control Status

% Capital Efficiency

% Occupancy

% Outpatient Revenue

% Total Revenue

Medicaid Expansion Status


Key Considerations for Rural Providers


Engaging Rural Hospital Leadership Teams Across the Country

500+ healthcare executivesand their trustees.


Key Considerations for Rural Hospitals

Remote geography presents both opportunities and challenges for rural providers

Physician recruitment, retention, retirement, and burnout are significant patient barriers to access in rural healthcare

Reliance on government reimbursement disproportionately impacts the rural health safety net

Improving access and quality of care requires clinical integration

EHR integration is critical to effective clinical partnerships

Virtual care may improve access and patient experience at low cost, but may be a disruptor to current care delivery and payment models

Value is incentivized by alternative payment models, under which strong performance is essential to secure bonus revenues

Investment in primary care networks by rural acute care providers is critical

Population health management demands high-value, coordinated care, incentivized by alternative payment models that reward improved community health

Strategic governance must be informed by the latest rural-relevant research


Survey Response: Top 3 considerations

69%

69%

46%

23%

Geographic Remoteness

Physician Recruitment, Retention

Workforce (non-Dr.) Recruitment, Retention

Reliance on Govt. Reimbursement

Improving Clinical Partnerships

Potential for Virtual Care

Emergence of Alternative Models

Increase Investment in Primary Care Models

High-value, Coordinated Care for Pop Health

Strategic Governance using Rural Metrics


Sample Questions and Challenges Facing Key Stakeholder Groups

Hospitals and Healthcare Systems

Physicians/Clinicians and Medical Groups

• How do we attract more commercial patients to improve margins near-term? How do we optimize revenue?

• How can we better understand and control our costs? • Where do we get access to capital?• How can we grow our physician group? • What services will be needed in the future? • What IT systems should we invest in?• How do we break into digital health? Where do we begin?• Do we need a partner?

• Can I survive as an independent practice? How do I keep costs down? How can I grow my revenue? Should I combine with another practice, group or health system? Should I retire early?

• What new capabilities do I need, by when, and how will I afford them? Where do I find them? How do I implement them?

• Do we have the right leadership in place to guide us into the future?• What do my patients want and how do I provide it?• How do I tackle all of this and stay abreast of new medical advancements, billing and

coding, continuing medical education – and avoid burnout?


Evolution of Care Delivery, Payment, Disrupters & Innovations


Proliferation of Value Based Models with Varying Degrees of Risk & Reward

Fee For Service (FFS)

Bundled Payments

Pay for Performance

Partial or Full Capitation (ACO

Model)Shared Savings (ACO Model)

Quality andExperience

Cost

Value-Based Payment Models

Volume of Services Provided

Volume (Services, Episodes and/or Attributed Lives) + Outcomes and Cost Effectiveness

Value is being embedded in traditional models –

through benefits design, value- based purchasing,

and reference based pricing

Portion of reimbursement tied to performance on

specific metrics. -typically on top of a FFS base

Fixed reimbursement for an episode of care -

providers take responsibility for managing costs

Actual spending compared to target for

defined population over a set period.

Providers and payors share in any savings

Provider groups receive prospective fixed payment and take responsibility for managing all associated costs.

While the private sector continues to expand and test a range of value-based payment models, CMS has already transitioned 85% of FFS payments to value based purchasing categories.

Increasing Degree of Risk/Reward


A Shift in Focus – from Treating Individuals to Managing a Population

Key capabilities required:• Providers with clinical capabilities• A mix of services that the population

demands, generally of your choosing• Facilities, equipment, supplies• Some IT platforms• Billing and coding department• Administrative infrastructure

Key capabilities required:• Everything to the left, plus:

• Full range of services, owned or via partnership• Population risk stratification• Actuarial capabilities to examine costs• Advanced data informatics capabilities• Disease management programs and

interventions• Care coordination• Clinical integration• Extensive quality improvement programs• Patient attraction and retention strategies

FOCUS ON TREATING INDIVIDUALS FOCUS ON MANAGING A POPULATION


Health Disparity in Arkansas: Opioids and Primary Care Access

80-100%ile

60-80%ile

40-60%ile

20-40%ile

0-20%ile

Population Health Status

Opioids PCP Access


Pop Health: OB Access in the Southeast


Case Study: VBP Analysis and Action

State-wide network VBP initiative

Identified $1.1M in ‘at risk’ revenue ~$200K HCAHPS performance

~$500K Outcomes performance

~$350K Efficiency performance

CAH example ($10,500 HCAHPS opportunity)

Baseline Period10/14-9/15

Performance Period7/16-6/17

Performance Period1/16-12/16


The Lines Begin to Blur Across the Healthcare Landscape

Providers are becoming payors

Payors are becoming providers

Companies from other segments are becoming providers

New players are getting into the risk business


Disruptors May Upend Healthcare as We Know It

• These companies are moving into healthcare because they see opportunity: a broken healthcare system hampered by legacy assets, business models, and payment systems

• They bring with them elements that traditional healthcare providers and start-ups don’t have, including: tons of cash, large customer bases, distribution networks, advanced data tracking and analysis capabilities, artificial intelligence experience


Employers Continue to Test New and Innovative Models to Contain Costs

72%

28%Of employers:

healthcare delivery payment reform is

part of current strategy

“In the private sector, escalating [healthcare] costs have eroded the

bottom line ...purchasers simply cannot afford the status quo”

2012 IOM executive roundtable findings

SEEKINGNATIONALCONTRACTS

SHIFTING RISKTO DEFINED

CONTRIBUTION

CAPPINGPAYMENTS

SPREADINGMODELS

Reference pricing

Purchaser consortium

Private exchange


‘’System-ness” – The Power of Affiliation and Partnership


Why Do Health Systems Affiliate with CAHs?

Mission Bring care to communities with unmet needs and deliver services that local providers may not otherwise support

HIT Integrate technology platforms

Referral Patterns Develop a hub-and-spoke network to drive care for the right patient for the right procedure to the right place for the right price.

Population HealthCoordinate care across the continuum of service providers and geographies (including rural) and develop interventions upstream of acute care providers to meet the Triple Aim

ACOs and Alternative Payment Systems

Deliver superior value by providing high-quality, coordinated care in a cost-efficient manner

Corporate Allocations and Cost Report Optimization

Optimize cost-based reimbursement for investments in shared services across CAHs


System-Affiliated Rural Hospitals Generally Outperform Peers

System-affiliated rural hospitals tend to see higher operating margins (based on INDEX).

1 AHA Data Viewer, 20152 Healthcare Cost Report Information System (HCRIS) Q3 2017

53% of Rural Hospitals

are System-Affiliated1

29% Of these facilities are Contract-Managed1

47% of Rural Hospitals are

Freestanding1

2.9%

0.6%

0.0%

1.3%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

System-Affiliated (incl.Contract Mgd)

Contract-Managed Freestanding

Med

ian R

ural

Hosp

ital

Ope

ratin

g Pr

ofit

Mar

gin2

Median Operating Profit Margin All Rural Median

52%ile 52%ile49%ile 50%ile

40

45

50

55

60

System-Affiliated (incl.Contract Mgd)

Contract-Managed Freestanding

Med

ian IN

DEX

Scor

e

Median INDEX Score All Rural Median


Articulating Goals & Partnership RequirementsEstablishing an open dialogue across the enterprise that facilitates a candid discussion of needs and the associated trade-offs is essential to defining overall strategic direction and objectives.

Rural Affiliates Health System

Articulating Goals

What services or technologies would be helpful in delivering care to your local

communities?

What are they system’s goals and expectations from better alignment with

rural affiliates?

Considerations & Trade-Offs

What level of control would be acceptable to share in order to access

this suite of services/technology?

What level of control would be acceptable to share to gain tighter

alignment with rural affiliates?


National Rural Health Day Recognitions


Performance Spans Market, Value, and Finance

Market

Inpatient Market Share


Outpatient Market Share

Diagnostic Tests Market Share

Drugs Market Share

Emergency Market Share

Procedures Market Share

Radiology Market Share

Visits & Consultations Market Share

Value

Quality

Emergency (ED)

Outpatient (OP)

Immunization (IMM)

Outcomes

HF Readmission

PN Readmission

HF Mortality

PN Mortality

Hospital-Wide Readmission

Proprietary Mortality Score

Patient Perspective

All Domains

Cost

Adjusted IP Costs

Adjusted OP Costs

Charges

Adjusted IP Charges

Adjusted OP Charges

Finance

Financial Efficiency

Capital Efficiency

What level of care are patients receiving?

Is a facility capturing a sufficient volume within

its home market?

Are costs under control? Are charges

too high/low?

How strong is a facility at

generating revenue?


Performance Pillars Span Market, Value, and Finance

Market




Diagnostic Tests Market Share

Drugs Market Share

Emergency Market Share

Procedures Market Share

Radiology Market Share

Visits & Consultations Market Share

Value

Quality

Emergency (ED)

Outpatient (OP)

Immunization (IMM)

Outcomes

HF Readmission

PN Readmission

HF Mortality

PN Mortality

Hospital-Wide Readmission

Proprietary Mortality Score

Patient Perspective

All Domains

Cost

Adjusted IP Costs

Adjusted OP Costs

Charges

Adjusted IP Charges

Adjusted OP Charges

Finance

Financial Stability

Capital Efficiency


CO WV

KS

MI

MT

ID

TX

UTOH

NC

ME

MA

NH

VT

WY

2019 Top 100 Critical Access Hospitals

15

8/9

6/7

1/2

3/4

IL

INNE

SD

OR MN

WI

ND

IA


CO

ME

GA

2019 Top 100 Rural & Community Hospitals

7/8

6

5

4

1/2

3

WA

MS

NY

VT

WV

NM

NE

ORMT

SD

PA

TX

MD

KS

OK

NC

AR

UT IL

MI

OH

MNWI

IN KY

MO

9

WY

IA


How the 2019 Top 100 CAHs Measure Up to Rural Peers

0

10

20

30

40

50

60

70

80

90

100



Quality Outcomes Patient Perspective

Cost Charge Financial Stability

Top 100 CAH Median

IND

EX P

erce

ntile

2019 All CAH Median


Save the Dates

National Rural Health Day (Nov. 21) Performance Leadership Awards

Top 100 (February 2020)


Michael TopchikNational Leader, The Chartis Center for Rural [email protected]

Troy BrownClient Services Manager, The Chartis Center for Rural [email protected]

Thank You For Your Time and Attention

Documents

Key Considerations for Rural Healthcare Leaders and the ... › wp-content › uploads › 2019 › 10 › Key...Physician recruitment, retention, retirement, and burnout are significant