Survival of the Fittest: How Hospitals and Health Systems are Adapting to Changing U.S. Healthcare

Transcription

1 Survival of the Fittest: How Hospitals and Health Systems are Adapting to Changing U.S. Healthcare Greg Jelinek, EVP, PNC Healthcare Karen Veselsky, VP, KentuckyOne Health/CHI

2 Research: What We Did Stage 1 Secondary research on emerging trends Stage 2 Stakeholder interviews with healthcare experts and futurists, and PNC Healthcare Advisory Board members Stage 3 Take Stock analysis of Stages 1 and 2 Stage 4 Qualitative research with hospital executives Stage 5 National quantitative survey of hospital executives

3 Today s Discussion 1. Evolutionary Progress 2. Evolutionary Threats 3. Who Will Survive In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves to their environment. Charles Darwin, On the Origin of Species

4 Evolutionary Scale Control utilization Low operating costs Quality care Patient-centric Consumerism Brand awareness Access to capital Philanthropy Breadth of services Scale / scope Geographic reach Integrated physicians

5 Important Commitments: How far we ve come % Very committed % Very confident % A great deal of progress Payer-Provider Integration New Financing Models Behavioral Health Acquisitions & Consolidation New Billing / Collection Models IT / Systems Integration / Migration Value-Based Care Patient-Centered Care

6 Patient Centered Care Initiatives % Total Adoption Utilizing mobile apps for remote patient monitoring Utilizing mobile apps for patient scheduling Telehealth / telemedicine Expanding hours and/or locations Online patient portal Coordinated care teams & case managers Emphasizing customer service

7 Value-Based Care Initiatives % Not currently doing, but plan to % Currently doing % Total Adoption Pioneer ACO Capitated Payments Next Generation ACO Model Shared Savings Program Shared Risk Program Population Health Bundled Payments

8 Billing and Collections % Overall Satisfaction Not very satisfied 8 Not at all satisfied 3 Timeliness of your bills % Excellent / Good 64 Very satisfied 18 Clarity of your bills 61 Somewhat satisfied 52 Cost transparency for patients Ability to collect patient selfpay How do you effectively (provide a consolidated statement) do that in a non-integrated system? COO, California Health System

9 Acquisitions and Consolidation % Expansion Past 3 Years / Next 3 Years Has not / will not expand New or renovated buildings / infrastructure Expansion Type by % 65 Integrating physician practices / groups 58 Has expanded / will Added / adding urgent care clinic(s) Added / adding specialty care centers Increasing the number of hospital sites % Expansion Method Added / adding surgical center(s) Added / adding imaging center(s) Added / adding retail clinic(s) 29 Added / adding freestanding labs Added / adding microhospital(s) Organic growth Acquisition(s) Joint venture(s) / partnership(s) Merger(s) Other 6

10 Evolutionary Threats Value- Based Care Metrics Systems Integration Human Capital Lowering Costs

11 Threat: Data to Execute on Value-Based Care Defining metrics for value- Linking of clinical and financial Your ability to extract data Your ability to act on the data Quality of your clinical data Your ability to report on the data Ease of interpreting your reports Quality of your financial data Data Metrics % Top 3 Box Q: Thinking about your organization s value-based care initiatives, using the 9-point scale below, how challenging has each of the following been? The challenge is that we have become data rich and information poor because we have so much information now from so many different places, but are we truly able to mine it and understand it properly to be able to use it to make decisions that affect our business? That is part of the journey of migrating from fee for service to where you just worry about totaling your procedures, to actually worrying about your outcomes. President, New Jersey Health System

12 Threat: System Integration Not currently, and do not plan to 12 % Integration I tell people that it s like we allow folks to pull up to the McDonald s drive thru and order a whopper and then the employee runs out to Burger King, runs back, and hands it thru the McDonald s window. It s very expensive and cannot go on like this for long. Treasurer, Indiana Academic Medical System Not currently, but integrating into one Yes, currently integrated 51 Total Very satisfied 32% Somewhat satisfied 55 Neither satisfied nor dissatisfied 8 Not very satisfied 2 Q: Does your organization have a single, integrated ERP system across all sites and providers? Not at all satisfied 1 Q: Overall, how satisfied are you with your organization s ERP system or systems? BASE: Those who say Yes, currently integrated

13 Threat: Physician and Staff Recruitment & Alignment Challenges % Top 3 Box Recruiting / retaining good nurses 63 Recruiting / retaining good physicians 57 Pricing / cost transparency for patients Physician alignment / morale I m going to label it culture but it s really starting to think less like individual silos and more in this network mentality. CFO, Texas Health System Non-physician staff alignment / morale 47 Q: Healthcare executives like yourself have discussed a number of challenges facing hospitals and health systems today. Using the 9-point scale below, how much of a challenge is each of the following for your organization today?

14 Threat: Lowering Costs % Total Confidence Somewhat Confident Very Confident There s a lot of waste in healthcare with overutilization and receiving batteries of tests and doing things that aren t necessary, keeping patients too long, that type of thing. Under this new commercial model that we have moved to, the intent is to reduce utilization, strive for highest quality outcomes at the lowest cost. It s going to be challenging. It s totally different from how we ve been successful in the past, but we feel it s the right thing to do. CFO, Utah Health System 18 Reduce Healthcare Costs Q: Overall, how confident are you that the shift toward value-based care will reduce overall healthcare costs?

15 Who Will Survive?

16 Survival Characteristics % Top 3 Box Quality medical care Patient-centric Low operating costs Access to capital Integrated physicians Brand awareness and reputation Control utilization Being adaptable / risk-taking Top 7 Having a breadth of services - from cradle to grave Good philanthropy / fundraising Large scale / scope Broad geographic reach 56 58

17 Confidence in Survival % Confident in 10 Year Survival Not very confident 4 Not at all confident 2 Somewhat confident 38 Very confident 56

18 Likelihood of Survival # of Sites Characteristics of Respondents (100 = 100% Chance of Survival) IT / Systems Integration Progress of Initiatives Index ( Made a Great Deal of Progress On ) Average Survival Index All Respondents (87) Behavioral Health 91 Revenues < $250M 84 New Financing Models 92 $250-$999M $1B New Billing / Collection Models 93 Title C-Suite 84 Patient-Centered Care 92 VP / SVP / Dir / Mgr 89 Payer-Provider Integration 93 Geographic Reach Local 84 Value-Based Care 89 Regional National Acquisitions & Consolidation 91

19 Survival of the Fittest You ve got to be big enough, centralized enough, and financially strong enough to be able to survive the rough times. You have to be able to raise enough capital and you have to be notable enough in the community to be able to raise philanthropy. You need to partner. Partnering allows you to expand your market area even though you don t get 100% of that revenue. I think the third is really a data-driven organization. You ve got to constantly analyze the data and be willing to be mobile enough to make changes. Maybe the fourth is to be in tune with your employees and that includes your physicians. Making sure they are committed to the organization, they support the mission and feel that they re listened to and have input into what s going on. COO, Pennsylvania Health System

20 Standard Disclosure PNC, PINACLE, Working Cash, ActivePay, Global Trade Excellence, XPACK and Vested Interest are registered marks of The PNC Financial Services Group, Inc.( PNC ). PDF or the PDF logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. Excel is either a registered trademark of Microsoft Corporation in the United States and/or other countries. Midland Loan Services, Enterprise!, CMBS Investor Insight, Portfolio Investor Insight, Borrower Insight, Deal Flow and Shared Servicing are registered marks of PNC Bank, National Association. Banking and lending products and services and bank deposit products and investment and wealth management and fiduciary services are provided by PNC Bank, National Association, a wholly-owned subsidiary of PNC and Member FDIC. Certain fiduciary and agency services are provided by PNC Delaware Trust Company. Equipment financing and leasing products are provided by PNC Equipment Finance, LLC, a wholly-owned subsidiary of PNC Bank, National Association. Aircraft financing is provided by PNC Aviation Finance, a division of PNC Equipment Finance, LLC. Merchant services are provided by PNC Merchant Services Company. Private equity financing is provided by affiliates of PNC Equity Management Corp. Mezzanine financing is provided by PNC Mezzanine Capital Corp. Investment banking and capital markets activities are conducted by PNC through its subsidiaries PNC Bank, National Association, PNC Capital Markets LLC, and Harris Williams LLC. Services such as public finance advisory services, securities underwriting, and securities sales and trading are provided by PNC Capital Markets LLC. Merger and acquisition advisory and related services are provided by Harris Williams LLC. PNC Capital Markets LLC and Harris Williams LLC are registered broker-dealers and members of FINRA and SIPC. Harris Williams & Co. is the trade name under which Harris Williams LLC conducts its business. Foreign exchange and derivative products are obligations of PNC Bank, National Association. Securities products and brokerage services are offered through PNC Investments LLC, a registered broker-dealer and member of FINRA and SIPC. Insurance products and advice may be provided by PNC Insurance Services, LLC. The PNC Financial Services Group, Inc. ( PNC ) uses the names PNC Wealth Management, Hawthorn, PNC Family Wealth and PNC Institutional Investments to provide investment and wealth management, fiduciary services, FDIC-insured banking products and services and lending of funds through its subsidiary, PNC Bank, National Association, which is a Member FDIC, and uses the names PNC Wealth Management and Hawthorn, PNC Family Wealth to provide certain fiduciary and agency services through its subsidiary, PNC Delaware Trust Company. Brokerage and advisory products and services are offered through PNC Investments LLC, a registered broker-dealer and investment adviser and member of FINRA and SIPC. Insurance products and advice may be provided by PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or by licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate will receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. Hawthorn and PNC do not provide legal or accounting advice and neither provides tax advice in the absence of a specific written engagement for Hawthorn to do so. "PNC Wealth Management," Hawthorn, PNC Family Wealth and "PNC Institutional Investments" are registered trademarks of The PNC Financial Services Group, Inc. Important Investor Information: Brokerage and insurance products are: Not FDIC Insured. Not Bank Guaranteed. May Lose Value. PNC does not provide legal, tax or accounting advice. PNC does not provide investment advice to Vested Interest plan sponsors or participants. Lending and leasing products and services, including card services, trade finance and merchant services, as well as certain other banking products and services, require credit approval The PNC Financial Services Group, Inc. All rights reserved.

21 Greg Jelinek EVP, PNC Healthcare

22 Survival of the Fittest Karen Veselsky Vice President, Revenue Cycle

23 Largest and most comprehensive health system in the Commonwealth of Kentucky More than 165 locations, including hospitals, physician groups, clinics, primary care centers, specialty institutes and home health agencies in Kentucky and southern Indiana Dedicated to bringing wellness, healing and hope to all, including the underserved

24 Partners in KentuckyOne Health: Saint Joseph Health System, Lexington, KY - sponsored by Catholic Health Initiatives Jewish Hospital & St. Mary s HealthCare, Louisville, KY -co-sponsored by Jewish Hospital HealthCare Services and Catholic Health Initiatives

25 By the Numbers 2,312 Licensed Beds 10,000+ Employees 3,100 Active Medical Staff 688 Employed Physicians and Advanced Practice Clinicians $2 Billion in Revenue KentuckyOne Health Partners largest Medicare-certified ACO in KY 100,000 Managed lives 2,000 Providers

26 Catholic Health Initiatives 100 Acute Hospitals including 3 academic health centers and major teaching hospitals 30 critical access hospitals 2 Community Health Service Organizations 22 Long-term Care Facilities 55 Home Health Service locations 12 Clinically Integrated Networks National Headquarters - Englewood, Colorado

27 Patient Centered Care KOMG ability to access diagnostic scheduling software and initiate appointment prior to the patient departing the physician s office improves continuity of care Use of telemedicine in our remote, rural areas improves access Expanded hours at primary care practices and urgent care centers to redirect non-emergent ER visit volume to appropriate locations Implement an on-line patient portal for access to hospital and physician records/information

28 Systems Integration CHI investment of $250M on health information technology improvements to standardize operations and utilization of patient care templates Cloud based applications underway or remote hosting service agreement provide significant benefits for Citrix and Cerner access and others are underway Relationships with best in class partners: Conifer Health Solutions, Cerner/Epic/Meditech, 3M, and PNC

29 Billing and Collections Kentucky, a Medicaid expansion state, has experienced two insolvent plans that left our organization with $13M in lost reimbursement 85% of VA claims take over 90 days to receive payment and there are over $1.2M in charges pending reimbursement Deferral policy implemented to ensure that non-emergent, scheduled services have financial clearance prior to provision of service Valid physician order supporting medical necessity Insurance verification complete Prior authorization obtained from the payer Patient s financial liability calculated and communicated

30 Growth Review of service line profitability and where to grow volume Evaluation of payer contracts and where to partner for increased patient referrals/volume KOH/CHI had significant growth over last five years through acquisitions and is currently experiencing the pain of integration

31 Payer Provider Integration KOH Clinically Integrated Network for own employees and local employers has been successful CHI s health plan, QualChoice, provides Medicare Advantage & Commercial plans in six states and continues to struggle Strategic growth aimed at specific thirdparty insurance carriers is in process Denial/Appeal efforts have been a focus and improvements of over $40M were experienced in FY16

32 Challenges Recruit/retain quality nurses Lower operational expense Lower reimbursement and payment delays (i.e., denials) IT system integration and stability Streamline/standardize work flow and process Improve utilization and length of stay Access to capital

33 Survival of the Fittest Surround yourself with talent Lower costs and provide better outcomes Remove variation and increase efficiencies by utilizing technology whenever possible Constantly evaluate performance and revise goals Growth must be targeted

34 Karen Veselsky, CHAM Vice President, Revenue Cycle KentuckyOne Health 312 South Fourth Street, Louisville, KY Office: (502) Mobile: (610)