Baby Boomers! Demographically driven economic influences by the... What Is High Performance and How Do You Measure UP 5/16/2016

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1 What Is High Performance and How Do You Measure UP Terry Glasscock, Senior Project Consultant TCPA CEO/CFO Meeting May 18, Demographically driven economic influences by the... Baby Boomers! 2 1

2 Number of Workers Per Retiree Federal Receipts vs. Entitlements Baseline SS, Medicare, and Medicaid Continue at same rate Baseline receipts (includes JGTRRA) 4 2

3 Social Security, Medicare & Medicaid Outlays as a Percentage of GDP Social Security Medicaid Medicare Source: C. Eugene Steurle and Adam Carasso, (Budget Crisis at the Door), The Urban Institute, Based on data from the Congressional Budget Office, A 125Year Picture of the Federal Government s Share of the Economy, , July 3, 2002, table 2. 5 A Boomer Pop Quiz Don t worry It s multiple choice. 6 3

4 1. Describe your first TV A. It was a huge wooden cabinet with two big knobs and a teensy screen featuring a blackand-white picture the size of a cantaloupe that I barely saw because my dad was always standing in front of it adjusting the picture and saying bad words. B. It was a Sony Who was on your first lunchbox? A. Davy Crockett B. Vanilla Ice 8 4

5 3. Do you remember Howdy Doody? A. Of Course B. You re making that name up! 9 4. Who was the first living President you remember? A. Dwight Eisenhower B. Vanilla Ice 10 5

6 5. Did you own a whole batch of 45 R.P.M. records that you wrote your name on the labels of and kept in a carrying case with a handle and put little plastic inserts in the holes to play them? A. Yes B. Why did you have to put little plastic inserts in the holes? Where were you when you first heard The Beatles? A. In a station wagon on the way to school. B. In a fallopian tube. 12 6

7 7. Have you ever experimented with drugs? A. Uhhhh no B. Uhhhh no 13 You may be part of the problem! But we definitely must be part of the solution 14 7

8 Things to Know Before You Learn to Manage Strategically If you can smile when everything goes wrong, you probably don t understand the problem. If you think there is good in everybody, you haven t met everybody. Indecision is the key to flexibility Someone who thinks logically is a nice contrast to the real world. One seventh of your life is spent on Monday Sometimes too much to drink is not enough. There is always one more imbecile than you counted on. 15 So how do you stack up with the High-performers? Let s look at the high-achievers and compare. 16 8

9 HRSA-Supported High Performance Study: Purpose Seek to shed light on 2 key questions: 1. Do health centers that excel in providing high quality patient care do better or worse than other health centers financially? 2. What do health centers that achieve high quality and the strongest financial results look like? What do they do differently / better than their peers? 17 HRSA-Supported High Performance Study: Analytic Approach We studied a cohort of HRSA 2014 Quality Leader Awardees health centers for which we have 4 years of audits Control Group: Health centers that did not receive a Quality Leader award health centers for which we have 4 years of audits Study time period:

10 Overall Finding Clinical quality and strong financial performance go hand in hand! - Quality Awardees perform better on key financial ratios 19 Operating Margin 10.00% 7.50% 5.00% 2.50% 0.00% -2.50% Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control (75th) Control (Median) Control (25th) 4-year average performance at Median: Quality Awardees: 2.8% -5.00% Control health centers: 1.6% 20 10

11 Days Cash on Hand Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control (75th) Control (Median) Control (25th) year average performance at Median: Quality Awardees: 48 Days Cash on Hand Control health centers: 38 Days Cash on Hand 21 Quality Awardees Achieve Stronger Overall Results, Despite Proportionally less grant funding Slightly less favorable payer mix 22 11

12 Revenue Mix 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 5% 64% 58% 26% 31% Quality Awardees 2013 Control 2013 Other Net Patient Services Grants and Contracts 23 Payer Mix 120% Payer Mix 100% 80% 60% 13% 15% 9% 9% 41% 42% Privately Insured Patients (Normalized) Other Publicly Insured Patients (Normalized) Medicare Patients (Normalized) 40% Medicaid Patients (Normalized) 20% 37% 34% Uninsured Patients (Normalized) 0% Quality Awardees 2013 Control 24 12

13 How Do Quality Awardees Achieve Stronger Overall Results? Better collections Higher utilization Higher productivity Slightly different service and staffing mix 25 Collected Revenue by Payer Type 120% 100% 80% 60% 10% 10% 2% 1% 10% 10% Private Insurance as % of Total Collections Other Public Insurance as % of Total Collections Medicare as % of Total Collections 40% 66% 69% Medicaid as % of Total Collections Self-Pay as % of Total Collections 20% 0% 13% 9% Control, Normalized, 2013 Quality Awardees, Normalized,

14 Net Patient Service Revenue per Patient and per Visit NPSR per Visit NPSR per Patient $160 $700 $140 $120 $100 $80 $60 Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control Group (75th) $600 $500 $400 $300 Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control Group (75th) $40 Control Group (Median) $200 Control Group (Median) $20 Control Group (25th) $100 Control Group (25th) $ $ Virtually identical NPSR per visit, but more per patient relates to visits per user 27 Total Visits per Patient Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control Group (75th) Control Group (Median) Control Group (25th) 4-year average performance at Median: Quality Awardees: 4.1 total visits per patient, 3.4 medical visits/patient Control health centers: 3.7 total visits per patient, 3.2 medical visits/patient 28 14

15 Medical Visits per Medical Provider Physicians and Mid-Levels 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control Group (75th) Control Group (Median) Control Group (25th) 4-year average performance at Median: Quality Awardees: 3,270 total visits per provider Control health centers: 3,084 total visits per provider 29 Mid-Level to Physician Ratio 180% 160% 140% 120% 100% 80% 60% 115% 113% 87% 82% 74% 73% 124% 93% 83% 133% 97% 87% Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control (75th) Control (Median) Control (25th) 40% 38% 44% 45% 47% 20% 0%

16 Staffing Mix 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 39.9% 39.1% 6.9% 7.9% 2.5% 2.4% 10.0% 8.2% 19.0% 18.7% 21.5% 23.3% Quality Awardees Median Values, 4-Year Average Control Medical FTEs as % Total FTEs Dental FTEs as % of Total FTEs Mental Health FTEs as % of Total FTEs Enabling FTEs as % of Total FTEs Vision FTEs as % Total FTEs Pharmacy FTEs as % Total FTEs Substance Abuse FTEs as % Total FTEs Other Programs and Services FTEs as % Total FTEs Other Professional Services as % Total FTEs Patient Support Staff FTEs as % Total FTEs Administrative and Facility FTEs as % Total FTEs 31 Enabling Visits as % Total Visits 14% 12% 10% 8% 6% 4% 2% Quality Awardees (75th) Quality Awardees (Median) Quality Awardees (25th) Control Group (75th) Control Group (Median) Control Group (25th) 0%

17 How do High Performers Differ from Their Peers? What are the key differentiators? - Size High Performers had median total revenue of $14.3 million vs. $13.7 million for all Quality Awardees and $9.9 million for the control group - Location More likely to be in lower cost-of-living states - A little better at everything! 33 Operating Margin 12.0% 10.8% 10.0% 9.0% 8.0% 8.0% 7.9% 6.0% Control - Median Quality Awardees - Median High Performers - Median 4.0% 3.6% 2.0% 2.2% 1.7% 2.7% 2.4% 1.9% 2.6% 0.7% 0.0%

18 Days Cash on Hand Control - Median Quality Awardees - Median High Performers - Median Payer Mix and Collections 120% 120% 100% 80% 60% 40% 20% 0% 15% 13% 11% 9% 9% 7% 43% 41% 42% 34% 37% 39% Control Quality Awardees High Performer 2013 Privately Insured Patients (Normalized) Other Publicly Insured Patients (Normalized) Medicare Patients (Normalized) Medicaid Patients (Normalized) Uninsured Patients (Normalized) 100% 80% 60% 40% 20% 0% 10% 10% 2% 1% 10% 10% 66% 69% 5% 2% 7% 77% 13% 9% 9% Control, Normalized, 2013 Quality Awardees, Normalized, 2013 High Performers, Normalized, 2013 Private Insurance as % of Total Collections Other Public Insurance as % of Total Collections Medicare as % of Total Collections Medicaid as % of Total Collections Self-Pay as % of Total Collections 36 18

19 Personnel Expense as Percent of Total Operating Revenue 90% 80% 70% 72% 75% 74% 72% 72% 72% 76% 73% 60% 67% 66% 69% 69% 50% 61% 62% 64% 61% High Performers (75th) High Performers (Median) High Performers (25th) 40% Control (75th) Control (Median) 30% Control (25th) 20% 10% 0% Productivity 4,500 4,083 4,040 4,000 3,848 3,786 3,500 3,000 2,500 3,493 3,538 3,319 3,310 3,210 3,138 3,025 2,964 3,010 3,055 3,009 2,932 High Performers (75th) High Performers (Median) High Performers (25th) 2,000 Control (75th) Control (Median) 1,500 Control (25th) 1,

20 Other Distinguishing Characteristics of High Performers Even higher utilization Higher proportion of enabling services and staff Newer facilities Lower Mid-Level-to-Physician ratio Heavier pediatric focus Longer average tenure of management staff 39 Preliminary Summary Conclusions Quality Awardees appear to be stronger financially primarily due to: - Revenue maximization - Higher utilization - Productive teams High Performers are good at all the above AND are strong on cost control (particularly staffing costs) 40 20

21 Holy Cow! So how do I get there? 41 Where Do We Start? 42 21

Strategic Management You must learn to manage strategically. Start with a workable dynamic strategic plan. What you may have is a one year tactical plan with a few years of guesses added on.

22 Strategic Management You must learn to manage strategically. Start with a workable dynamic strategic plan. What you may have is a one year tactical plan with a few years of guesses added on. And, you probably don t really use it the way you should. Use your metrics! Plan and implement your way to High-Performance Please believe me this is critical at no time in our history has it been so important to manage strategically!

23 Why Have a Strategic Plan? If you don t know where you are going, any road will get you there. Cheshire Cat Eliminate surprise Provide a guide for every day decisions (critical minutia) A tool to help keep pace with external change 45 Why Have a Strategic Plan? Tool to create and maintain Adjacent Possibilities - Old systems designed to kill change, minimize both possibilities and adjacency. Keep pace with the change around you. Allows you to manage at the edges. Learn to manage strategically or perish. Person Person Person Person Person Person 46 23

24 Strategic Planning Toolkit (free) Mission and Values Who are we? What do we want to be? Are we ready? Self- Assessment Environmental Scan What conditions are affecting us now? What about the future? What are our possible futures? How might these futures impact us? Impact Evaluation Goal Setting What must we achieve for success? What are the steps to take? Measures of success? Action Plan Mission Reaffirmation and Sustainability 47 Contact Us Main Office Massachusetts Allison Coleman Chief Executive Officer Susan Petrie Chief Operating Officer Tel: Steve Rubman Director of Data & Information Systems Tel: Dan Woodman Project Consultant Tel: Regional Offices California Dale Johnson Project Consultant Tel: Tony Skapinsky Project Consultant Tel: Colorado Jonathan Chapman Tel: Director of CHC Advisory Services Missouri Mark Lurtz Senior Director of Partnership Development Tel: Rhode Island Rebecca Polan Project Consultant Tel: South Carolina Terry Glasscock Senior Project Consultant Tel: West Virginia Cindy Barr Operations & Facilities Planner Tel:

25 Visit us Online: Learn more about our products and services Download our free publications and resources Register for upcoming webinars Sign up for our e-newsletter, Capital Ink Subscribe to our blog at capitallinksblog.blogspot.com 49 25

It is all about demographics

You Can t Manage What You Can t Measure! Terry Glasscock, Senior Project Consultant Cindy Barr, Senior Project Consultant TCPA CEO/CFO Meeting May 17, 2016 1 It is all about demographics that are working