Physician groups what goes wrong, how do we avoid it? Subtitle: Physicians, Change, and Maximizing Employed Physician Performance Thomas Ferkovic Managing Partner SS&G Healthcare Chicago tferkovic@ssandg.com
Learning Objectives Identify the traits of high performing physician practices Identify the format that provides physicians most useful data to be successful Describe the KPIs that change physician behavior
In the historic words of our president. No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and their aunts.
Those were the words of President Lyndon B. Johnson at the signing of the Medicare Bill on July 30, 1965. The more things change, the more they stay the same
Health Reform 5
A compounding problem Has anything really changed with ACA? AMA Medicare and the Sustainable Growth Rate 6
Successful Physician - Health System Integration Group Formation for Leverage Developing Efficiency through best in class Operations Reducing Variation and managing care Impact on Cost,Quality, and Profitability Mission, Sites, Services Joint Negotiations w/ Payers and suppliers Access to Capital Shared Clinical Systems Share expertise Across business units Shared Operating Standards Rationalizing Care Sites and Delivery Triaging Patients Across sites Must Raise the Bar And Bend the Curve.. Degree of Business Integration
Why Not?????
Snapshot of your Peer Organizations Remember we are looking at $15,000,000 to $30,000,000 Companies!
Hospital Medical Group Growth Pattern 50 45 40 70 35 30 25 40 20 15 25 10 5 12 0 2007 2008 2009 2010
Investment per Physician MGMA($187,930) SS&G Benchmarks ($147,000) Worth it?
Corporate Overhead Overhead includes: Billing, corporate management, coding, finance and systems. Private practice physicians: < 8% of revenue Hospital Employed Physicians: 8-11% of revenue
Dakota Tribal Wisdom: When you discover you re riding a dead horse, the best strategy is to dismount. However in healthcare, we often try other strategies with dead horses.: -Author unknown. Modified by SS&G Healthcare
Dakota Tribal Wisdom: Healthcare 1. Buy a stronger whip. 2. Threaten the horse with termination. 3. Say things like, This is the way we have always ridden this horse. 4. Arrange to visit other sites to see how they ride dead horses. 5. Lower the standards so that dead horses can be included. 6. Appoint a tiger team to revive the dead horse. 7. Ride the dead horse outside the box. 8. Create a training session to increase our riding ability. 9. Name the dead horse Paradigm Shift and keep riding it. 10. Ride the dead horse smarter not harder. 11. Change the Dead Horse s compensation model. 12. Harness several dead horses together for increased speed. 13. Do a time management study to see if the lighter riders would improve productivity. 14. Call the dead horse a joint venture and let others ride it. 15. Purchase additional dead horses and call it an integrated health system. 16. Form a quality circle to find uses for dead horses. 17. Get the horse a Web site.
Evolving Healthcare Dynamics... How will this affect how we manage performance? What do we know? Continued downward pressure on reimbursement Significant expansion of Medicaid Physicians pay models not tied to actual cash Increased dependence of health systems on employed medical staff Continued focus on compliance is essential (CMS/OIG) Co-payments and deductibles are increasing and falling on providers to collect
Evolving Healthcare Dynamics... How will this affect how we manage performance? What don t we know? Timing and models of bundled payment Final form of ACOs Timing and specific impact of growth in health care entitlements Future regulatory and legislative actions
Reviewing how we got here... Where we came from understanding our strategy Maintaining an institutional memory... Is a challenge Crisis motivated decision making is often counter productive Avoiding past mistakes and missteps
Practice Comparison Hospital Owned All payers Payer Mix Private Practice Preferred payers All services Dynamic Enterprise Focus Growing Scope of Service Practice size Practice Focus Charity Care Optimized services ( profit margin) Stable (or stagnant) Internal Focus Minimal
Physician Performance Numbers are important but only a starting point... YTD Physician New Established Gross Net Total Operating Base Salary Specialty Visits Visits Charges Revenue Expense Margin Adjustment A FP 270 1,878 $ 406,672 $ 211,665 $ 336,912 ($125,247) ($135,469) B IM 116 2,865 $ 446,554 $ 254,049 $ 315,509 ($61,460) ($32,054) C FP.75fte 389 2,105 $ 452,519 $ 226,382 $ 311,911 ($85,529) ($103,870) D FP 386 3,113 $ 504,756 $ 258,978 $ 280,253 ($21,275) $12,291 E IM 149 2,297 $ 725,058 $ 396,252 $ 375,691 $20,561 $7,721 F IM 127 3,516 $ 967,148 $ 579,678 $ 511,554 $68,125 $13,295 G IM 42 1,731 $ 892,839 $ 487,951 $ 421,992 $65,959 $80,537 Region 1 Average Loss per Physician: $38,119 (45 doctors) Region 2 Average Loss per Physician: $92,673 (77 doctors)
Current Business Process KPIs in Hospitals Inpatient Mortality Rate CMS Core Measures Harm events per 1,000 days Readmission Rate Occupancy Rate Ave Length of stay Patient Satisfaction Total Operating Margin A/R days outstanding A/P days outstanding Claims Denial Rate Days cash on hand ETC., ETC. ETC.
What gets measured, gets done! For Patients: Lab Results Blood Pressure Why not for doctors?
heart monitor for workouts
Health System - FY2011 Perfomance Indicators Dr. Smith Site: Location X Specialty: Surgery - Vascular - Primary Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD FY2011: Established Visits 7 198 67 66 56 45 64 22 47 60 - - 632 New Visits 1 59 29 23 13 15 14 5 18 23 - - 200 Consults - 5 - - - - - - - - - - 5 Other Eval & Mgmt 29 16 22 53 8-23 28 21 13 - - 213 New Visits/Total % 3% 21% 25% 16% 17% 25% 14% 9% 21% 24% 0% 0% 19% Total Visits 37 278 118 142 77 60 101 55 86 96 - - 1,050 Medicine Procedures 202 293 140 280 178 187 208 150 524 366 - - 2,528 PathLab Procedures - - - - - - - - - - - - - Radiology Procedures 66 44 73 44 42 22 62 54 58 63 - - 528 Surgery Procedures 112 48 95 89 68 49 120 61 97 98 - - 837 Total Procedures 380 385 308 413 288 258 390 265 679 527 - - 3,893 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - WRVUs Analysis Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY2011 FY2010 MGMA50 MGMA75 MGMA90 12 Month Rolling Average Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD FY2011 FTEs 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 #N/A #N/A 1.0 FY2011 Work RVUs 1,204 907 1,066 1,388 822 645 1,370 819 1,353 1,198 #N/A #N/A 10,772 FY2010 Work RVUs 838 804 398 1,208 596 748 1,594 844 841 1,450 656 1,299 11,275 12 Month Rolling Average 914 949 970 979 1,034 1,049 1,068 1,060 1,041 1,039 1,082 1,061 12,245 MGMA50 Benchmark 748 748 748 748 748 748 748 748 748 748 748 748 8,972 MGMA75 Benchmark 925 925 925 925 925 925 925 925 925 925 925 925 11,100 MGMA90 Benchmark 1,136 1,136 1,136 1,136 1,136 1,136 1,136 1,136 1,136 1,136 1,136 1,136 13,628 These percentiles were derived from MGMA 2010 report using 2009 Data Productivity Calculation: YTD Average wrvus per Procedure 2.77 YTD Average Procedures per Business Day 18 Next Percentile 90% YE wrvus at next percentile 13,628 Current YTD wrvus 10,772 YE wrvus for next percentile 2,856 Additional Procedures per FTE per Bus. Day 5.64 FY2011 wrvus MGMA Percentile 86% 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - YTD WRVUs Analysis Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY2011 FY2010 MGMA50 MGMA75 MGMA90
Health System - FY2011 Perfomance Indicators Dr. Smith Current Period FTE 1.0 Specialty: Surgery - Vascular - Primary 80 80.00% 70 70.00% 60 60.00% 50 50.00% 40 40.00% 30 30.00% 20 20.00% 10 10.00% 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun AR Days AR Days - Specialty AR Days - Site AR %> 90 Days AR %> 90 Days - Specialty AR %> 90 Days - Site 0.00% AR Trending Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun AR Days 62 53 58 65 56 67 60 42 44 56 #N/A #N/A AR Days - Specialty 56 49 61 63 60 68 49 41 48 49 #N/A #N/A AR Days - Site 56 49 61 63 60 68 49 41 48 49 #N/A #N/A AR %> 90 Days 45% 55% 54% 47% 63% 70% 37% 48% 38% 42% #N/A #N/A AR %> 90 Days - Specialty 50% 59% 54% 55% 57% 56% 22% 31% 30% 31% #N/A #N/A AR %> 90 Days - Site 50% 59% 54% 55% 57% 56% 22% 31% 30% 31% #N/A #N/A AR Days are calculated net of bad debt. AR % greater than 90 days includes bad debt. AR Aging: FY2011-10 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 0 to 30 31 to 60 61 to 90 91 to 120 121 to 150 151 to 180 181+ AR Aging % AR Aging - Site % AR Aging - Specialty % AR Aging: FY2011-10 0 to 30 31 to 60 61 to 90 91 to 120 121 to 150 151 to 180 181+ Total AR Aging $ 88,711 $ 33,426 $ 24,825 $ 24,211 $ 9,125 $ 8,019 $ 67,191 $ 255,509 AR Aging % 34.72% 13.08% 9.72% 9.48% 3.57% 3.14% 26.30% 100.00% AR Aging - Site % 41.24% 17.81% 10.12% 9.24% 6.32% 4.71% 10.55% 100.00% AR Aging - Specialty % 41.24% 17.81% 10.12% 9.24% 6.32% 4.71% 10.55% 100.00%
Dr. Smith 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New Visits 99201 99202 99203 99204 99205 Health System - FY2011 Perfomance Indicators Specialty: Surgery - Vascular - Primary New Visits 99201 99202 99203 99204 99205 Total Est Visits 99211 99212 99213 99214 99215 Total FY2011 0% 14% 13% 74% 0% 100% FY2011 0% 3% 59% 39% 0% 100% FY2010 3% 56% 24% 16% 2% 100% FY2010 2% 19% 54% 25% 0% 100% Site Benchmark 0% 3% 12% 84% 1% 100% Site Benchmark 0% 22% 30% 48% 0% 100% Specialty Benchmark 0% 3% 12% 84% 1% 100% Specialty Benchmark 0% 22% 30% 48% 0% 100% National Bench 4% 14% 38% 34% 10% 100% National Bench 3% 28% 49% 18% 3% 100% 70% 60% 50% 40% 30% 20% 10% 0% Est Visits 99211 99212 99213 99214 99215 Office Consult Inpatient Consult 80% 120% 70% 60% 50% 40% 100% 80% 60% 30% 40% 20% 10% 0% 99241 99242 99243 99244 99245 20% 0% -20% 99251 99252 99253 99254 99255 Office Consult 99241 99242 99243 99244 99245 Total Inpatient Consult 99251 99252 99253 99254 99255 Total FY2011 0% 20% 40% 20% 20% 100% FY2011 0% 0% 0% 0% 0% 0% FY2010 3% 26% 71% 0% 0% 100% FY2010 1% 15% 78% 3% 3% 100% Site Benchmark 17% 17% 33% 17% 17% 100% Site Benchmark 0% 0% 100% 0% 0% 100% Specialty Benchmark 17% 17% 33% 17% 17% 100% Specialty Benchmark 0% 0% 100% 0% 0% 100% National Bench 3% 11% 37% 39% 11% 100% National Bench 3% 13% 39% 34% 12% 100%
Health System - FY2011 Perfomance Indicators Dr. Smith Site: Location X Specialty: Surgery - Vascular - Primary 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Charge Lag Distribution - April - FY2011 00-03 04-07 08-14 15-21 22-31 32-60 61+ Office Other Office Other 00-03 93% 9% 04-07 1% 14% 08-14 2% 12% 15-21 2% 4% 22-31 1% 12% 32-60 2% 37% 61+ 0% 11% Charge Lag Trending - Rolling 12 Months Ended April FY2011 120.0 100.0 80.0 60.0 40.0 20.0 0.0 May-10 Jun-10 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-11 Feb-11 Mar-11 Apr-11 Average Office Lag Average Other Lag May-10 Jun-10 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-11 Feb-11 Mar-11 Apr-11 12 Month Avg Average Office Lag 77.8 66.8 103.5 40.7 10.0 3.0 1.3 1.8 6.1 1.0 4.0 2.1 26.5 Average Other Lag 57.7 46.3 47.6 53.3 50.8 49.3 61.7 65.9 64.7 61.2 64.7 33.5 54.7
Physician Payer Mix Variance
Location Impact on Payer Mix
Heart Monitor for Physician Practices Future
KPIs to the right person
Charges and Payments
Payor Mix
Alerts: Let the doctors know what they need to know
Manage Meaningful Use
What have we learned? A plurality of physicians found the visit variance to target more useful than financial data Importance of regular review of scorecards Importance of transparency cannot be overstated Development of detailed plans with individual physicians (and on site staff) to meet goals
How do our Compensation Models align with Goals? Goals are evolving... What is the philosophy on incentive compensation? Limitations of current models
How are Goals and Metrics Evolving? Traditional focus on: Financial performance Productivity Changing to include: Quality Compliance with clinical protocols Outcomes (e.g. Chronic disease management, readmissions, etc.) Future ACO metrics Patient satisfaction Office Practice HCAPS Access Other?
How do our Compensation Models align with Goals? Relative Value Unit Based Models Pros Incentivizes productivity Minimizes billing and accounting conflicts Minimizes payer mix issues Cons Does not incentivize cost/efficiency optimization Still requires negotiation on unit value Potential to increase operating loses
How do our Compensation Models align with Goals? Revenue/Income Based Models Pros Incentivizes productivity Focus on bottom line performance Maintains physician focus on cost and efficiency Cons Billing/Collection and accounting challenges Potential issues around payer mix Issues with in-office ancillaries
How do Practice Management Models align with Goals? Not systems, but approaches to practice management... Question: What is the importance of physician input and control within practice pods in achieving goals? Balance between management oversight and physician control Degree of physician input on: Scheduling Staffing Physician recruitment
Future State... Models will need to create incentives for nonfinancial metrics Groups or pods of physicians must work together as teams, not individuals Incentives must be material to drive change Potential for increase in operating loss trend under health care reform Funding may be risk based and subject to patient compliance Evolution away from volume and facility driven revenue models If reform is successful admissions will decrease Will the same specialties be of value to the health system?
What have we learned.. Well defined strategic business plan tied to system strategy Disciplined management Consistent physician contracts Effective financial reporting and key indicators Effective operations group Compensation model that aligns with strategy Credibility and trust with Physicians
Questions?
Thomas J. Ferkovic Managing Partner SS&G Healthcare tferkovic@ssandg.com Ssandghc.com