Getting Fit for the Future: Community Hospitals in a Time of Transition

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Getting Fit for the Future:Community Hospitals in a Time of Transition

Casey JohnsonSenior Corporate Strategy Associate

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• Long history and deep experience with community health

• Well-established relationships with patients and providers

• Smaller size makes it easier to adapt to change and standardize processes

• Experience in looking across the continuum of care

• Experience running lean

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Community hospitals by the numbers

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percent of the hospitals

vulnerable to closure in 2016 are

critical access hospitals

68% 99,000healthcare

jobs in rural communities would be lost

if the 673 vulnerable

hospitals were to shut down in

2016http://www.beckershospitalreview.com/finance/673-rural-hospitals-vulnerable-to-closure-5-things-to-know.html

of the hospitals vulnerable to

closure in 2016 are located in states that have not expanded Medicaid

63%

Other types of hospitals facing closures

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2010 2011 2012 2013 20140

5

10

15

20

25

30

3529

1417

14

911

16

22

3028

36 7

1214

Hospitals opened and closed, including rural, by year

Newly opened hospitals Closed hospitalsClosed rural hospitals

Num

ber

of H

ospi

tals

Note: Counts of closed hospitals include the rural hospital closures.

Historically, small hospitals have faced many other pressures before

1983DRG

1997BBA

2010ACA

Balanced Budget Act:• Length of stay 96 hours• Optional payment

method at 115% of fee schedule

• Participation of rural areas of metropolitan counties

Affordable Care Act:• Medicaid expansion

Rural Emergency Acute Care Hospital

Act:• To create a sustainable

future for rural health care

Diagnostic-related Group:

• Classification system to identify "products" patients received

• Rewards volume versus actual costs

2015Senate Bill

1648

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Medicaid Expansion 2014

19 states are not expanding Medicaid 26 states (including Washington, D.C.) are expanding Medicaid)

6 states are expanding Medicaid, but using an alternative to traditional expansion

Average patient trends show the benefits of Medicaid expansion

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1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

8.6% 8.8% 9.1% 9.2% 9.2% 9.4% 9.4% 9.0% 8.9% 9.0% 9.3% 9.0% 9.4% 9.3% 9.5% 9.6%

15.2%15.7%15.7%15.1%15.7%16.2%16.2%15.2%

17.1%19.4%

20.8%20.1%

20.9%21.5%21.6% 21.2%

7.1% 7.1% 7.1% 6.5% 6.8% 6.9% 7.0% 6.3% 6.3% 5.4% 5.4% 5.1% 4.8% 4.7% 4.7% 4.7%4.3% 4.4% 4.4% 4.1% 4.3% 4.1% 4.2% 3.8% 3.0% 2.4% 2.3% 2.4% 2.1% 1.9% 2.0% 2.0%

Proportion of PCP Visits From Medicaid and Uninsured Adults (18-64) for Medicaid Expansion States and Non-

Expansion States, 2012-2015*

Medicaid Visits in Non-Expansion States Medicaid Visits in Expansion StatesUninsured Visits in Non-Expansion States Uninsured Visits in Expansion States

Sample: Over 3.4 million visits to practices active on the athenahealth network before 2011.* States grouped by 2014 expansion status

2012 2013 2014 2015

Rural hospitals have seeing declining patient admissions

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Sources:2006 – 2013: http://www.northcarolinahealthnews.org/2015/07/24/commentary-why-rural-hospitals-are-closing/2014: http://www.medpac.gov/documents/reports/chapter-3-hospital-inpatient-and-outpatient-services-(march-2016-report).pdf?sfvrsn=0

2006 2007 2008 2009 2010 2011 2012 2013 20140

1020304050607080 67 67 67 66 65 65 64 63 64

48 48 48 47 45 45 43 42 37

64 64 64 63 62 62 61 60 60

Hospital occupancy rates, 2006-2013

Urban Rural All hospitals

Fiscal year

Occu

panc

y ra

te (p

erce

nt)

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Source: http://www.tha.com/blog/Default.aspx?pid=17

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

-25.0%

Total Hospital Medicare Margins by Year

20032004

20052006

20072008

20092010

20112012

20132014

20152016

20172018

2019

The hospital business model is under assault and it needs new operating platforms

Predictive Trend

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Financial pressure such as expenses consistently exceeding revenues

Consolidation processes

Federal funding terminated due to patient safety concerns

How to Build a Thriving Community Hospital

Prioritize High

Return Projects

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Improve Clinician Loyalty & Alignment

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4 Strategies for a StrongCommunity Hospital

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Get Control Over

Financials

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Build Patient Loyalty

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Get control over your financials

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6% DENIAL MANAGEMENT TEAM

ENTER CLAIM

NETWORK KNOWLEDGE WORK

CHECK ELIGIBILITY

✔ 94% FIRST PASS

RULES ENGINE

REPORTING, TRACKERS,

ALERTS, APPEALS

PAYMENT POSTING

US BANK ACCOUNT

OUTREACHCAMPAIGNS

$

AUTHORIZATIONMANAGEMENT

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Build patient loyalty

Portal adoption a potential competitive differentiator

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Portal adopters 13 percentage points more likely to return for second visit

18 Month Retention RatesNon-Portal Adopters

67%Portal Adopters

80%

Portal Adopters More Loyal

1 “More than Forty Percent of U.S. Consumers Willing to Switch Physicians to Gain Online Access to Electronic Medical Records, According to Accenture Survey,” Accenture, September 16, 2013.

Retaining your patients pays off

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A B C D E F$0

$500

$1,000

$1,500

$2,000

$2,500

$101 $143 $95 $119 $131 $99

$814 $903 $863$704

$1,358

$2,026

Retained Patients Drive Considerable Downstream Revenue

Revenue Impact for Six Illustrative PracticesPatient Not Retained Patient Retained

3 Ye

ar R

even

ue*

Source: athenaResearch

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Improve clinician loyalty and alignment

Estimates of the proportion of primary care visits that might be attended by PAs or NPs range between 50%-75%

Hospital-based physician

Office-based physician

Mid-level provider

Support staff Patient

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Bring the principle of comparative advantage to the health care supply chain

Estimates of the proportion of primary care visits that might be attended by PAs or NPs range between 50%-75%

Hospital-based physician

Office-based physician

Mid-level provider

Support staff Patient

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Bring the principle of comparative advantage to the health care supply chain

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QUALITY MANAGEMENT ENGINE

PROVIDER VISIBILITY

SMART

WORKFLOW

NETWORK KNOWLEDGE WORK

195,000 ELECTRONIC INTERFACES

DOCUMENT MANAGEMENT

PATIENT ENGAGEMENT

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Prioritize high-return projects

Prioritize high-return projects

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✔

✔

✔

✔

Medicare and annual wellness visit campaigns

Hot spotting and intervention of the uncompensated care pool

Management of re-admits

Pursuing new grant opportunities

Don’t go it alone.

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health information backbone

that makes health care work as it should.

Software

ASP

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Network-EnabledService The Cloud

Perfo

rman

ce &

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bilit

y

Connection to Outcomes HIGH

HI

GH

+KNOWLEDGE WORK

RESULTSNETWORK

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Patient Engageme

nt

Care Coordination

Revenue Cycle &

Financial Manageme

ntElectronic

Health Records

athenaOneCLOUD-BASED SERVICES

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Focus anddeliver

on resultsAligned

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At-risk service

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Get paid more, faster, with less work

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Keep current patients and capture new ones

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Thank You