Assessing the situation  Chillax Medical Group Clinical Integrated Network (CIN) was formed with the merger of three smaller groups ten years ago

Subject:FinancePrice: Bought3

Share With

Assessing the situation 

Chillax Medical Group Clinical Integrated Network (CIN) was formed with the merger of three smaller groups ten years ago. The group has added two new small primary care groups in the past two years. Chillax now has 380 providers (310 physicians). The group includes multiple specialties (the current make-up is 58% primary care, 42% specialists). The group is highly regarded throughout the state and has major contracts with 2 academic hospitals, and it is also affiliated to Federally Qualified Health Centers (FQHC).

Four years ago, Chillax decided to move aggressively towards population health management and value based payment models. The group's president noted, "If we do nothing, our reimbursement will simply go down each year for most RVUs. If, on the other hand, we could work to take and manage the physician—and maybe even the hospital and pharma—portion of the premium dollar, we could control our own destiny."

Chillax leaders knew there were risks. However, this seemed to be the course with the best chance to maintain Chillax's position as a lead provider organization in its market. Chillax's president also sought to eliminate silos in clinical information: "Some people think that information is power—this is just wrong. Shared information is what generates positive outcomes."

Chillax's leaders visited several other groups that were working to be leaders in population health management. They recognized that they would need a new infrastructure in order to make this happen. They also recognized that a substantial investment would be required to build this infrastructure. Investments would come into consideration for: People, Processes and Technology.

The initial proposed technology is to provide a centralized care management organization that would allow Chillax CIN to care transition patients to multiple modalities of care and also at the same time, realize significant savings from making sure patients have the right care at the right time by the right providers.

 

Assessing options 

Key issues for Chillax in moving forward in population health were: 

• Where to get the required investment capital 
• How to accumulate/identify the optimal patient population
• How to define risk of a population to accurately account for cost and utilization containment.
• How to develop or invest in an analytics financial system to track costs, expenses and budgets
• How to make sure Fee for Service revenue does not get impacted by risk bearing contract but rather support both efforts for the physician practices
• How to engage and hire the right leaders to drive transformational changes and manage the day-to-day progress towards defined goals.

Chillax's leadership considered four approaches to accessing the funds to invest in population health management infrastructure:

• Joint venturing with a health system
• Joint venturing with a payer (payer mix in the state for Commercial products are 1. Blue Cross Blue Shield 2. Humana 3. Cigna and 4. Aetna)
• Teaming with a venture capital firm
• Borrowing the funds

Chillax ultimately decided to joint venture with a payer. The payer was a co-investor in a joint venture company to own the infrastructure. This payer was also the physician group's first value-based payment contract.

Next, the group looked for other physician groups to join in spreading the overhead cost and in assembling a larger patient population. Some groups were invited and accepted proposals to merge into Chillax. Other groups were not considered to be good merger candidates, or were already owned by area hospitals, but were still good candidates to participate in a CIN. 

Chillax and its joint-venture partner established a management services organization (MSO) to provide electronic medical record support, claims and EMR data analysis, and other support services including care navigation, budget support and cost/utilization analysis. 

Chillax will use HIMSS model for realizing value in Healthcare IT by looking at: 1. Satisfaction 2. Treatments/Clinicals 3. Electronic Information Data 4. Prevention and Patient education and ultimately 5. Savings.  

 

Moving forward

Chillax Medical Group recognizes that both the medical group and the CIN will evolve over time. Other issues continuing to evolve include: 

• Culture: emphasizing the need for a more team-oriented approach to care
• Analytics: defining specific care populations and treating them in a consistent manner at the cheapest price to the patient and cost to the healthcare system
• Compensation: incentivizing quality and cost-efficiency as well as productivity for all providers including primary care and specialists
• Payer contracts: seeking increased value-based contracts based on REAL data and definitions of quality measures that were specific to the DNA of the CIN and its services.
• Finances: determining distribution of revenues within the CIN in a fair and consistent manner so as to change perception of new risk bearing models.
• Show payers and employers that the system can deliver a consistently high-quality services at a competitive per member per month price

CIN's Revenue Distribution Model 

Chillax's network has expanded to cover a 10-county area. A new entity, Chichillin ACO, has been formed. Chillax's president notes, "We are not sure the ACO is going to be a big financial success. However, we like having the legal position of being an ACO, which clearly helps establish that we are providing clinically integrated care. This also covers a patient population that would otherwise be hard to reach. The Chichillin ACO will cover 120,000 medicare lives in an MSSP contract that will start with Track 1 and in its 3^rd year move to track 1+"

Chillax and its partners now are involved in value-based contracts, including

• 4 commercial contracts
• 1 gain-sharing ACO
• 3 Medicare Advantage contracts
• 1 narrow panel option with a health plan on the state exchange
• 1 MSSP ACO with Medicare covering 120,000

"We are still learning," noted Chillax's president. "And we are likely to be on a fast learning curve for several years. But we appear to be on the right track. We also believe we are doing the right thing for patient care. In the meantime, we like our bonuses, and it sure is easy to recruit."

The CIN is assisting all primary care practices in the CIN with moving to become patient-centered medical homes (PCMH). Care coordinators are being added to several of the practices. Meanwhile, Chillax largest hospital is in a position to move faster with respect to some aspects of population health however they are going through a "rip-and-replace" strategy to switch EMRS from Cerner to Epic.

In other important changes, 

• Physician dashboards. The CIN is intent on developing physician level dashboards that include quality, patient experience, RVU, cost, utilization, medical expense management for high tech radiology, and per-member-per-month cost data. The system began receiving direct feeds of claims data for all patients from two payers. These data are combined with national HEDIS metrics and early feeds from its electronic medical records. The system CIO, CMO and CFO recently visited two other systems to see what others are doing. At this point, the dashboards are much better developed for the employed physician group than for the other physicians in the CIN.
• Physician compensation. The compensation agreements for primary care physicians in the employed group have been modified to be 80% based on RVUs, 20% based on an agreed-on set of quality, risk and service indicators. 
• Hospitalist services. The system has negotiated an agreement with a national hospitalist group. The group is incentivized to work closely with primary care physicians, care coordinators, and other providers in the CIN to avoid readmissions. There is a penalty for the hospital for each preventable readmission
• Analytics and predictive modeling. The system has acquired sophisticated analytics to help identify the "sickest of the sick" patients. The system is establishing its first "extensivist clinic" on the campus of its largest hospital. The system hopes to go further by partnering with other systems in pooling population health information and approaches. This is expected to include a joint approach to predictive modeling and cost containment.
• Reducing leakage. The system and CIN are beginning to address leakage in the system (the numbers of patients who start by receiving services in the system but end up going outside even though the services needed are within the system). The first step was to measure the leakage and begin to identify why it was happening. Already, this effort is leading not only to better hospital bottom lines, but also to improved financial performance in specialists' practices.

Questions:

• Moving a physician group from fee-for-service towards a value-based focus: what are the financial implications of changing revenue models for physicians? Why would a physician want to join Chillax? What incentives are the most important for a PCP or Specialist group in order to drive change management but also don't disrupt their existing Fee-for-Service business?
• Addressing physician compensation changes in a medical group: why does quality become so important in addressing a fair and incentivized model for physicians? Who are the physicians in the community to best tackle cost containments and increased quality improvements?
• Forming a multi-organizational clinically integrated network (CIN): what business implications does Chillax need to consider in creating a CIN? Who should cover the initial investment? Was it smart to select a payer to partner with the CIN? How are other payers in the market collaborate with the CIN when one of their competitors is providing financial investment into Chillax? What are the pros and cons of selecting the other 3 approaches of selecting funds?
• Sharing finances in a CIN: Design a financial dashboard and what are the main KPI's Chillax CIN should track. Think of ways to track whether the CIN multiple contracts will make them money or lose them money? How can they predict?
• Governing and managing a CIN: what kind of investment is people, process and technology should Chillax invest in? Who should run the CIN and what kind of financial leadership skills would be required? Should they worry about security of financial data? What are some mitigating steps the CIN should take to secure it's liability exposure of financial data?
• Providing the CIN's infrastructure: what can the government (CMS) to support the new CIN? What financial incentives can be given to the CIN to drive change in hospital readmissions?
• Establishing relations with payers and health systems: Design a financial dashboard for providers. What important KPI's from a financial perspective would be important for Physicians to track? Think of the projected ROI and how to track for making sure the CIN realizes 17 million dollars in return. How will they be able to identify initiatives to drive ROI?