Value-Based Care Webinar: Using Analytics to Thrive in New Payment Models

© 2015 Health Catalyst
www.healthcatalyst.com
Proprietary and Confidential
c
Webinar - December 2, 2015
How to Thrive in the New
Value-Based Care
Delivery World
Tom Burton
Executive Vice President, Health Catalyst
Co-founded Health Catalyst 2008
Intermountain Healthcare – 2002-2008

Learning Objectives
1. Understand how to use analytics to
manage at risk contracts in value-based care
delivery
2. Understand network optimization through provider
selection and leakage reduction
3. Understand a balanced approach to
care management
4. Understand the three capabilities required for
systematic population health management

Population Health Components
3
Clinical Quality Improvement
(Broad Processes & Workflow)
Care Management
(Patient Specific)
Enterprise Data Warehouse
(Enables Data Integration and Interpretation)
Financial Claims EMRs Other
(Social/Economic)
Cost
Population Health
Shared & At Risk
Management & Administration
1) Manage at risk
contracts
2) Network
optimization
4) Systematic
improvement
3) Balanced care
management

Fee for Service Fee for Value
The Common Denominator:
Reduce Costs, Improve Quality
4
Cost
Payment
Cost
Payment

Balancing Short-Term Imperatives
with Long-Term Transformation
5
Short-term goal:
Successfully Manage At-Risk Contracts
Owner: Accountable Care Team
Long-term goal:
Transform the Care Delivery System
Owner: Care Delivery Team
Cost
Accountable Care
Population Health Management

www.healthcatalyst.comProprietary and Confidential
Understand how to use analytics to
manage at risk contracts
in value-based care delivery
6

Come on down!
7

Lowest bid,
but still make money
8
Last Years PMPM
Payment
180 180 180 180
PMPM BID 175 182 165 170
- Actual PMPM Cost -170 -170 -170 -170
PMPM Margin 5 12 -5 0

Diabetes Population to Bid on
• 15,000 Diabetes Patients
• Total claims paid last year for this patient group was $45 Million, or
payments of $250 PMPM
• Readmission Rate of 15.1%
• Number of inpatient days last year was 9,014
• This is a condition capitation arrangement with the payer for
primary or secondary diagnosis of diabetes
What is your PMPM (per member per month) bid?
Remember the winner is the lowest bid, but still make money
9

Lowest bid, but still make money
10
Last Years PMPM
Payment
250 250 250 250
PMPM BID 245 249 235 240
- Actual PMPM Cost -240 240 240 240
PMPM Margin 5 9 -5 0

Need for Improved Costing
11
Variable Expenses
Labor Supplies Total
Unit Charge Qty RCC RCC RCC
Hip Implant - Device $8,500 1 $1,000 $3,000 $4,000
Hip Implant - OR Time $9,600 1 $3,300 $1,500 $4,800
All other expenses $5,000
Total cost $13,800
RCCCosting
Unit Charge Qty RVU Avg Cost RVU + Avg
Hip Implant - Device $8,500 1 200.0 $4,000 $4,200
OR Level 2 Per Minute $200 120 3.5 $12 $5,640
Total cost $14,840
RVUCosting
Unit Charge Qty ABC
Acquisition
Cost
ABC +
Acquisition
Hip Implant - Uber Max $8,500 1 $400 $5,000 $5,400
OR Level 2 Per Minute $200 120 $50 $13 $7,560
Total cost $17,960
Activity-Based
Costing
Bundled payment
of $15,000
Yes
Maybe
No – unless
actual cost can
be reduced
to < $15 K

Proprietary and Confidential 12
Data Capture Data Analysis
Results
EMRs
HR Supplies
Data
Provisioning
Enterprise
Data
Warehouse
• Ratio of Cost to Charges
• Volumes
• Relative Value Units
• Duration Based
• Explicit (e.g. Drugs)
More
Allocated
More
Explicit
2) Attach costs to Patients
• Not just by charge items
but by more explicit
activities
Prioritized cost
reduction
opportunities
based on actual workflow
variation
Less Expensive
Staffing Models
through predictive activity
based algorithms
Informed payer
contracting by
understanding true PMPM
costs for specific
populations
1) Attach costs to Drivers using
best available costing method:
3) Custom groupers of like
patients to identify opportunities
• Bundled Payments
• Payer negotiations
• Outsource decisions on
specialty care
Rx Blood
Allocations of costs
to activities
How an Activity Based Costing Solutions works:
General Ledger
Real-Time Location
Services (RTLS)
Cost Center Manager
User Interface

Retrospective Analytics
Month-Over-Month PMPM Performance
13
Principle: Know what’s driving
your PMPM payments AND costs

PMPM Trend, Continued
Top Contributors to the Overall Trend
14

Poll Question
What kind of costing capabilities does your
organization have?
A) Just Starting: We are still in a fee-for-service
mindset – most clinicians have no idea what it costs to
deliver care
B) Mid-Journey: We use rudimentary costing techniques
such as Cost to Charge Ratios or Relative Value Units
– some clinicians understand the cost of care they
deliver
C) Mature: We have a robust Activity Based Costing
system. Every clinician knows precisely what it costs
to delivery care for each individual patient
15

Back & Neck Pain Population
• 12,000 Back & Neck Pain Patients
• Total claims paid last year for this patient group was $9 Million
• Last years actual cost was $114 PMPM, payment was $125 PMPM
• This is a condition capitation arrangement with the payer for primary or
secondary diagnosis of neck and back pain
16

Lowest bid,
17
Last Years PMPM
Cost
114 114 114 114
PMPM BID 115 119 124 120
- Actual PMPM Cost -118 -118 -118 -118
PMPM Margin -3 1 6 2

Predictive Analytics
18
Predictive model for rising risk patients
Principle: Use data beyond traditional claims to
predict rising risk in populations

Poll Question
How is your organization at predicting rising risk?
A) Just Starting: We are just now realizing this may be
important in a value-based care delivery world
B) Mid-Journey: We have a few analysts in our finance
department who manually calculate rising risk in
spreadsheets as we prepare for negotiations with
payers
C) Mature: We use robust predicative analytics to
measure the rising risks in populations and clinicians
can access predictive risk models for each individual
patients to attempt to prevent bad clinical and cost
outcomes.
19

Full Capitation Population
• 175,000 Members
• Total claims paid last year for this patient group was $500 Million
• Last years payments were $238 PMPM and next years predicted
cost are $225 PMPM using rising risk models
• This is full capitation arrangement with the payer
20

Lowest bid,
21
Predictive Cost 225 225 225 225
PMPM BID 230 190 220 215
- Actual PMPM Cost -200 -200 -200 -200
PMPM Margin 30 -10 20 15

Improvement Prioritization
22
Care Process Families by Resources Consumed (High to Low)
TotalResourcesConsumed
Top 10 Care Process
Families account for 34%
of the opportunity
Top 40 Care Process
Families account for 80%
of the opportunity

The Long-Term Vision:
Transforming Care Delivery
23
Short-term goal:
Successfully Manage At-Risk Contracts
Owner: Accountable Care Team
Long-term goal:
Transform the Care Delivery System
Owner: Care Delivery Team
Cost
Accountable Care
Population Health Management

Outlier Management
# of
Cases
Current Condition:
Significant Volume and Variation
# of
Cases
Option 1: “Punish the Outliers”
or “Cut Off the Tail”
Mean
Focus on
Minimum
Standard
Metric
Excellent OutcomesPoor Outcomes Excellent OutcomesPoor Outcomes
Outlier Management
• Set a minimum standard of quality
• Focus improvement effort on those not meeting the minimum standard

Excellent OutcomesPoor Outcomes
# of
Cases
Excellent Outcomes
# of
Cases
Option 2: Identify Best Practice
“Narrow the curve and shift it to the right”
Mean
Poor Outcomes
Inlier Management
(Focus on Better Care)
Inlier Management
• Identify evidenced based “Shared Baseline”
• Focus improvement effort on reducing variation
• Often those performing the best make the greatest improvements
Current Condition:
Significant Volume and Variation

Prescriptive Analytics
26
Opportunity analysis can focus efforts
Principle: Use variation and volume key process analysis to
identify opportunities likely to produce significant savings
Total Variable Cost
SeverityAdjusted
CoefficientofVariation

Learning Objective Review
• Understand how to use analytics to
manage at risk contracts in value-based care delivery
 Retrospective Analytics – Know your historic
costs PMPM (Per Member Per Month)
 Predictive Analytics – Gain the ability to predict
future costs – especially in rising risk patients
 Prescriptive Analytics – Use analytics to
prioritized opportunities to eliminate waste from care
delivery

Understand network optimization
through provider selection and leakage
reduction
28

29
Care Management
(Patient Specific)
(Social/Economic)
Cost
Population Health
Shared & At Risk
1) Manage at risk
contracts
2) Network
optimization
4) Systematic
improvement
3) Balanced care
management

Network Management
Moving Beyond our Four Walls
30
How do I reduce
costs? How do I
improve referral
patterns?
Who are my
best (lowest
cost, highest
quality)
partners?
How do I reduce
leakage?
Partners
Out-of-Network
In Network
Manage
Leverage data on leakage
and referrals to pinpoint
opportunities to improve the
performance of your
provider network.
Optimize
Overlay information about
your patient population’s
needs and your provider
population (including
accessibility, cost, and
quality) to identify gaps.

Network Optimization Game
Polarity Principle:
• Reduce inappropriate utilization costs AND
reduce out of network leakage
Analogy:
• Include anywhere from 1 to all 10 providers
• Must reach target of <10% leakage AND
PMPM must be less than $240 PMPM
31

3
8
4
5
10
9
6 7
2
1

Sample Results:
• If you included all MDs
 Leakage = 0% (every MD is “In-Network”)
 … But, PMPM costs may be very high
• If you include only a few MDs (you guess at low cost providers)
 Your PMPM cost may be much lower
 … But, your leakage may be a high %
(patient may not want to travel long distances to see MD)
Solution: Use analytics to help design your network
33

Network coverage optimization
Service Area Definition
Dartmouth Atlas
Hospital Referral Regions
(boundaries based on cardiac
surgery and neurosurgery)
Central Place Theory
(boundaries based on
distribution of medical
specialties)
Venn overlap of
Health Referral Regions and
Central Place Theory
boundaries

Example: Leakage
35

Where do your patients live?
36

Where are your patients receiving care?
Network overlay on population density
37

How far is it to drive to your PCP?
Network drive time isochrones
38

3
8
4
5
10
9
6 7
2
1

Poll Question
How well do you feel your organization is at
designing an effective network?
A) Just Starting: We are not using data analysis to help
design our network or monitor leakage, referrals are
based primarily on physician relationships
B) Mid-Journey: We use rudimentary provider cost and
quality metrics to evaluate who should be included in
our network
C) Mature: We have a robust geospatial analytics which
help us overlay cost, quality and experience data with
drive time, population density and other useful
information to create ideal network design
43

Principle Review
Network Optimization
• Designing a care delivery network should include the following
considerations
 Who are the low cost providers? (you want them in your
network)
 Where does your population live?
 What are the natural barriers geographically (rivers, freeways,
train tracks)? This can cause leakage
 ACTION: remove and add providers to your network to
minimize leakage AND achieve the lowest appropriate cost
44

Understand a balanced approach to
care management
45

46
Care Management
(Patient Specific)
(Social/Economic)
Cost
Population Health
Shared & At Risk
1) Manage at risk
contracts
2) Network
optimization
4) Systematic
improvement
3) Balanced care
management

Care Management Basics
47
Population Health
Care Mgmt.
Case/
Disease
Mgmt.
Sometimes referred to as Care
Coordination
Broader than traditional Case or
Disease Management.
More narrow than full Population
Health
Source: Frost & Sullivan 2015
• Only the health plan had Incentives for care
management in a “Fee-For-Service” model
• “At-Risk” reimbursement aligns the incentive with
care providers

Care Coordination Reduces Costs
48

Five Core Capabilities for Care Mgmt
49

Data Integration
(EDW)
Patient
Stratification &
Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Key Components of
Effective Care Management

51
Patient Stratification & Care Strategy
5%
30% Rising
Risk
65% Latent/Lower Risk
Complex, Acute
& High Risk
CareManagement
Condition/Disease
Management
• Personal Relationship
• Comorbidity Management
• Cross Continuum
• Risk of Escalation
• Self Management
• Condition/Disease Focused
• Self Service
• Preventive
• Coaching

52
Balloon Dart Board Analogy
Pick your darts (care plans) you have $100 to spend
$25 for red darts
$10 for yellow darts
$5 for green darts
Preventative / Latent Risk Rising Risk
High Cost
High Risk
Hit a green
balloon
get $10 back
Hit a yellow
balloon
get $25 back
Hit a red
balloon
get $ 65 back

Poll questions
How many of each type of dart do you want?
• A) 4 red darts
• B) 3 red darts, 2 yellow darts, 2 green darts
• C) 2 red darts, 3 yellow darts, 4 green darts
• D) 1 red dart, 6 yellow darts, 3 green darts
53

54
So what is the correct answer?
Pick your darts (care plans) you have $100 to spend
$25 for red darts
$10 for yellow darts
$5 for green darts
Preventative / Latent Risk Rising Risk
High Cost
High Risk
Hit a green
balloon
get $10 back
Hit a green
balloon
get $25 back
Hit a green
balloon
get $ 65 back
D) 1 red dart, 6 yellow darts, 3 green darts
163
Here’s why…..

Actual Opportunity
Dart Board
55
Preventative / Latent Risk Rising Risk High Cost
High Risk

Data Integration
(EDW)
Patient
Stratification &
Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Key Components of

Identify High-Risk, High-Cost Patients
57
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Patient Stratification Analytics
58
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Key Take-away: Use Analytics to assign the right patients, to the right care program with the right care team

Data Integration
(EDW)
Patient
Stratification &
Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Key Components of

Care Management Detail
60
A
B
A
B
A
A
B
A
B
A
A
A
A
A
A
A
B
A
Care Program A
Care Program B
Claims Clinical
EDW
Population
Under at Risk
Contract
Configurable Patient
Complexity Score &
Stratification
Configurable cut
point and initial;
program, PCP, and
team attribution
Pre-enrollment patient list
refinement (add/remove)
Final attribution to Care
Program
FinalattributiontoCare
TeamandPCP
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Care Coordination &
Patient Engagement
Agreement on:
- Patient Centered Goals
- Tasks to drive to Goals
Initial tasks are prioritized,
scheduled, and dispersed
On an ongoing basis;
- Goals are modified
- Tasks are modified
- Tasks are re-assigned
- Alerts are created and sent based on
task
- Extended care team members are
added (or removed) as needed
- Secure SMS communication between
all players
Types of tasks for patients include;
- Education materials to be reviewed
- PROM surveys to be completed
- Daily activity and measurements to be
entered
Types of tasks for care team include;
- Active medications review
- Follow up appointment creation
- Identify local resource/support for
patient
Patient “discharged” from care
program

Proprietary and Confidential62
Manage CM Team Workflow
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Review Patients Progress
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

64
Communications is Critical
to the Circle of Care
http://www.ahrq.gov/professionals/prevention-chronic-care/improve/coordination/atlas2014/index.html
Patient
Care
Coordinator
Provider
Team
Primary
Care
Pharmacist
Family
Home
Care
Acute Care
Mental
Health
Community
Resources
Specialty
Care
Two Key Factors:
1. Single platform for
secure
communications
across the
continuum
2. Work hand in
hand with EMRs
Source: Lori Evans
Bernstein, President GSI
Health in Health IT News,
Dec 2013

Engage Patients
with Mobile technologies
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Communicate frequently with
patients
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Data Integration
(EDW)
Patient
Stratification &
Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Evaluate Care Management Effectiveness

Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Monitor Care Management ROI

Evaluate Care Plan Effectiveness
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Measure Engagement by Care Plan
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Project Cost Savings
Data
Integration
Patient
Stratification
& Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement

Data Integration
(EDW)
Patient
Stratification &
Refinement
Care
Coordination
Patient
Engagement
Performance
Measurement
Review: Key Components of

Principle Review
Care Management
Traditional Process – Very Rare that this produces an ROI
 List High Risk, High Cost Patients – perform a bunch
of interventions to attempt to lower costs in the short
term
Balanced Approach – Greater chance for long term ROI
 Involve more stakeholders – better Patient
Engagement
 Choose the right interventions for the right patients
 Play to win Long Term – ounce of Prevention, pound
of cure
73

Understand the three capabilities
required for systematic population
health management
74

75
Care Management
(Patient Specific)
(Social/Economic)
Cost
Population Health
Shared & At Risk
1) Manage at risk
contracts
2) Network
optimization
4) Systematic
improvement
3) Balanced care
management

Three Core Capabilities for
Systematic Improvement
76

Questions the 3 Systems answer
77
What should we be doing? How are we doing?
How do we transform?

Capabilities the 3 systems provide
78
• Enterprise Data Warehouse
• Actionable Metrics
• Predictive Models
• Checklists
• Protocols
• Interventions
• Adaptive Leadership
• Data Governance
• Improvement Teams
• Clinical Outcomes
• Cost Outcomes
• Experience Outcomes

Key
Principles
79
• Prioritize using Key Process Analysis
• Data Quality Assurance
• Designing Data Systems
• Understanding Variation
• Gather Best Practice Knowledge Asset
• Pick one Asset to standardize first
• Protocol Design – make it easy to do
the right thing
• Start with the Why
• Diffusion of Innovation
• Fingerprinting and Adaptive Leadership
• Permanent Teams
• Iterative Design
• Aim and Goal Selection
• Team Interaction and Implementation

Information
System Centric
“If we build it they will
come.” Focus on
reducing information
request queue.
No real outcomes
improve.
What if only 1/3 Systems is present?

Research
Centric
Academic ideas
with no practical
application. Lots of
published papers.
No real outcomes
improve.

Motivational Speaker
Centric
Management “Flavor of the
month”
Most clinicians disengage if
best practice and analytics
are both missing
No real outcomes improve.

Automation
Centric
“Paved Cow Paths”
Process is electronic
but NOT improved –
many EMR “analytics”
deployments
Limited Improvement.
What if only 2/3 Systems are present?

LEAN
Centric
Un-sustainable
Improvements.
Can’t manually
measure
after 2 or 3
projects.
Limited
Improvement.

Science
Project Centric
Pockets of
excellence, Limited
roll-out of
improvement
across all units and
facilities
Limited
Improvement.

Principle Review: Three Capabilities for
Scalable Outcomes Improvement
86
What should we be doing? How are we doing?
How do we transform?
• Clinical Outcomes
• Cost Outcomes
• Experience Outcomes

Thriving in a
Value-Based Care Delivery World
87
Care Management
(Patient Specific)
(Social/Economic)
Cost
Population Health
Shared & At Risk
1) Manage at risk
contracts
2) Network
optimization
4) Systematic
improvement
3) Balanced care
management

Today’s Lessons Learned
Manage At Risk Contracting
 Retrospective Analytics – know your historic costs before you go at risk
 Predictive Analytics – anticipate rising risk
 Prescriptive Analytics – let data point to outcomes improvement opportunities
Network Optimization
 Know where your patients live
 Be aware of natural boundaries thru geo-spatial analytics
 Include lowest cost providers in your network
Balanced Care Management
 Increase patient engagement with more stakeholders
 Match interventions to patients using analytics
 Have balanced care management strategy (more than claims based CM)
Systematic Outcomes Improvement
 Analytics, Best Practices AND Adoption produce Outcomes Improvement
 If you are missing one or two of these three systems then results are limited
88

Thank
You
89

Appendix
90

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