Oss: Sustainability During & After The Perfect Storm

NYAPRS Note: Some incisive reflections from Open Minds’ Monica Oss following NYAPRS’ recent Executive Seminar.

 

Sustainability – During & After The Perfect Storm

By Monica E. Oss, Chief Executive Officer, OPEN MINDS  May 9, 2013

 

Developed by OPEN MINDS, 163 York Street, Gettysburg PA 17325, www.openminds.com.  All rights reserved

 

“The Perfect Storm.” I didn’t describe the health and human service landscape this way – but I did hear someone at a recent provider organization meeting in New York use the phrase.

It’s an apt analogy for health and human service provider organizations. And, like any storm, there are two issues for survival – surviving the turbulence of the storm itself and thriving in the post-storm “new normal.”

 

On Monday, I mentioned the three challenges that provider organizations face in this “perfect storm” in my briefing Specialist Options In An Integrated Care Management World all members. The first two challenges – the new infrastructure and competencies (and sunk costs) needed to continue providing services in a “managed” environment and the infrastructure needed to accept value-based payment arrangements. This is the surviving the turbulence part – capitalizing the cost of change for the current organization.

 

But, it is the third challenge that is more fundamental – creating new services and an organizational model – that is financial sustainable in the new landscape. This is a complex strategic issue with three elements – the services in demand in the new market, the vertical positioning of the services in the care management structure, and the financing model.

The first element in sustainability strategies is determining what services will be in greater demand (or have less competition) in the post-storm market landscape. Downward cost pressure and health care reform – in the form of more coordinated and managed environments – are decreasing demand for specialist services and for hospital-based care. What’s on the upswing in demand? Community-based support services for high-needs consumers, hospital diversion programs and readmission prevention programs, coordinated service models for complex consumers. We refer to these service line options as “horizontal” market positioning – the broad range of service options available to consumers.

Examples of Strategic Options In Service Delivery: Horizontal Positioning

Specialty population services (dual dx – MH/SA, MH/MR, sexually reactive, etc.) – care coordination and/or direct service

Crisis stabilization functions or program

Short-term care models focused on community transition from facility-based services

Case rate-reimbursed multi-service programs

Service ‘island’ – one of limited provider of a service in a specific area

The second element in positioning in the emerging market landscape is the connection of services to payers and to consumer care coordination. This vertical positioning is about access to payment for services delivered – and generally involves accepting more value-based payment in exchange for a secured stream of referrals and consumer revenue. The current strategic jousting match in most markets is about who controls consumer care coordination – and with it the revenues for serving those consumers. This is a match that is not yet over.

Examples of Strategic Options In Care Management: Vertical Positioning

Accountable care organization (ACO) or ACO partner

Specialty ACO provider or partner

Medical home or health home

Medical home or health home partner

Specialty care manager for specific populations – for MCO, ACO, BHO, or Medi/Medi plans

The final element in positioning for post-reform sustainability is financing options. The available options are often parallel to vertical positioning. Many care management options are not possible without accepting some type of value-based reimbursement. And, the more financial risk in the reimbursement model, the more control over care decisions. The typical range of reimbursement options in care management positioning options is shown below.

Vertical/Care Management Positioning	Typical Reimbursement Options
Accountable care organization (ACO) or ACO partner	FFS, FFS with P4P, Case Rate, Episodic/Bundled Payment, Capitation
Specialty ACO provider or partner	FFS, FFS with P4P, Case Rate, Episodic/Bundled Payment, Capitation
Medical Home Or Health Homes Provider	FFS, FFS with P4P, Case Rate, Capitation
Medical Home or Health Home Partner	FFS, FFS with P4P
Case Rate-Reimbursed Specialty Program (By Specialty ACO provider or partner Population)	Case Rate, Episodic/Bundled Payment
High-Performing Network Provider And/Or “Center Of Excellence”	FFS, FFS with P4P, Case Rate, Episodic/Bundled Payment
Contracted provider	FFS

Where to start with your post-reform marketing positioning? For any positioning of services in any market, strategic options are limited by two factors – the payer landscape and your competitors. Understanding those factors (see From Payer Vendor To Payer Partner all members) is fundamental to strategy development. And for a hands-on discussion of these strategy issues, don’t miss the presentation by OPEN MINDS Senior Associate Joseph P. Naughton-Travers, Ed.M., The OPEN MINDS Guide To Strategic Planning: How To Find The Right Path For Your Organization In A Turbulent Market at the 2013 OPEN MINDS Planning & Innovation Institute.