User login
The Hospitalist only
UCLA Exec: Patient-Centered Approach Essential to Quality of Hospital Care
–David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles
Patient satisfaction is a buzzword in HM circles, as compensation is increasingly tied to performance in keeping inpatients happy. David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles, could be called a guru of patient satisfaction.
Just don’t tell him that.
“I hope I’m not seen as ‘patient satisfaction,’” he says. “I hope I’m seen as ‘patient centeredness.’ And patient satisfaction is a key piece of patient centeredness.”
Dr. Feinberg, who assumed his current role UCLA Health System in 2011, is a national voice for pushing a patient-centric model of care delivery. To wit, he will be one of the keynote speakers at HM13 next month at the Gaylord National Resort & Convention Center in National Harbor, Md. His address is fittingly titled “Healing Humankind One Patient at a Time.”
The Hospitalist spoke to Dr. Feinberg about his message to hospitalists.
Question: What do you think is the evolution of patient centeredness, as that becomes more of a focus for others?
Answer: Patient centeredness to me is the true north, and I think everything else that we’ve done that isn’t patient-centered has been a distraction. … It’s why we signed up to get into healthcare. It’s what we should be doing today and tonight, and it should guide our future tomorrow. It would be like me saying to the restaurateur, “How important is the food?”
Q: Is it something that hasn’t always been done?
A: It’s pathetic. You’re totally right. We’ve lost our way.
Q: If it’s so common-sense, how did we lose our way?
A: It really became, to me, the coin of the realm in medicine was how much the doctor made, how great their reputation was. It even got to the point of: You were a good doctor if your waiting room was packed. … I keep saying the waiting room should be for the doctors. The patient shouldn’t have to wait. You should be back in the exam room and the doctor should be waiting to see you. So we’ve got to completely change the paradigm. … It’s really the patient who’s at the top of the pyramid. And I just think we’ve lost that completely.
Q: How does a hospitalist engage quickly to ensure that they’re trying to accomplish patient centeredness and manage outcomes properly?
A: Hospitalists have a unique opportunity there, because everybody remembers when they got put in the hospital. It is a big deal when you’re hospitalized. Your family is in a vulnerable state, everybody is in a heightened sense of alertness and focus. Think about how important those four days are around education, around myths and demystifying, around beliefs and disbelief.
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Q: So what is the one thing you want hospitalists to take away from your address?
A: That they should join with all of us who want to heal humankind; that they are healers, above all.
Q: How do you translate “I want to be a healer” to the grind of daily work?
A: Well, I don’t think this is a grind. I think that when you’re in this healing profession, that you come here with a purpose. I think if we asked them to look at their personal statements of why they went into med school, every single one of them has something to do with, “I was sick as a kid, my grandmother got sick, I had had this doctor who was a role model, I like to help people, I was a volunteer and I met this patient.” Everyone says that. So this is different than trying to inspire the workers at Costco. These are people that, by definition, have gone and chosen this. We know they’re all smart. They could have all become investment bankers, they could have all become schoolteachers, but what they chose was to go into this field that’s about healing others, and that’s what I think we need to and what I would want them to do, is to get back in touch with themselves because I know it’s there. By definition, it’s there.
Q: Then why don’t more people just make that connection? What is the hurdle?
A: There are a lot of distractions. There are a lot of things coming your way. Worrying about your own life; doctors have lives at home. Worrying about the pressures of making a living. Some of this stuff is really, really hard. There are a million things going on. I believe, and I hope at UCLA, that we believe the strategy to make all of that stuff work is to get it right with the patient. And if you get it right with the patient, then all of that other stuff seems to fall into place and starts to make sense. The finances work out. The market share works out. The healthcare reform works out. I think it is the answer.
Richard Quinn is a freelance writer in New Jersey.
–David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles
Patient satisfaction is a buzzword in HM circles, as compensation is increasingly tied to performance in keeping inpatients happy. David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles, could be called a guru of patient satisfaction.
Just don’t tell him that.
“I hope I’m not seen as ‘patient satisfaction,’” he says. “I hope I’m seen as ‘patient centeredness.’ And patient satisfaction is a key piece of patient centeredness.”
Dr. Feinberg, who assumed his current role UCLA Health System in 2011, is a national voice for pushing a patient-centric model of care delivery. To wit, he will be one of the keynote speakers at HM13 next month at the Gaylord National Resort & Convention Center in National Harbor, Md. His address is fittingly titled “Healing Humankind One Patient at a Time.”
The Hospitalist spoke to Dr. Feinberg about his message to hospitalists.
Question: What do you think is the evolution of patient centeredness, as that becomes more of a focus for others?
Answer: Patient centeredness to me is the true north, and I think everything else that we’ve done that isn’t patient-centered has been a distraction. … It’s why we signed up to get into healthcare. It’s what we should be doing today and tonight, and it should guide our future tomorrow. It would be like me saying to the restaurateur, “How important is the food?”
Q: Is it something that hasn’t always been done?
A: It’s pathetic. You’re totally right. We’ve lost our way.
Q: If it’s so common-sense, how did we lose our way?
A: It really became, to me, the coin of the realm in medicine was how much the doctor made, how great their reputation was. It even got to the point of: You were a good doctor if your waiting room was packed. … I keep saying the waiting room should be for the doctors. The patient shouldn’t have to wait. You should be back in the exam room and the doctor should be waiting to see you. So we’ve got to completely change the paradigm. … It’s really the patient who’s at the top of the pyramid. And I just think we’ve lost that completely.
Q: How does a hospitalist engage quickly to ensure that they’re trying to accomplish patient centeredness and manage outcomes properly?
A: Hospitalists have a unique opportunity there, because everybody remembers when they got put in the hospital. It is a big deal when you’re hospitalized. Your family is in a vulnerable state, everybody is in a heightened sense of alertness and focus. Think about how important those four days are around education, around myths and demystifying, around beliefs and disbelief.
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Q: So what is the one thing you want hospitalists to take away from your address?
A: That they should join with all of us who want to heal humankind; that they are healers, above all.
Q: How do you translate “I want to be a healer” to the grind of daily work?
A: Well, I don’t think this is a grind. I think that when you’re in this healing profession, that you come here with a purpose. I think if we asked them to look at their personal statements of why they went into med school, every single one of them has something to do with, “I was sick as a kid, my grandmother got sick, I had had this doctor who was a role model, I like to help people, I was a volunteer and I met this patient.” Everyone says that. So this is different than trying to inspire the workers at Costco. These are people that, by definition, have gone and chosen this. We know they’re all smart. They could have all become investment bankers, they could have all become schoolteachers, but what they chose was to go into this field that’s about healing others, and that’s what I think we need to and what I would want them to do, is to get back in touch with themselves because I know it’s there. By definition, it’s there.
Q: Then why don’t more people just make that connection? What is the hurdle?
A: There are a lot of distractions. There are a lot of things coming your way. Worrying about your own life; doctors have lives at home. Worrying about the pressures of making a living. Some of this stuff is really, really hard. There are a million things going on. I believe, and I hope at UCLA, that we believe the strategy to make all of that stuff work is to get it right with the patient. And if you get it right with the patient, then all of that other stuff seems to fall into place and starts to make sense. The finances work out. The market share works out. The healthcare reform works out. I think it is the answer.
Richard Quinn is a freelance writer in New Jersey.
–David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles
Patient satisfaction is a buzzword in HM circles, as compensation is increasingly tied to performance in keeping inpatients happy. David Feinberg, MD, MBA, president of UCLA Health System in Los Angeles, could be called a guru of patient satisfaction.
Just don’t tell him that.
“I hope I’m not seen as ‘patient satisfaction,’” he says. “I hope I’m seen as ‘patient centeredness.’ And patient satisfaction is a key piece of patient centeredness.”
Dr. Feinberg, who assumed his current role UCLA Health System in 2011, is a national voice for pushing a patient-centric model of care delivery. To wit, he will be one of the keynote speakers at HM13 next month at the Gaylord National Resort & Convention Center in National Harbor, Md. His address is fittingly titled “Healing Humankind One Patient at a Time.”
The Hospitalist spoke to Dr. Feinberg about his message to hospitalists.
Question: What do you think is the evolution of patient centeredness, as that becomes more of a focus for others?
Answer: Patient centeredness to me is the true north, and I think everything else that we’ve done that isn’t patient-centered has been a distraction. … It’s why we signed up to get into healthcare. It’s what we should be doing today and tonight, and it should guide our future tomorrow. It would be like me saying to the restaurateur, “How important is the food?”
Q: Is it something that hasn’t always been done?
A: It’s pathetic. You’re totally right. We’ve lost our way.
Q: If it’s so common-sense, how did we lose our way?
A: It really became, to me, the coin of the realm in medicine was how much the doctor made, how great their reputation was. It even got to the point of: You were a good doctor if your waiting room was packed. … I keep saying the waiting room should be for the doctors. The patient shouldn’t have to wait. You should be back in the exam room and the doctor should be waiting to see you. So we’ve got to completely change the paradigm. … It’s really the patient who’s at the top of the pyramid. And I just think we’ve lost that completely.
Q: How does a hospitalist engage quickly to ensure that they’re trying to accomplish patient centeredness and manage outcomes properly?
A: Hospitalists have a unique opportunity there, because everybody remembers when they got put in the hospital. It is a big deal when you’re hospitalized. Your family is in a vulnerable state, everybody is in a heightened sense of alertness and focus. Think about how important those four days are around education, around myths and demystifying, around beliefs and disbelief.
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Q: So what is the one thing you want hospitalists to take away from your address?
A: That they should join with all of us who want to heal humankind; that they are healers, above all.
Q: How do you translate “I want to be a healer” to the grind of daily work?
A: Well, I don’t think this is a grind. I think that when you’re in this healing profession, that you come here with a purpose. I think if we asked them to look at their personal statements of why they went into med school, every single one of them has something to do with, “I was sick as a kid, my grandmother got sick, I had had this doctor who was a role model, I like to help people, I was a volunteer and I met this patient.” Everyone says that. So this is different than trying to inspire the workers at Costco. These are people that, by definition, have gone and chosen this. We know they’re all smart. They could have all become investment bankers, they could have all become schoolteachers, but what they chose was to go into this field that’s about healing others, and that’s what I think we need to and what I would want them to do, is to get back in touch with themselves because I know it’s there. By definition, it’s there.
Q: Then why don’t more people just make that connection? What is the hurdle?
A: There are a lot of distractions. There are a lot of things coming your way. Worrying about your own life; doctors have lives at home. Worrying about the pressures of making a living. Some of this stuff is really, really hard. There are a million things going on. I believe, and I hope at UCLA, that we believe the strategy to make all of that stuff work is to get it right with the patient. And if you get it right with the patient, then all of that other stuff seems to fall into place and starts to make sense. The finances work out. The market share works out. The healthcare reform works out. I think it is the answer.
Richard Quinn is a freelance writer in New Jersey.
Team Hospitalist Recommends Nine Don’t-Miss Sessions at HM13
Eight educational tracks, an equal number of credit bearing pre-courses, a score of small-group forums, three plenaries, and an SHM Town Hall meeting offers a lot of professional development in a four-day span. But that’s just a sampling of what HM13 has slated May 16-19 at the Gaylord National Resort & Convention Center in National Harbor, Md., just outside Washington, D.C.
So how does one get the most value out of the conference?
“The highest-yield content is going to depend on what your background is and how to spend that time in a way that augments your knowledge, your perspective, or your exposure to like-minded colleagues in a very individual way,” says HM13 course director Daniel Brotman, MD, FACP, SFHM, director of the hospitalist program at Johns Hopkins Hospital in Baltimore. “One of the things that’s so cool about hospital medicine is its diversity.”
But don’t take Dr. Brotman’s well-educated word for it. Here’s a list of recommendations from Team Hospitalist, the only reader-involvement group of its kind in HM, on events they would not miss this year.
The New Anticoagulants: When Should We Be Using Them?
2:45 p.m., May 17
Dr. Ma: “I’m very interested about the new anticoagulants talk. What I’m curious to see is what the speaker thinks about the survivability of these medications in our society, with so many lawyers. Pradaxa already has fallen out of favor. Let’s see what happens to Xarelto.”
How do CFOs Value Their Hospitalist Programs?
2:50 p.m., May 18
Dr. Ma: “The problem today is CFOs have to valuate their hospitalists in the setting of other specialists who also receive subsidies. There is less money to be spent on hospitalists, as other specialists vie for this allotment of savings from hospital-based value purchasing.”
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Mentoring/Coaching an Improvement Team: Lessons from SHM’s Mentored Implementation Programs
2:45 p.m., May 17
Dr. Perumalswami: “As a Project BOOST physician mentor in Illinois, I would highly recommend the session because the discussion will involve an inside look into valuable experience-based observations and analysis for the success of any process improvement team. The nature of teams and the culture of improvement at various sites will also be discussed. There will be a mentee side of the presentation, too, which will help other mentors of implementation programs better understand what the issues are ‘from the other side.’”
Strategies to Improve Communication with Patients and Families to Improve Care
2:45 p.m., May 17
Dr. Hale: “It is well known in pediatrics that you are treating two patients: both the child and the parents. If the family has a shared understanding of the child’s illness and there is collaboration for the care plan, there will be improved care.”
Neonatal HSV: When to Consider It, How to Evaluate for It, and How to Treat It
11 a.m., May 18
Dr. Hale: “Neonatal HSV is a devastating disease. It is essential to recognize high-risk patients to decrease morbidity and mortality for this illness. There have been recent updates in the understanding of epidemiology of this disease that can assist the provider in recognizing high-risk patients.”
Supporting Transition for Youth with Special Healthcare Needs: Coordinating Care and Preparing to Pass the Baton
4:15 p.m., May 18
Dr. Hale: “The transition of adolescents and young adults from pediatric-care teams to adult-medicine-care teams should be seamless for the sake of the patient, but often it is a blurry transition over the course of years. This session is high-yield for both pediatric and adult hospitalists.”
Getting Ready for Physician Value-Based Purchasing
9:50 a.m., May 19
Dr. Simone: “Dr. [Pat] Torcson’s presentation last year was one of the best at HM12, and I expect this year to be the same. He chairs SHM’s Performance Measurement and Reporting Committee and is well versed in these matters. He speaks in terms that will capture all audiences, whether they are experienced or new to the business aspects of medicine. Highly recommended.”
BOOSTing the Hospital Discharge Process: What Works and What Doesn’t
10:35 a.m., May 17
Dr. Simone: “Both panelists are excellent presenters as well as leading authorities when it comes to discharge processes. This presentation is very timely with the new CMS payment system, which penalizes unnecessary and unexpected readmissions.”
Success Stories: How to Integrate NPs and PAs into a Hospitalist Practice
4:15 p.m., May 18
Cardin: “This is an important session because, as every hard-working hospitalist knows, there simply aren’t enough physicians to fill the needs of our medically complex hospitalized patients. It is simply a reality that there will be an increased need in the future for mid-level providers, and it is valuable to maximize the success of a program by learning how to assimilate them into hospitalized practice.”
Diagnostic Errors and the Hospitalist: Why They Happen and How to Avoid Them
12:45 p.m., May 17
Cardin: “Half of practicing medicine is pattern recognition, and if there are patterns to making diagnostic errors, it would be so valuable to be aware of them. We have tremendous responsibility when caring for patients, and I think it is always beneficial to learn from mistakes.”
Richard Quinn is a freelance writer in New Jersey.
Eight educational tracks, an equal number of credit bearing pre-courses, a score of small-group forums, three plenaries, and an SHM Town Hall meeting offers a lot of professional development in a four-day span. But that’s just a sampling of what HM13 has slated May 16-19 at the Gaylord National Resort & Convention Center in National Harbor, Md., just outside Washington, D.C.
So how does one get the most value out of the conference?
“The highest-yield content is going to depend on what your background is and how to spend that time in a way that augments your knowledge, your perspective, or your exposure to like-minded colleagues in a very individual way,” says HM13 course director Daniel Brotman, MD, FACP, SFHM, director of the hospitalist program at Johns Hopkins Hospital in Baltimore. “One of the things that’s so cool about hospital medicine is its diversity.”
But don’t take Dr. Brotman’s well-educated word for it. Here’s a list of recommendations from Team Hospitalist, the only reader-involvement group of its kind in HM, on events they would not miss this year.
The New Anticoagulants: When Should We Be Using Them?
2:45 p.m., May 17
Dr. Ma: “I’m very interested about the new anticoagulants talk. What I’m curious to see is what the speaker thinks about the survivability of these medications in our society, with so many lawyers. Pradaxa already has fallen out of favor. Let’s see what happens to Xarelto.”
How do CFOs Value Their Hospitalist Programs?
2:50 p.m., May 18
Dr. Ma: “The problem today is CFOs have to valuate their hospitalists in the setting of other specialists who also receive subsidies. There is less money to be spent on hospitalists, as other specialists vie for this allotment of savings from hospital-based value purchasing.”
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Mentoring/Coaching an Improvement Team: Lessons from SHM’s Mentored Implementation Programs
2:45 p.m., May 17
Dr. Perumalswami: “As a Project BOOST physician mentor in Illinois, I would highly recommend the session because the discussion will involve an inside look into valuable experience-based observations and analysis for the success of any process improvement team. The nature of teams and the culture of improvement at various sites will also be discussed. There will be a mentee side of the presentation, too, which will help other mentors of implementation programs better understand what the issues are ‘from the other side.’”
Strategies to Improve Communication with Patients and Families to Improve Care
2:45 p.m., May 17
Dr. Hale: “It is well known in pediatrics that you are treating two patients: both the child and the parents. If the family has a shared understanding of the child’s illness and there is collaboration for the care plan, there will be improved care.”
Neonatal HSV: When to Consider It, How to Evaluate for It, and How to Treat It
11 a.m., May 18
Dr. Hale: “Neonatal HSV is a devastating disease. It is essential to recognize high-risk patients to decrease morbidity and mortality for this illness. There have been recent updates in the understanding of epidemiology of this disease that can assist the provider in recognizing high-risk patients.”
Supporting Transition for Youth with Special Healthcare Needs: Coordinating Care and Preparing to Pass the Baton
4:15 p.m., May 18
Dr. Hale: “The transition of adolescents and young adults from pediatric-care teams to adult-medicine-care teams should be seamless for the sake of the patient, but often it is a blurry transition over the course of years. This session is high-yield for both pediatric and adult hospitalists.”
Getting Ready for Physician Value-Based Purchasing
9:50 a.m., May 19
Dr. Simone: “Dr. [Pat] Torcson’s presentation last year was one of the best at HM12, and I expect this year to be the same. He chairs SHM’s Performance Measurement and Reporting Committee and is well versed in these matters. He speaks in terms that will capture all audiences, whether they are experienced or new to the business aspects of medicine. Highly recommended.”
BOOSTing the Hospital Discharge Process: What Works and What Doesn’t
10:35 a.m., May 17
Dr. Simone: “Both panelists are excellent presenters as well as leading authorities when it comes to discharge processes. This presentation is very timely with the new CMS payment system, which penalizes unnecessary and unexpected readmissions.”
Success Stories: How to Integrate NPs and PAs into a Hospitalist Practice
4:15 p.m., May 18
Cardin: “This is an important session because, as every hard-working hospitalist knows, there simply aren’t enough physicians to fill the needs of our medically complex hospitalized patients. It is simply a reality that there will be an increased need in the future for mid-level providers, and it is valuable to maximize the success of a program by learning how to assimilate them into hospitalized practice.”
Diagnostic Errors and the Hospitalist: Why They Happen and How to Avoid Them
12:45 p.m., May 17
Cardin: “Half of practicing medicine is pattern recognition, and if there are patterns to making diagnostic errors, it would be so valuable to be aware of them. We have tremendous responsibility when caring for patients, and I think it is always beneficial to learn from mistakes.”
Richard Quinn is a freelance writer in New Jersey.
Eight educational tracks, an equal number of credit bearing pre-courses, a score of small-group forums, three plenaries, and an SHM Town Hall meeting offers a lot of professional development in a four-day span. But that’s just a sampling of what HM13 has slated May 16-19 at the Gaylord National Resort & Convention Center in National Harbor, Md., just outside Washington, D.C.
So how does one get the most value out of the conference?
“The highest-yield content is going to depend on what your background is and how to spend that time in a way that augments your knowledge, your perspective, or your exposure to like-minded colleagues in a very individual way,” says HM13 course director Daniel Brotman, MD, FACP, SFHM, director of the hospitalist program at Johns Hopkins Hospital in Baltimore. “One of the things that’s so cool about hospital medicine is its diversity.”
But don’t take Dr. Brotman’s well-educated word for it. Here’s a list of recommendations from Team Hospitalist, the only reader-involvement group of its kind in HM, on events they would not miss this year.
The New Anticoagulants: When Should We Be Using Them?
2:45 p.m., May 17
Dr. Ma: “I’m very interested about the new anticoagulants talk. What I’m curious to see is what the speaker thinks about the survivability of these medications in our society, with so many lawyers. Pradaxa already has fallen out of favor. Let’s see what happens to Xarelto.”
How do CFOs Value Their Hospitalist Programs?
2:50 p.m., May 18
Dr. Ma: “The problem today is CFOs have to valuate their hospitalists in the setting of other specialists who also receive subsidies. There is less money to be spent on hospitalists, as other specialists vie for this allotment of savings from hospital-based value purchasing.”
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Mentoring/Coaching an Improvement Team: Lessons from SHM’s Mentored Implementation Programs
2:45 p.m., May 17
Dr. Perumalswami: “As a Project BOOST physician mentor in Illinois, I would highly recommend the session because the discussion will involve an inside look into valuable experience-based observations and analysis for the success of any process improvement team. The nature of teams and the culture of improvement at various sites will also be discussed. There will be a mentee side of the presentation, too, which will help other mentors of implementation programs better understand what the issues are ‘from the other side.’”
Strategies to Improve Communication with Patients and Families to Improve Care
2:45 p.m., May 17
Dr. Hale: “It is well known in pediatrics that you are treating two patients: both the child and the parents. If the family has a shared understanding of the child’s illness and there is collaboration for the care plan, there will be improved care.”
Neonatal HSV: When to Consider It, How to Evaluate for It, and How to Treat It
11 a.m., May 18
Dr. Hale: “Neonatal HSV is a devastating disease. It is essential to recognize high-risk patients to decrease morbidity and mortality for this illness. There have been recent updates in the understanding of epidemiology of this disease that can assist the provider in recognizing high-risk patients.”
Supporting Transition for Youth with Special Healthcare Needs: Coordinating Care and Preparing to Pass the Baton
4:15 p.m., May 18
Dr. Hale: “The transition of adolescents and young adults from pediatric-care teams to adult-medicine-care teams should be seamless for the sake of the patient, but often it is a blurry transition over the course of years. This session is high-yield for both pediatric and adult hospitalists.”
Getting Ready for Physician Value-Based Purchasing
9:50 a.m., May 19
Dr. Simone: “Dr. [Pat] Torcson’s presentation last year was one of the best at HM12, and I expect this year to be the same. He chairs SHM’s Performance Measurement and Reporting Committee and is well versed in these matters. He speaks in terms that will capture all audiences, whether they are experienced or new to the business aspects of medicine. Highly recommended.”
BOOSTing the Hospital Discharge Process: What Works and What Doesn’t
10:35 a.m., May 17
Dr. Simone: “Both panelists are excellent presenters as well as leading authorities when it comes to discharge processes. This presentation is very timely with the new CMS payment system, which penalizes unnecessary and unexpected readmissions.”
Success Stories: How to Integrate NPs and PAs into a Hospitalist Practice
4:15 p.m., May 18
Cardin: “This is an important session because, as every hard-working hospitalist knows, there simply aren’t enough physicians to fill the needs of our medically complex hospitalized patients. It is simply a reality that there will be an increased need in the future for mid-level providers, and it is valuable to maximize the success of a program by learning how to assimilate them into hospitalized practice.”
Diagnostic Errors and the Hospitalist: Why They Happen and How to Avoid Them
12:45 p.m., May 17
Cardin: “Half of practicing medicine is pattern recognition, and if there are patterns to making diagnostic errors, it would be so valuable to be aware of them. We have tremendous responsibility when caring for patients, and I think it is always beneficial to learn from mistakes.”
Richard Quinn is a freelance writer in New Jersey.
Two Accountable Care Organizations (ACOs) Share Their Strategies for Success
Success as an ACO likely won’t come from any one strategy, but from many. Christopher Kim, MD, MBA, SFHM, a hospitalist and associate professor of internal medicine at the University of Michigan, says the Michigan Pioneer ACO serving roughly 20,000 beneficiaries in the state’s southeastern region has benefited greatly from a variety of pre-existing relationships and initiatives. The university’s medical center, one of 10 participants in a Medicare ACO precursor called the Physician Group Practice demonstration project, was among the few sites to successfully meet the requirements and gain the full cost savings benefits in all five years.
The newer ACO, which officially launched in January 2012, pairs the university’s Faculty Group Practice with Integrated Health Associates Inc. (IHA), a large multispecialty private-practice group. Many IHA providers already had access to the university’s electronic health records so they could track admitted patients. One preliminary collaborative effort between the two entities hinted at a trend toward lower readmission rates among a small group of patients who were seen by a primary-care provider within seven days of a hospital discharge, underscoring the importance of a smooth transition.
Providers also have been able to tap into statewide initiatives aimed at improving quality and care coordination in key areas, such as cardiovascular disease, cancer, and hospital care transitions (sponsored by Blue Cross Blue Shield of Michigan).
—Christopher Kim, MD, MBA, SFHM, associate professor of internal medicine, University of Michigan Health System, Ann Arbor
“These programs helped physician organizations and hospitals throughout the state become familiar with best practices related to these kinds of conditions,” Dr. Kim says, “and I think partly because of that, we were very prepared to work on a quality-improvement initiative such as this while also improving efficiency.”
Listen to Dr. Kim discuss the added responsibility hospitalists in ACOs like the one formed between the university faculty and a large multi-specialty practice called Integrated Health Associates, Inc.
For stratifying beneficiaries by risk, the ACO has benefited from a separate initiative called the Michigan Primary Care Transformation Project, which uses the concept of a pyramid to classify increasingly complicated patients. A complex-case manager, typically an advanced practice nurse, acts as the point person for guiding patients in the upper half of the pyramid toward the best resources while preventing unnecessary duplication of tasks or consultation referrals. Optimal coordination means that hospitalists need to communicate effectively with these managers as well as with other providers.
From Medicare claims supplied by CMS, Beth Israel Deaconess Physician Organization (BIDPO) in the Boston metropolitan region has used software to identify its highest-risk patients, or those most likely to be admitted to the hospital within the next 12 months. As part of the process, BIDPO officials asked doctors to validate the results based on their own patient records and observations.
The ACO has hired nurse practitioners through a company called INSPIRIS Massachusetts to visit its sickest and frailest Medicare beneficiaries at home to prevent hospital admissions and to avoid post-discharge readmissions among the highest-risk patients. BIDPO also uses nurse care managers to do telephone-based care management for less acute patients, and is asking emergency department staff to recognize patients who could be sent home safely with appropriate care rather than be admitted. Patients with cellulitis, for example, could be treated via IV antibiotic therapy at home, a service made possible through a collaboration with a home infusion company.
Dr. Parker, BIDPO’s medical director, says hospitalists will be key to understanding the need for excellent inpatient care and thoughtful, comprehensive discharge planning that helps avoid adverse events post-discharge.
Success as an ACO likely won’t come from any one strategy, but from many. Christopher Kim, MD, MBA, SFHM, a hospitalist and associate professor of internal medicine at the University of Michigan, says the Michigan Pioneer ACO serving roughly 20,000 beneficiaries in the state’s southeastern region has benefited greatly from a variety of pre-existing relationships and initiatives. The university’s medical center, one of 10 participants in a Medicare ACO precursor called the Physician Group Practice demonstration project, was among the few sites to successfully meet the requirements and gain the full cost savings benefits in all five years.
The newer ACO, which officially launched in January 2012, pairs the university’s Faculty Group Practice with Integrated Health Associates Inc. (IHA), a large multispecialty private-practice group. Many IHA providers already had access to the university’s electronic health records so they could track admitted patients. One preliminary collaborative effort between the two entities hinted at a trend toward lower readmission rates among a small group of patients who were seen by a primary-care provider within seven days of a hospital discharge, underscoring the importance of a smooth transition.
Providers also have been able to tap into statewide initiatives aimed at improving quality and care coordination in key areas, such as cardiovascular disease, cancer, and hospital care transitions (sponsored by Blue Cross Blue Shield of Michigan).
—Christopher Kim, MD, MBA, SFHM, associate professor of internal medicine, University of Michigan Health System, Ann Arbor
“These programs helped physician organizations and hospitals throughout the state become familiar with best practices related to these kinds of conditions,” Dr. Kim says, “and I think partly because of that, we were very prepared to work on a quality-improvement initiative such as this while also improving efficiency.”
Listen to Dr. Kim discuss the added responsibility hospitalists in ACOs like the one formed between the university faculty and a large multi-specialty practice called Integrated Health Associates, Inc.
For stratifying beneficiaries by risk, the ACO has benefited from a separate initiative called the Michigan Primary Care Transformation Project, which uses the concept of a pyramid to classify increasingly complicated patients. A complex-case manager, typically an advanced practice nurse, acts as the point person for guiding patients in the upper half of the pyramid toward the best resources while preventing unnecessary duplication of tasks or consultation referrals. Optimal coordination means that hospitalists need to communicate effectively with these managers as well as with other providers.
From Medicare claims supplied by CMS, Beth Israel Deaconess Physician Organization (BIDPO) in the Boston metropolitan region has used software to identify its highest-risk patients, or those most likely to be admitted to the hospital within the next 12 months. As part of the process, BIDPO officials asked doctors to validate the results based on their own patient records and observations.
The ACO has hired nurse practitioners through a company called INSPIRIS Massachusetts to visit its sickest and frailest Medicare beneficiaries at home to prevent hospital admissions and to avoid post-discharge readmissions among the highest-risk patients. BIDPO also uses nurse care managers to do telephone-based care management for less acute patients, and is asking emergency department staff to recognize patients who could be sent home safely with appropriate care rather than be admitted. Patients with cellulitis, for example, could be treated via IV antibiotic therapy at home, a service made possible through a collaboration with a home infusion company.
Dr. Parker, BIDPO’s medical director, says hospitalists will be key to understanding the need for excellent inpatient care and thoughtful, comprehensive discharge planning that helps avoid adverse events post-discharge.
Success as an ACO likely won’t come from any one strategy, but from many. Christopher Kim, MD, MBA, SFHM, a hospitalist and associate professor of internal medicine at the University of Michigan, says the Michigan Pioneer ACO serving roughly 20,000 beneficiaries in the state’s southeastern region has benefited greatly from a variety of pre-existing relationships and initiatives. The university’s medical center, one of 10 participants in a Medicare ACO precursor called the Physician Group Practice demonstration project, was among the few sites to successfully meet the requirements and gain the full cost savings benefits in all five years.
The newer ACO, which officially launched in January 2012, pairs the university’s Faculty Group Practice with Integrated Health Associates Inc. (IHA), a large multispecialty private-practice group. Many IHA providers already had access to the university’s electronic health records so they could track admitted patients. One preliminary collaborative effort between the two entities hinted at a trend toward lower readmission rates among a small group of patients who were seen by a primary-care provider within seven days of a hospital discharge, underscoring the importance of a smooth transition.
Providers also have been able to tap into statewide initiatives aimed at improving quality and care coordination in key areas, such as cardiovascular disease, cancer, and hospital care transitions (sponsored by Blue Cross Blue Shield of Michigan).
—Christopher Kim, MD, MBA, SFHM, associate professor of internal medicine, University of Michigan Health System, Ann Arbor
“These programs helped physician organizations and hospitals throughout the state become familiar with best practices related to these kinds of conditions,” Dr. Kim says, “and I think partly because of that, we were very prepared to work on a quality-improvement initiative such as this while also improving efficiency.”
Listen to Dr. Kim discuss the added responsibility hospitalists in ACOs like the one formed between the university faculty and a large multi-specialty practice called Integrated Health Associates, Inc.
For stratifying beneficiaries by risk, the ACO has benefited from a separate initiative called the Michigan Primary Care Transformation Project, which uses the concept of a pyramid to classify increasingly complicated patients. A complex-case manager, typically an advanced practice nurse, acts as the point person for guiding patients in the upper half of the pyramid toward the best resources while preventing unnecessary duplication of tasks or consultation referrals. Optimal coordination means that hospitalists need to communicate effectively with these managers as well as with other providers.
From Medicare claims supplied by CMS, Beth Israel Deaconess Physician Organization (BIDPO) in the Boston metropolitan region has used software to identify its highest-risk patients, or those most likely to be admitted to the hospital within the next 12 months. As part of the process, BIDPO officials asked doctors to validate the results based on their own patient records and observations.
The ACO has hired nurse practitioners through a company called INSPIRIS Massachusetts to visit its sickest and frailest Medicare beneficiaries at home to prevent hospital admissions and to avoid post-discharge readmissions among the highest-risk patients. BIDPO also uses nurse care managers to do telephone-based care management for less acute patients, and is asking emergency department staff to recognize patients who could be sent home safely with appropriate care rather than be admitted. Patients with cellulitis, for example, could be treated via IV antibiotic therapy at home, a service made possible through a collaboration with a home infusion company.
Dr. Parker, BIDPO’s medical director, says hospitalists will be key to understanding the need for excellent inpatient care and thoughtful, comprehensive discharge planning that helps avoid adverse events post-discharge.
Accountable Care Organizations (ACO) Gain Popularity with Physicians in Wake of Added Incentives, Revised Federal Rules
Throughout much of 2011, ambivalence plagued efforts by the Centers for Medicare & Medicaid Services (CMS) to expand the federal government’s reach into integrated care delivery to help improve patient outcomes while lowering costs. Critics panned the initial draft of regulations for a large accountable-care demonstration project called the Shared Savings Program, and prominent medical groups announced their intention to sit on the sidelines.
At the start of 2013, the atmosphere couldn’t be more different. CMS won over most of its critics with a well-received final version of the rules that provided more incentives for groups to form accountable-care organizations (ACOs), and the presidential election provided more clarity about the future of healthcare reform. Medical groups around the country are readily jumping on the ACO bandwagon, with its emphasis on shared responsibility among provider groups for a defined pool of patients.
Few medical groups have enough data to suggest whether their varied approaches to managing patient populations will lead to better-quality care that’s also more affordable; the first batch of Medicare ACO data isn’t expected until later this spring. And healthcare experts differ on which models and components are likely to make the biggest long-term impact; even the precise definition of an ACO remains a moving target. But industry observers say they’re surprised and encouraged not only by the speed with which the movement has taken off, but also by the breadth of models being investigated, the strong engagement of the private sector, and a spreading sense of cautious optimism.
“This is actually moving faster than I thought—faster than I think anybody thought,” says SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM.
Although CMS still is in the beginning stages of its work and has focused most of its efforts on reviewing applications and providing feedback on organizations’ historical expenditure and utilization patterns, agency officials say the ACO initiative has not encountered any unexpected setbacks. “As with any new program, there are bumps along the way, but I don’t think we’ve experienced anything that is out of the ordinary,” says John Pilotte, director of Performance-Based Payment Policy in the Center for Medicare. “We’re pretty happy with where we are with the program.”
The Shared Savings Program, which Pilotte describes as “an easier on-ramp” to population management for providers and offers low financial risk in exchange for a modest level of shared cost savings, is proving especially popular. Combined, several hundred organizations submitted applications for the program’s second and third rounds, which began July 1, 2012, and Jan. 1, 2013, respectively.
“Two hundred twenty ACOs are currently up and running, and we expect to continue to add ACOs to the program annually,” Pilotte says.
—David Muhlestein, analyst, Leavitt Partners
Last January, another 32 groups joined Medicare’s Pioneer ACO program, designed for more experienced organizations with more resources. The groups assume more risk, and in return are more handsomely rewarded if they meet benchmarks.
All told, the tally of confirmed ACOs in the U.S. reached 428 by the end of January, according to Leavitt Partners, a Salt Lake City-based healthcare consulting firm that is tracking the growth of accountable care (see “A Sampling of Significant ACO Programs,” below). David Muhlestein, an analyst with Leavitt Partners, says private ACOs now account for roughly half of that total, a trend driven by their ability to experiment with different approaches and more easily track costs through clearly defined patient populations.
The central role for hospitalists within most ACOs is rooted in the reality that hospital care is the most expensive part of healthcare. Successfully implementing a plan to coordinate care and prevent hospital readmissions might not correlate directly with improved quality metrics, but it can lead to significant savings.
The diverse ACO models now being tested, however, could result in varying responsibilities for hospitalists, depending on the focal points of the sponsoring entities. After patients have been admitted to a hospital, for example, many hospitalists assume responsibility for managing inpatient care and the inpatient-outpatient handoff. A main goal of a physician-owned medical group, such as an independent practice association (IPA), by contrast, is to keep patients out of the hospital altogether, placing more of the focus on primary and specialty care. An IPA that forms an ACO, Muhlestein says, might hire its own hospitalists to monitor the care of patients in affiliated hospitals while using the association’s approach to limiting costs.
ACO participants also have varied widely in the effort expended to get up to speed. “Some people have said they haven’t had to make any major changes to their organization, while some people have had to drastically think how they provide care,” Muhlestein says. In general, many of the former have had the luxury of working within relatively integrated facilities and building upon existing frameworks, whereas many of the latter previously toiled away in silos and are now scrambling to establish more cohesive working relationships from scratch.
Optimism Abounds
Though many ACOs have only limited data so far, Muhlestein says most are generally optimistic that their early results will be positive. Even so, Dr. Greeno says, he fully expects the Pioneer ACOs to produce the best results among the Medicare demonstration projects. Those organizations already have successful track records in managing patient populations, and the Pioneer model’s incentives are stronger because the groups are assuming more risk. If the Pioneer ACO results are eclipsed by those of the Shared Savings Program, he says, “I’d fall out of my chair.”
The Beth Israel Deaconess Physician Organization (BIDPO) now has four global payment contracts, including its Pioneer ACO arrangement with CMS that serves 33,000 beneficiaries in the Boston metropolitan region. “The decision-making around joining was a recognition that the fee-for-service model is highly dysfunctional,” says Richard Parker, MD, BIDPO’s medical director. “Our organization and our leadership believed that most of the country, both private payor and governmental payor, would be moving toward global payment and that it would be to our advantage to get in early.”
Despite the complicated rollout and delays in receiving Medicare data on patients from CMS, Dr. Parker says, the feedback from both providers and patients has been mostly positive. “I would say, anecdotally, that the doctors seem appreciative that we’re trying to fix some of these gaps in care that we all know have existed for some time,” he says. “And, anecdotally from the patients, we get appreciation that we’re trying to take better care of them.”
Chris Coleman, chief financial officer for Phoenix-based Banner Health Network, another Pioneer ACO participant, says the project fits in well with his company’s decision “to transform itself into more of a value-based, performance-based provider.” Banner’s ACO, which serves about 50,000 beneficiaries, is still setting up needed systems, including a consistent platform for electronic medical records throughout the entire provider network. Even during the building phase, however, Coleman says company officials have been pleasantly surprised by the ACO’s positive effect on utilization, patient care, and apparent savings.
Although the company has only a partial year of Medicare claims to go by, Coleman says the data look “pretty good” so far and suggest the ACO is on track for modest savings of perhaps 3% or 4%. Like BIDPO, Banner has other shared-risk agreements in place, including one for a Medicare Advantage population and another with a private payor. So far, Coleman says, those arrangements also seem to be “performing positively.”
Dr. Greeno and other experts see the best ACO results coming from such rapidly growing private arrangements, and early published data have been generally encouraging.1 The ability to more narrowly define patient groups and assume more control over payments, he says, has allowed private ACOs to keep better track of costs and implement innovative population health interventions.
—Ron Greeno, MD, FCCP, MHM, SHM Public Policy Committee chair
Built to Last?
Whether public, private, or a hybrid between the two, some ACOs are trying to manage the care of their entire patient pool and look at everything that might help them accrue cost savings. Others are focusing only on the sickest patients to reach their quality improvement (QI) and savings goals, and targeting specific parameters, such as blood pressure or medication adherence, for patients with myocardial infarction.
Joane Goodroe, an Atlanta-based healthcare consultant, favors the latter approach, at least for new ACOs. Goodroe recommends adopting a streamlined strategy that will get an ACO up and running, then allow the group to gradually add to it, rather than waiting until all of the right pieces fall into place. Her own data analysis of Medicare patients, for example, suggests that a diabetic who’s been an inpatient can average $50,000 in yearly costs, compared with $2,400 for a diabetic who has never been admitted to a hospital.
Setting up a system to manage every diabetic patient from the start, she says, would require too much time and money. “If you try to build the perfect ACO structure, it’s going to be too expensive for the results you initially get back,” she says, making it seem like the ACO is an unsustainable failure. “You’ve got to figure out how to build a cost-effective infrastructure while you’re also improving the care of the patients, and the best place to go is to target your sickest patients first.”
CMS’ Advance Payment ACO Model is designed to help by providing upfront payments to smaller ACO organizations that might lack capital, giving them an advance on potential shared savings so they can install the infrastructure and support structures necessary to redesign care.
To maximize the overall chances of success, Dr. Parker says, ACO leadership should be fully engaged, and each organization should have enough resources to address its own care management and information technology needs. “My goal as medical director is to improve the quality of care of the patients and, hopefully, also improve the working life of the doctors and staff,” he says. “And my belief and expectation is that if we do that, the cost of care will ultimately go down.”
Bryn Nelson is a freelance medical writer in Seattle.
Reference
Throughout much of 2011, ambivalence plagued efforts by the Centers for Medicare & Medicaid Services (CMS) to expand the federal government’s reach into integrated care delivery to help improve patient outcomes while lowering costs. Critics panned the initial draft of regulations for a large accountable-care demonstration project called the Shared Savings Program, and prominent medical groups announced their intention to sit on the sidelines.
At the start of 2013, the atmosphere couldn’t be more different. CMS won over most of its critics with a well-received final version of the rules that provided more incentives for groups to form accountable-care organizations (ACOs), and the presidential election provided more clarity about the future of healthcare reform. Medical groups around the country are readily jumping on the ACO bandwagon, with its emphasis on shared responsibility among provider groups for a defined pool of patients.
Few medical groups have enough data to suggest whether their varied approaches to managing patient populations will lead to better-quality care that’s also more affordable; the first batch of Medicare ACO data isn’t expected until later this spring. And healthcare experts differ on which models and components are likely to make the biggest long-term impact; even the precise definition of an ACO remains a moving target. But industry observers say they’re surprised and encouraged not only by the speed with which the movement has taken off, but also by the breadth of models being investigated, the strong engagement of the private sector, and a spreading sense of cautious optimism.
“This is actually moving faster than I thought—faster than I think anybody thought,” says SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM.
Although CMS still is in the beginning stages of its work and has focused most of its efforts on reviewing applications and providing feedback on organizations’ historical expenditure and utilization patterns, agency officials say the ACO initiative has not encountered any unexpected setbacks. “As with any new program, there are bumps along the way, but I don’t think we’ve experienced anything that is out of the ordinary,” says John Pilotte, director of Performance-Based Payment Policy in the Center for Medicare. “We’re pretty happy with where we are with the program.”
The Shared Savings Program, which Pilotte describes as “an easier on-ramp” to population management for providers and offers low financial risk in exchange for a modest level of shared cost savings, is proving especially popular. Combined, several hundred organizations submitted applications for the program’s second and third rounds, which began July 1, 2012, and Jan. 1, 2013, respectively.
“Two hundred twenty ACOs are currently up and running, and we expect to continue to add ACOs to the program annually,” Pilotte says.
—David Muhlestein, analyst, Leavitt Partners
Last January, another 32 groups joined Medicare’s Pioneer ACO program, designed for more experienced organizations with more resources. The groups assume more risk, and in return are more handsomely rewarded if they meet benchmarks.
All told, the tally of confirmed ACOs in the U.S. reached 428 by the end of January, according to Leavitt Partners, a Salt Lake City-based healthcare consulting firm that is tracking the growth of accountable care (see “A Sampling of Significant ACO Programs,” below). David Muhlestein, an analyst with Leavitt Partners, says private ACOs now account for roughly half of that total, a trend driven by their ability to experiment with different approaches and more easily track costs through clearly defined patient populations.
The central role for hospitalists within most ACOs is rooted in the reality that hospital care is the most expensive part of healthcare. Successfully implementing a plan to coordinate care and prevent hospital readmissions might not correlate directly with improved quality metrics, but it can lead to significant savings.
The diverse ACO models now being tested, however, could result in varying responsibilities for hospitalists, depending on the focal points of the sponsoring entities. After patients have been admitted to a hospital, for example, many hospitalists assume responsibility for managing inpatient care and the inpatient-outpatient handoff. A main goal of a physician-owned medical group, such as an independent practice association (IPA), by contrast, is to keep patients out of the hospital altogether, placing more of the focus on primary and specialty care. An IPA that forms an ACO, Muhlestein says, might hire its own hospitalists to monitor the care of patients in affiliated hospitals while using the association’s approach to limiting costs.
ACO participants also have varied widely in the effort expended to get up to speed. “Some people have said they haven’t had to make any major changes to their organization, while some people have had to drastically think how they provide care,” Muhlestein says. In general, many of the former have had the luxury of working within relatively integrated facilities and building upon existing frameworks, whereas many of the latter previously toiled away in silos and are now scrambling to establish more cohesive working relationships from scratch.
Optimism Abounds
Though many ACOs have only limited data so far, Muhlestein says most are generally optimistic that their early results will be positive. Even so, Dr. Greeno says, he fully expects the Pioneer ACOs to produce the best results among the Medicare demonstration projects. Those organizations already have successful track records in managing patient populations, and the Pioneer model’s incentives are stronger because the groups are assuming more risk. If the Pioneer ACO results are eclipsed by those of the Shared Savings Program, he says, “I’d fall out of my chair.”
The Beth Israel Deaconess Physician Organization (BIDPO) now has four global payment contracts, including its Pioneer ACO arrangement with CMS that serves 33,000 beneficiaries in the Boston metropolitan region. “The decision-making around joining was a recognition that the fee-for-service model is highly dysfunctional,” says Richard Parker, MD, BIDPO’s medical director. “Our organization and our leadership believed that most of the country, both private payor and governmental payor, would be moving toward global payment and that it would be to our advantage to get in early.”
Despite the complicated rollout and delays in receiving Medicare data on patients from CMS, Dr. Parker says, the feedback from both providers and patients has been mostly positive. “I would say, anecdotally, that the doctors seem appreciative that we’re trying to fix some of these gaps in care that we all know have existed for some time,” he says. “And, anecdotally from the patients, we get appreciation that we’re trying to take better care of them.”
Chris Coleman, chief financial officer for Phoenix-based Banner Health Network, another Pioneer ACO participant, says the project fits in well with his company’s decision “to transform itself into more of a value-based, performance-based provider.” Banner’s ACO, which serves about 50,000 beneficiaries, is still setting up needed systems, including a consistent platform for electronic medical records throughout the entire provider network. Even during the building phase, however, Coleman says company officials have been pleasantly surprised by the ACO’s positive effect on utilization, patient care, and apparent savings.
Although the company has only a partial year of Medicare claims to go by, Coleman says the data look “pretty good” so far and suggest the ACO is on track for modest savings of perhaps 3% or 4%. Like BIDPO, Banner has other shared-risk agreements in place, including one for a Medicare Advantage population and another with a private payor. So far, Coleman says, those arrangements also seem to be “performing positively.”
Dr. Greeno and other experts see the best ACO results coming from such rapidly growing private arrangements, and early published data have been generally encouraging.1 The ability to more narrowly define patient groups and assume more control over payments, he says, has allowed private ACOs to keep better track of costs and implement innovative population health interventions.
—Ron Greeno, MD, FCCP, MHM, SHM Public Policy Committee chair
Built to Last?
Whether public, private, or a hybrid between the two, some ACOs are trying to manage the care of their entire patient pool and look at everything that might help them accrue cost savings. Others are focusing only on the sickest patients to reach their quality improvement (QI) and savings goals, and targeting specific parameters, such as blood pressure or medication adherence, for patients with myocardial infarction.
Joane Goodroe, an Atlanta-based healthcare consultant, favors the latter approach, at least for new ACOs. Goodroe recommends adopting a streamlined strategy that will get an ACO up and running, then allow the group to gradually add to it, rather than waiting until all of the right pieces fall into place. Her own data analysis of Medicare patients, for example, suggests that a diabetic who’s been an inpatient can average $50,000 in yearly costs, compared with $2,400 for a diabetic who has never been admitted to a hospital.
Setting up a system to manage every diabetic patient from the start, she says, would require too much time and money. “If you try to build the perfect ACO structure, it’s going to be too expensive for the results you initially get back,” she says, making it seem like the ACO is an unsustainable failure. “You’ve got to figure out how to build a cost-effective infrastructure while you’re also improving the care of the patients, and the best place to go is to target your sickest patients first.”
CMS’ Advance Payment ACO Model is designed to help by providing upfront payments to smaller ACO organizations that might lack capital, giving them an advance on potential shared savings so they can install the infrastructure and support structures necessary to redesign care.
To maximize the overall chances of success, Dr. Parker says, ACO leadership should be fully engaged, and each organization should have enough resources to address its own care management and information technology needs. “My goal as medical director is to improve the quality of care of the patients and, hopefully, also improve the working life of the doctors and staff,” he says. “And my belief and expectation is that if we do that, the cost of care will ultimately go down.”
Bryn Nelson is a freelance medical writer in Seattle.
Reference
Throughout much of 2011, ambivalence plagued efforts by the Centers for Medicare & Medicaid Services (CMS) to expand the federal government’s reach into integrated care delivery to help improve patient outcomes while lowering costs. Critics panned the initial draft of regulations for a large accountable-care demonstration project called the Shared Savings Program, and prominent medical groups announced their intention to sit on the sidelines.
At the start of 2013, the atmosphere couldn’t be more different. CMS won over most of its critics with a well-received final version of the rules that provided more incentives for groups to form accountable-care organizations (ACOs), and the presidential election provided more clarity about the future of healthcare reform. Medical groups around the country are readily jumping on the ACO bandwagon, with its emphasis on shared responsibility among provider groups for a defined pool of patients.
Few medical groups have enough data to suggest whether their varied approaches to managing patient populations will lead to better-quality care that’s also more affordable; the first batch of Medicare ACO data isn’t expected until later this spring. And healthcare experts differ on which models and components are likely to make the biggest long-term impact; even the precise definition of an ACO remains a moving target. But industry observers say they’re surprised and encouraged not only by the speed with which the movement has taken off, but also by the breadth of models being investigated, the strong engagement of the private sector, and a spreading sense of cautious optimism.
“This is actually moving faster than I thought—faster than I think anybody thought,” says SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM.
Although CMS still is in the beginning stages of its work and has focused most of its efforts on reviewing applications and providing feedback on organizations’ historical expenditure and utilization patterns, agency officials say the ACO initiative has not encountered any unexpected setbacks. “As with any new program, there are bumps along the way, but I don’t think we’ve experienced anything that is out of the ordinary,” says John Pilotte, director of Performance-Based Payment Policy in the Center for Medicare. “We’re pretty happy with where we are with the program.”
The Shared Savings Program, which Pilotte describes as “an easier on-ramp” to population management for providers and offers low financial risk in exchange for a modest level of shared cost savings, is proving especially popular. Combined, several hundred organizations submitted applications for the program’s second and third rounds, which began July 1, 2012, and Jan. 1, 2013, respectively.
“Two hundred twenty ACOs are currently up and running, and we expect to continue to add ACOs to the program annually,” Pilotte says.
—David Muhlestein, analyst, Leavitt Partners
Last January, another 32 groups joined Medicare’s Pioneer ACO program, designed for more experienced organizations with more resources. The groups assume more risk, and in return are more handsomely rewarded if they meet benchmarks.
All told, the tally of confirmed ACOs in the U.S. reached 428 by the end of January, according to Leavitt Partners, a Salt Lake City-based healthcare consulting firm that is tracking the growth of accountable care (see “A Sampling of Significant ACO Programs,” below). David Muhlestein, an analyst with Leavitt Partners, says private ACOs now account for roughly half of that total, a trend driven by their ability to experiment with different approaches and more easily track costs through clearly defined patient populations.
The central role for hospitalists within most ACOs is rooted in the reality that hospital care is the most expensive part of healthcare. Successfully implementing a plan to coordinate care and prevent hospital readmissions might not correlate directly with improved quality metrics, but it can lead to significant savings.
The diverse ACO models now being tested, however, could result in varying responsibilities for hospitalists, depending on the focal points of the sponsoring entities. After patients have been admitted to a hospital, for example, many hospitalists assume responsibility for managing inpatient care and the inpatient-outpatient handoff. A main goal of a physician-owned medical group, such as an independent practice association (IPA), by contrast, is to keep patients out of the hospital altogether, placing more of the focus on primary and specialty care. An IPA that forms an ACO, Muhlestein says, might hire its own hospitalists to monitor the care of patients in affiliated hospitals while using the association’s approach to limiting costs.
ACO participants also have varied widely in the effort expended to get up to speed. “Some people have said they haven’t had to make any major changes to their organization, while some people have had to drastically think how they provide care,” Muhlestein says. In general, many of the former have had the luxury of working within relatively integrated facilities and building upon existing frameworks, whereas many of the latter previously toiled away in silos and are now scrambling to establish more cohesive working relationships from scratch.
Optimism Abounds
Though many ACOs have only limited data so far, Muhlestein says most are generally optimistic that their early results will be positive. Even so, Dr. Greeno says, he fully expects the Pioneer ACOs to produce the best results among the Medicare demonstration projects. Those organizations already have successful track records in managing patient populations, and the Pioneer model’s incentives are stronger because the groups are assuming more risk. If the Pioneer ACO results are eclipsed by those of the Shared Savings Program, he says, “I’d fall out of my chair.”
The Beth Israel Deaconess Physician Organization (BIDPO) now has four global payment contracts, including its Pioneer ACO arrangement with CMS that serves 33,000 beneficiaries in the Boston metropolitan region. “The decision-making around joining was a recognition that the fee-for-service model is highly dysfunctional,” says Richard Parker, MD, BIDPO’s medical director. “Our organization and our leadership believed that most of the country, both private payor and governmental payor, would be moving toward global payment and that it would be to our advantage to get in early.”
Despite the complicated rollout and delays in receiving Medicare data on patients from CMS, Dr. Parker says, the feedback from both providers and patients has been mostly positive. “I would say, anecdotally, that the doctors seem appreciative that we’re trying to fix some of these gaps in care that we all know have existed for some time,” he says. “And, anecdotally from the patients, we get appreciation that we’re trying to take better care of them.”
Chris Coleman, chief financial officer for Phoenix-based Banner Health Network, another Pioneer ACO participant, says the project fits in well with his company’s decision “to transform itself into more of a value-based, performance-based provider.” Banner’s ACO, which serves about 50,000 beneficiaries, is still setting up needed systems, including a consistent platform for electronic medical records throughout the entire provider network. Even during the building phase, however, Coleman says company officials have been pleasantly surprised by the ACO’s positive effect on utilization, patient care, and apparent savings.
Although the company has only a partial year of Medicare claims to go by, Coleman says the data look “pretty good” so far and suggest the ACO is on track for modest savings of perhaps 3% or 4%. Like BIDPO, Banner has other shared-risk agreements in place, including one for a Medicare Advantage population and another with a private payor. So far, Coleman says, those arrangements also seem to be “performing positively.”
Dr. Greeno and other experts see the best ACO results coming from such rapidly growing private arrangements, and early published data have been generally encouraging.1 The ability to more narrowly define patient groups and assume more control over payments, he says, has allowed private ACOs to keep better track of costs and implement innovative population health interventions.
—Ron Greeno, MD, FCCP, MHM, SHM Public Policy Committee chair
Built to Last?
Whether public, private, or a hybrid between the two, some ACOs are trying to manage the care of their entire patient pool and look at everything that might help them accrue cost savings. Others are focusing only on the sickest patients to reach their quality improvement (QI) and savings goals, and targeting specific parameters, such as blood pressure or medication adherence, for patients with myocardial infarction.
Joane Goodroe, an Atlanta-based healthcare consultant, favors the latter approach, at least for new ACOs. Goodroe recommends adopting a streamlined strategy that will get an ACO up and running, then allow the group to gradually add to it, rather than waiting until all of the right pieces fall into place. Her own data analysis of Medicare patients, for example, suggests that a diabetic who’s been an inpatient can average $50,000 in yearly costs, compared with $2,400 for a diabetic who has never been admitted to a hospital.
Setting up a system to manage every diabetic patient from the start, she says, would require too much time and money. “If you try to build the perfect ACO structure, it’s going to be too expensive for the results you initially get back,” she says, making it seem like the ACO is an unsustainable failure. “You’ve got to figure out how to build a cost-effective infrastructure while you’re also improving the care of the patients, and the best place to go is to target your sickest patients first.”
CMS’ Advance Payment ACO Model is designed to help by providing upfront payments to smaller ACO organizations that might lack capital, giving them an advance on potential shared savings so they can install the infrastructure and support structures necessary to redesign care.
To maximize the overall chances of success, Dr. Parker says, ACO leadership should be fully engaged, and each organization should have enough resources to address its own care management and information technology needs. “My goal as medical director is to improve the quality of care of the patients and, hopefully, also improve the working life of the doctors and staff,” he says. “And my belief and expectation is that if we do that, the cost of care will ultimately go down.”
Bryn Nelson is a freelance medical writer in Seattle.
Reference
The Future of ACOs Remains Cloudy
Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.
—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.
SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.
“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”
John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”
Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”
The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.
“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”
Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.
“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH
Bryn Nelson is a freelance medical writer in Seattle.
Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.
—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.
SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.
“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”
John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”
Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”
The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.
“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”
Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.
“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH
Bryn Nelson is a freelance medical writer in Seattle.
Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.
—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.
SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.
“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”
John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”
Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”
The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.
“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”
Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.
“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH
Bryn Nelson is a freelance medical writer in Seattle.
ONLINE EXCLUSIVE: Why Hospitalists Should Spread the Good Word on Capitol Hill
ONLINE EXCLUSIVE: The Medical Director of the National Alliance on Mental Illness Spotlights Hospitalist Communication, Attention to Discharge Details
Click here to listen to Dr. Duckworth
Click here to listen to Dr. Duckworth
Click here to listen to Dr. Duckworth
ONLINE EXCLUSIVE: Listen to SHM Annual Meeting Course Director and Keynote Speaker
Click here to listen to Dr. Brotman
Click here to listen to Dr. Feinberg
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Click here to listen to Dr. Brotman
Click here to listen to Dr. Feinberg
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
Click here to listen to Dr. Brotman
Click here to listen to Dr. Feinberg
Check out our 6-minute feature video: "Five Reasons You Should Attend HM13"
The Process of Selling a Hospitalist Group from Start to Finish
Whether your hospitalist group has five or 500 practitioners, you and your partners might be thinking about whether you want—or need—to enter into a merger or acquisition in the near future. For some hospitalist groups, mergers and acquisitions could be part of a growth strategy designed to increase geographic footprint, market penetration, or bargaining power. These types of transactions will allow larger groups to increase their competitiveness by being able to leverage investments in such items as information technology upgrades across a larger base of business.
For others, a desire to retire or an inability to either afford or justify certain capital investments needed to remain competitive might be leading some players to consider selling their hospitalist groups. Moreover, changes in the healthcare industry, coupled with the anticipation of tax increases, could factor into decisions to sell practices in the relatively near term.
While each transaction is unique, most tend to follow a similar process, incorporating a number of relatively standard phases that must be undertaken in order to complete a transaction. The transaction process typically takes between three and nine months, although preparations are often best begun in advance of the actual deal process.
Preliminary Matters
For hospitalist group owners and executives considering selling their practice, a number of preliminary matters should be addressed in preparation for a sale. First, potential sellers should carefully consider whether they really wish to enter into the sale process. The sale process is lengthy, time-consuming, and costly, and it is often stressful and demanding on the practice’s management. Thus, potential sellers should not undertake the process unless they are serious about selling and have a realistic expectation of what they will receive as the purchase price.
As part of the preparation, sellers should begin by assembling an experienced transaction team. Typically, the team includes key members of the practice’s management, as well as experienced healthcare mergers and acquisitions attorneys and accountants. These experienced professionals can be of great assistance in making sure that a transaction is executed on a timely basis and under terms appropriate for the specific transaction.
Another prudent step is undertaking a tax analysis to determine the implications of the sale on both the selling practice and its individual owners. This analysis should be performed as far in advance of a proposed transaction as possible, in order to allow time for adjustments to be made (if necessary) to limit the tax implications in advance of the sale. Sellers also will want to use this preparatory phase to make sure that the practice’s books and records are in good order in preparation for the buyer’s due diligence review, as well as to address any issues in order to make the practice more attractive to potential buyers. Some sellers might want to have an investment banker or other qualified professional provide a valuation appraisal of the practice to provide a realistic purchase price.
Finding a Buyer
As a seller begins the process to find a buyer, the seller must first consider the approach that it wants to take. Some larger groups are sold through auction-like processes in which a number of bidders are contacted and invited to participate. The advantage of this type of process is that it typically drives prices higher by introducing competition into the bidding process. On the other hand, this type of process has certain disadvantages, such as a longer time frame and increased risk of a breach of confidentiality.
For some sellers, a more targeted approach, with limited participants, might be more desirable. If a fair purchase price can be obtained without involving multiple potential buyers, the process can be completed faster and with less risk to the ongoing business operations.
The process of finding a buyer typically requires the seller to provide potential buyers with confidential information regarding the business so the interested parties can evaluate whether the selling group is even of interest and the amount that they will be willing to pay. However, the selling practice should only provide this confidential information after potential buyers have signed nondisclosure agreements.
Ultimately, the process will lead to the submission of specific proposals from interested parties. Typically, this results in the seller and the selected buyer entering into a letter of intent, a statement of key terms for the proposed transaction. Letters of intent are largely not binding and are subject to the satisfaction of conditions, such as the negotiation of definitive written agreements. Typically, in this phase of the process, the basic structure of the transaction, the purchase price, and the manner of payment are determined.
Due Diligence
In almost all sale transactions, the buyer will conduct a review and investigation of the seller’s business. The purpose of this review is to confirm the information previously provided by the seller and to allow the buyer to gain a thorough understanding of the business to determine whether it is truly willing to buy the business on the terms identified in the letter of intent. The buyer will want to confirm that it is not going to inherit any unexpected liabilities or problems, such as healthcare regulatory issues or lawsuits. To comply with the information requests from the buyer as it conducts its due diligence review, the seller will be required to assemble many documents and voluminous amounts of financial and other information. The burden of providing this information to the buyer will be substantial and could distract management from their day-to-day duties of running the practice.
Upon completion of the due diligence process, the buyer will either confirm that it is willing to move forward with the transaction “as is,” or, if the due diligence review reveals troubling information, the buyer can either demand changes to the transaction (such as a reduction of the purchase price) or be unwilling to proceed with the transaction altogether.
Negotiating Definitive Agreements
The parties will need to negotiate and agree on certain definitive written agreements, which will govern the transaction. First and foremost, this will include a purchase agreement, such as a stock purchase agreement or an asset purchase agreement. In addition, there may also be various ancillary agreements, such as noncompetition agreements between the buyer and the owners of the selling practice and new employment agreements for the sellers.
Typically, the negotiation of definitive agreements proceeds in parallel with the buyer’s due diligence review.
Closing
At the closing, both sides will sign numerous documents, including those necessary to transfer ownership of the purchased group to the buyer, as well as all ancillary agreements and other documents needed for the transaction. Once signatures have been obtained and exchanged between the parties, the transfer of title will occur and the buyer will tender the purchase price.
Post-Closing
Although the vast majority of the work associated with the transaction will terminate upon the completion of the closing, certain aspects of the sale will require some attention after the closing. For example, there may be purchase price adjustments based upon the final balance sheet or net working capital position of the seller’s business as of the closing date. Typically, these adjustments are addressed in the months following the closing. Also, if any indemnification claims are brought, the parties will need to address those claims and reach a resolution.
Merger and acquisition transactions are complex, time-consuming matters that require a great deal of effort on the part of all parties involved. An orderly process is essential for both buyers and sellers. Sellers will want to take steps to make sure that the transaction is completed in a timely manner while minimizing risk to the ongoing business operations. At the same time, buyers will want to make sure that the value that they are receiving from the seller’s business is commensurate with the purchase price and that the buyer’s goals for entering into the sale will truly be met post-closing.
Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at [email protected].
Whether your hospitalist group has five or 500 practitioners, you and your partners might be thinking about whether you want—or need—to enter into a merger or acquisition in the near future. For some hospitalist groups, mergers and acquisitions could be part of a growth strategy designed to increase geographic footprint, market penetration, or bargaining power. These types of transactions will allow larger groups to increase their competitiveness by being able to leverage investments in such items as information technology upgrades across a larger base of business.
For others, a desire to retire or an inability to either afford or justify certain capital investments needed to remain competitive might be leading some players to consider selling their hospitalist groups. Moreover, changes in the healthcare industry, coupled with the anticipation of tax increases, could factor into decisions to sell practices in the relatively near term.
While each transaction is unique, most tend to follow a similar process, incorporating a number of relatively standard phases that must be undertaken in order to complete a transaction. The transaction process typically takes between three and nine months, although preparations are often best begun in advance of the actual deal process.
Preliminary Matters
For hospitalist group owners and executives considering selling their practice, a number of preliminary matters should be addressed in preparation for a sale. First, potential sellers should carefully consider whether they really wish to enter into the sale process. The sale process is lengthy, time-consuming, and costly, and it is often stressful and demanding on the practice’s management. Thus, potential sellers should not undertake the process unless they are serious about selling and have a realistic expectation of what they will receive as the purchase price.
As part of the preparation, sellers should begin by assembling an experienced transaction team. Typically, the team includes key members of the practice’s management, as well as experienced healthcare mergers and acquisitions attorneys and accountants. These experienced professionals can be of great assistance in making sure that a transaction is executed on a timely basis and under terms appropriate for the specific transaction.
Another prudent step is undertaking a tax analysis to determine the implications of the sale on both the selling practice and its individual owners. This analysis should be performed as far in advance of a proposed transaction as possible, in order to allow time for adjustments to be made (if necessary) to limit the tax implications in advance of the sale. Sellers also will want to use this preparatory phase to make sure that the practice’s books and records are in good order in preparation for the buyer’s due diligence review, as well as to address any issues in order to make the practice more attractive to potential buyers. Some sellers might want to have an investment banker or other qualified professional provide a valuation appraisal of the practice to provide a realistic purchase price.
Finding a Buyer
As a seller begins the process to find a buyer, the seller must first consider the approach that it wants to take. Some larger groups are sold through auction-like processes in which a number of bidders are contacted and invited to participate. The advantage of this type of process is that it typically drives prices higher by introducing competition into the bidding process. On the other hand, this type of process has certain disadvantages, such as a longer time frame and increased risk of a breach of confidentiality.
For some sellers, a more targeted approach, with limited participants, might be more desirable. If a fair purchase price can be obtained without involving multiple potential buyers, the process can be completed faster and with less risk to the ongoing business operations.
The process of finding a buyer typically requires the seller to provide potential buyers with confidential information regarding the business so the interested parties can evaluate whether the selling group is even of interest and the amount that they will be willing to pay. However, the selling practice should only provide this confidential information after potential buyers have signed nondisclosure agreements.
Ultimately, the process will lead to the submission of specific proposals from interested parties. Typically, this results in the seller and the selected buyer entering into a letter of intent, a statement of key terms for the proposed transaction. Letters of intent are largely not binding and are subject to the satisfaction of conditions, such as the negotiation of definitive written agreements. Typically, in this phase of the process, the basic structure of the transaction, the purchase price, and the manner of payment are determined.
Due Diligence
In almost all sale transactions, the buyer will conduct a review and investigation of the seller’s business. The purpose of this review is to confirm the information previously provided by the seller and to allow the buyer to gain a thorough understanding of the business to determine whether it is truly willing to buy the business on the terms identified in the letter of intent. The buyer will want to confirm that it is not going to inherit any unexpected liabilities or problems, such as healthcare regulatory issues or lawsuits. To comply with the information requests from the buyer as it conducts its due diligence review, the seller will be required to assemble many documents and voluminous amounts of financial and other information. The burden of providing this information to the buyer will be substantial and could distract management from their day-to-day duties of running the practice.
Upon completion of the due diligence process, the buyer will either confirm that it is willing to move forward with the transaction “as is,” or, if the due diligence review reveals troubling information, the buyer can either demand changes to the transaction (such as a reduction of the purchase price) or be unwilling to proceed with the transaction altogether.
Negotiating Definitive Agreements
The parties will need to negotiate and agree on certain definitive written agreements, which will govern the transaction. First and foremost, this will include a purchase agreement, such as a stock purchase agreement or an asset purchase agreement. In addition, there may also be various ancillary agreements, such as noncompetition agreements between the buyer and the owners of the selling practice and new employment agreements for the sellers.
Typically, the negotiation of definitive agreements proceeds in parallel with the buyer’s due diligence review.
Closing
At the closing, both sides will sign numerous documents, including those necessary to transfer ownership of the purchased group to the buyer, as well as all ancillary agreements and other documents needed for the transaction. Once signatures have been obtained and exchanged between the parties, the transfer of title will occur and the buyer will tender the purchase price.
Post-Closing
Although the vast majority of the work associated with the transaction will terminate upon the completion of the closing, certain aspects of the sale will require some attention after the closing. For example, there may be purchase price adjustments based upon the final balance sheet or net working capital position of the seller’s business as of the closing date. Typically, these adjustments are addressed in the months following the closing. Also, if any indemnification claims are brought, the parties will need to address those claims and reach a resolution.
Merger and acquisition transactions are complex, time-consuming matters that require a great deal of effort on the part of all parties involved. An orderly process is essential for both buyers and sellers. Sellers will want to take steps to make sure that the transaction is completed in a timely manner while minimizing risk to the ongoing business operations. At the same time, buyers will want to make sure that the value that they are receiving from the seller’s business is commensurate with the purchase price and that the buyer’s goals for entering into the sale will truly be met post-closing.
Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at [email protected].
Whether your hospitalist group has five or 500 practitioners, you and your partners might be thinking about whether you want—or need—to enter into a merger or acquisition in the near future. For some hospitalist groups, mergers and acquisitions could be part of a growth strategy designed to increase geographic footprint, market penetration, or bargaining power. These types of transactions will allow larger groups to increase their competitiveness by being able to leverage investments in such items as information technology upgrades across a larger base of business.
For others, a desire to retire or an inability to either afford or justify certain capital investments needed to remain competitive might be leading some players to consider selling their hospitalist groups. Moreover, changes in the healthcare industry, coupled with the anticipation of tax increases, could factor into decisions to sell practices in the relatively near term.
While each transaction is unique, most tend to follow a similar process, incorporating a number of relatively standard phases that must be undertaken in order to complete a transaction. The transaction process typically takes between three and nine months, although preparations are often best begun in advance of the actual deal process.
Preliminary Matters
For hospitalist group owners and executives considering selling their practice, a number of preliminary matters should be addressed in preparation for a sale. First, potential sellers should carefully consider whether they really wish to enter into the sale process. The sale process is lengthy, time-consuming, and costly, and it is often stressful and demanding on the practice’s management. Thus, potential sellers should not undertake the process unless they are serious about selling and have a realistic expectation of what they will receive as the purchase price.
As part of the preparation, sellers should begin by assembling an experienced transaction team. Typically, the team includes key members of the practice’s management, as well as experienced healthcare mergers and acquisitions attorneys and accountants. These experienced professionals can be of great assistance in making sure that a transaction is executed on a timely basis and under terms appropriate for the specific transaction.
Another prudent step is undertaking a tax analysis to determine the implications of the sale on both the selling practice and its individual owners. This analysis should be performed as far in advance of a proposed transaction as possible, in order to allow time for adjustments to be made (if necessary) to limit the tax implications in advance of the sale. Sellers also will want to use this preparatory phase to make sure that the practice’s books and records are in good order in preparation for the buyer’s due diligence review, as well as to address any issues in order to make the practice more attractive to potential buyers. Some sellers might want to have an investment banker or other qualified professional provide a valuation appraisal of the practice to provide a realistic purchase price.
Finding a Buyer
As a seller begins the process to find a buyer, the seller must first consider the approach that it wants to take. Some larger groups are sold through auction-like processes in which a number of bidders are contacted and invited to participate. The advantage of this type of process is that it typically drives prices higher by introducing competition into the bidding process. On the other hand, this type of process has certain disadvantages, such as a longer time frame and increased risk of a breach of confidentiality.
For some sellers, a more targeted approach, with limited participants, might be more desirable. If a fair purchase price can be obtained without involving multiple potential buyers, the process can be completed faster and with less risk to the ongoing business operations.
The process of finding a buyer typically requires the seller to provide potential buyers with confidential information regarding the business so the interested parties can evaluate whether the selling group is even of interest and the amount that they will be willing to pay. However, the selling practice should only provide this confidential information after potential buyers have signed nondisclosure agreements.
Ultimately, the process will lead to the submission of specific proposals from interested parties. Typically, this results in the seller and the selected buyer entering into a letter of intent, a statement of key terms for the proposed transaction. Letters of intent are largely not binding and are subject to the satisfaction of conditions, such as the negotiation of definitive written agreements. Typically, in this phase of the process, the basic structure of the transaction, the purchase price, and the manner of payment are determined.
Due Diligence
In almost all sale transactions, the buyer will conduct a review and investigation of the seller’s business. The purpose of this review is to confirm the information previously provided by the seller and to allow the buyer to gain a thorough understanding of the business to determine whether it is truly willing to buy the business on the terms identified in the letter of intent. The buyer will want to confirm that it is not going to inherit any unexpected liabilities or problems, such as healthcare regulatory issues or lawsuits. To comply with the information requests from the buyer as it conducts its due diligence review, the seller will be required to assemble many documents and voluminous amounts of financial and other information. The burden of providing this information to the buyer will be substantial and could distract management from their day-to-day duties of running the practice.
Upon completion of the due diligence process, the buyer will either confirm that it is willing to move forward with the transaction “as is,” or, if the due diligence review reveals troubling information, the buyer can either demand changes to the transaction (such as a reduction of the purchase price) or be unwilling to proceed with the transaction altogether.
Negotiating Definitive Agreements
The parties will need to negotiate and agree on certain definitive written agreements, which will govern the transaction. First and foremost, this will include a purchase agreement, such as a stock purchase agreement or an asset purchase agreement. In addition, there may also be various ancillary agreements, such as noncompetition agreements between the buyer and the owners of the selling practice and new employment agreements for the sellers.
Typically, the negotiation of definitive agreements proceeds in parallel with the buyer’s due diligence review.
Closing
At the closing, both sides will sign numerous documents, including those necessary to transfer ownership of the purchased group to the buyer, as well as all ancillary agreements and other documents needed for the transaction. Once signatures have been obtained and exchanged between the parties, the transfer of title will occur and the buyer will tender the purchase price.
Post-Closing
Although the vast majority of the work associated with the transaction will terminate upon the completion of the closing, certain aspects of the sale will require some attention after the closing. For example, there may be purchase price adjustments based upon the final balance sheet or net working capital position of the seller’s business as of the closing date. Typically, these adjustments are addressed in the months following the closing. Also, if any indemnification claims are brought, the parties will need to address those claims and reach a resolution.
Merger and acquisition transactions are complex, time-consuming matters that require a great deal of effort on the part of all parties involved. An orderly process is essential for both buyers and sellers. Sellers will want to take steps to make sure that the transaction is completed in a timely manner while minimizing risk to the ongoing business operations. At the same time, buyers will want to make sure that the value that they are receiving from the seller’s business is commensurate with the purchase price and that the buyer’s goals for entering into the sale will truly be met post-closing.
Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at [email protected].
ONLINE EXCLUSIVE: Society of Physician Entrepreneurs Co-Founder Talks about MD Career Changes
Click here to listen to Dr. Hausfeld, managing director of FMS Financial Solutions, Greenbelt, Md., co-founder and treasurer of the Society of Physician Entrepreneurs.
Click here to listen to Dr. Hausfeld, managing director of FMS Financial Solutions, Greenbelt, Md., co-founder and treasurer of the Society of Physician Entrepreneurs.
Click here to listen to Dr. Hausfeld, managing director of FMS Financial Solutions, Greenbelt, Md., co-founder and treasurer of the Society of Physician Entrepreneurs.