Guide to Health Care Partnerships for Population Health Management and Value-Based Care
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GUIDE TO HEALTH CARE PARTNERSHIPS FOR POPULATION HEALTH MANAGEMENT AND VALUE-BASED CARE July 2016 ACKNOWLEDGMENTS The Kaufman Hall Author Team Patrick M. Allen Managing Director, Mergers, Acquisitions and Partnerships ([email protected]) Michael J. Finnerty Managing Director, Mergers, Acquisitions and Partnerships ([email protected]) Ryan S. Gish Managing Director, Strategic and Financial Planning ([email protected]) Mark E. Grube Managing Director and National Strategy Leader ([email protected]) Kit A. Kamholz Managing Director, Mergers, Acquisitions and Partnerships ([email protected]) Anu R. Singh Managing Director, Mergers, Acquisitions and Partnerships ([email protected]) J. Patrick Smyth Senior Vice President, Strategic and Financial Planning ([email protected]) Rob W. York Senior Vice President, and Leader, Population Health Management division, Strategic and Financial Planning ([email protected]) Suggested Citation: Allen, P.M., Finnerty, M.J., Gish, R.S., et al. (2016, June). Guide to Health Care Partnerships for Population Health Management and Value-based Care. Chicago, IL: Health Research & Educational Trust and Kaufman, Hall & Associates, LLC. Accessed at www.hpoe.org Accessible at: www.hpoe.org/healthcarepartnerships Contact: [email protected] or (877) 243-0027 © 2016 Health Research & Educational Trust and Kaufman, Hall & Associates, LLC. All rights reserved. All materials contained in this publication are available to anyone for download on www.aha.org, www.hret.org or www.hpoe.org for personal, non- commercial use only. No part of this publication may be reproduced and distributed in any form without permission of the publication or in the case of third-party materials, the owner of that content, except in the case of brief quotations followed by the above suggested citation. To request permission to reproduce any of these materials, please email [email protected]. 2 Guide to Health Care Partnerships for Population Health Management and Value-based Care TABLE OF CONTENTS Executive Summary 4 Introduction 6 » A New Business Model for Health Care 6 » Increasing Partnership Activity 6 Key Considerations in Partnering for Population Health Management 9 » Strategic Intent 10 » Network Development 10 » Population Health Management Functions 11 » Health Plan Operations and Risk 11 » Products 12 » Economic Integration and Provider Risk 12 » Asset Contribution and Exit Provisions 13 Partnerships That Could Be Considered 14 » Merger for Population Health Management: AtlantiCare and Geisinger Health System 14 » NewCo Health System: Beaumont Health 16 » Joint Venture Insurance Product: Vivity 18 » Joint Venture Health Insurance Company: Tufts Health Freedom Plan 19 » Joint Venture Geographic Network: Together Health Network 19 » Management Services Agreement: Novant Health Shared Services 20 » Brand/Expertise Extension: The Mayo Clinic Care Network 22 Process Recommended for Evaluating Potential Partnerships 24 » Phase 1: Pre-Partnership Assessment and Planning 24 » Phase 2: Making and Executing the Strategic Partnering Decision 30 Concluding Comments 36 Endnotes 37 About Kaufman Hall and About HPOE 40 Guide to Health Care Partnerships for Population Health Management and Value-based Care 3 EXECUTIVE SUMMARY As the business model for U.S. health care population health management (PHM) transforms from a volume-driven model to a functions; health plan operations and consumer-centric, value-driven model, new risk, involving contracting arrangements, competencies are required of hospitals and insurance license and health plan health systems to effectively manage a capabilities; responsibility for product population’s health over the continuum of care development and management; needs, or a portion thereof. Many hospitals economic integration and the level of and health systems will need to partner with risk to be assumed; and assets to be other organizations to gain the capabilities and contributed to the venture and terms of efficiencies required to provide services under exit provisions. new care delivery and payment arrangements. » Partnerships that could be considered This section describes seven named As might be expected, partnerships are partnership arrangements in various areas proliferating nationwide, with a wide range of the country, ranging from highly in arrangement types spanning from less- integrated partnerships to looser affiliation integrated contractual affiliations to highly options. Partnership objectives and early integrated agreements. initiatives are described, as available, Developed for hospitals, health systems, and other using publicly accessible information. health care organizations, Guide to Health Care » Process recommended for evaluating Partnerships for Population Health Management potential partnerships and Value-based Care is intended to help executive Because achieving a best-fit partnership management and board teams understand key is more critical than ever for effective considerations for delivery system and health population health management, this plan-related partnerships for population health section outlines an approach that can management; partnership types; and the process direct organizational resources to the recommended for partnership exploration and most promising option(s) using strategic- decision making. financial assessment and planning. The approach includes a pre-partnership To meet these objectives, this guide is organized phase, which covers service area around three sections: assessment, organizational position assessment, development and testing of » Key considerations in partnering for baseline projections for the partnership, population health management and evaluation of strategic options. The This section addresses seven second phase, which covers making considerations, including: strategic and executing the strategic partnership intent, namely what the organization decision, has five activities, including wants to achieve and how its establishing partnership objectives, success will be measured; network identifying and comparing options, development—i.e., the delivery selecting the likely best-fit partner and elements that will be included within the partnership structure, and executing the partnership’s scope; responsibility for agreement and transition plans. 4 Guide to Health Care Partnerships for Population Health Management and Value-based Care Partnerships are accelerating as participants in guide, as an integral part of an organization’s health care ready themselves for a value-based, population health strategy. Resources such as population health-focused delivery system. Leadership Toolkit for Redefining the H: Engaging This guide concludes with a description of the Trustees and Communities1, Approaches to characteristics of successful strategic partnerships. Population Health in 2015: A National Survey of Hospitals,2 and Hospital-based Strategies for Outside this publication’s scope are the many Creating a Culture of Health3 address hospital- types of hospital-community partnerships community partnerships in detail and are available with public health departments, chambers through hpoe.org. of commerce, community health centers, schools, social service agencies, city and county The legal, taxation and regulatory issues governments, faith-based entities, YMCA/YWCA surrounding partnerships are complex and and other entities to improve community health subject to change. This guide does not provide and build a culture of health. These partnerships information in these areas; providers should are important and should be considered, along seek expert counsel. with the types of partnerships described in this Guide to Health Care Partnerships for Population Health Management and Value-based Care 5 INTRODUCTION A New Business Model As always, financial integrity continues to matter for Health Care significantly, differentiating organizations that can afford to assume higher levels of risk through The business model for U.S. health care is partnership arrangements that meet the needs transforming from a volume-driven model to of growing patient populations. a consumer-centric, value-driven model.4 The value-based care model’s objective is to improve Increasing Partnership Activity quality, access and outcomes, while reducing costs through the effective management of a Due to the cost and time required to develop population’s health over the continuum of its population health management capabilities on health and health care needs. their own, many hospitals and health systems are establishing collaborative partnerships and “Anywhere care” is the new modus operandi affiliations with providers, health plans and for nonacute, low-intensity services. Such care other organizations to gain the needed expertise will occur primarily in ambulatory or home and scope. As a result, both traditional and settings through in-person or virtual means— nontraditional partnerships are proliferating whichever best meets the consumer’s needs nationwide. The wide range in arrangement types and goals. spans from less integrated contractual affiliations To manage a population’s health, new to highly integrated asset purchases. Stakeholder competencies are required of hospitals and lines continue to blur. The arrangements may health systems, including clinical integration; be between: consumer, clinical and business intelligence; » Traditional providers: for profit, not-for- operational efficiency; customer engagement; profit, public hospitals,