Pharmacy and the C-suite: Managing the Interface - PowerPoint Presentation

Slide1

Pharmacy and the C-suite: Managing the Interface

The Evolving Health Care Model: Leading Change With The C-Suite

Philip E. Johnson, M.S., B.S.Pharm., FASHPOncology Director, Premier Inc.Committee on Clinical Leadership, AHASlide2

Learning Objectives

Describe the evolving healthcare market and the emerging challenges and opportunities for Pharmacy to collaborate with the C-SuiteDescribe the priorities of C-Suite executives

and explain the relationship of these priorities to your departmental goals.Define the emerging value proposition for Pharmacy and how to sell it to senior executives.Slide3

Understanding the C-Suite

Who are they?What do they worry about?What do they expect?

What do they need to know?Slide4

C-Suite Composition

CEO

-Chief Executive OfficerCOO-Chief Operating Officer

CFO-Chief Financial OfficerCMO-Chief Medical OfficerCNO-Chief Nursing Officer

THE CORE

OTHER STAKEHOLDERS

CQO

Chief Quality Officer

CPO

CSO

CIO

Chief Purchasing Officer

Chief Safety Officer

Chief Information Officer

VP of Pharmacy

Data

on file from CEO

interviews

and PCAB

Surveys.Slide5

C-Suite Focus

Financial Risk More Patients, Less Money, Shifting Payment Models

Liability Risk Patient Safety / Quality of Care / Reputation / LitigationAcquisitions and Mergers Job Security / Power GridEverything ElseSlide6

Eight Things You Need To Know Today To Engage The C-Suite

C-Suite priorities are:Cost / Margins (Financial Risk)Patient / Payer Satisfaction (Reputation and Market Share)

Quality and Safety (Litigation and Reputation)Acquisitions and Mergers (Job Security vs Career Growth)Is my team Engaged and Accountable? Future leadership is #1 concern of American Hospital AssociationRecognize rise in capability of Pharmacists / ASHP leadership training3. US Healthcare model is not sustainableCost, Quality / Outcomes, Access, Inefficiency / WasteChange is exponential, unpredictable, and a future model is not clearNew stakeholders and a shift in powerAcquisitions and Consolidations within all stakeholder groupsSlide7

Eight Things You Need To Know Today To Engage The C-Suite

Patients are increasingly medically informed, IT connected, and demanding. a. How can we create patient responsibility and accountability?5. Employers are increasingly driving

decisions Work and social productivity are measurable outcomesDirect quality / at risk contracts with providersInformation sharing, pertinent data are essential, but lacking today a. IT will not lead innovation, as long as we continue to pay for mediocrityCost of inefficiency and fragmentation must reflect IT value analysisProviders cannot compete without relevant dataProviders cannot assume risk without relevant dataDrug and supply costs are rising at an unstainable rateValue based / Risk shared payment models are inevitablePharma

will not collaborate as long as we pay disproportionate prices compared to the rest of the worldSlide8

Eight Things You Need To Know Today To Engage The C-Suite

8. Pharmacy has a strong value propositionOnly if we quantify itAre bold enough to assert it Hold ourselves accountable.

Bottom Line: Providers cannot be at Risk if they aren’t equipped with knowledge (data), with a method to guide decisions and analyze outcomes, and a contract that rewards “doing the right thing”. “Where does Pharmacy add Value” is the basic question behind everything we do, and every new opportunity. Slide9

The Emerging World Order

The Pace of Change is ExponentialSlide10

•

American Recovery and Reinvestment Act of 2009 (The “Stimulus”) – Requires Meaningful Use of Health Information Technology•

Affordable Care Act of 2010 (Obamacare) – Medicaid Expansion – Insurance Exchanges – High Deductible Health Plans – Guaranteed Health Insurance Promises – Minimum Essential Benefits (Prevention, Maternity,

Mental)• Budget Control Act of 2011 (The Sequester) –

Reduces Medicare Payments to

Hospitals

• American

Taxpayer Relief Act of 2013 (The Fiscal Cliff)

–

Reduces Medicare Payments to Hospitals, to Avoid Tax

Increases

Government Power Shift from 2014 Election

Change and controversy won’t stop, ever …………….. !

The Game Changers

Batchelor

, “Leadership and Culture: Building Highly Reliable Systems of Care”,

ASHP Leadership Conference, Oct 20, 2014, Chicago, ILSlide11

Deloitte: What To Expect – ACA Impact

Medicare will cut reimbursement to hospitalsMedicaid will expand dramaticallyEmployers become more active shoppersManufacturers create new deals with hospitals

Value basedShared riskBad debt increases as margins for patient care shrinkRadical cost-reductionRisk management“Go big or get out” leading to a few very large groups Insurers will play hardball with hospitalsSome hospitals will “go at risk” Physicians will seek coverNew alignment with hospitals or large “group practices”Paul Keckley, Deloitte Center for Health Solutions, 2014Slide12

Oncology As The Forerunning Model

ASCO Projections From 2010 To 202013.8 to 18.1 million cancer patients

45% increase in new cases annually Cancer becomes the leading cause of death in US$104 billion to $173 billion annual cost of cancer drugsAssociated drug therapy costs rise 27%More than 400 drugs in oncology related pipelineMost new drugs are biologic with genetic target20% to 65% Site of Care from MD Offices to HospitalsTherapy choice determined / paid differentlyFrom Protocols to Pathways to Genomic / Proteomic TestingFrom Fee For Service to Episodic Bundles to Population HealthMany cancers have become a chronic disease35% increase in number of survivors (18 million by 2022)Estimated cost of survivor year = $16,000American Society of Clinical Oncology. J Oncol Pract

. 2014; 10: 119-42. Slide13

Savings potential

Continuing Movement

T

owards

A

ccountability and Population

H

ealth

M

anagement

Substantia

l

Minimal

Pay-for-performance

Shared risk/

savings

Full risk / bundled payments

Traditional

fee-for-service

EPISODIC COST ACCOUNTABILITY

TOTAL COST ACCOUNTABILITY

Long-term footprint

National scope

<2000 2008 2012 2017>

Each step brings us along the journey of controlling cost, increasing quality and improving the Patient experienceSlide14

Fee For Service vs Episode:

Saves Money, Improves OutcomesStudy:5 groups treated breast, colon, lung810 patientsQuality and outcomes statistically similar

Episode paymentPredicted cost based on fee structure = $98,121,388 Actual cost = $64,760,116 actualPredicted cost of oncology drugs = $7,519,504Actual cost = $20,979,417Overall cost decreasedParadoxical increase in oncology drug costNewcomer, LN et. al. J Oncol Pract. 2014; 10:322-6.Slide15

What Drives Therapy Decisions

andDecision to Pay ?Slide16

Current Therapy Decision Cycle

CEO Must Understand and Leverage Each Component

Value / Evidence

Based

Decision Model

Pre-Authorization / Auto-Approval

Genomics /

Proteonics

Quality of DataSlide17

The New Era of Personalized Care Replacing population health whenever possible

Specific patient’s unique clinical profileTraditional clinical metrics are still importantEvidence rated Clinical Guidelines / PathwaysGenomic profile1

3 FDA Required Companion Diagnostics (8-6-2014) 150+ gene panels for < $1,000Therapy and Disease ConsiderationsCo-morbidity / End-of-Life Guidelines Acuity Adjusted Patient Scale (AAPS)Impact of wellness programs and screeningInformed Empowered PatientsPatient Accountability is emerging in shared risk contracts !http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/InVitroDiagnostics/ucm301431.htmSlide18

Value and RiskSlide19

“… A fundamental and largelyunrecognized

problem, we don’tknow what it costs to deliver healthcare to individual patients, muchless how those costs compare to theoutcomes achieved.”

“Understanding costs could be thesingle most powerful lever totransform the value of health care.”- Robert S. Kaplan & Michael E. PorterFundamental Problem: Measuring ValueMcKenna, “Optimizing Outcomes Management: Leveraging Information to Lead Health System Organizations”October 20, 2014, ASHP Leadership Conference, Chicago IL.Slide20

How Can Pharmacy Add More Value?• Alignment – Support Value

Equation• Quality – Competitive Outcomes• Employee Effectiveness – Simplify, Consistent• Clinical Effectiveness – Process Redesign• Financial Effectiveness – Leverage PharmacyC-suite Expectations

• Relevance, Relevance, Relevance ! ! ! – Understand the organization’s strategic priorities and challenges – Why is the pharmacy relevant? Show me the numbers !• Frame the conversation in stories they can relate to• Recruit thought leader ChampionsPharmacy Value and RelevanceFrom 2 COOs at 2014 ASHP Leadership ConferenceSlide21

Payers Strategy is Fundamentally Same as C-Suite

Drive efficient use of evidence-based medicine

Platform that provides content and workflowsIntegrate into both payer and provider systems Simplify the administrative processes for providersImprove the care experience for the members with cancerAvoid waste and misuse of medical services

Better provider alignment, which includes transparency & reporting(e.g., Oncology Patient Centered Medical Home), B

etter

network (narrow, tiered)

B

etter

decision support strategies

Better patient support in active treatment and care transitions

Leverage and integrate the many current (and future) medical and pharmacy cancer-care initiatives

S

eamless

, end to end cancer experience for members and providersSlide22

Fragmented Care in Most Systems

Who is the

Gatekeeper / Patient Navigator? … Perhaps Pharmacy?

Physicians

Sites of Care

Pharmacies

Comorbid diseases

Payers

2 primary , 5 specialists

/

ave.

year

No incentive to be the “Gatekeeper”

Hospitals, MD offices, home care, retail clinics, SNF

Hospital,

Ambulatory, Retail

, Specialty

Chronic and Acute

Primary and supplemental

Member shift = 2.5 years

Few incentives for “prevention”

Multiple

Clinical Integration-The Key to Real Reform. Trend Watch. American Hospital Association.

February

2010.Slide23

What is at Risk ?

Provider financial margin Market share if “customer defined” standards are not met

Medical liability if “standards of practice” are not metSlide24

Population Health Requires Embracing Risk

“Population based accountable care exposes hospitals to many new operational and financial challenges. Ignoring them may be the biggest risk of all.”Care management processes or programsPredictive analytical tools to identify high risk patientsCase managers / Patient

navigatorsPost discharge continuity of care / End of life planningChronic care management programs: Multiple conditions should be highest focusHow will you adapt to population health? http://www.hhnmag.com/display/HHN-news-article.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle/data/HHN/Magazine/2014/Oct/cov-risk-accountable care-population-health . Accessed 2014 Nov 14.Slide25

Value and Risk Dynamics

High CostPoor Outcomes

InefficiencyUnnecessary CarePatient ComplianceValue Based Business ModelHigh Value TherapyMeasurable OutcomesQuality and SafetyPrevention / DetectionMARKET SHARE … LIABILITY POSITION … FINANCIAL MARGINS

R I s kSlide26

Who is at Risk ?

New Stakeholders … More Stakeholders … Each with Demands!Employers / Purchasers determine value Develop performance contracts with Payers / Providers

Payer is shifting full burden of risk to ProvidersProviders were paid less for quality & performance inadequaciesProviders will be paid differently in the future:Fixed “capitated” for a specific stage of a specific diseaseAnnual fee per “covered life” in a large populationManufacturers were rewarded for quantity of use Lab, Radiology, PharmaManufacturers will be paid based on outcomes / valueIncentivized to develop better diagnostic / predictive toolsConsignment models on the riseSlide27

Will Eventual PRIMARY PROVIDER Bundle Include ALL RISK ?

Patient

EmployerPayerSlide28

How does a Risk Contract Work ?

Quality penalties are not achieving desired resultsNew Incentives for wellness, prevention, early detectionCheaper to prevent, than treat what was preventableDetermine value of “health capital” as QOL and productivity

Manufacturer costs must be honest and transparentCost to get new drug to market: $125 million vs $1.3 billionLight (Harvard), Kantarjian (MD Anderson), AARP Bulletin, May, 2014, p22Enable provider “bundle” to be competitivePromote only appropriate useGuided evidence rated pathways / algorithms / guidelines / compendiaAble to predict response rateShared financial loss for failure to respondMissing essential IT toolsProcess and communication effectiveness / efficiencyConsolidate versus fragment providersAppropriate discrete metricsPatient inclusion and accountabilitySlide29

Value / Risk Based Payer Contracts

Performance CriteriaGuideline Adherence = Predictable Outcomes/Costs 1st, 2nd, 3rd line therapy Supportive Care, Co-Morbid Disease, End of Life

Population Health (Prevention, Screening) Patient adherence to therapy planReimbursement IncentivesOutcome / Cost / Value Data ExchangedAuthorization Process Waived / ExpeditedLower reimbursement contractual deductionFaster payment ( < 30 days )Preferred provider statusSlide30

Value/Risk Based Purchasing Incentives

Guideline adherence = committed volumesTiered Price IncentivesAdherence MetricsTherapeutic /

Biosimilar Substitution Single Class of Trade Oncology or IDN / ACO Shared Risk Concepts Non-performance penalties ACO standards of care Clinical non-performance of drug Define ROI of each drug within a bundled payment Cost adjustment formula to ensure positive marginsShared Outcomes DataOptimize role of GPOSlide31

Metrics and InformaticsSlide32

Pharmacy Expense as a Percentage of Net Revenue is beyond control of supply chain, as are regional and contractual differences in reimbursement

Cost of therapy must include direct and indirect costs in the emerging “episode” or “bundled” modelsPharmacy Expense per Adjusted Patient Day doesn’t consider LOS or re-admissions

Case Mix Index (CMI) is based on reimbursement and not clinical indicators.What will emerge to define value, efficiency, effectiveness, and serve as peer benchmarks?Traditional Metrics are ObsoleteSlide33

What Endpoints Does Manage Care “Care” About?

“Hard” outcomes versus “Soft”Heart attacks vs. blood pressureOverall survival vs. initial response

Cost of OutcomesAdverse events resulting in additional therapy vs. localized irritation Hospitalization or ER visit vs. outpatient office visit Efficient delivery of care Outcomes aligned with quality metrics and CMS programs Health Effectiveness Data and Information Set (HEDIS) Physician Quality Reporting System (PQRS) National Quality Measures Clearinghouse (NQMC) Hospital Inpatient VBP Program Hospital Readmissions Reduction Program Hospital OP and IP Quality Reporting (OQR and IQR) Programs Evidence That DifferentiatesSlide34

Predictive Analytics: Metrics for the New Era

We will need to Treat More People

… … With Less Money and Shifting Payment Models 

Predictive models can estimate the impact of variables on specific products, services and states:

Supply chain analytics

can help to effectively take out production and distribution costs to offset price reduction and protect margins

Optimization analytics

can help to make processes more efficient

Price analytics

can help brands determine appropriate levels of pricing and promotion in changing market conditions

Value chain analytics

can help identify areas of price or cost reductions that will have the least impact on quality of service and goods

http://www.kdnuggets.com/2014/09/predictive-analytics-health-care.htmlSlide35

Hospital EHRs Inadequate for Big Data

Crossing the Omic Chasm. A Time for –Omic Ancillary Systems

EHR data systems are not sophisticated enough to handle or store the amount of electronic information created by currently available medical technology.EHRs are not currently capable of integrating genomics clinical decision support.Genomics, epigenomics, proteomics, and metabolomicsWe need dynamic systems that can reanalyze and reinterpret stored raw data as knowledge evolves, and can incorporate genomic clinical decision support. http://labsoftnews.typepad.com/lab_soft_news/2013/04/justin-starren-specialized-systems.htmlStarren J et al. JAMA. 2013; 309: 1237-8. Slide36

C Suite Game PlanSlide37

Critical Issues Identified by AHAHow Can Pharmacy Bring Value?

Future LeadershipPhysician, Administration, NursingASHP / Pharmacy identified as “best practice”Acquisitions and Mergers = New Power BaseFinancial / Regulatory Change and the “Pace of Change” Quality / Safety / Population HealthValue Based Payment

Models / AuditsEvolving Metrics / Insufficient InformaticsIncreasing RiskEvolving Business / Practice Models Cost of New Technology / Drugs in Capitated Payment ModelsNew competition (Foreign and Domestic)New empowered stakeholders (Employers, Patients, and more) Based on Phil Johnson’s observations as 6 year ASHP representative to AHA Committee on Clinical Leadership, 2008 - 2014Slide38

What business models will gain traction?

Some health systems will be integrators of care that put together all the management elements for patient care, geographic reach, and financial risk. But in most cases, individual organizations will play a part in some larger system, providing geographic coverage, or a unique array of services that strengthen the larger system needs.

Rich Umbdenstock M.D., CEO AHASlide39

R.Ph., CRITICAL Linking Pin

R.Ph. may be only person who FULLY understands both CLINICAL and FINANCIAL components of healthcare !

Clinical FinancialRPhSlide40

Primary C-Suite Expectations for Pharmacy

Information, Metrics, and Accountability: No Surprises !

Are we buying drugs at the best possible advantage?Are sound business principles and practices being applied to all pharmacy operations? (i.e., Is the pharmacy business being approached as the large business enterprise it has become?)Are patient billing and revenue processes for pharmacy sound and routinely monitored?Are pharmacy resources, including drugs, supplies and manpower, properly controlled and managed?Are patient outcomes and medication safety concerns properly balanced with financial considerations in the pharmacy department?Are all pharmacy entrepreneurial opportunities identified, explored, and pursued when appropriate?Slide41

Redefining C-Suite Expectations

for PharmacyAccountability for integrated distribution of products and information across all points of care

Clearly defined role for pharmacy expertise to be available at the point of careRedefinition of the basic systems and services to meet the changing organizational model and regulationsCreative and innovative solutions that align with organizational goals and direction“Balancing act” that requires collaboration and new skillsSlide42

What we can do “In the Box”

Drug Expense and SupplyOptimize contractsOptimize inventory managementLeader in Health-System Efficiency StrategiesRevenue Cycle Optimization

Safety and Quality ExpertEducation: Pharmacy, Institutional, Patient, CommunityOptimize Informatics SystemsPPMI / Clinical Activities Multidisciplinary Team LeadershipTherapy Management / Direct Patient CareClinical guideline / pathway developmentPositive Patient Satisfaction ScoresPositive Institutional Survey ScoresSlide43

Inclusion Creates AdvocatesSlide44

What can we do “Outside the Box”Re-defining “our box”

Revenue cycle/ value based payer contractsRisk sharing, secure access drug contractsLegal and regulatory advocacyDevelop new business opportunitiesClinical and financial /

economic ResearchCommunity / population health initiativesPharmacy response to Institutional Strategic PlanInter-departmental InitiativesDefine meaningful metrics / dashboardsInformatics and Automation optimizationCompanion diagnosticsSlide45

Transparency: Timing is EverythingSlide46

Be proactive.

Don’t wait until the last minute.

Don’t avoid people or issues.There will be good days and bad days. Keep things in perspective.Slide47

uestions