Strategy and Leadership: Achieving Rewards for Measurable Value Understand Your Market | Prepare to Change| Innovate Around Value | Lead and Manage Change Jim Hoyme Therapy Partners

Therapy Partners - MSO and Value Networks Signs of the Times – Connect the Dots for Opportunity Volume to Value Change Revolution in the Market Leading Change Planning to Deliver Value

Therapy Partners Minnesota-Western Wisc MSO All Health Plan Contracts Under TPI TIN including Risk Sharing FOTO Care / Outcomes Management Common Billing Office Rev Cycle & Payment Managemt Common Billing & EMR Technology Credentialing, Compliance Professional Development – Leadership – Strategy - Collaboration Value Networks Value Based, Shared Savings Contracts Health Plan, ACO Strategy and Change Leadership High Touch FOTO Training for High Level Outcomes FOTO Outcomes Management for Clinics Risk Sharing Contract Management with Plans and ACO 3

Therapy Partners MSO Member Practices Simplify Processes / Reduce Costs Predictable Outcomes and Costs Triple Aim Value Plans and ACOs Reduce Operational Costs Improve Reimbursement Strengthen Market Position 4 Brings Measurable VALUE to The Member Practices, Health Plans, and ACOs

MSO and FOTO 2006 tp Failure No Leadership Cast no FOTO Vision Lacked clear Reason (Urgency) No defined Management High resistance – 20% embrace Negative impact on culture Inconsistent process and use Low outcome scores “65 / 20 / 40” 2010 on - Raging Success Leadership: Clear Direction Vision: Strength in mkt; help team Urgency: Pilot; Help PTs and Pts. Management: Goals, Accountable Fully embraced with rewards Positive impact – proud of quality Defined processes and message High level outcomes “85 / 45 / 19” 5 5 jj

Therapy Partners Value Networks Value Networks Goal – Win – Win Win - Increase $$ to Practices Win - Reduce TCOC for Plans Value Network Model  Loose knit  Keep own TIN and own billing/EMR  Organize around “Measured Value” using FOTO  Seek Value Based, Shared Savings Pilots/Contracts 6 6 jj

Therapy Partners Value Networks Value Networks Most clients have existing networks Health plans embrace value focus and our value-based, shared savings models 3 Plans have provided us large amounts of cost data - health services provided for musculoskeletal conditions Work with plans to analyze cost data – develop pilot models 7 7 jj

What’s Going On Around Us Connect the DOTS 8

PwC Health Care Division “Approximately 50% of the $3Trillion spent on health care in the US in 2012 was either unnecessary or duplicative.” 9 The Message... We waste about $1.5T annually on services that add no value to patients. Could greater access to skilled therapists with proven value outcomes reduce unnecessary costs?

United Health Care “In 2013, the US spent 17% its health care expenditures on musculoskeletal conditions. Only 7% of people with musculoskeletal conditions received physical therapy care” 10 The Message... We spend ≅ $500B/yr on MSK pain. $250B wasted? Could greater access to skilled PTs reduce cost of musculoskeletal conditions?

United Health Care 3/14 “In 2012, the most costly procedures performed in operating rooms were 1. Spinal Fusions 2. Total Knee Replacements 3. Cardiac Angioplasty 4. Total Hip Replacements 11 The Message... We spend a lot of money on orthopedic surgeries Could greater access to skilled PTs with proven outcomes reduce a % of these surgeries?

ACA – Obama Care “We must insure more people and reduce the rapidly rising costs in health care so 100% of Americans can get better care at a lower cost.” 12 The Message... The government is demanding Greater Access, Better Quality, Lower Total Costs

ACA – Obama Care “We must hold providers accountable through accountable care organizations, outcomes, and financial risk sharing.” 13 The Message... The government is demanding accountability – what gets measured gets managed Can innovative therapists deliver measured outcomes and successfully share financial risk?

Health Plan Execs “Even if we have a President and Congress who repeal the ACA – health care reform will continue. Rising costs are unsustainable for the people who pay for health care.” cost.” 14 The Message... The private sector is demanding measurable quality health care at lower costs. Can therapists prove they deliver excellent functional and cost outcomes?

Med Director - Large Plan “ We have a shortage of 1° care MDs across the country – we need at least 300 more 1° care MDs in our small state and at least that many ‘mid-level’ providers. It’s the same all over the country and will get worse as more people are insured.” 15 The Message... Patients must wait too long to see a qualified provider when we are trying to attain better access Can skilled therapists become 1° care for MSK?

US Military and Keiser “PTs serve as primary care providers for musculoskeletal pain. It reduces pressure on primary care MDs, is more efficient, and they know more about the problems than MDs.” 16 The Message... Skilled PTs can provide quicker access better care for MSK patients

Virginia Mason MD-PT Team “Physical therapy is the best treatment for LBP. Same day access to PT reduces costs dramatically and results in measurable functional gains. Because we have such great results, we get more LBP patients” 17 The Message... Quick access for people with LBP to skilled PTs results in lower costs and better outcomes

Julie Fritz, PT, PhD and Intermountain Research Team – Spine “Physical Therapy provided within 2 weeks of primary care MD visit for patients with LBP yields lower total cost of care. Delayed physical therapy care resulted in higher total costs.” 18 The Message... Early access to PTs results in lower costs

Alfred Gellhorn, MD U of Washington Research Team – Spine “ Early access to physical therapists for Medicare patients with LBP resulted in lower costs.” 19 The Message... Early access to PTs results in lower costs

Incentives Drive Behavior “A majority of providers are paid based on volume of services provides – FFS. More interventions results in higher payments. Care is driven not by what is best for the patient but by what provides best reimbursement for the provider.” 20 The Message... FFS creates volume incents high utilization and drives up costs with no regard for quality – function/health Can skilled therapists reduce costs if given an incentive to achieve high outcomes?

21 In a word... Yes!

TPI Data from Health Plan “For people with MSK conditions who received PT – Upstream Costs – 40% Physical Therapy Costs – 30% Downstream Costs – 30%. 22 The Message... Inconsistent care paths, many providers, no measured outcomes – high costs Upstream Costs 40%PT Costs 30%Downstream 30% 1° Care Visits, Imaging, Injections, Ortho Visits, Meds Imaging, injections, ortho visits, surgery, surg ctr, hosp Can a consistent care path involving earlier PT with a focus on outcomes reduce unnecessary costs?

TPI – PT Network Pilot “PTs using FOTO to manage their care and focus on achieving higher functional outcomes reduced TECOC associated with shoulder pain by 30% and shared in the savings. Big reduction in hospital, significant reduction in imaging/orthopedic surgery, and slight reduction in direct PT costs.” 23 The Message... Outcomes, value-focused physical therapy care can reduce total cost of care

24 Shortage of Primary Care Providers $3T in health care costs – 17% MSK pain - $500B Measured Quality – Better Health Plans will Provide Incentives for Value Spine Fusions, Total Joints Very Costly Half of Health Care $$ add no Value Hold Providers Accountable Outcomes Research Early PT - Low $ High Results Many PTs Best Access Point for MSK Pts Must Reduce Cost of Health Care But must have better access to care

25 $3T in health care costs – 17% MSK pain - $500B Spine Fusions, Total Joints Very Costly Half of Health Care $$ add no Value Hold Providers Accountable -Outcomes Must Reduce Cost of Health Care Skilled Innovative Physical Therapists Can be a Value Based Solution Skilled Innovative Physical Therapists Can be a Value Based Solution But must have better access to care Measured Quality – Better Health Shortage of Primary Care Providers Many PTs Best Access Point for MSK Pts Research Early PT - Low $ High Results Plans will Provide Incentives for Value

The Volume to Value Revolution

“If the rate of change on the outside exceeds the rate of change on the inside... the end is in sight. ” Jack Welch Former CEO, GE 27

BIG Change In Provider Incentives is Coming 28

And When Incentives Change 180°... Provider Behavior Must Change Accordingly 29

Financial Incentives for Health Care Providers are Volume Based 30 $$

(Profitable Services x Max Fees) x (Max f ) Minus Minimized Expense 31 The Volume Equation This Creates Conflict Provider – How can I maximize Volume so I can get paid more? Payers – How can we minimize Volume so I can pay less?

But it’s NOT Based On What Consumers Want 32

Volume Based Provider Focus Drive Consumer Demand for ChanGe 33

To Models that Deliver Value 34

“The days of business as usual are over. Incremental fixes attempted by health care policy makers have not worked. It’s time for a fundamental change. A change from provider focused volume incentives to models that reward providers for delivering patient centered value - collaboratively achieving the Best Outcomes at the Lowest Total Cost.” Michael Porter, Phd, Harvard Business School from The Strategy That Will Fix Health Care - HBR 35

The Value Equation Quality + Service + Convenience + Caring Cost How can I maximize value to my patients?

37 The Value Equation Is What Consumers Want Individuals who are your patients Business who employ them Health Plans who insure them

But Providers Do Not Have a Financial Incentive to Deliver Value because ”The more you do, the more you get paid” 38

So the Market is Changing and Financial Incentives are beginning to Reward Value 39

Reimbursement Value – Risk Share Triple Aim Value Patient Centeredness Consolidation Patient Centered Medical Home ACOs Collaboration Innovation Key Aspects of Health Care Reform that Drive Value

Power Government Purchasers of Health Care Health Plans ACOs – Medical Homes Reality Power Government Purchasers of Health Care Health Plans ACOs – Medical Homes Reality The Triple Aim Measurable Quality An Exceptional Patient Experience Lower TCOC Your Mission The Triple Aim Measurable Quality An Exceptional Patient Experience Lower TCOC Your Mission Value Outcomes Patient Centeredness Collaboration Care Management Your Culture Value Outcomes Patient Centeredness Collaboration Care Management Your Culture Innovation Integration Care Model Change Risk Sharing Payment Arrangements Your Strategy Innovation Integration Care Model Change Risk Sharing Payment Arrangements Your Strategy Aligning Health Care Reform for Value Focused Success

42 Under Utilization Over Utilization Increasing Visits Increasing Function

Lower than Expected Higher than Expected Expected Lower than Expected FOTO’s 9 Cell Value Matrix Increasing Functional Change – Effectiveness Fewer Visits - Efficiency 43

44 It’s Time for Innovation... But ChanGe doesn’t come easy

45 Most People Struggle with Change And Need Leaders to Guide Them and Managers to Help Them 5-10% Hate It! Resist It! Try to Make It Fail! 15-20% Hate It! Resist It! 30-40% Go with the Flow But Won’t Try to Convert Resistors 15-20% Embrace Change Convert Resistors 5-10% Love it! I’m Your Change Champion 20-30% Hold You Back 50-70% Take Your Time 20-30% Will Help You

46 Leaders Vision | Drive Change | Inspire | Define the Culture Managers Plan | Organize | Analyze | Hold People Accountable + Leadership Poor Managemt Leaders: compelling urgency – vision - ongoing enthusiasm Managers: fail to plan – fail to hold team members accountable Result: Early progress; change dies + Leadership + Managemt Leaders: compelling urgency – vision - inspiration –enthusiasm Managers: Solid plan – Analyze problem solve – accountability Results: Change is Culture Poor Leadership Poor Managemt Leaders: Early urgency/vision – lack enthusiasm – not a priority Managers: fail to plan – fail to hold team members accountable Result: Change never starts Poor Leadership + Managemt Leaders: Early urgency/vision – lack enthusiasm – not a priority Managers: Want to succeed – plan – analyze –problem solve- give up Result: Good start; change dies

47 Making the FOTO Change Work Requires Effective Leadership and Management

“In God we Trust... Everyone else bring data. ” Edward Deming - Statistician Dennis Hart, PT, PhD FOTO Inc. 2/3/1948 – 4/11/