How Providers Survive in a Cost Cutting Environment Don Holloway, Ph.D. Co-founder of NIATx

How Providers Survive in a Revenue Cutting Environment Don Holloway, Ph.D. Co-founder of NIATx Better Title

Story: Mason City, Iowa Mason City Iowa The outpatient program at Prairie Ridge Addiction Treatment Services increased its outpatient revenue by $381,000 per year. Historically, the agency received 60% of its outpatient revenue through a block grant capped at 1,100 clients. The agency averaged 42% over-utilization of block grant funds for 5 years, resulting in up to $462,000 of annual unreimbursed care for 540 clients. After joining NIATx, the program focused on increasing the other 40% of revenue, (third party, Medicaid, and client fees). Within 2 years, it increased this revenue from $627,000 per year to $1,008,000, an increase of $381,000 per year. The block grant is now 48% of outpatient revenue, down from 60%.

Prairie Ridge’s Problem  540 clients served without payment of  $462,000  Would require a 58% cut in cost to break even, from $855 to $356 per client

What would you do?  Renegotiate contract?  Reduce costs?  Turn clients away?  Make clients wait longer?  Terminate contract for block grant?  Change payer mix? “Cost-shift”?

Summary PayerReferrer Client Provider Reduce Costs Increase Revenue

What’s it like to be our client? Referral !st Treatment Session 1 st Contact Assessment Start Next Level of Care 4 th Treatment Session End This Level of Care Reduce No-shows Reduce Waiting Time Increase Admissions Increase Continuation Within One Level Increase Continuation Between - Transition NIATx Aims

Increase Any Admissions? Referral !st Treatment Session 1 st Contact Assessment Start Next Level 4 th Treatment Session End This Level of Care Reduce No-shows Reduce Waiting Time Increase Admissions Increase Continuation Within One Level Increase Continuation Between Levels - Transition Any Admissions? NIATx Aims

Typical Payer-Provider-Referrer Relationship PayerReferrer Client Provider

Strengthen The Payer-Provider- Referrer Relationship PayerReferrer Client Provider

What’s it Like to Pay Us? PayerReferrer Client Provider Women’s Adult Women with Children Battered Women Men’s Adult Boy’s Adolescent Girl’s Adolescent Parents Veterans Elder Dual Diagnosis Depression HIV Professional: Pilots, Drs, Rns, Clergy

What’s it Like to Pay Us? Payer Referrer Client Provider Are we paid enough? FFS No Cap FFS with Cap Annual Budget Fee per Client per Year No Contract/Source Utilization Controls: Limit to 10 visits Prior authorization

What’s it Like to Refer to Us? PayerReferrer Client Provider Referrals that start clients in addiction treatment are made by: self parents family and friends employers Unions schools your staff other health care providers child protection services judges, lawyers, and probation officers

What’s it Like to Refer to Us? PayerReferrer Client Provider Transitions from the end of one level of care to the start of another are made by: detox residential inpatient partial hospitalization intensive outpatient outpatient

Aim: Become Preferred Provider for Selected Referrers PayerReferrer Client Preferred Provider 1.Identify Referrers 2.Invite One Referrer to Join You 3.Form a Joint Change Team 4.Invite Referrer to Participate in a Walk Through 5.Agree on Aims 6.Establish Baseline Data 7.Identify Barriers and Opportunities 8.Test Promising Practices 9.Sustain Improvements 10.Invite Another Referrer to Join You and Repeat

How will we know we’re preferred? PayerReferrer Client Preferred Provider # of referrals will increase % of referrals admitted will increase % of revenue from selected payers will increase

What changes can we test? Tailor brochure for referrer too many referrers do not have written materials with directions and guidance for clients to use to contact addiction treatment Assign each referrer one person to contact for all their referrals too few referrals are made, and when they are, too few end in admission Guide referrers to make appropriate referrals too many referrers do not know when or how to make a referral Encourage referrers to make 1st appointment while referrals are still in their office too many clients are not ready, willing or able to make initial contact or appointment on their own Continue on next slide...

What changes can we test? Continued... Acknowledge all referrals referrers need to be reminded about your services – one way is to send a thank you note Keep them informed about “their” client to the extent confidentiality is not broken Visit referrers periodically and ask “What’s it like to refer a client to us?” Stay at top of referrer’s mind you are easy to forget Offer specialized services, e.g. elderly funding from current payer sources is saturated

How can we sustain our preferred status? PayerReferrer Client Provider  Assign each referrer one person to contact for all their referrals  Visit referrers periodically and ask “What’s it like to refer a client to us?

Summary PayerReferrer Client Provider Selectively contract - change payer mix Reduce Costs Selectively strengthen existing relationships and build new ones Increase Revenue Reduce Waiting Time Reduce No-shows Increase Continuation