ACOs and the Impact on Supply Chain

1. ACOs and the Impact on Supply Chain

2. Today’s Presenters Dennis Orthman, CMRP • Senior Director • SMI - Strategic Marketplace Initiative Thomas M. Lubotsky, FACHE • Vice President Supply Chain and Clinical Resource Management • Advocate Health System

4. FMOL Health SystemWilliam Mosser Geisinger Health System*Deborah Petretich Templeton, Joel MeckleyGreenville Hospital SystemJohn Mateka Group Health CooperativeDavid Efroymson Inova Health SystemCharles Neikam Intermountain Healthcare*Brent Johnson Johns Hopkins Health SystemBill Kennett Kaiser PermanenteLaurel Junk Kettering Health NetworkTrisha Osborn LHP Hospital GroupAndrew Montgomery LifespanNicholas Dominick, Ed BonettiMayo Clinic*James Francis Mercy / ROi*Vance Moore, Gene KirtserMethodist Hospital System, TheGary Wagner North Shore Long Island Jewish Health SystemDonna DrummondNorthwestern Memorial HealthCareGary FennessyNovant HealthMark Welch Ochsner Health SystemMichael Louviere Ohio State University Medical CenterRosalind Parkinson Orlando HealthRandy Hayas, Rosaline Parson Adventist Health SystemCeleste West, Carole OwensAdvocate Health CareThomas Lubotsky Allina Hospitals and ClinicsCheryl HarelstadAscension Health AllianceMichael Gray Avera Health*Steve HuckabaaBaptist Health SystemSherry Wininger BayCare Health SystemJudith LipscombBeth Israel Deaconess Medical CenterSteve CashtonBJC HealthCare*Nancy LeMaster CHE Florence Doyle Catholic Health InitiativesKevin Kakuda, Bev Slate Catholic Health PartnersCalvin Wright, Ed Pryor Children's Hospital of PhiladelphiaJoni RittlerCHRISTUS HealthEd HardinCleveland ClinicSimrit SandhuDana-Farber Cancer InstituteJohn Willi Denver Health and Hospital AuthorityPhilip Pettigrew, Stewart Layhe Duke University Health SystemJane Pleasants Fairview Health ServicesLeAnn Born Fletcher Allen Health CareCharles Miceli OSF Healthcare SystemJohn Horne Parallon Business SolutionsJay Kirkpatrick Parkland Health & Hospital SystemJoe Velasquez Partners HealthCareLisa, Scannell, Mark Faulkner Presbyterian Healthcare ServicesMatthew PehrsonProvidence Health & ServicesDavid Hunter Roper St. Francis HealthcareScott FergusonSanford HealthThomas Harvieux Scottsdale HealthcareMichael Hildebrandt Sentara HealthcareDoug Farley, Nancy Grunewald SSM Health CareMichael Rosenblatt St. Luke's Health SystemCameron Marlowe Texas Health ResourcesJohn Gaida Thomas Jefferson University HospitalsRobert Burkholder UAB Health SustemBob Taylor University Kentucky HealthCareLorra Miracle UnityPoint HealthPeggy Samuels, Sandra Erickson UPMCJames Szilagy, David Hargraves Virginia Mason Medical CenterMilrose Mercado Yale New Haven Health SystemPam Scagliarini SMI PROVIDER PARTNERS

5. SMI INDUSTRY PARTNERS

6. This Executive Briefing and other free SMI Tools are available at www.smisupplychain.com

7. ACOs: Foundational Keys: • MDs are the decision-makers and leaders whose buy-in is crucial for an accountable care program to succeed. • Payment models incentivize providers to become successful episodic care managers, a key step toward population health management.

8. ACO Growth in 2013

9. 5 elements of accountable care impacting supply chain • Physician Integration • Alignment of Incentives • Clinical Integration • Information Management • Supply Chain Engagement.

10. Element #1Physician Integration In 2000, 57 % of physicians were independent. In 2013, 39 % were independent.

11. Element #2 Alignment of Incentives • Volume – will no longer drive physician compensation or hospital compensation • ACO payment models can include: • Measurements for hospitals include: Bundled Payments Capitation (full/partial) Shared Savings Patient Falls Readmissions HAIs

12. Element #3Clinical Integration Accountable care seeks to monitor and coordinate care across all stages and locations of care, often via a patient-centered medical home (PCMH). PCMH: • takes an integrated team consultation approach. • assigns a care coordinator to: • avoid unnecessary testing • perform patient education • coordinate follow-up care • fill/monitor prescriptions

13. Element #4Information Management Performance Metrics Patient Tracking Value Based Contracting Evidence Population Health Interconnected Information Systems Data Warehouse ERP EHR HIE

14. Element #4Information Management • Serious Challenges • Costs • Lack of uniform standards • Limits on data mineability • Resistance “Big data equals big costs.” Patrick Flaherty UPMC, SMI Provider Partner “When folks deploy EHRs, only about 30 percent of the information is really reportable, with the rest in free-form text that structured reports cannot pull out.”Mary Beth Lang, PhD, UPMC, SMI Provider Partner

15. Element #5Supply Chain Engagement • Emergence of the “Service Line” organizational model presents a supply chain opportunity. • Service line leadership monitors and manages cost, quality, and outcomes. • Supply chain’s value analysis approach needs to integrate with service lines.

16. Advocate Health Care • Hospitals • 4 teaching hospitals • 1 children's hospital • 1 critical access hospital • 5 level 1 trauma centers • Physicians • 6,250 medical staff • members • 4,525 Advocate Physician • Partners • 1,250 employed physicians • Post-acute • $5.0B Revenue • AA Rated • 34,000 Associates 16

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18. Key Drivers Of Physician Engagement 18

19. Advocate Physician Partners Vision To be a faith-based system providing the safest environment and best health outcomes, while building lifelong relationships with the people we serve. Our Role To drive improvement in health outcomes, care coordination and value creation through an innovative and collaborative partnership with our physicians and the Advocate system. 19

20. Pluralistic Physician Approach Active physicians on medical staffs (6,250) Total APP physicians (4,525) 25% PCPs – 75% specialists Employed/affiliated (1,250) Independent APP (3,275) Independent non-APP (1,725) Dreyer Affiliated (183) Advocate Medical Group (1,067) 20

21. More Than 100 Physicians Involved In APP Governance APP Board of Directors Class A - Physicians Class B - Advocate PHO Boards ContractFinance Committee UtilizationManagement Committee Credentialing Committee Quality & CIImprovement Committee Audit Committee Pharmacy & Therapeutics Committee Clinical Integration Measures Committee 21

22. Value Based Agreements 14

23. Advancing Evidence-Based Medicine And Care Our cost is 1530 23

24. Projects do not Advance if: • Decrease in Safety and/or Quality • No Value-Based Cost Benefit Mission: To continuously improve the standard of care across the system, rooted in evidence and achieved through shared best practices • Involve: • Physicians • Nurses • Allied Health Providers • Staff • Tools: • Education (CBTs, Rounds, Thought Leaders) • Physician to Physician Detailing • Communications/PR (Multiple “Touch Points”) • Metrics (Feedback, Tracking) • Formulary Restrictions (Pharmacy, Supply Chain) • EMR (Removal, Clinical Decision Support, Hard Stops, Order Sets) • Guidelines / Policies • CI Measures • Principles: • Data-Driven • Evidence-based • Best Practices • Focus Areas: • Lab utilization • Imaging utilization • Pharmacy utilization • Physician preference items • Supply chain opportunities Better health outcomes (including those that matter to patients) VALUE Cost to achieve those health outcomes

25. Clinical Effectiveness Governance • Clinical Effectiveness Advisory Committee • Multi-disciplinary senior leadership team • Provide advice and oversight • Remove barriers to progress • Membership • Specialist Subcommittees

26. Clinical Integration GoalCardiac Rhythm Management Devices Targeted Area of Focus: Clinical Effectiveness

27. Governance of Product Use and Adoption New Product Introductions Variation of Use is widely permissive.

28. Advocate Physician PartnersCombined Incentive Fund Distribution History2008-2013 ($ in millions) Note: 2008-2010 unearned applied to clinical integration incentive only 28

29. 2013 Value Report To download a copy of the 2013 Value Report, go to:advocatehealth.com/valuereport 29

30. Questions 30