Charting a Future Course for a Regional Family Clinic

June 21, 2018

CHALLENGE: A family practice located in a small, south central Iowa town was formed in 2011 as a Virtual Private Practice (VPP) within a larger health care system. Since the practice’s primary mission is meeting the total health needs—including preventive, acute, chronic medical care, and obstetrics—of the underserved, the VPP model was an ideal way to quickly get the clinic up and running. A VPP outsources the business side of the practice, freeing clinicians to do what they do best: provide personalized patient care. Faced with the realities of the ever-evolving local, state, and national health care industry landscape, however, it quickly became clear to the family practice clinicians that the VPP model wasn’t sustainable. Handling the volume and complexity of increasing regulations while continuing to provide the same level of patient care, would require a solid administrative structure and a new, financially viable model.

PROJECT: Board-certified family medicine physician Michelle Rebelsky used her PEMBA experience to devise a solid and sustainable path forward for the clinic. While the practice dissolved the VPP and joined the larger health care system’s tax identification (Tax ID) number (meaning the physicians billed using the hospital’s Tax ID) in 2015, Rebelsky and her fellow clinicians realized that the current system wasn’t the most efficient or cost-effective. Even though the hospital had taken over a larger role in maintaining the clinic (including retaining final control over operational and financial decisions), the practice financials remained on an Excel spreadsheet and the compensation structure still was based on the original VPP model. Using the tools learned through her PEMBA coursework, and with the guidance and executive coaching of the PEMBA team (especially professor Dr. Ray Husband, academic program manager Tom Brown, and Haslam College of Business Associate Dean for Graduate and Executive Education Dr. Bruce Behn), Rebelsky charted and enacted the steps needed to transition the family practice clinic from the VPP model to the more sustainable Advanced Payment Model-Accountable Care Organization (APM-ACO).

PROCESS: Rebelsky tackled the challenge using the ExperiencePoint “Lakeview” change management simulation. A modification of John Kotter’s popular “8-Step Process of Leading Change,” Lakeview is a scenario and case based on using Lean as a strategy to improve patient flow in a hospital. Here’s a quick overview of how the Rebelsky employed the Lakeview approach to develop a new administrative structure for the family practice:

1. Understand the need for change. Rebelsky focused on the top three change drivers: competition from new specialists, a new health care network affiliation, and the Medicare Access and CHIP Reauthorization Act (MACRA).

Until October of 2016, the larger health system had an affiliation agreement with an even larger health care network. The family practice had a prominent role in the network’s Accountable Care Organization (ACO). The network and the ACO helped fill the gaps in administrative leadership and outpatient expertise that was missing at the local level. With this affiliation, the family practice was on track to join the network’s APM-ACO for 2017. Being part of the APM-ACO would enable the family practice to participate in MACRA without the Merit-based Incentive Payments System (MIPS) component. MACRA, bipartisan legislation signed into law in 2015, created the Quality Payment Program that:

  • Repeals the Sustainable Growth Rate formula
  • Changes the way that Medicare rewards clinicians for value over volume
  • Streamlines multiple quality programs under MIPS
  • Gives bonus payments for participation in eligible alternative payment models (APMs).

MIPS was designed to tie payments to quality and cost efficient care, drive improvement in care processes and health outcomes, increase the use of healthcare information, and reduce the cost of care. Since Medicare is approximately 30 percent of the family practice clinic’s revenue, a guaranteed five percent increase in payment as part of the APM-ACO would be much better for the clinic than gaining or losing four percent under MIPS.

In late October 2016, the larger health care system ended its seven-year affiliation with the health care network and started working with two other entities in a joint venture. This joint venture still was in the planning stages as Rebelsky proceeded with her project, requiring her to deal with many moving parts as the project—and the transition from VPP model to a more sustainable model—unfolded.

2. Enlist a core team. Rebelsky assembled a strong Change Staff made up of the family practice providers and clinic supervisor, and the health care system’s vice president of finance, who helped served as a liaison between the pro-change clinic staff and the change-resistant hospital leadership. Satellite team members included “helpers,” such as the information technology (IT) and billing departments and PEMBA faculty.

3. Develop a vision and strategy. The initial vision called for the family practice to be part of an APM-ACO for 2018 using the following strategies:

  • Finish establishing a Patient-Centered Medical Home (PCMH) model encompassing five functions and attributes: comprehensive care, patient-centered, coordinated care, accessible services, and quality and safety.
  • Get financials in order. 

  • Develop a new compensation model. 

  • Review staff concerns about changes that were happening.
  • Investigate the requirements for joining the joint venture’s ACO. 

  • Investigate a local Clinically Integrated Network (CIN), a legal entity where physicians and hospitals partner to provide high quality and cost-effective patient-centered care.
  • Consider independent options.

4. Motivate by creating a sense of urgency. Since May 2017 was the Centers for Medicare & Medicaid (CMS) deadline for joining an APM-ACO and several discrepancies in the financials needed to be reconciled before the merger, the urgency was clear.

5. Communicate the Vision: Rebelsky and her team conveyed the vision in multiple meetings and huddles, and through visuals.

6. Act: Here’s a quick overview of the actions steps, all of which involved some repetition of steps 1-5. Rebelsky and her team:

  • met with the leadership of the joint venture and the ACO
  • attended multiple health care system taskforce meetings
  • spent months reconciling financials
  • rejected local CIN and independent options due to staff concerns.

7. Consolidate gains. To maintain the momentum for change (and to avoid reverting to the clinic’s old way of doing things), Rebelsky celebrated the achievement of three short-term objectives before setting tougher goals.

The three big wins were:

  1. Attaining PCMH Level 3 recognition from the National Committee for Quality Assurance in February 2018
  2. Approval in September 2017 for the ACO in 2018
  3. Negotiating a new physician compensation model.

RESULTS: In January 2018, the larger health care system was acquired by the joint venture and renamed. The gains achieved through Rebelsky’s PEMBA OAP allowed for a new clinic structure, which is the transition plan for 2018 and 2019.

“My initial proposal was to develop a new administrative structure for GRFP,” Rebelsky says. “The Virtual Private Practice model would not be financially sustainable when the joint venture acquired the hospital and clinic in January 2018. With the newly developed and implemented administrative structure, we have had a smooth transition into the new health care system and the ACO.”