Insurance Exchanges – Public & Private Implications for Hospitals GSMC| 2014 Fall Conference and Annual Meeting Young Harris, GA| October 2, 2014 © 2014 Kaufman, Hall & Associates, Inc. All rights reserved. Meeting Agenda • Introductions • Private exchanges – What are private exchanges and how do they work? – Private exchange adoption outlook – Implications for hospitals and health systems • Public exchange update – National – Georgia • Narrow network prospects and implications • Summary implications • Questions GSMC 2014 Fall Conference & Annual Meeting 1 Health Insurance Exchanges Are Here • “Exchanges” are marketplaces for individuals and businesses to comparison shop and purchase healthcare coverage • Seek to increase competition and/or consumer choice while providing benefit standardization, lower costs • Public and private exchanges will co-exist in many areas Public: Individual Private Public: SHOP • Federally mandated for January 2014 • Won’t exist in all states • Individual exchanges will target uninsured and selfinsured individuals • Less regulated than public exchanges • SHOP exchanges will target small employers (<50) early on • Will support defined contribution models • Community-rated premiums with limited riskadjustment • • Small business tax credits and individual subsidies will make exchanges attractive Various exchange models will target different employer segments GSMC 2014 Fall Conference & Annual Meeting 2 Private Exchanges – What Are They And How Do They Work? GSMC 2014 Fall Conference & Annual Meeting 3 Private Exchanges – What Are They? As the commercial insurance market continues to move from defined benefit to defined contribution plans, employers will seek new benefit models to maximize or cap the value of their healthcare benefit subsidies Private exchanges will support this market shift by offering a broader choice of plan and coverage options sponsored by a variety of organizations Private Exchange Sponsors GSMC 2014 Fall Conference & Annual Meeting 4 Private Exchange Adoption Outlook GSMC 2014 Fall Conference & Annual Meeting 5 Private Exchange Activity Occurs Across a Range of Employer Sizes Liazon Forges Partnerships with National Brokers Mercer Announces 2014 Private Exchange Participants Walgreens Joins AON Hewitt Private Exchange BAN/USI have 150 US offices; Liazon exchange includes 2,000 employers 33 mostly midsize companies across range of industries will enroll 75K employees 160K Walgreen’s employees will enroll in 2014; total AON 2014 enrollment will be 600K Small to Midsize Employers Midsize to Large Employers Large Employers Note: 600K AON enrollees includes employees and dependents across 18 employers, an increase of 15 employers vs. the 3 employers enrolled in 2013. Sources: Shutan, B: “BAN Partners with Liazon,” Health Insurance Exchange News, Sept 17, 2013. “USI Helps Clients Manage Employee Benefits Through Launch of Private Insurance Exchange,” Fort Mill Times, Oct 17, 2013. McCann, D: “Midsize Companies Move to Private Health Exchanges,” CFO.com, Oct 15, 2013. Armstrong D, “Walgreen Joins in Exodus of Workers to Private Exchanges,” Bloomberg, 18 Sept, 2013. “Private Exchanges Woo More Employers, But Real Traction Won’t Begin Until 2015,” Inside Health Insurance Exchanges, Aug 15, 2013. GSMC 2014 Fall Conference & Annual Meeting 6 2014 Enrollment Amongst Select Major Private Exchange Operators Has Reached 1.2 Million Commercial Lives Exchange Operator Total # of 2014 Enrollees # of 2014 Employers # of Enrollees per Employer 600,000 18 33,333 400,000 14 28,571 100,000 2,400 42 75,000 33 2,273 46,500 3 15,500 1,221,500 2,468 495 Private exchange operators are quickly growing their enrollee bases and appealing to employers of all sizes Source: Company press releases and investor conference calls. GSMC 2014 Fall Conference & Annual Meeting 7 Early Adopters Include Many Household Names with Outsized Representation by the Retail and Restaurant Industries GSMC 2014 Fall Conference & Annual Meeting 8 Drivers That Could Impact Commercial Shift to Private Exchanges Driver Influence Factors “Me Too” Effect Secondary wave of “fast followers” will emerge if initial wave of employers demonstrates success Rising Administrative Costs Employers continue to look for ways to lower administrative expenses of employee benefits Delivery Cost Favorable insurer network contracts will increase plan participation and pressure on employers to shift Cadillac Tax Some employers may use private exchanges to avoid the excise tax stipulated to begin in 2018 Exchange Plan Options and Premiums Plan designs and premiums must be as good or better than current group coverage Paternalism Employers can be paternalistic and resistant to significant changes in employee benefit design Union and Public Sector Collectively bargained cohorts and public sector employers typically are slower to change Shift Impact ↑ ↔ ↓ Source: “Sizing Up The Healthcare Exchanges - Big Long-Term Opportunity,” Credit Suisse, Sept 26, 2013. GSMC 2014 Fall Conference & Annual Meeting 9 Implications for Hospitals and Health Systems GSMC 2014 Fall Conference & Annual Meeting 10 Private Exchanges Are Likely to Lead Some Employees to Trade Down to Cheaper Options Impact on Plan Choice of Shift From Defined Benefit to Defined Contribution Liazon Corporation1 70% Primary Options for Employees Seeking to “Trade Down” Chose Less Expensive Plan “Very few people spend other people’s money as carefully as they spend their own.” Milton Friedman Nobel Prize-Winning Economist High Deductible Narrow/ Tiered Network Source: 1. Based on interview with Liazon Corporation (a defined contribution benefit company) documented in Singhal S, Stueland J, and Ungerman D, How US Health Care Reform Will Affect Employee Benefits. McKinsey & Company, June 2011. 2. Liazon Corporation available at: www.liazon.com. GSMC 2014 Fall Conference & Annual Meeting 11 Sears and Darden Among the Major Employers to Pioneer the Private Exchange Concept Sears and Darden Private Exchange • • • Sears and Darden chose a defined benefit/ private exchange healthcare benefit model for 2013 More than 100,000 active employees of Sears, Darden, and other employers were given a company credit to purchase benefits via an exchange sponsored by Aon Hewitt Aon Hewitt decision support tools and benefits advisors facilitated employee plan decisions Source: 1. Enrollment Results Show Aon Hewitt’s Corporate Exchange Empowers Employees to Become More Astute Health Care Consumers. Aon Hewitt, March 18, 2013. www.aon.com. 2. Mathews A.W. Big Firms Overhaul Health Coverage. The Wall Street Journal, Sept 26, 2012. online.wsj.com. GSMC 2014 Fall Conference & Annual Meeting 12 Many Participants Shifted to CDHPs in the First Year of the Sears and Darden Private Exchange Distribution of Sears and Darden Employee Health Benefits by Type of Plan 12% 18% 39% 14% 70% Consumer-Directed Health Plan HMO PPO 47% 2012 2013 Sears and Darden found that choice of plans changed when employees were presented with expanded plan options and control over employer subsidy Source: Mathews A.W. To Save, Workers Take on Health-Cost Risk. The Wall Street Journal, Mar 17 2013. online.wsj.com. GSMC 2014 Fall Conference & Annual Meeting 13 Transparency Tools Are a Key Catalyst for High Deductible Impact • Growth in high deductible plans has prompted payers and employers to develop price transparency tools revealing cost and quality data to members • Informed patients are likely to choose the “low-cost/high-quality” providers when faced with increased cost sharing • Providers in competitive markets are at risk of revenue and market share erosion as payers and patients become aware of reimbursement variance • Improving cost structure and competing on value is the only viable long-term option Select Companies Offering Transparency Tools GSMC 2014 Fall Conference & Annual Meeting 14 Private Exchanges Will Break Apart Employee Populations, Leading to New Contracting and Strategic Considerations Employee populations will break apart Wholesale Retail Open Access Networks Narrow/ Tiered Networks Lives will be broken up across multiple carriers and networks, many of which could be narrow or tiered, resulting in increased fragmentation, risk of share and revenue loss GSMC 2014 Fall Conference & Annual Meeting 15 Exchanges and Value-Based Payments Have Already Merged In Some Markets Open Network ACO Options Medica Private Exchange • Exchange offers MN participants 5 Options (4 with partner ACOs and 1 open network) • ACOs seek to lower cost via fee reductions and enhanced coordination/ outcomes • More than 40% of enrollees chose ACO plan; all of year-one employers renewed Source: Anderson J.: Medica Partners with Four Diverse ACOs on Unique Private Exchange Model, ACO Business News, October 2012. Shafer L.: Exchanges Have Been Tried, and Worked, Star Tribune, October 3, 2013. GSMC 2014 Fall Conference & Annual Meeting 16 Private Exchanges Will Accelerate the Transition to Emerging Payment Models and Create New Strategic/ Financial Challenges Today’s Model Private Exchanges Emerging Models Open Access PPO High Deductible Narrow/Tiered Expected to decline over time Likely near-term model of choice Expected to increase over time as narrow/tiered networks mature Implications Risk of Share Loss Price Pressure Bad Debt Use Rate Pressure Limited Threat GSMC 2014 Fall Conference & Annual Meeting Significant Threat 17 Public Exchange Update GSMC 2014 Fall Conference & Annual Meeting 18 Public Exchange Update and Analysis – National GSMC 2014 Fall Conference & Annual Meeting 19 Public Exchange Enrollment Surpassed both Incremental and Cumulative Administration Targets for March Cumulative U.S. Public Exchange Enrollment1 Thousands 8,020 Public Exchange Enrollment • National public exchange enrollment increased to 8.0M during the initial enrollment period • Administration 2014 enrollment goal was 7.1M 4,242 3,300 2,153 106 364 Oct Nov Dec Jan Feb Mar % Target 21% 30% 65% 75% 75% 113% 3 2 Notes: (1) HHS definition of enrollment (those who have “selected a plan”) (2) March data includes Special Enrollment Period through 19 April 2014 (3)Percentage of HHS enrollment target. Sources: ASPE, Health Insurance Marketplace Enrollment Reports, 13 Nov 2013, 11 Dec 2013, 13 Jan 2014, 12 Feb 2014, 11 Mar 2014, and 1 May 2014. Tavenner M, Projected Monthly Enrollment Targets for Health Insurance Marketplaces in 2014, 5 Sept 2013. GSMC 2014 Fall Conference & Annual Meeting 20 The Vast Majority of Those Enrolled Nationally Chose Silver and Bronze Plans National Plan Selection by Metal Level Initial Enrollment Period1 Bronze Plan Choice Trends 20% 2 Cat. (2%) 2% Platinum Silver 5% 9% 65% • 85% of those enrolled nationally chose cheaper Bronze or Silver plans • Silver plans (eligible for cost-sharing subsidies) are the most popular and account for 65% of all enrollment Gold Notes: (1) Includes additional special enrollment period activity through 19 April 2014. (2) Catastrophic plan. Source: ASPE, Health Insurance Marketplace Enrollment Report, 1 May 2014. GSMC 2014 Fall Conference & Annual Meeting 21 Initial National Public Exchange Enrollment Skews Older Than Administration Targets National Exchange Age Distribution Initial Enrollment Period1 25% 23% 55 - 64 45 - 54 17% 35 - 44 18 - 34 Well below national HHS 18-34 target of 39% <18 28% 6% • • • • National Enrolling young and healthy people is critical to a stable risk pool Age 18-34 enrollment lags the 39% administration target How enrollment compares to health plan expectations will dictate plan profitability The “3Rs” will mitigate premium changes in the near to medium term Note: (1) Includes additional special enrollment period activity through 19 April 2014. Source: ASPE, Health Insurance Marketplace Enrollment Report, 1 May 2014. GSMC 2014 Fall Conference & Annual Meeting 22 Despite Recent Improvements, the Previously Uninsured Represent Only About Half of the National Enrollment % of Public Exchange Enrollment by Uninsured National Surveys 57% 27% 26% Feb 4 - Feb 13 McKinsey April 7 - April 16 McKinsey 11% Nov 25 - Jan 10 McKinsey • • • June 19 Kaiser McKinsey surveys suggest that a majority of those enrolled nationally previously had individual or employer coverage Broker/ consultant data from mid-January found that 33% were previously uninsured Kaiser Family Foundation Survey of small sampling suggests that 57% were previously uninsured Notes: McKinsey data from 11/25 to 1/10 survey, Feb 4 to Feb 13 survey, and April 7 to April 16 survey; Broker/consultant estimates from 1/17 WSJ article. Sources: Weaver C and Mathews A, Exchange See Little Progress on Uninsured, WSJ, 17 Jan, 2014; Demko P, 27% of 2014 Individual Market Enrollees Previously Lacked Coverage, Study Says, Modern Healthcare, March 2014: Hamel L, Rao M, Levitt L, Claxton G, Cox C, Pollitz K, Brodie M, Survey of Non-Group Health Insurance Enrollees, Kaiser Family Foundation, 19 June, 2014.. GSMC 2014 Fall Conference & Annual Meeting 23 Many of Those Who Have Selected a Plan Have Not Yet Paid Their Premiums National Estimated Distribution of Enrollees by Payment Status As of August 31, 2014 Premiums Paid 87% 3% 10% Premiums Expected to be Paid How Many Enrollees Have Paid Their Premium? • 3% of current enrollees drop their coverage each month • Slightly more than 7 million enrollees have paid for their coverage • A haircut should be applied to reported enrollment figures to adjust for these nonpayments Premiums Unpaid Source: The Graph, Updated: Paid QHPs should have broken 8 million at last! ACASignups.net, August 31, 2014, http://obamacaresignups.net/14/08/31/graphupdated-paid-qhps-should-have-broken-8-million-last-92m-total GSMC 2014 Fall Conference & Annual Meeting 24 Public Exchange Update and Analysis – Georgia GSMC 2014 Fall Conference & Annual Meeting 25 Georgia Is One of 28 Federally Facilitated Exchanges 7 17 Source: Kaiser Family Foundation, www.statehealthfacts.org. State Decisions For Creating Health Insurance Exchanges as of Oct. 2013. GSMC 2014 Fall Conference & Annual Meeting 26 Public Exchange Enrollment in Georgia Surpassed Administration Targets Cumulative Georgia Enrollment1 316,543 Public Exchange Enrollment • GA public exchange enrollment increased to 316,543 • Full year HHS target was 204,000 • Enrollment in GA reached 155% of HHS initial enrollment target 139,371 101,276 58,611 1,390 6,859 Oct Nov Dec Jan Feb Mar % Target 10% 20% 61% 80% 85% 155% 3 2 Notes: (1) HHS definition of enrollment (those who have “selected a plan”) (2) March data includes Special Enrollment Period through 19 April 2014 (3)Percentage of HHS enrollment target. Sources: ASPE, Health Insurance Marketplace Enrollment Reports, 13 Nov 2013, 11 Dec 2013, 13 Jan 2014, 12 Feb 2014, 11 Mar 2014, and 1 May 2014. Tavenner M, Projected Monthly Enrollment Targets for Health Insurance Marketplaces in 2014, 5 Sept 2013. GSMC 2014 Fall Conference & Annual Meeting 27 Absolute Level of Public Exchange Enrollment in Georgia Surpasses National Average Cumulative Public Exchange Enrollment by State Absolute Enrollment California: 1,405,102 400,000 Florida: 983,775 Texas: 733,757 350,000 Federally–Run Exchange 300,000 Georgia: 316,543 State–Run Exchange 250,000 200,000 National Average: 157,250 150,000 100,000 50,000 CA FL TX NY NC PA GA MI IL VA WA NJ OH MO TN WI IN CO AZ SC LA AL UT KY CT ID OK OR MD MS KS MN NV ME AR NE NH VT MT NM MA IA RI WV DE SD AK WY DC ND HI Source: Department of Health and Human Services; Health Insurance Marketplace: Addendum to the Summary Enrollment Report for the Initial Annual Open Enrollment Period; 1 May 2014 GSMC 2014 Fall Conference & Annual Meeting 28 Georgia Also Surpasses National Averages as a Percentage of HHS Targets 250% Cumulative Public Exchange Enrollment by State % of HHS Targets Federally–Run Exchange 200% Georgia: 155% State–Run Exchange 150% National Average: 113% 100% 50% CT RI NH FL ME ID NC WI DE VA NY MI NJ GA PA IL UT CO MO SC TN AL MT TX LA AZ CA KS NE MS IN ND HI WY AR WV OK OH MN IA SD VT AK WA MD NV NM KY OR DC MA 0% Source: Department of Health and Human Services; Health Insurance Marketplace: Addendum to the Summary Enrollment Report for the Initial Annual Open Enrollment Period; 1 May 2014 GSMC 2014 Fall Conference & Annual Meeting 29 Bronze and Silver Plans Make Up 82% of Public Exchange Enrollment in Georgia Plan Selection by Metal Level Initial Annual Open Enrollment Period1 National Georgia Bronze Bronze 11% Cat. (2%) 2%2 Platinum 10% Gold 20% 71% Silver Cat. (2%) 2% Platinum 5% 9% Silver 65% 7% Gold • Plan selection in Georgia skews toward low cost Silver and Bronze plans but slightly less so than the national average Note: (1) Includes additional special enrollment period activity through 19 April 2014. (2) Catastrophic plan Source: ASPE, Health Insurance Marketplace Enrollment Report, 1 May 2014. GSMC 2014 Fall Conference & Annual Meeting 30 Age Distribution of Georgia and National Enrollment Are Similar Exchange Age Distribution Initial Enrollment Period1 21% 25% 23% 23% 55 – 64 45 – 54 20% 17% 35 – 44 18 – 34 <18 • • 32% 28% 5% 6% Georgia National Georgia has a slightly lower percentage of enrollees between the ages of 55 and 64 than the national average 32% of Georgia enrollees are in the pivotal 18–34 cohort, which is slightly higher than the national average (28%) and well below the administration target (39%) Note: (1) Includes additional special enrollment period activity through 19 April 2014. Source: ASPE, Health Insurance Marketplace Enrollment Report, 1 May 2014. GSMC 2014 Fall Conference & Annual Meeting 31 Georgia Bronze Premiums Are Slightly Higher than the National Average Monthly Premium of Lowest Cost Individual Bronze Plan in State1 $450 $425 $400 National Avg: $249 $350 $300 $265 $250 $200 $144 $150 $100 MN TN OK KS MD IL UT DC OR IA TX AZ MI NM ID NV PA CO NE VA AL MO Avg. FL MT OH WA RI LA SC GA AR NY CA WV NC ND WI NH IN SD DE NJ ME CT VT AK MS $0 WY $50 Note: 1) Age weighting for all states is based on expected age distribution in the Marketplaces, estimated by the RAND Corporation. Source: APSE Issue Brief, Health Insurance Marketplace Premiums for 2014, Health and Human Services, avail able at: aspe.hhs.gov (accessed Oct 1, 2013). GSMC 2014 Fall Conference & Annual Meeting 32 Georgia’s Five Individual Market Plans Puts the State Toward the Middle of the Pack Insurer Competition by State Individual Market Source: Avalere Health, Analysis on Health Plan Offerings on the Federally-Facilitated Marketplace, 3 Oct 2013. GSMC 2014 Fall Conference & Annual Meeting 33 Georgia Health Insurance Exchange Participants – Blue Cross Blue Shield of Georgia Plans are Available State Wide Georgia Public Individual Exchange Participants Georgia Public SHOP Exchange Participants Source: Miller, A.: UnitedHealthcare to be fourth company to offer insurance in State Exchange next year, The Augusta Chronicle, July 14, 2014 GSMC 2014 Fall Conference & Annual Meeting 34 Drivers That Could Impact Commercial Shift and Employer “Dumping” to Public Exchanges Driver Firm Size Subsidy/ Tax Credits Delivery Cost Wages/ Part-Time Workforce/ Retirees Exchange Implementation and Promotion Timing Recruitment and Retention Exchange Plan Options and Premiums Penalties Influence Factors Shift Impact Small firms are more likely to choose SHOP exchanges or dump to HIX Subsidy and tax credit availability will stimulate exchange uptake Favorable insurer network contracts will increase plan participation and pressure on employers to shift ↑ Low-wage geographies will have greater subsidy availability; part-time employees and pre-65 retirees more apt to shift Good communication, promotion, and receptivity will stimulate enrollment Uptake could initially be slow but increase over time once the market settles out, particularly if the “me too” effect takes hold ↔ Higher skilled/ wage employers who prioritize recruitment and retention may not be willing to shift to public exchanges Fewer plan options and higher premiums will delay uptake ↓ Employer responsibility penalties a key deterrent for larger employers; fear among some that penalties could be increased in the future GSMC 2014 Fall Conference & Annual Meeting 35 Public Exchange Analysis Summary Observations • Georgia is one of 28 Federally-Facilitated Exchanges • Georgia enrollment of 316,543 far exceeded the HHS projection of 204,000 • Of the 50 States, Georgia was ranked 7th in enrollment • Georgia was one of 24 States that exceeded the HHS enrollment goals • Leaner and less expensive silver (71%) and bronze (11%) plans are currently the most popular in Georgia which could result in collection challenges for providers • 32% of Georgia enrollees are in the pivotal 18–34 cohort, which is slightly higher than the national average (28%) and well below the administration target (39%) • Average Bronze Premiums were slightly higher than the National Average • There was a decent selection of plans available in Georgia Source: Medicaid & CHIP: April 2014 Monthly Applications, Eligibility Determinations and Enrollment Report, June 4, 2014 GSMC 2014 Fall Conference & Annual Meeting 36 Narrow Network Considerations GSMC 2014 Fall Conference & Annual Meeting 37 Limited Networks Will Have a Significant Presence on the Georgia Public Exchange 120% 2014 Limited Network Percentage of Plan Offerings By State Federal Exchange States Limited Network Penetration 100% • 80% 72% 60% • 40% 20% Network adequacy regulations, hospital competition, spare capacity will influence prevalence 72% of plans offered on Georgia’s exchange were narrow network plans NH SC IN NJ FL UT DE VA GA WY SD MS WI MI TX ME PA OK IA OH AZ ND TN IL LA NC NE AK AL AR KS MO MT WV 0% Note: Limited network defined as EPO and HMO plans. Survey results exclude the 49% of respondents who indicated that they “did not know” their exchange contract network plan design. Source: Health Insurance Marketplace Premiums for 2014 Databook (Information Current as of Sept 18, 2013); MHA member survey. GSMC 2014 Fall Conference & Annual Meeting 38 Commercial Market Share by Service Area Conceptual Illustration 100% 90% Tot. Discharges Tot. Discharges 25% 36% Market Share 80% 70% 60% 23% Tot. Discharges 65% 18% 50% Competitor 1 40% 30% 20% Other Competitors Client 6% 52% 46% 29% 10% 0% PSA SSA GSMC 2014 Fall Conference & Annual Meeting PSA + SSA 39 Understanding What Is Truly “in Play” with Narrow Network Contracts – Emergent vs. Elective Volumes Conceptual Illustration Elective vs. Emergent Inpatient Admissions % of Client Commercial Volume 45% Elective 55% Emergency 45% of inpatient commercial volume is emergent and therefore would not be steered by a narrow network contract GSMC 2014 Fall Conference & Annual Meeting 40 How Much Capacity Is Available to Make Narrow Network Plays? Conceptual Illustration Client Occupancy by Facility Client Hospital 1 Client Hospital 2 Client Hospital 3 System Total Staffed Beds 403 254 194 851 Occupancy 85% 73% 45% 68% • Overall, two of the three hospitals appear to have capacity at current occupancy rates to accommodate additional incremental elective volumes GSMC 2014 Fall Conference & Annual Meeting 41 Key Considerations for Narrow Network Participation Key Consideration Steps: 1. Evaluate market share of local competitors to quantify if additional share can be gained • How much volume is potentially at risk if you do not participate? 2. Based on available market share, evaluate elective vs. emergent split – how much elective volume can you expect to gain? 3. Does the organization have the capacity to handle the additional volume? 4. What discounts will be required to participate in narrow networks and are individuals likely to choose narrow networks? In pursuing a narrow network contract, is it worth discounting rates to obtain additional volume, and if so, by how much? GSMC 2014 Fall Conference & Annual Meeting 42 Summary Implications GSMC 2014 Fall Conference & Annual Meeting 43 Balancing New Revenue Opportunities and Cannibalizing the Existing Commercial Business Uninsured Exchange Commercial Exchange New Rev. Lost Rev. What is the optimal way to balance these threats and opportunities? GSMC 2014 Fall Conference & Annual Meeting 44 Summary Implications • Exchanges will catalyze the shift of purchasing healthcare benefits from the wholesale to the retail channel • This channel shift will change the behavioral economics of plan purchasing decisions and increase the prevalence of high deductible and narrow network plans • Value-based reimbursement will increase over the long-term as pricing and cost pressures grow, which will require improved cross-continuum care coordination • Competing on value and improving cost structure are the only viable long-term options for continued growth GSMC 2014 Fall Conference & Annual Meeting 45 How Do You Prepare for the Increasing Shift to Public and Private Exchanges? Kaufman Hall believes that operational and financial success with healthcare exchanges requires an integrated planning framework • Strategic Planning: A Health Insurance Exchange Strategy will be necessary to compete in the changing market environment. New reimbursement and contract models, in addition to FFS, will be used for exchange-based products, most likely requiring providers to assess and acquire new strategies and tactics • Financial Planning: Many health systems and providers are in the early stages or have not yet begun to plan for how health insurance exchanges will impact their current and future patient populations and revenue base. A thorough analysis and plan to quantify the implications and potential financial impact should be completed • Tactical Planning: New skills and capabilities will certainly be required for financial and operational success when working with health insurance exchanges. Developing the right tactical plan, resources, and investments while taking into consideration specific opportunities, priorities, risks, and benefits will be necessary Exchanges are expanding; make sure your organization is prepared GSMC 2014 Fall Conference & Annual Meeting 46 Discussion/ Questions GSMC 2014 Fall Conference & Annual Meeting 47 Kaufman Hall Services at a Glance CAPITAL MARKETS Since 1985, Kaufman Hall has acted as financial advisor to more than 1050 healthcare debt transactions. Total debt and swaps issued on behalf of our clients exceeds $105 billion and $50 billion, respectively COMPREHENSIVE SOFTWARE SUITE Over 1,400 software licenses are in place nationwide. The ENUFF Software Suite uses corporate finance principles to directly support the financial management cycle FINANCIAL AND CAPITAL PLANNING Introduced concept of strategic financial planning to healthcare field in 1983. Kaufman Hall has prepared financial and capital plans for over 800 hospitals and healthcare systems STRATEGIC SERVICES Kaufman Hall provides a broad range of strategyrelated services to support organizational management and decision making. Kaufman Hall pioneered the development of the integrated strategic financial plan GSMC 2014 Fall Conference & Annual Meeting MERGERS, ACQUISITIONS, AND DIVESTITURES Kaufman Hall has advised on hundreds of M&A-related engagements including analyzing, structuring, negotiating and executing mergers, acquisitions, divestitures, joint ventures, strategic partnerships and affiliations CAPITAL ALLOCATION Kaufman Hall helps organizations design and implement capital allocation processes which provide consistent and rigorous methodologies to guide the capital decision-making process 48 Kalani Redmayne, Assistant Vice President Kalani Redmayne is an Assistant Vice President at Kaufman Hall and a member of the firm’s Strategy practice. In this role, she provides strategic planning advisory services for a wide range of clients, including healthcare systems, academic medical centers, and community hospitals. Ms. Redmayne’s responsibilities focus on payer-provider strategies, alternative reimbursement methodologies, health plan and service operations, healthcare reform, payer relations and product development. Ms. Redmayne has more than 20 years of experience in the healthcare industry. Prior to joining Kaufman Hall, Ms. Redmayne was Vice President of Product Development and Management for UnitedHealthcare, Inc., where she focused on Medicare Advantage, Medicare Supplement, Prescription Drug Plans and UnitedHealthcare’s private exchange products. During her 15 year tenure with UnitedHealthcare, Inc, Ms. Redmayne held other senior positions in Sales Operations, Sales and Marketing, and Marketing Operations. Before UnitedHealthcare, she spent five years as a sales executive with Downey Community Hospital/HealthFirst Medical Group. Contact Ms. Redmayne at 310.227.8988 or [email protected] GSMC 2014 Fall Conference & Annual Meeting 49 Qualifications, Assumptions and Limiting Conditions (v.12.08.06): This Report is not intended for general circulation or publication, nor is it to be used, reproduced, quoted or distributed for any purpose other than those that may be set forth herein without the prior written consent of Kaufman, Hall & Associates, Inc. (“Kaufman Hall”). All information, analysis and conclusions contained in this Report are provided “as -is/where-is” and “with all faults and defects”. Information furnished by others, upon which all or portions of this report are based, is believed to reliable but has not been verified by Kaufman Hall. No warranty is given as to the accuracy of such information. Public information and industry and statistical data, including without limitation, data are from sources Kaufman Hall deems to be reliable; however, neither Kaufman Hall nor any third party sourced make any representation or warranty to you, whether express or implied, or arising by trade usage, course of dealing, or otherwise. This disclaimer includes, without limitation, any implied warranties of merchantability or fitness for a particular purpose (whether in respect of the data or the accuracy, timeliness or completeness of any information or conclusions contained in or obtained from, through, or in connection with this report), any warranties of non -infringement or any implied indemnities. The findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are subject to inherent risks and uncertainties. In particular, actual results could be impacted by future events which cannot be predicted or controlled, including, without limitation, changes in business strategies, the development of future products and services, changes in market and industry conditions, the outcome of contingencies, changes in management, changes in law or regulations. Kaufman Hall accepts no responsibility for actual results or future events. The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. All decisions in connection with the implementation or use of advice or recommendations contained in this report are the sole responsibility of the client. In no event will Kaufman Hall or any third party sourced by Kaufman Hall be liable to you for damages of any type arising out of the delivery or use of this Report or any of the data contained herein, whether known or unknown, foreseeable or unforeseeable. 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