An interview with Steve Fogg, Consonus Healthcare’s chief financial officer
That’s a pretty bold phrase—winning managed care. Sounds a bit presumptuous, kind of like winning gravity. After all, managed care programs are as different as seashells and snowflakes, with state and county-specific variances that can boggle the mortal mind.
But the growth and prevalence of the model, mostly in urban areas, is simply a reality of life for long-term care providers these days. “If you’re an operator in a growing number of areas in the country, you better be in the managed care space or you won’t even be in the business,” says Steve Fogg, chief financial officer for Consonus Healthcare and Marquis Companies.
Steve is a nationally-recognized expert on this complex and ever-evolving topic. With a corporate base in Oregon—now a petri dish for managed care with one of the nation’s highest penetration densities—he has deep, first-hand experience. He’ll be presenting “The Secrets to Winning Managed Care Business” at the National Investment Center’s Spring Investment Forum March 9, 2018 in Dallas, Tex.
In a recent interview, we asked him for five top things providers should know about securing or maintaining managed care contracts.
Obviously, this topic can’t really be boiled down into five quick bullet points. But let’s try.
Sure, but whenever I talk about this, I always start with a preamble. Managed care is very different in terms of who the players and opportunities are, so it’s important to assess any specific market. You don’t go in with blinders and try to get a managed care contract.
What should that assessment include?
In broad terms, you should get answers to some fundamental questions. Things like, who are the managed care players, and how many members do they have? What’s their average daily case load in nursing homes? How do they contract in terms of the economics, and what’s their rate methodology? Is it per diem, percentage of the RUGs, episodic? What other providers in the market are working with them already?
Time and time again operators think they have a great managed care opportunity—and seek out our Consonus consultants for assistance—but in reality it just isn’t there. That’s why advance knowledge of the market is so important.
So how do you define “winning managed care?”
Winning can mean securing a new managed care relationship, or improving on an existing one with market share or renegotiations of reimbursement rates. Regardless, I think success in this space comes down to five primary keys, though of course there are many more.
Key #1: Drive stellar operational results
The first and perhaps most critical key to winning managed care is driving operational results that lead to high Five-Star scores, low readmission rates and great functional improvement and resident satisfaction outcomes compared to the competition. While this has nothing directly to do with how you contract and work with managed care, you have to have great operational execution and results to get in the door. If you don’t, they won’t even talk to you.
Key #2: Develop C-suite relationships
To drive market share with the managed care plans, you need to get their C-suite aligned with you in incentives and goals. Otherwise you’ll be just like everyone else. Creating those relationships also takes down the barrier of us versus them, and shows we’re actually all in this together for the same purpose. If you work just with the contracting people, you’ll find they can get very siloed. But the C-suite is more interested in engaging at a higher strategic level, and has the experience, capability and authority to engage in those conversations.
Key #3: If you don’t have the scale, you better have a story
If you come to the table with a managed care plan, you’ll frankly have a better chance at creating market share if you have multiple facilities or scale. If you’re a stand-alone facility, unless your outcomes and readmission rates are so great that they’ll work with you anyway, or you’re located close to hospitals, it’s going to be a more challenging battle. If you’re independent, make sure you can tell a story that’s compelling enough on outcomes and Five-Star to keep you at the table. Our consulting with individual facilities is mostly to help them tell those stories.
Key #4: Understand financial drivers
Your communication with managed care companies has to tell the story around financial drivers, and you must work in concert on managing lengths of stay and minimizing of hospital readmissions. Lengths of stay are a big part of their overall spend, and every time a resident goes back to the hospital it costs them significantly–$13,000 here in Oregon, for instance. So they’ll want to work with providers who demonstrate shorter stays and lower readmission rates, which of course takes us right back to the first key—operational execution.
Key #5: Utilize live data analytics
Of course, understanding financial drivers and telling your story accordingly means having access to the best live data analytic tools available—which I think happens to be Consonus Co-Pilot. It provides the clear, irrefutable evidence you need to support the claims you’re making about quality outcomes, functional improvement, Five Star, resident satisfaction and other areas. For instance, we can track hospital readmissions in so many different ways—by doctor, hospital, time of day, diagnosis, day in the episode, etc. Robust reports that show your key trends can be very influential in convincing managed care plans to work with you.
Any final thoughts?
Success in driving market share is not in doing any one of these five keys—it’s in doing all of them. If you’re one of the large number of operators that are still not adequately sophisticated in how you negotiate rates with managed care payors, maybe this could serve as a wake-up call. Now is a critical time to improve your operational results, forge new managed care relationships, understand the drivers and employ a live data analytics tool that will help you get a seat at the table and tell a persuasive story.