Oss: 4 Essential Organizational Competencies for the New Market Based Environement

NYAPRS Note: In just 2 weeks, NYAPRS is very pleased to give attendees to our upcoming Executive Seminar the chance to have some expert 'face time' with one of the nation's foremost behavioral healthcare management consultants, Open Minds' Monica Oss. Monica will share some of the insights she provided at the preconference session she gave earlier this week at the National Council's 2013 Conference in Las Vegas.Monica comes to Albany on April 25 in this special opportunity: register today at https://registration.nyaprs.org/.

Four Essential Organizational Competencies For The Future By Monica E. Oss Chief Executive Officer, OPEN MINDS April 8, 2013

Developed by OPEN MINDS, 163 York Street, Gettysburg PA 17325, www.openminds.com. All rights reserved.

Greetings from Las Vegas and the 2013 National Council Mental Health & Addictions Conference. Our team from OPEN MINDS was part of the conference launch yesterday with our Preconference University session -Four Essential Organizational Competencies For Future Success: Looking At the Next 50 Years of Community Behavioral Health<http://www.openminds.com/events/national-council-preconference.htm>.

The idea for our seminar started with a meeting with Linda Rosenberg, the President of the National Council. She was discussing the theme of this conference - the 50th anniversary of the Community Mental Health Center Act. Her question - what would the next 50 years look like? And, what were the key organizational competencies that behavioral health provider organizations would need to ensure success and financial sustainability in the next 50 years?

Our team at OPEN MINDS - always up for the challenge - set about answering that question. After much discussion and debate, we came up with a list of four key competencies: 1. Competing for customers 2. Participating in value-based purchasing arrangements 3. Delivering services at market rates 4. Integrating new technologies into service models

These are not new management concepts - we have written several briefings and delivered many executive institute sessions on each of them. But together, I think these make a core skills set for any service provider organization in a competitive market. And, the word "competitive" is key here. With the passage of the Patient Protection and Affordable Care Act (PPACA)<http://www.openminds.com/library/032410mhcdppaca.htm>premium members, the U.S. has made a policy decision to have an insurance-based health care financing system - which by its very nature moves our system to a market-based model. Whether you agree or disagree with the policy, the effects on the management infrastructure needed for sustainability are clear.

Competing for customers - The ability to compete for customers, both consumers and payers, is the foundational change in the health and human service system. We are moving a highly-regulated, any-willing-provider market model that will increasingly give preference to certain professionals and organizations based on market factors. Organizational capabilities to compete for customers include designing "preferred" services; developing and implementing marketing strategies; and delivering customer-centric services. For a deeper dive into these marketing competencies check out: 1. Developing A Winning Marketing Plan: A Tried & True Process For Health & Human Service Executives<http://www.openminds.com/market-intelligence/premium/2013/030113/030113m.htm> premium members 2. Reframing The 4Ps Of Marketing<http://www.openminds.com/market-intelligence/intelligence-updates/012513-reframing-four-ps.htm> all members 3. The New Health Care Market: Consumers Spend More & Consumers Want More<http://www.openminds.com/market-intelligence/premium/2011/120111/120111b.htm> premium members

Participating in value-based purchasing arrangements- Policy, payer, and provider organization executives all seem to agree that our pay-for-volume, fee-for-service system needs to go. But for provider organizations, the ability to participate in the emerging value-based arrangements (either pay-for-performance and/or risk-based) bring the need for new management infrastructure and management knowledge. Some required reading this area includes: 1. Getting Your Team Ready for Performance-Based Contracting<http://www.openminds.com/market-intelligence/intelligence-updates/pbc_jt.htm> all members 2. The Challenges and Opportunities of Performance-Based Contracting<http://www.openminds.com/library/021110challengespbc_jt.htm> premium members 3. Managing Risk-Based & Performance-Based Contracts: How To Succeed In Moving Beyond Fee-For-Service<http://www.openminds.com/library/021413pmicontractmgmt.htm> premium members

Delivering services at market rates - In increasingly competitive markets for health and human services, the ability to deliver services at the rates set by the market is critical - these will be rates based on value of services. We are seeing an end to cost-based reimbursement in many markets, which means that executive teams need to both know market rates in their area and have the ability to use target costing techniques to reduce costs when necessary. For more on the rate and unit cost issue, these articles provide an overview of the issues: 1. Three Critical Tools For Unit Cost Management<http://www.openminds.com/market-intelligence/intelligence-updates/050510unitpricing_jt.htm> all members 2. Best Practice Models for Unit Costing: Managing and Reducing the Cost of Service Delivery<http://www.openminds.com/library/030110profitability_jtalbot.htm>premium members 3. Competitively Pricing Your Services: A Model for Approaching Setting Rates<http://www.openminds.com/market-intelligence/premium/omol/2001content/123101competitively.htm> premium members

Integrating new technologies into service models - These first three competencies (customer-centric services, value-based purchasing arrangements, and the move to market rates) increase the importance of adopting and successfully leveraging technology. There are a whole group of available but not fully deployed, technologies in the field. And, who knows what will emerge in the next 50 years. For a primer on tech selection, check out: 1. 'Must Consider' Technology<http://www.openminds.com/market-intelligence/intelligence-updates/040412-mustconsider.htm> all members 2. Technology ROI: Value-Based Purchasing For Executives<http://www.openminds.com/market-intelligence/premium/2012/070112/070112b.htm> premium members 3. Using Technology To Transform Your Business Model & Preserve Your Mission: Finding The Opportunities In A Changing Health & Human Service System<http://www.openminds.com/library/040412-njamha-presentation-oss.htm> premium members

Over the next few days, I want to share our perspectives on these four critical competencies - and current best practices in these areas for behavioral health and social service organizations. As always, your thoughts on the future path to organizational sustainability are appreciated. Just shoot your comments to me atopenminds at openminds.com<mailto:openminds at openminds.com>. http://www.openminds.com/market-intelligence/intelligence-updates/040813-four-essentials.htm

>From Payer Vendor To Payer Partner In our continuing discussion of the four competencies that behavioral health and social service provider organizations need for future sustainability (see Four Essential Organizational Competencies For The Future<http://www.openminds.com/market-intelligence/intelligence-updates/040813-four-essentials.htm> all members), we've taken a look at one of the four - competing for customers (see Best Practice Provider Marketing? Think Push & Pull<http://www.openminds.com/market-intelligence/intelligence-updates/040913-provider-marketing.htm> all members).

Today, I want to move on to the second of the four competencies - participating in value-based purchasing arrangements. This brings our focus to one customer group, payers. I think both provider organization executives and payer organization executives have tired of the "vendor" relationship between payers and providers that is the basis of the current fee-for-service (FFS) reimbursement system. For provider organizations, it often means low rates, lots of administrative expenses, and unpredictable service volume. For payers, it is a high-cost administrative situation - lots of contracts, lots of preauthorization, lots of claims, and lots of audits.

For those reasons, and many others, there is a shared desire of both payer organizations and provider organizations to shift the relationship as a FFS vendor relationship to a value-based partner relationship. The challenge? How to get there. For provider organization management teams, this is where a specialized and focused approach to payer marketing comes in. The goal is to secure newly-emerging "partnership" opportunities with payers - partnership relationships that will involve assuming more accountability and financial risk for consumer services.

If you're a service provider organization, a key strategic question is whether your organization wants to go down this path - it involves an investment in some managed care types of infrastructure (see Rumors Of The Death Of Managed Care<http://www.openminds.com/market-intelligence/intelligence-updates/111412-managed-care-winner.htm> all members and 40 States Increased Prevalence Of Medicaid Managed Care In 2012 Or Are Planning To In 2013<http://www.openminds.com/market-intelligence/basic/omolfree/111212strat4.htm> all members) and the assumption of new financial liabilities.

Assuming your organization wants to move in that direction, there is a standard six-step process to best practice, payer business development:

Step #1: Market mapping - Create a three-part map of your market focused on payer sources - all the payers in your service area with their metrics and relationships; the consumers with their demographics and health care coverage statistics; and the predominant competitors working with those payers. Before you develop your plan, you need a "map" of the territory.

Step #2: Solution-focused sales and payer strategy (playbook) development - Based on your market map, select the key payers in your market for building relationships - and find a way to talk to their team. The purpose of these discussion is to get a standard network contract (if you don't have one) and to understand their problems and concerns as it relates to the consumers that your organization serves. The purpose here is to identify opportunities to solve problems for the payers in your market.

Step #3: Developing a service with the payer value proposition in mind - Based on your discussions with payers, develop proposed "solutions" to their concerns. This can be a concept paper - but it needs to be a concept that has numbers attached that demonstrate the value proposition your proposed solution can provide the payer.

Step #4: Concept sale, program development, and contracting - Going from concept to contract is a multi-stage process that takes skill and patience. It is this period where many possible partnership go sideways.

Step #5: Consumer pull through - When the partnership is struck and your organization is providing a new program for your new partner, realizing revenue may require a new approach to referral source and consumer marketing.

Step #6: Managing to the performance metrics - No partnership lasts if the partners don't deliver. Your marketing team needs to know that your organization has the infrastructure and management commitment to deliver on the new programs.

That is obviously a very high-level description of the major phases of a payer marketing approach. For more, see our full presentation, Developing Pay-For-Performance (Incentive Compensation, Case Rates, Capitation) Contracts With Payers & Health Systems - And Successfully Managing Those Contracts<http://www.openminds.com/library/040713NCCBHpreconSection4.htm>premium members. To put this type of plan in place, most organizations will need to make an investment in a payer marketing team member who is focused on building - and maintaining - these relationships. To decide whether this is a prudent investment for your organization (and before your managers jump to the conclusion "we can't afford that", a strategic review of both your current payers is in order. I would suggest a focus on the payers, their future plans, and the competitors for consumer services in those systems - from your original market mapping exercise.

If your position with your current (or desired) payers is secure, perhaps this is an investment that can wait. If you're concerned about the competition for positioning in your current market, proactive payer marketing plans may be a wise step. http://www.openminds.com/market-intelligence/intelligence-updates/041013-payer-partner.htm