Post-acute provider Chapters Health System has introduced two unique business models designed to help legacy hospices leverage shared resources to improve financial viability and stave off acquisitions from larger organizations.
The company designed the Chapter Health Managed Service Organization (MSO) program largely in response to widespread consolidation in the hospice space. A second model, Chapters CareNu, is geared toward companies with a goal of engaging patients further upstream in the course of their illnesses. These programs are oriented towards supporting legacy non-profits that may be struggling to compete against larger organizations.
Chapters Health System provides hospice, palliative care and home health services throughout Florida, as well as durable medical equipment and pharmacy services. Hospice and palliative care brands affiliated with Chapters include Chapters Health Palliative Care, Good Shepherd Hospice, Hospice of Okeechobee, HPH Hospice and LifePath Hospice. The Chapters model incorporates predictive analytics, risk-modeling, geriatric case management and social determinants of health..
Andrew Molosky, president and CEO of Chapters Health System, recently spoke with Hospice News about the launch of the MSO program and CareNu.
Can you start by telling me about Chapters Health MSO? How does the program work?
Chapters MSO are managed service offerings, basically a managed service organization. Chapter has realized that some of the very specialized functions that have done so well to help legacy hospices operate more efficiently over the course of time, in your economies of scale, aggregations, subject matter expertise. Those are really in many regards the services that become pivotal, freeing up resources to reallocate to the bedside that are typically only reserved for much larger programs.
If you’re a smaller hospice who wants to keep their name, keep their legacy, keep their position in the community, but does need to free up 5% to 20% revenue to reallocate to your staff or to their mission, there’s a great opportunity to do so when you can aggregate that level of expertise. It’s difficult to find the top notch compliance folks, for example, that over the course of time Chapters picked up.
The MSO is an opportunity to enhance our business model, but in the same breath it’s the chance to give a small-town hospice access to some of the highest level subject matter expertise in the space.
What inspired Chapters to develop the program?
It kind of goes to the core of our mission as an organization. Chapters Health is very much built and predicated on the legacy of providing local nonprofit hospices a chance to persevere and thrive in the advancing [payment] models. Most of those aggregations or roles in our organization have been member substitutions, or they came in as full members of Chapters Health.
We realized there’s a good audience out there who wants to maintain their independence and wants to maintain freedom from being part of something larger, but absolutely would be willing to pay for and ultimately receive those services. So the MSO is serving the mission of how do you adapt to really giving a local nonprofit what they need to thrive or survive in their market. With the advancing technology with the advancing complexity of the industry, the time just felt right.
What are some of the concerns you have about the impact of consolidation on nonprofit nonprofit hospices?
Hospice is still a very highly fragmented, highly localized service. A large percentage of the care is rendered by a few large organizations that usually record profit-status, but typically are aggregated. That’s becoming the way the world. So it’s setting up a David and Goliath type of environment. We need to be on par with the macro-level resources and infrastructure service offerings and network adequacy.
But realistically to do that and maintain an independent, nonprofit legacy status, the chasm is growing. So we talk about aggregation. We want to take this wonderful mission-driven nonprofit space that we’ve all operated in and bring it up to the playing field of those who are doing hospice on a bigger scale.
We’re not necessarily trying to rebrand folks who want to keep their boards in place and employees in place, but we do offer a substantially larger path to that do network adequacy and economies of scale. And what we’ve done with the MSO is kind of branch out from an all-or-nothing approach where you’re in [Chapters Health] or out. Now you can be in and access some of these services.
Moving on to the CareNu model, what were some of the innovations that were involved in creating that program?
It was our stamp on maintaining or establishing ourselves as the nation’s preeminent chronic illness management organization, and I use that term purposefully. It’s a distinct point of distinction between end-of-life care and chronic illness management. If you were to manage a continuum of care and truly provide a payer or a partner a solution over not just for six months or even a year, but three or five or seven years, now you’re talking about managing chronic illness.
To do that you have to build out a separate infrastructure that can deliver. Our mission is to maintain that community-based care and to aggressively build out our continuum of value-based programs. We are committed to touch more lives through payers and through providers.
We’ve established about eight things that constitute our approach: risk based programming, value-based contracts with those payers and providers, sub-capitated payment arrangements, utilization review, geriatric case management, predictive analytics, social determinants of health and care coordination. You package all that together, embrace the hospice mindset, and move it further upstream with the other capitated payment offerings. Now you’re taking care of chronic illness over a long period of time. That will indeed be a very unique value proposition and is properly postured to offer a path forward to a nonprofit who may not have an extensive footprint.
Can you say a little bit more about what you mean when you say “embrace the hospice mindset”?
I say that categorically when I talk about a person-centered, holistic team approach. If you think about traditional health care being transactional, if you break your arm you go in, get your x-ray, and you go see your pharmacist and you’ll see a physical therapist, and they all do their thing and hand off to the next provider.
Our approach would be: You broke your arm, where do you want to be in six weeks? You want to be back to work in as little pain as possible. You want to make sure that meals are prepared for your kids and want to make sure that your dog gets walked. Those are your goals, and we’re gonna build what you need. Population health is what hospice has done for years, but we just did it for a very narrow niche of folks. Why? Who deserves less?
Can you add a little more color on the financial or business incentives that exist within the MSO and CareNu programs for the participating organizations?
Our small community-based hospices face consolidation, and part of this comes with the ability to influence or procure the contracts or procure the payment arrangements. So much of this comes down to whether your network of service is large enough. Do you have enough capital reserves? Do you have a clinical program robust enough to handle not just six months of care, but five years?
Assuming you’ve answered yes to all of that, or you’ve chosen the path by partnering with an organization like Chapters, you get into the space where you can take a [Center for Medicare & Medicaid Innovation] demo project, or you can take a risk contract with a major payer in your market.
Depending on your risk tolerance, depending on your financial condition, and ultimately your business sophistication, you want to determine how many of those eggs you want to put in any one basket. We’ve chosen a very highly diversified model that touches on all of them, based on geographic expansion, based on capital reserves and based on intellectual property.