Planning Case Study. Barbara Ann Karmanos Cancer Institute McLaren Health Care Detroit, Michigan

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1 Planning Case Study Barbara Ann Karmanos Cancer Institute McLaren Health Care Detroit, Michigan On the vanguard of thought. Reimagining The futurecancer of healthcare Care requires nothing less.

2 Planning For Partnership & Cancer Care Success In 2012, Dr. Gerold Bepler, CEO of the Barbara Ann Karmanos Cancer Institute (Karmanos) began a search for a strategic partner for the NCI-designated cancer center. Dr. Bepler recognized the traditional fee for service reimbursement landscape was passing away and that positioning Karmanos for success would require thinking creatively about strategic partnerships, organizational efficiencies and mechanisms to reach a much larger clinical population. Barbara Ann Karmanos Can- The Barbara Ann Karmanos Cancer Institute is one of only 49 Picking A Partner For The Future Of Cancer Care Delivery And Research National Cancer Institute-designated comprehensive centers in the United States. Oncology was jointly engaged by Karmanos Cancer As part of this exploration, Oncology (OS) was Institute and McLaren Health Care as they planned strategically engaged to facilitate joint strategic discussions between for their integrated delivery model. Karmanos and McLaren Health Care. OS had assisted McLaren over a span of 20 years with strategic and facility planning engagements, including establishing the cancer tertiary cancer center in Flint, MI, and launching the Great Lakes Cancer Institute for system-wide oncology integration. With this history, OS had a good sense of market dynamics and the key strategic issues that would need to be resolved to form a meaningful partnership between the two entities. Both Karmanos and McLaren brought significant interest and momentum into developing a sustainable model for the future. As McLaren and Karmanos began their strategic exploration, the two parties agreed on guiding principles to govern the acquisition including developing a superior value-based cancer delivery network and protecting the funding for Karmanos 700 cancer research programs. OS provided intensive analytic support and facilitated a series of joint planning discussions to address each parties goals both shared and divergent to arrive at a model that could preserve their triple mission of clinical care, research and education. Page 2

3 Integral to this process was the development of detailed financials supporting the long term financial sustainability of the project and a determination as to whether each party secured a return on the investment in each other s primary interest, i.e., clinical care and research. I have had the privilege of working with the exceptional team at Oncology for the past five years and have seen first-hand their unprecedented level of passion, commitment and expertise when serving their clients while improving patient care delivery. Justin Klamerus, MD, MMM Now, President, Cancer Hospital and Network Previous, President McLaren Cancer Institute Market Opportunity Return on Investment Organizational Architecture Market analytics and diseaselevel cancer projections to assess community need and organizational opportunity. Detailed five-year pro forma financials and business case outlining the impact of the proposed strategic partnership. Conversion of strategy into a binding letter of intent for McLaren s eventual acquisition of Karmanos cancer care. By joining forces with McLaren, this agreement strengthens our ability to provide exceptional cancer care and furthers our commitment to cancer research and exceptional care across the state of Michigan. Joint planning and model development led to the successful signing of a letter of intent between Karmanos and McLaren in Broadly, this enabled the parties to achieve the following: 1. Integration of Karmanos clinical expertise into one of Michigan s largest health networks. 2. Delivery of scale to both organizations as McLaren sought quaternary expertise and Karmanos extended its clinical and research programs across the 10-hospital health system. 3. Preservation of financial vitality and growth in Karmanos robust research portfolio. 4. Extension of superior quality and access to clinical trials across McLaren s six million person service area. 5. Provider compact to establish principles of professional practice for all members of the larger Institute. 6. Adoption of service line governance across the Karmanos network. Page 3

4 The LOI was successfully developed into formal merger agreements and the two institutions are now fully integrated in their delivery of cancer care and research. Collectively, the Karmanos Cancer Institute touches ~12,000 new cancer patients each year and continues to lead the way in advancing value-based care in the state of Michigan. As an extension of the planning and transactional work, Oncology continued its role as advisor for Karmanos in a variety of capacities between 2014 and present. This included establishing an organizational architecture to optimally align clinical and research activities, a full-scale clinical research program assessment and a business planning effort for the expansion of the clinical trials office as well as exploration of additional strategic affiliations. References for Oncology work with Karmanos Cancer Institute: Justin Klamerus, MD President, Cancer Hospital & Network Barbara Ann Karmanos Cancer Institute Gerold Bepler, MD, PhD President & CEO Karmanos Cancer Institute Philip Incarnati President & CEO McLaren Health Care Page 4

5 About the Authors v Richard Taylor, PhD Director rtaylor@chartis.com Richard Taylor is a Director with the Chartis Group in the Oncology practice. He brings more than 44 years of experience in providing strategic direction to cancer programs across the country. Mr. Taylor helps healthcare organizations solve their most challenging business needs, including strategic planning, mergers and acquisitions, business transformation, physician integration, and system-wide cancer program implementation. He has also had an influential role in shaping notable milestones in the evolution of cancer care. As an advisor to the National Institutes of Health, Mr. Taylor was instrumental in designing the evaluation criteria for the NCI Comprehensive Cancer Centers Program, and co-founded the Association of Community Cancer Centers. Rhonda S. Mealor Director and Practice Leader rsmealor@chartis.com Rhonda Mealor is a Director with the Chartis Group and Practice Leader for the Oncology practice. For more than 25 years, she has helped health care organizations of all types and sizes align operations and strategic goals towards the improvement of performance and long-term growth. Ms. Mealor works closely with physicians and clinical staff to establish treatment guidelines and quality measurement and reporting structures. She has helped many organizations reduce costs, improve resource utilization and provide more efficient, coordinated care through the development of multidisciplinary, tumor-specific programming. She has established more than 55 teams and facilitated nearly 400 tumor-site meetings across the United States. Kelley D. Simpson, MBA Director ksimpson@chartis.com Kelley Simpson is a Director with the Chartis Group in the Oncology practice. Kelley has spent 26 years utilizing her unique blend of strategic, financial, program development, and implementation experience to assist a wide variety of cancer care providers. Her analytical and operational skills, together with her organizational experience, enable her to be a catalyst for change with physician enterprise and ambulatory networks. Hospital and oncology executives, faculty practice plan, and medical staff trust Kelley to work alongside their care teams to enhance oncology service line performance. She has developed and negotiated numerous hospital-physician arrangements, helping both parties to improve efficency and succeed financially in today s health environment. Page 5

6 About the Authors Ryan Langdale, MBA Principal Ryan Langdale is a Principal with the Chartis Group in the Oncology practice. He has consulted for more than 60 cancer programs, including some of the nation s top health systems. His areas of focus include hospital and health system strategy, delivery network design, and mergers and partnerships. Ryan s recent work included design of an integrated delivery model for one of the largest health systems in upstate New York; care design for the opening of a $400M cancer center in south Florida; and strategic planning for the affiliation programs at two of the top NCI cancer centers. Ryan is a regular contributor to industry publications, including a recent article Integrating Cancer Care Isn t Always Easy But It Brings Results in Hospital & Health Networks. Page 6

7 About (COS) was established in January 2018 when Oncology joined The Chartis Group, a comprehensive healthcare advisory and analytics firm. COS offers preeminent cancer care advisory and analytics services to community hospitals, health systems, NCI-designated and academic cancer centers across the country. With an unparalleled depth of expertise and experience, COS works collaboratively with healthcare professionals to strategically and operationally implement cancer care programs that enhance patient experience, improve provider performance and impact communities. Oncology was founded in 1973 as the first firm exclusively dedicated to serving cancer providers. For more information, visit Atlanta Boston Chicago Minneapolis New York San Francisco