Wait! CCM Can Be Profitable?

October 14, 2020 /

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By Jon-Michial Carter, ChartSpan CEO

On a cold day, last December, I traveled halfway across the country to meet with the management team of a small health system.  They were contemplating hiring my company, ChartSpan, to take over the management of their Chronic Care Management (CCM) program. 

For the previous two years, the health system had been running their own CCM program using dedicated, in-house resources. Deservedly proud of their program and their commitment to serving the unique needs of the chronically ill, they termed the program “successful” but were challenged to offer any concrete evidence of that success.  They were looking to partner with an experienced firm because they were having difficulty dedicating adequate clinical resources to their CCM patients – in short, their challenge was a universal one – how do I achieve scale without becoming upside-down on the finances?  A familiar narrative, I suspected they were having more problems than just needed resources.  

My first question to the management team was a question I have asked dozens of other practices and health systems who have stood up their own CCM program, “Do you have a P&L (profit and loss statement) for the program?” What followed was an awkward silence.  Then, one of the executives said, “we don’t have a P&L for our CCM program.”  My response was “then how do you know you are profitable?”  More awkward silence followed.  

In seven years of running ChartSpan, I have yet to meet an organization that tracked the actual profitability of their CCM program with a P&L, or with any method.  In fact, I’ve seen more that struggle, than those that succeed in achieving profitability. I am empathetic. In becoming the largest provider of Medicare CCM programs in the country – I’ve learned the critical commitment required in ensuring profitability is tracked and transparently communicated with clients.  Improved patient outcomes rule the day, but the “bottom line” is a critical success factor in any CCM program. 

Medicare’s CCM program is relatively new; started in 2015 by CMS. In that short time, I’ve learned a thing or two.  One of my most important learnings is that clients rarely appreciate the costs shouldered by a third-party partner in running a successful CCM program.  The road behind us is littered with well-intentioned business folks who failed to understand the challenging nature of this business. Frankly, it took me an uncomfortably long time to get good at ensuring that our clients understood the financial proforma that we needed to operate under as partners and how to think about the profitability AND the clinical success achieved within their CCM program.  

So, how do you go about ensuring the program is profitable? Without question, a practice must track all related CCM program costs which include:

  • Data access and normalization – Costs associated with extricating data from EHR or PM systems and, then, reconciling that data for patient eligibility identification. These are real and ongoing labor costs and the degree of difficulty associated with this activity can vary with each EHR – someday, let’s talk about the reality of interoperability
  • The overhead associated with the enrollment function – This includes the recurring labor and infrastructure costs to continuously enroll patients in a CCM program. Patients churn in and out of Medicare and the practice every day. Your CCM program needs to account for and manage the constant nature of patient churn.  
  • Patient marketing and engagement –  Substantial investments in labor, technology, and physical costs must be made and accounted for. 
  • Managing the clinical team – This includes: 
    • Clinician training and staffing 
    • Labor costs of clinicians needed to engage patients
    • 24/7/365 staffing required to run a clinical support center
    • Administrative support and clinical oversight 
    • Analytic software needed to track interventions provided, patient inbound and outbound calls, clinical resource utilization, and productivity
  • Systems – Used to address and manage social determinants and barriers to care 
  • The infrastructure required to manage performance and compliance
    • Medicare compliance auditing
    • Technology required to record and archive calls

My own P&L at ChartSpan reads like a novella, with operational complexities that would overwhelm even a seasoned healthcare operator.  

In short, success at CCM requires more than having a clinician and a CCM module in the EHR – these are the easiest parts of running a CCM program.  The heavy burden and majority of costs are woven into the periphery of the operational requirements involved in running a successful CCM program.  This is always overlooked by a well-intentioned health system attempting to initiate their own program while unfamiliar with the operational complexities of doing so.  

Recently, ChartSpan began delivering “CCM Program Profitability Reports” to each of our clients.  This includes ensuring we track and report each client’s “net” profitability and account for their actual copay collection rate, that can vary wildly.  We believe that we are the only CCM firm in the country to manage with this level of financial transparency but, frankly, it should be expected by our customers. 

What about the results? 

Most of our traditional healthcare practice clients achieve 20-30% net profit margins, while our RHC and FQHC clients average 45-55% profit margins (they receive higher CCM reimbursements than non-complex CCM services.)  There are very few healthcare services that can deliver these types of net profit margins – pause and reflect on this: what other service is delivered by a physician practice that delivers a 20%+ net margin?  This is even more impressive when you account for our commitment to standup a CCM program with little to no up-front costs borne by the provider.  

ChartSpan ensures the profitability of our CCM customers because we manage our margins with incredible discipline and pass most of the profit to our customers.  We have the largest aggregate enrolled CCM patient population in the country and leverage volume over margin. 

Whether you hire a third-party partner or implement your own internal CCM program, ensure you track the costs and profits of your CCM program.  Doing so will ensure you hold yourself accountable to the financial success of your program in addition to the outcomes you achieve for your patients and save you headaches down the road.  

I always enjoy the opportunity to jump on a brief call, share learnings, and answer questions. If you’d ever like to learn more about our journey at ChartSpan and my view of what it takes to run a successful CCM program, you can reach me at JonMichial.Carter@ChartSpan.com.   

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