1

Opportunities to Improve Health Care for Washingtonians

Life Sciences Discovery Fund Meeting ~ March 17, 2009

Our Purpose Today

Discuss key issues and trends in Washington’s health care system today

Discuss potential research opportunities to improve outcomes

Focus on improving quality of care

In our view, the cost and access

problem is a quality problem:

Rising cost of health care – impact on business, on the uninsured

Quality improves affordability, and greater affordability improves access

18.6%

17.1%

12.1%

10.1%

8.0%

2.5%

6.1%

8.1%

11.2%

14.7%

10.1%

7.5%

6.1%6.1%

2.1%

7.3%

-1.1% 0.2%

16.7%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Workers' EarningsAnnual Change in Total Health Benefit Cost per EmployeeOverall inflation

Quality problems and variability in care are driving health care costs

State revenue growth is 4%, health care growth trends are 10% Health care cost increases take away from education and other priorities Rising health care costs are negatively impacting jobs, wages and employer provided

coverage As we pay more for health care, cuts hurt safety nets like community clinics

We’re spending more on health care, but the population is less healthy Children born today face a lower life expectancy than you or I Increases in diabetes, obesity, heart disease

Significant quality issues drive increased costs RAND: Americans get evidence-based care only 55% of the time IOM: up to 98,000 Americans die each year due to avoidable medical errors NCQA: up to 79,000 Americans die each year due to quality gaps CDC: 2 million patients acquire infections in the hospital each year => 90,000 die

5

Trends in Washington State

Cost Services being provided

Source: State of Washington Office of Financial Management (July 2005)

0.70

0.90

1.10

1.30

1.50

1.70

1.90

2.10

2.30

2000 2001 2002 2003 2004 2005 2006 2007

DSHS Medical Assistance Department of Health

HCA - Basic Health Employee Health Benefits & K-12 Subsidy

K-12 Education GF-State Revenues

All Health-Related Expenditures

What are we spending our money on (state budget)?

Growth in Costs versus Growth in General Fund-State Revenue

Medical Assistance Admin.Employee & K-12 Health Benefits

All Health-Related Expenditures

Dept. of Health

K-12 EducationGF-State RevenuesHealth Care Authority: Basic Health

Note: MAA growth is a combination of medical cost (avg. 6%) and caseload growth (avg. 4%)

In what health care settings?

Top Medical Assistance Expenditures – SFY 2007

Expenditure data from the November 2008 HRSA Medical Assistance Forecast* - Mandatory Services

Managed Care Premiums *

30%

Inpatient *18%

Drugs 12%

Physicians *7%

Outpatient *7%SMI

6%

FQHC/RHC5%

Dental4%

DME3%

Transportation *2%

Other6%

By which health care professionals & facilities?

Top Venues

Community Provider $102M

FQHC $90M

Indian Health Center $30M

Family Planning Clinic $23M

Rural Health Center $12M

Public Health Dept $0.5M

Medical Assistance Data

Top Provider TypePCP $258M

Other $209M

Dental $113M

Specialist $73M

Top Facilities (% paid)

Other PPS 77%

CPE 15%

CAH 5%

Children’s 13%

Harborview 7%

Sacred Heart 7%

Swedish 6%

Tacoma General 6%

For which services & clients?

Top 10 DiagnosticCancer $21M

OB/GYN $17M

Musculoskeletal $16M

GI $18M

Injury $14M

Other $12M

Respiratory $10M

Cardiac $9M

GU $8M

Dental $6M

Top ProceduresE&M $21M

Diagnostic Radiology $33M

Office Rx $18M

Path/Lab $17M

CV $8M

Medical Assistance Data

Top Client TypesVentilator Chronic and Acute

Chronic Mental Health

Re-hospitalizations

Traumatic Brain

Transplant and Bone Marrow

Inpatient Payments - By Eligibility  

CN Blind/Disabled 51%

CN Other Kids 11%

CN Pregnant Alien Women 9%

CN TANF 8%

MN Blind/Disabled 6%

CN Pregnant Women 4%

For which services / clients (cont)?

Medical Assistance Data

Payments For Top 9 services = 62 % of Total $590.6 million paid to all hospital (PPS, CAH, CPE, LTAC)

NEONATE14%

PULMONARY8%

OB/DELIVERY8%

GENERAL SURGERY7%

ORTHOPEDICS6%PSYCHIATRY

7%

CARDIAC SURGERY5%

NEUROSURGERY3%

VASCULAR3%

Other Service Categories39%

SFY06 - Total pymt $590.6 millions by Service Category - All Hosp pymt

On what type of drugs?

Medical Assistance Data

Top Drugs TypesBrand 80%Generic 20%Generic Fill Rate 63%*Mental Health 40%Antipsychotics 25%

* WA plans at 80%

Top Client Types

Hemophilia $0.5-1M per userChemo $100 ->$10K/monMental Health Monthly Rx $500 Poly-pharmacy Avg. 7 drugs per user

$82,700,584.90

$40,651,335.60

$29,211,563.98

$16,397,294.10

$13,864,147.99

$10,001,365.61

$9,861,328.69 ANTIPSYCHOTICS

ANTICONVULSANTS

ANTIHEMOPHILIC

PROTON-PUMP INHIBITORS

ANALGESICS, NARCOTICS

INSULINS

Top Drugs (specific)

Seroquel $21.4MAbilify $16.3MNovoseven $15.4MRisperdal $15.1MZyprexa $13.7M

A final perspective on costs chronic care

Source: Agency Financial Reporting System (AFRS); OFM Eligibility File; State FY 2008

Five percent of the clients have chronicmedical, mental health and substance-abuse issues that are responsible for 50% of FFS expenditures

Manged Care54%

Fee-For-Service

46%

Average Monthly Caseload

Managed Care38%

Fee-For-Service

62%

Total Expenditures

Source: Agency Financial Reporting System (AFRS); OFM Eligibility File

Figures in total dollars (All State, Local, and Federal fund sources); State FY 2008

5% of clients drive 50% of costs

Top Venue -- Hospital, RxTop Issues -- CV, MH, GI, Cancer, InfectionsTop Rx -- Narcotic, CV, MHD

5% of Clients

95% of Clients

Health care spend by client?

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Trends in Washington State

Quality of care Variation, defects, waste

The Cost of Variability

Supply Sensitive Care

Preference Sensitive Care

Effective Care

Proportion of Medicare spending attributed to each category of unwarranted variation

63%25%12%

Source: The Dartmouth Institute for Health Policy & Clinical Practice

Spending and QualitySupply-sensitive services and the paradox of plenty

Medicare spending

per beneficiary2003

Green - US HRRsBlue - FL HRRsRed - WA, OR

HRRs

How can the best medical care in the world cost twice asmuch as the best medical care in the world? – Uwe Reinhardt

Cedars-SinaiCedars-Sinai 76,93476,934UCLA Medical CenterUCLA Medical Center 72,79372,793New York-PresbyterianNew York-Presbyterian 69,96269,962Johns HopkinsJohns Hopkins 60,65360,653UCSF Medical CenterUCSF Medical Center 56,85956,859Univ. of WashingtonUniv. of Washington 50,71650,716Mass. GeneralMass. General 47,88047,880Barnes-JewishBarnes-Jewish 44,46344,463Duke University Hosp.Duke University Hosp. 37,76537,765Mayo Clinic (St. Mary's)Mayo Clinic (St. Mary's) 37,27137,271Cleveland ClinicCleveland Clinic 35,45535,455

20,000

40,000

60,000

80,000

100,000

120,000

Inpa

tient

+ P

art B

spe

ndin

g pe

r de

cede

nt Spending per Medicare beneficiary with severe chronic disease

(Last 2 years of life, 2000-2003)

Variations in practice, spending, and across America’s Best Hospitals (USN&WR + Cedars)

Transurethral Prostatectomy for Benign Prostatic Hyperplasia

1.01.0

2.02.0

3.03.0

4.04.0

5.05.0

6.06.0

7.07.0

8.08.0

9.09.0

10.010.0

11.011.0

12.012.0

Seattle 3.5Olympia 3.1Yakima 2.6

Port Angeles 9.1

Spokane 7.2

Everett 5.1Tacoma 4.9

per 1,000 Male Medicare Enrollees (2002-03)

Coronary Artery Bypass Grafting

2.02.0

4.04.0

6.06.0

8.08.0

10.010.0

Spokane 5.4Yakima 4.9Kirkland 4.9Tacoma 4.7Olympia 4.5Everett 4.2Seattle 3.9Bellevue 3.5

per 1,000 Medicare Enrollees (2002-03)

Percutaneous Coronary Interventions

3.03.0

9.09.0

15.015.0

21.021.0

27.027.0

33.033.0

39.039.0

Bellevue 12.3Kirkland 11.5Olympia 11.2Yakima 9.9Tacoma 8.7Everett 7.6Spokane 6.9Seattle 6.6

per 1,000 Medicare Enrollees (2002-03)

Back Surgery

1.01.0

2.02.0

3.03.0

4.04.0

5.05.0

6.06.0

7.07.0

8.08.0

9.09.0

10.010.0

Spokane 6.2Tacoma 5.7Olympia 5.3Yakima 4.5Seattle 4.2Everett 4.1

Port Angeles 2.8

per 1,000 Medicare Enrollees (2002-03)

Anti-Psychotic Medication in Children

Maximal doses of anti-psychotics in kids vary between 0.5-3.8%

What does all this tell us about variation in performance overall?

0%10%20%30%40%50%60%70%80%90%

100%

above%

avg%

below%

1

10

100

1,000

10,000

100,000

1,000,000

Health care quality defects occur at alarming rates

U.S Airline flight fatalities/U.S. Industry Best of Class

Airline baggage handling

Breast cancerScreening (WA)

Detection &treatment ofdepression

Adverse drugevents

Hospital acquired infections

Hospitalized patientsinjured through negligence

1(69%)

2(31%)

3(7%)

4(.6%)

5(.002%)

6(.00003%)

Overall Health Care Quality in U.S.

(Rand Study 2003)

IRS Phone-in Tax Advice

U.S. birth defects

Recommendedwell-child visits (WA)

Treatment ofBronchitis (WA)

NBA Free-throws

Sources: modified from C. Buck, GE; Dr. Sam Nussbaum, Wellpoint; Premera 2004 Quality Score Card; March of Dimes

level (% Defects)

Def

ects

per

mil

lio

n

∑

Unnecessary procedures contribute to waste

ConsumerReports.org 10 overused tests and treatments November 2007

1 BACK SURGERY. … surgery, which can cost $20,000 plus physician's fees …..

2 HEARTBURN SURGERY. operation, costs $14,600 or more

3 PROSTATE TREATMENTS. . over treated with surgery that costs $17,000, or by radiation therapy for $20,700

4 IMPLANTED DEFIBRILLATORS. … cost some $90,000 over a lifetime.

5 CORONARY STENTS. Billions are spent each year….

6 CESAREAN SECTIONS. ..cost almost $7,000, about 55 percent more than natural delivery...

7 WHOLE-BODY SCREENS. CT scans, which can cost $1,000 … no proven benefits for healthy people. A few CT scans a year can increase your lifetime risk of cancer.

8 HIGH-TECH ANGIOGRAPHY. Using a CT …costs an average of $450...standard angiography is sometimes still needed.

9 HIGH-TECH MAMMOGRAPHY. Using software to flag suspicious breast X-rays would add $550 million a year to national costs if used for all mammograms. But a 2007 study found that this technique failed to improve the cancer-detection rate significantly, yet resulted in more needless biopsies.

10 VIRTUAL COLONOSCOPY. …Though less costly than a standard colonoscopy, the virtual test isn't cost-effective because any suspicious finding requires retesting with the real thing.

Copyright © http://www.consumerreports.org/cro/health-fitness/index.htm 2000-2006 Consumers Union of U.S., Inc.

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Potential Research Opportunities

Connecting these trends to the work of the LSDF

Research Opportunities

How do we reduce variability in health care?

How do we achieve more population health for the same or fewer dollars?

How do we actually change people’s behavior?

Some examples (brainstorming)….

High risk pregnancy is larger cause of low birth weight and NICY admissions

How about a low-cost, highly reliable and portable uterine monitor for high risk moms?

High tech old idea: You cannot manage what you do not measure

C-Section Rates Vary 14-48%

Environmental triggers cause asthma to worsen

How about an Air Sampler that tells you good or bad air and what’s wrong?

Only 40% of people take their medications regularly

$200

$20

$75

How about a $2 medication bottle that lights up redred/yellowyellow/greengreen based on compliance?

New Generics Total Class $ Brand vs. Generic Spend ($ diff)

Risperidal (AAP) $86.7M $81M vs. $4M ($121) Venlifexine(AD) $16M $12M vs. $4M ($185) Protonix (PPI) $16.4M $14.9M vs. $1.6M ($58) Altace (ACE) $0.49M $ 0.45M vs. $0.045M ($51) Norvasc (CCB) $0.94M $0.06M vs. $0.88M ($66) Oxycontin (LAO) $10M $5.6M vs. $4.5M ($280) Zocor (Statins) $7.7M $ 7.1M vs. $0.6M ($87)

Lipitor (2012)

Imitrex (2010) $6.5M Allegra Zertex $0.48M $0.1M vs. $0.3M ($34)

For each new generic a new “me too” brand emerges in the class. Often “me too” drugs show little difference in efficacy or are only more effective in special populations. Only two PDL classes have generic > brand costs.

Generics are less expensive and often equally effective

Basis for clinical

decisions

Marker Measuring device Unit of measurement

Evidence Randomised controlled trial

Meta-analysis Odds ratio

Eminence Radiance of white hair

Luminometer Optical density

Vehemence Level of stridency Audiometer Decibels

Eloquence (or elegance)

Smoothness of tongue or nap of suit

Teflometer Adhesion score

Providence Level of religious fervour

Sextant to measure angle of genuflection

International units of piety

Diffidence Level of gloom Nihilometer Sighs

Nervousness Litigation phobia level

Every conceivable test

Bank balance

Confidence* Bravado Sweat test No sweat *Applies only to surgeons

If not good science: what else?

Changing behavior

Washington Wellness handout

Putting it all together - research & policy

Research can help guide state policy to:

Put health care on a budget Increase access by lowering cost and improving quality Significantly increase public health spending on nutrition, obesity,

smoking, and exercise Change reimbursement system Change definition of medical necessity to reflect national standards and

remove decision making from those who have an economic interest Significantly increase transparency of practice patterns, pricing, and

payments to providers Reduce unwarranted variation Defend the state’s position in Medicare as a relatively efficient and higher

quality state

Additional Questions / Discussion