A Provider’s Perspective on the Latest Health Care Trends

Orange County Employee Benefits Council Breakfast February 12, 2015

Diane Laird, MPH MHS Chief Strategy Officer

Greater Newport Physicians CEO

MemorialCare Health System

Five Major Trends

1. Consolidation/Alliances

2. Private Exchanges

3. Population Health

4. Consumerism

5. Value

Our Existing Business Model

Staying Afloat Through Cross-Subsidization Traditional Hospital Cross-Subsidy

Below Cost Above Cost

Commercial Insurance Public Payers

• Above-cost pricing

• Robust fee-for-service volume growth

• Steady price growth

• Only one component of our total business

Hospital Payment-to-Cost Ratio, Private Payer, 2012

149% Hospital Payment-to-Cost

Ratio, Medicare, 2012

86%

Source: American Hospital Association, “Trendwatch Chartbook 2014,” available at: www.aha.org; Health Care Advisory Board interviews and analysis.

Five Major Trends

Consolidation/Alliances Private Exchanges Population Health Consumerism Value

OC Consolidation/Alliances

• MemorialCare Health System– Bristol Park (2010), Greater Newport Physicians and Nautilus Healthcare Management Group (2012)

• United Optum – MHIPA (2011), Monarch (2011)

• DaVita – HealthCare Partners (2012), Arta (2012)

• St. Joseph Health System – Mission Internal

Medical Group (2011), Hoag (2012)

MemorialCare Alliances

• MemorialCare Medical Foundation

• Imaging Centers

• Ambulatory Surgery Centers

• Seaside Health Plan

• UC Irvine Health

• Vivity

Innovative Alliances

offered by

JV between Anthem and 7 prominent health systems

Consolidation/Alliances Private Exchanges Population Health Consumerism Value

Private Exchanges

• Private exchanges support market shift from “defined benefit” to “defined contribution” by offering more choice of plans and coverages

Overview

• A benefits strategy that drives cost efficiency through the

healthcare and insurance supply chain – Creates new competition among insurers, providers – Reduces administrative costs and improves quality through

standardization – Supports new market entrants enabling competition

$4T

2015F 2010 2005 2000

Health Care Costs

Con

tinue

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ure

PRIVATE EXCHANGES:

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• Support healthcare reform compliance and leverage its benefits – Streamlines compliance requirements – Mitigates 40% excise tax in 2018 – Leverages ability to offer non-sponsored employees and retirees

support for individual medical plan enrollment

Shifting Responsibilities

Individuals Employers

Empo

wer

Em

ploy

ees

• Offers improved employee benefits appreciation – More choice, greater support

• Can address the needs of all employees and retirees – Full and part time employees, pre-Medicare and Medicare

retirees

MERCER

Poised for Rapid Growth

Employers are moving rapidly to defined contributions

contribution and private exchanges

large employers will be offering benefits through private exchanges

In 2014…

exchanges

carriers participating on third-party exchanges

types of products available through private exchanges

100+

35+

180+

25+

Private exchange growth has just begun

25

50

Millions of lives

Private Exchange

0 2013 2014 2015 2016 2017 2018

• Private exchanges will be mainly employer-sponsored • 65%+ of employees will likely choose different benefits

than they have today

MERCER

Implications for Employees

• More choice of plans • Increased choice of ancillary products

(dental, vision, critical illness, etc.) • May “trade down” to cheaper options –

higher deductibles, narrow/tiered networks

Consolidation/Alliances Private Exchanges Population Health Consumerism Value

Linking the Triple Aim to Strategy

• Better health of a population

• Better patient experience

• Lower per capita cost

Challenges

• Identifying the “population”

• Developing a solid data analysis system/IT

• Establishing a care management team (roles, responsibilities and workflows)

• Quantifying outcomes beyond cost of care

Essential Components

• Risk based payment • Infrastructure

– IT – Experienced

care management teams – Scale

• Alignment of provider incentives • Engaging the consumer

Care Management

High-Cost Patients

Rising-Risk Patients

At-Risk Patients

Healthy Patients

Risk Stratification and Predictive Modeling

5% e.g., poorly controlled CHF

With multiple comorbidities

e.g., patient with diabetes And depression 20%

40% e.g., pre-diabetic patient

35% e.g., patient with no disease diagnosis

Coordinated Care • Wellness & Prevention

– Health Coaching – Preventive Screenings – Vaccination Outreach

• Ambulatory Care Management – 24/7 Telephone Advice Nurse – Primary Care Case Mgmt. – Specialized Clinics

• Anti-coagulation • Discharge Clinic • ACTIVE Diabetes • Back pain

• Specialty Care Management

– Complex & High Risk Care Management

– Virtual Care Conference

• Hospital Care Management – 24/7 Hospitalists – After hours RN Triage – Repatriation/Concurrent

Review – Care Transitions

• Disease Management Programs – COPD – CHF – Diabetes – Palliative Care – Medication Reconciliation

GNP - Case Study

• ACTIVE Diabetes

• Results:

HbA1C 9.7 7.8

• Right Care Initiative Award

Caring for our Own Employees

• The Good Life • Linking Benefits to Behavior • Chronic Condition Management

In Balance

First Year Results - In Balance

Participants with diabetes & hypertension

• 84% participant retention • 92% compliance with

medications • BMI: 50% achieved or

maintained BMI < 25 • Diabetes: average HbA1c

improvement of 10% • Hypertension: average BP

reduction of 20/13

Per Capita Costs National Average

Health Care Spending Rate Increase over 5

years = 8.5%

MemorialCare Average Health Care

Spending Rate Increase over 5 years

= 3.5%

Consolidation/Alliances Private Exchanges Population Health Consumerism Value

Employers Driving Consumerism • High deductible health plans

• Wellness initiatives

• Steerage and incentives

• Price transparency tools

Patients vs. Consumers

Consumers are Engaged • Physician recommendation &

verification • Online tools & social media • Personal experience & comparison shopping • Value = access + service delivery

+ outcomes + cost

INFORMED & EMPOWERED

Consolidation/Alliances Private Exchanges Population Health Consumerism Value

Attributes for Success

Clinical & Service Quality

Geographic Reach

Cost

Quality

Greater Newport Physicians – MemorialCare Medical Group -

Centers for Medicare and Medicaid Services (CMS) Medicare Five-Star Quality Measures

Standards of Excellence 4 Star Elite Status Eight consecutive years - Greater Newport Physicians MemorialCare Medical Group

Long Beach Memorial Orange Coast Memorial Saddleback Memorial Receive A –Hospital Safety Score

Long Beach Memorial Orange Coast Memorial Saddleback Memorial Ranked as High Performing in multiple specialties by US News & World Report.

Geographic Reach

Cost

MemorialCare Controllable Expense per Discharge

Questions?