DU Strategic Issues DU Strategic Issues PanelPanel

Jay Want, MD

December 9, 2010

Today’s AgendaToday’s Agenda

Why health care has to change, and why it has to now

How health care will change over the next two decades

What part information technology will play Other cost containment mechanisms

What’s Not On Today’s What’s Not On Today’s AgendaAgenda The magic bullet (single factor solutions) How IT will magically improve health care without any

effort on anyone’s part Ways to “build a seawall” against health care reform How to find $10 trillion of other people’s money over the

next decade to allow us to continue with the current FFS mess (the Chinese are on to us)

Why can’t health care cost Why can’t health care cost grow infinitely?grow infinitely? Health care costs compete with all other costs:

transportation, investment in innovation, education Competitors who spend more on raw materials generally

lose to competitors who spend less; health care is a raw material for all other goods and services

We are losing global competitiveness, partly because it costs too much to provide health care to our people relative to other countries

Poor global competitiveness=high unemployment for a really long time

What’s The Problem?What’s The Problem?

Theories about what’s wrong with health care: Cost

It’s greedy (insurance companies, doctors, hospitals, pharmaceutical companies); if they were eliminated from the equation, cost would come into control.

Access It’s that I’m paying for everyone else; if I just weren’t paying for

the uninsured, I could afford it. Or, if I could eliminate the cost shift associated with the uninsured, I could afford it.

Quality It’s that the quality is so poor; if everyone would just do the right

thing, health care would be affordable.

Okay, There Are At Least Two Okay, There Are At Least Two More ProblemsMore Problems Problem 1: We think there’s only one problem. Problem 2: Even if we think there’s a problem, not

everyone’s sure they want to fix it.

The Road To Hell Is Paved With The Road To Hell Is Paved With Good Intentions And Other Good Intentions And Other People’s MoneyPeople’s Money Third party payer system creates gigantic pool of

unsupervised money Innovators learn how to provide more stuff, in bigger

billable chunks Giant sucking sound: providers of care hooking hoses up

to government/business treasuries and turning on the vacuum

Managed care clogs up hose, open access clears clog Designing larger bore vacuums is a growth industry American health care inflation roughly double what it is in

other developed nations since 1965

International Comparison of Spending on International Comparison of Spending on HealthHealth1980–20041980–2004

Data: OECD Health Data 2005 and 2006.

Average spending on healthper capita ($US PPP)

Total expenditures on healthas percent of GDP

Schoen C, Davis K, How SKH, Schoenbaum SC. US health system performance: A national scorecard. Health Aff. 2006;25(6):w457-w475.

8

“Ask not what your country can do for you, ask what you can do for your country.”

John F. Kennedy, POTUS

“Somebody has to do something, and it's just incredibly pathetic that it has to be us.”

Jerry Garcia, Grateful Dead

What Will Oppose The Status What Will Oppose The Status Quo: Megatrends Quo: Megatrends Consumerism/free markets (health care as service

industry): retail clinics, commercial telemedicine, concierge medicine

Data and transparency: performance reports for providers on the web (I think there’ll be an app for

this), need for aggregation into larger entities for measurement

purposes/performance improvement

Globalization: offshoring, medical tourism

Believe It Or Not, PPACA Is Believe It Or Not, PPACA Is Here To Help: Little Here To Help: Little Understood ProvisionsUnderstood Provisions Near universal coverage, phased in Center for Medicare/Medicaid Innovation Independent Payment Advisory Board

(replaces RUC?) ACO pilot modeled after Physician Group

Practice Demonstration Project

The Role of IT: Will It Save The Role of IT: Will It Save Us?Us? “Information is not knowledge. The world is drowning

information, but slow in the acquisition of knowledge. There is no substitute for knowledge.”—W.E. Deming

More than ever in the information age, information translated into knowledge is power.

IT is a means to knowledge, not an end in itself IT requires the user to change workflows—this is a good

thing IT is an equalizing force; it will reduce the power

asymmetry between providers and patients—also a good thing

Other Mechanisms You’re Likely To See Intensive care management and coordination

by whatever entity is at financial risk (provider, health plan, ACO, government, business)

Predictive modeling Guideline adherence incentives for both

patient and provider Patient activation coaching Assembly of patient care teams

Take HomesTake Homes

American health care is unsustainable in its current form, and it is no accident that reform is upon us now

The change in the market dynamics will be from accountable for volume only to accountable for cost and quality outcomes

The new markets will be driven by consumerism, data and transparency, and declining relevance of geography in service delivery, like other goods and services

IT will enable, but not be a mission unto itself; it will reduce the power asymmetry between providers and patients/consumers, and reward those that can turn information into knowledge to serve customers better

Teams will win over individuals as complexity increases; this will drive aggregation and larger units of delivery