Interpreting the Healthcare Move to Value€¦ · 7/7/2014 6 2000-2005 IC Growth 87.5% Pop...

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Interpreting the Healthcare

Move to Value

Brian Baker

Founder, CEO

“To fully appreciate the breadth of my experience, the depth of

my business acumen and the heights I reached in my previous

position, you need to read my resume with 3-D glasses.”

Copyright Carealytics 20142

The “Secret” to Interpreting

Healthcare’s Move to Value

For Attendees Eyes Only!

• Why a move to value?

• How to measure value in healthcare

• Has healthcare become a commodity?

• How do differences in technology affect value?

• The real goal of the Affordable Care Act

• What the healthcare legislation really means

• Commoditization / Differentiation in healthcare

• Adapting to move away from commoditization and demonstrate value and quality

Todays Objectives


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“…Because Medicare pays for just over 1/5 of all

US Healthcare…it must pursue reforms that control

spending and create incentives for beneficiaries to

seek and providers to deliver high-value services.”

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What’s the Big Deal?

MedPAC Report to Congress

March 2014


5

December 15, 2011

35 Degrees

Light Rain

Lunch Time


6Copyright Carealytics 20146

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8 Hospital based MRI choices within 15 miles

All are 1.5t

Chargemaster based pricing:

Low = $2,067.58

High = $3,971.15

Average = $3,119.70

Medicare payment range:

Low = $322.11

High = $357.77


Where’s the Value?

Source: April 2014 Medicare Data

Nashville, TN


The 2010 Affordable Care Act mandated the development

of a mechanism to allow Medicare to make differential

payment to fee for service MDs based on the relative

quality and costs for the care they provide.

Why a Move to Value?

9 Copyright Carealytics 2014

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Source: International Federation of Health Plans, Cited in NY Times, 1/22/12

US HEALTH CARE UNIT PRICING IS MUCH HIGHER

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Interpreting the Move to Value


Source: CMS.govAll Payers, All Spend

12

0

0.5

1

1.5

2

2.5

3

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Trillions

Total US Healthcare Spending Trend



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Baicker, K and Chandra, A. Medicare spending, the physician workforce, beneficiaries' quality of care.

Health Affairs Web Exclusive 7 April 2004; W4-184-97.

Medicare Cost Vs. Quality

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With Permission: GE Market Trends & Assumptions, Fall 2013

Rob Reilly, Chief Marketing Officer

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2012 = $8,915 Per Person all PayorsSource: 2014 MedPac Report



With Permission: GE Market Trends & Assumptions, Fall 2013

Rob Reilly, Chief Marketing Officer

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2000-2005

IC Growth 87.5%

Pop Growth 4.7%

2005-2008

IC Growth 10.9%

Pop Growth 2.9%

2008- 2012

IC Growth 8.8%

Pop Growth 3.2%

IC’s per Million Pop

2000 10.8

2005 19.5

2008 21.2

2012 22.5

16

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

30683366

4159

51635450

5753 59696241 6455

6150 6311 6383

70746816

Total Number of Freestanding US Imaging Centers

265

270

275

280

285

290

295

300

305

310

315

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Millions

Population Growth Source: US Census


0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

30683366

4159

51635450

5753 59696241 6455

6150 6311 6383

70746816

Total Number of Freestanding US Imaging Centers

265

270

275

280

285

290

295

300

305

310

315

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Millions

Population Growth Source: US Census

2000-2005

IC Growth 87.5%

Pop Growth 4.7%

2005-2008

IC Growth 10.9%

Pop Growth 2.9%

2008- 2012

IC Growth 8.8%

Pop Growth 3.2%

IC’s per Million Pop

2000 10.8

2005 19.5

2008 21.2

2012 22.5



� Credit Radiation Exposure Concerns for Utilization Decreases

� Overall 2.5% Decrease in 2010 was 1/30th of Previous Decade of Growth

� Appropriateness Still a Concern – Must be Addressed

� ECG’s and CV Stress grew at over 85% from 2000-2009 – Faster than Imaging

March 2012 Report

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There is increased urgency to address payment variations across settings because many

services have been migrating from physicians’ offices to the usually higher paid (H)OPD

setting as hospital employment of physicians has grown. This shift toward (H)OPDs has

resulted in higher program spending and beneficiary cost sharing without significant changes

in patient care.

June 2013 Report

“If the same service can be safely provided in different settings, a prudent

purchaser should not pay more for that service in one setting than in another.”

Medicare payment differences across ambulatory settings

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So, in the Future…

Incomes will be based

on outcomes

Adapted From: Creating Sustainability in Medical Imaging: Defining

and Rewarding Value, Rich Duszak, MD FACR Harvey L Neiman

Health Policy Institute



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Medicaid

16%

Medicare

23%

Out of Pocket

(excl. Premiums)

14%

Other Third Party

Payers

9%

Private Health

Insurance

34%

Other Insurance

Programs

4%

Total HC Spend

$2.4 Trillion 2012(CMS data = $2.7 Trillion in 2011)

Total of

105.7m Govt. Enrollees

March 2014 Report


Future Predictors


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“Finally, studies have found that a significant share of

health care spending in the United States is wasteful;

even if the growth rate of health care spending slows,

much can be done to improve quality of care while

lowering cost per beneficiary.”

2012 Medicare Spend $574 Billion

2012 Medicare Funding $537 Billion

(37 Billion)

March 2014 Report


Future Predictors

For Attendees

Eyes Only!

2005 DRA Introduced

2006 Feb: Congress passes DRA – partial reductions in effect

Some Payers adopt DRA “influenced” rate reductions

RBM’s starting to affect volume

Stark 2 causing Imaging JV’s to unwind

2007 DRA reductions fully implemented

RBM growth continues

“In office exception” fastest growing Imaging segment

Smaller Locations begin to flounder – abundance of centers for sale

2008 GAO recommends preauthorization to slow “explosive” Medicare imaging growth

OBAMA elected – Healthcare reform major part of platform

Credit crisis ensues

2009 Congress report predicts blitz of reimbursement cuts on horizon as part of HC reform

MEDPAC report recommends reduction in RVU equipment utilization calculation

SGR fix not in place

Medicare cuts planned for 2010

2010 Medicare cuts in place, Practice expense RVU calculation implement for 2011

May: House Reviewing SGR 5 yr fix: 1.5% update 2010, 1 % update 2011, 2012-2014 GDP + 1% to MPFS

2011-2012 75% Equipment utilization factor, CT bundling, Same-day procedure cuts

2013 Sequestration -2%, SGR fix still not in place, Multiple procedure cuts applied to Professional services, consolidation

2014 → Equalization between HOPD & MPFS, M.D. Consolidation, P4P = P4Q via data = No P4 duplication or poor quality

Ima

gin

g M

ark

et

Tim

eli

ne


Future Predictors

Highest Projected Growth StatesOverall Projected Growth

13.6% Nationally

61 Million Additional

Annual Procedures

Nationally


Future Predictors

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Value =“Outcomes”

Cost

Outcomes include:

• Appropriateness

• Safety

• Efficiency

• Satisfaction

• Financial Toxicity

Cost to:

• Provider

• Facility

• Patient

• Employer

• Physician

• Society

What is Value?

Adapted From: Creating Sustainability in Medical Imaging: Defining

and Rewarding Value, Rich Duszak, MD FACR Harvey L Neiman

Health Policy Institute



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Some FFS Confounders

� Coverage edits

� Payment edits

� Discounts

� Documentation

� Coding

Data to inform

physicians and

practices

Physicians

and Practices

Courtesy: Creating Sustainability in Medical Imaging: Defining and Rewarding

Value, Rich Duszak, MD FACR Harvey L Neiman Health Policy Institute

Physician Reporting

� CPT coding drives payment under FFS

� As a general rule, payment for higher complexity codes is higher than that for lower intensity codes

� Physician documentation drives code selection



Complete Abdominal US (76700)

1. Liver

2. Gallbladder

3. Common bile duct

4. Pancreas

5. Spleen

6. Kidneys

7. Upper abdominal aorta

8. Inferior vena cava



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Limited Abdominal US (76705)

1. Liver

2. Gallbladder

3. Common bile duct

4. Pancreas

5. Spleen

6. Kidneys

7. Upper abdominal aorta

8. Inferior vena cava



Abdominal Ultrasound

� 76705 Limited

� 76700 Complete

39%

$28.24$39.13



Ultrasound Documentation

� 336,062 abdominal US

reports

� 37 facilities

� 1,136 radiologists

� Incomplete documentation

� 7 or fewer elements on

complete examinations

� 9.3% to 20.2% of reports

� 2.5% to 5.5% lost

revenue

Duszak R, et al. JACR 2012; 9: 403-408.



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Value: n. The importance, worth or usefulness of something

v. Consider someone or something to be important or beneficial


Courtesy: VRad, Pat Basu M.D.

A Strategic Response; Moving to Value



Achieving this will move imaging and healthcare to the “value”

payment model demonstrating differentiated quality and costs.

The Trillion Dollar Prize

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“Translate data from treatment and

results combined with analytics to direct

clinical intervention…or not, empirically.”B.Baker 2013



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The Trillion Dollar Prize in Practice

“I want to know what the outcome will be before I

treat the patient.”CEO, Physician




Sick Patient

MD Diagnosis Decision

Tests Performed

Outcome Report of

Test

MD Treatment Decision

Patient Outcome

Lab

Imaging

Physical Therapy

Clinical

LearningImages

Values

Opinion

Poorly functioning feedback loop for learning and improvement

Healthcare Process Today

Moving to Value

Weather

Economy

Disease Trends

Birth Rates

Deaths

Immigration

Utilization

Regulations

Numeric Values

Professional Opinion

Technology

Predictive Analytics

Etcetera…

Plus:

Healthcare Process Tomorrow

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Clinical

Learning

Sick Patient

MD

Diagnosis

Decision

Tests

Performed

Analysis

Report of

Test

MD

Treatment

Decision

Patient

Outcome

Big Data

&

Powerful

Analytics

Moving to Value


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• Need for Change

• Customer Power

• Greater Participation

• Meaningful Engagement

Requires

acceptance of:

40

Moving to Value


ACO Presence

– Over 400 ACO’s

– Represented in all 50 states

– Over half are Medicare contracted

– Range of models and sizes

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Moving to Value


ACO Structure & Goals

� Shared responsibility to deliver broad services to a defined patient population.

� Held accountable for cost and quality via incentives

� Provide team-based integrated, high quality care

� Strong leadership from MD community

� Clinically integrated care

� All clinical, legal, and admin transparency to MD’ s and public. Includes quality

management, efficiency processes and value in delivery.

� Include method for inclusion of patient / family input in policy development.

� Commitment to improved population health via program involvement

� Provide incentives for patient and or family engagement

� …and 15 other elements!

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Moving to Value


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• ID Patients in need of care management 66%

• Measure clinical outcomes 64%

• Performance measurement and management 64%

• Point-of-Care clinical decision making 57%

Data and analytics, the Keystone to ACO success

IDC Health Insights survey published in Healthcare IT News. March 2013

ACO Survey Results: Priorities

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Moving to Value


Video:

Shaping Healthcare Value


ACR Phantom: Slices 9 & 8 for T1: (Same Manufacturer)

3T 1.5T 1.0T 0.34T 0.2T

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Courtesy: Bell Associates


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1.16T 1.0T 0.7T 0.3T 0.2T

ACR Phantom: Slices 9 & 8 for T1: Open Sided (Same Manufacturer)

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Courtesy: Bell Associates


• Benefits management companies creating ACO

focused business units

• Employers building owned service lines

• Employers collaborating to negotiate w Providers

• Providers forming “Patient Home” models


Value Modeling

…do we find problems earlier in the health cycle?

…to create self service or automated tools?

…much of care is related to genetics?

…much of care is related to environment?

…much can we actually have an impact on?

…do we stop wasting so many HC resources?


Value Modeling

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• Coordination

• Cooperation

• Capability

• Connection

The Four C’s

49

Value Modeling


…and much more

Detailed Financial Performance

Liaison Impact & M.D. Loyalty

Scheduling Effectiveness

Exam Effectiveness

Report Turn-Around-Time

Patient Wait & Exam Times

Staff Productivity

Coordination

Cooperation

Capability

Connection

Culture

The Four C’s

Financial

Culture

Transparency

Technology

Risks

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Value Modeling


1. Be the least replaceable player

2. Become the owner of quality

3. Follow the customer

4. Manage the growth story

5. Demonstrate / IncentivizeAdapted from HBR July-August 2013

“How to Drive Value Your Way”

Michael G. Jacobides and John Paul MacDuffie

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Value Modeling



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1 2 3 4

Replaceability Quality Customer Growth

Incumbent Strategies

Entrant Strategies

Prevent others from

assuming a system

integrator role

Avoid open standards

Brand the customer

experience

Assume responsibility for

the final product

Stay in tune with customer

needs

Anticipate changes in the

identity of the end

customer

Pursue growth, but not at

the cost of strategic control

Use your scale advantage to

keep supplier networks

closed

Become the go-to

outsource source

Move to selling and

providing solutions

Be patient in terms of returns

Make the case that open

standards will fuel growth

Try to change who the

customer is or what it wants

Find new or overlooked

customers and build new

ecosystems

Leverage brand adjacency

Manage standards to

commoditize incumbents

Adapted from HBR July-August 2013

“How to Drive Value Your Way”

Michael G. Jacobides and John Paul MacDuffie

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Value Modeling…Giants do not compete in a sector,

they shape it.



Carolinas Health System: Using data

from 2m patients. Purchased to ID

high risk patients through predictive

modeling. Results will be shared w

MD’s in 2 yrs.

UPMC: Similar models being tested.


Source: Bloomberg 6.26.14

“The Doctor Knows You’re Killing Yourself. The Data Brokers Told her.”


Make informed business decisions

Measure the impact of changes

Improve population health

Improve Efficiency

Deliver Value

Differentiate

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Using Up-to-date actionable

information allows you to:


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1. Can you survive if paid at 100% Medicare?

2. How do/will your imaging services fit into an

ACO model?

3. How will you manage the culture when your RADS

are paid 30% less?

4. What can we do (together) to demonstrate value?

5. Who is your consumer?

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5 Questions to Take Home


1. Define Success

2. Identify Critical Success Factors

3. Measure the Current State of those Factors

4. Forecast Impact of Change

5. Prioritize Actions

6. Execute

7. Re-measure

Develop Your Target Objectives Define

Control

Analyze

Improve

Measure


Ste

p 1

: G

ain

so

me

kn

ow

led

ge

Formula for Value



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Formula for Value

Ste

p 2

: E

xert

so

me

Co

ntr

ol



Formula for Value

Ste

p 3

: D

em

on

stra

te V

alu

e


Thank you!Brian Baker

[email protected]

(615) 330-6675

60

www.care-alytics.com

Interpreting the Healthcare Move to Value€¦ · 7/7/2014 6 2000-2005 IC Growth 87.5% Pop...

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