THE FUTURE OF THE HEALTHCARE MARKETPLACE: NOW WHAT ...
Transcript of THE FUTURE OF THE HEALTHCARE MARKETPLACE: NOW WHAT ...
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December 7, 2016Riverside
THE FUTURE OF THE HEALTHCARE MARKETPLACE:NOW WHAT?
Ian Morrison, PhD
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OUTLINE
• American Healthcare: Progress and Promise
• Elections Matter
• Looking Ahead:
– Financial Hydraulics of Healthcare
– Shallow Pocketed Consumers
– Employers Stay or Go
– Massive Medicaid
– Making Volume to Value Real
– Access to Care: Urgent and Emergency Care
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AMERICAN HEALTHCARE: PROGRESS AND PROMISE
• Coverage Expansion– Obamacare: Exchanges and Managed Medicaid
• Payment Reform– ACOs, MACRA, Medicare Advantage, Managed Medicaid, bundles and value‐based payment in private sector
• Volume to Value– Payment reform in concert with shift to population health, providers at risk
• Consolidation and Integration– Plans, health systems and physicians merging and partnering more and more
• Delivery Shift to Ambulatory Environment– Outpatient, alternate site and retail
• IT Infrastructure– Ubiquitous EHRs, telehealth, big data, and consumer‐facing apps
• Enhancing the Consumer (and Provider) Experience– High deductible health care is a blunt instrument– High bar of service in a world of Apple, OpenTable, and Uber
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BIG DROP IN UNINSURED UNDER OBAMACARE
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ELECTIONS MATTER
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BREXIT OR BLOWOUT?
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SCOTLAND, NORTHERN IRELAND AND LONDON VOTED TO REMAIN
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SCOTLAND, NORTHERN IRELAND AND LONDON VOTED TO REMAIN: NEWS TO DONALD TRUMP
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OLDER, LESS WELL EDUCATED AND NATIONALISTIC VOTERS MORE LIKELY TO BREXIT
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TRUMP TRIUMPHS
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WHY TRUMP WON: “BREXIT PLUS, PLUS”
Trump Won These Categories Convincingly:
• White 58%• White without a college degree 67%• Can bring needed change 83%• Small, city or rural 62%• Country seriously off track 69%• Family financial situation worse today 78%• Angry about how the federal government is working 77%• Trade takes away jobs 65%• Worse for next generation 63%• Deport illegal immigrants 84%• Support building a wall 86%
Source: 2016 Official Exit Polls12
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THE PARTISAN DIVIDE ON HEALTHCARE
Source: Harvard/Politico October 201613
VIEWS ON ACA ARE BASED ON VIEWS ON GOVERNMENT ROLE IN IMPROVING HEALTHCARE SYSTEM
Source: Harvard/Politico October 201614
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WHAT SHOULD HAPPEN TO ACA?
Source: Harvard/Politico October 201615
MAJOR CHANGES IN ACA WITH REPUBLICAN WIN
• Major structural changes to ACA – changed name
• End of mandates – individual/corporate
• Elimination or reduction of “Cadillac Insurance Tax”
• Establishing state pre‐existing condition pools
• Less federal subsidies for uninsured and Medicaid
• More state discretion for Medicaid spending
• Less insurance regulation
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WHAT WILL CHANGE: COVERAGE
• Repeal and replace … incrementally
• More market‐oriented less heavy‐handed regulation
• Will coverage of 20 million be significantly eroded?
• “You Break It, You Own it”
• Guaranteed issuance preserved, but how if mandates are removed?
• Fragile individual market, and small group inflation: What to do?
• Sources of market failure in private health insurance
– Cream skimming
– Adverse selection
– Moral hazard
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WHAT WILL NOT CHANGE: PAYMENT AND DELIVERY REFORM
• Shift from volume to value
• MACRA
• Payment reform in public and private sector
• Managed Medicaid, but more state flexibility
• Increased transparency on cost and quality
• Medicare Advantage growth
• Consolidation
• Population health and continuum of care
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10
TRUMP’S REPEAL AND REPLACE IS LIKE BREAKING UP THE BEATLES: JUST KEEP GEORGE AND RINGO AND
EXPECT IT TO SOUND GOOD
Subsidies to Medicaid and Exchanges
Guaranteed Issuance
Taxes and Fees RaisedMandates
Stay on Parents Plan
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THE FINANCIAL HYDRAULICS OF HEALTHCARE
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MEDICARE SPENDING VERSUS PRIVATE SPENDING: A DIFFERENT STORY
Source: cited in NY Times, December, 15th, 2015
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PAYMENT‐TO‐COST RATIO (ILLUSTRATIVE)
0
0.5
1
1.5
2
2.5
3
Uninsured Medicaid Medicare CommercialPayer
DementedSaudi Prince
0.07
0.690.89
1.5
3
Payment to Cost Ratio
Source: Morrison Estimates, in other words a good guess
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PAYMENT‐TO‐COST RATIO (ILLUSTRATIVE)
0
0.5
1
1.5
2
2.5
3
Uninsured Medicaid Medicare Exchange CommercialPayer
DementedSaudiPrince
0.07
0.69
0.89
1.2
1.5
3
Payment to Cost Ratio
Source: Morrison Estimates, in other words a good guess
‐
+++
+
++
‐
‐
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70%
80%
90%
100%
110%
120%
130%
140%
150%
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Private Payer
Medicaid(1)
Medicare(2)
AGGREGATE HOSPITAL PAYMENT‐TO‐COST RATIOS FOR PRIVATE PAYERS, MEDICARE AND MEDICAID,
1994 – 2014
Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.(2) Includes Medicare Disproportionate Share payments.
AMERICAN HOSPITAL ASSOCIATION
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SERVING SHALLOW‐POCKETED CONSUMERS
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CUMULATIVE INCREASES IN HEALTH INSURANCE PREMIUMS, WORKERS’ CONTRIBUTIONS TO PREMIUMS, INFLATION, AND WORKERS’
EARNINGS, 1999‐2016
98%
160%
213%
92%
167%
242%
24%
45%
60%
21%
35% 44%
0%
50%
100%
150%
200%
250%
300%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Health Insurance PremiumsWorkers' Contribution to PremiumsWorkers' EarningsOverall Inflation
SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2016. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999‐2016; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999‐2016 (April to April).
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$5,277
$4,955
$4,823
$4,565
$4,316
$4,129
$3,997*
$3,515
$3,354
$3,281*
$2,973*
$2,713
$2,661*
$2,412*
$2,137*
$1,787*
$1,619
$1,543
$12,865
$12,591*
$12,011
$11,786
$11,429*
$10,944*
$9,773
$9,860*
$9,325*
$8,824
$8,508*
$8,167*
$7,289*
$6,657*
$5,866*
$5,274*
$4,819*
$4,247
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999Worker Contribution
Employer Contribution
$18,142*
AVERAGE ANNUAL WORKER AND EMPLOYER CONTRIBUTIONS TO PREMIUMS AND TOTAL PREMIUMS FOR FAMILY COVERAGE, 1999‐2016
*Estimate is statistically different from estimate for the previous year shown (p < .05).
SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2016.
$5,791
$6,438*
$7,061*
$8,003*
$9,068*
$9,950*
$10,880*
$11,480*
$12,106*
$12,680*
$13,375*
$13,770*
$15,073*
$15,745*
$16,351*
$16,834*
$17,545*
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16%21%*
35%*
40%
46%50% 49%
58%* 61%
63%65%
6%8% 9%
13%*17%
22%*26%
28%32%
39%*
45%
10%12%*
18%*22%*
27%*31%
34%38%
41%
46%
51%
0%
10%
20%
30%
40%
50%
60%
70%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
All Small Firms (3‐199 Workers)
All Large Firms (200 or More Workers)
All Firms
* Estimate is statistically different from estimate for the previous year shown (p<.05).
NOTE: These estimates include workers enrolled in HDHP/SOs and other plan types. Average general annual health plan deductibles for PPOs, POS plans, and HDHP/SOs are for in‐network services.
SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 2006‐2015.
PERCENTAGE OF COVERED WORKERS ENROLLED IN A PLAN WITH A GENERAL ANNUAL DEDUCTIBLE OF
$1,000 OR MORE FOR SINGLE COVERAGE, BY FIRM SIZE, 2006‐2015
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INSURED ADULTS WITH LOWER INCOMES WERE MORE LIKELY TO REPORT THEY HAD DELAYED OR AVOIDED
GETTING CARE BECAUSE OF THEIR COPAYMENTS OR COINSURANCE
Note: FPL refers to federal poverty level.Source: The Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014.
30 28 2824
46
10 10 12 10
21
0
25
50
75
Had a medicalproblem, but did
not go to adoctor or clinic
Did not fill aprescription
Skipped amedical test,treatment,or follow‐uprecommendedby a doctor
Did not see aspecialist whenyou or your
doctor thoughtyou needed to
see one
At least one cost‐related access
problem
<200% FPL 200% FPL or more
Insured adults ages 19 – 64 who pay a copayment or coinsurance
Percent responding “yes”
3030
COST‐RELATED ACCESS BARRIERS IN THE PAST YEAR
7 7 8 8 1014
16 17 1822
33
0
20
40
60
UK GER NETH SWE NOR AUS CAN FRA NZ SWIZ US
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent*
*Had a medical problem but did not visit doctor; skipped medical test, treatment or follow up recommended by doctor; and/or did not fill prescription or skipped doses30
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COST‐RELATED ACCESS BARRIERS IN THE PAST YEAR, BY INCOME
8
16 1620
23 2428 30 30 31
43
7 6 7 8 713
1814 13
22
32
0
20
40
60
80
100
UK GER* SWE* NOR* NETH* AUS* NZ* FRA* CAN* SWIZ* US*
Low income adults All other adults
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent
*Indicates differences are significant at p<0.05. Note: “Low income” defined as household income less than 50% the country median. Sample sizes are small (n<100) in the Netherlands and UK.
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DOES SATISFACTION MATTER? COMPARED TO WHAT?
2010(A)
2012(B)
2013(C)
2014(D)
2015(E)
2016(F)
77% 79% 84% 81% 79% 77%Satisfaction with your insurance benefits
Insurance plan meets my/my family’s needs very/extremely well
Satisfaction with out of pocket costs for health care services
Prepared for: Strategic Health PerspectivesBase: All US Adults (2010 n=2775, 2012 n=2000, 2013 n=2501, 2014 n=2501, 2015 n=5037, 2016 n=10011 split sampled)Source: Q600: How satisfied or dissatisfied are you with each of the following?; Q185: Thinking now about all the different components of your health insurance plan, how well does your plan meet your/your family’s health needs?
Significance tested at 95%
General Impression of Health Insurance(Top‐2 Box %)
58% 59% 66% 62% 61% 61%
Satisfaction with out of pocket costs for prescription medications 62% 66% 72% 66% 67% 66%
69% 66% 55% 56%Only 47% of Exchange based plan holders feel their plan
meets needs very or extremely well
However…
F ABDEF
AEF AF
A ABDEF
A A A
ABDEF
AB A A
DEF EF
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Some change towards the positive, but 1 in 4 consumers remains powerless
Prepared for: Strategic Health Perspectives
Base: All US Adults (2014 n=2501, 2015 n=5037, 2016 n=30052)Source: Q90 How would you describe your feelings about the health care you receive today, including how much you pay for it and the benefits you receive? Please select all that apply.
CONSUMERS EMOTIONS TOWARDS HEALTHCARE THEY RECEIVENot much change nationally, but Californians are
significantly more positive in 2016
Consumer Emotions Towards Healthcare They Receive
9%
17%19%
37%
28%
15%
23%
11%14%
6%
20%
13%
32%
24%
17%
31%
14%
18%
9%
21%
15%
34%
24%
14%
26%
12%
17%
14 15 16 14 15 1614 15 16
Empowered Hopeful Relieved Accepting NeutralResigned/ Given up
Powerless Depressed Angry
SHP CONSUMERS 2016
Significant over prior year
13%
37%
24% 18%
27%
14%
21%
10%
California 2016 in Red
13%
14 15 16 14 15 16 14 15 16 14 15 16 14 15 16 14 15 16
STRATEGIC HEALTH PERSPECTIVES℠
COST MATTERS BECAUSE CONSUMERS PAY MORE OF THE INCREASE … THIS MAKES THEM FEEL MORE POWERLESS
Prepared for: Strategic Health PerspectivesBase: All US Adults (n=10011 split sample)Q660. Please indicate if any of the following happened to you in the past year
28%
Received a balance bill for care they thought was covered
8% Received a bill for hospital services ''not in network'' even though the
hospital was in network13%EXCHANGE
TOTAL
12%21%
10% 13%20%
36%
18% 22%
Resigned/ Given up
Powerless Depressed Angry
14%25%
11% 15%21%
35%
21% 22%
Resigned/ Given up
Powerless Depressed Angry
Have notHave not
HaveHave
Have notHave not
HaveHave
California 21%
California 6%
California 13%
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WHO IS BORDERLINE?
9%
21%15%
34%24%
14%
26%
12%17%
7%15%
7%15% 14%
30%
48%
31%41%
Empowered Hopeful Relieved Accepting NeutralResigned/ Given up
Powerless Depressed Angry
40%Have Employer based insurance
42%Had 3+ doctor visits last year
32%Had 1+ ER visits last year
51%Received a balance bill for care they thought was covered
Gen Pop
20% Are uninsured
They are NOT on public insurance!
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STRATEGIC HEALTH PERSPECTIVES℠
Above Average
Average*
384748596066768890909394101111
143149161
181205Low monthly premiums
Has a low deductible
Low copay for doctor visits
Access to all medical imaging at reasonable cost‐sharing/co‐pay
Reasonable cost sharing, or copay levels for hospitalization
Direct access to all specialists (no referral needed)
Includes an extensive network of doctors
Access to leading hospitals in my area
Coverage for dependents
Coverage for medical care at retail clinics or urgent care centers
Low copay for generic drugs
Access to cutting edge medical devices and medications
Access to brand name drugs at reasonable cost‐sharing, or co‐pay, levels
Provides me with cash incentives or rewards for healthy behavior
Coverage for a wide selection of brand name drugs
Includes an extensive network of hospitals
Coverage for over‐the‐counter medications
Access to specialty hospitals (i.e. children’s hospitals)
The insurance brand is a name I know and trust
LOW OUT‐OF‐POCKET COST REMAINS CRITICAL IN PICKING INSURANCE
Consumers concerned with premiums, deductibles and copays…reasonable cost sharing for hospital services and retail clinic coverage are surging.
BASE: ALL QUALIFIED RESPONDENTS (2015 n=5037)Q65 Respondents were given a maximum difference trade off exercise in which they were forced to choose the most preferred and least preferred plan feature. *Average is 100, and the scores represent importance relative to that average.
Relative Importance of Benefit
SHP CONSUMER 2015
Below Average
Was below avg in 2014
Even higher than 2014
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EMPLOYERS: STAY OR GO?
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STRATEGIC HEALTH PERSPECTIVES℠
Projections for 2016: Wide range of estimates7.5
9.7 10.3
14.713.0
10.6
8.5 8.0
6.0 6.07.0
6.0 5.4 5.24.1 4.4 4.0
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Health care trend afterplan and contributionchanges
CPI‐U
Wells Fargo
Mercer
JUMBO EMPLOYERS ARE SEEING A PROLONGED RESPITE FROM DOUBLE‐DIGIT PREMIUM INCREASES, BUT THESE ARE STILL RUNNING AT TWO TIMES CPI
SOURCE: Towers‐Watson NBGH Annual Surveys (2014‐2015)
TOWERS WATSON
20
STRATEGIC HEALTH PERSPECTIVES℠
21%
79%
36%
64%
BUT MORE ARE SAYING THAT BUSINESS PERFORMANCE SUFFERING AS A RESULT OF HEALTH
INSURANCE COSTS
Base: All Employer Health Benefit Decision Makers (n=340)Q805 Which comes closest to your company’s attitude towards health insurance benefits?
Current Company Attitude towards Health Insurance Benefits
Our business performance is suffering due to health insurance costs
Health insurance costs have very little impact on our business performance
2014 2016
41% 53%
18% 21%27%
44% 46%
33%26%
45%
59%
58%
45%
58%53%
87% 88%
2010 2011 2012 2013 2014 2016
FEWER EMPLOYERS ARE LOOKING FOR AN EXIT; CONTINUE TO FEEL RESPONSIBILITY FOR EMPLOYEE
HEALTH NEEDS
* Asked only of Employers with 50 or more employeesBase: All Employer Health Benefit Decision Makers (n=340)Q800: Please indicate your level of agreement with the following statements. Do you strongly agree, somewhat agree, somewhat disagree or strongly disagree?
Company’s Position on Employer‐Sponsored Healthcare: Providing Benefits(Top‐2 Box % ‐ Describes Completely/Very Well)
It is our responsibility to ensure our employees' healthneeds are met
My company is actively exploring ways to get out ofproviding health insurance to our employees
Employer‐based health insurance will soon become athing of the past
My company feels it is worth it to pay the penaltyassociated with not providing employee health benefitsrather than providing health benefits to our employees.*
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21
55%57% 58%
54% 53%50% 50%
53%50%
52%49%
52%
48%* 47% 46%44% 45% 44%
66% 67%69% 69% 68% 68%
66%63%
65% 66% 65%63% 64%
62% 61% 62% 63%61%
62% 63%65%
63% 62% 61% 60% 59% 59% 60% 59% 59% 58%56% 56% 55% 56% 55%
20%
30%
40%
50%
60%
70%
80%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
All Small Firms (3‐199Workers)
All Large Firms (200 or MoreWorkers)
PERCENTAGE OF ALL WORKERS COVERED BY THEIR EMPLOYERS’ HEALTH BENEFITS, IN FIRMS BOTH OFFERING AND
NOT OFFERING HEALTH BENEFITS, BY FIRM SIZE, 1999‐2016
*Estimate is statistically different from estimate for the previous year shown (p<.05).
SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2016.
STRATEGIC HEALTH PERSPECTIVES℠
41%38%
34%32%31%31%31%28%27%27%26%26%25%24%23%
Increased emphasis on wellness and prevention
Focus more on primary care
Cost transparency tools for employees to make…
Aggressive management of specialty…
Negotiated reference pricing for specific…
Improved management of behavioral and…
Better manage heavy utilizers of care
Centers of Excellence models
Private exchanges
Focus on accountable care / ACOs
Direct contracting with hospitals
Promoting greater use of bundled payments
Narrow network health plans
Expanded use of Patient‐Centered Medical…
Consumer Directed Health Plans (CDHP)
MOST EMPLOYERS DO NOT THINK CURRENT INITIATIVES WORK WELL TO CONTAIN COSTS CDHPs are at the bottom, but even wellness at the top of the list isn’t viewed as very effective
Base: All Employer Health Benefit Decision Makers (n=340)Q1709 How well do you think each of the following initiatives will work to contain costs?
Works Extremely/Very Well to Contain Costs
22
PROVIDER PRICES FOR PRIVATE INSURANCE
43
MEDICARE SPENDING VERSUS PRIVATE SPENDING: A DIFFERENT STORY
Source: cited in NY Times, December, 15th, 2015 44
23
45
70%
80%
90%
100%
110%
120%
130%
140%
150%
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Private Payer
Medicaid(1)
Medicare(2)
AGGREGATE HOSPITAL PAYMENT‐TO‐COST RATIOS FOR PRIVATE PAYERS, MEDICARE
AND MEDICAID, 1994 – 2014
Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.(2) Includes Medicare Disproportionate Share payments.
AMERICAN HOSPTAL ASSOCIATION
STRATEGIC HEALTH PERSPECTIVES℠
EMPLOYERS MOST CONCERNED ABOUT HOSPITAL PRICES,SPECIALTY PHARMACEUTICALS AND CANCER CARE
Base: All Employer Health Benefit Decision Makers (bases vary) Q1707: Please indicate your level of concern for the following drivers of health care costs.
Level of Concern for Healthcare Cost Drivers, Total Employer Benefit Decision‐Makers (Top 2 Box: Extremely/Very Concerned)
2013 2014 2016
Hospital inpatient prices ‐ ‐ 60%
Specialty pharmaceuticals 47% 54% 55%
Cancer care 54% 56% 54%
Hospital outpatient prices 47% 49% 50%General pharmaceuticals 46% 50% 50%Physician prices 54% 53% 48%
Obese patients generally 45% 53% 48%
Health plan fees for care management 45% 44% 44%Diagnostic imaging 43% 47% 41%Hospital outpatient utilization 40% 50% 40%
Innovative, breakthrough treatments/cures for disease ‐ 46% 40%
Orthopedic surgery (hips/knees/etc) 41% 44% 39%
Diabetes patients ‐ ‐ 39%
Physician utilization 45% 45% 37%
NICU/early childhood disease costs 0% ‐‐ 36%Low‐back pain treatment 43% 40% 34%Maternity care 41% 40% 32%
Routine preventative testing 40% 43% 31%
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MASSIVE MEDICAID
47
MASSIVE MEDICAID
• US Medicaid Population edges out France and the Congo for top 19 spot in total population with 72,650,000 enrollees
• US Medicaid spending edges out Argentina for top 25 economies at $540 billion
• US Medicaid is bigger than Wal‐Mart by $50 + billion
48
25
MASSIVE MEDICAID
• Churning in Medicaid eligibles and exchange population
• Who will take these enrollees and what will be the financial impact on providers that do take them?
• Medicaid covers kids, mums, expansion populations, supports the dual eligible and is the default LTC policy for the middle class
• Can we design financially sustainable delivery models for Medicaid?
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• Medicaid is dominant for low income and children
• Medicaid population has significant churn of approximately 25%
• Exchange population has 40% churn due mainly to changing life circumstances
• Get to 65 and you are “home free on Medicare” … at least for now
• Republicans may move age of Medicare eligibility up
• Democrats may move age of eligibility (or buy in) down
50
26
MAKING VOLUME‐TO‐VALUE REAL
51
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Base: All Hospital‐Based Execs (2016: n=205; 2015: n=200; 2014: n=202)Q980: Which of the following best describes your hospital’s/hospital system’s “risk bearing” strategy?
Hospitals committing to clinical integration for contracting w/ payers, but full risk only for the few
Hospital Risk Management Strategy
RISK‐BEARING STRATEGIES VARY CONSIDERABLY
SHP HOSPITALS 2016
41%
29%
19%
10%1%
31%
25% 26%
12%8%
30%28% 27%
9% 6%
No plans to take riskbeyond modest sharedsavings and pay‐for‐
performancearrangements
Experimenting w/riskarrangements, but small
part of revenue
Committed to clinicalintegration organizationstrategy for contracting
w/payers
Building an ACO modelthat is capable of takingrisk such as MedicareAdvantage or employer
direct contracting
Committed to movingthe majority of revenuesto fully at risk within 5
years
201420152016
52
27
53
HALF OF ALL EMPLOYERS WILLING TO CONSIDER CONTRACTING WITH LOCAL
HOSPITAL/HOSPITAL SYSTEM
Consider Contracting with Local Hospital or System to Provide Health Insurance
Base: All Employer Health Benefit Decision Makers (n=340) Q816 Would your company consider offering a health insurance plan provided by a local hospital or hospital system rather than one offered by an insurance company?
14%
7%6%
19%
34%
19%
2016
Yes, definitely
Yes, probably
No, don'thave enoughemployees inonegeography
53% Would consider
29%
28%
32%
32% Would Not Consider
5
THE TENSION
Bundles
•More is still better
• Encourage improvement of teams
•Not everything is easily bundled
• “Screw me on the bundle, and I’ll screw you on the rest”
Population Health/Risk and Accountable Care
•Frequency
•Appropriateness
•Determinants of health care
•The mutual disrespect problem
•Social work not medical care
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WHAT POPULATION LEVEL ANALYTICS REVEAL
• The 5/50 Problem
– 5% account for 50% of spending
– 1% account for 20%
– Bottom 50% account for about 2%
• Segmentation of populations
• What you will find …– HONDAS
– Behavioral health
– End‐of‐life care
– Cancer
– Frail elderly
– Social work not medical care
– Specialty pharmaceuticals
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THE TRUCK, THE REFRIGERATOR AND THE BUS
56
29
PHYSICIANS CONTINUE TO FEEL POWERLESS IN CURRENT SYSTEM
Physicians’ Feelings Towards Current Health Care System
Base: All Physicians (2016: n=599; 2015: n=626)Q1850: How would you describe your feelings about the health care system today? Please select all that apply.
2%
23%
1%
23%
16%
23%
43%
24% 23%
4%
23%
1%
24%
13%
21%
42%
24%22%
Empowered Hopeful Relieved Accepting NeutralResigned/ Given up
Powerless Depressed Angry
2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016
SHP PHYSICIANS 2016
One in four physicians is depressed or angry about the health care system today – no change since last year.
57
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ONE IN THREE PHYSICIANS IS DRINKING THE BERWICK KOOL AID
Optimistic IntendersI haven’t reformed yet, but I want to.
Blazing BelieversIntegrating…and happy about it.
Reluctant ObjectorsIntegrating…and NOT happy about it.
Independent ResistersI haven’t reformed, and don’t plan to.
Experience with Integration
Attitudetowards
Integration
14%
30%
37%
20%
Back in 2012, we created a segmentation to understand how US doctors are dealing with all this consolidation and integration. Are they drinking the kool‐aid? Or sitting it out?
Segmentation inputs include: • Use of EHRs• Knowledge about meaningful use criteria• % of medication DAW vs generic allowable• P12M experience on salary, management by health plan,
or use of evidence based guidelines
• Willingness to work in solo practice• Perceptions on physician responsibility for patient
treatment compliance
THE SEGMENTATION OF BERWICKIAN NIRVANA
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STRATEGIC HEALTH PERSPECTIVES℠
THE FORCE AWAKENS –RESISTERS ARE COMING BACK
Believers are increasing but Resisters are also growing once again.
0000
32% 25% 14% 20% 30%
16%19% 35% 20%
14%
22%23% 24%
21% 20%
23% 34% 28% 39% 37%
2012 2013 2014* 2015 2016
BlazingBelievers
ReluctantObjectors
OptimisticIntenders
B
*The 2014 sample skewed a bit different (higher solo practice than the population).
THE SEGMENTATION OF BERWICKIAN NIRVANA (2)
ACCESS TO CARE: URGENT AND EMERGENCY CARE
60
31
DID NOT GET SAME‐ OR NEXT‐DAY APPOINTMENT LAST TIME YOU NEEDED CARE
19 22
31
41 41 42 43 44 47 50 53
0
20
40
60
80
100
NETH NZ AUS SWE UK US SWIZ FRA GER NOR CAN
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent
Base: Excludes adults who did not need to make an appointment to see a doctor or nurse61
69585656544946
39383635
0
20
40
60
80
100
ACCESS TO AFTER‐HOURS CARE
Percent
9595909081807876
68
4635
Adults, 2013Easy getting after‐hours care
without going to the ER
Primary care physicians, 2012Practice has arrangement for patients’
after‐hours care to see doctor or nurse
Source: 2012 and 2013 Commonwealth Fund International Health Policy Surveys.
Base: Needed care after hours. * In Norway, doctors asked whether their practice had arrangements or there were regional arrangements.
62
32
PRACTICE HAS ARRANGEMENT FOR PATIENTS’ AFTER‐HOURS CARE TO SEE DOCTOR OR NURSE
63
94 92 89 8580 78 75
69
4839
0
20
40
60
80
100
NETH NZ UK GER NOR AUS SWE SWIZ CAN US
Percent
* In Norway, respondents were asked whether the practice has arrangements or if there are regional arrangements.
Source: 2015 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.
DIFFICULTY GETTING AFTER‐HOURS CARE
25
4044 44
49 5158
63 64 64 64
0
20
40
60
80
100
NETH NOR AUS NZ UK US SWIZ CAN FRA GER SWE
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent who said it was somewhat or very difficult to get after‐hours care without going to the emergency department
* Base: Excludes adults who did not need after-hours care 64
33
USED THE EMERGENCY DEPARTMENT IN THE PAST TWO YEARS
11
20 22 23 24 2630 33 35 37
41
0
20
40
60
80
100
GER NETH AUS NZ UK NOR SWIZ FRA US SWE CAN
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent
65
WAITED SIX DAYS OR MORE FOR APPOINTMENT LAST TIME NEEDED CARE, BY INCOME
5 711 14
27 27 29 3235 37 38
5 37 9
16 17
25 2417
27 27
0
20
40
60
80
100
NETH NZ AUS SWIZ UK* FRA* NOR SWE* US* CAN* GER*
Low income adults All other adults
Source: 2016 Commonwealth Fund International Health Policy Survey
Percent
*Indicates differences are significant at p<0.05. Note: “Low income” defined as household income less than 50% the country median. Sample sizes are small (n<100) in the Netherlands and UK.
66
34
ACCESS TO CARE: CONVENIENCE FOR WHOM?
• 5,000 hospital emergency rooms • 10,000 urgent care centers• 5,000 ambulatory surgery centers• 2,800 retail clinics • 500 freestanding emergency rooms
67
URGENT CARE
• 10,000 all across US• Open usually from 8 a.m. until 10 p.m. • Charge at rates that are a third of the emergency department rates
• A facility fee is included in the single bill for services rendered in these facilities
• Located in high‐traffic areas• Goal is volume• Convenience is key• Offer basic on‐site diagnostic services with no advanced imaging such as CT or MRI
• 20 to 24 patients per day are required to break even• Regulatory barriers are relatively low, just like any medical office or clinic
Source: Wally Ghurabi MD, Personal Communication and Industry Filings 68
35
URGENT CARE (cont.)
• Few hospital referrals, but well‐insured when they happen
• Staffed by primary care physicians and nurse practitioners
• Formal emergency medical training is not required
• Well received by consumers for convenience, short waiting time and speedy resolution of episodic care issues
• Franchise‐like offerings in some markets, e.g., the market leader Med Express (which was purchased by Optum in 2015) operates, according to its website, in 15 states and has approximately 200 urgent care centers in those states
• The clinics are open 12 hours a day, seven days a week to serve consumers
• The key driving force behind urgent care is convenience
Source: Wally Ghurabi MD, Personal Communication and Industry Filings 69
FREE‐STANDING EMERGENCY ROOMS • Over 500 especially in Texas, Colorado, Ohio, Minnesota and Arizona
• Texas: Adeptus, a for‐profit publicly traded corporation, is the oldest and largest provider in the freestanding emergency department business. Under its First Choice Emergency Room brand, the company has nearly 100 locations in Texas 52 in metro Dallas (many in partnership with Dallas health system powerhouse Texas Health Resources) and 30 in Houston, seven in San Antonio, and five in Austin
• Could be as many as 2,000 of these facilities nationally in the near future according to Harvard researchers
Source: Wally Ghurabi MD, Personal Communication and Industry Filings
70
36
FREE‐STANDING EMERGENCY ROOMS (cont.) • Two basic types of freestanding emergency rooms:
– Hospital affiliated: that are recognized by CMS as being part of a hospital billing number and therefore can be reimbursed for a facility fee under Medicare
– Independent and not recognized by CMS (the latter also tend not to accept Medicaid patients because they cannot bill for the facility fee)
• 54 percent of all freestanding emergency rooms are hospital affiliated while 37 percent are independent
• Freestanding emergency department are fundamentally different from urgent care in that they are open 24/7, 365 days a year
• Desired location is a high‐traffic area, but disproportionately in relatively affluent suburban communities where a high percent of privately insured patients either live or work
Source: Wally Ghurabi MD, Personal Communication and Industry Filings
71
FREE STANDING EMERGENCY ROOMS (cont.)• Most freestanding emergency departments charge and payers normally pay standard ER rates
• Physicians bill a professional fee, and a facility fee is collected (usually three times the professional fee)
• The facility fee can be collected by the owner, whomever that is
• Because the charges are so high, they don’t need high volume and depend more on high acuity
• The break‐even point is 8 to 10 patients per day
• Typically they offer more advanced diagnostic equipment, including X‐ray, lab and CT scanner,
• Much more complex to license compared with urgent care, requiring medical practice committees like a hospital
Source: Wally Ghurabi MD, Personal Communication and Industry Filings
72
37
FREE STANDING EMERGENCY ROOMS (cont.)• Referrals from freestanding emergency departments with typical hospital ERs, are extremely attractive to the hospital since almost every admission will be a commercially insured patient
• Freestanding emergency departments require staff with formal training in emergency medicine.
• Parent company Adeptus indicates in its latest 10 Q filing with the SEC that it also has active partnerships with HCA, Concentra, Dignity Health, University of Colorado Health System and Trinity Health, in addition to their joint venture with Texas Health Resources
• The 10 Q filing also reveals that over 90 percent of its revenue comes from commercial patients, with Medicare and Medicaid being a tiny sliver of revenues
• This is cherry picking through location
Source: Wally Ghurabi MD, Personal Communication and Industry Filings
73
LOOKING TO 2020• Pressure on public payment sources will continue
• Private Payers will not tolerate costs shift willingly
• Exchanges, Medicare Advantage, Managed Medicaid and DB to DC among employers makes market more retail
• Shallow‐pocketed consumer becomes more important as decision maker
• Long run three payer segments: Managed Medicaid, HDHP (Exchange and Employer) and Medicare Advantage/ACO increase pressure to deliver value
• Care redesign for higher performance
– Migrating Business model to Risk
– Care coordination and management across the continuum of care
– Alignment of all physicians, nurses and caregivers with this process
– Consumer facing innovation in delivery and telehealth
– Innovation at Scale
• Stay Tuned: Even More Change is Coming74