What’s Next for Health Care? Understanding the current

state to get to the future state

Julie LewisDirector for Health PolicyThe Dartmouth Institute for Health Policy & Clinical Practice

Presented to the Concord CoalitionMay 28, 2009

What does health care in the US currently look like?

Healthcare is in Crisis Unsustainable Growth in Spending

Pay for Volume, not Value Little to No Accountability for Quality or Cost

Gaps & Variances in Care Poor Chronic Disease Management Lack of Care Coordination Disparities by Race and Ethnicity

Increasing Uninsured & Underinsured Lack of Information

Effectiveness of Treatments Comparative Effectiveness Public Information on Provider Cost and Quality

The Numbers US healthcare costs in excess of $2.5 trillion Recent CBO report suggests waste = $700B/year Patients, on average, receive recommended health

care only 55 percent of the time (McGlynn et al. 2003)

Per

cent

of G

DP

Cost: Over half of cost growth in federal spending will be attributed to per capita cost growth

Allocation of Projected Growth in Federal Spending on Medicare and Medicaid by SourceSource: Economic and Budget Issue Brief: Accounting for Sources of Projected Growth in Federal Spending on Medicare and Medicaid. A series of issue summaries from the Congressional Budget Office. May 28, 2008

Cost: U.S. Health Expenditures and Workers’ Earnings, 2000–2008

0

25

50

75

100

125

2000 2001 2002 2003 2004 2005 2006 2007* 2008*

Net cost of private health insurance administration

Private insurance net of administraion

Out-of-pocket spending

Workers’ earnings

106%

75%

29%

Perc

ent

47%

Three fold variation in per capita spending

Peter Orszag, N Engl J Med, 2007

Spending and resource usechronically ill, last 6 months of life

Total Medicare spending 50,522 40,181 26,330

Physician visits 52.1 42.2 23.9

Hospital days 19.2 17.7 12.9

UCLA MedicalCenter

Massachusetts General Hospital

Mayo Clinic (St. Mary's Hospital)

End-of-Life SpendingVariation at Major US Medical Centers

Where is the variation?

More Care in High Spending Regions

Less Care in High Spending Regions

Examples:Mammogram, Women 65-69 Pap Smear, Women 65+Pneumococcal Immunization Aspirin at admission (Heart attack)

Evidence-Based Quality

Higher healthcare spending is not associated with better quality

Source: Baicker et al. Health Affairs web exclusives, October 7, 2004

Where is the variation?

More Care in High Spending Regions

Less Care in High Spending Regions

Examples:Total Hip Replacement Total Knee ReplacementBack Surgery CABG Following Heart Attack

Evidence-Based Quality

Preference Sensitive Care

Variation in preference sensitive care exists within ALL regions rather than between regions

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Q1 Q2 Q3 Q4 Q5

Rate of Coronary Artery Bypass

Graft SurgeryAge-sex-race adjusted, 2001

Rate

per

100

0 En

rolle

es

HRRs by Spending Quintile

Each red dot represents a Hospital Referral Region (HRR)

Where is the variation?

More Care in High Spending Regions

Less Care in High Spending Regions

Examples:Total Inpatient Days/ICU Days Diagnostic TestsEvaluation and Management (visits) Imaging

Evidence-Based Quality

Preference Sensitive Care

Supply Sensitive Care

What do higher spending regions get?

(1) Fisher et al. Ann Intern Med: 2003; 138: 273-298 (2) Baicker et al. Health Affairs web exclusives, October 7, 2004(3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005(4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006(5) Sirovich et al Ann Intern Med: 2006; 144: 641-649(6) Fowler et al. JAMA: 299: 2406-2412

What’s going on? Research on causes of regional variations

What might be going on?Research on causes of regional variations

Source: Sirovich et al. Health Affairs. May/June 2008

What about Iowa?

Per Capita Medicare Reimbursements(Part A & B, 2006)

Iowa$6,572/beneficiary

Dolla

rs

States

Per Capita Medicare Reimbursements(Part A & B, 2006)

Dubuque$7,859/beneficiary

Dolla

rs

Hospital Referral Region

Iowa City$6,045/beneficiary

Total Medicare reimbursements per enrollee (Part A and B)

Area Population Rates Surplus/Deficit

*Marshalltown , IA 7,611 4169 -

Dubuque , IA 11,082 7586 37,863,403

Mason City , IA 15,814 7495 52,587,171

Clinton , IA 8,196 7086 23,900,376

Davenport , IA 18,135 7041 52,070,779

Waterloo , IA 13,903 7031 39,787,086

Fort Dodge , IA 7,394 6913 20,285,509

Sioux City , IA 15,666 6796 41,150,195

Burlington , IA 8,470 6771 22,037,085

Des Moines , IA 52,517 6412 117,787,060

Ames , IA 7,653 6200 15,539,730

Cedar Rapids , IA 28,327 5999 51,834,360

Ottumwa , IA 5,094 5874 8,680,673

Council Bluffs , IA 9,919 5769 15,866,515

Iowa City , IA 14,041 5605 20,154,443

What if….If per capita Medicare spending in Iowa was at the Marshalltown level?

Saving for…- Just Medicare- Just for Part A & B- Just 2006

Would have been:

$520 Million

Standardized PricesTotal Medicare Expenditures (Part A & B)

National Average

Standardized Prices Inpatient Short Stays

National Average

Standardized Prices Hospice Services

National Average

Standardized Prices Outpatient Services

National Average

Annual Growth Rates of per Capita Medicare Spending

Source: Slowing the Growth of Health Care Spending: Lessons from Regional VariationFisher, Skinner, Bynum, New England Journal of Medicine, February 26, 2009

Dubuque……………..5.2%Sioux City……………4.9%Waterloo……………..4.2%Des Moines………….4.0%Davenport……………3.5%Cedar Rapids………..3.5%Iowa City……………..2.8%

Where are we trying to go?

Focus of Measurably Improving

Health

Better Evidence to

Reduce Gray Areas

Engaged Patients, Informed Choice

The Right Workforce to Lead the

Change

Organizational

Accountability for

Capacity, Cost, and Quality

Meaningful Measures of

System Performance

Rewarding Value, Not

Volume

Principles for

Reform

Focus of Measurably Improving

Health

Engaged Patients, Informed Choice

The Right Workforce to Lead the

Change

Organizational

Accountability for

Capacity, Cost, and Quality

Meaningful Measures of

System Performance

Rewarding Value, Not

Volume