Where Is Healthcare Going? And How Will We Get There?

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Copyright 2013, INTEGRATED Healthcare Strategies. All rights reserved.

WHERE IS HEALTHCARE GOING?AND HOW WILL WE GET THERE?

Iowa Hospital Association Annual MeetingOctober 7, 2014

Des Moines

Presented by:

William F. Jessee, M.D., FACMPE, Chief Medical Officer & Senior Advisor

INTEGRATED Healthcare Strategies

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http://www.carilionclinic.org/Carilion/Home+Page

http://hartfordhealthcare.org/

http://www.oakwood.org/


WHAT ARE THE FORCES SHAPING HEALTHCARE TODAY?


Five Trends that Are Driving Change

1. Rising costs2. Spotty quality3. Waste4. Changing patient and physician

demographics5. Economic pressures on physician

practices


1. Rising Costs


Consistently higher than GDP growth


While rate of rise has slowed, it is still going up

•Real spending for healthcare increased by only 0.8% per person in 2012, just below the real gross domestic product •Healthcare prices in October 2013 rose 0.9% above October of 2012—the lowest reading in the 50+ years for which data are available•For six consecutive months, healthcare prices have grown more slowly than economy-wide prices •Medicare spending per beneficiary grew at a rate of 1.7% annually from 2010 to 2012—down considerably from previous experience


We Get Less Than We Pay For…


2. Spotty Quality

Some care is superb• Leader in technology and innovation• Leader in delivery innovations, such as ambulatory surgery centers, disease management programs, ESRD care

• Top tier places for care of serious illness---like Mayo, Cleveland, Hopkins, Partners, etc.

• Shorter waiting times for specialist or surgery than any OECD country except Germany

• Transplantation services best in the world


2. Spotty Quality (cont.)

Some care is far below expectations…• Around 47 million with no insurance in

2012...• ...but rate dropped from 18% to 13.4%

between September, 2013, and April, 2014

• Significant racial / ethnic / socio-economic disparities

• Hospital readmissions• Hospital-acquired infections• Never events• High rates of treatment-related injury• Hospitalizations from inadequate

ambulatory management


3. Waste

Institute of Medicine estimates 30% of total cost is wasteUnnecessary services ($210B)Excessive administrative costs ($190B)

US Admin cost = 30%; Taiwan = 2%Inefficiently delivered services ($130B)Excessive prices ($105B)Fraud ($75B)Missed prevention opportunities ($55)

http://resources.iom.edu/widgets/vsrt/healthcare-waste.html




4. Changing Demographics

Patients–Living longer (a double-edged sword)–More active lifestyles (some)–The obesity epidemic–More chronic disease associated with aging

–The Baby Boomer surge


4. Changing Demographics (cont.)

Physicians– Currently 40% women; by 2020, a

majority– Gen X and Gen Y values– Large number of (male, Baby Boomer)

physicians approaching retirement– Almost 40% of physician work force is

55 or older– Younger physicians are employees,

rather than owners– Primary care / specialist imbalance


5. Economic Pressures

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

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-5.4% -3.8% -2.4%

-0.9% -0.9% -0.9% -0.4%0.6% 2.9% 2.9%

-25.4%

0.0% 1.6%3.9%

6.7%10.3%

13.8%17.1%

21.6% 21.1% 23.1% 23.1% 23.1%

13.8%16.6%

20.6%

30.0%34.0%

44.5%

50.2%53.1%

49.3% 50.9% 51.1%

Cumulative Percent Change Since 2001 for the Medicare Conversion Factor,Not Hospital/IDS-Owned Multispecialty Group Operating Cost, and the Consumer Price Index

Medicare Conversion Factor CPI Total Operating Cost per FTE Physician

* 2010, 2011, and 2012 median operating cost values are three year moving average projections of previous years'data.* 2010, 2011, and 2012 CPI figures are the July 2010 semiannual figure. * 2011 MCF figure illustrates the estimated net impact of the 12/2010 legislation.

Projected


HOW IS THE DELIVERY SYSTEM CHANGING IN

RESPONSE TO THE ENVIRONMENT?


How the System is Changing

1. Decentralization of care delivery

2. Physician / hospital consolidation

3. Blurring of lines between providers and

insurers

4. Declining payment rates

5. Demands for value and accountability


1. Decentralization

“Big Box” hospitals vs purpose-built facilities

Ambulatory surgery centersEndoscopy centersImaging centersDialysis centersSpecialty hospitals

Large medical office buildings vs small practicesPatient convenience / experienceSupply chain challenges


2. Consolidation

Insurers consolidating

Physician practices getting larger

Hospitals acquiring physician practices

“Consolidation” easy---”integration” a challenge


3. Blurring Lines

Insurers acquiring practices, hospitals (Highmark, Cigna for example)

Provider organizations starting health plans, assuming other forms of risk

Employers becoming more aggressive (Walmart, Boeing, Disney, Lowe’s for example)

Insurer / provider JVs---esp. for ACOs


4. Declining Payments

Physician payment rates have been essentially flat for 10 yearsIncreased volume as a responseLikely across the board cuts coming

Hospitals, health plans already seeing cuts

Physicians, pharma likelyMoving away from payment based on volume---but 90% of physician payments are still FFS


5. Value and Accountability

All providers are being held ACCOUNTABLE for the Patient Experience:

SafetyQualityCost-effectivenessPatient satisfaction


Value and Accountability

Payment mechanisms drive changes in the delivery system (“follow the money”)Both insurers and provider groups are driving change in the private sectorHighmark “Quality Blue” programMassachusetts Blue Cross “Alternative Quality Contract”Advocate Health Care / Blue Cross of Illinois ACONorton Healthcare / Humana ACOIntegrated Healthcare Association (CA)


WHAT DOES ALL THIS MEAN FOR HOSPITALS AND

PHYSICIANS?


“Disruptive Innovations”

•Greater transparency: http://www.surgerycenterok.com/

•Patient friendly: http://visitingphysicians.com/house-call-physicians/

•Tech savvy: http://www.americanwell.com/

•Mainstreaming: http://www.hmsa.com/wellness-programs/online-care/

• Big dogs win: https://www.youtube.com/watch?v=tHvExOg4NI0

http://www.surgerycenterok.com/

http://visitingphysicians.com/house-call-physicians/

http://www.americanwell.com/

http://www.hmsa.com/wellness-programs/online-care/

https://www.youtube.com/watch?v=tHvExOg4NI0


Likely Impacts of Changes

1. Payment rates are likely to decline2. Free-standing physician practices will find

survival a challenge3. High cost, chronic conditions* will be a

major target for cost reductions4. Physician-led, team-based care will be

critical5. At least part of hospital and physician

payments will be at risk, driven by metrics of safety, quality, cost-efficiency, patient satisfaction

6. Chronic disease management expertise in high demand

7. Extensive use of HIT essential


ACCOUNTABLE CARE Organization

Vs.

Accountable Care ORGANIZATION


The Bottom Line

•Healthcare today DEMANDS measurable performance (on measures of safety, quality, efficiency and patient satisfaction)

•Performance REQUIRES alignment, engagement and integration of the work force—and a CULTURE committed to performance

•The work force INCLUDES physicians, nurses, other clinicians, management, support staff, volunteers, and board members


Some Suggestions for Thriving

•Focus on creating a culture of accountability•Enhance relationships and communication among PCPs, specialists, hospitalists, nursing staff, and post-acute providers•Become adept with HIT---not just EHRs, but telemedicine, home monitoring, patient education, etc.•Discuss possible partnerships with payers and employers•Align executive, physician and staff pay with performance metrics•Participate in value-based payment experiments


Final Points

1 The status quo is unsustainable

2 Change is happening---and healthcare organizations and professionals must lead the process---not be swept aside by it

3 Leadership is essential

4 “Skate to where the puck is going to be…”

5 “You miss 100% of the shots you don’t take.”


Contact Information

William F. Jessee, MD, FACMPE [email protected]

612-339-0919

BOSTON | DALLAS │ KANSAS CITY │ MINNEAPOLIS

www.INTEGRATEDHealthcareStrategies.com

Where Is Healthcare Going? And How Will We Get There?

Healthcare

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