Health Care: In Transition to Clinical Performance Risk Implications for Physicians
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1 Health Care: In Transition to Clinical Performance Risk Implications for Physicians April 2012 John Hensing, MD, FACP EVP, Chief Medical Officer Banner Health
2 Today s Agenda Three Historical Phases of American Health Care Evolution and Innovation in Another Industry Where We Find Ourselves Today The Era of Accountability Industry s Response Payor Hospitals Physicians
3 Three Phases of Clinical Progress in the Modern Era* 1. Understanding and Classifying Disease 2. Defining Treatments 3. Designing Organized Care Delivery * David Cutler, Otto Eckstein Professor of Applied Economics Harvard University
4 First issue of the International Classification of Diseases ICD-1 Classifying Disease 1900 For causes of death (191) Residential Medical Office, Otego, NY 1900
5 Defining Treatments 1950 Advent of truly effective therapies: Vaccines for childhood illnesses including polio Significant use of penicillin New drugs for glaucoma, arthritis First organ transplant Colorado physician, Life Magazine, 1948
6 A response to: Designing Care Delivery 1999 Cost growth Safety recognition of patient injuries Growing patient expectations for coordination of care Complexity - 19 th Century payment and delivery models for 21 st Century care/complexity Leading to two directional choices: Cost revolution so, do we Addresses only the first challenge (cost) value? Challenging without organized resources Value revolution or, do we cost as primary response?
7 Evolution, Efficiency, Innovation in Another Industry
8 US population - 76 million Food costs occupied greater than 50% of many working class families incomes More than 500,000 food stores (specialty shops) in the USA Meat from a butcher Vegetables from a vegetable stand, etc in America
9 Along comes A & P John and George Hartford and the economy store Standard stores Selling branded products Owned warehouses and trucks 9,000 stores by 1923 Safeway, Kroger not far behind Chain stores market share 4% (1919) to 29% (1932)
10 1920 s Creative Destruction At least 100,000 small shops go out of business Scale mimicked by independents Cooperative associations Price advantage shrinks All competing on the basis of scale
11 Innovation Environmental factors Autos/transportation, industrialization Refrigerators, radio advertising Michael Cullen at Kroger Huge store, cash only, no customer delivery Outskirts of town King-Kullen Self-service Shopping carts 20% of net incomes goes to advertising ,000 stores, 380 supermarkets 160,000 stores, 27,000 supermarkets 3% market share 74% market share
12 1980 s and Today Club stores Costco 1983, Sam s 1983 Superettes Whole Foods 1978, Trader Joe s 1966 Scanning bar codes, Logistics, Walmart 30,000 products per store by 1990 Today Average store 50,000 square feet 45,000 products Food averages 6% of a family s disposable income
13 Key Lessons 1. Both Quality and Efficiency are essential for success 2. Scale is a common and copied tool for efficiency 3. Environmental Factors facilitate market evolution -- Information technology, purchaser expectations will undoubtedly accelerate the pace of change in health care 4. Innovation and Creative Destruction are sparks to the next steps in our journey to Industry Leadership
14 Where Are We in Healthcare Now? The current economic trends in health care are unsustainable The US can t afford the current rate of cost growth The past decade of cost growth has wiped out the real income gains for an average US family (Health Affairs 30, No 9, 2011) Premium rate reviews; cost shifting is reaching limits The provider payment methodology is changing Transparency is forcing aggregate clinical accountability The advent of consumerism and evolving technologies are major forces for change The competitive environment is dynamic and potentially disruptive to all payors, providers, patients
15
16 Source: Fischbeck, Paul. US-Europe Comparisons of Health Risk for Specific Gender-Age Groups. Carnegie Mellon University; September, 2009.
17 The Current System Healthy Person Continued Health Strategies : Acute & Post-acute Cost Mgmt Bundled Pricing, Case rates Co-management Arrangements for acute care episodes Performance Penalty Avoidance Chronic Disease PCP Specialist Care Mgmt. Etc. Successful Management Acute Episode Hospital Care Specialty Care Invasive Care Etc. Post Acute Care Rehab Skilled Nursing Home Health Etc.
18 The Evolution to Population Health Management Healthy Person Continued Health Chronic Disease Successful Management Strategies: Understanding global costs Disease Management Community Care Networks Cross-continuum EMR HIE Team-based delivery System Design PCP Specialist Care Mgmt. Etc. Acute Episode Hospital Care Specialty Care Invasive Care Etc. Post Acute Care Rehab Skilled Nursing Home Health Etc.
19 CMS (ACA) Quality Related Payment Initiatives The Early Efforts for Payment Reform 1. Value-Based Purchasing (VBP) Program (process adherence, patient satisfaction) 2. Medicare Shared Savings Program (via an Accountable Care Organization ACO ) * 3. National Pilot Program on Payment Bundling * 4. Hospital Readmission Reduction Program 5. Payment Adjustment for Conditions Acquired in Hospitals * Opportunity for Shared Savings
20 From: Services to Outcomes New Environment From: Relative Simplicity to Complexity From: Episodic Interventions to Accountable Health Management Key Strategies for Provider Organizations: 1) Create collaborations and organized care models for improved outcomes 2) Invest in value-based infrastructure and information 3) Embrace measurement and transparency 4) Clinically transform implement consensus-based and evidencebased care models and practices across the continuum 5) Acquire and develop clinical leadership
21 Payor Responses Leverage current strengths: Integrated information and risk assumption, Capital resources,medical management competencies (Population Health) Several Options: Create delivery/provider arms Develop medical management products and services to assist provider organizations Promote innovative products and benefit designs (e.g. narrow networks, patient engagement) Develop innovative provider incentives
22 Hospital/Health System Responses Develop Coordinated Care Models with focus on one stop to meet patient expectations Organize Risk Assumption vehicles/networks Enhance Medical Management competencies Invest in Information Systems and Analytic strengths Bottom line: Accountable Care Reliable, safe, efficient & appropriate care to address outcome risk Need for aligned skillful clinicians as a critical element of delivery, knowledge and leadership? End of stand alone hospital? (57% are in systems today*)
23 Physician Responses Needs: Maslow s Hierarchy Physiologic Needs Security Needs Social Needs Esteem Needs Self-actualization Needs Their needs will be met as they become an essential element in organized care models. Their values will heavily influence their choices: clinical integrity, the importance of science, sense of fairness and the honoring of ethical principles.
24 Percentages of U.S. Physician Practices Owned by Physicians and by Hospitals, Kocher R, Sahni NR. N Engl J Med 2011;364:
25 Percentages of Active U.S. Primary Care Physicians (PCPs) and Specialist Physicians Employed by Hospitals, , MGMA Data. Kocher R, Sahni NR. N Engl J Med 2011;364:
26 As patients accumulate more, and more complex, medical conditions, their care will require greater coordination, greater use of clinical data, and collaborative provider teams which integrated delivery systems are best positioned to deliver. In the long run, any pricing distortions derived from market power and friction associated with changing the role and behaviors of physicians are likely to dissipate and be outweighed by improved productivity, outcomes, and patient experiences, and more efficient health care markets may translate into lower prices over time. Hospitals' Race to Employ Physicians The Logic behind a Money-Losing Proposition Robert Kocher, M.D., and Nikhil R. Sahni, B.S. N Engl J Med 2011; 364: , May 12, 2011
27 The greatest danger in times of turbulence is not the turbulence, it is to meet the turbulence with yesterday s logic. Peter Drucker
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