Finding Opportunity in Creative Destruction
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1 Finding Opportunity in Creative Destruction HHRMAC Annual Conference Sunday, February 9, 2014 Art Sponseller President/CEO
2 Ashton James Brackett Life Expectancy?
3 Creative Destruction Economic Renewal
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7 Unintended Consequences Purposive Social Action - Deliberate acts intended to cause social change (Merton) The Law of Unintended Consequences Intervention in a complex system tends to create unanticipated and often undesirable outcomes.
8 Unintended Consequences Unexpected Benefits Off label use (aspirin) Unexpected Drawbacks Prohibition Perverse Results Censored things are desirable Environmental Intervention Forest fire protection = fewer but larger fires
9 Starvation Diet The ACA!
10 Cost Shift In CA Annual ratio of hospital profit to costs by payor category 1 Reductions in Medicare and Medi- Cal reimbursement have required hospitals to increase charges to private payors to maintain overall profitability Estimates Private Payor Medicare Medi-Cal (including DSH)
11 Starvation Diet The Antidote Integration, alignment and riskbased or shared savings financing
12 ACA Employer Funding Dilemma
13 Rent-a-Bed! Retail, lease, or rent beds/floors to care coordinators Low cost & high quality Hospitalists? Procedure space? Emergency room? Concierge levels (upgrades) Infrequent Flyer points
14 Never Say Never Again Disruption Opportunity Photo credit: writing.wikinut.com
15 Healthcare Today
16 Wildcards Unintended Consequences
17 Federal Health Issues ACA Medicare and Medicaid Reform, DSH Cuts SGR Medicare Cuts Aging of Population Mental Illness Chronic Conditions
18 Federal Health Issues Advanced Illness Long Term Care Lifestyle (Demand) Supply Cost Fragmentation, Duplication Alignment, Coordination Fraud and Abuse Transparency / Pricing
19 State Issues State Budget AB 97 Lawsuit (10%, 27% Medi-Cal cuts) Health Care Reform Covered California Private Marketplace Hospitals, Physicians and Others Medi-Cal, Hospital Fee Program and DP/NFs
20 State Issues SPDs, Duals, LIHPs, Medi-Cal Expansion, Bridge Plan, DRGs Eligible but not Enrolled Residents Workforce, Jurisdictional Disputes 2014 Ballot Initiatives (state and local) Pricing and Public Views
21 November 4, 2014 Ballot Initiatives CHA Hospital Protection Rate Regulation MICRA SEIU-UHW Executive Compensation in NFP Hospitals and Health Systems Pricing Controls (125% of cost) on Hospital Services and Items
22 Executive Compensation Initiative Does: Limits TOTAL compensation to $450,000. Covers: Charitable hospitals, medical entities, systems Excludes Public and investor-owned Impact: Brain drain!
23 Fair Healthcare Pricing Initiative Does: establishes limits on hospital charges at 125% of cost each item plus annual aggregate. Covers: private hospitals Excludes Public and children s hospitals Impact: layoffs, downsizing, elimination of services, closures, etc.
24 Health Care Reform Individuals Groups Covered California Health Plans Qualified Health Plans (QHPs) QHPs Exchange Benefits (Covered California Products) Provider 1 Networks Provider 1 Networks Provider 2 Networks Provider 2 Networks 1 Identical 2 Varies Catastrophic (< 26) Bronze 60% Silver 70% Gold 80% Platinum 90% Market Products Market Products
25 Health Care Reform With California Rate Controls* Commissioner of Insurance Covered California Health Plans QHPs Provider Networks Provider Networks Health Insurance Companies Provider Networks * Assumes Consumer Watchdog rate regulation initiative passes on November 4, 2013.
26 Covered California New Market Tiering and Narrow Networks Essential Community Providers Delegated Medical Groups Integrated Networks
27 Covered California New Market Lower Premiums/Health Plans Impact (in and out of Exchange) Network Adequacy Deductibles & Subsidies $6k/$12k
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36 Heading for a Train Wreck! Consumers, Health status, population health Unfunded Mandates Payers Covered California Medicare Medi-Cal Providers Uncompensated Care Revenue Controls payers/providers
37 Creative Renewal Changing the economic inputs Creating a new world Change that cannot be stopped
38 Key Economic Inputs NOW Come to us for care Labor Capital technology & bricks and mortar Future Care comes to you Knowledge and Information Capital for innovation Knowledge and Information Labor Bricks and Mortar
39 Technology Fantastic Voyage Genetic engineered organisms, medicine, etc. Stem cell based organ regeneration Remote monitoring V-Go Proteus 3-D printing Nano-technology
40 3-D Organ Printing
41 Pills That Talk
42 The Employee of the Month has a BATTERY!
43 Nanotechnology
44 Top 10 Strategic Plan Questions 1. Financial impact anticipated changes? 2. Reduce costs, how? 3. Grow, how? 4. Recruit physicians desirability? 5. Quality and patient safety, improve?
45 Top 10 Strategic Plan Questions 6. Ready for population health? 7. Which populations to start with? 8. Differentiate, how? 9. Reality vs. plan, fill gaps? 10.Remain independent? Align?
46 United We Stand!
47 Think Long Term Plan Short Term Act Now! C. Duane Dauner
48 Thank You! Art Sponseller President/CEO
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