Reengineer, Repackage, Reprice and Re-activate -- A Strategy to Reduce Health Care Costs in America. Alliance of CEOs

Similar documents
together in Total Health 2011 Annual Report At-A-Glance

Understanding Patient Choice Insights Patient Choice Insights Network

Note: Accredited is the highest rating an exchange product can have for 2015.

The Alternative Quality Contract (AQC): Improving Quality While Slowing Spending Growth

Kaiser Permanente QUALITY OVERVIEW OVERALL RATING : 3.4 COMPANY AT A GLANCE. Company Statistics. Accreditation Exchange Product

WHITE PAPER. The Shift to Value-Based Care: 9 Steps to Readiness.

Kaiser Permanente: Integration, Innovation, and Capitation in Health Care

Eliminating Excessive, Unnecessary, and Wasteful Expenditures: Getting to a High Performance U.S. Health System

HIMSS CEO Addresses Leveraging Information and Technology to Minimize Health s Economic Challenges Session # 96 March 6, 2018 Hal Wolf CEO, HIMSS

Looking Ahead: The Future of American Health Care. Ezekiel J. Emanuel, M.D., Ph.D.

Operational Assessments: Utilizing Productivity Standards

RE: RIN 0938-AQ22, Final Rule, Section 3022 of the Affordable Care Act, Medicare Shared Savings Program: Accountable Care Organizations

Population Health or Single-payer The future is in our hands. Robert J. Margolis, MD

Colorado Choice Health Plans

Friday Health Plans of Colorado

Integrated Health System

Solutions for Effective Health and Benefit Plans. Healthcare Cost Transparency Tools. March 2015

Remaking Health Care in America

Better health. Better bottom line.

Healthcare Hotspotting: Delivering Better Care to the Most Complex Patients

Four Initiatives for Healthcare Change in BC

Clinical Operations. Kelvin A. Baggett, M.D., M.P.H., M.B.A. SVP, Clinical Operations & Chief Medical Officer December 10, 2012

Anthem BlueCross and BlueShield

PBM SOLUTIONS FOR PATIENTS AND PAYERS

PHCA Webinar January 30, Latsha Davis & McKenna, P.C. Kimber L. Latsha, Esq.

Transforming to Value: One Way Forward

Anthem BlueCross and BlueShield HMO

Long term commitment to a new vision. Medical Director February 9, 2011

total health and wellness Programs exclusively for our Blue Shield members For small businesses with 2 to 50 eligible employees

Connected Care Partners

A Practical Approach Toward Accountable Care and Risk-Based Contracting: Design to Implementation

3 Ways to Increase Patient Visits

ACOs the Medicare Shared Savings Program And Other Healthcare Reform Payment Methods

REDESIGNING HEALTH CARE FROM THE BOTTOM UP INSTEAD OF FROM THE TOP DOWN

Central Ohio Primary Care (COPC) Spotlight on Innovation

Health Care Evolution

THE HIGH PRICE OF HEALTHCARE THREE MISTAKES IN US HEALTHCARE THAT EMERGING ECONOMIES CAN T AFFORD TO REPEAT

total health and wellness

Healthy Kids Connecticut. Insuring All The Children

Health Center Strong:

Clinical and Financial Benefits of IT Implementation

Examining the Differences Between Commercial and Medicare ACO Models

4/15/2018. Disclosure of Commercial Interests. Reducing Staff Vacancy in Senior Care Organizations

Making the Business Case

Best Care at Lower Cost. The Path to Continuously Learning Health Care in America

ILLUSTRATION BY STEPHANE MANEL

Rural Health Disparities 5/22/2012. Rural is often defined by what it is not urban. May 3, The Rural Health Landscape

Coastal Medical, Inc.

Bundled Payments. AMGA September 25, 2013 AGENDA. Who Are We. Our Business Challenge. Episode Process. Experience

Using Data to Yield High Impact Business Intelligence Wednesday, July 25, 2012

Introduction to Value-Based Health Care Delivery

Coordinated Care: Key to Successful Outcomes

Healthcare 2015: Win-win or lose-lose?

Community Health Needs Assessment: St. John Owasso

Better Care, Consistent Care, Patient-Focused Care

The Cost of Care: Understanding the Next Generation of Payment Models

Canada s ICT Investments in our Economic Plan. Valerie La Traverse, S&T Counsellor Canadian Embassy September 21, 2009

How to Improve HEDIS Reporting Among Providers and Improve Your Health Plan Rankings

Generosity of R&D Tax Incentives

The Triple Win. Rethinking Public Private Partnerships for Healthcare in Vietnam

Health Reform and IRFs

U.S. Healthcare Problem

Capitalizing on Comprehensive Care: Cultivating a Medicare Advantage Mindset

Keenan Pharmacy Care Management (KPCM)

Your First Capitation Contract: How to Ensure That You Have an Adequate Cap Rate. October 23, 2017

Money and Members: Pay for Performance in a Medicaid Program

The Patient Protection and Affordable Care Act Summary of Key Health Information Technology Provisions June 1, 2010

Next Generation Physician Compensation Design in a Schizophrenic Payer Environment

MyHealth. results with your doctor. Talk High. to him or her about how often 3. Eat foods low in saturated 140/90 or higher

Banner Health Friday, February 20, 2015

Conference on Health Payment Reform NH Citizens Health Initiative/NH Dept of Health and Human Services May 11, 2009

Professor Dato Dr Jai Mohan, FRCP (Lon), FAMM

STRATEGIES AND SOLUTIONS FOR REDUCING INAPPROPRIATE READMISSIONS

COLLABORATING FOR VALUE. A Winning Strategy for Health Plans and Providers in a Shared Risk Environment

Quality of Care of Medicare- Medicaid Dual Eligibles with Diabetes. James X. Zhang, PhD, MS The University of Chicago

Health plans for Maine small businesses Available through the Health Insurance Marketplace

Examples of Measure Selection Criteria From Six Different Programs

Driving the value of health care through integration. Kaiser Permanente All Rights Reserved.

Health Care Reform An Integrated Health Care Delivery System Perspective

The Accountable Care Organization Specific Objectives

Questions that Changed the Landscape

Value-based Care. Fact Sheet. How Value-based Care is improving quality and health.

Scoring Methodology FALL 2016

Challenges and Opportunities for Improving Health and Healthcare in Ohio through Technology

National Survey on Consumers Experiences With Patient Safety and Quality Information

Best Practices. SNP Alliance. October 2013 Commonwealth Care Alliance: Best Practices in Care for Frail and Disabled Medicare Medicaid Enrollees

The Minnesota Statewide Quality Reporting and Measurement System (SQRMS)

Lessons Learned in Care Management. Meghan Sheridan, RD, CDE Ohio Association of Community Health Centers 2017 Annual Conference

CMS Quality Initiatives: Past, Present, and Future

The Affordable Care Act

For fully insured groups of 100 or more eligible employees. HealthyOutcomes. A fully-integrated health management solution that works for you

3 rd International Conference. Session Sectorial Policy - Health. Public Hospital Reforms in India, China and South East. Asia :

ENHANCING PRESCRIBER RELATIONSHIPS: MAKING IT A WIN-WIN JULY 12, :00 5:00 PM

Women s Health: A Focus on Chronic Disease

New Options in Chronic Care Management

Value-based Care Report. February How Value-based Care is improving quality and health.

Quality Circles. Nursing as a Revenue Center NDNQI

Ageing, Chronic Disease and Long- Term Care

Workhorse or Unicorn: Incentive Realignment and Health Improvement After One Year of ACOs. Objectives

Health Reform and Medicare: What Does it Mean for a Restructured Delivery System?

Transcription:

The Four R s -- Reengineer, Repackage, Reprice and Re-activate -- A Strategy to Reduce Health Care Costs in America Alliance of CEOs George C. Halvorson Chairman and CEO Nov. 11, 2011 1

U.S. Health Care generates $2.8 trillion in annual revenues. Health care is the fastest growing segment of our economy. 2

By itself, the American Health Care Expenditure Level is larger than the total economies of all but five countries -- including the United States: Only China, Japan, India, and Germany have total economies larger than U.S. health care all by itself. Source : CIA Source book, 2009 est. https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2001rank.html 3

Average family premium in the U.S. -- $16,000 4

Minimum wage for a fulltime worker in the U.S. -- $14,000 5

Complete salary and benefits for a Systems Engineer in Bangalore, India -- $12,000 6

We need health care reform in America because we need much more affordable care. 7

Four Key Components of Basic Reform 1) Coverage 2) Care 3) Cost 4) Health 8

We need to focus our attention on achieving affordability by making care better and smarter. 9

There is more than enough money in American health care now -- it is not efficiently and effectively used. 10

We should reengineer and reprice care to get increases in care costs down to CPI in four years. 11

Agriculture used to involve thirty percent of our workforce and food consumed forty percent of a family s cash flow. Now agriculture involves less than two percent of the work force and consumes less than ten percent of the average family budget. 12

We can t get to CPI cost increase levels in one year or with one change in practice. 13

-- But -- We can get there in several years if we reengineer care, make care safer, connect care, reprice care, computerize care data, and regulate a few key pieces of care. 14

Kaiser Permanente 1) Vertically Integrated (All Major Care Components) 2) Prepaid 3) Relevant Size -- 8.8 million members -- 180,000 workers -- $45 billion in revenue 15

Kaiser Permanente 1) Fully electronic care support 2) Ten million medical records 3) Thirty million electronic contacts 4) Largest electronic medical library for care support 16

KP Current Electronic Medical Library 1) Medical Journals / Papers / Text Books / Research Resources 2) Key Protocols 3) Best Practices 4) Real Time Access Point of Care 5) Instantaneous Revision 6) Order Tests / Prescribe Drugs 7) Patient Information Print Outs 8) Continuous Improvement (6 th Generation) (Only Kaiser Permanente physicians have this tool kit.) 17

Basic Premise -- 1)All / All / All 2) Make The Right Thing Easy To Do 18

Success Levels -- HIMMS Wins (35 Stage Seven Awards) HEDIS Wins (21 Best In Country Scores) Leapfrog Group Wins (16 Hospitals) System Availability Uptime Institute Wins (6) JP Power -- Best Health Plan for Service HIMSS Organizational Davies Award 19

Success Levels (cont d) ( Star Wars ) -- 459 Health Plans Were Rated by Medicare -- Nine Health Plans received five stars Five Kaiser Permanente regions won five stars and the other three Kaiser Permanente regions received 4.5 stars. (Service, Quality, Satisfaction Levels and Process Functionality) 20

Care Improvement Performance Successes Fewer heart attacks Fewer asthma complications Fewer broken bones Shift change error reduction Zero reportable pressure ulcers Sepsis deaths cut in half (Care can be reengineered) 21

Major Cost Drivers For The Country Chronic Care 75% Acute Care 25% 22

Cost Distribution of Care Population Cost 1% 30% -- Costs are not evenly distributed -- 23

Huge Opportunity for Focus U.S. Population U.S. Care Costs 10% 80% Care improvement should focus on high leverage interventions and high impact preventions. 24

Chronic care is a team sport. 25

Teams Need -- 1) Identity 2) Function 3) Captains 4) Connectivity and Tools (Medical Homes -- ACO s -- Basic Care Teams) 26

We Need The Right Payment Model -- Prepayment and package prices can empower and enable both process engineering and continuous improvement / reengineering. 27

Fee For Service As a Payment Model (Traditional Payment Mechanism) 1) Perverse incentives 2) Focus on process vs. outcomes 3) Rewards entire categories of errors, bad care and mistakes 4) Cripples innovation and process redesign and process improvement 28

Packaged Payments Allows Innovation and Process Engineering to Happen KP does nine key things to reduce broken bones by roughly half -- six of the nine KP steps are not billable for either Medicare or Commercial Insurance 29

Reengineering has huge upside potential for reducing the costs of care. 30

-- Fifteen Million E-Visits -- Twenty Million Follow-up Lab Visits 31

Thirty-five million visits that would be individually billed in a non-connected, fee-for-service care environment. (Patients love e-visits) 32

Fee-For-Service Issues 1.7 million hospital infections Sepsis as number one case of death Growing pressure ulcers 1.9 million medication errors (Fee-For-Service Payment Models Reward Caregivers for those deficiencies) 33

Reengineering Wins -- Sepsis deaths reduced by half Pressure Ulcers reduced by half Shift change error rate reduced by half 34

3 R s of Direct Cost Mitigation 1) Reengineer 2) Regulate 3) Reprice 35

We need business model changes to accomplish all three of those agendas. 36

America Needs a New Business Model for Care That Creates -- A) Safety B) Better Care C) Better Outcomes D) Better Prices 37

Business Model Cash Flow Enhancements 1) Prepayment 2) Packages of care 3) French model of price-relevant benefit design 4) Focus on team care value based benefit design that steers patients with co-morbidities to team care. 38

We very much need to look at care prices in America. 39

We have the highest unit prices for care in the world. 40

Physician Fees: Normal Delivery (US$) $6,000 $5,000 (95 th percentile) $4,848 $4,000 $3,000 $2,997 (Average) $2,000 $1,000 $324 $503 $1,336 $2,380 $0 Spain Canada France USA Fee Range USA Low USA Average USA 95th Percentile (Actual Payments) 41

Scans and Imaging Fees: Angiogram (US$) $2,500 (95 th percentile) $2,160 $2,000 $1,500 $1,000 $500 $- $117 $134 $187 $245 $287 $682 $153 Spain Switzerland UK France Germany USA Fee Range (Average) USA Low USA Average USA 95th Percentile (Actual Payments) 42

Scans and Imaging Fees: CT Scan: Head (US$) $1,600 $1,400 (95 th percentile) $1,430 $1,200 $1,000 $800 $600 $400 $200 $0 $65 $117 $179 $187 $287 $360 $464 Canada Spain France UK Germany Switzerland USA Fee Range $82 (Average) USA Low USA Average USA 95th Percentile (Actual Payments) 43

$16,000 $14,000 Hospital Charges: Average Cost Per Hospital Day (US$) (95 th percentile) $14,306 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- $470 $554 $617 $909 $1,041 $3,612 (Average) $1,595 Spain Germany Switzerland France Canada USA Fee Range USA Low USA Average USA 95th Percentile (Actual Payments) 44

Total Hospital and Physician Costs: Bypass Surgery (US$) (95 th percentile) $140,000 $126,182 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $11,618 $13,998 $15,802 $16,325 $19,180 $22,212 $27,237 $59,770 $37,793 (Average) $0 Switzerland UK Spain France Netherlands Canada Germany USA Fee Range USA Low USA Average USA 95th Percentile (Actual Payments) 45

Drug Prices: Nexium (US$) $400 $350 (95 th percentile) $339 $300 $250 $200 $150 $136 $167 (Average) $186 $100 $50 $30 $30 $32 $35 $50 $69 $- UK France Canada Netherlands Spain Switzerland Germany USA Fee Range USA Low USA Average USA 95th Percentile (Actual Payments) 46

How Important Are Fee Levels To The Total Cost Of Care in the U.S.? -- Compare Canada to the U.S. -- If we delivered all of the care we deliver today in this country -- every single visit, scan, prescription, surgery, medical procedure and hospital admission -- and if we simply repriced each piece of American care at Canadian levels -- we would drop our percentage of the GDP spent on care From roughly 18% --To less than -- 12% We cannot continue to ignore prices and fees as a cost driver for care in this country. 47

French Model 1) Prices are relevant. 2) High priced vendor choices by patients don t increase premiums for other patients. 3) Consumers get 1 st dollar coverage for key services. 48

Premiums Are Now The Average Cost of Care ACA Loss Ratio Law (Focus will shift to provider costs and prices) 49

Fee Horror Stories Now Relevant -- $30,000 Ultrasounds $27,000 ER Activation Fees $25,000 Delivery Fees Proctological Exam-- $400 to $4,000 50

Payer Backlash Beginning -- Ultrasound at $59,490 Spurs Aetna Outrage in Suit Naming Doctors Aetna Inc. (AET) is suing six New Jersey doctors over medical bills it calls unconscionable, including $56,980 for a bedside consultation and $59,490 for an ultrasound that typically costs $74. 51

$10 drug now $1500 after FDA grants monopoly A progesterone hormone injection, used to prevent preterm labor, used to be $10 a shot. Now that the FDA has assigned an exclusive right to create the easily-made formula to one company, KV Pharmaceuticals, the price has risen to $1500. 52

We need to buy packages of care at an affordable price (including prepayment for a complete package of care). Or We need to put fees in front of consumers at the point of care and make them relevant to the patient. 53

-- Package prices allow providers to reengineer. -- Price relevance brings prices down. 54

Lasik Eye Surgery $2,000 per eye 55

Lasik Eye Surgery $2,000 per eye $1,500 per eye 56

Lasik Eye Surgery $2,000 per eye $1,500 per eye $1,000 per eye $500 per eye 57

Care Was Reengineered New anesthetic New portable eye laser New recovery setting Better diagnostic scanner Leaner staffing model Better care and better care measurement 58

Other Business Model Evolution Wins -- Heart Transplants -- Ninety-Day Guarantees 59

Fees Are a Huge Opportunity Area 1) All invented 2) No inherent legitimacy for any fee 3) Huge variation today 4) Untapped resource for cost mitigation 5) Major fees are invisible to consumer 60

Next Steps Private buyers should coordinate safety agenda with CMS Prepayment wherever possible Packaged care for appropriate services Channel patients to team care Full data on process, outcomes, and cost Cap cost shift 61

We also need to improve health. Chronic care drives nearly eighty percent of total care costs in the U.S. (over half for the world) 62

Chronic care needs are created by individual behaviors -- food intake, weight, smoking and physical inactivity. 63

We need to help people eat better (and less) and become physically active. 64

Physical activity is easier to achieve than weight loss. Activity creates positive neurochemicals instead of negative neurochemicals -- so it is much easier to both improve activity levels and sustain them over time then it is to lose weight and keep it off. 65

Fit Beats Fat 66

Benefits of Walking Daily Walking has huge value Prevents and manages diabetes Prevents heart disease and strokes Prevents and treats depression and anxiety Helps manage asthma Lowers the rate of some cancers A Moderate Amount of Walking Has a Huge Impact 67

Walking 30 minutes a day, five days a week can cut new cases of diabetes in half. (Losing ten pounds as well can cut the rate of new diabetics by nearly two thirds.) 68

Two Fifteens Will Do The Trick The best news is we can achieve the 30 minutes a day in two 15-minute time periods -- It doesn t have to be a continuous half hour. -- -- We can achieve health goals with two 15's. -- www.everybodywalk.org 69

From a purely practical perspective -- Walking is our best hope and our best strategy. 70

Walking is the best, most accessible, and most likely to succeed health improvement option for most people. 71

We Need Affordable Health Care 1) Better care 2) Price competitive care 3) Buying care by the package and not by the piece 4) Proactive prevention to reduce the need for care -- Walking is a great next step. 72

www.everybodywalk.org 73