1. The Perfect Storm: Our Role in Delivering Value in Healthcare
Matt Wain, Chief Operating Officer, MUSC Health
May 6, 2016

2. Agenda Introduction MUSC Health Perfect Storm Changes Patient Focused
High Reliability
Our Role as Partners
Questions & Comments
Key Message:
We currently find ourselves in the midst of 1 of only 3-4 ‘perfect storms’ that have affected healthcare, particularly academic medical centers, in the history of the US.
(Flexner changes in early 1900s, Medicare/Medicaid, Revenue cuts in 1990s, and now)
But like hurricanes – you can prepare to a degree. 2 2

3. Overview Employees - 8,000 Physicians - 750 Nurses - 2,400
1/11/2013
Overview
Employees - 8,000
Physicians - 750
Nurses - 2,400
Four Hospitals
Inpatient visits - 36,114
Observations - 5,629
Ambulatory surgeries - 3,693
Outpatient visits - 1,205,066
Off-campus care settings – 120
Emergency department visits - 66,736
Clinical trial studies actively enrolling
Operating budget - $1.6 Billion

4. Accomplishments

5. Increase in Cost of Healthcare
The Perfect Storm
Increase in Cost of Healthcare
Key Message:
The US has experienced tremendous increases in the cost of care since WWII. 5 5

6. Why is this important? HealthCare becomes more of a business every day
Double digit cost increases annually
Balancing business and patient duties is difficult
> 40% of private practice physicians spend at least one day per week managing business responsibilities.
> 82% find this balance “challenging” or “extremely challenging”
74% identified financial management as an area they would like to improve Source: Medical Practice Monitor survey by OPEN
Hospital Margins Decline
Non-Profit Hospital Revenue Growth lowest in 2 decades (Moody’s)

7. Current U.S. Healthcare System
Free Market Based
Who, when and where is largely
an individual decision
Employer, Private, Government and Self
Strengths
Choice, Access, Technology, Availability
Challenges
Costs, Un/Under Insured

8. Current U.S. Healthcare System
Costs
16.0% of US GDP spent on healthcare including:
Technology
Infrastructure
Services
Payment
Consumer Costs
Highest % Among Industrialized Nations
4.3 times higher than spending on National Defense
Different perspectives on whether this is good or bad?

9. Current U.S. Healthcare System
Uninsured Population
46.6 million uninsured in the United States including:
Non-citizens
Anyone without insurance for 1 day
Those who choose not to be insured
Can’t afford insurance and don’t have it for more than 2 years
Based on median US income level

10. Current U.S. Healthcare System
Uninsured Population
46.6 million uninsured in the United States including:
Non-citizens
Anyone without insurance for 1 day
Those who choose not to be insured
Can’t afford insurance and don’t have it for more than 2 years
Based on median US income level
8.2 million Americans uninsured

11. Key Message:
If the price of everything had grown as quickly as healthcare, this is what we would be paying at the grocery store!

12. The Perfect Storm
Increase in Cost of Health Care
Access to Health Care  Affordable Care Act – “Obamacare”
Value-Based Purchasing
Decrease in payment for unfunded
Expansion of Medicaid
Key Message:
We have millions of citizens with no reasonable way to pay for care and therefore no (or limited) access to care. The ACA is a fix to that access, but to do that will result in significant changes to healthcare across the US. This will keep up for the next 3-5 years.
ACA is complex with many components but 3 that have an important impact for us are:
1. VBP – which links the amount of our payment with the quality and efficiency of our results
2. Decrease in payments we have historically received for unfunded care (called disproportionate share payments or ‘dish’ for short)
3. Expansion of Medicaid enrollment to provide payment coverage for more people 12 12

13. The Perfect Storm Recession  South Carolina Budget Deficit
Increase in Cost of Health Care
Access to Health Care  Affordable Care Act – “Obamacare”
Recession  South Carolina Budget Deficit
Key Message:
SC, like most states in the nation, experienced a serious budget shortfall 13 13

14. The Perfect Storm Decrease in Medicaid Funding
Increase in Cost of Health Care
Access to Health Care  Affordable Care Act – “Obamacare”
Recession  South Carolina Budget Deficit
Decrease in Medicaid Funding
Key Message:
One way that SC addressed its budget deficit was to reduce Medicaid payments. For us, that meant $20 M less per year for the same amount of care. 14 14

15. The Perfect Storm 1 of 15 States to Not Expand Medicaid
Increase in Federal Spending
Access to Health Care  Affordable Care Act – “Obamacare”
Recession  South Carolina Budget Deficit
Decrease in Medicaid Funding
1 of 15 States to Not Expand Medicaid
Key Message:
Currently SC is 1 of 15 states that have elected not to expand Medicaid. So we, and other SC hospitals, will not see the reduction in unfunded patients that this part of the plan would have addressed
About half of the states are electing to expand Medicaid. SC is not one of them.
Even though SC is not expanding Medicaid, we will still see the cuts to monies we receive for taking care of unfunded patients. We have already experienced some of these cuts and more are scheduled to take place in October 2014. 15 15

16. The Perfect Storm
Increase in Cost of Health Care
Access to Health Care  Affordable Care Act – “Obamacare”
Recession  South Carolina Budget Deficit
Decrease in Medicaid Funding
1 of 15 States to Not Expand Medicaid
Key Message:
We will likely continue to see the same level of unfunded patients in the foreseeable future.
Funding for that care is slated to be reduced or eliminated at some point.
For us that is $45 Million per year.
The lack of Medicaid expansion and the lost of monies for unfunded care is particularly important at MUSC since we have the largest amount of unfunded patients. We are not alone – we are 1 of 6 hospitals across SC which see a large number of unfunded patients.
1 of 6 SC Hospitals with Largest share of unfunded patients 16 16

17. How Safe are We? The Perfect Storm Increase in Federal Spending
Access to Health Care  Affordable Care Act – “Obamacare”
Recession  South Carolina Budget Deficit
Decrease in Medicaid Funding
1 of 15 States to Not Expand Medicaid
Key Message:
The perfect storm is approaching.
We are already experiencing the ‘outer bands.
Like with all storms, we need to be prepared.
Script - above
1 of 6 SC Hospitals with largest share of unfunded patients 17 17
How Safe are We?

18. third leading cause of death in the US
How Safe is Healthcare?
Scheduled Commercial Airlines
European Railroads
Nuclear Power
Safe
Driving in the United States
Chartered Flights
Chemical Manufacturing
Healthcare
During the May town halls, we discussed how healthcare compares to other industries and activities when it comes to safety…
third leading cause of death in the US
Mountaineering
Bungee Jumping
Unsafe

19. Gram-positive, spore-forming anaerobic bacteria
Clostridium Difficile “C Diff”
Gram-positive, spore-forming anaerobic bacteria
453,000 cases annually; 29,300 deaths
Two-thirds of C Diff cases are estimated to originate in hospitals

20. Clostridium Difficile “C Diff”
Various Surveys:
42% of hospital privacy curtains were contaminated with some bacteria; 4% with C Diff
One C Diff outbreak linked to mop pads after a laundry malfunction
Infection rate reduced by 47.8% with effective bed cover laundry methods
Mattress cover openings/cracks result in increased incidence

22. The Perfect Storm Our Response Choluteca Bridge, Honduras Key Message:
We have a response in order to be prepared for this “storm”
So, what is our response – let’s review that…..
Choluteca Bridge, Honduras 22 22

23. 23

25. Score Repurchase Recommend
Moments of Truth
“A moment of truth occurs anytime a customer comes into contact with your organization and can form an opinion.”
Jan Carlzon
Scandinavian Airlines
It is these moments of truth that define us. Actually, it’s that moment of truth from the perception of the customers eyes that define us.
Often field complaints. After listening I hear it’s one poor moment of truth surrounded by many good experiences…
We talk about satisfaction but…
Exceed expectations = loyalty
Satisfaction = Risk
Score Repurchase Recommend
5 90% 96%
4 56% 71%
3 12% 19%
2 7% 10%
1 3% %
…About TV’s or something
Business can…
Better prices
Convenient locations
Frequent buyer perks – 9th hosp visit free
Special discounts & sales
Brand recognition
…but we can’t.

26. Correlation of Patient Care and Service Excellence5
COMPASSION 4
COURTESY 3
COMPETENCE
1-2
Fred Lee, “What if Disney Ran Your Hospital”
Inspired
Required
Hired
Fired
(5-7 minutes)
What about hospitals? What does this mean in healthcare? - the only source of loyalty for hospitals is patient/customer experiences (moments of truth).
Background on Fred Lee
Competence – customers assume quality.
basic level indicating hire/fire
Courtesy – Customer service
not a hiring criteria
might not fire for non-courtesy like we would for clinical
inadequacy
Compassion – emotional level
difference between good and great
Kelly
Courtesy and Compassion more important than competence and efficiency => putting campus values in line with key factors for patient satisfaction and loyalty
TASK vs. PURPOSE
Airlines
Concerned but assume safe
Remember on time but experience is key
mwain

27. Putting it all Together
Key Message:
The US has experienced tremendous increases in the cost of care since WWII. 27 27

28. Questions, Comments & Discussion