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National strategies in federated health systems Dr Mark Britnell Chairman and Partner Global Health Practice

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1 National strategies in federated health systems Dr Mark Britnell Chairman and Partner Global Health Practice KPMG @markbritnell

2 1 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Mark Britnell – over 60 countries, 170 occasions.

3 2 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. A The exam question Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Q Is it possible to have a national healthcare strategy in a federated political system? It is probably not desirable to have a comprehensive national strategy but it makes sense to have some national strategies.

4 3 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. My argument ‘Most systems adopt transactional not transformative strategies for change but there is a growing realisation that integration might lead to more sustainable systems. Many national strategies aspire to this but many barriers, including fragmentation and misalignment, hinder laudable and lofty ambitions. So, federate where necessary, localise where possible.’ Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here]

5 4 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Health systems require major change; integration will be an important tool for achieving this Healthcare strategies the world over tend to have a lot in common How do these common themes play out in practice in other federated health systems? Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] This presentation 1 2 3

6 5 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 3,000 CEOs from all industries see the importance of transformational change but focus their attention on short term transactional efficiency. Changing business operations to realize cost efficiencies Improving cash and working capital management Exploiting growth opportunities through successful transactions Preparing your organization for major business model changes Managing and retaining the right people within the organization Addressing risk throughout the organization Looking for growth in emerging markets Innovation through product development Adapting to take into account changing customer and stakeholder behavior Using information to forecast response to uncertain times Refinancing or seeking capital Using technology as a strategic enabler, not just an operational facilitator Embedding sustainability in the business model Responding to regulatory change Seizing opportunities offered by increasing public/private sector interaction KPMG research: Transaction trumps transformation. Note:(a)Due to rounding up and down total figure may vary from 300% Source:KPMG ‘Succeeding in a Changing World’ 2012 Total adds up to 300% all respondents had three votes (a)

7 6 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Healthcare Healthcare leaders are even more focused on the urgent issues of today and less on the important ones of tomorrow. Note:(a) Due to rounding up and down total figure may vary from 300% Source:KPMG ‘Succeeding in a Changing World’ 2012 Total adds up to 300% all respondents had three votes (a) Improving cash and working capital management Changing business operations to realize cost efficiencies Addressing risk throughout the organization Exploiting growth opportunities through successful transactions Using information to forecast response to uncertain times Preparing your organization for major business model changes Seizing opportunities offered by increasing public/private sector interaction Looking for growth in emerging markets Adapting to take into account changing customer and stakeholder behavior Using technology as a strategic enabler, not just an operational facilitator Embedding sustainability in the business model Managing and retaining the right people within the organization Refinancing or seeking capital Innovation through product development Responding to regulatory change

8 7 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. KPMG in Rome, 2012. Over 40 senior executives and clinicians from 22 countries debated major global challenges of today. Frances Diver Executive Director, Victorian Department of Health Chris Rex CEO, Ramsay Health Care Dr. Claudio Luiz Lottenberg Chairman & President, Hospital Israelita Albert Einstein Prof. Axel Ekkernkamp CEO, Unfallkrankenhaus, Berlin Glenna Raymond President and CEO Ontario Shores Centre for Mental Health Sciences Dr. Kevin Smith President and CEO, St. Joseph's Health System Prof. Shan Wang CEO, Peking University Peoples Hospital Christian Boel Vice Healthcare President in Region Midtjylland Filippo Monteleone Managing Director, General de Santé Prof. Dr. Udo Janssen Chairman, German Hospital Institute Prof. Anupam Sibal Medical Director, Apollo Hospital Dr. Terry McWade Deputy CEO, Royal College of Surgeons in Ireland Carlo Perucci Head of the National Outcomes Programme, National Healthcare Agency Dr. Giancarlo Ruscitti CEO Fondazione "Opera San Camillo" Paolo Rolleri Director General IRCCS San Raffaele Pisana – Istituto di Ricovero e Cura a Carattere Scientifico Dr. Masami Sakoi Planning Policy Director, Ministry of Health, Labour and Welfare Dr. Chul Lee CEO, Yonsei University Health System Prof. Dr. Hans Büller CEO, Erasmus Medical Centre Prof. Dr. Bastiaan Bloem Medical Director, Radboud University Nijmegen Medical Center Dr. Pieter Hasekamp CEO, Dutch Health Insurers Association (ZN) Unni Hembre President, European Federation of Nurses Associations (EFN) Isabel Vaz CEO, Espírito Santo Saúde Bala Krishnan Director of Development Office of Chairman, Aspetar Scientific Advisory Board Orsida Gjebrea Senior Policy Advisor, Supreme Council of Health Prof. Benjamin Ong CEO, National University Health System Dr Brian Ruff Head of Risk Intelligence and Access Innovating Divisions, Discovery health Martin Gerber CFO, Universitätsspital Basel Dr. Jennifer Dixon Director, Nuffield Trust Sir Ian Carruthers CEO, NHS South of England Sir Jonathan Michael CEO, Oxford University Hospitals NHS trust Sir Robert Naylor CEO, University College London Hospitals NHS Foundation Trust Valerie Michie Global Head of Health, SERCO Tim Harford Senior Columnist at the FT and Author of Adapt: Why Success Always Starts with Failure Sir Bruce Keogh Medical Director of the NHS and NHS Commissioning Board Gary Kaplan CEO, Virginia Mason Medical Center Dr. Arthur Southam Executive Vice President, Kaiser Permanente Ron Williams Former Chair & CEO of Aetna Inc. and member of President Obama’s Management Advisory Board Anne McElvoy Public Policy Editor, The Economist Paul Cummings Director of Finance, Northern Ireland Health and Social Care Board Lord Nigel Crisp Independent Crossbench Member of the House of Lords

9 8 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The paradox. Most people believe that their health sectors need substantial change but think their own organisational plans are robust. They can’t all be right. Transformational change requires the majority to have a new vision. That's why change is hard. Focus remains on transactional change not transformational reforms.

10 Leading hospitals, health plans and life sciences executives believe their business models are ‘somewhat sustainable ’ From volume to value (USA): Source: Transforming Healthcare: From Volume to Value – New Research on Emerging Business Models KPMG 2012 Sustainability of current business models over next 5 years:

11 But they don’t feel their industries will stay the same… …with moderate to major change coming in their sectors Source: Transforming Healthcare: From Volume to Value – New Research on Emerging Business Models KPMG 2012 Extent of changes to your industry over next 5 years:

12 11 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Healthcare leaders in Rome also demonstrate the paradox. ‘Most (75%) think that current business models are somewhat sustainable but almost all (95%) expect moderate (30%) or major (65%) business model change in the sector’ Question – The current business models operated by hospitals are: Somewhat sustainable Question – How much change do you expect to see in the shape of the provider system and in their business models in the next 5 years? Major changes Source: Pre-conference survey Something to teach, Something to learn, KPMG Rome 2012

13 They believe that integrated care will… Source: Pre-conference survey Something to teach, something to learn, KPMG Rome 2012 …offer new possibilities for quality and cost Reduce costs (75%) Improve outcomes (90%)

14 13 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 21 st century healthcare is a chaotic combination of 20 th century acute care and 19 th century general practice. Competing and conflicting business and care models destroy value. Some hospitals are beginning to understand they need to change their value proposition and integrate. ■A clearly defined population ■The ability to do reliable risk stratification and develop registries ■Accountability for outcomes, supported by aligned contracts and incentives ■Systematic clinical care ■Staff and systems to support coordination ■Shared records ■Shared quality governance arrangements between participants ■Payment mechanisms that support these arrangements ■The development of a workforce with new skills including the ability to manage multiple morbidity including dementia and work in multidisciplinary teams Prerequisites for an integrated system Integration.

15 14 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Consensus on major trends. Payers are becoming ‘activist’. 1 Some hospitals are transforming into health systems. 2 Patients becoming active partners. 3 High growth health systems, providing new perspectives on health reform. 4 Innovative integration and partnership. 5

16 15 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Health systems require major change; integration will be an important tool for achieving this Healthcare strategies the world over tend to have a lot in common How do these common themes play out in practice in other federated health systems? Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] This presentation 1 2 3

17 16 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Same strategy, different country – there are core elements that we see repeated in most healthcare strategies throughout the developed world Coordinated / integrated care Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: Stratifying and segmenting patient populationsDesigning systems & processes around patients’ needs, not existing structuresCo-ordination across a broad continuum of care rather than independent silosStrengthening the capacity and capability of primary and community care Flexible workforce, fit for the future Developing new roles &responsibilities; staff working to the limit of their licencesTeams that cross organisational boundaries Paying for quality, not volume and cost containment Creating pricing and payment structures that support co-ordination & quality

18 17 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Same strategy, different country (continued) Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] E-Health and technology Making better use of data to understand and target patient populationsProviding better access to diagnostics, often in less acute settings Provider networks Consolidating the most specialised services, potentially through networksCollaboration between public and private sectors Patient information and transparency More easily accessible information about outcomes and patient feedbackPatients taking control of their own health informationCreating portable electronic patient data to improve continuity of care

19 18 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. These recurring themes resonate with what Don Drummond found here in Ontario “What we have is a series of disjointed services in many silos. Ontario needs to integrate these silos... that impede efficient and effective service” “Our health system developed to deal with acute care and largely remains in that mode. Today, the key health issues are increasingly shifting to chronic care questions” “All health services in a region must be integrated” Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] A workforce trained (and structured) to meet the needs of complex patients: A health system coordinated around the needs of patients – particularly those who use it the most: “Physicians’ primary goal should be prevention and keeping people out of hospitals.” “Medical schools should educate students on “system issues” so that they better understand where physicians fit in the whole health care system.”

20 19 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. These recurring themes resonate with what Don Drummond found here in Ontario “Extensive use of IT is key to pushing the health care system to operate in a co-ordinated fashion.” “Accelerate the adoption of electronic records, working from the bottom up.” Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Organisational structures that promote quality and efficiency: A health system that makes the best use of technology: “Centralize all back-office functions such as IT, human resources, finance and procurement.” “Hospitals are paid on the basis of average costs...so there is no incentive to increase efficiency.... A blend of activity-based funding (i.e., funding related to interventions or outcomes) and base funding would work best.” Payment mechanisms that incentivise quality & efficiency, not volume:

21 20 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – Australia Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Payment reform Setting a national price for activity-based funding for hospitals, through a government agency, the Independent Hospital Pricing Authority The Commonwealth Government to fund 50% of the efficient cost of hospital care A more coordinated system with a stronger role for primary care Establishing Medicare Locals to coordinate and integrate primary healthcare and to provide the link between primary health and the hospital networks eHealth Rolling out Personally Controlled Electronic Health Records Australia’s 2011 reform agenda aims to create a more uniform, national system. Some of the core elements of these reforms make for familiar reading

22 21 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – Australia Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] A shift towards prevention rather than cure The Australian National Preventive Health Agency was established in January 2011 Structural reforms to the acute sector Creating networks of hospital providers through the LHNs...continued...

23 22 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – South Africa Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Funding and payment reform – National Health Insurance Achieving universal coverage and reform of the funding and payment system is at the heart of a whole suite of health reforms Costing services accurately and creating payment models that encourage efficiency Pricing to allow private sector involvement in National Health Insurance system A more coordinated system with a stronger role for primary care Linking primary and secondary care facilities New structures for primary care that are more flexible and closer to the patient The Federal Government is rolling out fundamental reforms to the national health system. Despite a less well-developed starting point, many of the reforms mirror those of more developed systems.

24 23 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – South Africa Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] New organisational structures Networks of providers to improve continuity of care and management capability Public / Private collaboration to build capacity and improve quality of acute care Workforce reform Defining new roles and strategic planning to meet a serious workforce shortage... continued...

25 24 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – Germany Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] There have been a series of reforms in Germany, legislated between 2009 and 2012, aimed at: Payment reform Creating a new model of financing for social health insurance, moving towards per- capita flat-rate financing, reducing geographic health inequalities A more coordinated system with a focus on quality Allowing payers to pay hospitals based on outcomes, not volumes; establishing a new body to define quality metrics to support this eHealth Rolling out new electronic patient information cards and expanding their scope

26 25 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The strategic goals in other federated health systems – Germany Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here]...continued... Controlling costs Reforming the relationship with pharmaceutical companies to ensure best value and efficacy for the drugs sold into the public health system A central role for patients Strengthening patients’ rights, particularly in the relationship between provider and patient; and creating a statutory duty to provide information to patients upon request

27 26 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Health systems require major change; integration will be an important tool for achieving this Healthcare strategies the world over tend to have a lot in common How do these common themes play out in practice in other federated health systems? Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] This presentation 1 2 3

28 27 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Three federated systems with different characteristics Strong role for the States – even in policy makingDifferent masters for different parts of the patient journeySubsidiarity and ‘corporatism’Little direct government control, either as payer or providerClear National / Provincial distinction for policy & strategySilos for priority areas of delivery

29 28 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The federal / provincial split in Australia, Germany and South Africa Australia Divided responsibilities for most aspects Germany Decentralised with many autonomous agents South Africa Clear division of policy & delivery... with exceptions Funding & payment Primary = Commonwealth Secondary = C’th &State Capex = States Activity = AB DRGs & pricing = AB Pricing = National Budgeting = Provinces Delivery C’wealth = Primary & aged States = Acute AB payers and provider associations Tertiary = National Secondary = Provinces Primary = Districts Policy & strategy C’wealth govt passes legislation; States tweak and implement (COAG) Federal governmentNational government Workforce & training Primary = Commonwealth Secondary = States (w/ universities) Regional 3 rd parties Education = National Training = Provinces Drugs Commonwealth GovtALB National Government AB = Autonomous Body ALB = Arm’s Length Body (Govt Agency)

30 29 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The 2011 Australian health reforms aim for a more uniform, national approach to pricing and performance Public funding is currently split 60/40 between Commonwealth and States Independent price setting authority and activity-based funding – will increase ‘clout’ of the Commonwealth Govt The creation of government agencies is central to this reform – some operate at a local level, such as LHNs and Medicare Locals Funding & payment Workforce & training Currently a C’wealth agency runs GP training; States plan acute education & training Policy & strategy C’wealth passes legislation; COAG tweaks it...then States implement in different ways Primary care is a national issue; hospital care is a State issue Delivery National Health Performance Authority established to oversee performance Some governance is being devolved to 136 LHNs and 60 Medicare Locals

31 30 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Lessons from Australia The States need a voice in the policy process (the COAG) but this doesn’t ensure harmony Local flexibility is needed even when there is national agreement......New South Wales is nothing like W. Australia Party-political difference between States and Commonwealth can undermine reform Different masters for primary and secondary care make integration very difficult

32 31 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Ostensibly the South African system appears to separate strategy from operations but there are silos of National Government top-down control Source:: 1 - The Lancet, Nov 2012, ‘Health in South Africa: changes and challenges since 2009’, The National Govm’t sets prices and Provincial budgets; Provinces administer budgets The National Govm’t also regulates private health system but struggles to control prices Funding & payment Workforce & training National Govmt’ drives national strategy and is responsible for medical education Provinces are responsible for training but have no control over no. of graduates Policy & strategy National Government sets strategy, legislates and defines norms & standards Delivery Provinces manage secondary hospitals; Districts manage primary care Some high-priority services have been ‘prioritised’ creating operational silos (HIV, TB) National Govt recently took on direct management of the 10 Academic Hospitals

33 32 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Lessons from South Africa Federal action has a positive impact where Provinces don’t have scale (antiretroviral coverage, for example 2 ) But knee-jerk political responses to disease crises create delivery silos Source:1: The Lancet, Nov 2012, ‘Health in South Africa: changes and challenges since 2009’, http://dx.doi.org/10.1016/ S0140-6736(12)61814-5 2. World Health Organisation (2011 & 2013) Provinces have little opportunity to tailor reforms (KZN is very different to Gauteng but has the same systems) Different masters for primary and secondary care create disjointed care

34 33 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The German system is characterised by numerous autonomous bodies representing different interests – this undermines Federal / State action Sources: 1. Civitas, ‘Healthcare Systems: Germany’, Jan 2013 Hospital investment is funded by the Länders; activity is funded through G-DRGs Payroll-tax-funded but payers are autonomous sickness funds The sickness funds contract providers through regional physician associations Funding & payment Workforce & training Physicians’ chambers are responsible for training & education and standards. They are regional organisations but are coordinated nationally Policy & strategy Federal Govmt responsible for reform; legislation at Federal and Länder level Highly collaborative system – the Fed. Joint Committee is a ‘negotiation platform’ including sickness funds, hospital associations and physician organisations 1 Delivery Länders own most University hospitals but the Government (State or Federal) has virtually no role in the direct delivery of health care 1

35 34 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Lessons from Germany Continuum of care paid for by the same payer (the sickness funds) so they have an incentive to buy efficient, integrated care However, it is still possible for Government to drive care reform through regulation of the internal insurance market Central Health Fund now allocates money to sickness funds based on risk 1, intended to drive competition based on quality & efficiency Sources: 1. Civitas, ‘Healthcare Systems: Germany’, Jan 2013 Multiple independent actors representing different interests – doctors, insurers, pharma – make it... “difficult for any one group to change the rules...without the consent of the other parties... as required changes can come up against vested interests.” 1

36 35 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The paralysis caused by a lack of cohesion and perverse incentives is not unique to the German system “The health care system is not really a system: What we have is a series of disjointed services in many silos.” “The public debate has been poisoned in recent decades by a widespread failure to comprehend the trade-offs that must be made; by knee-jerk reactions to worthy but complex ideas for change; by politicians (and media outlets) who have been too willing to pander to fear-mongering; by stakeholders in the health care system who, wishing to cling to the status quo, resist change; and generally by a lack of open-minded acceptance of the reality that change is needed now and that money alone will solve nothing.” “The government should remove perverse incentives that undermine care: physicians are penalized when one of their patients goes to another walk-in clinic but not when the patient goes to the emergency department of a hospital.” Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Don Drummond on Ontario:

37 36 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Final thoughts Federate where necessary, localise where possible; The developed world isn't so different; we have broadly similar strategies; Nation building and political context always make it look different; The federal / state divide is sometimes overcome through 'arms length bodies'; Some areas like financing, education, workforce supply and pricing seem to be centralised; Often, fragmentation within health systems is a bigger problem than political division; What makes sense from a patient and population health point of view? Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here]

38 Note PowerPoint 2007 has a problem with indentation in text tables and text boxes. Once text has been deleted from the cell the formatting of the bullets is also removed. To fix this you will need to use the format painter to copy the formats of each level (line by line) from the panel below: [For headings highlight from here to here] [For second level without bullet highlight from here to here] ■[For third level with bullet ■highlight from here to here] –[For fourth level with bullet –highlight from here to here] ■[For fifth level with bullet ■highlight to here] –[For sixth level with –bullet highlight to here] Launched at Davos... Necessity: the mother of innovation Low-cost, high-quality healthcare

39 kpmg.com/socialmedia © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


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