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1 Richard E. Anderson, M.D. Chairman and Chief Executive Officer Richard E. Anderson, MD Chairman and Chief Executive Officer January 25, 2011 Healthcare.

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Presentation on theme: "1 Richard E. Anderson, M.D. Chairman and Chief Executive Officer Richard E. Anderson, MD Chairman and Chief Executive Officer January 25, 2011 Healthcare."— Presentation transcript:

1 1 Richard E. Anderson, M.D. Chairman and Chief Executive Officer Richard E. Anderson, MD Chairman and Chief Executive Officer January 25, 2011 Healthcare Reform and the Practice of Medicine

2 2 Introduction Context of contemporary practice Health reform timeline Potential impacts Conclusions

3 3 On Being a Doctor Today… 5 forces  Excessive business and legal complexity in the provision of medical care  Decreased medical spending without reduced demand for medical services  The increasing role of for-profit corporations in changing the traditional emphasis on patient care into concern for shareholder equity  A growing population of uninsured patients adding to the financial stresses on physicians and healthcare institutions  Provider demoralization (Washburn)

4 4 On Being a Patient…. “Patients, nominally the designated beneficiaries of these changes, seem the unhappiest of all. They have lost the unquestioned assurance that the physician is their advocate. Shifts in the marketplace may force them to find new doctors without warning or cause. Medical costs are again rising rapidly, and patients are being asked to pay an increasing share of their own medical bills. Only 44% of Americans express ‘a great deal of confidence’ in medicine.”

5 5 By The Way – The Reality of Medical Student Debt 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total Student Debt (%) > $200,000 $100,000 - $199,000 $1 - $99,999 No debt > $200,000 Robert Steinbrook, NEJM Dec. 18, 2008

6 6 Challenges of Practicing Medicine Today  Managed care  Third party holds most of the authority,  All accountability rests with physician  Paperwork burden does nothing but grow  Pressure to reduce healthcare spending while demand for services increases virtually without limit Mandates, fear of litigation, time pressure favors action not discussion, unreasonable expectations, culture of entitlement Most savings come from simply reducing payment to the people who actually provide the care

7 7 Medical-Legal Context of Practice  Arguable standard of care is best imaginable outcome Practice guidelines: endless proliferation renders them practically meaningless, often in conflict, and not infrequently wrong Virtually all medicine is defensive medicine –Patients bear risk and cost Devalues physician judgment Economic pressures compete with clinical imperatives –Need for through-put is not a defense More than one-third of doctors would not choose a career in medicine a second time, nor for their children

8 8 TDC Frequency Frequency 8.0% 7.7% 7.4% 7.6% 8.0% 9.6% 13.0% 12.4% 12.5% 12.9% 13.4% 13.6% 14.1% 14.4% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% Report Year

9 9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 42% 61% All PhysiciansAge 55 & Over Source: AMA’s 2007 – 2008 Physician Practice Information Survey Medical Liability Claim Frequency Number of Claims per 100 Physicians 95161

10 10 Medical Liability: Frequency by Specialty Source: AMA’s 2007 – 2008 Physician Practice Information Survey

11 11 TDC Severity * Compound Annual Growth Rate $59 $58 $65 $74 $67 $80 $72 $75 $83 $87 $93 $94 $40 $60 $80 $ Report Year Severity ($000's)

12 12 Impact of Legal Reforms in PPACA Grants to states to develop liability reforms that –Allow for dispute resolution over injuries caused by healthcare providers or organizations –Promote reduction of healthcare errors through enhanced patient safety –But, ineligible if that law “limits attorneys’ fees or imposes caps on damages” –And plaintiffs may opt out at any time in the process

13 13 Future Prospects Most Democrats opposed Most Republicans would rather have the issue Focus will be elsewhere Battleground shifts back to states

14 Healthcare Reform: Mechanisms of Action

15 15 The Trick Fast, Cheap, or Good, pick any two  Cost, Coverage, Quality

16 16 Accountable Care Organizations Entities that accept responsibility for:  Cost and quality of care  To a given population of patients and  Provide data on their performance Typically includes physicians and hospital(s), possibly nursing home, home health agency, etc. Can we get there from here?

17 17 Barriers to ACOs Even today, most physicians remain in small practices  Lack of: capital infrastructure leadership Challenge to (remaining) physician autonomy Incentives for each component not aligned  Income redistribution  Authority/responsibility mismatch

18 18 Barriers to ACOs (2) Patients  No incentives to cooperate or even join  Even less to help reduce cost Legal and regulatory  Anti-trust  Corporate practice of medicine laws

19 19 Independent Payment Advisory Board 2015 Purpose: control Medicare spending  Target growth rate  If target rate exceeded Board makes proposals that reduce Medicare spending each year until target must be met in 2018 BUT…

20 20 Independent Payment Advisory Board (2015) Proposals must be directed at providers NOT beneficiaries  i.e. may not “ration healthcare” Proposals go to President who forwards to Congress  Inaction is not an option  If Congress does not adopt substitute provisions, HHS automatically implements Board’s proposal

21 21 Daunting Math Historically, healthcare spending exceeds GDP growth by 2.5 percentage points Collision course for 2018  If targets not met, the only alternatives would be: Cuts Increased taxes More borrowing Global budget – set rates for all payers

22 Potential Impacts

23 23 Healthcare Leadership Council Survey: Impact of PPACA After 2017 Improve (1)(2) Stay relatively unchanged (3) (4) Deteriorate (5) The nation’s healthcare efficiency14%25%23%19% The nation’s healthcare quality15%30%25%14%15% The nation’s access to healthcare services 23%27%18%15%18% My organization’s delivery of efficient healthcare services 14%26%31%17%12% My organization’s delivery of quality healthcare services 15%25%39%13%8% My community’s access to healthcare services 18%26% 16%13% Base = 289

24 24 Do you consider your organization part of an accountable care organization? No 59% Yes 41% HLC Survey: Do you expect your organization will become part of an accountable care organization in the future? No 31% Yes 69%

25 25 HLC Survey: Which of the following strategies does your organization currently have in place?

26 26 HLC Survey: Which of the following strategies do you expect your organization to increase due to the enactment of PPACA?

27 27 Uncertainty The ambiguity of the legislation itself Unknowns surrounding implementation even as written Multiplied by the political uncertainty  As you look ahead, what are the advantages of remaining small?  If national reform were actually repealed, what would happen?

28 28 Extrapolate Current Trends Medical student debt Gender balance Gen X, Gen Y Disappearance of solo practice Physician demoralization Increasing demand for more, and better, services Bureaucracy of practice Litigation pressure Conclusion Uncertainty drives the same trends driven by the reform itself

29 29 One Example Specific Impact: EHR How good is the old system?  Paper charts  X-ray films  Relied on direct communication among physicians EHR could be (have been) a Holy Grail  Better (still imperfect) match of investment and return  Standardization of platform and infrastructure  Clinical optimization Integrated communication across the system

30 30 Potential Medical-Liability Risks of EMRs During initial implementation  Transition from paper to electronic record may create documentation gaps  Inadequate training on EMR systems may create new error pathways  Failure of clinicians to use EMRs consistently may lead to gaps in documentation and communication  System-wide EHR “bugs” or outages could adversely affect clinical care “Too err is human…” Source: NEJM – Medical Malpractice Liability in the Age of Electronic Health Records, 363:21 November 18, 2010

31 31 Potential Medical-Liability Risks of EMRs (Cont’d) As systems mature advice:  Facilitates response without thorough investigation and examination of the patient  Multiplies the number of clinical encounters that can give rise to claims Temptation to copy and paste  Risks missing new information and perpetuates previous mistakes  Bright audit trail Information overload may cause clinicians to miss important pieces of information Departures from clinical-decision support guidelines are obvious Source: NEJM – Medical Malpractice Liability in the Age of Electronic Health Records, 363:21 November 18, 2010

32 RAND Study: Impact of National EHR Annual savings of $80 billion Is this still true today? Can Electronic Medical Records Transform Health Care? Potential Health Benefits, Savings and Costs, Health Affairs, v.24, no. 5, 2005

33 33 Observation “… The one truly scary thing about health reform: Far from being a government takeover, it counts on local communities and clinicians for success. We are the ones to determine whether costs are controlled and healthcare improves…” Atul Gawande M.D.

34 34 Another Observation “Relatively little of healthcare reform will make our nation healthier. The bigger impact will still come from addressing the underlying physical, social, and behavioral determinants of health.” Dr. Stephen Shortell

35 35 Conclusion The next decade of medical practice will see a collision of massive economic interests, social concerns, and unintended consequences. This will occur in an extraordinarily polarized nation with inadequate resources and limited vision. It will not be smooth, and it is unlikely to be pretty


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