Premiums for Family Coverage, by State, 2013 Source: 2013 Medical Expenditure Panel Survey–Insurance Component. U.S. average = $16,029
People age 55 and over account for about half of total health spending Share of total health spending by age group, 2012 Source: Kaiser Family Foundation analysis of Medical Expenditure Panel Survey, Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services
Medicare Per Capita Spending For Traditional Medicare Beneficiaries Over Age 65, By Age And Survival Status, 2011. Neuman P et al. Health Aff doi:10.1377/hlthaff.2014.1371
Medicare Per Capita Spending For Traditional Medicare Beneficiaries Over Age 65, By Type Of Service, 2011. Neuman P et al. Health Aff doi:10.1377/hlthaff.2014.1371
Cost-Related Access Barriers and Out-of-Pocket Costs in the Past Year Percent Experienced cost-related access problem* Spent $1,000 or more out- of-pocket Source: 2013 Commonwealth Fund International Health Policy Survey in Eleven Countries. * Did not fill/skipped prescription, did not visit doctor with medical problem, and/or did not get recommended care.
Excess Cost of U.S. Health Care---30% Countries spend more on health care as their wealth increases. Health care spending in the United States is far above the expected level, even after adjusting for wealth. Source; McKinsey
Why Does U.S. Healthcare Cost so Much More Than Expected? Technology Prices are higher Supply-driven demand of services Price insensitivity to end consumer Judgment based nature of physician care— practice variation Our values and culture Fueled by Fee-for-Service Payment System
Estimated Costs of Unnecessary Care are $700 Billion 13 Source: “Where can $700 billion in Waste Be Cut Annually From the U.S. Healthcare System?” – Robert Kelley, Vice President, Healthcare Analytics Thompson Reuters Over-Utilization 64 % or roughly $450 billion spent on Over-Utilization Events Over-Utilization
Flat or declining payment rates Hard-hitting utilization management Increase in transparency about cost and quality CastLight and other companies provide online cost information CareFirst ranks Maryland specialists Red-Yellow-Green on cost of care Insurance products that put more of the financial burden on the patient High deductible benefit plans Tiered/narrow networks Reference pricing Shift to risk based payments Patient Centered Medical Home Rewards/Penalties for quality Bundled payments/global budgets/shared savings/capitation 14 The Payers’ Response
New Companies Increase Transparency in HealthCare Castlight Health IPO Soars 149% in Debut
Voice of the Patient Our Health System Must Improve This 17 No doctors ask me what my goals are I can’t afford to fill my prescriptions if I buy these groceries Whose doctors can I trust? My dad is not safe to be at home any longer My neighbor recommended a specialist. Is she any good? I am confused about what to do next How will I manage when I get home? I feel fine. Why worry about my health? Do these people even talk to each other???
Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, by Firm Wage Level, 2012 *Estimate for many workers are lower-wage is statistically different from estimate for many workers are higher-wage (p<.05). NOTE: Firms with many lower-wage workers are ones where 35% or more of employees earn $24,000 or less. Firms with many higher-wage workers are ones where 35% or more of employees earn $55,000 or more. Wage cutoffs are the inflation adjusted- 25 th and 75 th percentile of national wages according to the National Compensation Survey: Occupational Earnings in the United States, 2010. 1% of covered workers are in firms which are both high income and low income, excluding these firms does not change the estimates or significance testing. SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2012. National Compensation Survey: Occupational Earnings in the United States, 2010. http://www.bls.gov/ncs/ocs/sp/nctb1489.pdf.
Focus is Shifting to the Total Cost of Care Proprietary and Confidential Cost ---------- Person Episodes ------------- Person Processes ------------- Episode Cost ------------- Process XX= From G. Poulsen, Intermountain Health Total Cost of Care = Number of People X Cost/ Person
20 How the Insurance Premium Dollar is Spent Hospital/Outpatient costs = $0.35 cents of the total premium
21 Near Term: Capture More of the Premium $ Position to capture $0.87/premium dollar
The 70/10 Rule Source: Thomson Reuters Marketscan Database
Population Health Management: Assumptions Care can be improved and costs reduced by creating better care systems for the sickest patients Physicians must organize and take a leadership role in designing and implementing new systems of care Care teams are the most effective way to care for the patients with chronic disease and disability Population Health Management concepts are simple but successful implementation of programs is difficult
Population Health Management: Definition A group of physicians (often in collaboration with other providers) takes responsibility for the health care of a population of patients, with the triple aim of improving the care of individual patients, improving the health of the population and reducing the per capita cost of care. Simultaneously, the provider takes risk based payments from the payer that reward both improvements in quality and lower costs
Population Health Management: Core Elements “Population” of patients Those receiving all hospital services---HSCRC Government insured: Medicare Advantage, Medicaid, Dual Eligible, Medicare (MSSP) Commercially insured (small business, ACA exchanges) Self-insured (large employers) Risk based payment, based on quality and cost of care Global budget for hospitals---HSCRC Risk for total cost of care Capitated payment Shared savings Risk for an episode of care---bundled payment for physician, hospital and post-acute care
Population Health Management: Core Elements A healthcare delivery system to manage the care Led by physicians Clinically integrated and share accountability Care programs that improve quality, experience and are the least expensive alternatives---especially for the “10%.” For whom is the delivery system caring?---Understand the model for attribution The key physicians that manage the population For general populations, primary care with wrap around programs Specialists who deliver high value care
Population Health Management: Tools Maximizing standardization and efficiency of care Reducing unnecessary utilization of diagnostic and therapeutic interventions Avoiding use of the hospital when care can be provided elsewhere Using the least expensive equivalent when there is no perceived difference in quality Building and using alternative systems of care Practicing team based care Engaging patients in shared decision making What is the role of physical therapists in the new paradigm?
Population Health Management: Medical Management Infrastructure Hospitalist ProgramsUrgent Care CentersHealth EducationBehavioral HealthDiabetes Disease ManagementCOPD Complex Care Management ProgramCongestive Heart Failure – Complex Care Management ProgramESRD ProgramHigh Risk ClinicHome Care ProgramPalliative Care ProgramHospice ProgramCare Coordination 23
Population Health Management: Hospitalist Programs Reducing unnecessary admissions and readmissionsDecreasing average length of stayER intervention and triageImproving hospital throughputCommunication and educating patient, family and hospital staffCare transitionsSNFistPost AcuteLong Term CareHospice
Multiple Components of Population Health Management High Risk and Palliative Care – Provides 1:1 physician, nurse & case mgmt. for highest risk population. As risk is reduced, patient transferred to Level 2. Physicians & care managers are integrated into community resources, physician offices, or clinics. Complex Care & Disease Mgmt – Provides whole person care enhancement for the population using a multidisciplinary team approach. (Diabetes, COPD, CHF, CKD, Depression, Dementia, Organ transplant and Cancer) Quality Care Assessment – Continuous care assessment and patient population management system that allows physicians to accurate identify and document their treatment plan for patients to improve quality and cost outcomes Home Care/Extended Services – Provides in-home (or dialysis bedside) medical care management by specialized physicians, nurse care managers and social workers for chronically frail or ESRD patients that have physical, mental, social and financial limitations. Sub Acute Care – Ensures excellent quality of step-down facility and physician care is available outside the hospital facility to bring rehabilitative care to a new level of excellent, as both an alternative to acute care, as well as a better solution for post- acute services. Technology Infrastructure – a physician portal to delivery actionable point of care solutions, accurate priority work lists and reports, powered by user- friendly software modules (such are STAR and care management) and robust data mining and analytics. Payer and Network Contracting – provides services to client’s contract mgmt. to help define, negotiate & manage payer agreements around population health, as well as support in development of specialty, hospital, and ancillary delivery networks. Process & Change Mgmt – provides assistance in structuring compensation & incentive programs, training & education and process redesign and change management. Hospitalists/Care Transitions – Improves quality of care throughout the stay starting at the ED evaluation and continuing through discharge to optimize inpatient care and make all transitions hand offs most effective.
Level 4 Home Care Management Level 3 High Risk Clinics Level 2 Complex Care and Disease Management Level 1 Self-Management & Health Education Programs Additional Medical Management Infrastructure Costs (per patient treatment per month) ESRD Medical Home Home Care Management Provides in-home medical care management by specialized physicians, nurse care managers and social workers for chronically frail seniors that have physical, mental, social and financial limitations. Chronically disabled patients receive specialized integrated home care programs Complex Care and Disease Management Provides long-term whole person care enhancement for the population using a multidisciplinary team approach. Diabetes, COPD, CHF, CKD, Depression, Dementia, Organ transplant and Cancer. Self Management, PCP Provides self-management for people with chronic disease and prevention services. High Risk Clinics and Care Management Provides one-on-one physician /nurse, and case management for highest risk population. As risk is reduced, patient transferred to Level 2. Physicians and care managers are integrated into community resources, physician offices, or clinics. Chronically mentally ill are directed to specialized medical clinics Hospice/Palliative Care Hospitalist and SNFist Matching the Patient to the Care They Need
Distribution of Cancer Care Costs by Phase of Illness Monthly Costs of Colon Cancer for Different Survival Rates* Proportion of Costs by Phase of Care for Major Cancers** Cancer costs can be divided into three phases: Diagnosis and Initial Treatment, Continuing Care and Recurrence and End-of- Life Care The first and third phases are associated with very high PMPM costs but the PMPM during continuing care is much higher than the general population There are significant opportunities in all three phases to reduce unnecessary costs. For example 65% of costs in the last year of life are due to hospitalizations. Many of these episodes can be avoided with effective advanced care planning and palliative care
Integrated Cancer Care Clinical Model to Enhance Quality, Patient Experience and Reduce Cost Model Element Description Challenge Addressed Quality Patient Experience Cost Adherence to Evidence Based Protocols Compliance with 74 evidence- based treatment protocols developed by CCE to reduce practice variation in and encourage value-based therapies. Additional protocols being built End-to-End Patient Care Navigation Oncologist/team to coordinate patient care across care spectrum (including non-cancer care needs) for the highest priority patients through investment in Care Coordinators and Navigators Enhanced After Hours Care After hours protocol driven program to treat symptoms and expanded office hours to mitigate unnecessary ED/ IP visits Advanced Care Planning and Palliative Care Advanced care planning and palliative care for all patients who have failed first line therapy, aligning goals of the patient with the care plan Optimized Lab / Imaging Utilization Approach for identifying/reducing unnecessary or redundant events. Use of lowest cost equivalent services 33
34 20-30% efficiency by focusing on the areas that account for over 60% of the total population spend. Inpatient Admissions / Readmissions 10-25% Radiology Management 4-6% ER Visits 2-4% Lab 2-4% Care Coordination / High Risk Management 100% Care Plans Intensive Readmission Prevention 100% Patient Follow-up 100% Compliance with Physician Visits within 1 week Physician Governance Standards EMR Workflow/Alerts Same Day Scheduling After Hours Access EMR Workflow / Alerts Care Coordination Follow-up Rx 1-3% Patient Education Generics Value is Created by Reducing Unnecessary Utilization
Reductions in Utilization Reduce Revenues More Than Costs 20% reduction in volume 7% reduction in cost 20% reduction in revenue Adapted From Harold Miller
Healthcare costs are unsustainable Utilization and unit price will decrease Patients will become more price sensitive Transparency of price and quality will increase Providers will be at risk for clinical and financial performance Innovation is necessary to reduce the cost of caring for the “10%” Conclusions
Embrace the “Stockdale Paradox” Optimize decision making: “Be nimble and adaptable” Determine where you add value Move services to lower cost settings and closer to the patient Use the intellectual capital to innovate in health care delivery especially for the “10%” Use technology as an enabler of care The Imperatives for All Health Care Providers
“You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.” The Stockdale Paradox
“The best way to predict the future is to invent it.” - Bill Gates