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Nursing Executive Center Transforming Healthcare Through Nursing Implications for Practice and Education 2015.

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1 Nursing Executive Center Transforming Healthcare Through Nursing Implications for Practice and Education 2015

2 ©2013 The Advisory Board Company advisory.com

3 Nursing Executive Center Practice Manager Jennifer Stewart Pascale Chehade Design Consultant Steven Berkow Executive Director

4 LEGAL CAVEAT The Advisory Board Company has made efforts to verify the accuracy of the information it provides to members. This report relies on data obtained from many sources, however, and The Advisory Board Company cannot guarantee the accuracy of the information provided or any analysis based thereon. In addition, The Advisory Board Company is not in the business of giving legal, medical, accounting, or other professional advice, and its reports should not be construed as professional advice. In particular, members should not rely on any legal commentary in this report as a basis for action, or assume that any tactics described herein would be permitted by applicable law or appropriate for a given member’s situation. Members are advised to consult with appropriate professionals concerning legal, medical, tax, or accounting issues, before implementing any of these tactics. Neither The Advisory Board Company nor its officers, directors, trustees, employees and agents shall be liable for any claims, liabilities, or expenses relating to (a) any errors or omissions in this report, whether caused by The Advisory Board Company or any of its employees or agents, or sources or other third parties, (b) any recommendation or graded ranking by The Advisory Board Company, or (c) failure of member and its employees and agents to abide by the terms set forth herein. The Advisory Board is a registered trademark of The Advisory Board Company in the United States and other countries. Members are not permitted to use this trademark, or any other Advisory Board trademark, product name, service name, trade name, and logo, without the prior written consent of The Advisory Board Company. All other trademarks, product names, service names, trade names, and logos used within these pages are the property of their respective holders. Use of other company trademarks, product names, service names, trade names and logos or images of the same does not necessarily constitute (a) an endorsement by such company of The Advisory Board Company and its products and services, or (b) an endorsement of the company or its products or services by The Advisory Board Company. The Advisory Board Company is not affiliated with any such company. IMPORTANT: Please read the following. The Advisory Board Company has prepared this report for the exclusive use of its members. Each member acknowledges and agrees that this report and the information contained herein (collectively, the “Report”) are confidential and proprietary to The Advisory Board Company. By accepting delivery of this Report, each member agrees to abide by the terms as stated herein, including the following: 1. The Advisory Board Company owns all right, title and interest in and to this Report. Except as stated herein, no right, license, permission or interest of any kind in this Report is intended to be given, transferred to or acquired by a member. Each member is authorized to use this Report only to the extent expressly authorized herein. 2. Each member shall not sell, license, or republish this Report. Each member shall not disseminate or permit the use of, and shall take reasonable precautions to prevent such dissemination or use of, this Report by (a) any of its employees and agents (except as stated below), or (b) any third party. 3. Each member may make this Report available solely to those of its employees and agents who (a) are registered for the workshop or membership program of which this Report is a part, (b) require access to this Report in order to learn from the information described herein, and (c) agree not to disclose this Report to other employees or agents or any third party. Each member shall use, and shall ensure that its employees and agents use, this Report for its internal use only. Each member may make a limited number of copies, solely as adequate for use by its employees and agents in accordance with the terms herein. 4. Each member shall not remove from this Report any confidential markings, copyright notices, and other similar indicia herein. 5. Each member is responsible for any breach of its obligations as stated herein by any of its employees or agents. 6. If a member is unwilling to abide by any of the foregoing obligations, then such member shall promptly return this Report and all copies thereof to The Advisory Board Company.

5 Transforming Healthcare Through Nursing Implications for Practice and Education

6 © 2013 The Advisory Board Company Road Map Implications for Nursing Practice and Education Care Delivery Transformation Our New Market Reality 6

7 © 2013 The Advisory Board Company What Business Are We In? Businesses Displaced by Focusing on the Means Rather than the Ends Study in Brief: What Business Are We in? Explores how Eastman Kodak Company’s camera and film business was displaced by alternate mediums that fulfilled customers’ desires for images Draws parallels to the challenges that provider organizations face in shifting activities from delivering health services to a broader spectrum of tactics for health Providing Health, Not Health Care “…It's always better to define a business by what consumers want than by what a company can produce…whereas doctors and hospitals focus on producing health care, what people really want is health. Health care is just a means to that end—and an increasingly expensive one.” Source: Asch D., "What Business Are We In? The Emergence of Health as the Business of Health Care,” NEJM, 367,2012: ; Nursing Executive Center interviews and analysis. ” % market share of commercial film business 1990s Digital cameras enter mainstream market 2012 Kodak files for bankruptcy Timeline for Eastman Kodak Business 7

8 © 2013 The Advisory Board Company Staying Afloat Through Cross-Subsidization Source: American Hospital Association, “Trendwatch Chartbook 2014,” available at: Health Care Advisory Board interviews and analysis.www.aha.org Our Existing Business Model Hospital Payment-to-Cost Ratio, Private Payer, % Hospital Payment-to-Cost Ratio, Medicare, % Above-cost pricing Robust fee-for-service volume growth Steady price growth Only one component of our total business Commercial InsurancePublic Payers Below CostAbove Cost Traditional Hospital Cross-Subsidy 8

9 © 2013 The Advisory Board Company Source: American Hospital Association Chartbook, available at: http: accessed on April 29, 2011; Advisory Board Company interviews and analysis. Payer Cross-Subsidy Eroding Projected Discharges by Payer, 2021Annualized Commercial Price Growth Medicare Medicaid Commercial Inpatient Contribution Income Weighted Per-Case Average 6-7% 9

10 © 2013 The Advisory Board Company Medicare Payment Cuts Becoming the Norm Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012; CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011; CBO, “Bipartisan Budget Act of 2013,” December 11, 2013, all Health Care Advisory Board interviews and analysis. 1)Includes hospital, skilled nursing facility, hospice, and home health services; excludes physician services. 2)Disproportionate Share Hospital. Public-Payer Reimbursement Still in the Crosshairs ACA’s Medicare Fee-for-Service Payment Cuts Reductions to Annual Payment Rate Increases 1 $260B Hospital payment rate cuts, Office of the Actuary, CMS “Notwithstanding recent favorable developments… Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation.” Not the End of the Story $56B$151B Reduced Medicare and Medicaid DSH 2 payments, Reduced Medicare payments due to sequestration and 2013 budget bill 10

11 © 2013 The Advisory Board Company But Every Silver Lining Has Its Cloud Coverage Expansion and the Rise of Individualized Insurance Source: Gallup, “In U.S., Uninsured Rate Holds at 13.4%,” Department of Health and Human Services, “Impact of Insurance Expansion on Hospital Uncompensated Care Costs in 2014,” Health Care Advisory Board interviews and analysis. ACA (and Recovery) Making a Dent in Uninsurance 18.0% (highest on record) 13.4% (lowest on record) 2013 Q32014 Q3 Percentage of U.S. Adults Without Health Insurance Employer-sponsored coverage grows Medicaid expansion begins Insurance exchanges launch $5.7B Reduction in uncompensated care, 2014 A Bargain Still Unbalanced $14B ACA-related reductions in Medicare fee-for-service payment, 2014 vs. 11

12 © 2013 The Advisory Board Company Not Currently Participating 28 States + DC Have Opted for Expansion Medicaid Expansion Source: Kaiser Family Foundation, “Current Status of State Medicaid Expansion Decisions,” January 27, 2015, available at: reform/slide/current-status-of-the-medicaid-expansion-decision/; CMS, “Medicaid and CHIP: October 2014 Monthly Applications, Eligibility Determinations and Enrollment Report,” December 18, 2014; HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” May 1, 2014; PricewaterhouseCoopers, “Medicaid 2.0: Health System Haves and Have Nots,” Health Care Advisory Board interviews and analysis. 1)Children’s Health Insurance Program. 2)Estimate does not include CT or ME. Medicaid Expansion Contentious—and Consequential Increase in Medicaid, CHIP 1 enrollment, July-Sept Oct M Advisory Board estimate of impact of Medicaid expansion on typical hospital’s 10-year operating margin projection 2.4% State Participation in Medicaid Expansion Participating Expansion by Waiver As of February % Average Medicaid enrollment increase across non-expansion states PricewaterhouseCoopers “For-profit health systems…report far better financial returns through the first half of the year than expected, owed in large part to expanded Medicaid” Financial Impact 12

13 © 2013 The Advisory Board Company Challenge to Subsidies Making Its Way Through the Courts Another Year, Another Lawsuit Does the language of the ACA allow subsidies in states that do not set up their own exchanges? The Question: Supreme Court Stepping In Halbig v. Burwell D.C. Circuit panel strikes down subsidies on federal exchanges King v. Burwell Fourth Circuit rules subsidies legal on Virginia’s federally-run exchange Potential Impact Unsubsidized Subsidized on State-Run Exchanges Subsidized on Federally-Run Exchanges Over half of all enrollees collecting potentially unallowable subsidies Supreme Court agreed to hear King v. Burwell in November 2014; final ruling expected by June

14 © 2013 The Advisory Board Company No More A’s for Effort Source: The Advisory Board Company, “Mortality Rates Are Only One of Many VBP Changes to Come,” December 4, 2013, CMS, “Request for Information on Specialty Practitioner Payment Model Opportunities,” February 2014, available at Health Care Advisory Board interviews and analysis. 1)Includes Value-Based Purchasing Program, Hospital Readmissions Reduction Program, and Hospital-Acquired Conditions Program. Increasing Competition for Medicare Dollars Clinical Process Patient Experience Outcomes of Care Efficiency Medicare Value-Based Purchasing Program Performance Criteria 6% Other Mandatory Risk Programs Hospital-Acquired Condition Penalties Readmission Penalties No Trivial Thing Weight in Total Performance Score Medicare revenue at risk from mandatory pay-for-performance programs 1, FY

15 © 2013 The Advisory Board Company Many Facilities Receiving Multiple Penalties Few Escaping Penalties Altogether, Almost Half Facing Two or More Source: CMS, Advisory Board Analysis. VBP Penalty 152 (5%) HAC Penalty 112 (3%) Readmissions Penalty 1,071 (32%) 43 (1%) 961 (29%) 318 (9%) 288 (9%) Hospitals receiving multiple P4P penalties 48% Hospitals Receiving FY 2015 P4P Penalties 1 1)Based on Readmissions and VBP proxy adjustment factors from FY 2015 IPPS Final Rule, proxy HAC adjustments from FY 2015 IPPS Proposed Rule. No Penalties 423 (13%) 15

16 © 2013 The Advisory Board Company Overview of Risk-Based Payment Models 1)Center for Medicare and Medicaid Innovation. Key Attributes Bundled Payments Shared Savings Programs (ACOs) Capitation Definition Purchaser disburses single payment to cover certain combination of hospital, physician, post-acute, or other services performed during an inpatient stay or across an episode of care; providers propose discounts, can gainshare on any money saved Network of providers collectively accountable for the total cost and quality of care for a population of patients; ACOs are reimbursed through total cost payment structures, such as the shared savings model or capitation Provider receives a flat per-member, per-month payment for providing all necessary care for a defined population Purpose Incent multiple types of providers to coordinate care, reduce expenses associated with care episodes Reward providers for reducing total cost of care for patients through prevention, disease management, coordination Source: Health Care Advisory Board interviews and analysis. 16

17 © 2013 The Advisory Board Company Tools for Translating Market Forces into Frontline Terms The Market Force Course Source: Nursing Executive Center, The Market Force Course, Customizable Presentations Plug-and-Play Videos Interactive Exercises Nurse Manager “Cheat sheets” PowerPoint slides and scripting for leaders to brief staff on tough messages Short, easy-to- digest videos for frontline staff on current market forces Games for frontline staff and managers aimed at conveying budget constraints One-page primers on market forces impacting organizational strategy Sample Toolkit Resources Ready-to-Use Posters Visuals that distill complex concepts into concrete actions for frontline staff To access The Market Force Course, visit advisory.com/nec/publications. 17

18 © 2013 The Advisory Board Company Operational Economics on the Brink of Failure Source: Health Care Advisory Board interviews and analysis. Margin Improvement Analysis Results Five-Year Margin ProjectionsTen-Year Margin Projections Greater than 10% Decline 5-10% Decline Improvement 0-5% Decline 5-10% Decline Greater than 10% Decline HCAB Service in Brief: The Margin Improvement Intensive 0-5% Decline Combines customized scenarios for key financial and operational metrics with a facilitated onsite session and an institution-specific action plan to help hospitals and health systems improve margin performance Available to all Health Care Advisory Board members at no extra cost Visit to participate 18

19 © 2013 The Advisory Board Company Road Map Implications for Nursing Practice and Education Care Delivery Transformation Our New Market Reality 19

20 © 2013 The Advisory Board Company How Much Avoidable Cost Is There in Health Care? Source: Institute of Medicine, “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America”, 2012; Nursing Executive Center analysis. $

21 © 2013 The Advisory Board Company A Clear Mandate for Meaningful Change? Source: Best Care at Lower Cost: The Path to Continuously Learning Health Care in America. Washington, DC: The National Academies Press, 2012; Kelley, Robert, “Where Can $700 Billion in Waste Be Cut Annually from the U.S. Healthcare System?” Thomson Reuters, 2009; Delaune J., Everett W., “Waste and Inefficiency in the U.S. Health Care System,” New England Healthcare Institute, 2008; Nursing Executive Center interviews and analysis. Areas of Opportunity Avoidable Costs Unnecessary Care$210 B Administrative Inefficiencies$190 B Inefficiently Delivered Services$130 B Missed Prevention Opportunities$55 B Fraud and Abuse$75 B High Prices$105 B Select Studies Analyzing Opportunities for Reducing Health Care Costs Estimated Magnitude of Avoidable Cost Opportunities 30 Cents of every health care dollar an unnecessary expense 21

22 © 2013 The Advisory Board Company Source: Truven Health Analytics, “Avoidable Emergency Department Usage Analysis,” 2013, Web/TruvenHealthAnalytics/EMP_12260_0113_AvoidableERAdmissionsRB_WEB_2868.pdf; Robert Wood Johnson Foundation, Reform in Action: Reducing Avoidable Hospital Readmissions,” 2013, about-rwjf/newsroom/features-and-articles/reform-in-action--reducing-avoidable-readmissions.html?cid=xtw_ qualequal; CMS's 2012 Inpatient Standard Analytical File (SAF); Nursing Executive Center interviews and analysis. 1)Based on Truven Health Analytics analysis of 6,135,002 ED visits in 2010; “Avoidable” includes all ED visits except those for which medical care was required within 12 hours in the ED setting. 2)CMS, Huge Opportunity for Improvement Percentage of ED Visits that are Avoidable in the US 1 Estimated number of preventable trips to US hospitals each year 4.4M 30-day all-cause readmission rate 2 18% 22

23 © 2013 The Advisory Board Company Unnecessarily Crowded Many Medical Admissions Preventable Ambulatory-Sensitive 1 Inpatient Admissions Source: MedPAR FY2009; Nursing Executive Center interviews and analysis. 1)Inpatient admissions associated with Agency for Healthcare Research and Quality (AHRQ) Preventable Quality Indicator conditions. Medicare Revenue per Case SurgicalMedical An Ounce of Prevention… CFO “It’s a lot easier to prevent people from needing a service than it is to eliminate the service once you offer it.” 17% Percent of Medicare discharges considered sensitive to better ambulatory care ” 23

24 © 2013 The Advisory Board Company Health System Strategy, c “Extractive Growth” Health System Strategy, “Value-Based Growth” Grow by being bigger: Leverage market dominance to secure prime pricing, network status Grow by being better: Leverage cost, quality, service advantage to attract key decision makers Discharges Service line share Fee-for-service revenue Pricing growth Occupancy rate Process quality Share of lives Geographic reach Risk-based revenue Share of wallet Outcomes quality Total cost of care Inpatient capacity Outpatient imaging centers Clinical technology Ambulatory surgery centers Primary care capacity Care management staff and systems IT analytics Post-acute care network Toward an Economics of Value Adapting to New Rules of Competition Source: Advisory Board interviews and analysis. Description Performance Metrics Critical Infrastructure 24

25 © 2013 The Advisory Board Company Disaggregating Health Care Reform Source: Nursing Executive Center analysis. Coverage Expansion Financing Delivery System Reform 25

26 © 2013 The Advisory Board Company Economics Aligning with Mission Source: Nursing Executive Center interviews and analysis. Evolving Market Demand Managing Chronic Care for High-Risk Patients Building Long-Term Patient Relationships for Ongoing, Coordinated Care Improving Overall Health and Wellness of the Population Centering Hospital Care on the Patient 26

27 © 2013 The Advisory Board Company Establishing the Medical Perimeter Extensive Ambulatory Care Network Addresses Medical Demand Source: Nursing Executive Center interviews and analysis. Medical Management Investments Health Information Exchanges Electronic Medical Records Medical Home Infrastructure Primary Care Access Population Health Analytics Patient Activation Post-Acute Alignment Disease Management Programs The New Reality 27

28 © 2013 The Advisory Board Company If We Were Building from Scratch… Governing Principles of the Transformed Care Enterprise Aligned Across the Continuum Outcomes-Driven System Dashboard aligned to key cost, quality goals for improving population health Information available across the continuum to track utilization Multidisciplinary team works together to maintain unified care plan across patient needs Data transparency, sharing to ensure streamlined patient care Care management appropriately matched to individual patient, population need Oriented toward patient-centered goals that will drive clinical metric improvement Source: Nursing Executive Center interviews and analysis. Team available to patient for access, education, decision support Accessible when, where patient needs care Accessible Primary Care Personalized Management 28

29 © 2013 The Advisory Board Company Key Factor Driving The Change Today: The Rise of The Retail Triple-Threat Purchase Spend Lifestyle Integration Unleashing the consumer… a force incumbent health systems are ill prepared to cope with! Retail consumer behavior at the point of… Confronted with choices and spending our own money, we make very different purchasing decisions High deductibles and narrow networks make us price sensitive with a high demand for value Health and healthcare must fit into our lives and be convenient; we will reward those who can deliver and retailers are lining up for the opportunity 29

30 © 2013 The Advisory Board Company Aggregate Numbers in Line With Expectations; Enrollee Mix Older Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” May 1, 2014; Cheney K and Haberkorn J, “Obama: 8 Million Enrolled Under ACA,” Politico, April 17, 2014, Cheney K and Norman B, “Insurers See Brighter Obamacare Skies,” Politico, April 15, 2014, Health Care Advisory Board interviews and analysis. 1)Numbers do not add precisely due to rounding. One Year In, Insurance Exchanges Generally on Track Initial Public Exchange Enrollment M (Original CBO Projection) 91% Of enrollees still enrolled as of September M Projected exchange enrollment by 2018 Enrollees aged % 30

31 © 2013 The Advisory Board Company Fewer Glitches, Greater Awareness Driving Increased Enrollment Early Year Two Enrollment Outpacing First Round 106K Enrollment during first month A Solid Start for Both Federal, State Exchanges 11K Enrollment during first four days First Round EnrollmentSecond Round Enrollment 462K Enrollment during first week 11K Enrollment during first fifteen days F EDERAL E XCHANGE C ALIFORNIA E XCHANGE M ARYLAND E XCHANGE 16K Enrollment during first two months 16K Enrollment during first week C OLORADO E XCHANGE 204 Enrollment during first week 6K Enrollment during first week Source: CNBC, ‘'Solid' Obamacare start: More than 1M apply in first week,” Baltimore Sun, “Md. health exchange enrolls 16,700 in first week,” Colorado Public Radio, “Colorado health exchange: Enrollment rate outpacing last year,” Los Angeles Times, “California enrolls 11,357 in first 4 days of Obamacare open enrollment,” enrollment-california story.html; Health Care Advisory Board interviews and analysis. 31

32 © 2013 The Advisory Board Company Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” May 1, 2014; Health Care Advisory Board interviews and analysis. 1)Data from federally-facilitated exchanges only. Individuals Gravitating Toward Leaner Plans Bronze Level 1: Choice of Metal Tier Gold Platinum Catastrophic Silver People Choosing Cheaper Premiums and Higher Deductibles Factors Influencing Metal Level Deductible Copays Out-of-Pocket Maximum Non-Essential Services Covered Network Composition Level 2: Plan Choice Within Metal Tier Any Other Plan Lowest- Cost Plan Second-Lowest-Cost Plan All Metal Levels 1 Scope of Non-Essential Benefits Negotiated Payment Rates to Providers Utilization Patterns, Trends Premium Levers Beyond Benefit Design Negotiated Rates 32

33 © 2013 The Advisory Board Company Aggressive Cost Sharing Troublesome for Provider Strategy Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index Report for Open Enrollment and Q1 2014,” May 2014; Health Care Advisory Board interviews and analysis. High Deductibles Accelerating Consumerism $6,000+ $3,000-$5,999 Individual Deductibles Offered On Public Exchanges 2014 Median $1,000- $2,999 <$1,000 Individual Deductibles Chosen on eHealth Individual Marketplace $2,500$6,250 Maximum High out-of-pocket costs discourage appropriate utilization Challenges for Providers Large patient obligations lead to more bad debt, charity care Price-sensitive patients more likely to seek lower- cost options 33

34 © 2013 The Advisory Board Company Convenience Consistently a Top Consumer Priority Source: The Advisory Board Company, 2014 Primary Care Consumer Choice Survey, Marketing and Planning Leadership Council; Health Care Advisory Board interviews and analysis. Increasing Consumer Preference ing provider with symptoms How Convenient Is Convenient? Consumers Want Virtual, 24/7 Access Clinic location near work Clinic located near errands Clinic located near the home Cost Service Access, Convenience Convenience Outranking Service and Cost Top Preferences for On-Demand Care 6 OF TOP 10 FEATURES RELATED TO ACCESS, CONVENIENCE #1 out of 56 “Walking in without appointment and being seen within 30 minutes” #5 out of 56 “The clinic is open 24 hours, 7 days a week” 34

35 © 2013 The Advisory Board Company Cost-Conscious Behavior Affecting Pillars of Profitability Source: KFF, “2012 Employer Health Benefits Survey,” available at: New Choice Health, “New Choice Health Medical Cost Comparison,” available at: Healthcare Blue Book, “Healthcare Pricing,” available at: Kliff S, “How much does an MRI cost? In D.C., anywhere from $400 to $1,861,” Washington Post, March 13, 2013, available at: Health Care Advisory Board interviews and analysis.www.kff.orgwww.newchoicehealth.com 1)High-deductible health plan. 2)$2,086; based on KFF report of average HDHP deductible. 3)$733; based on KFF report of average PPO deductible. Price Sensitivity at the Point of Care Consumers Paying More Out-of-Pocket Fall within HDHP deductible 2 $730 $900 $1,269 $2,183 $411 Price-sensitive shoppers will be acutely aware of price variation MRI prices range from $400 to $2,183 MRI Price Variation Across Washington, DC Fall within PPO deductible 3 35

36 © 2013 The Advisory Board Company Meet Our New Competitors Walgreens Aims to Become the Premier Health Destination Source: Japsen B, “How Flu Shorts Became Big Sales Booster for Walgreen, CVS,” Forbes, February 8, 2013, available at: “Take Care Clinics at Select Walgreens Expand Service Offerings,” Reuters, May 31, 2012, available at: Murphy T, “Drugstore Clinics Expand Care into Chronic Illness,” The Salt Lake Tribune, April 4, 2013, available at: Walgreens, “Company Overview,” available at: Health Care Advisory Board interviews and analysis. Retail Clinics 2009: Launches flu vaccine campaign Simple Acute Services Vaccinations and Physicals Chronic Disease Monitoring Chronic Disease Diagnosis and Management 2013: Launches three ACOs; begins diagnosing and managing chronic disease Case in Brief: Walgreen Co. Largest drug retail chain in the United States, with 372 Take Care Clinics In April 2013, became first retail clinic to offer diagnosis and treatment of chronic diseases 2007: Acquires Take Care Health Systems 2012: Offers three new chronic disease tests Not Just a Drugstore “Our vision is to become ‘My Walgreens’ for everyone in America by transforming the traditional drugstore into a health and daily living destination...” Walgreen Co. Overview ” 36

37 © 2013 The Advisory Board Company Saving Money—For Its Associates and Customers Source: Canales MW, “Wal-Mart Opening Clinic in Cove,” Killeen Daily Herald, April 18, 2014, Health Care Advisory Board interviews and analysis. Walmart Enters Full Primary Care The Largest “Activated Employer” Yet “As the largest private employer in the U.S., we are committed to finding ways to drive down health care costs for our 1.3 million U.S. associates and the 140 million customers who shop our stores each week.” Labeed Diab President of Health and Wellness, Wal-Mart Visit fee for Walmart associates $4 Visit fee for Walmart customers $40 Walmart Care Clinic Model Walmart associate or customer visits Care Clinic Care Clinic staffed by two NPs from QuadMed, an employer onsite clinic provider NP provides primary care services, refers to external specialists and hospitals 37

38 © 2013 The Advisory Board Company Retail Clinics Expected to Continue Growing 1)As of Oct Source: Accenture, "Retail medical clinics: From Foe to Friend?," 2013; Ritchie J, "After a stall, Kroger could add clinics," Cincinnati Business Courier, July 5, 2013; Robeznieks A, "Retail clinics at tipping point," Modern Healthcare, May 4, 2013; Health Care Advisory Board interviews and analysis Estimated Total Number of Retail Clinics in the US Growth trajectory depends on preferred payer relations, PCP capacity, and health system partnerships Retailer Operational Retail Clinics

39 © 2013 The Advisory Board Company Differentiating Effective Population Health Source: Health Care Advisory Board interviews and analysis. Keep patient healthy, loyal to the system Avoid unnecessary higher-acuity, higher- cost spending Trade high-cost services for low- cost management High- Risk Patients Rising-Risk Patients Low-Risk Patients 60-80% of patients; any minor conditions are easily managed 15-35% of patients; may have conditions not under control 5% of patients; usually with complex disease(s), comorbidities Managing Three Distinct Patient Populations 39

40 © 2013 The Advisory Board Company Chronic Disease Growth Outpacing Population Population Growth Source: Milken Institute, available at: pdf/chronic_disease_report.pdf, accessed April 27, 2011; Nursing Executive Center interviews and analysis. Projected Increase in Chronic Disease Cases %: Projected population growth,

41 © 2013 The Advisory Board Company Plenty of Room for Improvement in Managing Care Source: Milliman; Nursing Executive Center interviews and analysis. Difference Between “Loosely-Managed” and “Well-Managed” PMPM 1 Spending 2011 $ Loosely Managed Well Managed MedicareCommercial $ Loosely Managed Well Managed Medicaid $ Loosely Managed Well Managed 41

42 © 2013 The Advisory Board Company Source: Nursing Executive Center interviews and analysis. Building a System that Never Discharges the Patient Evolution of Patient Care Perspective Perfecting Individual TransitionsAchieving Care Continuity SNF Home Rehab PCP Home Health Retail Clinic Acute Care ED 42

43 © 2013 The Advisory Board Company Finding the 80/20 Key Root Causes of Patients Receiving Fragmented, Episodic Care Patients receive fragmented, episodic care Clinicians don’t have time Patients face economic roadblocks Clinicians’ incentives focus on site-specific care Patients don’t know how Patients lack motivation Clinicians don’t have necessary patient information Clinicians have a siloed, setting- specific perspective Clinicians only feel accountable for their immediate setting Clinicians don’t know how Clinicians not equipped to provide continuous care Patients and families don’t manage their care effectively Source: Nursing Executive Center interviews and analysis. To access Achieving Top-of-License Nursing Practice, visit advisory.com/nec/publications. 43

44 © 2013 The Advisory Board Company Investing in Nursing with Good Reason Source: MEDPAR 2001, 2005, 2010; Needleman J, et al., “Nurse-Staffing Levels and the Quality of Care in Hospitals,” New England Journal of Medicine, 346 (2002): ; Aiken L, et al., “Educational Levels of Hospital Nurses and Surgical Patient Mortality,” JAMA, 290 (2003): ; Kane RL, et al., “The Association of Registered Nurse Staffing Levels and Patient Outcomes: Systematic Review and Meta-Analysis,” Medical Care 45 (2007): ; McHugh M, et al., “Hospitals with Higher Nurse Staffing Had Lower Odds of Readmissions Penalties than Hospitals with Lower Staffing,” Health Affairs, 32(2013): ; Nursing Executive Center analysis. 1)Case Mix Index (CMI) in short-stay hospitals participating in Medicare’s Inpatient Prospective Payment System; excludes Medicare Advantage patients. Average Medicare Case Mix 1 Mounting Evidence Linking Nursing to Patient Outcomes Patient Complexity Increasing Representative Studies on the Impact of Nurse Staffing Primary Author Top-Level Findings Needleman et al., 2002 An increase in the number of RN hours per day from the 25 th to the 75 th percentile was associated with better outcomes for medical and surgical patients Aiken et al., 2003 An increase in the proportion of RNs with a Bachelor’s or Master’s degree across the entire institution was associated with better outcomes in mortality and failure to rescue Kane et al., 2007 A review of the literature finds consistent associations between increased RN staffing and lower odds of hospital-related mortality and adverse patient events McHugh et al., 2013 Hospitals with higher nurse staffing had 25% lower odds of incurring Medicare readmissions penalties than similar hospitals with lower nurse staffing 44

45 © 2013 The Advisory Board Company An Alarming Dichotomy Source: American Hospital Association, “Trendwatch Chartbook 2013: Trends Affecting Hospitals and Health Systems,” available at: accessed on December 2, 2013; CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012, available at: accessed on December 2, 2013; Bureau of Labor Statistics, “Employer Costs for Employee Compensation Historical Listing March 2004 – June 2013,” available at: ftp://ftp.bls.gov/pub/special.requests/ocwc/ect/ececqrtn.pdf, accessed on November 12, 2013; Nursing Executive Center analysis. 1)Reductions to annual payment rate increases; includes hospital, skilled nursing facility, hospice, and home health services; excludes physician services. 2)Does not include capital. Total RN Compensation per Hour Worked Care Team EconomicsHealth System Economics Percentage of Hospital Costs 2 Comprising Wages and Benefits Affordable Care Act’s Medicare Fee-for-Service Payment Cuts 1 Expenses per Adjusted Admission $6,980 $10,

46 © 2013 The Advisory Board Company Population Health Efforts Shaping Volume Outlook Utilization Patterns Difficult to Predict Inpatient Volume Under Different Population Health Assumptions Quite a Difference 7.6% Total inpatient volume growth, , with no additional population health management effort 1.1% Total inpatient volume growth, , with aggressive population health management efforts Source: Health Care Advisory Board interviews and analysis. 46

47 © 2013 The Advisory Board Company Designing the Care Team for Accountable Care Source: Nursing Executive Center interviews and analysis. Inefficient, Interprofessional Care Team Nurses and other caregivers collaborate to provide care, but nurses do not practice at top of license Efficient, Siloed Care Team Nurses practice to the full extent of their training and skills but within professional silo Efficient, Interprofessional Care Team Interprofessional care team collaborates efficiently and effectively, providing high- quality, low-cost care Two Dimensions of Care Team Design Inefficient, Siloed Care Team Nurses do not practice to the full extent of their training and skills; caregivers work in professional silos Nursing Team Efficiency Interprofessional Team Integration 47

48 © 2013 The Advisory Board Company A Unique Moment in Time to Build a Different Kind of Care Team Source: US Department of Health and Human Services, Health Resources and Services Administration, The Registered Nurse Population: Findings from the 2008 National Sample Survey of Registered Nurses, 2010, available at: accessed on April 25, 2013; US Department of Health and Human Services, Health Resources and Services Administration, The U.S. Nursing Workforce: Trends in Supply and Education, 2013, available at: accessed on May 7, 2013; Nursing Executive Center interviews and analysis. Opportunities to Redefine the Care Team Instill a new care team philosophy in new hires Age Distribution of Practicing Registered Nurses in the US 2008 ~1,000,000 Number of RNs reaching retirement age in the next years Fill vacant positions with a different skill set Use attrition (rather than cuts) to eliminate positions 48

49 © 2013 The Advisory Board Company A Nurse Isn’t a Nurse Isn’t a Nurse Source: Aiken L, et al., “Educational Levels of Hospital Nurses and Surgical Patient Mortality,” JAMA, 290 (2003): ; Nursing Executive Center analysis. 1)Percentage of hospital staff nurses with BSN degree. Patient Mortality Failure to Rescue Estimated Rate of Adverse Outcomes per 1,000 Patients by Hospital-Wide Level of Nurse Education

50 © 2013 The Advisory Board Company Three Paths for Building the High-Value Care Team Source: Nursing Executive Center interviews and analysis. Align Interprofessional Goals and Work 2 Change the Nursing Skill Mix 1 1.Achieve Top-of-License Nursing Practice 2.Right-Size the Proportion of RNs in the Skill Mix 3.Trade a Nursing Position for an Expert RN Role to Improve Unit Performance 4.Give All Care Team Members the Same Set of Goals 5.Transfer Work to Specialized Team Members 6.Gather Physicians and Staff at the Bedside at the Same Time 7.Keep Teams as Consistent as Possible Uncoordinated Interprofessional Care Overreliance on Bedside RNs Root Cause of Inefficiency Path to Higher Value Deploy the Minimum Core Team and Selectively Scale Up Support 3 8.Select Your Patient Population of Focus 9.Identify Patients Needing Additional Support 10.Define the Core and Expanded Care Teams 11.Layer Additional Support onto the Core Team 12.Regularly Reassess Patient Need for Support A “One-Size-Fits-All” Care Team 50

51 © 2013 The Advisory Board Company Road Map Implications For Nursing Practice and Education Care Delivery Transformation Our New Market Reality 51

52 © 2013 The Advisory Board Company Nursing at the Heart of Transformative Change Future of Nursing: Leading Change, Advancing Health Working on the front lines of patient care, nurses can play a vital role in helping realize the objectives set forth in the 2010 Affordable Care Act, legislation that represents the broadest health care overhaul since the 1965 creation of the Medicare and Medicaid programs. Institute of Medicine Source: Institute of Medicine, “The Future of Nursing: Leading Change, Advancing Health,” available at: Advancing-Health, accessed November 11, 2011; Nursing Executive Center analysis. ” 52

53 © 2013 The Advisory Board Company Then and Now…. Single-needs patient an endangered species Mr. Jones; 1975Mr. Jones; 2015 AMIAMI, HF, diabetes, obese PCPPCP, cardiologist, endocrinologist, hospitalist, geriatric NP 2 meds15 meds Lives at homeLives in assisted living Wife is caregiverMultiple family members, no one designated LOS: 10 daysLOS: 2.5 days One admission in 1973Third admission in

54 © 2013 The Advisory Board Company Imperatives for Nursing and Nursing Practice Top of License PracticeInter-Professional Collaboration Enhancing the Patient ExperienceFrontline Accountability Value-based care Activity ‘completion’ not enough Ownership of outcomes the key Care team as core in all settings Roles clearly defined, supported, aligned with patient needs Beyond satisfaction Processes and systems patient-’centered’ Patient as partner Non-valued added work eliminated Core responsibilities clear Professional practice model as foundation 54

55 © 2013 The Advisory Board Company The Future of Nursing: Leading Change, Advancing Health Endorsing “Top-of-License” Nursing Practice Source: Institute of Medicine, “The Future of Nursing: Leading Change, Advancing Health,” available at 2010/The-Future-of-Nursing-Leading-Change-Advancing-Health, accessed November 11, 2011; Fairman J, et al., “Broadening the Scope of Nursing Practice,” New England Journal of Medicine, 364 (2011): ; Nursing Executive Center analysis. Imperative: Top of License Practice Institute of Medicine “Nurses should practice to the full extent of their education and training.” ” Broadening the Scope of Nursing Practice Julie A. Fairman, PhD, RN John W. Rowe, MD Susan Hasmiller, PhD, RN, FAAN Donna Shahala, PhD “All health care professionals should support an expanded, standardized scope of practice for nurses as a way to improve health care in the United States.” ” 55

56 © 2013 The Advisory Board Company Defining “Top-of-License” Practice by Patient Needs Establishing Consensus on Core Responsibilities Imperative: Top of License Practice Core Nursing Responsibilities Across Settings Source: Nursing Executive Center interviews and analysis. Assess Clinical and Psychosocial Patient Needs 1 Establish Patient Goals and Track Progress 2 Provide Patient-Centered, Outcomes-Focused Care 3 Educate and Engage Patients and Their Families 4 Manage Key Components of the Clinical Record 5 Coordinate Care with Interprofessional Caregivers 6 Facilitate Safe Patient Transitions to the Next Care Setting 7 Assess and Incorporate New Technologies and Evidence-Based Practice 8 56

57 © 2013 The Advisory Board Company An All-Too-Common Reality Imperative: Top of License Practice Real Nurses’ Stories from the Front Line Source: Nursing Executive Center interviews and analysis. Primary Care Office Emergency Department InpatientSkilled Nursing Facility Home Health 10 minutes looking for patient’s suicide risk in the EMR Hunted down catheter because no one else available and care time-sensitive Wheeled patient to radiology so wouldn’t miss scheduled ultrasound Transported resident to dining room and stayed for the entire meal to assist him with feeding Drove 20 miles to agency office to document care in the electronic record Stuck waiting for physician’s order to administer pain medication Physician kept referring to the medical assistants as “nurses” Called hospital charge nurse to decipher hand- written discharge instructions Made four calls to physician to have patient’s medication adjusted 20 minutes cleaning up large spill to prevent an avoidable fall 57

58 © 2013 The Advisory Board Company Opportunity Lies in Underleveraged Hours Source: Storfjell J, Omoike O, and Ohlson S, “The Balancing Act: Patient Care Time Versus Cost,” JONA 38 (2008): ; Nursing Executive Center analysis. Imperative: Top of License Practice 1)Based on three-year study of nursing activities on 14 med/surg units in three hospitals. 2)Assessing, teaching, providing hands-on care, providing psychosocial support, coordinating care, and documenting care. 3)Waiting, disruptions, delays, work-arounds, and rework. Current Distribution of Med/Surg Nursing Time 1 $756,724 RN wages spent on non-value- added time per med/surg unit “Most attention has been focused on increasing nursing staffing levels rather than on increasing patient care time.” Judith Lloyd Storfjell, PhD, RN Osei Omoike, MS, MBA, RN Susan Ohlson, MSA, RNC ” “Non-Value- Added” Time 3 “Value-Added” Time 2 58

59 © 2013 The Advisory Board Company Impeding Effective Patient Care Staff Often Feeling Unsupported by Interprofessional Colleagues Source: Advisory Board Survey Solutions Data Cohort, Imperative: Interprofessional Collaboration Staff Strongly Agreeing with the Following Statements: “I receive the necessary support from employees in other units/departments to help me succeed in my work.” “I receive the necessary support from employees in my unit/department to help me succeed in my work.” 59

60 © 2013 The Advisory Board Company Poor Collaboration Leading to Poor Patient Outcomes Source: Baggs J, et al., “Association Between Nurse-Physician Collaboration and Patient Outcomes in Three Intensive Care Units,” Critical Care Medicine, 27 (1999): ; Nursing Executive Center analysis. Imperative: Interprofessional Collaboration Association Between Nurse-Physician Collaboration and Negative Patient Outcomes in the ICU Negative Outcome to Predicted Mortality Unit Collaboration Score, 1 (Poor) to 7 (High) The lower the nurse-physician collaboration score, the higher the risk of a negative patient outcome Medical ICUSurgical ICUMed/Surg ICU 60

61 © 2013 The Advisory Board Company Estimating the Costs InnInefficientollabortaionEstimating the Cost of Inefficient CoCollabommunication Inefficient collaboration and communication…. Source: Agarwal R, et al., “Quantifying the Economic Impact of Communication Inefficiencies in U.S. Hospitals,” Journal of Healthcare Management, 55 (2010): ; Nursing Executive Center analysis. Imperative: Interprofessional Collaboration Annual Economic Burden of Communication Inefficiencies Average 500-Bed Hospital $0.3 M $1.8 M$2.5 M Cost of Wasted Physician Time Cost of Wasted Nurse Time Cost of Increased LOS $4.6M Total annual costs attributed to inefficient communication for average 500-bed hospital 61

62 © 2013 The Advisory Board Company Renewed Emphasis on Interprofessional Education Source: Institute of Medicine, “Educating for the Health Team,” National Academy of Sciences, October 1972, available at accessed November 12, 2012; Interprofessional Education Collaborative, “Core Competencies for Interprofessional Collaborative Practice: Report of an Expert Panel,” 2011, available at resources/IPECReport.pdf, accessed November 12, 2012; Nursing Executive Center interviews and analysis. Imperative: Interprofessional Collaboration Factors Reinforcing the Need for Improved Interprofessional Collaboration New payment models rewarding effective primary care and population management Impending health care workforce shortages Aging population with multiple chronic conditions 1972 Institute of Medicine Report “Educating for the Health Team” “We face, in the next decade, a national challenge to redeploy the functions of health professions in new ways, extending the roles of some, perhaps eliminating others, but more closely meshing the functions of each than ever before.” Educating for the Health Team Institute of Medicine

63 © 2013 The Advisory Board Company Is This All We Aspire to Do? Source: HCAHPS, available at: accessed November 11, 2011; Nursing Executive Center interviews and analysis. Imperative: The Patient Experience Summary of Eight HCAHPS Domains 1.Communication with nurses 2.Communication with doctors 3.Responsiveness of hospital staff 4.Pain management 5.Communication about medicines 6.Discharge information 7.Hospital environment (quiet, noise) 8.Overall hospital rating 63

64 © 2013 The Advisory Board Company Broadening Our Ambition Imperative: The Patient Experience Ongoing Emotional Support Family Involvement and Care Team Integration Avoidable Disruptions Minimized Compassionate, Empathetic Caregivers Clear, Actionable Patient Education Up-to-Date and Thorough Information Physical and Emotional Needs Anticipated Patient Experience Communication Quiet at Night Information About Medications Discharge Information Cleanliness Responsiveness Pain Management HCAHPS Source: HCAHPS, available at: accessed November 11, 2011; Nursing Executive Center interviews and analysis. 64

65 © 2013 The Advisory Board Company Still Ample Room for Growth Imperative: The Patient Experience Percentage of Physicians and Patients Agreeing With the Following Statements About Compassionate Care n=800 patients, 510 physicians Source: Health Affairs, “An Agenda For Improving Compassionate Care: A Survey Shows About Half Of Patients Say Such Care Is Missing,” available at: accessed November 10,

66 © 2013 The Advisory Board Company Advancing Multiple Aims Imperative: Patient Experience Source: Boulding W, et al., “Relationship Between Patient Satisfaction With Inpatient Care and Hospital Readmission Within 30 Days,” American Journal of Managed Care, 2011, 17:41-48; Glickman S, et al., “Patient Satisfaction and Its Relationship With Clinical Quality and Inpatient Mortality in Acute Myocardial Infarction,” Circulation: Cardiovascular Quality and Outcomes, 2010; 3: ; Bertakis K, et al., “Patient- Centered Care is Associated with Decreased Health Care Utilization,” Journal of the American Board of Family Medicine, 2011, 24: ; Nursing Executive Center interviews and analysis. Representative Studies About the Relationship Between Patient Experience and Outcomes Journal of the American Board of Family Medicine Patient-Centered Care is Associated With Decreased Health Care Utilization American Journal of Managed Care Relationship Between Patient Satisfaction With Inpatient Care and Hospital Readmission Within 30 Days Circulation: Cardiovascular Quality and Outcomes Patient Satisfaction and Its Relationship With Clinical Quality and Inpatient Mortality in Acute Myocardial Infarction 66

67 © 2013 The Advisory Board Company Growing Number of Metrics Linked to Reimbursement Imperative: Accountability Source: Centers for Medicare & Medicaid Services; Nursing Executive Center interviews and analysis. HCAHPS Survey Measures During this hospital stay, how often did nurses treat you with courtesy and respect?” During this hospital stay, how often did nurses listen carefully to you? During this hospital stay, how often did nurses explain things in a way you could understand? During this hospital stay, after you pressed the call button, how often did you get help as soon as you wanted it? During this hospital stay, how often were your room and bathroom kept clean? During this hospital stay, how often was the area around your room quiet at night? During this hospital stay, did you need help from nurses or other hospital staff in getting to the bathroom or in using a bedpan? How often did you get help in getting to the bathroom or in using a bedpan as soon as you wanted? During this hospital stay, how often was your pain well controlled? During this hospital stay, how often did the hospital staff do everything they could to help you with your pain? Before giving you any new medicine, how often did hospital staff tell you what the medicine was for? Before giving you any new medicine, how often did hospital staff describe possible side effects in a way you could understand? During this hospital stay, did doctors, nurses or other hospital staff talk with you about whether you would have the help you needed when you left the hospital? During this hospital stay, did you get information in writing about what symptoms or health problems to look out for after you left the hospital? Core Process Measures Acute Myocardial Infarction Aspirin prescribed at discharge Fibrinolytic agent received within 30 minutes of hospital arrival Time of receipt of primary percutaneous coronary intervention Statin prescribed at discharge Heart Failure Discharge instructions Evaluation of left ventricular systolic function Angiotensin converting enzyme inhibitor Pneumonia Blood culture performed in the ED prior to first antibiotic received Appropriate initial antibiotic selection Surgical Care Improvement Project Prophylactic antibiotic received within 1 hour prior to surgical incision Prophylactic antibiotic selection for surgical patients Prophylactic antibiotic discontinued within 24 hours after surgery end time Cardiac surgery patients with controlled 6AM postoperative serum glucose Postoperative urinary catheter remoaval on post operative day 1 or 2 Surgery patients on a Beta Blocker prior to arrival who received a Beta Blocker during the perioperative period Surgery patients with recommended VTE prophylaxis ordered Surgery patients who received appropriate VTE prophylaxis within 24 hours pre/post surgery Patient Safety and Quality Measures Mortality Measures Acute Myocardial Infarction 30-day mortality rate Heart Failure 30-day mortality rate Pneumonia 30-day mortality rate Readmission Measures Acute Myocardial Infarction 30-day risk standardized readmission measure Heart Failure 30-day risk standardized readmission measure Pneumonia 30-day risk standardized readmission measure Healthcare-Associated Infections Central line associated bloodstream infection Surgical site infection Catheter-associated urinary tract infection Hospital-Acquired Condition Measures Foreign object retained after surgery Air embolism Blood incompatibility Pressure ulcer stages III & IV Falls and trauma Vascular catheter-associated infection Catheter-associated urinary tract infection Manifestation of poor glycemic control Prevention: Global Immunization Measures Immunization for influenza Immunization for pneumonia 67

68 © 2013 The Advisory Board Company Frontline Accountability Foundational to Success Imperative: Accountability Practice Strategy Hierarchy Peak Performance Frontline Accountability for Organizational Goals InnovationStandardization Source: Nursing Executive Center interviews and analysis. Protocol adherence clearly important… …Ownership of protocol/standard of practice outcomes supported by critical thinking essential Critical thinking essential to addressing needs 68

69 Strategies for Nursing to Influence, Shape, Own, and Lead….. What Lies Ahead? 69

70 © 2013 The Advisory Board Company Holistic Care Transformation … An Opportunity to Design the Future Together Population Health Management Care Transitions Care Model 70

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