Presentation is loading. Please wait.

Presentation is loading. Please wait.

Increasing the Affordability of Health Care Revised 7/2007 1.

Similar presentations

Presentation on theme: "Increasing the Affordability of Health Care Revised 7/2007 1."— Presentation transcript:

1 Increasing the Affordability of Health Care Revised 7/2007 1

2 Total National Health Expenditures, 1980 – 2005 (1) Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 8, (1) CMS completed a benchmark revision in 2006, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see (2) Expressed in 1980 dollars; adjusted using the overall Consumer Price Index for Urban Consumers. Spending on health care is on the rise. 2

3 National Expenditures for Health Services and Supplies (1) by Category, 1980 and 2005 (2) Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 8, (1) Excludes medical research and medical facilities construction. (2) CMS completed a benchmark revision in 2006, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see (3) Other includes net cost of insurance and administration, government public health activities, and other personal health care. (4) Other professional includes dental and other non-physician professional services. $234.0B$1,860.9B However, hospitals are a shrinking share of the growing spending pie. 3

4 The U.S. is the only country where health care accounts for more than 13 percent of the GDP, spending 16.5% in

5 38% 47% 50% 34% 23% Percent of Adults Facing Serious Problems Paying for Insurance in the Past Two Years, by Income Level, 2006 Fifty percent of adults with incomes less than $50,000 have experienced problems paying for insurance in the past two years… Note: Percent values on the top of each bar reflect the sum of the values within each bar. Source: The Commonwealth Fund (2006) Public Views on Shaping the Future of the U.S. Health Care System 5

6 Percent of Firms Offering Health Benefits, 2002 and 2006 Source: Employer Health Benefits 2006 Annual Survey, (#7527), The Henry J. Kaiser Family Foundation and Health Research and Educational Trust, September 2006 …and may small businesses do not even offer coverage. 6

7 These factors contribute to a growing number of uninsured. Number and Percent Uninsured, 1985 – 2005 Source: US Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: Data released August Table 8. People With or Without Health Insurance Coverage by Selected Characteristics: 2004 and Link: (1) 2004 and 2005 figures reflect revised estimates released by the Census Bureau on March 23,

8 Increased spending is linked to several factors. 1.Increased demand for care –Demographics –Health status –Technology: health care can do more things for more people 2.Rising costs to provide care –Labor shortage –Technology –Regulatory burden –For private sector, government underfunding 8

9 Drivers of Demand Demographics 9

10 The aging of the population is driving up demand for health care. Source: US Census Bureau US Population Trends and Projections by Age, , , , , , , , , , Thousands and over 10

11 With the aging of the Baby Boomer population, hospital admissions of Boomers will more than double… * Projected. 1 Non-Boomer adults indicates non-Boomers over the age of 15. Source: When Im 64, American Hospital Association, May FCG projections based on National Center for Health Statistics, National Hospital Discharge Survey 2004, May Number of hospital admissions

12 …leading to a majority of hospital patients being over 65. * Projected. Source: When Im 64, American Hospital Association, May FCG projections based on National Center for Health Statistics, 2004 National Hospital Discharge Survey, May 2006 Total Hospital Admissions in Million Total Hospital Admissions in 2030* 49 Million 12

13 Physician office visits for adults will number more than one billion by * Projected. 1 Non-Boomer adults indicates non-Boomers over the age of 15. Source: When Im 64, American Hospital Association, May FCG projections based on National Center for Health Statistics, National Ambulatory Care Survey 2004, June Number of Physician Office Visits


15 Drivers of Demand Health Status 15

16 We have a rising number of people with chronic conditions. Number and Percent of Americans with Chronic Medical Conditions,* 1995 – 2030 Millions of People Source: Adapted from Partnership for Solutions, Johns Hopkins University, Chronic Conditions: Making the Case for Ongoing Care, December 2002 Percent of Total Population *Values for 2005 to 2030 are projections. 16

17 Lifestyle factors are contributing to the rising levels of chronic illness. Prevalence of Diabetes (1) and Obesity (2), U.S. Population, Source: Centers for Disease Control and Prevention. (1)Diabetes is age-adjusted prevalence from the National Diabetes Surveillance System. (2)Obesity is median % of individuals 18 years or older reporting body mass index greater than 30 kg/m 2 in states, DC, and the U.S. territories reporting data to the Behavioral Risk Factor Surveillance System. 17

18 By 2030, 37 million Boomers will be managing more than one chronic disease. 18

19 On average, the cost of health care for an individual with more than 5 chronic conditions is nearly 15 times that of an individual with no chronic conditions. 19

20 INSERT YOUR DATA HERE INSERT DATA ON CHRONIC CONDITIONS SPECIFIC TO YOUR COMMUNITY. In addition to your own internal data that can be gleaned from the medical records, visit for state level data on chronic disease from the BRFSS survey. 20

21 Drivers of Demand Technology: Health care can do more things for more people 21

22 TechnologyMedicare Costs Drug-eluting coronary stents$2 – 4 B ICD for sudden death prophylaxis$1 – 3 B PET for Alzheimers disease$1 B Verteporfin for macular degeneration$750 M Left-ventricular assist devices$1 – 7 B Source: Adapted from Neumann PJ, Medicare National Coverage Decisions: How is CMS Doing? Presented at National Health Policy Conference, February 2005 Projected Annual Costs of Recent Technology Related Medicare Coverage Expansions Each year we can do more things for more people, but innovations are costly. 22

23 People demand innovations in care because they save lives. Mortality from Heart Attacks in Relation to Advances in Care 1980s Blood Thinners Beta Blockers CABG Metal stents Thrombolytics Implantable defibrillators Drug-eluting stents 1990s 2000s Statins ACE inhibitors Death Rate per 100,000 Source: The Value of Investment in Health Care 23

24 Rising Costs of Providing Care Labor Shortage 24

25 Percent of Hospital Costs (1) by Type of Expense, 3Q06 Source: AHA analysis of Centers for Medicare and Medicaid Services data, using base year 2002 weights. (1) Does not include capital. (2) Includes postage and telephone expenses. (2) Health care is very labor intensive, but… 25

26 Vacancy Rates for Selected Hospital Personnel, December 2006 …hospitals also face workforce shortages in key care-giving professions… Source: 2007 AHA Survey of Hospital Leaders Note: 116,000 vacancies is a national estimate created by extrapolating the vacancy rate to all 5,000 community hospitals in ST: Speech Therapist, OT: Occupational Therapist, PT: Physical Therapist. 116,000 RN Vacancies* 26

27 National Supply and Demand Projections for FTE RNs, 2000 – 2020 Source: National Center For Health Workforce Analysis, Bureau of Health Professions, Health Resources and Services Administration, Link: Shortage of over 1,000,000 nurses in 2020 A continuing and growing workforce shortage is a key driver of the increased costs of RNs… 27

28 …as well as physicians. * Projected. Sources:Physician Supply and Demand: Projections to 2020, HRSA, October 2006 Research Shows Rapid Decline in Geriatric Medicine Students, Press Release, University of Cincinnati, April 4, 2007Aging Boomers Face a Doctor Shortage, CBS News, March Physician Shortage for Select Specialties

29 Rising Costs of Providing Care Technology, Regulatory Burden and Government Underfunding 29

30 Hospitals face significant increases in the costs of caring for patients… Percent Change in Hospital Expenses for Pharmaceuticals and Medical Supplies/Devices, 2004 to 2005 Source: AHA 2006 Survey of Hospital Leaders 30

31 …driven in part by new technology that increases costs for providing the same service. Stents: The Rising Costs of Technological Development Source: University HealthSystem Consortium 31

32 WHO REGULATES HOSPITALS IRSEPAFTCFCC FBI HHS/HRSAHHS/NIOSHJCAHONRCDOL SEC OPOs FAA DEA Regional Home Health Intermediaries DME Regional Contractors Treasury DOJ OSHA DOT FDA Regional Offices IntermediariesCarriersPROs PRRB Medicare Integrity Program Contractors Congress Federal Circuit CourtsSupreme Court Departmental Appeals OIG State Survey & Certification Courts Attorneys General Medicaid Health Boards Medical Boards Local Governments Licensure Hospitals CMS Regulatory burden contributes to rising costs for hospitals and the system as a whole. 32

33 Hospital Payment Shortfall Relative to Costs Medicare and Medicaid, 1997 – 2005, (in billions of dollars) Medicare Medicaid Total 2005 Medicaid and Medicare Shortfall of $25.4 Billion Source: AHA Annual Survey Billions of Dollars For the private sector, government underfunding adds to costs…

34 …as do rising levels of uncompensated care, contributing to… Aggregate Hospital Uncompensated Care Costs, (in billions) Source: AHA Annual Survey 34

35 Source: AHA Annual Survey Total, Operating and Patient Care Margins, 1997 (pre-BBA) vs Total MarginOperating Margin Patient Care Margin …decreasing hospital margins… 35

36 Operating Margins of the Top Insurers, 2003 – 2005 Source: Hoovers. Data from January Link: (1) 2004 operating margin data for WellPoint include both pre- and post-merger data for the merger with Anthem in November 2004 (1) …while margins of top insurers are in the double digits. 36

37 More can and should be done to make care more affordable. With costs of caring on the rise and demand increasing in an ever changing environment we must seize opportunities to make care more affordable. 37

38 A New Lens is Needed… 38

39 The increase in spending on health care is a frequent topic of debate, but the value of this investment is seldom part of the discussion. CBO Issues Warning on Rising Health Care Costs Senate Republicans in Albany Eye Big Medicaid Cuts Medicare Revamp Fails to Cure Angst Over Costs 39

40 Research indicates significant health gains have accompanied increased spending. Since 1980, per capita expenses up $2,254, but: Overall death rate down 16% Life expectancy from birth up by 3.2 years Disability rates down 25% for people over 65 56% fewer days spent in the hospital Health gains of $2.40 to $3.00 per dollar invested 40

41 Advances in health care have lead to fewer deaths and less disability.206millionmore days in hospital 2.3millionmoredisabledpersons 470,000moredeaths 41 Where we would be in 2000 without advances since 1980?

42 Death rates for key diseases have declined dramatically Death Rates for Key Conditions Studied Source: Health, United States 2002 Heart Attack Type 2 Diabetes Stroke Breast Cancer 42

43 Americas health care system is at a crossroads, and hospitals are part of the solution. 43

44 Key opportunities exist to increase affordability. Focus on wellness –Go beyond the medical model of care to look at wellness and prevention Better manage chronic disease –Anticipate the wave of the Boomers and the growing incidence of chronic disease Improve care delivery –More demand for services requires new approaches to care delivery Increase transparency of quality performance Better understand and reduce duplication of services Speed adoption of IT 44

45 Focus on Wellness Promote preventive services Reward personal participation Reward healthy behaviors 45

46 More employers are investing in wellness. Individuals with healthy lifestyles typically are: More productive File fewer medical claims Have lower medical costs Research shows a $3 to $1 return on investment Prevention/detection demonstrates success in cancer and heart disease 46

47 Research has shown that a focus on wellness is cost effective. Average Percent Change in Employers Costs Resulting from Workplace Health Promotion and Wellness Programs Source: Chapman, L. (2003). Meta-evaluation of Worksite Health Promotion Economic Return Studies. Art of Health Promotion Newsletter, 6(6). 47

48 Employers also believe financial incentives could work. Money is not enough so employers must build something into the plan such as tools and health coaches. – Midwest Business Group on Health. Source: PricewaterhouseCoopers Management Barometer Survey Do you believe that providing financial incentives to employees for participating in healthy lifestyle programs will reduce your companys health care costs? 48

49 Focus on wellness INSERT INFORMATION ON THE WELLNESS PROGRAMS YOU ARE INVOLVED IN… For additional examples or ideas, visit 49

50 Better manage chronic disease INSERT INFORMATION ON YOUR EFFORTS TO MANAGE CHRONIC DISEASE IN YOUR COMMUNITY –Its helpful to include data that show results. (i.e. lower admissions of asthma or improved lab results of those participating in a program) 50

51 Improve care delivery INSERT INFORMATION ON YOUR EFFORTS TO IMPROVE CARE DELIVERY –Its helpful to include data that show results. (i.e. wait times in the ED, faster discharge times, quicker bed turn over) –Demonstrated improved patient satisfaction levels (i.e. survey results) 51


53 Better understand and reduce duplication Following care guidelines and protocols, clinicians could help reduce readmission rates to hospitals and lessen complications. INSERT INFORMATION ON WAYS YOUR ORGANIZATION IS ADDRESSING THIS GOAL 53

54 Speed adoption of IT Todays health care system is choked with paper. Health care will be more affordable if we spend more time at the bedside and less on paperwork. INSERT INFORMATION ON WAYS YOUR ORGANIZATION IS ADDRESSING THIS GOAL 54

55 Broadening of the digital backbone in healthcare Widespread adoption of electronic medical records and other health information technology is estimated to save $162 billion a year by improving care management, reducing preventable medical errors, lowering death rates from chronic diseases, and reducing the number of employee sick days. Payer benefits Drops in administrative costs More accurate forecasting Provider benefits Reduced duplicate testing Reduced adverse drug reactions Source: Pricwaterhouse Coopers, June

56 Keeping health care affordable will involve every segment of the health care system – insurers, hospitals, business, physicians, nurses, employers and individuals. We can and must do this together! 56

Download ppt "Increasing the Affordability of Health Care Revised 7/2007 1."

Similar presentations

Ads by Google