Bipartisan Policy Center Glenn D. Steele Jr., MD, PhD President and CEO Geisinger Health System April 24, 2008

Geisinger Health System Business Strategy & Development 02/08

Business Strategy & Development 02/08 Geisinger Health System

Business Strategy & Development 02/08 Geisinger Health System

~ 211,000 members –HMO, PPO, diversified products –35,000 Medicare Advantage >16,000 empanelled physicians * 75 non-Geisinger hospitals 41 PA counties * Includes Geisinger physicians of ~700 Geisinger Health Plan

Electronic Health Record (EHR) Decision to implement Epic®: 1995 > $80M invested (hardware, software, manpower, training) Running costs: ~ 4.2% of annual revenue of $2.0B Fully-integrated EHR - 40 community practice sites; GMC in- patient; GWV nursing documentation; GWV and GSWB Emergency Department live on EPIC® –GSWB nursing documentation to go live: April 2008 > 3 million patient records –~ 98,000 active users of MyGeisinger; goal = 100,000 –> 1,300 non-Geisinger users; confidential access (referring physicians) –Real-time registries track clinical metrics by dept/physician –PACS and web-based image distribution

Targets for the Geisinger Transformation Unjustified variation Fragmentation of care-giving Perverse payment incentives – Units of work –Outcome irrelevant Patient as passive recipient of care; not an active participant Managing to Success

Transformation Initiatives * Geisinger Medical Home Chronic Disease Care Optimization Transitions of Care ProvenCare SM for acute episodic care (the “warranty”) *Achievable only through innovation Managing to Success

Geisinger Medical Home Partnership between primary care physicians and GHP that provides 360-degree, 24/7 continuum of care “Embedded” nurses Assured easy phone access Follow-up calls post-discharge and post-ED visit Telephonic monitoring/case management Group visits/educational services Personalized tools (e.g., chronic disease report cards)

Admission Metrics Baseline Pre-Program Jan – Oct First Year of Pilot Jan-Oct Percent Reduction GHP MC Medicare 311/1,000 0% Lewistown 365/1,000291/1,000-20% Lewisburg 269/1,000232/1, %

Readmission Metrics Baseline: Pre- Program 2005 Q4 – 2006 Q3 Readmission Rate First Year: Pilot 2006 Q4 – 2007 Q3 Readmission Rate % Reduction GHP Managed Care (MC) Medicare 16.6%16.5%0% GHP MC Medicare GHS Sites 17.0%16.6%-2.3% All Medical Home Sites 19.5%15.9%-18.5% Lewistown (2,120 pts)20.3%17.8%-12.3% Lewisburg (645 pts) 15.2%7.9%-48.0%

9/30/06 23% 9/30/06 15% 9/30/06 4% 12/31/07 25% 12/31/07 22% 12/31/07 10% > 20,000 patients 7 met8 metAll met

Chronic Disease Portfolio Diabetes Congestive Heart Failure Coronary Artery Disease Hypertension Prevention Bundle

ProvenCare SM for Acute Episodic Care (the “Warranty”)

Pay-for-Performance Acute Episodic Care ProvenCare SM Identify high-volume DRGs Determine best practice techniques Deliver evidence-based care GHP pays global fee No additional payment for complications

ProvenCare SM CABG: Reliability % of patients who received all components of care P=0.01

Quality Clinical Outcomes - (18. mos) Before With % Improvement/ ProvenCare SM ProvenCare SM (Reduction) (n=132)(n=181) In-hospital mortality 1.5 % 0 % Patients with any complication (STS) 38 % 30 % 21 % Patients with >1 complication 7.6 % 5.5 % 28 % Atrial fibrillation 23 % 19 % 17 % Neurologic complication 1.5 % 0.6 % 60 % Any pulmonary complication 7 % 4 % 43 % Blood products used 23 % 18 % 22 % Re-operation for bleeding 3.8 % 1.7 % 55 % Deep sternal wound infection 0.8 % 0.6 % 25 % Readmission within 30 days 6.9 % 3.8 % 44 %

Value Financial Outcomes - (18 months) Average total LOS fell 0.5 days (6.2 vs. 5.7) Hospital net revenue grew 7.8% Contribution margin of index hospitalization grew 16.9% 30-day readmission rate fell 44%

ProvenCare SM Portfolio ProvenCare: –CABG –Angioplasty –Angioplasty + AMI –Hip replacement –Knee –Cataract –EPO –Perinatal –Bariatric surgery

Policy Implications Pay for acceptable outcomes only (Medicare) –Achievable by: IDS Virtual IDS