Engage Connect Influence

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1 Engage Connect Influence

2 2013 CAP Policy Meeting Pathology s Experience with Care Coordination Blair Childs Premier Healthcare Alliance

3 Blair Childs SVP, Public Affairs

4 THE NATION S LARGEST HEALTHCARE ALLIANCE OUR MISSION: TO IMPROVE THE HEALTH OF COMMUNITIES 2,800+ member hospitals 2.5 million real-time clinical transactions daily $4.8 billion savings in ,000+ alternate sites of care Database representing 1 in every 4 U.S. discharges Six-time winner of Ethisphere s Most Ethical award Malcolm Baldrige National Quality Award Winner $40+ billion in group purchasing volume Solving industry s challenges through scale, Intelligence and transformation 4

5 A TRANSFORMATIVE MOMENT IN HEALTHCARE Systemic challenges Fragmented care delivery Misaligned relationships with physicians, payers 30% unnecessary services Lack of transparency Economic and regulatory challenges Government, commercial and consumer pricing pressure Mix degradation Flat/declining utilization Transformative challenges Movement to risk-based payments Value-based purchasing and harm penalties Bundled payments Imperative to manage population health, impact outcomes and provide higher quality at lower cost 5

6 TRANSITIONING TIMES IN HEALTHCARE Value-based purchasing: Bundled payment Global payment HAC & readmissions penalties Shared savings FEE-FOR-SERVICE MOVING TO INTEGRATED CARE, NEW PAYMENT MODELS & RISK High Performing Hospitals Most efficient supply chain Best outcomes in quality, safety Waste elimination Satisfied patients High Value Episodes DRG and episode targeting Care models and gainsharing Data analytics Cost management Population Management Population analytics Care management Financial modeling and management Legal Physician integration 6

7 SUSTAINED IMPROVEMENT FOR HIGH PERFORMING HOSPITALS Year 1 Year 2 Year 3 Year 4 Year 5 (Q2 2012) Hospital deaths avoided 6,951 21,099 42,388 72,353 91,840 Dollars saved $683M $2.12B $4.55B $7.53B $9.13B Patients receiving all EBC 9,427 24,091 42,878 66,531 80,128 If all acute-care hospitals nationwide were able to achieve these results, over five years we could have: Avoided approximately 950,000 acute care deaths Provided evidence-based care to an additional 1 million patients Saved about $93 billion 7

8 GROWING NUMBER OF PUBLIC AND PRIVATE ACOS Estimated 400+ public and private ACO s in 43 states Medicare specific ACOs: First ACOs (10 organizations) part of the PGP demonstration project beginning in CMMI Pioneer participants, program began 1/1/2012 Medicare Shared Savings Program 4/01/2012: 27 ACOs selected to participate 7/01/2012: 89 ACOs selected to participate 1/1/2013: 106 ACOs selected to participate = Hospital System = Insurer 8 = IPA = Community Based Organization Source: Leavitt Partners Center for Accountable Care Intelligence, January 2013 PROPRIETARY & CONFIDENTIAL 2013 PREMIER INC.

9 23 markets 100+ hospitals 5,000+ MDs 50 markets 300+ hospitals 12,000+ MDs 100% success rate in helping 20 members apply for MSSP and Pioneer 9 PROPRIETARY & CONFIDENTIAL 2013 PREMIER INC.

10 TIME UNTIL JOINING OR CREATING ACO (C-SUITE ONLY) 25.0% 20.0% 21.0% 20.3% 18.8% 15.0% 14.5% 14.5% 10.9% 10.0% 5.0% 0.0% We already have an ACO in place By the end of 2013 By the end of 2014 By the end of 2015 After 2015 My health system will not be joining or creating an ACO in the foreseeable future 10 Source: Premier healthcare alliance spring 2013 member survey

11 EARLY RESULTS SHOW OPPORTUNITIES FOR SAVINGS $500 savings per patient/year Lowered health plan costs by $10m to $15m 19% lower patient costs $1.59m savings on cardiac and ortho. services 4.48% reduction in employee BMI 12.3% reduction in net health care costs 11

12 NUMBER OF EXECUTED AGREEMENTS, BY PAYOR CATEGORY 12

13 1,682,000 COVERED LIVES, BY MODEL (AS OF ) Capitation 52,670 Shared Savings (downside) 445,305 Shared Savings (upside) 748,430 Bundled Payment 165,000 Care Management Fees 325, , , , ,000 13

14 14 TOP 5 AND BOTTOM 5 LESSONS FROM COMPARISONS Factors That Differentiate Organizations with High ACO Readiness 1. Ownership of a health plan with population health management capabilities 2. Existing collaboration with other health systems in the community 3. Positive relationships with primary care and specialty care providers in the market 4. More advanced level of clinical integration across the continuum of care 5. Some investment in patient-centered medical home development with their PCPs 6. Existing risk-based contracts with payers including bundled payments Factors That Do NOT Differentiate 1. Already in active execution of a clinical integration strategy across the system 2. Number of employed physicians 3. Disproportion of the market with government financed health services 4. Financial strength (strong for the entire group) 5. Medicare spending level, including end-of-life care 6. Market share Factors Likely to Become Differentiators in More Mature Models 1. Active governance structures that include physician leadership (e.g. PHOs) 2. An EHR and HIE implementation strategy across the continuum of care 3. Physician leadership development programs or culture barriers 4. Payers that are initiating innovative risk-based relationships 14

15 NO MATTER WHERE YOU ARE ON THE JOURNEY Total cost of care reduction is essential Data-driven utilization analyses Labor productivity Efficient and effective supply chain Clinical outcomes are driving value Value-based purchasing Readmissions Reducing harm Share best practices, learn from top performers 15

16 FOCUS AND RECOMMENDATIONS Focus on reducing costs by eliminating: Redundancy Unjustified variation Process inefficiencies Mistakes Failure to follow EBC Poor care coordination Engage Profit center to cost center Physician leadership areas Care models Demonstrate ROI/ Be a value consultant Culture change 16

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