Healthcare s Transformation Journey
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1 Healthcare s Transformation Journey Susan DeVore, president and CEO, Premier, Inc. November 21, 2014
2 2
3 Premier, Inc. Our Mission: To improve the health of communities. Uniting approximately 3,400 hospitals 68% of U.S. community hospitals and 110,000 alternate sites of care $41 billion in group purchasing volume Integrating clinical, financial, operational and population data Approximately 1 in every 3 U.S. hospital discharges MAKE HEALTHCARE SUPPLY CHAIN EFFICIENT AND EFFECTIVE DELIVER CONTINUOUS IMPROVEMENT IN COST AND QUALITY TODAY AND ENABLE SUCCESS IN NEW HEALTHCARE DELIVERY / PAYMENT MODELS INTEGRATE DATA AND KNOWLEDGE TO CREATE MEANINGFUL BUSINESS INTELLIGENCE THAT DRIVES IMPROVEMENT 3
4 Healthcare trends 2014 Partners are us Chronic care, everywhere Data liberation Healthcare at home On the job health Changes in the exchanges War of the words Put me in, coach 4
5 Wave election for Republicans: Implications Bipartisan ACA changes possible; ACA framework remains: 30 hour work week Repeal device tax, IPAB, employer mandate Copper plan Starve reform (insurance risk pool) 2015: SGR patch or reform? Issue continues to be pay for and its re-scored Unlikely in lame duck Republicans will seek structural entitlement reform pay fors» Means testing; standardized co-pays/deductibles Physician P4P still proceeding SCOTUS: New political dynamic Other healthcare issues: 340B; site neutral payment 5
6 Optimizing the transition in our transformation journey Value-based purchasing: HACs, quality, efficiency, cuts Bundled payment Global payment HAC and readmission penalties Shared savings MOVEMENT TO INTEGRATED CARE, NEW PAYMENT MODELS & RISK High Performing Hospitals Most efficient total cost 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 Physician integration This journey requires collaboration 6
7 Shifting incentives Medicare payment shifts Fee For Service (FFS) FFS Linked to Quality Alternative Payment Models on FFS Architecture Population- Based Payment Achieve quality outcomes Implications for health systems Improve patient safety. Improve patient safety Reduce costs Manage populations 6% Of CMS payments at risk on performance by X HACs pose triple threat to reimbursement Efficiency measures and reduced reimbursements Understanding and managing high risk patients 7
8 What we need to transform, from the inside out Scale Shared, integrated infrastructure Co-innovation Intelligence to transform from the inside Leadership in population health How do health systems survive the current state, optimize the transition, and build for the future. all at the same time?! 8
9 Data, data, everywhere... and not a drop to drink!
10 Collaboration is a science, not a meeting ACCELERATING IMPROVEMENT Measure with defined metrics Report transparently Share best practice Execute collaboratively Knowing is not enough; we must apply. Willing is not enough; we must do. -Johann Wolfgang von Goethe 10
11 QUEST High performance healthcare collaborative VBP Cost of Care VBP Evidence- Based Care Mortality VBP VBP PFP Harm Readmissions Patient Experience VBP PFP Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Hospital deaths avoided 6,951 21,099 42,388 72, , ,388 Dollars saved $683M $2.12B $4.55B $7.53B $10.12B $13.2B Patients receiving all EBC 9,427 24,091 42,878 66,531 93, ,956 Harms Prevented N/A N/A 3,447 7,924 13,963 21,679 Readmissions Prevented N/A N/A N/A 7,332 25,722 55, Results based upon all members in QUEST as of Q4 2013; results are cumulative.
12 QUEST delivering measureable results $9,300 $8,800 $8,300 $7,800 $7,300 $6,800 $6,300 $5,800 Q Q QUEST and non-quest costs are comparable at start of collaborative Mortality Observed to Expected Ratio Matched Cohort Analysis Medpar Inpatient Claims Data 4-quarter moving average QUEST PAD Cost (N = 111) QUEST (N = 117) Non-QUEST (N = 117) Cost per Discharge Trends 4-Quater Moving Average In nominal, non-inflation adjusted dollars National Trend 37% increase QUEST 14% increase National Trend (BLS Price Index for Inpatient Services) Q Q Mortality 38% improvement. 1 in every 5 deaths prevented was a Sepsis case. Cost of care 22% decrease in CMI/inflation adjusted costs. ~ $1,421 drop in mean cost/discharge. Evidence-based care 18% improvement in evidence-based care. 97% compliance achieved benefitting 123,956+ patients. Patient experience Improved patient experience scores by 6% since baseline. Harm avoidance 46% reduction in harm Hospital acquired injuries saw a 72% reduction from current Readmissions 9% reduction in current PROPRIETARY CONFIDENTIAL 2014 PREMIER, INC.
13 Next performance frontiers: Addressing unjustified variation in and across healthcare Unjustified Clinical Practice Variation Excessive premium device utilization Unnecessary lab testing, imaging, treatments and procedures Inappropriate level of inpatient care, length of stay, care location Suboptimal pharmaceutical selection, utilization Excessive use of blood and blood products Harm and Safety Medication errors Hospital acquired conditions/ infections Lack of adequate antibiotic stewardship Transitions of Care Excessive readmissions Inadequate medication reconciliation Inability to transition to lower levels of care Overuse of skilled nursing facilities Management of chronic conditions Operational Effectiveness Cross-continuum staffing inefficiency Excessive use of overtime and agency/contract staffing Sub-optimized skill mix Supply item selection Non-compliance with preferred suppliers Inadequate turnaround/cycle times 13
14 Population health is complex so is the business of getting there Determinants of Health Adaptation: IHI; Dahlgren & Whitehead s Social Model of Health 14
15 Expenditures as % of GDP Source: BMJ Qual Saf bmjqs published Online First: 29 March
16 Expenditures as % of GDP Source: BMJ Qual Saf bmjqs Published Online First: 29 March
17 Source: Heartland Health Saint Joseph, MO 17
18 What we sell is the ability for a 43-year-old accountant to dress in black leather, ride through small towns and have people be afraid of him. Source: Heartland Health Saint Joseph, MO 18
19 What is the matter with you? Source: Susan Edgman-Levitan, PA, is Executive Director of the John D. Stoeckle Center for Primary Care Innovation at Massachusetts General Hospital 19
20 What matters to you? Source: Susan Edgman-Levitan, PA, is Executive Director of the John D. Stoeckle Center for Primary Care Innovation at Massachusetts General Hospital 20
21 The emerging models for population health Maine >50% 10-15% 5-10% 4-6% 2-4% 0-2% As of 8/04/2014 Medicare Advantage Enrollment Varies geographically; likely due to:: Urban origins of HMOs in Medicare Advantage History of managed care in state Existence of employer sponsored retiree health insurance % Population Covered by ACO 18.2 million covered lives across public and private ACOs Led - equally - by physicians and hospitals State-Based Medicaid Reform Accountable Care Model (14) Bundled Payment/Episodes of Care (3) Delivery System Reform Incentive Program (DSRIP) (8) Colorado and Oregon - statewide Medicaid ACO models Source: (MA Enrollment) Kaiser Family foundation, Medicare Advantage 2014 Spotlight: Enrollment Market Update. 21
22 Driving toward per capita cost reduction Patient Care Focus Areas Impact to Utilization Rates Chronic disease management - six major disease areas Asthma / Diabetes / CHF / COPD / Hypertension / Chronic depression Patient centered medical home Palliative/end of life care Appropriate utilization of diagnostics Pharmaceutical use/costs e.g., use of generics More efficient locations of care e.g., primary care practice office Primary Care/Urgent Care/Minute Clinic visits Emergency Department visits Admissions Readmissions related to chronic disease Ambulatory sensitive admissions End of life/palliative Care Skilled Nursing Facility volume Home care visits Market share can increase (less Leakage) 22
23 ACO readiness what we ve learned Factors that differentiate organizations with high ACO readiness Full or partial ownership of a health plan with pop health management capabilities Existing collaboration with other health systems in the community Existing risk-based contracts with payers including bundled payments A sophisticated EHR and HIE implementation strategy across the continuum of care Clinical integration across the continuum of care Patient-centered medical home with employed or community providers Positive relationships with primary and specialty care providers in the market Active governance structures that include physician leadership (e.g. PHOs) Factors that do NOT differentiate organizations with high ACO Readiness 23 Market share Number of employed physicians Disproportion of the market with government financed health services Financial strength (strong for the entire group) Medicare spending level low cost areas are not further along High proportion of commercially insured patients Already in active execution of a clinical integration strategy across the system
24 How could policy change accelerate this transformation? Barriers Misaligned incentives Lack of data, identifiers and interoperability Rigid FFS system Burdensome laws and regulations Lack of patient engagement tools Recommendations Speed VBP across payment silos Enact voluntary bundled payment program Test new payment models in rural areas Demand APIs as open source tools Implement UDI Create patient identifiers Enable innovation Protect Medicare Advantage Continue to test and scale new models Replace the SGR formula Streamline and rewrite regulations, e.g., Conditions of participation; cost report; 3-day hospital stay; self-referral, anti-trust and CMP laws, RACs, Z-PICs, MICs Measures Benefit design Legal waivers 24
25 If you want to go fast, go alone. If you want to go far, go together. 25
26 Transforming Healthcare TOGETHER 26
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