League of Women Voters. November 20, 2012

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1 League of Women Voters November 20, 2012

2 Palo Alto Medical Foundation Multi-Specialty Medical Group for past 82 years. Outpatient Medical Centers not a hospital Community based, not-for-profit Physician-led Community Trustee governed Excellence, Caring, Innovation

3 PAMF Service Area PAMF cares for more than 750,000 patients with more than 1,100 physicians and 5,000 employees in 40 locations: Palo Alto 350 physicians with satellite clinics in Fremont, Los Altos, Portola Valley, Redwood City and Redwood Shores Camino 350 physicians with offices in Sunnyvale, Cupertino, Mountain View and Santa Clara Santa Cruz 150 physicians with clinics in Santa Cruz, Watsonville, Aptos, Scotts Valley and Watsonville, VNA and Sutter Maternity and Surgery Center San Mateo 100 physicians in San Mateo and Burlingame Alameda 150 physicians in Fremont and Dublin 3

4 Coordinated Healthcare Delivery System All Physicians and Staff Work Together Common Electronic Medical Record Integrated Diagnostic Facilities and Treatment Centers Patient Convenience; One-stop for all Care Value: Superior Clinical Performance and Service for Every Dollar Spent

5 Medical and Surgical Specialties Allergy Anesthesiology Bariatric Surgery Cardiology Cardiothoracic Surgery Dermatology Endocrinology ENT Family Medicine Gastroenterology General Surgery Geriatric Medicine Hand Surgery Hematology Hospitalist Immunology Infectious Disease Internal Medicine Nephrology Neurology Neurosurgery Ob/Gyn Occupational Medicine Oncology Ophthalmology Orthopedic Surgery Pediatrics Physiatry Plastic Surgery Podiatry Psychiatry Pulmonary Medicine Radiology Radiation Oncology Rheumatology Sleep Medicine Sports Medicine Travel Medicine Urgent Care Urology Vascular Surgery 5

6 Services Diagnostic Imaging - CT, MRI, Ultrasound - Breast Diagnostic Centers Mammography Stereotactic Biopsy - Nuclear Medicine Laboratory Cancer Treatment Centers Surgery Centers Urgent Care Centers Sleep Centers Physical Therapy

7

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9 Impact of Demographics 9

10 Impact of Demographics 70.0% Cumulative Percent Change Since 2001 for the Medicare Conversion Factor, PAMF Total Operating Expense per Provider FTE, and the Consumer Price Index 60.0% 61.4% 50.0% 49.3% 40.0% 39.1% 39.3% 30.0% 27.0% 27.9% 20.0% 10.0% 0.0% -10.0% 17.7% 21.6% 19.2% 17.1% 7.9% 13.8% 10.3% 6.7% 3.9% 1.6% -0.9% -0.9% -0.9% -0.4% 0.6% % -3.8% -2.4% PAMF Op Exp per Provider FTE Medicare Conversion Factor CPI 10

11 Where does the Healthcare premium go? Hospital Services 45% Physician Service 25% Pharmaceuticals 15% Other (Admin; Marketing; Profit) 15%

12 On whom is the health care dollar spent? 86% of $ spent on 14% of patients Whom? (50% of $ on sickest 5%) - Individuals with Chronic Disease - Diabetes, Heart Disease, Lung Disease 40% of all Medicare expenditure in the last year of life.

13 Why are healthcare costs so high? Advances in Medicine - Diagnostic and Therapeutic Interventions - Pharmaceuticals Cost Unconscious Consumer Unaligned Incentives - Lack of Coordination in Care - Variation in Practice Waste in the System

14 So, who pays the bills? Out of Pocket Expenses 13% Private Health Insurance 37% 50% Government Programs

15 Lobbying Lobbying was Fierce - Insurance Industry: Fears Governmental Health Plan - AMA: Fears decrease in Medicare reimbursement - Medical Device Makers: Fear comparative effectiveness based on value. - Hospitals: Fear decreased reimbursement; tax - Pharma: Fears government price setting - AARP: Fear loss of Medi-Gap Insurance sales - Citizen Taxpayers: Fear increased taxes

16

17 Delivery System Reform Management of a population with fixed or shared savings reimbursement - Capitation Total Cost of Care Management - Accountable Care Organizations - Bundled payments for specialty service - Differential Pay for Quality? 17

18 Impact of ACA Increase in patients with MediCal. Increase in newly insured patients on State Insurance Exchange. - Higher Risk Lower reimbursement for provision of services by physician. - Medicare - State Insurance Exchange Hopefully incentive reimbursement for: - Demonstrated Quality Outcomes - Efficiency in management of the total cost of a population of patients.

19 Palo Alto Medical Foundation Health care is a local need. PAMF is a local, non-profit, essential, community asset. PAMF needs to be here for our community regardless of the economic reimbursement system. PAMF needs your understanding and your support.

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