North Texas Health Care Sector. Karen Kennedy Chief Administrative Officer
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1 North Texas Health Care Sector Karen Kennedy Chief Administrative Officer
2 Health Care Economic Indicators Population Growth Fort Worth fastest growing city in US 2010 Texas projected to add 2.24 million people by percent compared to 4.74 percent for US Greatest population increase is expected in the Metroplex from ,585 over the 5 year period 30% of the total gain forecast for Texas 26% of total state population growth Texas expected to add 1.25 million jobs Source: M. Ray Perryman, Economist
3 Projecting Future Physician Need and Supply to Meet Population Growth Factors that contribute to physician demand: Aging of the population, which will affect physician-to-population ratios in the hospital s service area Changes in physician practice patterns (e.g., greater use of non-physician practitioners), which may also affect physician-to-population ratios Increase in ratio of female to male medical students A hospital service population, based on the hospital s overall market share and out-of-area draw, is typically used to determine the hospital s or market need for different physician specialties: Primary care Hospital-based physicians Surgical specialties Medicine based specialties
4 Population and Physician Need by Specialty DFW Area Example Assuming Current Market Share and Out-of-Area Draw for a Hospital s Primary Service Area (PSA): Population increase of 400,000 in PSA market Physician-to population ratio Physician Primary care need Ratio of 50 per100,000 population often used to determine the need for PCPs in specific areas Hospital PSA with 50% Market Share 200,000 additional residents in the PSA, the hospital has a 50% market share in the PSA, and the hospital draws 20% of its patients from outside the PSA. Hospital has an effective service population of 125,000, calculated as follows: (PSA population x market share) / (1 out-of-area draw) or (200,000 x 0.5) / (1 0.2) = 125,000 Source: Health Strategies & Solutions, Inc., 2008
5 Extrapolation: Primary Care Needs for Population Growth of 200,000 Primary Care Physicians PSA Market Share Out of Area Draw Effective Service Population Physician to Population Ratio Family practice 35% 18% 170, Internal medicine 35% 18% 170, Physician Need Hospitalist 35% 18% 170, Pediatrics 35% 18% 170, Source: Health Strategies & Solutions, Inc., 2008
6 What Population Growth Means for DFW? Demand increases for all healthcare services Physicians employment Physician extenders employment Nurses employment Support staff employment Hospital services (inpatient and outpatient) Ancillary services (diagnostic, home health, skilled nursing) National shortage of primary care physicians One primary care physician typically hires 4 5 employees Need for care team based medicine Tort reform has made Texas more attractive for physicians!
7 2011 Annual Premiums for Employer-Sponsored Family Health Coverage Employer sponsored health insurance climbed to $15,073, up almost 9 percent from last year Workers pay an average of $4,129 of the total Employers pay $10,944. Premiums for worker-only coverage rose to $5,429, an 8 percent increase from Overall, the cost of family coverage has about doubled since 2001, when premiums averaged $7,061, compared with a 34 percent gain in wages over the same period." Source: Kaiser Family Foundation and the Health Research and Educational Trust
8 Health care reform inevitable (public & private sectors) Large employers healthcare cost increases above CPI 8.11% 2011 up from 7% % projected for 2012 (slowest increase since 1997) 9.0% average for the past 5 years Projected to almost double in 5 years at the current pace of inflation to $25,000 + a year for family coverage Employers adjust by: Increasing the percentage employees contribute to the premium Raising out-of-pocket maximums,in-network and out-of-network deductibles Raising co-pay/co-insurance for specialist care and primary care MCNT Impact» (August 2010 survey report by the National Business Group on Health) Average number of patient visits per year are down from 3.0 to 2.5 Non-compliance is up between 35% - 50% Number of days in A/R have increased for patient cash balances
9 Health Care Reform Existing system is fragmented and siloed Insufficient funding to sustain current model CMS New models of care coordination New payment systems (bundling) Multiple demonstration projects (primary care based) Accountable Care Organizations (ACO) CMS and commercial carriers Integrated delivery systems (hospitals & physicians) Multispecialty physicians groups Independent physician associations
10 Local Healthcare Reform Impacting Employers Market Consolidation/Hospitals acquiring physician practices Hospital based services increase in the total cost of care Without re-engineering delivery process there is no value proposition Introduction of pilot programs in DFW: Patient Centered Medical Home Models/Accountable Care Models Care coordination Access to data Enhance communication Application of technology Measurement of outcomes Move from negotiating with HR to C - Suite for new payment models Shared savings based on beating market trend & budget Payments dependent on meeting quality metrics
11 New Paradigm Era of Accountability Increased patient responsibility will account for 30% of revenue to physicians and hospitals = more patient input Physician accountability for management of a population of patients utilizing a care delivery team Open up patient access, communication and coordination between providers New quantitative and qualitative measurement of physicians, hospitals, programs and services Move from episodic re-active care to pro-active continuous care Increase transparency around quality and price Steerage to high quality cost effective networks Offsetting the employer cost today will defer higher costs to the future Unfettered choice must cost more! Payment systems must transition from volume to value!
12 Questions?
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