Forecasting the Futures of Health Care: Exploring a New Realm of Possibilities
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1 Richmond, Virginia; June 4, 2015 Forecasting the Futures of Health Care: Exploring a New Realm of Possibilities Jeffrey C. Bauer, Ph.D. Health Futurist & Medical Economist Jeffrey C. Bauer
2 Disclaimers My comments do not necessarily represent positions of the Virginia Chamber or any other organization I do not have investments/employment relationships with any health care businesses My criticism of one faction s positions on health reform does not imply support for any other faction s positions After 40+ years in health care, I believe American enterprise and technology can create the world s best health system
3 Do we really have the world s best health system? Our ranking on national health scales is very low for comparable countries #34 (OECD) and #39 (WHO) Yet the world s top-ranked systems are American Mayo, Cleveland, Kaiser, Geisinger, etc. Our world-class systems are highly diverse They are constantly changing
4 change
5 Strategy - purposeful response to anticipated change, consistent with mission and values
6 STRATEGY TACTICS See all factors as variable! Identify possibilities! Make tough choices! Do the right things See all factors as fixed! Meet goals! Make best decisions! Do things right
7 How can Virginia s business leaders plan to do the right things in an environment of unprecedented change in the medical marketplace?
8 Implementing ACA Reading trade journals Seeing what others are doing Attending professional meetings Predicting based on trend analysis Forecasting based on the possibilities
9 The Science of Predicting A prediction is a specific estimate of the value of a key variable at a future point in time
10 The Science of Predicting Specify independent explanatory variables for the analytical model (Health sector: medical science, technology, economics/insurance, politics) Collect historical data on the variables Determine best fit mathematical relationship Extrapolate trend line to future values
11 The Science of Predicting Example: Medical Sector Actual: 17%
12 The Science of Predicting Useful predictions can be made when the quantifiable relationships that represented how things worked in the past will continue to work the same way in the future...but the U.S. economy and the health care sector will not continue to work the same way in the future!
13 A revolution in biological sciences is shifting providers core function from acute care to disease management The one-size-fits-all clinical paradigm is being replaced by precision medicine (personalized/predictive/preventive) Cost-effective care will result as therapies are matched to an individual's disease characteristics & epigenetics Population health will be improved by managing patients diseases to prevent the need for acute care Patient-centered care teams (physicians + qualified nonphysician practitioners) will become the best-practice model
14 Information and communications technologies are transforming business models, production processes, and sites of care Robust ICT networks will be the foundation of least-cost production of medical services Integrated electronic record systems will be essential for meeting quality standards Telemedicine (virtual visits) will replace a substantial portion of hands-on care Mobility of information will dramatically expand sites of care (home, work, retail, medical travel destinations)
15 New economic forces are restructuring the medical marketplace and the demand for health care Governments and employers have reached the limits of their ability and willingness to spend more on health care The market will shift from fee-for-service reimbursement (quantity) to value-based payment (quality) Demand will change significantly as patients are expected to pay an increasing share of their costs of care Patients will not have disposable income to pay more for care, forcing providers to change delivery and pricing
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18 Problems with government-driven reform are compelling providers and their business partners to develop successful futures on their own Rushed legislative sessions produced flawed laws that are unlikely to be approved by amendments Legal challenges create an uncertain environment for meeting the legislated mandates Neither the administration nor Congress has adequate resources to complete all tasks delegated by the laws DHHS has responded to the challenges of implementation with waivers, delays, and program cancellations Responsibility for implementation has been delegated to states with wide variations in commitment and capacity
19 Given all these changes in direction, the future of health care is unpredictable! Is there a proven way to prepare for an unpredictable future?
20 The Art of Forecasting A forecast is an estimate of the probabilities of possibilities for a key variable at a future point in time
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22 The Art of Forecasting Identify explanatory variables (Weather: water, temperature, pressure, wind) Collect historical data on the variables Categorize different outcomes for similar combinations of variables Assign probabilities to the different outcomes Update models for climate change as necessary
23 My forecast for health care as % of GDP: % chance of growth 45% chance of stagnation 40% chance of decline
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25 My forecast for health enterprises: % will cease to exist as organized 45% will continue to exist as organized... precariously 25% will thrive by fixing the way care is delivered
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27 The Paradox: Americans are not as healthy as people in dozens of comparable countries that spend 30% less on health care, and our medical marketplace overall is plagued by problems of cost, quality, and access. Yet, the world s best individual health systems are located in the US each a unique result of visionary leadership and private initiative, not government-driven health reform. The Imperatives: Due to powerful new forces explained in this book, medical spending has stopped growing. Purchasers, payers, and patients are no longer willing or able to keep paying more. Consequently, in order to stay in business and improve the population s health, providers must eliminate the shameful waste generated by inefficient and ineffective production processes. The Solution: Simply repairing or repealing the Affordable Care Act will not get us where we want to go. The fundamental roadblock is a wasteful system, not uninsured Americans. Reform needs to be immediately redirected to creating the best health care system that 17% of GDP can buy. Money saved in the new path to reform can then be used to improve population health through access for all.
28 New Realms of Possibilities!! Political Reforms Honoré Daumier (1858)
29 Fix the way care is delivered! All health care enterprises including groups of practitioners must adopt better ways of doing business with performance improvement tools (Lean, Six Sigma, etc.) that ensure care is delivered correctly all the time, as inexpensively as possible Efficiency is maximizing output for a fixed budget or minimizing costs for a fixed output (i.e., no economic waste) Effectiveness is a measure of relative compliance with objective specifications of expected performance (i.e., no unexplained variation)
30 Fix the way care is delivered! JAMA, April 11, 2012 Waste as % of Total Spending Low 21% Midpoint 34% High 47%
31 Fix the way care is delivered! JAMA, April 11, 2012
32 Fix the way care is delivered! Health System Integration: Tactical Response Purchasers Payers Practitioners Providers (Government & Employers) (Insurers & Health Plans) (Health Professionals) (Hospitals & Clinics) Horizontal
33 First Law of Parasitism: Don t kill the host that feeds you. (No element of society can survive at the expense of other elements.)
34 Fix the way care is delivered! Health System Integration: Strategic Response Vertical Purchasers Payers Practitioners Providers (Government & Employers) (Insurers & Health Plans) (Health Professionals) (Hospitals & Clinics)
35 First Law's Corollary: If you are not at the table, you are on the menu.
36 Fix the way care is delivered!
37 Fix the way care is delivered!
38 Fix the way care is delivered! Replace traditional care models with systems customized to local marketplace, consumer preferences, and new sites of care (no one size fits all )! Optimize population health by strategically shifting resources from acute care to disease management! Constantly improve performance to do health care right all the time, as inexpensively as possible! Develop payment/revenue mechanisms that reward efficiency and effectiveness (volume to value shift)! Create long-term (>5-year), multi-stakeholder partnerships to fix the way care is delivered
39
40 RENÉ MAGRITTE - LA CLAIRVOYANCE
41 Jeffrey C. (Jeff) Bauer, Ph.D.! Health Futurist and Medical Economist 636 West Schubert Avenue, #A Chicago, IL 60614! Telephone: Mobile: Web:
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