Transforming Healthcare: The Philadelphia Challenge. Innovation to Address the Problems

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1 Transforming Healthcare: The Philadelphia Challenge Innovation to Address the Problems April10, 2014 American Health Lawyers Association Health Care Transactions Anthony V. Coletta M.D., M.B.A. Senior Vice President My Story: The Abridged Version! TJU Medical School and Hospital education and training 25 years in Private Practice of General Surgery at Bryn Mawr Hospital The early 90 s Capitation, health systems acquiring practices, pizza and beer IPA s Creation of the Renaissance Physician Organization 50/50 joint venture with IBC the power of partnership, information and population health Evolution into a PCP Pioneer ACO Holy Redeemer Health System EVP/CMO (2009) IBC SVP to develop and lead the physician centric model 1

2 The Challenges in Healthcare have never been greater We are truly at a crossroad. Some would say Once again. What it will take. 2

3 Disruptive Innovation: The Innovator s Prescription Clayton Christensen, et al Technology Facilitated Networks New Business Models 5 The Cost Problem 3

4 As US healthcare spending continues to comprise a larger proportion of GDP, American s are growing more concerned US Healthcare spending as a percent of GDP Historical Projected AIDS Cancer Healthcare/ Insurance Costs Heart Disease Smoking What is the most pressing health problem in America today? Healthcare/ 33 Insurance Access Healthcare/ Insurance Costs 13 Flu/ H1N Cancer Obesity 8 32 Source: Centers for Medicare and Medicaid Services; Harris Poll (1999); Gallup Poll (2009) 7 Household spending on healthcare has grown at a significantly higher rate than other categories Average annual expenditures for selected categories of consumer spending, for homeowners, 1986 and 2010 Food 15% 12% -14% Housing 31% 34% +11% Apparel and apparel services Transportation Gasoline and motor oil Healthcare Health insurance Entertainment Personal insurance and pensions 6% 3% 17% 22% 4% 4% 7% 5% 4% 5% 2% 6% 10% 12% -41% -22% +15% +42% +145% +11% +24% 1986 Source: Bureau of Labor Statistics: Consumer Expenditure Survey

5 The Quality Problem Variation in Evidence-based Care % of Recommended Care Rec d 68.0% Coronary Artery Disease 64.7% Hypertension 63.9% Congestive Heart Failure 53.9% Colorectal Cancer 53.5% Asthma 45.4% Diabetes 39.0% Pneumonia 24.7% Atrial Fibrillation 55% Patients do not receive care in accordance with best practices 45% Patients receive care in accordance with best practices Source: McGlynn, E. et.al. NEJM (June 2003) 10 5

6 Quality defects occur at alarming rates Breast cancer screening (65 69) Overall Health Care in U.S. (Rand) Outpatient ABX for colds Hospital acquired infections Defects per million Post MI blockers Detection & treatment of depression Adverse drug events Hospitalized patients injured through negligence Airline baggage handling Anesthesia related fatality rate U.S. Industry Best in Class 1 (69%) 2 (31%) 3 (7%) 4 (.6%) 5 (.002%) 6 (.00003%) level (% defects) Source: Modified from C. Buck, GE 11 As a country, we continue to struggle to manage population health Prevalence of Childhood Obesity % of 2-19 y/o children Prevalence of Diabetes Millions of Americans Prevalence of Heart Disease Millions of Americans Japan San Marino Andorra Australia Iceland Israel Italy Monaco Spain Switzerland Cyprus France Luxembourg Netherlands New Zealand Norway Sweden Austria Belgium Finland Germany Greece Ireland Korea Malta United Kingdom Chile Costa Rica Denmark Portual Slovenia United States Life Expectancy at Birth Years Source: Centers for Disease Control; World Health Organization, Department of Interior; Advanced Renal Education Program

7 A closer look at life expectancy 13 The Philadelphia Challenge 7

8 Health care is not just expensive, it varies by where you live Commercial inpatient admissions per thousand in the Philadelphia region are the highest among 64 large MSAs and are over 25% higher than the national average Source: Milliman U.S.A. Inc Data / Health Cost Guidelines Commercial Area Factors - includes all inpatient admissions. 15 Inpatient Utilization Annual Inpatient Days Per Thousand Members Commercial annual inpatient days per thousand in the Philadelphia region is the 4 th highest among 64 large MSAs, 31% higher than the national average Source: Milliman U.S.A. Inc Data / Health Cost Guidelines Commercial Area Factors - includes all inpatient admissions. 16 8

9 Putting Our Market Challenge in Perspective Inpatient Utilization Medicare Bed Days per Thousand Philadelphia: ~ Moderately Managed Market: ~ 1500 Southern California: ~ 754 Medicare Admissions per Thousand Philadelphia: ~ 468 Moderately Managed Market: ~ 380 Southern California: ~ 200 SNF Utilization Annual Inpatient Admissions Per Thousand Members SNF admissions per thousand in the Philadelphia region are the highest of 64 large MSAs and about 33% higher than the national average Source: Milliman U.S.A. Inc Data / Health Cost Guidelines Commercial Area Factors includes all SNF admissions 18 9

10 Why is Philadelphia an Outlier in Utilization? Our patients are sicker? The medico-legal climate in southeastern Pa? Large concentration of traditionally high cost academic medical centers? Hospital industry is the largest in the region (Phila. = Med and Ed)? Specialist/Primary Care ratio/resources? All of the above? Addressing the Philadelphia Challenge What we are doing now is not enough 10

11 Context for Provider Strategy Given the pivotal role of the physician in determining utilization, a physician-centric/ integrated care model to delivery system transformation is required c Source: Unit Cost IBC Provider Contracting; Utilization Milliman; Total Medical Costs IBC MHS claims, Finance and Actuarial. 21 A New Joint Venture Other Payors Davita Healthcare Partners Provider Contract Provider Contract Tandigm Health IPAs/Medical Groups (e.g. in PA5) IPAs / Medical Groups (e.g. outside PA5) Independent Physicians Independent Physicians 22 11

12 NewCo Go it Alone Business Plan Proprietary & Confidential Our Value Proposition Primary Care Physicians are our Customers No single constituent in health care delivery is better suited to address the excess waste, costs and inefficiencies in our system while continuously improving quality than primary care physicians Innovation and collaboration between physicians and payors represents an untapped resource We will engage physicians to become effective and successful at providing efficient, coordinated, high quality, lower cost care for their entire practice, improving their own experience as well as that of their patients Generated savings will permit lower cost products, be shared with network physicians as well as be re-invested in the delivery system in a manner that will allow for growth and improved access through high quality, low cost products 24 12

13 Our Mission To become the premier company that transforms health care delivery in the Philadelphia Metropolitan service area and beyond by engaging physicians in an innovative and collaborative model that creates a three way partnership payer/physician/member 25 Our Vision Engage Primary Care Physicians using enhanced behavioral economic models Enable Primary Care Physicians with the value based tools needed to understand better all of the needs of their entire population of patients Empower Primary Care Physicians through data, systems, clinical resources and facilities to lower medical costs while improving quality by reducing unnecessary and/or avoidable inpatient and outpatient utilization while directing their patients towards facilities and specialists who meet data driven metrics of cost, quality and outcomes 26 13

14 Tandigm Health Products and Services Engage A key Tandigm product is robust incentives to drive up quality while driving down costs: Goal: to be better than what is currently on the market - minds, hearts and wallets! Impacting what is truly under the PCP s sphere of influence regarding cost/quality, e.g. Decreasing Admits per thousand Direct and timely physician encounters With new HMO patients With recently discharged patients Decreasing Medical Cost Ratio Inpatient utilization Care directed towards selected specialists and hospitals Growth in panel size Commercial Medicare Advantage Minimum of annual visits with all Medicare Advantage patients Improved, accurate, compliant coding 27 Tandigm Health Products and Services Enable Tandigm will provide integrated systems and tools directly into the workflow of the PCP s practice setting Using enhanced analytics including risk stratification, patient registries, gaps of care analyses Prior authorization and utilization review of services Establishing and reporting comprehensive quality assurance and financial metrics; Medical home "person-centric" case management and targeted disease management; Community based admission prevention programs, case management, and supportive services; IT systems that support real time management of utilization, quality, best practices, financial analytics and provider network data sharing Contract administration, provider relations, and network Promotion, marketing and branding of new plan products in the selected service areas in conjunction with IBC 28 14

15 Enable Technology and Facilitated Networks Aggregating and Formatting the Data Creating and Enabling the Network Tandigm Health Products and Services Empower Enhanced, community based delivery care infrastructure Deliver care for patient population beyond just PCP offices and hospital emergency rooms Referrals of patients to virtual networks of specialists and hospitals Clinically-based Practitioners and Programs Deployment of NewCo based physicians in both acute and sub acute care settings Community based hospitalists and snfists House call physicians and nurse practitioners The potential for developing and owning capitated primary care practices Palliative Care teams Enhanced Care Management Services Innovative Home Care models Coordinated programs to prevent avoidable ER visits Creation and deployment of clinical best practices Regional Physician Groups where primary care physicians gather regularly to compare and discuss cost, quality and performance improvement initiatives Facility-based Programs: Places Urgicenters (owned or contracted) Chronic Care clinics such as CHF,COPD, Diabetic specialty clinics Surgery Centers 30 15

16 Delivery System Transformation What will it take to enhance the community based delivery of care? How is the Tandigm model fundamentally different? Status Quo vs. Tandigm Model PCPs refer patients to the specialists and hospitals with whom they are most familiar. Hospital ER doctors make admission decisions for patients who show up in the ER. PCPs refer patients to high quality, low cost specialists and facilities Hospitalists are on site in the hospital and involved in admission decisions for members who show up in the ER and actively steer those members to lower cost settings (where appropriate). Hospital staff coordinate the care for patients admitted to the hospital. Hospitalists have full access to the hospital (including ICU) to coordinate care for their members. Members select their PCP. For members with multiple chronic conditions, the PCP is supported telephonically by IBC disease management. Members select their PCP. However, members with multiple chronic conditions are assigned to a Comprehensive Care Center (CCC) that serves as their de facto primary care site, while continuing to work with their selected PCP. The health plan drives care management. Providers drive care management

17 How is the Tandigm MA model fundamentally different? Status Quo vs. Tandigm Model No specific MA incentive program Enhanced and refined MA specific incentives When new MA patient selects PCP, notification occurs via letter. Health plan engages new member for HRA and care planning When new MA patient selects PCP, Tandigm engages PCP practice in comprehensive on boarding including HRA, risk stratification, Care Planning and coordination. Accurate HCC scoring enhanced through Inovalon engagement For members with multiple chronic conditions, the PCP is supported telephonically by IBC disease management. The health plan drives care management. Growth through comprehensive Health Plan Sales Force. Comprehensive IT and Educational programs in physician offices using face to face encounters as needed to obtain and maintain accurate HCC scoring High risk members with multiple chronic conditions are assigned community based resources including Home Care, House Call, Palliative Care and Comprehensive Care Centers (CCC) that serves as their de facto primary care site, while continuing to work with their selected PCP. Providers drive care management. Physician incentives help to drive MA growth. Physicians and office staff become advocates for superior plans. 33 How and why it will work Aligned reimbursement Incentives to improve quality and decrease costs Hospitalists actively involved in admission decisions and inpatient care coordination Integrated Systems that enable physicians to manage cost, quality across the continuum Focus on specialists with data driven cost, quality and outcomes Focus on lower cost/higher quality outpatient facilities (e.g. Urgicenters, ASC s) The Tandigm Facilitated Network Focus on inpatient facilities with data driven cost, quality and outcomes Care Management programs developed collaboratively with payor and physician Utilization of select clinicians for both inpatient and community based services Enhanced access for prevention of avoidable emergency room visits Coordinated Palliative Care/Hospice Care Programs 34 17

18 Health Policy Newsletter Volume 11 Number 1 January, 1998 Article 5 Medicare and the Philadelphia Market: The Gathering Storm Anthony V. Coletta MD, FACS * * Bryn Mawr Hospital Copyright 1998 by the author. Health Policy Newsletter is a tri-annual publication of the Thomas Jefferson University/Jefferson Health System Department of Health Policy, 1015 Walnut Street, Suite 621, Philadelphia, PA Suggested Citation: Coletta, AV. Medicare and the Philadelphia market: The gathering storm. Health Policy Newsletter (1): Article 5 Retrieved [date] from What it will take The time has come to solve the problems of cost and quality and face the challenges of the Philadelphia market and beyond. 18

19 Questions? 37 19

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