Download - Financial Executives Networking Group
Financial Executives
Networking Group
Steven H. LipsteinJune 8, 2011
2
30.
6
12.1 12 12.2
10.3
9.6 11.2
10.4 11
9.8
16
8.9
8.2 10
.2
9.1
9.4
9.4
7.8 8.4 9.4
10.3
9.9
8.3
8.6
6.4 9.
5
7.1 7 7.3
6.2
5.8
25.5
22.9
21.4
23.1
23.7 21.6
21.8
21.1
20.8
13.3
20.1
20.4 17.4
17.9
16.9
16.6
17.1
16.5 15.5
13.9
14.3
15.4
15.1
16.7 11.6
13.5
12.3
11.0
5.9
4.5
0
5
10
15
20
25
30
35
40Sw
eede
n
Fran
ce
Neth
erla
nds
Belg
ium
Denm
ark
Switz
erla
nd
Aust
ria
Ger
man
y
Finl
and
Unite
d St
ates Ita
ly
Unite
d Ki
ngdo
m
Portu
gal*
Norw
ay
OEC
D Av
erag
e
Gre
ece
Luxe
nbou
rg
Hung
ary
Icel
and
Cana
da
Aust
ralia
Spai
n
Japa
n
Pola
nd
New
Zea
land
Czec
h Re
publ
ic
Slov
ak R
epub
lic
Irela
nd
Kore
a
Mex
ico
Total Social Service ExpendituresTotal Health Service Expenditures
32.
1
34.
933
.6 33
.4 33
.3
37.
6
32.
8 32.
2
29.
3 29.
0 28.
627
.6 27.
0 26.
326
.0 24
.9 24
.9 24
.9 24
.2 24
.2 23
.7 23
.7 23
.1
21.
1 20.
619
.3
18.
312
.1
10.
3
Expe
nditu
res
as %
of G
DP
Total Health and Social Service Expenditures for OECD Countries, 2005
*Expenditures for Portugal are from 2004 due to missing data for 2005.
Source: OECD Health Data 2009 (Accessed June 2009); OECD Social Expenditure Dataset (Accessed Dec 2009); Health and Social Service Spending; Associations with Health Outcomes Article by Elizabeth Bradley, Ph.D, Benjamin Elkins, MPH, Brian Elbel, Ph.D.
3
Federal Government P & L (2011) (in billions)
Revenues $2,100 (14% of GDP)
Expenses
• Defense / Homeland Security $ 786
• Medicare / Medicaid $ 773
• Social Security $ 727
• Other Mandatory $ 676
• Other Discretionary $ 640
$3,602 (24% of GDP)
Deficit ($1,502) (10% of GDP)
4
Increasing Debt and Deficit
Source: International Monetary Fund, World Economic Outlook Database, October 2010. Last observation: 2009.
5
Debt Reduction 101
Total Debt = $15T Total GDP = $15T Debt / GDP Ratio = 100%
Targets: Total Debt / GDP Ratio = 60%Annual Federal Budget Deficit % < Annual GDP Growth % (About 2 – 3 %)
If GDP Growth = 2.5% then 2021 GDP = $19Tthen… 2021 Debt at 60% of GDP = $11T
Debt Reduction Required = $15T (Current Level) Minus $11T (60% of 2021 GDP) = $4 Trillion
Democrats: $3T in Spending Cuts + $1T in New TaxesRepublicans: $5T in Spending Cuts + $1T in New Tax Cuts
$4 Trillion is the Consensus Target
6
Spreading the “Hurt” on the First $3 TrillionDefense = $1 TrillionMedicare/Medicaid = $1 TrillionAll Other = $1 Trillion
Of the $1 Trillion Attributable to Medicare/Medicaid,One-Third Allocated to Hospitals/Doctors
= $330 Billion
Of the $330 Billion Allocated to Hospitals, 0.1% Impact on BJC HealthCare= $330 Million
(This Amount Deducted From BJC 10-Year Forecast of Cash Flow)
ACOs plus HIZs plus Bundles plus all other CMMI Innovations = -$330 Million to BJC HealthCare
Manage Costs to Medicare Breakeven: Supply Chain, Revenue Cycle, Enterprise Resource Management, Ancillary and Pharmacy Utilization, Length-of-Stay, Labor Inflation = PCE
Inflation
Imagine: Then:NIH (Leading Bio-Medical Research) Washington University School of Medicine (WUSM)
Mayo Clinic (Leading Adult Specialty Care)
WUSM and BJC HealthCare
Children’s Hospital of Philadelphia (Leading Pediatric Specialty Care)
WUSM and St. Louis Children’s Hospital
Cook County Hospital (Anchor Hospitalof Regional Safety Net)
Barnes-Jewish Hospital and Christian
Intermountain Health (Leading Integrated Delivery Network of Community-Based Hospitals and
Doctors with Highly Regarded Patient Outcomes)
Missouri Baptist, Christian, Alton, BJWCH, BJSPH, Progress West, Sullivan, Parkland, Clay County, Boone, BJCMG, BJC Home Care, BJC
Corp. Health, BJC Behavioral Health, BJC Health Literacy and School Outreach
+ +
+ +
+ +
+ +
Large, Balanced, Diversified, Risk-Dispersed Portfolio(Not Highly Integrated – Yet)
7
BJC is Uniquely Bi-State (Missouri and Illinois)
8
Standard and Poors Credit Rating For BJC HealthCare “AA” Long-Term Rating Reflects BJC’s:
• Status as a well-established, multi-hospital regional system with stable system membership, a long track record of system integration, good leverage with third-party payers, and excellent financial-risk dispersion;
• Maintenance of a leading, though not dominant, share in the greater St. Louis, MO market, bolstered by broad regional and national draws at its largest facility, Barnes-Jewish Hospital, due to a reputation of clinical excellence and a long-time academic relationship with the highly respected Washington University School of Medicine (WUSM), which is one of the top recipients of federal research funding;
• Strong financial profile, characterized by low leverage of 18% debt to capitalization, solid unrestricted liquidity with 286 days’ cash on hand as of December 31, 2010 with cash to long-term debt of over 3x;
• Very capable management team☺that is responsible for the system’s strong financial performance in the past five years and a strong governance structure that makes system members highly unlikely to disaffiliate;
• Historically strong maximum annual debt service (MADS) coverage averaging over 8x for the past five years, with fiscal 2010 MADS coverage at 11.59x; and
• Continued good operating performance in fiscal 2010 with margins of 5.5%
9
Health Care Reform
Coverage Expansions: 16 Million Added to Medicaid16 Million Added Via Individual MandateMedicare RX Donut Hole
Coverage Improvements: Guaranteed Issue (w/o Health Status or Gender Rating)Premium Rate Bands (1x – 6x) (Age, Tobacco Use, Family Composition)
Individual Mandate: Constitutional or Not?
Payment / Delivery System Improvements:
• Medicare Rates ↓• Tax Cadillac Coverage• Simplified Electronic Billing• ACOs, HIZs / Bundles (CMMI)• PCORI (CER)
• State Insurance Exchanges• Meaningful Use of IT• IPAB• Drug Prices• Geographic Variations
Domains
KeyPlayers
KnowledgeDomain
CareDeliveryDomain
PayerDomain
INTERFACE
“A”
INTERFACE
“B”
• Medical Schools• Teaching Hospitals• NIH• Developers/Manufacturers of
Drugs, Devices, Implants, Equipment and Instrumentation
• Other Research Organizations
• Patients• Doctors• Hospitals• Post-Acute
• CMS• State Medicaid Plans• Private Insurance Plans• Employers
Health Reform Impact
Source: Mayo Clinic Health Policy Center, 2009, adapted.
Medicaid ExpansionPrivate Insurance Fixes
Individual MandateInsurance Exchange
“Starter Set” forDelivery and Payment
Reform
Incremental ChangeOver Time
Fees Leviedon Devices/Pharma
Medicare Medicaid UninsuredPrivate Insurance
Options
Population
• About 47 million• Over 65• Some Disabled
• About 58 million• Living Below A
Poverty Threshold• Some Disabled
• About 51 million• Many w/o Access to
Employer-Based Coverage
• About 164 million• Under 65• Above Poverty
Threshold
The Payer Domain
Payers
Will growto 70 million
as baby boomersreach age 65
Will growto 74 million
with Medicaid expansion
Will shrinkto 19 million
with individual mandate
Initial growthto 180 million+then decline as
Medicare grows
Reduce Variations and Waste of Resources
Increase Value: Outcomes per Dollar Expended
CareDeliveryDomain
PayerDomain
INTERFACE
“B”
Patient
BJC HealthCare Professionals / Hospitals
– Washington University Physicians
– BJC Medical Group
– BJC Affiliated MDs
– BJC Home Care
– Rehabilitation Institute of St. Louis
– BJC HealthCare Professionals
– BJC Hospitals
Payers
– Center for Medicare/ Medicaid Services (CMS)
– Essence
– Aetna
– Cigna
– Anthem
– Coventry
– HealthLink
– United
– Washington University
– BJC
Population Management (Non-Clinical)
– Enrollment– Claims Administration– I/T (Financial)– Member Services– Actuarial Expertise
Population Management (Clinical)
– MD Leaders and Clinical Team Captains
– Multi-Disciplinary Teams
– IT (Clinical)– Facilities– Outcome Measurement– Payment Models
(Team Rewards)
Populations by Payers
– Medicare Advantage
– Medicare ACOs
– BJC (Employer)
Populations by Medical Conditions
– Obesity/Diabetes
– Complex Patients
– COPD
– CHF
– Stroke
– Back Pain
Reduce Price
Reduce Consumption
What Health Systems and Payers are Doing (w/o Informed Consent)
13
• Pay a Medical Home more money (incentives) to manage patients away from Hospitals (reduce admissions / ER visits / ancillary utilization).
• Pay a Pharmacy Benefit Manager (PBM) to improve medication compliance and use of less expensive generic substitutes.
• Increase Employee Out-of-Pocket cost-sharing (“Skin in the Game”):> Co-Pays> Deductibles> Premiums> Reimbursement and Spending Accounts> Donut Holes
• Bjchelpforyourhealth.com And myHealthFolders.com
• The “Super Six” of Health Promotion and Disease Prevention
What Employers Are Doing
– Medical Home– No Tobacco Use– BMI <30 or Weight
Management Program
– BP <130/90 or Medicine– BS <140 or Medicine/Diet/Exercise– BC <230 or Medicine/Diet/Exercise