HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 1
FOLLOW THE MONEY WHO PAYS FOR HEALTHCARE AND WHY IT MATTERS
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 2
$3.35 T 18%
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 3
PRODUCT RIGHT
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PRODUCT RIGHT Car accident
Cancer Ear Infection
Knee replacement Child birth
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ACA OBAMA CARE
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
ACA OBAMA CARE Affordable Care Act
Preventative care requirements
Lifetime cost limits Insurance subsidies to offset cost of insurance
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MEDICARE FOR ALL
STATE BLOCK GRANTS
Single national system One payer Leverage purchasing power
Regional control Complex distribution formula Savings through competition
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
1. 2015 Health Insurance Coverage of the Total Population: Kaiser Family Foundation
Commercial 49% 156 M
Medicaid 20% 62 M
Individual 7% 22 M
Medicare 14% 43 M
Uninsured 9% 29 M
VA & Other Govt 2% 6 M
318 M Insured Americans
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 9
Healthcare: It isn’t peanut butter
It is more than one business
Last year’s payment model
NOT SOLVING THE REAL PROBLEM
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 10
SEGMENT Tailor solutions to patient cohorts
ADVOCATE LEARN Understand the business model
Change the rules to fit today’s world
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Healthcare payments are like airline tickets Not all regulations were created equal Not everyone can be innovative
TARGETED SOLUTIONS
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Engaged Consumers
Low Discounters
Value Based Healthcare
CommercializedHealthcare
Healthy Families 66M Health Enthusiasts 23M Adult Skeptics 13M
PwC Health Research Institute 2017
Bridge Connector Provider patient relationship focused Technology supports interaction
Care Integrator Payment/ care integrated Incentives for reduced costs
Consumer Advocate Simple plans, transparent costs
Digital access to health data
Lean Operator Prioritize efficiency
Leverage strategic partnerships
Self-insured market Streamlined payments Strategic partnerships
Strong brand, financials, Mergers and acquisitions Technology drives care
Commercial market Price transparency
Self-service
Strong provider relationships Non-clinical providers Retail and telehealth
Health Insurer of the future
Frail Elderly 6M Complex Chronic 25M Chronic 175M Mental Health 10M
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Healthy Families Health Enthusiasts Adult Skeptics
Engaged consumers that shop Open to non-traditional health and wellness Early adopters of retail and on-line healthcare High revenue/ low utilizers
Market Segments – Care Delivery Perspective
Frail Elderly Chronic Illnesses Mental Illnesses
Unable to advocate for their health Needing multi-disciplinary team medicine Wanting high touch, hands on care High revenue for the adept/ high utilizers
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Individual Small Group Large Group
Sold on the exchanges Highly regulated Financially challenging Employers with >50 employees Moderately regulated Can be financially sustainable Employers with >51 employees Must cover ACA EHBs Financially sustainable but competitive
Market Segments – Payers Perspective
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Regulation Mandated benefits Annual contracts
Filing requirements
Population Stability Annual enrollment turnover Midyear disenrollment
Failure to pay premiums
Actuarial Risk
Innovation
No knowledge of medical history No knowledge of demographics
Adverse selection risk
Opportunities Risk adjustment provisions (ACA)
Individual Market Segment
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Regulation Mandated benefits Annual contracts
Premium filing requirements
Population Stability Sales drives enrollment Moderate enrollment turnover
Actuarial Risk
Renewing – known utilization history New – no known history
Adverse selection risk
Innovation"Opportunities
Provider risk contracts Sustainable when appropriately priced
Small Group Market Segment
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Regulation ACA and state ESBs only
Population Stability
Sales drives enrollment Moderate enrollment turnover
Actuarial Risk
Some known utilization history Premiums are experience rated
"Innovation"
Opportunities
Accountable care organizations
Provider risk contracts
Large Group Market Segment
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Is it volume or cost management based? Overhead is the big ticket Multiple revenue streams and multiple opportunities
LEARN THE BUSINESS MODEL
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Healthcare Business Model
Facility Fees 42%
Pharmacy 10%
Professional Fees 32%
Margin, Reinsurance & Taxes 5%
Case Management 3% Administration 8%
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Clinic Business Model – Volume Driven Fee for Service Model
RVU Payments Based on % of Medicare
Network Contract with Payer Patients
$140/ visit x 20 visits/day = $56,000/ month revenue MA+MD/ month expense = $15,200 MA+NP/ month expense = $9,600 Administration, supplies and facilities = $25,000/ month
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Clinic Business Model – Cost Management Capitation Model
Monthly Payment per Assigned Patient
Network Contract with Payer Patients
$25/ patient/ month x 1,800 patient panel = $45,000/ month Quality incentives @ 10% = $4,500/ month MA+MD/ month expense = $15,200 MA+NP/ month expense = $9,600 Administration, supplies and facilities = $25,000/ month
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
Transaction revenue Project revenue Recurring revenue Service revenue Platform revenue
Fee for service based on CPT code Bundled payment for episode of care Capitated payments, quality of care incentives Cash sale of DME, Rx and services to patients Sale of vendor products at site of care
Healthcare Business Model
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 23
Use design to identify problems to be solved
Connect design solutions to clinical outcomes
Advocate for implementation
CREATIVITY IMPROVES REGULATION
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.
ADVOCATE Regulations Care Delivery Inpatient vs. outpatient
Codes for buildings, not care models
Laws that incentivize poor solutions
Multi-day ASC stays
Retail urgent an emergency clinics
Consumer facing IOT health products
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 25
SEGMENT Tailor solutions to specific patients
ADVOCATE LEARN Understand the business model
Change the rules to fit today’s world
HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 26
FOLLOW THE MONEY
Erik Goodfriend Providence Health Plan | www.providencehealthplan.org Humanity Innovation Labs | www.humanityinnovationlabs.com [email protected]