+Health Reform,

System Transformation

And the

Implications

for Health, Hospitals and

Health Care Systems

By Susan Dentzer Senior Policy Adviser,Robert Wood Johnson Foundation University of Missouri Health Policy Summit October 25, 2013

+ This Presentation at a Glance

The United States face a number of health and health care

challenges – one reason for the Affordable Care Act

System transformation is being accelerated by the law but

will extend far beyond it

Pursuit of the Triple Aim: Challenges in health, health care

and health care costs

Key aspects of reform and transformation and the

implications for hospitals and health systems Focus on population and community health Coverage expansion, influx of chronically ill patients, and

impact of not expanding Medicaid Innovations in health care delivery, payment and

technology Patient activation and engagement

Some conclusions

+ First, a story….

+Once upon a time, there was a “country”…

With an economy the size of France: $2.8 trillion…

With tens of millions of unhealthy people – and life expectancy below that of 28 of the world’s richest countries…Where every day, a group of the natives “experimented” on others by subjecting them to “medical care,” about half of which has no evidence suggesting that it works…Where adverse events that occurred in the course of this “care” were among the top ten causes of death annually…

And partly because of the cost of the flawed care it does provide, the country was possibly going broke!

Where tens of millions didn’t get care they needed and tens of thousands died each year as a result…

+

What would you do with

this country?

Send in the Marines?

Send in the International Monetary Fund?

Send in Amnesty International?

Other?

+We know this country’s identity…

The United States

of Health Care

Ripe for Change!

What The US Did In 2010…

…Enact the Affordable Care Act

+A Heavy Lift?

+And about that country…

Our $2.8 trillion health system is unequivocally a major economic engine…

But the system is propelled by the volume of services, not sufficiently by value

The degree to which cost exceeds value is an opportunitycost – i.e., we might better spend the money some other way – for example, on educationExpenditures on care not reflected in superior health outcomes

How much will more “health care” solve this?

For more fundamental reasons, Americans may be ata health disadvantage relative to others

+

The Triple Aim

Drag picture to placeholder or click icon to add

Better health

Better health care

Lower cost

Core principle now at

heart of major U.S.

payment and delivery

system reform efforts

Donald Berwick, MDFormer AdministratorCenters for Medicareand Medicaid Services

+Better Health

Fans line up outside Paula Deen’s The Lady and Sons restaurant,

Savannah, Georgia, June 2013

The State Of US Population Health

Key Drivers of Health Status

Source: Schroeder S. N Engl J Med 2007;357:1221-1228

Obesity 66% adults obese or overweight

Physical Inactivity 28% inactive

Smoking 23% smokers

Stress 36% high stress

Aging 22% > 55 years old

Contribution to Premature Death

40%

30%

10%

15%5%

GeneticPredisposition

EnvironmentalExposure

SocialCircumstances

BehavioralPatterns

Health Care

+Geographic Health Differences: Your zip code matters more than your genetic code

+Health Factors and Outcomes Health Factors:

Low birth weight, tobacco use, adult obesity, physical

inactivity, alcohol use, sexually transmitted infections, teen

birth rate

Rates of uninsured, certain clinical care measures (e.g.

preventable hospital stays, screening)

Social and economic factors such as high school graduation

rates, employment and income, violent crime rate, fast food

restaurants

Environmental quality (safe drinking water), access to

recreational facilities

Health Outcomes: premature death; poor or fair health; poor

mental health days

+Missouri: Health Factors by County

+Missouri: Health Outcomes(Premature death; poor health)

+Comparison, factors vs. outcomes

+Institute of Medicine Study, January 2013 “For many years, Americans have been dying at

younger ages than people in almost all other

high-income countries.”

“Not only are their lives shorter, but Americans

also have a longstanding pattern of poorer

health that is strikingly consistent and pervasive

over the life course – at birth,

during childhood and adolescence,

for young and middle-aged adults, and

for older adults.”

Difference: almost double

Difference: almost double

+Rising Mortality, Declining Life Expectancy For Many

Trends in male and female mortality rates from

1992–96 to 2002–06 in 3,140 US counties.

Female mortality rates increased in 42.8 percent

of counties, while male mortality rates increased

in only 3.4 percent.

Factors associated with areas that had lower

mortality: higher education levels; low smoking

rates

Source: DA Kindig, ER Cheng,”Even As Mortality Fell In Most US Counties, Female Mortality Nonetheless Rose In 42.8 Percent Of Counties From 1992 To 2006.” Health Affairs, March 2013

Change In Male Mortality Rates From 1992–96 To 2002–06 In US Counties.

Kindig D A , and Cheng E R Health Aff 2013;32:451-458

©2013 by Project HOPE - The People-to-People Health Foundation, Inc.

Change In Female Mortality Rates From 1992–96 To 2002–06 In US Counties.

Kindig D A , and Cheng E R Health Aff 2013;32:451-458

©2013 by Project HOPE - The People-to-People Health Foundation, Inc.

+What are we doing about these

challenges?

Good news: some efforts to tackle child obesity,

for example, seem to be working

Centers for Disease Control and Prevention data

show child obesity falling in 19 states, including

Missouri

Source: Centers for Disease Control and Prevention

Source: Centers for Disease Control and Prevention

+Hospitals’ New Roles in Population Health

New requirements under ACA on tax-exempt

hospitals and health systems

To retain 501(c)(3) [tax exempt] status, organization

must conduct a “community health needs

assessment” at least every three years

Must adopt implementation strategy to meet the

community health needs identified through the

assessment

Penalty: $50,000 excise tax for each year that a tax-

exempt hospital subject to these provisions fails to

satisfy requirement

+Example of Innovation In Population Health

Austen BioInnovation

Institute, an

“accountable care

community” in Akron, OH

Nonprofit entity that

combines activities

among three independent

health care systems and

two universities

Source: Population Health

Implications of the Affordable Care

Act: Workshop Summary. Institute of

Medicine, 2013.

Conducted community-wide

assessment of health and

health care assets and gaps

Programs launched include

cost-effective diabetes

prevention program; ½ of

participants lost weight and

cost of diabetes care fell by 10

percent

+“Hot-spotting:” The Camden Coalition of Healthcare Providers

+“Hot-spotting” unhealthy communities King County Public Health Director

David Fleming

“The solutions to health in this

country lie beyond the walls of the

clinic and in our communities.”

Echoing Jeffrey Brenner and the

Camden Coalition

What if hospitals and health

systems “hot spotted” – using

similar techniques to identify the

nation’s poorest and least healthy

communities—and then teamed up

with public health and local

community development

organizations to set them on a

path to better health?

+The fundamental drivers of health

“Improving health outcomes across the United

States will require increased public and private

investment in the social and environmental

determinants of health—beyond an exclusive

focus on access to care or individual health

behavior.”

Source: DA Kindig, ER Cheng,”Even As Mortality Fell In Most US Counties, Female Mortality Nonetheless Rose In 42.8 Percent Of Counties From 1992 To 2006.” Health Affairs, March 2013

+Social determinants of health

Income and Income Distribution

Education

Employment or unemployment; job security; working conditions

Early Childhood Development

Food Insecurity

Housing

Social Exclusion; Social Safety Network

Access to Health Services; Disability

Gender, Race,  Aboriginal (Native American/Indian) Status

+The Social Determinants“Ten Tips For Better Health”

1. Don’t be poor. If you can, stop. If you can’t, try not to be poor for long.

2. Don’t have poor parents. 3. Own a car. 4. Don’t work in a stressful, low-paid manual job. 5. Don’t live in damp, low-quality housing. 6. Be able to afford to go on a vacation and sunbathe. 7. Practice not losing your job and don’t become

unemployed. 8. Make sure you have access to benefits, particularly if

you are unemployed, retired, or sick or disabled. 9. Don’t live next to a busy major road or near a polluting

factory. 10. Learn how to fill in the complex housing

benefit/shelter application forms before you become homeless and destitute.

Source: Centre for Social Justice, Canada; Social Determinants Across the Lifespan, <http://www.socialjustice.org/subsites/conference/resources.

+Issues for hospitals and health systems How do you broaden your focus beyond your

“population of patients” (panel) to the overall health

of the community?

Which among these social and economic determinants

should you focus on, how, and with whom?

How do you engage with the public health system?

How do you fund these activities or make the case for

more public and private funding of them?

Is there a particular role in transforming community

health for “repurposed” critical access hospitals?

+One Model – for critical access hospitals, e.g.? Maryland’s Total Patient Revenue Program –

population based rate method

10 rural hospitals in state operating under

guaranteed global budget

If revenue falls below budget hospitals can increase

prices; if exceeds budget they must return surplus

Western Maryland Hospital, e.g.: FY 2013 operating

profit of $15 million on $370 million in revenues;

provides $ for population health focus, care

transitions programs, etc.

Admissions down 15 percent; 30 day readmission rate

now 9 percent

+

Better Health Care

+Bringing More Americans Under The Health Insurance Security Blanket

Health Insurance Coverage in the United States, 2010, and Changes Under Affordable Care Act

Uninsured16%

Medicaid 17%

Medicare12%Private Non-

Group5%

Employer-Sponsored Insurance

49%

* Medicaid also includes other public programs: CHIP, other state programs, military-related coverage. Numbers may not add to 100 due to rounding.SOURCE: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

Total = 305.2 million

Approximately20-30 million willremainuninsured

This group willalso grow andpurchase coveragethrough insuranceexchanges

+Marketplaces and Medicaid: Across the States

+Medicaid Expansion – Or Not

Premium assistancemodel; Arkansas approvedby CMS; PA considering

Republican Gov.bypassed legislatureto embrace expansion

+Who Will Be Left Out

Source: New York Times, Oct. 2, 2013

+Who’s Hurt in States Not Moving Ahead With Expansion?

Source:KaiserCommissionOn MedicaidAnd TheUninsured

The Federal Government Will Pay for the Large Majority of the Medicaid Expansion

Note: Adults less than 133% FPL under standard participation scenario. SOURCE: Analysis for KCMU by The Urban Institute, May 2010

Total: $464.7 billion over 2014-2019

Federal95.4%$443.5 Billion

State:4.5% $21.1 Billion

+Impact on health: Oregon Medicaid Study After one year of Medicaid coverage,

previously uninsured adults in Oregon were 10

percent less likely to report having depression

25 percent more likely to report their health as

good, very good, or excellent.

Also experienced lower financial strain

because of lower out-of-pocket expenditures,

lower debt on medical bills, and lower rates of

refused medical treatment because of medical debt

Source: Sommers BD, Baicker K, Epstein AM,. N Engl J Med 2012;367:1025-34.

+Quality of Care and Care Coordination Issues

+Care Coordination/Avoidable hospital use Advanced Illness/End of Life

Half of older Americans (51%) visited emergency

department in last month of life; 77% of those seen

in ED admitted to hospital

68% of admitted died in hospital

Americans’ broad preference is to die at home

Emergency department use in last month of life rare

when enrolled in hospice one month before death

Source: Alexander K. Smith et al, “Half of Older Americans Seen In Emergency Department In Last Month of Life; Most Admitted To Hospital, And Many Die There,” Health Affairs, June 2012

+High-Value Health Care Collaborative Cleveland Clinic, Dartmouth-Hitchcock Medical Center,

Denver Health, Intermountain, Mayo, and nearly 20 others

Identified nine high volume, high cost, high variation

conditions to focus on:

total knee replacement diabetes congestive heart failure depression spine surgery labor and delivery asthma hip surgery bariatric surgery

+Variability, even among “the best”

Pooled data to examine differences in primary

total knee replacements (total US costs in 2008

= $9 billion)

Found substantial variations in such metrics as

hospital lengths-of-stay; longer operating times

associated with higher complication rates

Used findings to alter care, including more

coordinated management for complex patients

Source: Ivan M. Tomek et al, Health Affairs, June 2012 vol. 31 no. 6 1329 ff

+Comparison among institutionsMetric A B C D E Total

Mean LOS

3.6 4.2 3.9 3.3 3.2 3.2

Median LOS

3 4 3 3 3 3

By MD # of proce-dures (annual) 0-99

3.6 3.8 4.4 3.5 3.3 3.5

200+ -- -- 3.4 3.0 2.8 2.9

Surgery on Mon.

3.6 4.2 3.7 3.2 2.9 3.1

On Fri.

3.6 -- 4.3 3.4 3.0 3.3

31.2%differ-ence,lowtohigh

16%differ-ence

Care Moving Out of Hospitals: “Hospital At Home” Presbyterian Health Services,

New Mexico, in partnership

with Johns Hopkins

Identified patients who could

be “hospitalized” at home

and deployed physicians and

nurses to care for them

All results equal or better

than in hospital

Variable costs per stay are

$1000-$2000 lower = 19%

Patient satisfaction mean

score = 90.7% Source: Lesley Cryer et al, “Cost For Hospital At Home PtientsWere 19 Percent Lower, With Equal

or Better Outcomes Compared To Similar Patients,” Health Affairs, June 2012

Johnny Baker, then 49, COPD patient in “Hospital At Home” program

Telehealth/telemedicine Project ECHO (Extension for

Community Healthcare

Outcomes) in New Mexico

Via technology, specialists at

University of New Mexico partner

with primary care clinicians in

underserved areas

Deliver complex specialty care to

patients with hepatitis C,

asthma, diabetes, pediatric

obesity, chronic pain, substance

use disorders, rheumatoid

arthritis, cardiovascular

conditions, and mental illness

Source: “Partnering Urban Academic Medical Centers And Rural Primary Care Clinicians To Provide Complex Chronic Disease Care”. Sanjeev Arora et al, Health Affairs, June 2011

18 states now have laws mandatingpayment for covered services using broadband telehealth technology

+Virtual Visits: Verizon, Cisco, Others

+Waste in Health Care: The Savings Opportunity

Estimated to equal 21% to 34% of all US health spending (estimated $558 billion to $910 billion annually)

Source: Donald M. Berwick and Andrew D. Hackbarth, “Reducing Waste in Health Care Spending,” ,Journal of the American Medical Association, April 11, 2012.

+Focus on “Lean”

Example in Washington: Virginia Mason

+Reengineering Primary Care at Virginia Mason via Lean

Lean concept of jidoka - having the instructions and knowledge necessary

to do one’s job right the first time

Result: new “standard work” in appointment scheduling

When a patient requests appointment, patient services representative

checks the computer to identify preventive tests patient is due for and

schedules them right at the point of service

Lean concept of having each team member doing the right work for their

skill level, also known as level loading or heijunka

Some tasks that physicians handled reassigned to others

Medical assistants practice to the top of certification, going through the

problem list with the patient, reviewing medication lists, verifying

allergies, reviewing test results and administering vaccines.

Source: http://www.virginiamasoninstitute.org/workfiles/Virginia-Mason-

Institute-Case-Study-Mistake-Proofing-Primary-Care.pdf

+Patient Engagement and Activation

Engagement = actions that people take for their

health or health care

Activation = understanding own role in care process

and having knowledge, skills and confidence to take

it on

Increasingly understood as a distinguishable factor in

achieving Triple Aim (better health, better care, lower

costs)

+Patient Activation Measure Gauges the knowledge, skills and confidence essential to

managing one’s own health and healthcare

13-item questionnaire; patients rate selves on a scale

Statements include

“When all is said and done, I am the person who is

responsible for managing my health condition.

“I am confident that I can take actions that will help

prevent or minimize some symptoms or problems

associated with my health condition.

“I know what each of my prescribed medications do.”

Measure segments consumers into one of four progressively

higher activation levels

Source: Judith Hibbard et al, Health Affairs, Feb. 2013

+Patient Activation Measure

Patient activation and the “3 M’s”

It can be measured

It can be moved – patients’ low scores can be

improved via engagement over time

It matters – the degree to which patients are

activated predicts their factors such as their

success in medication adherence, use of

emergency department, and their likelihood of

having avoidable readmissions

+

Lower Costs

“Health care costs are the pounding headache to

which all of us in medicine will awaken each day

for the rest of our lives.”  --Thomas Lee, former network president, Partners Healthcare System

Annual Growth Rates, Gross Domestic Product (GDP) And National Health Expenditures (NHE), Calendar Years 1990–2022.

Cuckler G A et al. Health Aff doi:10.1377/hlthaff.2013.0721

©2013 by Project HOPE - The People-to-People Health Foundation, Inc.

Costcurvestill not bentenough

It’s the Prices, Stupid! International Price Variation

Service(US$)

Cost*(US$; 25 and 95%tile)

Cost/Hosp. Stay

7,707 Canada 14,427 US (4,001; 45,902)

Angioplasty 12,581 New Zealand29,055 US (18,266 – 60,448)

Normal Delivery

1,336 France2,997 US (2,380 – 4,848)

MRI Imaging 874 Switzerland 1,009 US (509-2590)

*International Federation Health Plans 2010 Report

Medical Tourism**(US$)

India CA Bypass 4,525

US CA Bypass 67,583

India Hip R. 4,308

US Hip R. 38,017

Safeway reference price set at $1,250

Source: Safeway Health

Houston San Francisco Portland, OR $-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$443

$848 $1,386

$3,508

$5,984

$4,571

Range of Prices Paid by Safeway for Colonoscopy in Three Markets, plus Reference Price Limit Established in 2010

MINMAX

Safeway Reference Pricing For Colonoscopy (Limit = $1,250)

+How we (mostly) pay for health care

Paying by “piecework” – known as “fee for service” for outcomes

Paying for the “package” – known as bundled payment, capitation etc. – and tying payment to quality outcomes

+Payment Innovation: Improving Value And Affordability

New ModelOld Model

Reward unit cost

Inadequate focus on care efficiency

and patient centeredness

Payment for unproven services; limited alignment

with quality

Reward health outcomes and

population health

Lower cost while improving patient

experience

Improve quality, safety and evidence

+Performance-based Innovations under CMS

Patient Centered Medical homes: e.g., all-payer national pilot; federally qualified health centers; ½ of states in Medicaid

Comprehensive Primary Care initiative

Accountable Care Organizations

State Demonstration Projects for Dual Eligibles

State Innovation Model Grants

Partnership for Patients/program to reduce avoidable readmissions

+Throwing It Up Against The Wall To See What Sticks?

+CMMI Innovations in Missouri

+Medicare ACO’s

+ACOs in Private Sector – e.g., Blue Shield of California

Launched pilot ACO with Dignity Health (formerly Catholic Health Care West) and Hill Physicians in January 2010 for 41,000 CalPERS employees and dependents

Global budget; shared upside and downside risk

Tactics included eliminating unnecessary care, such as excessive bariatric surgery; coordinating processes such as discharge planning; reducing variation in practices and resources; reducing pharmacy costs

2010-11 combined results: $37 million in savings to CalPERS; compounded annual growth rate for per member per month costs was ~ 3% vs. ~7% for everyone else

+Medical homes in Private Sector

Alabama Health Improvement Initiative Medical Home Pilot – Blue Cross Blue Shield of Alabama

Health plans in Maryland, Pennsylvania, Ohio, elsewhere reporting savings from medical homes

E.g., in Maryland, CareFirst reported 2.7% savings in health costs for its 1 million members in 2012

Group Health-University of Washington: TEAMcare program for people with depression and either diabetes, heart disease or both, saved as much as $594 per patient in outpatient costs after expenses of program

+Performance-based Innovations under CMS Programs to reduce unnecessary readmissions

Partnership for Patients, Community-Based Care Transitions program

(organizations paid an all-inclusive rate per eligible discharge based

on cost of care transition services)

Medicare penalties: hospitals above certain ratios for 30-day

readmissions in 3 conditions (heart attack, heart failure, pneumonia)

begin to be penalized under Medicare in October 2012

Readmissions rates in Medicare dropped 1 percentage from an

average of 19 percent during 2008-2011 to 17.8 percent in 2012,

according to CMS

Declines largest in hospitals participating in Partnership for Patients.

Source: Economic Report of the President, 2013

+Reducing Avoidable 30-Day Readmissions

+Hospital inpatient utilization down and projected to decline further

Sources: Milliman, Kaiser State Health Facts, American Hospital Association

40 percent difference

+ State Innovation Models under Center for Medicare and Medicaid Innovation

• Arkansas: majority of

population

in patient-centered medical

homes

• Minnesota: majority of popula-

tion in ACO’s, including

long-term services and

supports

• Oregon: “Coordinated Care

Organizations”

Examples:

+Overall Trends

Care moving out of hospital to ambulatory settings

and homes; inpatient utilization falling

Primary care fees up; hospital reimbursement

down

Emphasis on team-based care with “task-shifting”

Primary care physician panels becoming larger; 1

physician in a team handling10,000 patients

considered goal in many systems

Population health approach dramatically increases

emphasis on prevention and patient engagement

+Hospital of the Future? Narayana Hrudayalaya (NH)

Narayana Hrudayalaya – “God’s

Compassionate Care” –

Bangalore, India-based health

and hospital system/network

5,000 beds in India now; aims for

30,000 in next five years

Average cost of heart surgery is

$2,000 and is aiming for $800

“Our vision: Affordable Quality

Healthcare for the Masses

Worldwide”

Partnering with Ascension Health

Alliance on $2 billion tertiary

care hospital in Cayman IslandsAbove: Chairman, Dr. Devi Shetty; NH hospital in Bangalore

+Some Conclusions About Health Reform

“I don’t believe there’s any

problem in this country, no matter

how tough it is, that Americans,

when they roll up their sleeves,

can’t completely ignore.”

The Late Comedian George Carlin

“The Americans always do the right thing…

after they’ve exhausted all the other

alternatives.”

Sir Winston Churchill

“There has never been a better time to be an innovator in health care.”

--Don Berwick, former administrator, CMSMilitary Health System conference

January 2011

“Those who say it can’t be done are usually interrupted by others doing it.”

--the late James Baldwin, American novelist, essayist and playwright

“We always overestimate the change that will

occur

in the next two years and underestimate the

change

that will occur in the next ten.”

--Bill Gates Jr.

The Final Verdict on Building an American Health and Health Care System?

“Somebody has to do something, and it’s just incredibly pathetic that it has to be us.”

--the late Jerry Garcia of the Grateful Dead

+ The End