Michigan Health Care: A Strategic Assessment

1. Michigan Health Care: A Strategic Assessment Brian Peters Senior Corporate Vice President Michigan Health & Hospital Association June 6, 2007

2. Transportation and Health Care

3. MHA Membership 146 charitable, nonprofit community hospitals (consolidation: down from over 200 in 1980s) Small, rural facilities to large urban systems in every corner of state Governed by volunteer board from community Open 24/7/365 to everyone, regardless of ability to pay ($110 million in charity care and $440 million in bad debt in 2005)

4. MHA Membership “Hospitals should be run more like business.” Alfred P. Sloan, 1955

5. Hospitals and Other Businesses Similarities Heavy government regulation (DCH, JCAHO, CMS, NRC, etc.) Unionized labor force Exposure to liability (defensive medicine) Intense competition for market share Trend towards mergers/systemization

6. Hospitals and Other Businesses Differences Information gap: traditionally no “Consumers Report” for hospitals/health care Existence of third-party (insurer) insulates “customer” (patient) from true cost of care Different “customers” pay different rates, and many don’t pay at all Key decision-maker (physician) is typically not employed by hospital, and financial incentives are often misaligned between physician and hospital CON law – supported by MHA, business, and labor

7. Michigan’s Political Climate • Gov. Granholm re-elected • Attorney General Cox re-elected • Supreme Court: conservative majority maintained • Senate • Republicans control 21 to 17 (lost one seat) • New Majority Leader: Mike Bishop (R-Rochester) • House • Democrats control 58 to 52 • New Speaker: Andy Dillon (D-Redford)

8. Michigan’s Economic Crisis • Inflation-Adjusted General Fund Revenues Below 1972 Level • FY07: $940M deficit • Single business tax (SBT) eliminated effective 12/31/07: $2 Billion loss in general fund revenue • FY08: $1.4B deficit even if SBT fully replaced

9. Michigan’s Economic Crisis • Inflation-Adjusted General Fund Revenues Below 1972 Level • FY07: $940M deficit • Single business tax (SBT) eliminated effective 12/31/07: $2 Billion loss in general fund revenue • FY08: $1.4B deficit even if SBT fully replaced • What do we want to be when we grow up?

10. Health Care: An Economic Engine • Health care is the largest employment sector in Michigan • 496,000 direct jobs • 261,000 indirect and induced jobs • $33.1 billion in wages, salaries, benefits • Vision: Michigan as a world-class destination for health care • A healthier workforce = lower health care costs = enhanced job creation/retention

11. Health Care: An Economic Engine www.economicimpact.org

12. Health Care: An Economic Engine www.mha.org

13. *********************** ************ ************* ************* ******** ******** *********************** ************ ************* ************* ******** ******** Powerful Change……. Moore’s Law: Computer performance doubles every 18 months. Metcalfe’s Law: The value of networks rises by the square of the power of all computers attached to them. Source: Gordon Moore, 1965 Bob Metcalfe, 1993

14. The Results: • Telemedicine / Remote Robotic Surgery • Nanotechnology • Drug Design • Digital Sensors • Medical Tourism Massive impact on size/scope of health care workforce

15. Medical Tourism Coronary Angioplasty $3,700 $35,000

16. Medical Tourism

17. Quality of Care Vision:Michigan hospitals will lead the nation in patient safety and quality improvement practices. Mission:The MHA Keystone Center for Patient Safety & Quality will expedite the translation of patient safety and quality evidence into practice.

18. Quality of Care • Keystone Partners: • BCBSM $6 million grant (June 2006)

19. Quality of Care MHA Keystone: ICU (March 2004-December 2005): • More than 1,700 lives saved • More than 84,000 excess hospital days avoided • More than $188 million saved

20. Quality of Care • Keystone Collaboratives: • Intensive Care Unit (ICU) • Gift of Life (organ donation) • Hospital-Associated Infection • Stroke • Surgery (May 16 launch) • Emergency Department (in due diligence) • Obstetrics (in due diligence)

21. Community Health Improvement • Baseline survey of Michigan employers and individuals • 10/06 telephone survey: 150 employers; 603 individuals • “Low-hanging fruit” = support for wellness programs, but low adoption rate • Prevention & Wellness DVD • Detroit Chamber, Daimler-Chrysler, Pitney Bowes, Dow Chemical, others • Highlights success stories, provides resources for employers

22. Community Health Improvement MHA Campaign for Smoke-Free Hospitals • Goal: 100% smoke-free campuses by January 1, 2008 • Create health care cost savings and improve quality of care • “Lead by Example” = reducing Michigan’s high smoking rate is single most important public health issue

23. Community Health Improvement • 25% of hospitals have smoke-free campus today • 50% of hospitals have committed to smoke-free campus by 1/1/08 deadline • 25% actively investigating

24. Michigan Health Care: A Strategic Assessment Brian Peters Senior Corporate Vice President Michigan Health & Hospital Association June 6, 2007