WSHMMA

1. WSHMMA Rayburn Lewis MD Vice President for Medical Affairs Swedish Medical Center April 27, 2006

2. Historical influences • Original hospitals had few choices, and little revenue • charity • in kind • volunteer • revenue from those who could afford it

3. The open staff-workshop evolution: pre WW II • Physicians often dominated board of trustees. • fund raisers • still relatively few choices for supply and capital purchases • few “specialties”

4. Post War specialization • Surgeons differentiating • orthopedics • general surgery • eventually cardiac surgery • Choices increasing, although the boom was yet to come

5. Third party payers • Insurance was enhanced during the war • pay couldn’t be increased (wage freezes), but benefits could • beginning of cost plus revenue era for hospitals

6. Medicare • 1965, part of the social revolution of the ‘60’s, debate started at the turn of the century, enhanced by WWII • A whole class of high utilizers now have access to care • Until 1983, Medicare was a cost plus revenue source

7. Medicare reform, 1983 • The “buck$” stopped here • Prospective payments • risk and acuity weighting • budget restraints • regional rate determinations • Other insurers followed suit

8. Technology explosion • 1965, 1 hip • 2005, how many? • 1965, open heart surgery • 2005, catheter based PFO closure • defibrillators, drugs, RFA • LASIK • There is no specialty where technology has not touched, and the rate of expansion of new knowledge and its applications is increasing, including psychiatry

9. Business changes • Hospital consolidation • Hospital specialization • Regionalization • For profit hospitals

10. Financing Changes • HMO, PPO, Pay for performance, quality indicators, decreasing pass throughs • US highest per capita costs • highest number of uninsured in the 1st World • Is there a need for a national policy on health insurance? • Not in the top 10 in infant mortality rate

11. It’s not how much we spend, it is how we spend it!

12. Physician Enterprises • Fewer independent practitioners • Larger multi- and single-specialty groups of physicians and allied health professionals

13. Why larger groups of physicians? • Administrative and management sophistication • IT • Finance--revenue and expense management • HR • Capital investment • REVENUE!

14. Physician ownership • OR • Cath labs • Diagnostic labs • Imaging • PT/OT • Durable medical equipment, pharmacies

15. Ownership leads to independence from hospital It also leads to a more intimate knowledge of revenue* and expense Consequences of Physician Ownership

16. What do our physicians want? • The best for their patient, not necessarily the best value, unlikely the least expensive • Familiarity with the equipment • Convenience and speed • Flexibility

17. What do they need to contribute to the process? • A champion • A promise to listen to all the voices • Clarity over the final decision process • If physicians own the business, you owe them the best information you can give to them, to make an informed decision • If they are stakeholders, respect their preferences, even if you ultimately disagree

18. Specifics • Caps cost $ • high price • inventory • …where is my favorite implant?…but I thought you said you would honor the selection, even if your favorite wouldn’t play? • Limited vendor choices • be clear about the real cost of physician loyalty

19. Managemant • Purchasing • Revenue enhancement • Payment • Inventory management • New Product request management • OR vendor management • Trunk stock • New Technology Assessment