Transforming Healthcare Collaboration among Payors, Providers and Community Leaders

2. Transforming HealthcareCollaboration among Payors, Providers and Community Leaders Vinod K. Sahney, PhD Senior Vice President and Chief Strategy Officer Presented at Purdue University November 29, 2006

3. Outline • Introduction • Performance of U.S. Healthcare System • Collaboration to Improve Access to Healthcare • Collaboration to Improve Healthcare Delivery System • Collaboration to Improve Quality of Care in Massachusetts • Growing Conflicts • Conclusions

4. Introduction: Key Messages • Healthcare Delivery – Non System • Lack of Aims for Improvement • System Performance Compares Poorly to Developed Nations • Focus on Medical Technology Gives False Sense of Quality • Enough Money in System to Cover All • Collaboration Initiatives – Improve Care and Health Status • Leadership by Community Organizations Needed

5. Per-Capita Health Spending in the United States in Constant 2000 Dollars MANAGED CARE

6. Premium costs have risen five times faster than inflation and four times faster than wages Health Insurance Premiums Compared to Other Indicators Percent Increase Source: Employer Health Benefits Survey, KFF, 2004

7. International Healthcare Trends In fact, the U.S. spends much more per person on healthcare than other countries, as well as a larger percent of Gross Domestic Product. International Health Spending per Capita 2002 U.S. ($5,267, 14.6%) Switzerland ($3,446, 11.2%) Turkey ($446, 6.6%) Canada ($2,931, 9.6%) U.K. ($2,160, 7.7%) Japan ($2,077, 7.8%) Mexico ($553, 6.1%) Poland ($654, 6.1%) Note: Because these data are based on Purchasing-Power Parity values, they will differ slightly from earlier values cited herein. Source: Adapted from Anderson, GF et al. (2005) Health Affairs

8. National Healthcare Trends Healthcare expenditures are projected to more than double between 2000 and 2010, and healthcare is expected to account for 17% of the Gross Domestic Product by 2010. National Health Expenditures (NHE) and Percentage of GDP2000-2010 *Projected by Centers for Medicare and Medicaid Services.Source: Adapted from Centers for Medicare and Medicaid Services (2005a)

9. …and retirees are not faring any better • According to an analysis by the Urban Institute, by 2030 out-of-pocket expenses for retirees will consume: • • 30.3% of income for older unmarried adults, up from 17.3% in 2000, and • 35.1% of income for older married couples, more than double the 16% in 2000 Source: Henry E. Simmons, Pres. National Coalition on Health Care. November 14, 2005 address to International Foundation of Employee Benefit Plans

10. National Scorecard on U.S. HealthSystem Performance (Commonwealth Fund, September 2006)

11. National Scorecard on U.S. HealthSystem Performance (Commonwealth Fund, September 2006)

12. National Scorecard on U.S. HealthSystem Performance (Commonwealth Fund, September 2006)

13. Why Are We In This Situation? • No national healthcare goals • No organized leadership for improvement • Cottage industry structure • Defined benefit with no planning • No accountability • No one owns enough of the system to enforce change

14. MassachusettsHealthcare Reform

15. Health Care Reform: The Genesis • October 31, 2003: CONSENSUS DECLARED AT THE BCBSMA FOUNDATION: WE NEED A ROADMAP TO HEALTH CARE REFORM CONSENSUS DECLARED AT THE BCBSMA FOUNDATION: WE NEED A ROADMAP TO HEALTH CARE REFORM

16. Healthcare Reform Timeline • Health care reform has dominated the political landscape for over one year. House, Senate final bills/ conference committee appointed Governor, Senate bills released House bill released Governor signs into law Legislation drafted Legislation finalized _________________ Summer 2004 to early 2005 October 2005 November 2005 April 2005 April 4, 2006 April 12, 2006

17. Expanding the Focus • As first proposed, the concept of health care reform was about: • Lowering health care costs for employers • Efforts to enroll those eligible for Medicaid but unenrolled • Increasing access to care

18. Expanding the Focus • With input from BCBSMA, other issues were added to the mix: • Addressing the Quality of Care • Medicaid Provider Shortfalls In the end, all the issues came together in one bill.

19. Massachusetts:The Key Elements of Reform • Medicaid Expansions • Health Insurance Connector • Commonwealth Care – Premium Subsidy Program • Individual Mandate for all MA adult residents • Health Insurance Market Reforms • Employer Responsibilities (for firms > 11 employees) • Medicaid provider rate increases

20. MA Health Care Reform LawKey Components • $540+ million over next 3 years • Hospitals increases to be tied to quality standards in areas including addressing health disparities Medicaid provider rate increases for hospitals, physicians and community health centers

21. MA Health Care Reform Law: Key Components (cont’d) • Commonwealth Health Insurance Connector • New public authority (10-member board) • Administers “Commonwealth Care” low income premium subsidy program • Will offer “affordable” health insurance products to individuals and small businesses (50 or fewer employees)

22. MA Health Care Reform Law:Key Components (cont’d) • <100% FPL – fully subsidized, comprehensive benefits (including dental) • 100-300% FPL - sliding scale subsidies, no annual deductibles Commonwealth Care Health Insurance Program (C-CHIP) – Premium Subsidy Program

23. Mass Health Care Reform Law Key Components (cont’d) • Individual Mandate for all MA adult residents • Enforcement mechanisms • Indicate insurance policy number on state tax return • Loss of state personal income tax exemption for tax year 2007 • Fine for each month without insurance equal to 50% of affordable insurance product cost for tax year 2008

24. Mass Health Care Reform Law Key Components (cont’d) • Health Insurance Market Reforms • Non-group and small-group insurance markets merged • Young Adult plans for 19-26 year olds • Age for eligibility for dependent coverage for health insurance raised to 25 years

25. MA Health Care Reform LawKey Components (cont’d) • Employer Responsibilities (for firms > 11 employees) • Must offer access to pre-tax purchase of health insurance • “Fair share” assessment of no more than $295 per worker

26. Stakeholders • Health advocacy organizations • Organized labor • Business community • Hospitals • Health plans • Faith-based organizations • Physicians • Community Health Centers • Nurses • Appointed and elected officials

27. Health Care Delivery System:Introduction: Key Messages • Serious Problems in Quality • Great Degree of Variability • Source of Problems – Systems • Increased Quality and Cost Reduction Possible • Immediate Benefits by Improving Reliability of Healthcare Delivered

28. Conformance With Care Agreed byUS Health Experts

29. And the Latest Large American Study… • McGlynn, et al: The quality of health care delivered to adults in the United States. NEJM 2003; 348: 2635-2645 (June 26, 2003) • 439 indicators of clinical quality of care • 30 acute and chronic conditions, plus prevention • Medical records for 6712 patients • Participants had received 54.9% of scientifically indicated care (Acute: 53.5%; Chronic: 56.1%; Preventive: 54.9%) • Conclusion: The “Defect Rate” in the technical quality of American health care is approximately 45%

30. Clinical Effectiveness • Focusing on effectiveness and efficiency of clinical processes • Great deal of variability within university hospitals: • Major surgery complications 49% • CHF re-admission rates 49% • Mortality 30% • Total direct costs/OR hour 24% • Total cost/adj. discharge 80%

31. Collaboration to Improve HealthcareDelivery System

32. IHI Mission • The Institute for Healthcare Improvement is a not-for-profit organization driving the improvement of health by advancing the quality and value of health care.

33. IHI Vision • The Institute for Healthcare Improvement is a premier integrative force, an agent for profound change, dedicated to improving health care for all. Our measures of success include improved safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity.

34. IHI Initiatives • Breakthrough Series • Emergency Rooms • ICU • Surgical Infection • Ventilator Associated Pneumonia • Pursuing Perfection – 13 Hospitals • Impact Network – 210 Hospitals • Care at the Bedside • Patient Safety Officer Training • Executive Quality Academy

35. IHI Breakthrough Series(6 to 13 months time frame) Participants (10-100 teams) Select Topic (develop mission) Prework Congress, Guides, Publications etc. P P Develop Framework & Changes P A D A D A D Expert Meeting S S S LS 2 LS 1 LS 3 Planning Group Supports Email Visits Phone Assessments Monthly Team Reports

36. IHI – 100,000 Lives Saved Campaign • Campaign: December 2004 - June 2006 • Save 100,000 lives by improving reliability of healthcare within U.S. hospitals • Target 2,300 hospitals • Six proven initiatives

37. Six Initiatives • Deploy “Rapid Response Teams” at the first sign of patient decline • Deliver reliably, evidence-based care for acute myocardial infarction • Prevent adverse drug events by implementing medication reconciliation • Prevent central line infections – Implement bundles • Prevent surgical site infections – Implement bundles • Prevent ventilator associated pneumonia – Implement bundles

38. Accomplishments • Co-Sponsors: • Agency for Healthcare Research and Quality • American Medical Association • Association of American Medical Colleges • Center for Medicare and Medicaid • Joint Commission on Accreditation of Healthcare Organizations • National Patient Safety Foundation • University Health System Consortium • American College of Cardiology

39. Accomplishments (continued) • Co-Sponsors (continued): • Centers for Disease Control and Prevention • Society for Healthcare Epidemiology of America • American Nurses Association • Leapfrog • The National Business Group on Health • 20 State Hospital Associations • 3,300 Hospitals Voluntarily Signed Up • $15M Private Contributions • 122,000 Lives Saved

40. Collaboration to Improve Quality of Carein Massachusetts

41. Seven Levers of Change • Governance Focus • Trustees as champions of New Quality Standards • Governance Practices Linked to Hospital Contracts • Quality and Safety Standards • Adoption of Standardized Quality Measures • Transparent Reporting of Performance Information • Public Recognition Programs to Highlight Extraordinary Achievements in Quality Improvement

42. Seven Levers of Change (cont’d) • Financing and Incentives • Incentives to Achieve New Quality Performance Standards • Partnerships with Multiple Quality Improvement Organizations Including IHI, Dartmouth, Rand • Funded 100,000 Lives Saved Campaign • $35K to each hospital • $5M contribution • $400M in Incentives Tied to Quality Goals • Redesign Payment Systems to Reduce Overuse and Misuse

43. Seven Levers of Change (cont’d) • Legislation and Regulation • Cost and Quality Council • Healthcare Reform • Public Engagement • Segmented Focus Groups • Seminar Series – Public Forums • Public Education • Eastern Massachusetts Health Collaborative

44. Seven Levers of Change (cont’d) • Technology • E-Health Collaborative • Three Communities • 500 Physicians • $50M Investment • Organizational Readiness • LEAD Organization • Capability Building

45. Growing Conflicts

46. Growing Conflicts • A. Demographics: • Beneficiaries vs. Contributors • Aging of population • Utilization increases exponentially with age: • 65 years vs. 45 years 2 times • 85 years vs. 45 years 4 times • 95 years vs. 45 years 8 times

47. Growing ConflictsGrowth Trends – Aging Baby Boomers Growth Trends - Aging Baby Boomers • By 2030 one fifth of the population will be over 65 years of age Elderly Population by Age, 1990 to 2050: Percent 65+ and 85+

48. Health Spending and Aging Selected OECD Countries 2000 Now over 16% U.S. Switzerland Germany Canada France Netherlands Australia Sweden Japan U.K. Iceland Source: OECD Data, 2002

49. Growing Conflicts • B. Acute Care vs. Chronic Care • Half of seniors have at least one chronic condition: • arthritis: 49% • hypertension: 36% • hearing impairment: 30% • cardiovascular disease: 27% • Chronic care now accounts for more than 70% of all healthcare expenditures: • acute care system trying to deliver chronic care

50. Growing Conflicts:Current Environment - Crumbling • C. Severe Workforce Shortages: • Nursing • Pharmacy • Radiology technicians • Physicians - specialties