Future trends in global healthcare


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  • Future trends in global healthcare

    1. 1. Future Trends in Global Healthcare Thomas McAfee, MD Dean of Clinical Affairs, Physician in Chief
    2. 2. Agenda <ul><li>Why global healthcare reform? </li></ul><ul><li>What changes can we expect to see? </li></ul><ul><li>What strategies should we take to be ready? </li></ul>
    3. 3. Why healthcare reform?
    4. 4. Costs Going Up…and Up…and Up… *Projected U.S. 1960s 2007 2016* Total Health Expenditures $27 billion $2.2 trillion $4.1 trillion Per Capita Spending $126 $7,421 $12,782 Percent of GDP 5% 16.2% 19.6%
    5. 5. Costs Going Up…and Up…and Up…No plan to bend the curve!
    6. 6. Higher costs, higher quality? Per capita spending Average Life Expectancy
    7. 7. The Current Model is Not Sustainable! <ul><li>Developed and developing countries spending higher and higher percentage of GDP on healthcare. </li></ul><ul><ul><li>Governments cannot foot the bill </li></ul></ul><ul><ul><li>Employers and patients cannot pick up the slack </li></ul></ul><ul><li>Changing demographics will increase healthcare costs! </li></ul><ul><li>The value of our current investments in healthcare are not clear. </li></ul>
    8. 8. Re-newed focus on VALUE <ul><li>Value = Cost/Outcomes </li></ul>
    9. 9. What is driving costs to outpace inflation? <ul><li>Healthcare system level </li></ul><ul><li>Healthcare delivery level: physician practice and hospitals </li></ul><ul><li>Patient level </li></ul>
    10. 10. Cost Drivers at the Healthcare System Level <ul><li>Drug and technology costs </li></ul><ul><ul><li>Outpacing inflation </li></ul></ul><ul><li>Administrative costs </li></ul><ul><ul><li>System inefficiencies </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Health plan profits </li></ul></ul><ul><li>Malpractice </li></ul><ul><li>Population disparities </li></ul><ul><ul><li>Access </li></ul></ul><ul><ul><li>Uninsured </li></ul></ul>
    11. 11. Cost Drivers at the Hospital and Physician Level <ul><li>Inappropriate utilization of services </li></ul><ul><ul><li>Knowledge gap </li></ul></ul><ul><ul><li>Defensive medicine </li></ul></ul><ul><ul><li>Misaligned incentives </li></ul></ul><ul><li>Capacity and access issues: delayed treatments </li></ul><ul><li>Poor coordination of transitions of care: re-admissions </li></ul><ul><li>End of life issues: failure to plan </li></ul><ul><li>Practice, workflow inefficiencies </li></ul>
    12. 12. Cost Drivers at the Patient Level <ul><li>Patient non-adherence </li></ul><ul><li>Patients don’t want to accept limitations </li></ul><ul><li>Patient demand for services is increasing often fueled by mis-aligned incentives </li></ul>
    13. 13. What will healthcare reform look like?
    14. 14. Reimbursement headed down! <ul><li>Healthcare is in a financial bubble and headed for a deflationary cycle </li></ul><ul><li>Governments will be forced to drop reimbursement - private payers will ride the coat tails </li></ul><ul><li>Expect a 10% decrease in “real” dollars over the next decade. </li></ul>
    15. 15. Not Only Will Reimbursements Drop, But: <ul><li>Risk will shift from government and private payers to providers and patients. </li></ul><ul><li>Expect more bundled payments for episodes of care with risk for complications, outcomes, efficiency </li></ul>
    16. 16. Transparency and Payment Differentials based on: <ul><li>Clinical outcomes: complications, re-admissions, cost for episodes of care </li></ul><ul><li>Patient satisfaction </li></ul><ul><li>Access </li></ul>
    17. 17. What should we do to get ready?
    18. 18. Its Simple!!! <ul><li>Drive down costs at every level </li></ul><ul><li>Measure and improve clinical outcomes </li></ul><ul><li>Measure and improve patient satisfaction </li></ul><ul><li>Protect Margin through product diversification </li></ul><ul><li>Larger scale not enough: need clinical integration to manage costs of care and risk. </li></ul>
    19. 19. “ The Journey of 1,000Miles Begins with One Step” <ul><li>University of Virginia reduced supply costs by $9.4 million </li></ul><ul><ul><li>Standardizing surgical implants saved $2.4 million in hip and knee replacements, $4 million in spine </li></ul></ul><ul><ul><li>Rx switch from rocuronim to zemuron saved $130,000 </li></ul></ul><ul><ul><li>Replacing disposable pillows with reusable netted $285,000/year </li></ul></ul><ul><li>Mid-Atlantic AMC reduced FTEs by 260 by phasing out positions and using job reassignment bank </li></ul><ul><li>Jackson Memorial hired transplantation trained pharmacist to manage CMV immune globulin use…annual savings of $2 million </li></ul>
    20. 20. Protect Margin through Product Diversification <ul><li>Create capacity by reducing readmits and managing LOS </li></ul><ul><li>Fill unused capacity with “core” services, not commodity services </li></ul><ul><ul><li>Centers of Excellence </li></ul></ul><ul><ul><li>Active management of access, cost and outcome </li></ul></ul><ul><ul><li>Transparency of outcome </li></ul></ul>
    21. 21. Systems, Not Networks, <ul><li>What “true” healthcare systems do: </li></ul><ul><ul><li>Act like a central nervous system </li></ul></ul><ul><ul><li>Standardize care processes efficiently </li></ul></ul><ul><ul><li>Service Line/Program rationalization across system </li></ul></ul><ul><ul><li>Integrate and align physicians and hospitals </li></ul></ul><ul><ul><li>Create alignment of incentives/compensation </li></ul></ul><ul><ul><li>Create sustainable scale/dilute fixed costs </li></ul></ul><ul><ul><li>Manage efficient episodes of care through multispecialty integration.. </li></ul></ul>
    22. 22. Solutions at the Practice Level <ul><li>Practice evidence-based medicine </li></ul><ul><ul><li>Improve quality, outcomes, reduce errors </li></ul></ul><ul><li>Make communication, patient education a priority </li></ul><ul><li>Incorporate palliative, hospice planning in the treatment continuum </li></ul><ul><li>Optimize office, work flow efficiency </li></ul><ul><li>Make Health Information Technology the backbone of your practice! </li></ul>
    23. 23. Summary <ul><li>Rate of healthcare cost rise is not sustainable, value proposition unclear </li></ul><ul><li>Payers, private and public will seek to bend the cost curve </li></ul><ul><ul><li>Expect decrease in reimbursement </li></ul></ul><ul><ul><li>Expect transfer of risk to providers based on episodes of care and outcomes </li></ul></ul><ul><li>To maintain margins and manage risk, expect: </li></ul><ul><ul><li>Intense pressure for MD’s and Hospitals to drive down costs of production </li></ul></ul><ul><ul><li>Creation of integrated Health Systems to dilute fixed costs, rationalize services , and manage risk </li></ul></ul><ul><ul><li>Investment in health information will be critical </li></ul></ul>