October 24, 2013
Layton Lang
Chief Administrative Officer
CIVA- Dallas
Federal Healthcare Reform has energized the
ongoing debate on quality and cost of
healthcare.
What Does Quality Care Really
Mean?
Government’s Perspective:
 National Strategy for Quality Improvement in

Healthcare
...
What Does Quality Care Really Mean?
Patient’s Perspective
Encountering a kind, compassionate medical staff
Having more ...
What Does Quality Care Really Mean?
Healthcare Provider’s Perspective
Proven care that provides a good clinic outcome or...
Many Opportunities to Deliver Care at a
Lower Cost

Some hospitals paid 10x as much for CHF admits as others.
$2,200Variation in Average Costs of
Drug Eluting Stents in Hospitals
$16,000 Variation in Avg Costs of
Defibrillators Across Hospitals
Culprit Behind the Exponential HealthCare Cost Growth: Fee-for-Service
A patient who enters the facility is a revenuegener...
The Health Care Cost Equation
MEDICARE SPENDING =
# of Seniors Eligible X
# of Covered Services X
Rate of Service Utilizat...
Medicare Cost Containment:
Federal Policy Choices
MEDICARE SPENDING =
# of Seniors Eligible X
# of Covered Services X

Rai...
Medicare Cost Containment:
Federal Policy Choices
MEDICARE SPENDING =
# of Seniors Eligible X
# of Covered Services X
Rate...
Medicare Cost Containment: Better
Policy Choices
MEDICARE SPENDING =
# of Seniors Eligible X
# of Covered Services X
Rate ...
Big Win-Win for Both Physicians and
Payers By Eliminating Waste
Instead of Starting With How to Limit
Care for Patients…
Contributors to Healthcare Costs
How Do We Limit:
>New Technolog...
We Should Focus First on How to
Improve Patient Care
Contributors to Healthcare Costs
How Do We Help:
>Patients Stay Well...
Government has Identified Areas of
Improvement
Problem: Waste in duplication of services,

coordination of care and accou...
Accountable Care Organization
The ACO is an organization comprised of primary

care providers, some specialist and a hosp...
ACO Requirements Under the Bill
Define processes to promote care quality, report on costs and

coordinate care.
Develop ...
Metric Examples
Be uniformed in ordering medical devices: group

selects one prosthesis brand of knee replacement to
redu...
Case Study 1. Virginia Mason
Hospital was on the verge of losing an Aetna contract

due to high utilization.
Hospital me...
Current Workflow for Back Injury Care
Patient calls for appointment with

orthopedic surgeon: 1-2 week wait time.
Every ...
Conducted a Benefit Analysis of the
Current Treatment Workflow
85% of patients suffered form uncomplicated back

pain.
9...
Reengineered Workflow
Every patient is seen by Physical Therapist/Medicine

Physician team during initial visit.
Patient...
Virginia Mason Production System
Reduced initial weight times from 31 days to same day

access.
Reduced medical waste by...
Patient- Centered Medical Home
Primary care office financially incentivized to manage

a population’s health beyond the t...
Cigna’s Medical Home Program
Cigna Insurance has been promoting this model in the

metroplex. They recently signed with t...
Case Study 2. Arizona Primary Care
Associates
Group established a medical home model-

responsible for the health of 15,0...
Bundled Payments-Medical Tourism
Medical tourism is choosing to travel outside of your

local area for medical services.
...
Case Study 3. Scott and White
Hospital

Interstate Medical Tourism

Wal-Mart established a Center of Excellence program
...
Incentives to Access Interstate Care
Financial incentives for employee to choose this

treatment option.
No out of pocke...
Dallas Healthcare Market

Patients have become precious commodities.
Alliances and delivery systems are morphing.
Major...
Health &
Well-Being

ACO

Primary
Care
Providers

Acute Care

Transitional
Care
Non Providers Entering the Dallas Market to Gain Share
Health &
Well-Being

ACO

Primary
Care
Providers

Acute Care

Trans...
Channel Administrators
ACAP Health represents 80,ooo members of various

self-funded employers.
Developing bundled payme...
Hospital vs. Physician Office
Cardiac Nuclear Study
800
700
600
500
Hospital

400

Physician Office

300
200
100
0
2006

2...
Dallas Healthcare Bubble
Acute Care Hospitals
Inpatient volume has been flat for over five years.
American Hospital Ass...
Dallas Healthcare Bubble
Physicians
Many specialties are experiencing surpluses; not

shortages.
Cardiology: 137 physici...
Current Results of the Market Being
Overbuilt
Increase in the frequency and intensity of care
Increase in unnecessary ca...
Tipping Point

Uninsured patients coming on the Federal Exchange

may not be financially viable for providers.

Patients...
Tipping Point
Annual decreases in FFS and Risk fees. In order to

remain viable, the medical enterprise will have to
proc...
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Federal Healthcare Reform's influence on the healthcare delivery system

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Federal healthcare slides

  1. 1. October 24, 2013 Layton Lang Chief Administrative Officer CIVA- Dallas
  2. 2. Federal Healthcare Reform has energized the ongoing debate on quality and cost of healthcare.
  3. 3. What Does Quality Care Really Mean? Government’s Perspective:  National Strategy for Quality Improvement in Healthcare    Better Care: Reliable, accessible, and safe care. Healthy People/Healthy Communities: Improve the health of the U.S. population through an emphasis on prevention. Affordable Care: Develop cost effective care by spreading new health care delivery models.
  4. 4. What Does Quality Care Really Mean? Patient’s Perspective Encountering a kind, compassionate medical staff Having more face-time with your physician Receiving timely appointments Program that emphasizing preventative care and screening Dartmouth study suggests exceedingly high utilization of care increases patient satisfaction.
  5. 5. What Does Quality Care Really Mean? Healthcare Provider’s Perspective Proven care that provides a good clinic outcome or result. Reduce medical errors. Reduce hospital acquired infections. Meeting outcomes benchmarks.
  6. 6. Many Opportunities to Deliver Care at a Lower Cost Some hospitals paid 10x as much for CHF admits as others.
  7. 7. $2,200Variation in Average Costs of Drug Eluting Stents in Hospitals
  8. 8. $16,000 Variation in Avg Costs of Defibrillators Across Hospitals
  9. 9. Culprit Behind the Exponential HealthCare Cost Growth: Fee-for-Service A patient who enters the facility is a revenuegenerating event for the medical enterprise. The higher the intensity and frequency of care, the greater the financial reward.
  10. 10. The Health Care Cost Equation MEDICARE SPENDING = # of Seniors Eligible X # of Covered Services X Rate of Service Utilization X Provider Payment Per Service X % Paid by Seniors
  11. 11. Medicare Cost Containment: Federal Policy Choices MEDICARE SPENDING = # of Seniors Eligible X # of Covered Services X Raise the Eligibility Age for Medicare Cut Benefits for Seniors Rate of Service Utilization X Provider Payment Per Service X % Paid by Seniors Make Seniors Pay More
  12. 12. Medicare Cost Containment: Federal Policy Choices MEDICARE SPENDING = # of Seniors Eligible X # of Covered Services X Rate of Service Utilization X Provider Payment Per Service X % Paid by Seniors Increase Utilization Review/ Approval Cut Payment to Providers
  13. 13. Medicare Cost Containment: Better Policy Choices MEDICARE SPENDING = # of Seniors Eligible X # of Covered Services X Rate of Service Utilization X Redesign Care for Lower Costs Provider Payment Per Service X Create Better Payment Systems % Paid by Seniors
  14. 14. Big Win-Win for Both Physicians and Payers By Eliminating Waste
  15. 15. Instead of Starting With How to Limit Care for Patients… Contributors to Healthcare Costs How Do We Limit: >New Technologies >Higher-Cost Drugs >Potentially Life- Saving Treatment
  16. 16. We Should Focus First on How to Improve Patient Care Contributors to Healthcare Costs How Do We Help: >Patients Stay Well >Avoid Unnecessary Surgery and Other Hospitalizations >Eliminate Errors and Safety Problems >Reduce Costs of Procedures >Reduce Readmissions How Do We Limit: >New Technologies >Higher-Cost Drugs >Potentially Life- Saving Treatment
  17. 17. Government has Identified Areas of Improvement Problem: Waste in duplication of services, coordination of care and accountability of outcomes Solution: Accountable Care Organization Problem: Better management of patients with chronic disease and wellness care Solution: Patient Centered Medical Home Problem: Variance in treatment patterns for procedures and surgeries Solution: Bundled Payments
  18. 18. Accountable Care Organization The ACO is an organization comprised of primary care providers, some specialist and a hospital that are accountable to patients and payors for the quality, appropriateness, and efficiency of healthcare provided. Establish appropriate use and evidence-based treatment protocols and measure the performance. ACOs are responsible for distributing bonuses when targets are met and levy penalties when targets are missed. Primary payment methodology is episode-of-care.
  19. 19. ACO Requirements Under the Bill Define processes to promote care quality, report on costs and coordinate care. Develop a management and leadership structure for decision making. Develop a formal legal structure that allows the organization to receive/distribute bonuses to participating providers. ACO must manage at least 5,000 Medicare beneficiaries. Provide CMS with a list of participating PCPs and specialists. Have contracts in place with a core group of specialist physicians. Participate for a minimum of three years.
  20. 20. Metric Examples Be uniformed in ordering medical devices: group selects one prosthesis brand of knee replacement to reduce hospital inventory. Establish metric as to when patient should be rounded on to reduce inpatient stays. Evaluation daily before 8:30 a.m. Establish clinic pathways and education for patient discharge to reduce unnecessary readmission for Congestive Heart Failure. < 50% of National Average. Reduce ER visits to 25% of baseline.
  21. 21. Case Study 1. Virginia Mason Hospital was on the verge of losing an Aetna contract due to high utilization. Hospital met with Aetna’s largest client, Starbucks, and learned about its employee’s common medical complaint: Back Injuries. Applied Toyota Lean Manufacturing Principles: cut waste and optimize efficiency to create value for the customer.
  22. 22. Current Workflow for Back Injury Care Patient calls for appointment with orthopedic surgeon: 1-2 week wait time. Every patient, no matter the acuity of the back injury, would undergo an MRI. After work-up, patient underwent surgery or sent for conservative treatment: physical therapy.
  23. 23. Conducted a Benefit Analysis of the Current Treatment Workflow 85% of patients suffered form uncomplicated back pain. 90% of the resources provided in the current model provided little value. Evidence showed these patients required physical therapy early on to relieve the back pain.
  24. 24. Reengineered Workflow Every patient is seen by Physical Therapist/Medicine Physician team during initial visit. Patient receives some physical therapy for pain relief.  The team determines if patient requires an Orthopedic consultation. Utilized other imaging services and established evidence based criteria as to when to order an MRI. Prescription medication was reduced by 32%.
  25. 25. Virginia Mason Production System Reduced initial weight times from 31 days to same day access. Reduced medical waste by 50% Cutting expensive MRIs Cutting need to see specialist. Patient received relief within 48 hours of visit. 94% were returned to work by the next day. Hospital was able to align a delivery system to market place needs instead of the needs of the hospital. Hospital’s department was now overstaffed.
  26. 26. Patient- Centered Medical Home Primary care office financially incentivized to manage a population’s health beyond the traditional office examination. Screening Case Management of the overall health Steering patients to cost effective health Patient entry point into an ACO
  27. 27. Cigna’s Medical Home Program Cigna Insurance has been promoting this model in the metroplex. They recently signed with their third primary care group called Village Health. Cigna’s Medical home model was able to reduce healthcare expenditures by almost 5% with other primary care groups. Financial bonuses to manage the health of the patients. Incentive to not communicate only with the patient when they are sick, but to manage their overall health. Coordinating care with other providers beyond traditional face time with the physician. Case managers employed to communicate with patients regarding screening and preventative care.
  28. 28. Case Study 2. Arizona Primary Care Associates Group established a medical home model- responsible for the health of 15,000 lives. Risk contract that paid bonuses on healthcare costs. Group began to track and manage its chronic patient population to assess why this group’s health was not improving. Group’s goal was to eliminate barriers to care beyond what they could control in the office. Focus was to do whatever it took to become more engaged with their patients.
  29. 29. Bundled Payments-Medical Tourism Medical tourism is choosing to travel outside of your local area for medical services. Interstate and international tourism being utilized by large self -funded groups. ACOs and groups will utilize bundled pricing to attract exclusive contracts from other payors around the country. Bundled payment is a single episode-ofcare payment that covers the hospital and physician services. Payments may also come with a postoperative guarantee period.
  30. 30. Case Study 3. Scott and White Hospital Interstate Medical Tourism Wal-Mart established a Center of Excellence program to direct its employees to 6 leading hospitals around the country. Contract is for heart, spine and transplant services. Wal-Mart provides travel and housing assistance for employees. Patients will be traveling from New Mexico, Kansas. Oklahoma, Louisiana, Alabama and Florida.
  31. 31. Incentives to Access Interstate Care Financial incentives for employee to choose this treatment option. No out of pocket costs for employee and caregiver. Items covered Co-insurance  Travel  Lodging  Food  Hospital is paid on each episode of care.
  32. 32. Dallas Healthcare Market Patients have become precious commodities. Alliances and delivery systems are morphing. Major hospital systems are building empires across the entire care continuum while being cloaked under Federal Healthcare Reform. More and more new entrants appearing in the marketplace.
  33. 33. Health & Well-Being ACO Primary Care Providers Acute Care Transitional Care
  34. 34. Non Providers Entering the Dallas Market to Gain Share Health & Well-Being ACO Primary Care Providers Acute Care Transitional Care
  35. 35. Channel Administrators ACAP Health represents 80,ooo members of various self-funded employers. Developing bundled payment contracts with providers and hospitals for key high–end procedures. Compass Health steers patients to cost- effective entities and providers due to price variances.
  36. 36. Hospital vs. Physician Office Cardiac Nuclear Study 800 700 600 500 Hospital 400 Physician Office 300 200 100 0 2006 2007 2008 2009 2010 2011
  37. 37. Dallas Healthcare Bubble Acute Care Hospitals Inpatient volume has been flat for over five years. American Hospital Association’s 2010 survey: national average is 2.6 beds per 1,000. Dallas is at 4.4 beds. Bed census is at 59%. < 60% is difficult to sustain. In the next two years, the number of beds will increase by 11%. Dallas hospital catchment areas are declining. If hospitals are operating at full capacity, why are there so many hospital billboard ads around the city?
  38. 38. Dallas Healthcare Bubble Physicians Many specialties are experiencing surpluses; not shortages. Cardiology: 137 physicians, market can support 78. Other areas: General Surgery and Urgent Care Centers Hospitals continue to saturate markets by recruiting more physicians based on flawed manpower assumptions and the need to control referrals to the hospitals. Current physicians are skill mismatched. Physicians not seeing enough patients in their area of expertise.
  39. 39. Current Results of the Market Being Overbuilt Increase in the frequency and intensity of care Increase in unnecessary care Hospitals employing physician practices are increasing medical costs. Employed physician FFS contracts are 10- 30% higher than independent physician contracts. Provider-based billing for imaging is two to three times higher than independent physician contracts Health plans will take advantage of the situation and try to slash FFS fee schedules.
  40. 40. Tipping Point Uninsured patients coming on the Federal Exchange may not be financially viable for providers. Patients ability to pay out-of-pocket expenses Exchange health plans will demand price concessions from providers  663,878 are uninsured: Of the 2,139,366 people under age 65 in Dallas County, 31 percent are uninsured. The county is ranked the 72  311,893 women are uninsured : In Dallas County, 29.1 percent of women under age 65 are uninsured  354,433 young people are uninsured: In Dallas County, 44.9 percent of young people ages 18 to 39 lack health insurance, placing it in the worst four percent among all counties  311,288 uninsured are eligible for subsidies or tax credits: In Dallas County, 34.6 percent.
  41. 41. Tipping Point Annual decreases in FFS and Risk fees. In order to remain viable, the medical enterprise will have to process even more patients. Conversely, the focus of Federal Healthcare reform is to reduce wasteful care. Health Plans and ACOs steering patients into narrow networks, which will eliminate competition. Medical enterprises’ roles will change under Healthcare Reform.

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