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Andrew Cottrill, HCF - Growing Pressure of Rising Medical Costs

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Dr. Andrew Cottrill, Medical Director, HCF delivered this presentation at the 15th Annual Health Congress 2014. This event brings together thought leaders and leading practitioners from across the …

Dr. Andrew Cottrill, Medical Director, HCF delivered this presentation at the 15th Annual Health Congress 2014. This event brings together thought leaders and leading practitioners from across the Australian health system to consider the challenges, implications and future directions for health reform.

For more information, please visit http://www.informa.com.au/annualhealthcongress14

Published in: Health & Medicine
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  • 1. Growing Pressure on Medical Costs Perspectives from Benefits Management at HCF MARCH 2014 Dr Andrew Cottrill Medical Director acottrill@hcf.com.au
  • 2. Same drivers… 2 • Ageing population • Increased incidence of Chronic Disease • Lifestyle illnesses • New Technology • Changes in patterns of practice • Consumer driven demand • Supplier induced demand • Defensive (medico-legal) practice 9.4% of GDP 7.9% of GDP Australian Health and Total Spending Source: www.aihw.gov.au/australias-health/2012/spending-on-health/
  • 3. Changing face of healthcare 3 Genomics Proteomics 3D Organ Printing Robotics Nanoparticles Personalised Medicine M Health
  • 4. 4 Improving Value Value is about satisfying clinical need through the Right Service Right Place Right Time Right Cost “In the United States a survey by the Agency for Healthcare Research and Quality found that while healthcare expenditure doubled between 1994 and 2005, the quality of care – measured in terms of effectiveness, patient safety, timeliness, and patient-centredness – improved by barely a third” Source: Larsson et el: “From Concept to Reality: Putting Value-Based Health Care into Practice in Sweden.” Nov 2010, Boston Consulting Group.
  • 5. 5 Implantable Cardiac Defibrillators HCF spends approximately $8.5 Million per year Defibrillator costs: Average $51,000 Plus, leads, EPS studies etc, theatre, accommodation. Total Costs per episode around $65 - 80,000 And again, when the batteries run out!
  • 6. 6 22.5% ICD implants did not meet evidence based criteria for implantation JAMA, Jan 5, 2011, Vol 305, No1
  • 7. Diagnostic cardiac catheterisation 7 HCF funded 2,494 admissions last FY, at an average charge of $9,700, at total cost of approx $ 24 M. “One quarter of patients undergoing DC for suspected coronary artery disease were rated as inappropriate for the procedure…” Hannan, L et al: “Appropriateness of Diagnostic Catheterization for Suspected Coronary Artery Disease in New York State” Circ Cardiovascular Interv. Jan 28, 2014 8,986 DC procedures: • 35.3% appropriate • 39.8% uncertain • 24.9% inappropriate
  • 8. Value: Gastric Banding 8 “In Australia, the number of LAGB procedures increased by 10 times over the last decade, as compared to the rate of RYGB procedures” LAGB RYGB LAGBx1,000 RYGBx100
  • 9. … LAGB trending to younger patients 9 Recommends: • At least 15 years old • BMI > 40 • Associated complication such as Type 2 diabetes • Persistent problems despite undertaking lifestyle programs
  • 10. Value: HCF data on Bariatric Surgery 10 Year of Admission LAGB Other Bariatric Total No Admits Benefits Paid No Admits Benefits Paid No Admits Benefits Paid FY0910 911 80% $8.7 M 233 20% $2.5 M 1,144 $ 11.1 M FY1011 676 69% $6.6 M 305 31% $3.4 M 981 $ 10.0 M FY1112 547 57% $5.5 M 420 43% $4.9 M 967 $ 10.4 M FY1213 519 47% $5.2 M 587 53% $6.7 M 1,106 $ 11.8 M Year of Admission Reversal Repair Adjust Reduction Total Benefits Paid Benefits Paid Benefits Paid Benefits Paid Benefits Paid FY0910 $682 K $205 K $757 K $ 1,644 K FY1011 $1,152 K $233 K $ 0.5 K $914 K $ 2,299.5 K FY1112 $1,460 K $266 K $2 K $922 K $ 2,650 K FY1213 $1,765 K $243 K $2 K $864 K $ 2,874 K Total Benefits Paid $ 12.7 M $ 12.3 M $ 13.1 M $ 14.7 M
  • 11. 11 “RYGB produces substantially greater weight loss than LAGB. Whilst peri-operative complications are greater after RYGB, long term complication rate is higher following LAGB.” World J Gastroenterol 2013 September 28; Nguyen NQ et al. Vol 19(36): 6035-6043 RYGB LABG p Pre-op BMI 46.8 40.4 <.001 BMI reduced kg/m2 -14.8 -1.2 <.0001 Perioperative compl. 8% 0.5% <.001 Long term compl. 2.1% 8.9% <0.001 Fasting Blood Glucose 33% 17% <.02 Total Cholesterol 54% 4% <.001 Plasma Triglycerides 81% 27% <.0001
  • 12. Avg weight loss (n=930; Start BMI >30) 7.7kg 7.9% Members achieving some weight loss 916 99% 5% or more weight loss 695 75% 10% or more weight loss 258 28% 15% or more weight loss 52 6% … and a more conservative approach 12
  • 13. 13 Other procedures to consider… Routine Pre-operative echo & stress testing Hyperbaric oxygen therapy for diabetic wounds Sleep studies Arthroscopy for knee OA Da Vinci robotic surgery Midurethral sling vs colposuspension Cervical discectomy Drug eluting stents vs bare metal stents Stents in stable coronary disease Endovascular abdominal aortic aneurysm repair vs open surgical repair Spinal fusion CT coronary angiography vs percutaneous coronary angiography Inguinal hernia repair Indications for Caesarean sections Colonoscopy - indications Prostatectomy - indications
  • 14. Levers 14 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour
  • 15. Regulatory Environment Pricing Signals Levers 15 Member Behaviour Preventive Health Strategies Provider Behaviour - Exclusions - Restrictions - Minimum benefits - Benefit limitation periods + Incentives + Loyalty rewards Product Design
  • 16. Levers 16 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour Lobby Legislation Health technology Assessment processes: TGA PLAC MSAC PBAC
  • 17. Levers 17 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour Bundled case payments Rewarding desired outcomes Not paying for mistakes wrong site wrong side surgery
  • 18. Levers 18 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour Information to support informed health choices Information about how to navigate the health system Information about preference sensitive conditions Information to help select a provider Incentives
  • 19. Levers 19 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour Gap arrangements Contracts Direct service delivery Sharing performance information
  • 20. Levers 20 Product Design Regulatory Environment Pricing Signals Member Behaviour Preventive Health Strategies Provider Behaviour Health and wellbeing programs Health and wellness assessments Chronic disease management programs
  • 21. Impact: Savings from review 21 FUTURE $ 2.6 M $ 1.7 M $ 2.6 M Hospital benefits Ancillary Benefits Hospital Subsitute Treatment July 2013 – December 2013 $ 6.9 M 1.3% of total benefits
  • 22. Impact 22 FUTURE 0 100 200 300 400 500 600 700 800 900 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 BedDaysper1,000members Admission Month Go Live Rest of HCF Participants from enrolment Data as at 13 October 2013 Based on 26,400 currently active enrolments
  • 23. Impact: No gap coverage 23 FUTURE 76 % 77 % 78 % 79 % 80 % 86.8 % 87.4 % 87.6 % 88.0 % 89.2 % FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Hospital admissions with all medical services at no gap Medical services at no gap
  • 24. Impact: Member gaps 24 FUTURE $0$2,000$4,000$6,000$8,000 1 11 21 31 PaymenttoDoctor Services Cervical decompression Charge Distribution for item 40335 01/01/2012 - 31/12/2012 CMBS rate HCF no gap rate AMA Rate 73% no gap coverage
  • 25. Impact: Member gaps 25 FUTURE $-$200$400$600$800$1,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 103 106 109 112 115 118 121 124 127 130 133 136 PaymenttoDoctor Services Intravitreous injection Charge Distribution for item 42740 01/02/2013 - 01/02/2014 CMBS rate HCF No gap rate AMA rate 98% no gap coverage
  • 26. Impact: Member gaps 26 $0$2,000$4,000$6,000$8,000$10,000 1 11 21 31 PaymenttoDoctor Service Number Excision of Pituitary Tumour Benefit Distribution for item 39715 01/01/2010 - 31/12/2010 CMBS rate HCF no gap rate AMA Rate 52% no gap coverage
  • 27. 27 Summary • There is no cure for healthcare inflation • As new technologies evolve the scope of “healthcare” expands • Value-Based healthcare should be our aim • We have few levers with which to influence healthcare costs • We have had some success, but managing benefits is multi- faceted and difficult because it is a complex system requiring complex solutions

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