Integrated Care
The Alternate Path to Health Reform
March 2014
Matthew Cullen
1. Why Now?
2. What‟s Driving Growth?
3. The Path to System Reform
4. Integrated Care as a Catalyst
5. Future Reform
Healthcare costs in Australia are
growing at an unsustainable rate
3
Source: AIHW
4
Context: Healthcare Expenditure
Total Recurrent Healthcare Spend FY02-FY12 Federal Gov‟t Recurrent Healthca...
Despite unbroken economic
growth for many years, healthcare
expenditure continues to
encompass a greater proportion of
the...
Source: AIHW
6
Context: Healthcare Expenditure
Recurrent health spend per Capita per annum FY02-FY12 Health Expenditure as...
Context: Healthcare Expenditure
Source: Grattan Institute
7
Large changes in Commonwealth and state government
expenditure...
Hospital utilisation is the key issue:
in FY02 there were 0.33 hospital
admissions per capita but 0.41
admissions per capi...
Source: AIHW
9
Context: Healthcare Expenditure
MBS Funded Primary Care Consults p/annum FY02-FY12 Total MBS Funded Service...
For private payors the growth
trajectory is equally problematic
10
Context: Healthcare Expenditure
Source: PHIAC
554 594 638 669 713
126
135
143
153
164
111
121
129
136
143
FY08 FY09 FY10 F...
Based on the FY02-FY12 growth
trajectory, health spend will
account for 43.8% of government
tax revenue in 20 years (versu...
Context: Healthcare Expenditure
13
Extrapolation of growth rates from FY02 to FY12
Health Spend as a % of Federal Tax Reve...
1. Why Now?
2. What‟s Driving Growth?
3. The Path to System Reform
4. Integrated Care as a Catalyst
5. Future Reform
Cost growth is driven by multiple
interrelated factors but increases
in utilisation are the main
contributor
15
What‟s Driving Cost Growth?
Core Issues Contributing Factors
Healthcare Demand
 Inappropriate attendance
 Unplanned hosp...
Examples of key drivers reveal a
system with significant
unwarranted variation that is ill
equipped to deal with chronic
i...
There is material unwarranted variation in treatment rates between geographies that
can‟t be explained by age, sex or soci...
A significant proportion of services performed either lack strong evidence of efficacy
or are performed without patient in...
Cost growth: Complex and High Utilising Patients
There has been too little focus on the very small number of consumers tha...
21
Hand-written
Medications
Morning
Afternoon
Evening
“I did not really know who to turn to and
sometimes you feel that yo...
In the absence of systemic reform
future cost growth will continue to
be driven by higher utilisation
22
2002/03
Healthcare
Expenditure
2032/33 (f)
Healthcare
Expenditure
$85.06b
$246.06b
$37.75b
Ageing
Population
Disease
Rate
...
1. Why
Now?2. What‟s Driving
Growth?3. The Path to System Reform
4. Integrated Care as a Catalyst
5. Future Reform
25
The Path to System Reform
Key Global Themes
Quality & Outcome
Contracting for
Hospitals
Provider vertical
integration
G...
Fundamental system reform is
essential to long term sustainability
of healthcare in Australia
26
27
The Path to System Reform
Public Payors Private Payors
Tighter management of provider fees Tighter management of provid...
28
The Path to System Reform
Current State
Multiple payors for an individual
Clinician centric
Fee for service
Episodic, u...
1. Why Now?
2. What‟s Driving Growth?
3. The Path to System Reform
4. Integrated Care as a Catalyst
5. Future Reform
Integrated Care
30
A service aimed at complex, recurrent hospital utilisers
is an ideal catalyst for broader system reform...
The model developed takes
common elements from the most
successful international and local
services
31
 Single service jointly funded by public and private payers
 Insurers fund their population, government funds non-insure...
33
VirtualLayerPhysicalLayer
General
Practice
Outpatient
Specialist
ED
In-patient
Outpatient
Rehab
Community
Care
Pharmacy...
1. Why Now?
2. What‟s Driving Growth?
3. The Path to System Reform
4. Integrated Care as a Catalyst
5. Future Reform
A system where healthcare expenditure is linked to the economy‟s ability to pay, and
where consumer choice and service is ...
Thank you
for your time
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Matthew Cullen, Medibank Health Solutions - Integrated Care – the Alternate Path to Health Reform

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Matthew Cullen, Group Executive, Medibank Health Solutions 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

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Matthew Cullen, Medibank Health Solutions - Integrated Care – the Alternate Path to Health Reform

  1. 1. Integrated Care The Alternate Path to Health Reform March 2014 Matthew Cullen
  2. 2. 1. Why Now? 2. What‟s Driving Growth? 3. The Path to System Reform 4. Integrated Care as a Catalyst 5. Future Reform
  3. 3. Healthcare costs in Australia are growing at an unsustainable rate 3
  4. 4. Source: AIHW 4 Context: Healthcare Expenditure Total Recurrent Healthcare Spend FY02-FY12 Federal Gov‟t Recurrent Healthcare Spend FY02-FY12 State/Local Gov‟t Recurrent Healthcare Spend FY02-FY12 Non-Gov‟t Recurrent Healthcare Spend FY02-FY12 FY02 FY12 8.31% CAGR FY02 FY12 7.93% CAGR FY02 FY12 10.08% CAGR FY02 FY12 7.45% CAGR $140.2b $63.1b $59.5b $27.8b $38.3b $14.7b $42.4b $20.7b From 44.0% of healthcare spend in FY02 to 42.4% in FY12 From 23.2% of healthcare spend in FY02 to 27.3% in FY12 From 32.8% of healthcare spend in FY02 to 30.3% in FY12 All figures in Current prices
  5. 5. Despite unbroken economic growth for many years, healthcare expenditure continues to encompass a greater proportion of the economy 5
  6. 6. Source: AIHW 6 Context: Healthcare Expenditure Recurrent health spend per Capita per annum FY02-FY12 Health Expenditure as a % of GDP FY02-FY12 Federal Health Spend as a % of Tax Revenue FY02-FY12 State Health Spend as a % of Tax Revenue FY02-FY12 FY02 FY12 6.67% CAGR FY02 FY12 FY02 FY12 FY02 FY12 $6,172 $3,237 $9.51% 8.36% 26.4% 22.4% 24.5% 16.4% GDP was $755b in FY02 and $1,475b in FY12 Federal tax revenue was $124b in FY02 and $225b in FY12 State/Local tax revenue was $90b in FY02 and $156b in FY12 Population was $19.5m in FY02 and $22.7m in FY12 All figures in Current prices
  7. 7. Context: Healthcare Expenditure Source: Grattan Institute 7 Large changes in Commonwealth and state government expenditures, relative to GDP growth, FY03 to FY13 ($bn) Change in Australian governments‟ health expenditure by sub category, FY03 to FY13 ($bn) “Growth in health spending above GDP over the past ten years was greater than the growth above GDP of all other spending combined. The expense that did most to increase government spending above GDP growth was hospital spending”
  8. 8. Hospital utilisation is the key issue: in FY02 there were 0.33 hospital admissions per capita but 0.41 admissions per capita by FY12 8
  9. 9. Source: AIHW 9 Context: Healthcare Expenditure MBS Funded Primary Care Consults p/annum FY02-FY12 Total MBS Funded Services p/annum FY02-FY12 Total Hospital Separations p/annum FY02-FY12 Total ED Occasions of Service p/annum FY08-FY12 FY02 FY12 2.40% CAGR FY02 FY12 FY02 FY12 FY08 FY12 126.7m 99.9m 332.7m 220.7m 9.3m 6.4m 7.8m 7.1m Total MBS services have grown more quickly, driven by Pathology and Diagnostic Imaging Hospital admissions have grown from 0.33 per capita p/annum in FY02 to 0.41 per capita p/annum in FY12 Primary care growth is only marginally above population growth 4.19% CAGR 3.76% CAGR 2.41% CAGR ED occasions have grown from 0.33 per capita p/annum in FY08 to 0.34 per capita p/annum in FY12
  10. 10. For private payors the growth trajectory is equally problematic 10
  11. 11. Context: Healthcare Expenditure Source: PHIAC 554 594 638 669 713 126 135 143 153 164 111 121 129 136 143 FY08 FY09 FY10 FY11 FY12 Prostheses Medical Hospital Hospital treatment benefits per capita paid per year FY08 to FY12 ($) 5 Year CAGR: 5.2% 5 Year CAGR of 6.5% 5 Year CAGR: 6.6% 5 Year CAGR: 7.2% 11
  12. 12. Based on the FY02-FY12 growth trajectory, health spend will account for 43.8% of government tax revenue in 20 years (versus 25.6% today) 12
  13. 13. Context: Healthcare Expenditure 13 Extrapolation of growth rates from FY02 to FY12 Health Spend as a % of Federal Tax Revenue FY12-FY32 Health Spend as a % of State Tax Revenue FY12-FY32 Health Spend as a % of All Gov‟t Tax Revenue FY12-FY32 Health Spend as a % of GDP FY02-FY32 FY12 FY32 FY12 FY32 FY12 FY32 FY12 FY32 36.7% 26.4% 54.8% 24.5% 43.8% 25.6% 12.3% 9.5%
  14. 14. 1. Why Now? 2. What‟s Driving Growth? 3. The Path to System Reform 4. Integrated Care as a Catalyst 5. Future Reform
  15. 15. Cost growth is driven by multiple interrelated factors but increases in utilisation are the main contributor 15
  16. 16. What‟s Driving Cost Growth? Core Issues Contributing Factors Healthcare Demand  Inappropriate attendance  Unplanned hospital admissions and readmissions  Geographic, cultural and socio-economic diversity  Lack of preventative health expenditure and activity  Poor health literacy, education and self-management practices  Ageing, lifestyle risk factors, chronic disease and disability  Complex patients with multiple morbidities Healthcare Supply & System  System fragmentation & poor coordination (health & non-health)  Funding and incentives – non alignment of payer, provider & patient  Number of procedures, screens and tests (volume per case)  Unwarranted variation & procedures with a questionable evidence base  Organisational and operational efficiency and productivity  Price inflation driven by demand/supply imbalance  Medical technology and pharmaceutical costs  Traditional models of face to face healthcare 16
  17. 17. Examples of key drivers reveal a system with significant unwarranted variation that is ill equipped to deal with chronic illness 17
  18. 18. There is material unwarranted variation in treatment rates between geographies that can‟t be explained by age, sex or socio-economic factors (source: Health Dialog / NSW Health) Variation in PSC Surgery Rates/1,000 by AHS in NSW Chronic Medical Admission Rate/1,000 Variation by AHS in NSW Variation in Readmission Rates Post PSC Surgery by AHS in NSW Surgery Rates are adjusted by age, sex and socio-economic status of underlying population. Source: Linked records of the NSW Admitted Patient Data Collection Data from the period 1 July 2005 to 30 June 2008 Cost Growth: Unwarranted Variation
  19. 19. A significant proportion of services performed either lack strong evidence of efficacy or are performed without patient insight into risks, benefits and alternatives Cost Growth: Health Literacy & EBM  33% of patients believed the angioplasty (PCI) was emergent yet all were elective  70% believed the procedure would prevent future heart attacks  66% believed the angioplasty would extend their life  42% believed the angioplasty saved their life “Patients’ perceived benefits of an elective PCI do not match existing evidence. Better patient education may be needed prior to elective PCIs to elucidate the evidence-based risks and benefits so as to facilitate more truly informed consent.” “Arthroscopic partial meniscectomy is one of the most common orthopedic procedures, yet rigorous evidence of its efficacy is lacking…In this trial involving patients without knee osteoarthritis but with symptoms of a degenerative medial meniscus tear, the outcomes after arthroscopic partial meniscectomy were no better than those after a sham surgical procedure.” Widespread Patient Misconceptions Regarding the Benefits of Elective Angioplasty Medibank funds more than $100m of arthroscopic menisectomy every year
  20. 20. Cost growth: Complex and High Utilising Patients There has been too little focus on the very small number of consumers that are recurrently responsible for a substantial proportion of healthcare expenditure 40% of all hospital bed days 1/3 of all hospital benefits (~$1 billion per annum) 49% of all hospital medical benefit outlays 3 MDCs in 4 years on average 69 years old on average Approx. 13 hospital separations in 4 years 61,780 members (2.3% of members with hospital cover) Medibank Private Data FY07 to FY11 Source: Medibank Private 20
  21. 21. 21 Hand-written Medications Morning Afternoon Evening “I did not really know who to turn to and sometimes you feel that your GP is too busy to sit down and chat to” “My poor health is now the focus of my life, it has been such a strain on my family” “My husband is my full time carer, he does all the cooking cleaning and gets me sorted for the day with medications and any appointments” “My providers are so specialized and focus on just one area. I think this is necessary but dealing with so many at one given time, it can be hard to keep up with” Cost growth: Complex and High Utilising Patients
  22. 22. In the absence of systemic reform future cost growth will continue to be driven by higher utilisation 22
  23. 23. 2002/03 Healthcare Expenditure 2032/33 (f) Healthcare Expenditure $85.06b $246.06b $37.75b Ageing Population Disease Rate Volume per Case Treatment Proportion Price $34.38b -$2.29b $81.30b $1.03b $8.84b Components of Forecast Real Cost Growth Source: John Goss for AIHW “Increases in health expenditures are primarily driven not by an ageing population, but by people of all ages seeing doctors more often, having more tests and operations, and taking more prescription drugs, often employing new and effective treatments” Cost growth: Utilisation 23
  24. 24. 1. Why Now?2. What‟s Driving Growth?3. The Path to System Reform 4. Integrated Care as a Catalyst 5. Future Reform
  25. 25. 25 The Path to System Reform Key Global Themes Quality & Outcome Contracting for Hospitals Provider vertical integration GP outcome based remuneration Multi-modal service delivery The engaged patient Providers as payors Payors as providers Competing „single‟ payors Integrated care
  26. 26. Fundamental system reform is essential to long term sustainability of healthcare in Australia 26
  27. 27. 27 The Path to System Reform Public Payors Private Payors Tighter management of provider fees Tighter management of provider fees Higher taxes / more means testing Premium growth above income growth Higher debt and deficit Lower financial returns Healthcare rationing / supply constraints Higher exclusions and excesses In the absence of reform the consequences are predictable
  28. 28. 28 The Path to System Reform Current State Multiple payors for an individual Clinician centric Fee for service Episodic, unconnected care Unwarranted variation Variable evidence base Inefficiency / low productivity Inpatient centric Poor consumer engagement Face to face delivery Fragmented data Future State Single, competing payor for an individual Consumer centric Quality and outcome based payments Integrated Care Consistent pathways Strong evidence of efficacy „Industrial production‟ mindset Community centric Engaged, literate consumers Multi-modal delivery Connected data
  29. 29. 1. Why Now? 2. What‟s Driving Growth? 3. The Path to System Reform 4. Integrated Care as a Catalyst 5. Future Reform
  30. 30. Integrated Care 30 A service aimed at complex, recurrent hospital utilisers is an ideal catalyst for broader system reform Highly impactable patient cohort Demonstrates merits of fund pooling Solution addresses system fragmentation Requires a scalable, consistent model Strengthens the role of primary care Demonstrates merits of multi-modal delivery Demonstrates merits of data integration Evaluation enables future risk based funding model
  31. 31. The model developed takes common elements from the most successful international and local services 31
  32. 32.  Single service jointly funded by public and private payers  Insurers fund their population, government funds non-insured  „Concierge‟ model commensurate with utilisation and cost  General Practice led, applying dedicated resources  Designed to „glue‟ and not replicate the existing system  Integration within healthcare and between healthcare and social services  Face to face and virtual coordination services to improve access and efficiency  A dedicated platform to enable workflow and integration  A proactive provider engagement and change management strategy  Evaluation design, data linkage and data capture core to project design Addressing System Fragmentation 1. Better health outcomes 2. Better patient experience 3. Lower cost Triple Aim Goals Integrated Care 32
  33. 33. 33 VirtualLayerPhysicalLayer General Practice Outpatient Specialist ED In-patient Outpatient Rehab Community Care Pharmacy Web, Mobile & Remote Monitoring Care NavigatorNurse Triage Virtual Health coaching, and Specialists Nurse Home care & nursing Hospital Liaison Pivotal Touch Points Integrated Care System-wide coordinated care for high utilisers, led from General Practice, focusing on reduced hospital admissions / readmissions Core Services Nurse coordinators in general practice 24 x 7 nurse triage Care navigators (phone) Care management programs In-home services Platform, reporting & BI In-home services Independent evaluation
  34. 34. 1. Why Now? 2. What‟s Driving Growth? 3. The Path to System Reform 4. Integrated Care as a Catalyst 5. Future Reform
  35. 35. A system where healthcare expenditure is linked to the economy‟s ability to pay, and where consumer choice and service is central to success 36 Other jointly funded, GP led care management programs 2 Discrete population fund pooling models 4 Movement from fee for service to outcome based provider remuneration 5 Integrated Care Program 1 Competing payor models where each payor is responsible for all health funding for an individual 3 Future Reform
  36. 36. Thank you for your time

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