A cost increase means that whatever is being done is not working. The current system favors the Ins Carrier model… show chart of how they increased revenue over last few years. They bury their profit in “retention” This is like reserves
Health care is complex. If it was straightforward then anyone could do it, and we would not have the issues that exist today. The objective of this presentation is to show some of the core strategies to control, and reduce costs that HSR has learned in over 27 years in business. First we will discuss key areas where costs come from, then get into core strategies for reducing cost, and conclude with key differentiators for selection of a health plan administrator.
Obesity Outranks Smoking and Problem Drinking in Annual Increases in Health Care Costs
A study of 37 Million patient records in 2001, 2002 and 2003, by HealthGrades determined the number of deaths is 195,000 deaths per year in hospitals. This is due to potentially preventable, in-hospital medical events. You would expect more litigation, but the actual cost of litigation is less than 5% of the total cost.
Note that both scales are logarithmic. (point to both axes). This chart shows the risk comparison of several systems that exist between the extremes of “Dangerous” and “Ideal.” Hospitals are very close to dangerous! This rating is based on preventable events. In other words, quality issues that created problems in the system resulting in death and reduced quality of life for the patient. These may be due to drug interaction, infection, incomplete procedures, communication errors, etc. These events may not result in death but may lead to revision surgeries. That means that there is an increase in cost. When any part of a supply chain has a cost increase, it invariably impacts the final cost of the product.
We’ve been talking about dollars today, but we are paying more than dollars for our health care system. On the left are well people. The continuum extends all the way to death. On the right you see Utilization Review (hospital usage) and Case Management (serious cases are managed by a nurse). People near end of life require higher levels of care, at a significant cost. Through predictive modeling, the future needs of the patient are identified today so that medical catastrophes can be identified and avoided. (Ask “Where are your employees on this curve?” We can run a predictive model on your employees with two years of data and then you will know. “Would you like to do this?” Q. What is the cost? A. In most cases it would range $500 to $1,000)
This is the progression of heart disease and treatment cost. The opportunity for a good quality of life is greatly improved by early intervention. Early intervention comes from early detection. And early detection comes from high quality medical providers. High quality medical providers are more likely to spot trends and intervene at an early stage. Early intervention results in better quality of life for the patient and their family. The byproduct is lower cost.
Over the course of about 3.5 years this man went from a treatable disease to amputation, a nursing home and drastically reduced quality of life. As can be seen, the cost to the health plan shot up drastically. Something in the system went horribly wrong for this man. There were opportunities for interventions that apparently were not given, or were not adhered to. HSR’s medical management staff uses predictive modeling for detection and accountability for adherence to physician protocols to ensure that this kind of result is avoided.
This data comes from government sources. Here is a cost comparison of three common procedures in the same region. Because of the wide variation in facility costs, HSR directs patients to high quality, lower cost facilities.
Typically, one in five people will get an MRI scan per year. The average lives covered in this example is 2.25 people per employee. Your company may be higher or lower. This is a common example of how a company can save significant cost though directing their employees to lower cost MRI facilities. An educated patient can ask the physician’s office to direct them to the lower cost facility. An educated consumer makes better choices for their health, and for their out of pocket cost.
This is what we all want… lower health cost. There is a company that is doing this. This graph is from an actual client. Notice that their cost was above the U.S. average when we started. Four years later their cost was significantly below the U.S. average. Would you like to get this kind of result for your company? We can do it. Ask “is this the kind of result that you want?
We’ve had patients that go into a hospital for three hours and the cost is three years wages. Here’s the breakdown… Device implants are off the charts! At $24,000 the device is already expensive, but the hospital markup was four times! That’s just not right. Because we were told the cost after the fact, negotiation was more difficult, but HSR’s TPA negotiated the cost down to $55,000 and saved the plan $80,000.
This was for a union client. The employee had an eating disorder and had lost so much weight that she was only 77 pounds. The employee’s best hope for a successful outcome was an out of network facility in California. The primary insurer was one of the very large insurance companies and HSR was responsible for the delivery of medical management services. The primary insurer chose not to negotiate with the out of network facility. They walked away from the case. (Big insurance usually doesn’t bother to negotiate out of network deals). HSR coordinated a successful out of network treatment. HSR Case Managers found the right facility, negotiated the deal and got the patient well and saved the fund $167,000 off of billed charges. That’s some pretty remarkable savings. And yes, the patient came out of it O.K., got married and is doing just fine today.
Most health care companies focus solely on cost, it’s in their DNA. When HSR was founded, the philosophy was to treat patients like family members and get them the best quality health care. That’s in our DNA. The byproduct is cost reduction. There is a balance between quality and cost. By employing the strategies that we’ve outlined in the previous slides, the results have been outstanding! For every dollar spent on Case Management $30 has been saved in plan costs. Just for comparison, in the industry most providers of Case management would consider themselves lucky to get a ratio of 1:10, or save $10 for every dollar spent.
If you get it right the first time, you improve outcomes and reduce cost. Hey, HSR has been in business for a long time because we deliver what we say we do. We treat patients like family and a byproduct is reduced cost. Our Claims Payers have a history of catching billing errors that less experienced people may miss. While others measure Case Managers on the number of cases per hour, calls per hour, and pay bonuses for medical cost cutting, HSR maintains it’s philosophy of “treat patients like family.” And when patients get the best care, they get the best results in shorter time and the byproduct is reduced cost. Experience of Case Managers, supported by our proprietary systems delivers high ROI.
Creating New Opportunities Under Obama Health Care Reform
Creating New Opportunities Under Obama Health Care Reform Contact Don Barker Health Service Review [email_address] www.healthservicereview.com 800-573-0009
What are insurance carriers doing to lower costs?
What are insurance carriers doing to lower costs? Health insurance increases every year! Current cost control strategies are defective Nothing!
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2008. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 2000-2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 2000-2008 (April to April). Health Insurance Premiums Workers’ Earnings Overall Inflation What Are Health Insurance Carriers Doing? Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2008
Agenda <ul><li>What Drives Health Care Cost? </li></ul><ul><li>The Deterioration of the Quality of Life </li></ul><ul><li>Common Procedure Cost Comparisons </li></ul><ul><li>The Impact of Ignorance </li></ul><ul><li>Case Studies </li></ul><ul><li>Balancing the Health Care Equation </li></ul><ul><li>Getting Effective Cost Control </li></ul>The objective of this presentation is to show some key strategies to control and reduce costs that politicians, employers and employees should be focusing on.
What Drives Health Care Cost? Roland Sturm, Health Affairs 2002;21:245-253
“ Obesity related diseases account for nearly 10% of all US medical spending, an estimated $147B last year.” Obese people cost 42% more than normal people annually. What Drives Health Care Cost? Obesity: Sources: Centers for Disease Control, Health Affairs, rand Corporation American Obesity Association James Histon, Ed Yozwick Post/Gazette, Reuters Ed Blazina, Pittsburg Post Gazette Sunday August 2, 2009
Each year 300,000 people die of obesity related diseases What Drives Health Care Cost? Obesity: <ul><li>Linked with: </li></ul><ul><ul><li>diabetes </li></ul></ul><ul><ul><li>heart disease </li></ul></ul><ul><ul><li>hypertension </li></ul></ul><ul><ul><li>sleep apnea </li></ul></ul><ul><ul><li>gallbladder disease </li></ul></ul><ul><ul><li>some types of cancer </li></ul></ul><ul><ul><li>osteoarthritis </li></ul></ul><ul><ul><li>knee & hip replacement </li></ul></ul>
What Drives Health Care Cost? Source: Center for Disease Control Smoking: Smoking causes $96B in total annual medical expenditures and $97B from lost productivity. Center for Disease Control Each year 443,000 people die of smoking related diseases
June 2005, Forbes “Fixing Hospitals,” Robert Langreth What Drives Health Care Cost? Quality: “ Shoddy quality control plagues American medicine, killing at least a hundred thousand people every year and running up an estimated $500 billion a year in avoidable medical costs, or 30% of all health care spending” . (Could your company survive with 30% waste?)
195,000 people die in hospitals every year from preventable medical events HealthGrades study of 37 Million patient records in 2001, 2002, 2003 "The equivalent of 390 jumbo jets full of people are dying each year due to likely preventable, in-hospital medical events, making this one of the leading killers in the U.S." Dr. Samantha Collier, VP of Medical Affairs, HealthGrades What Drives Health Care Cost? Quality:
Is the U.S. Health System Really the Best? Why aren’t politicians focusing on fixing this?
Deterioration of Quality of Life This is where the major costs are
Progression of Heart Disease This is the progression of heart disease and treatment cost. The opportunity for a good quality of life is greatly improved by early intervention. Early intervention comes from early detection, and results in better quality of life for the patient and their family. The byproduct is lower cost.
Progression of Diabetes Over the course of about 3.5 years this man went from a treatable disease to amputation, a nursing home and drastically reduced quality of life. Early interventions were either not given, or not adhered to, and cost skyrocketed.
Common Procedure Cost Comparison Educate patients to shop high quality, lower cost facilities Delphi of Florida, Inc., 2008 Facility payment range $5,165 to $16,966 Facility payment range $479 to $3,528 Facility payment range $425 to $3,900 56 locations 71 locations 43 locations C-Section Colonoscopy MRI
Impact of Ignorance Delphi of Florida, Inc., 2008 An educated consumer makes better choices for their health, and for their out of pocket cost and the health plan wins. Assume 1 in 5 people get an MRI per year x 1000 x 45 = $45,000 Patients directed to lower cost facility: assume avg. cost of $1,000 per MRI If range is $425 to $3,900, then the average = $1,737.50 225 people = 45 MRI’s per year $1,737.50 45 = $78,187.50 100 employees = 225 people in plan
Impact of Ignorance Total knee replacement is a procedure used by many as a cost metric. It is a discrete procedure with few, if any, comorbidities.
Impact of Ignorance The best physicians have fewer complications, lower mortality rate, spend less time in the OR and have a lower Length of Stay.
Effective Cost Control You all want it, but how do you get it? (There is a company achieving this. This performance chart is from an actual client.)
Health Service Review (HSR) Mission To maximize the quality of life for employees while saving substantial health care and productivity costs associated with sick employees. In other words, enable the building of healthy businesses through healthy people.
HSR Case Study 1 A patient goes into a hospital for three hours and the cost is three years wages! Total charge for installation of Defibrillator – Pacemaker $135,000 Surgery (labor) $ 39,000 Device (parts) $ 96,000 Actual cost of Defibrillator – Pacemaker $ 24,000 Markup was 4x to $ 96,000 HSR negotiated savings of $ 80,000
HSR Case Study 2 51 day admission Six months later, 44 day admission for bipolar and suicidal 44 day partial hospitalization savings $119,000 51 day residential care program savings $ 48,000 HSR negotiated savings of $167,000 Out of network (OON) treatment for anorexia. Woman 5’ 6” and weighed 77 pounds
HSR Case Study 3 Four hospitals in the same county were asked to provide cost of ten outpatient procedures. This was then averaged. As can be seen, there is a big difference between lowest and highest.
Effective Cost Control We all want it, but how do you get it? <ul><li>Philosophy of “Get it right the first time” means improved outcomes and reduced cost </li></ul><ul><li>Case Management (CM) ROI = 30:1. </li></ul><ul><li>$1 spent on CM at HSR typically saves $30. </li></ul><ul><li>Strong Systems, Strong People, Great Results </li></ul>
Effective Cost Control Contact Don Barker Health Service Review [email_address] www.healthservicereview.com 800-573-0009