Navigating The Waves of Healthcare Reform
 

Navigating The Waves of Healthcare Reform

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Cindy Johnson delivered a detailed presentation on “Navigating the Waves of Healthcare Reform” at the Chicago Health Executives Forum Boat event and how Navigant has become one of the preeminent ...

Cindy Johnson delivered a detailed presentation on “Navigating the Waves of Healthcare Reform” at the Chicago Health Executives Forum Boat event and how Navigant has become one of the preeminent healthcare consulting firms in the country. She touched on healthcare reform: what it is and what it means, as well as, a section focusing on the question of where do we go from here? Johnson also highlights other market perspectives.

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Navigating The Waves of Healthcare Reform Navigating The Waves of Healthcare Reform Presentation Transcript

  • Navigating the Waves ofHealthcare ReformChicago HealthcareExecutive ForumJuly 2011D I S P U T E S & I N V E S T I G AT I O N S • E C O N O M I C S • F I N A N C I A L A D V I S O RY • M A N A G E M E N T C O N S U LT I N G
  • Table of Contents Section 1 » Navigant Overview Section 2 » Market Context: How we got here Section 3 » Reform Overview: What is it and what does it mean Section 4 » Developing an Approach: Where we go from here Section 5 » Market Perspectives: Views from the field
  • Section 1Navigant Overview
  • NavigantBusiness DescriptionNavigant is a specialized, independentadvisory firm that supports companies, Ticker NCI (NYSE)lenders, institutional investors, legalcounsel, and government agencies. 2009 Revenue $700+ MHeadquartered in Chicago, IL, thecompany focuses on entities and Professionals 1,800industries facing the challenges ofuncertainty, risk, distress and Headquarters Chicago, ILsignificant change, and on the issuesdriving these transformations. Navigant’s 1,800 professionals are located in 40 cities throughout North America, Europe and Asia
  • Navigant’s Healthcare PracticeNavigant is one of the preeminent healthcare consulting firms in the country. 2010 Our Strategy: Physician Operations » Comprehensive team of professionals representing all disciplines 2008 » Acquisition of best of breed consulting firms » Integrated capabilities providing a Physician Strategy 2009 true end-to-end solution Partnership 2005 2006 The Result: Strategy » 500+ resources including healthcare executives, clinicians, and physicians Coding & » Broad set of capabilities including Documentation Enterprise Strategy, Physician Strategy, Operations Improvement, and Financial Turnaround » Unique approach that incorporates strategy and physician engagement to ensure sustainable results
  • Section 2Market ContextHow we got here
  • Unsustainable Healthcare Costs U.S. Healthcare Expenditures 1998 - 2008 % of GDP Total premiums for family, in employer-sponsored plans 18.0% Personal health care expenditures per capita $14,000Healthcare spend as a percentage of U.S. GDP 16.0% Medicare spending per enrollee $12,000 14.0% CAGR: 8.4% $10,000 12.0% CAGR: 6.8% $8,000 Total annual premium 10.0% 8.0% CAGR: 5.3% $6,000 6.0% $4,000 4.0% $2,000 2.0% 0.0% $- 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Rising from 13.5% to 16.3% of U.S. GDP, health care expenditures are reaching an unsustainable level
  • Core Systemic Issues ExistThe current U.S. healthcare system has major access and affordability gaps due toa fundamentally flawed foundation – rewarding volume and inefficiencies, withlimited consequences for variation or quality related issues Medical Device Providers Health Insurers Life Sciences Manufacturers Silo Oriented Push for New Lack of transparency Technologies Excess Capacity Administrative ComplexitiesFee for Service payments Transactional Service Models Waste & Inefficiency Low Consumer Trust/Engagement
  • Section 3Reform OverviewWhat is it and what does it mean
  • Confused? Overwhelmed? You’re Not Alone Lots of Questions » What’s required for each market constituent? » How will the industry structure change? » How will the basis of competition shift? » How will value be created? Welcome to » How will the roles and players across the Healthcare Reform value chain change? » Who are the winners and losers? » How will the political and legislative environment and activities influence further changes?» Patient Protection and Accountable Care Act represents more than 2,400 pages of legislation» More than 400 separate rules….most of which remain undefined with vague timetables» 183 new agencies and departments formed and funded
  • Goals & Key Elements of Reform Decrease Costs Increase Access Improve Quality» Delivery system reform » Coverage and benefit » Care delivery provisions» Investments in public requirements › Medical Home health, prevention and › Elimination of › ACO wellness restrictions › Bundled payment pilots» Payment constraint › Mandates › Incentives for quality provisions › Essential benefits » Evidence based › Hospital market basket › Dependent coverage guidelines reductions » Premium subsidies » Expanding use of IT › Hospital productivity » Expansion of Medicaid » Transparency provisions adjustments » Increased choice and » Quality provisions › DSH payment competition through › Readmission payment reductions exchanges reductions › Hospital-acquired condition penalties
  • “PPACA” Creates a New Starting Point A. Health Insurance Reform 1. Enroll 32M entrants into system 2. Eliminate “injustices” (e.g., preexisting conditions) 3. Reduced ability to pass on increases and cross subsidize public payers B. Establishes Direction and Accelerates Evolution of Payment Agenda 1. ACO (Shared Savings Model) 2. Bundling 3. Value-Based Reimbursement Ahead of the curve, Massachusetts’ emerging 4. Medical Home reform agenda includes: 5. Geographic Variation » Reduce ED utilization » Reduce high-end imaging utilization C. Potential Mitigators » Promote generic prescribing/substitution 1. Political response » Promote treatment in the lowest cost 2. State energy (or lack thereof) setting/facility appropriate for care 3. Rapid economic improvement 4. Patient revolt 5. Not enough budget for CMS to implement / administer “What got you here, won’t get you there!”
  • New Challenges for Leadership» Volatility vs. Stability» Limiting, skeptical capital market» Consumers represent a wildcard (compliance, market response, etc)» Expense not price is last step in budget» Two curve problem» Developing internal excitement regarding change» Implementing a new economic model to support implementation» Creating a new culture to sustain it
  • Section 4Developing an ApproachWhere do we go from here
  • A Classic “Two Curve” Problem is Underway Many organizations are facing a decision between a classic “two curve” planning scenario. Curve 1: Most are very comfortable continuing to follow a path along Curve #1;” optimizing the current environment and maintaining the strategic direction and tactics that have been successful in the past Curve 2: While many organizations have begun piloting efforts on the second curve, few have the vision or fortitude to trust a Curve #2 path right now; that is, proactively exploring growth alternatives today with associated upfront costs that may negatively impact Curve #1 performanceContinue generating incremental Recognizing the medium and long term implicationsmargins despite evolving negative of the changing market dynamics, “jump” to the national, regional and local emerging curve, positioning the organization for the dynamics anticipated challenges of the future. Making the jump requires: 1) a forward thinking leadership 2) a high degree of organizational disruption
  • How do we get there…..
  • Section 5Market PerspectivesViews from the field
  • Reform Changes Everything;BUT Competition Preempts Reform! Although health reform is in the spotlight, a significant amount of the jockeying for strategic position in U.S. healthcare – among payers, providers, governments – was happening before PPACA. While PPACA has served to accelerate certain competitive trends, such as the move toward value-based healthcare, it continues to be competition and not reform that drives many markets.
  • Paper vs. Reality“Policy Land”: Reform is on the horizon,Reform is the rage… what’s movement is happening in the market? 1 Reducing “waste” by addressing cost and utilization 1. differences…”avoidable care” 2 Demonstration projects 2. 3 Achieving scale & driving value 3. 4 Physicians organizing 4. 5 Targeted/Specialty Population Focus 5. 6 Payer-Provider Collaboration 6. 7 Delivering Innovative Market Solutions 7.