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Briefing:Health System Reform: Update
Paul Keckley, Ph.D., Executive Director
Deloitte Center for Health Solutions
Washington, DC
Nashville, TN
August 6, 2009

Center for Health Solutions Research
2009
Monday Health Reform Memo (weekly – ongoing)
ROI for Personalized Therapeutics (1/09)
Health Care and Public Policy: What Do Americans Really Want (1/09)
Reducing Costs While Improving Care in the U.S. Health System: The Health Reform Pyramid (1/09)
2009 Survey of U.S. Health Care Consumers (3/09)
Comparative Effectiveness (5/09)
Academic Medicine: Sustainability (6/09)
Episode Based Payments (Summer 2009)
The Long Term Care Market in Medicaid: Ticking Time Bomb (Summer 2009)
Wellness and Healthy Living: New Business Models and Opportunities (Summer 2009)
Retail Medicine: Update (Summer 2009)
Medical Tourism: Update (Summer 2009)
The Medical Home: Update (Summer 2009)
2008
Pay for Quality
Consumer-Directed Health Plans: Update
Medicaid Medical Management
The Medical Home
Medical Tourism
Price Transparency in Health Care
Retail Medicine
Preparing for ICD-10
Retail Pharmacy and Disease Management
Connected Care: Technology Enabled Care at Home
2008 Survey of Health Care Consumers
Best Practices in Greening in Health Care Organizations
1

Current context for health reform
The U.S. economy is weak—recession began 12/07
Unemployment at 9.4%: highest since 1939
Banking industry solvency: 19 major banks stress tested
TARP program underway: results unknown, $140 billion yet to deploy
Containing health costs—key element in economic recovery
Fastest growing expense in households, companies and government
Only industry with employment increase since 12/07 downturn
The new administration—“change…yes we can”
Health care, energy, education priorities
Access to health insurance—campaign 2008 focus, but costs now a major theme
2
Copyright © 2009 Deloitte Development LLC. All rights reserved.

Health costs increased from 5.9 to 16.2% of GDP from 1960 to 2007: Fastest growing expenditure in federal budget
2008-2018 Forecast:
US economy: +4.1% CAGR
Health costs: +6.2% CAGR
Government spending for health care (Medicare and Medicaid): +7.2%
Private sector spending for health care: +5.3%
25% of entire federal budget
Annual health care expenditures in the United States have gone from $27.5 billion in 1960 to $2.24 trillion in 2007 and are projected to reach $4.35 trillion by 2018. Source: Department of Health and Human Services, Center for Medicare and Medicaid Services, the National Health Expenditures Accounts (NHEA)
3

Since December 2007, 6 million overall jobs have been lost; however, health care jobs have increased 190,000
Source: Labor Department
4

Consumer inclined toward reform: “The system isn’t working very well…”
Only 1 in 5 consumers give the U.S. health care system an above-average report card grade; those grading the system “F” outnumber those giving it an “A” by 6 to 1.
Source: 2009 Survey of US Health Consumers
5

Consumers believe system is wasteful
52% of Americans feel that at least half of health costs are wasted.
Source: 2009 Survey of U.S. Health Consumers
6

Not a system…a federation of interests that’s fragmented, costly
Administrators/Watchdogs
Regulators
Media
Professional
Societies/
Special Interests
Insurers
Innovators
Academic
Medicine
Pharma
BioTech
Accrediting
Agencies
Employers
HCIT
Device
Service Providers
Disruptors
Hospitals
Outpatient
Facilities
Long Term
Care
Allied Health
Professionals
Disease
Management
CAM
Physicians
Consumers
7

White House puts priority on health reform above energy, education: Reduce costs, cover everyone
February 24, 2009 to Joint Session of Congress: Reform energy, education and health care. Pass bill in 2009.
May 11, 2009 to Major Trade organizations: Cut CAGR to 4.7%, reduce costs by $2 trillion (2008 – 2018)
June 3, 2009: Everything on the table—mandates, employer tax exclusion, employer mandate, public plan, et al. Bill this summer.
8

Funding–follow the money
January 23: President Obama signs SCHIP expansion legislation, increasing eligibility to 4,000,000 children and pregnant women; $32.3B funded through increase of 62 cent federal tax on each pack of cigarettes
February 17: President Obama signs $787B stimulus package (America’s Recovery and Reconstruction Act) that includes $145B for health care
February 26: President announces “down payment on health reform”—a $634B 10-year fund to pay for long-term health reforms; cuts to pharmaceutical companies and Medicare Advantage plans plus increased taxes for those earning more than $250,000
March 11: Congress approves $410B appropriation to operate government through September 2009, including modest increases in a few areas of health care—primary care, NIH, National Service Corps
April 29: Passage of FY10 budget; targeted investments in health reforms (FDA, bundled payments); 8% overall growth in federal spending for Medicaid and Medicare but effective rate increase of 0.1%; insurance reform
9

Presidential news conference on July 22, 2009:“health insurance reform”
1 Health reform is necessary to reduce escalating costs of the system that threaten economic recovery. The result of inaction is economic collapse: employers will drop employee benefits coverage or shift financial burdens to employees who cannot afford premiums. The “status quo” is not an option.
2 Reform of the system must be deficit neutral: added costs for covering “47 million lacking insurance” (there are actually 45.7 million) and changes to the delivery system must be offset by savings or new revenues. The White House believes a combination of two-thirds from savings and one-third from taxes on high income households is the appropriate funding mechanism.
3 The President supports a public plan option available to uninsured and under-insured individuals and small businesses. Repeating an oft-used phrase, the President supports the public plan option to “keep the plans honest” and provide competition to commercial plans. NOTE: A positive earnings report from “a major plan” released today was referenced as evidence plans benefit at the expense of patients by denying coverage or refusing to pay for needed care.
4 Agreement among legislators is a “work in progress”: there is agreement that individual mandates, a comparative effectiveness program, health insurance exchanges, fraud reduction, health information technology utilization and integrated delivery systems are key elements. Pressed about partisan issues and defections among moderate Democrats due to the costs of the plan, the President defaulted to the legislative process: messy, necessary, and soon to result in a reform bill. The forthcoming work in the Senate Finance Committee is a key part of the process.
5 Key industry stakeholders support the need for reform: in his remarks and responses to reporters’ questions, three references to AARP and two each to AMA, ANA and PhRMA were used to suggest the White House has industry support.
6 To deflect criticism of government intrusion in coverage decisions and payment calculations for providers, the White House supports the development of an independent board to make recommendations. Congress would have 30 days to prevent implementation based on a vote. It would make determinations about advisable diagnostic and therapeutics based on evidence and costs. It would also set payment rates for providers based on its assessment of comparative effectiveness and value. NOTE: Sen. Jay Rockefeller proposed MedPAC as the independent entity; OMB Director had previously proposed a new entity, IMAC (Independent Medicare Advisory Commission).
7 The President anticipates signing a bill in 2009 but did not state his determination of a bill by the August recess.
10

Key players: Congressional Committee leadership
Senate Finance Committee
Senate Health Education, Labor and Pensions
CHUCK GRASSLEY:
Senior Senator from Iowa
TED KENNEDY:
Senior Senator from Massachusetts
MAX BAUCUS:
Senior Senator from Montana
House Ways and Means Committee
House Energy and Commerce Committee
House Education and Labor
GEORGE MILLER:
Member of the U.S. House of Representatives from California's 7th district
CHARLES RANGEL:
Member of the U.S. House of Representatives from New York’s 15th district
HENRY WAXMAN:
Member of the U.S. House of Representatives from California's 30th district
11

Key players: Two offices of health reform
Kathleen Sebelius:
United States Secretary of Health and Human Services
Nancy-Ann DeParle:
Director of the White House Office on Health Reform
12

Some major proposals have emerged: more to come
13

The most delicate issues will be:
14

Key stakeholders engaged in cost containment
Reduce spending to 4.7% ($2 trillion reduction over 10 years)
Administrative simplification, coordination of care, utilization management key initial focus
(excerpt from publicly available document)
15

The reform bill will likely include four strategies to reduce cost to fund improved quality and increased access for uninsured
It will take 6 years implement major reforms
Savings can be more than $2 trillion if implementation is accelerated via payment reform, IT adoption
Net result:
reduce CAGR
to 4.5%
4
Consumerism
Focus: CDHPs, transparency, PHRs, incentives, value
Coordination of care
Focus: Primary Care 2.0 Model (the new “Medical Home”)
3
Comparative Effectiveness/Evidence – based Medicine
Focus: (1) Personalized medicine, (2) comparative effectiveness; episode based payments to acute organizations
2
Health Care Information Technology
Focus: (1) e-prescribing, (2) care coordination (3) administrative cost reduction
1
16

The impact of major reforms will vary by sector
Modest Moderate impact Significant impact
17

Paying for health reform: proposed sources of funding
18

Contact information
For more information, please contact:
Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutionspkeckley@deloitte.com202-220-2150
For more information on the Center's view of health care in the new administration, please visit: www.deloitte.com/us/healthreform
And visit our website to subscribe to our content:www.deloitte.com/CenterforHealthSolutions/subscribe

US Congressman
Marsha Blackburn
7th District of Tennessee

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Looking under the covers - Measuring Quality/Value
A Panel Discussion - August 6, 2009
John R Morrow
www.HospitalValueIndex.com

Agenda
John R. Morrow – The Ratings Guy
Justin Lansing – Credence Healthcare
Eddie Pearson – Healthstream
Miriam Paramore -- Emdeon

What is Value?Why Transparency?
Transparency is a form of openness, a medium of communication and a measure for accountability; opposite of privacy.
Banking - R. Levine, policy of transparency improved efficiency
Corporate – Sarbanes-Oxley Act – confidence in capital markets
Management – PCAOB –oversight, independence, disclosures
Media – FOIA provides access
Politics – ethics, law, policy, economics, media, social new media
Research – Peer review, double blinded clinical trial
Sports – World Anti Doping Agency

Transparency in Health Care
Before HCFA realized it was a purchaser of health care we relied on FOIA for:
Financial, and Operating Reports
Clinical experience
Outcomes
Mortality
Complications
Research

Transparency in Hospitals
After CMS realized spending, utilization outcomes and experience were all different:
Ratings outpaced CMS w/Web & social media
Industry shamed by IOM findings
Quality differentiation made markets
Info systems and industry standards drive new insights
Greater disclosures by CMS forces accountability
Value based purchasing to determine reimbursement
Better management embraces disclosure & accountability

What We Can Now See
Core Process Measures
Patient Safety Indicators
HCAHPS – Patient Experience
Financial reporting
Clinical reporting – RAMI, RACI,
Post discharge mortality & readmissions
Population utilization

What We Want to See and Do
Institutional – more of the same…faster.
Purchaser/Employer Sponsored – what’s under the shell, what’s it all mean
Consumer/Patient/Person –
How about the real price?
My personal records and data?
Everything that John and thepanel can show me…Why Not?

How?
Defining Value by provider engages the patient/provider relationship
For routine care, services are a commodity where quality is not always a factor,
For complicated cases, experience with better outcomes becomes a factor,
All require disclosure and transparency so the patient can apply their own value judgment and participate in their own decision making about utilization,
Value incorporates all known aspects of outcomes with a published fair price.

Value is what Value does
Outcomes
Mortality & Complication rates
Patient Safety Indicator rates
Readmission rates
Efficiency rates
Satisfaction & Experience Rates
Post-discharge functional status SF-36
Affordability

Value like Transparency
Creates efficiencies, removes barriers
Improves communication – EMR/PHR
Differentiates to the community Form990
Integrates the patient into the care process
Builds the foundation of the medical home
Shares the responsibility and accountability
Increases compliance; realigns priorities

Your Panel
Justin Lanning – Credence Healthcare
Eddie Pearson – HealthStream
Miriam Paramore – Emdeon
John Morrow – www.HospitalValueIndex.com

August 6, 2009
45
Transparency in Healthcare Miriam Paramore, SVP Strategy & Government Affairs

Emdeon: A Leader inToday’s National Health Information Network
155 million
Patients
350,000
1,200
5 billion
Providers
Payers
RCM & Payment
Distribution
Healthcare
Information
PBM Services
ePrescribing
Pharmacies
55,000
46
46
Emdeon – We make healthcare efficient.

efficient healthcare
47

Healthcare Reform Is Demanding Price Transparency (Senate HELP Bill)
48

Healthcare Reform Is Demanding Price Transparency (House Tri-Committee Bill)
49

What is Transparency Hard?
50
Price
Healthcare is not retail – there is no price at the point of service
What a hospital charges is not the “price”
What an insurance company pays is the “price”
But the consumer can’t buy at that “price”
Quality
Data is not digital
Lack of standards means even digital data is meaningless
There is no good clinical information exchange
Consumer-friendly communication of medical terms is difficult

HIMSS Price and Quality Reporting White Paper (coming very soon)
51
HIMSS Financial Systems Steering Committee
6 Public-Private Collaborations
7 State & Local Initiatives
5 Value Driven Healthcare Initiatives
3 Business Coalitions
Total = 21 separate initiatives

efficient healthcareFunding Healthcare Reform
52

Where Does the Money Go?
85%
15%
Admin Costs =
$360 B
Cost of Care = $2 T
Total U.S. Healthcare Spend = $2.4 Trillion
53

“Gang of 6” Letter to President Obama
54
54

“Gang of 6” Recommendations
55
Utilization of care
Cost of doing business
Administrative simplification: Streamlining the claims processing system will allow clinicians and other personnel to spend less time and fewer resources on paperwork, lowering costs for everyone.
Chronic care
55

U.S. Healthcare Efficiency Index™Launched December 2008
56
56

U.S. Healthcare Efficiency Index™Advisory Council (partial list)
57
57

Funding Healthcare Reform – The Duh Factor
June 13, 2009 – President Obama announces $313 billion in cuts to Medicare/Medicaid providers
Peter Orzag: Cuts will save Medicare patients money “as much as $43 billion in reduced premiums for prescription drug coverage over the next 10 years.”
$43 billion over 10 years through Medicare/Medicaid cuts
vs.
$150 billion over 5 years through HIT
58

what would u dow/ $150 B?ushealthcareindex.com

Discussion

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Panel Discussion: PHR, EHR or EMR – A real solution or just Alphabet soup?
Moderator: Daniel Fell, Partner NDP
Panelist:
Steve Starkey, COO/CIO, HMS
Mikell van derLaan, Manager of Architecture, CHS
PHR EHR EMR

Discussion

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