9. Medicare’s Goals CMS is pursuing a vision to improve the quality of care by expanding the health information available through direct incentives to reward the delivery of superior care.
10. Performance On Medicare Quality Indicators: 2000-2001 Source: S.F. Jencks, E.D. Huff, and T. Cuerdon, “Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001, “ Journal of the American Medical Association, 289(3):305-12, Jan. 15, 2003. All Medicare beneficiaries have health coverage, yet the quality of care they receive differs significantly from state to state. Note: State ranking based on 22 Medicare performance measures First Third Fourth Second Quartile Rank DC
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17. Three Health System Imperatives Broad Physician Foundation Challenge For hospitals, the biggest threat of lockout comes from physicians, not insurers; physicians in evolving markets are increasingly concentrating their inpatient business with fewer hospitals. With capitation, physicians’ single greatest concern is to secure hospital cooperation in cost reduction efforts. Even without capitation pay form performance demands less hospital relationships. Implication No hospital task is more urgent than replacing traditional ‘feel good’ physician bonding with true economic partnerships. Farsighted hospitals will secure physician loyalty by investing in aggressive efforts to jointly re-engineer care and to align hospital and physician financial incentives, build high performance panels and gain from cost reduction efforts through direct contracting with employers. New Retail Franchise Challenge With the return of broad physician and hospital panels, provider choice will increasingly devolve from insurers back to consumers. As a result, inclusion in HMO panels will become secondary to providers’ ability to meet consumer demand for superior quality, service and access Implication The best health systems will invest in the creation of a retail franchise. Key priority is renewed emphasis on consumer marketing - appealing directly to enrollees through concerted efforts at consumer enrollment, consumer retention and elevation of the provider as a brand. Burden of Breaking In Challenge Particularly in early managed care markets, providers faced a very real threat of exclusion from key managed care contracts. While the danger of contract lockout is lessening over time, it will never disappear altogether, even broad-panel plans are unlikely to include every hospital and physician. Smaller networks within networks are working in several markets. Implication Concerted effort to ensure inclusion in major contracts is a major priority for providers to avoid losing access to lives and revenues as managed care penetration increases. However, in a world of broadening panels and panels within panels, effective contracting alone is no guarantee of health system success.
43. Develop Tiered Networks Compare Risk Adjusted Cost PHDC Population Profiling System Provider Ranking - Total Dollars Redirect Patients Include Provider in Select Network
46. Visualizing An Annual >>2.5% Gain In Cost Efficiency Source: Mercer US Health Care, Dr. Arnold Milstein, 2006. 2.5%/year 2.5%/year 50 th %ile 50 th %ile MD Quality Index (outcomes of % adherence to Q rules) Lower Higher Lower Longit. Efficiency/ Higher Total Cost Higher Longit. Efficiency/ Lower Total Cost Low Longit. Efficiency Low Quality (Worst) High Longit. Efficiency High Quality (Best) High Longit. Efficiency Low Quality Total Cost of Care Index for Seattle MDs (total cost per case mix-adjusted treatment episode) Low Longit. Efficiency High Quality
47. New Insights for Physicians and Hospitals Once employers and managed care understand that they can differentiate providers on quality, product, technology and price the market, as we once knew it, shifts and providers will need to look at risk differently
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49. CAP Protocol Compliance Source: Intermountain Healthcare, Dr. Brent James, 2006. Proportion Compliant Baseline Implementation Month Relative to CPM Implementation Implementation Group – Loose Abx Compliance
50. CAP: Cost Vs. Reimbursement Source: Intermountain Healthcare, Dr. Brent James, 2006. Actual vs. Expected Reimbursement ($) Expected Cost projected from risk-adjusted history, controls Actual Cost as complication rate fell Actual Reimbursement Month Relative to Protocol Introduction
51. Impact On Net Income Source: Intermountain Healthcare, Dr. Brent James, 2006. (15%) (0%) (40%) (45%) Decrease # of Cases Per Diem Decrease LOS (# nursing hours) Decrease other units per case Decrease # Units per Case Decrease Cost per Unit Shared Risk Per Case Discounted FFS Improvement to Cost Structure
52. Impact On Net Income Source: Intermountain Healthcare, Dr. Brent James, 2006. (15%) (0%) (40%) (45%) Decrease # of Cases Per Diem Payment Mechanism Decrease LOS (# nursing hours) Decrease other units per case Decrease # Units per Case Decrease Cost per Unit Shared Risk Per Case Discounted FFS Improvement to Cost Structure
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54. Identifying Profitable Service Lines Source: Health Leaders, March 2003. Tot Pay Avg Tot Cost Avg Tot Pay Avg Tot Cost Avg Tot Pay Avg Tot Cost Avg None Single CoC Multiple CoCs Cardio/Vascular/Thoracic Surgery Orthopedics General Surgery
55. Predicting Future Cost PHDC Population Profiling System Employer Ranking Risk - Adjusted Total Dollars Retrospective and Prospective ERG ™ s