The Top Trends That Matter in 2014

March 19, 2014
Top Trends That Matter in 2014
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1981 1986 1991 1996 2001 2006 2011
IPdaysinmillions
Inpatient Days
March 19, 2014
Top Trends That Matter in 2014
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2014 .. The year of
2
According to a baseline study of early
Accountable Care Organizations
(ACOs), ACO patients had 5.8% lower
total costs of care than non-ACO
patients ($7,694 vs. $8,164).
Source: The Commonwealth Fund, January 2014
Medicare ACOs are groups of doctors,
hospitals, and other health care providers,
who come together voluntarily to give
coordinated high quality care to the
Medicare patients they serve.
90 87
69
38
0
10
20
30
40
50
60
70
80
90
100
MidWest East South East West
Geographic Location of Medicare
ACOs
Source: Medicare Fact Sheet, 2013
ACO Accountable Care Organization
500 as of year end 2013, projected to double in a year
Medicare added 123 new ACOs (MSSPs) in January 2014
121
90
66
44 30
0
20
40
60
80
100
120
140
Composition of Medicare ACOs
Source: Medicare Fact Sheet, 2013

2014 … The year of
3
Analytics
Analytics is the discovery and communication of
meaningful patterns in data per Wikipedia.

2014… The year of
4
Acute Acute/Post Post Acute
Payment Retrospective Retrospective Retrospective Prospective
Participants 3 44 14 37
Organizations 32 192 165 75
Episode All acute patients, all DRGs
Selected DRGs, hospital
plus post-acute period
Selected DRGs, post-acute
period only
Selected DRGs, hospital
plus readmissions
Services included
in the bundle
All Part A services paid as
part of the MS-DRG
payment
All non-hospice Part A and
B services during the initial
inpatient stay, post-acute
period and readmissions
All non-hospice Part A and B
services during the post-
acute period and readmits.
All Part non-hospice A and
B services (including the
hospital and physician)
during initial inpatient stay
and readmissions
48 Bundled Payment Groupings
Major joint upper extremity
483 Major joint and limb reattachment procedure of upper extremity with
complication or comorbidity or major complication or comorbidity
Bundled Payment

2014… The year of
5
Bill posted on Internet $55,000 for
appendix operation
Consumer Transparency
HFMA’s common-sense best
practices bring consistency,
clarity, and transparency to
patient financial communications.

2014… The year of
6
We have definitely been hearing from members that they are seeing an
increase in bad debt and even in charity care for people with high-
deductible health plans," Caroline Steinberg, vice president for trends
analysis at the American Hospital Association, told KHN. "A lot of these
folks tend to not understand the structure of their benefits until they get to
the hospital, and they're not covered as thoroughly as they thought.“
Source: Kaiser Family
High Deductible Plan
The rate of workers in high-
deductible plans has more than
doubled since 2009 to 19 percent,
KHN says, citing figures from the
Kaiser Family Foundation.

2014… The year of
7
17.2%
10%
11%
12%
13%
14%
15%
16%
17%
18%
2000 2002 2004 2006 2008 2010 2012
Health Expenditure
as % of GDP
3.8% 3.8% 3.6% 3.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2009 2010 2011 2012
Health Care Spending
Growth
Expenditure
The number of people employed in healthcare
dropped by 6,000 in December, the first time
total healthcare employment declined since
July 2003, CNN Money.

2014… The year of
Frequent
Conditions AHRQ
8
Frequencies

2014… The year of
Congress has 3 months to consider 2 very
similar bipartisan bills in the House and
Senate that would repeal Medicare's
sustainable growth rate (SGR) formula for
physician pay. Both measures would shift
compensation from fee-for-service to pay-
for-performance and consolidate 3
Medicare incentive programs, including
meaningful use of electronic health
records, into a single program.
9
Delayed
20% decrease in Jan
SGR – Sustainable Growth Rate

2014… The year of
10
FY 2014 Final Inpatient PPS Rule
Creates HAC Reduction Program
with two Domain measurements that
overlaps in its entirety with existing
HAC program and VBP.
HAC – Hospital Acquired Conditions

2014… The year of
11
Outlook grim for docs' ICD-10 readiness
October 1, 2014
ICD-10
Physician practices are still behind schedule in terms
of preparation for ICD-10, yet generally are optimistic
about readiness for its implementation, according to
a recent survey conducted by medical claims
clearinghouse Navicure.
Seventy-four percent of survey respondents said
they still haven't started implementing their ICD-10s.
What can be taken as a bit of good news is that 76
percent of respondents to a series of KPMG surveys
indicated they have completed an impact
assessment, widely considered the first key step en
route to ICD-10.

2014… The year of
12
Two-thirds of primary care and one-
third of specialists currently depend on
an exclusive relationship with a
hospital for some or all of their
incomes. Many of these are employed.
But private health insurers and large
medical groups are options for
physicians seeking cover, and the
terms of their deals dis-intermediate
traditional hospital referral
relationships.
Source: Deloitte
311 362 423
536 592
263
304
363
439
482
67
90
99
122
133
-
200
400
600
800
1,000
1,200
1,400
2009 2010 2011 2012 2013
Physician Growth in
Healthcare System
Specialist PCP Extenders
Joint accountability with physicians

2014… The year of
13
Potential for revenue losses to
competitors, penalties from regulators,
new contract methodologies is
increasing. See shift below in FFS
(Fee for service).
82%
12%
5% 1%
2010
59%
5%
12%
23%
1%
2012
24%
5%
15%
55%
1%
2014 Budget
FFS
Partial Risk
Full Risk
Population Mgt
Bundled Payment
Risk

2014… The year of
14
Pharmacy Workflow Project
 Business Impact:
– Reduced the number of trips to the hospital pharmacy due to inventory
shortage by 8 trips per month
– Reduced the surcharges paid to the trucking company
– Reduced the pharmacy headcount by two full time equivalents (FTE)
Lean

2014… The year of
15
A measure in the new Efficiency Domain
A claims-based measure that include risk-
adjusted and price-standardized
payments for all Part A and Part B
services provided from 3 days prior to a
hospital admission (index admission)
through 30 days after the hospital
discharge
Measure under VBP starting 2015
M & A Merger and Acquisitions
Deals Hospitals
2010 72 125
2011 90 156
2012 100 247
MSPB – Medicare Spend Per Beneficiary

2014… The year of
Operating Income- on operations
Median in 2012 3.15%, California Median 3%
16
-3%
-2%
-1%
0%
1%
2%
3%
2013 2014 2015 2016 2017 2018
Operating Income Projections
Projection with no interventions.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2009 2010 2011 2012 2013
Operating Income
(In thousands)
Net income and operating income

2014… The year of
17
JP Morgan – Revenue growth: in the expansion of outpatient
care and in clinical integration leading to value-based care.
0%
1%
2%
3%
4%
5%
6%
7%
440
460
480
500
520
540
560
580
600
2009 2010 2011 2012 2013
Outpatient Visits
(In thousands)
50% 50% 49% 47% 45%
28% 29% 29% 30% 31%
19% 19% 19% 20% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013
Revenue Diversification
Hospital Outpatient Physician Other
Outpatient- Growth Area Up 2.9% from 2011

2014… The year of
18
Outpatient
Home
Physician
Hospice Cemetery
Skilled
Nursing
FacilityInpatient
Home Health
Care
Population-Centric Management
Population Health

2014… The year of
19
The Physician Quality Reporting System
(PQRS) has been using incentive payments,
and will begin to use payment adjustments in
2015, to encourage eligible health care
professionals (EPs) to report on specific quality
measures.
EPs who do not participate in 2013 and receive
a payment adjustment will be paid 1.5% less
than the than the Medicare PFS amount for
services provided in 2015. Increases to 2% in
2016.
2013 P2014 F2014
Measures 258 296 284
Measures Removed N/A 46 45
PQRS

2014… The year of
20
2013
1%
2014
2%
2015
3%
Readmission
• 2013- 1% $280M for
2,213 hospitals
- Average fine .42%
• 2014- 2% $227M for 2,225
hospitals
- Average fine .38%
• Overall readmit rate
for Medicare 18.4%(down from 19%)
Adds hip/knee and COPD
to program In FY 15
RAC Audit
Reference pricing
Retail
Readmit rate 2015

2014… The year of
Represent 14% of expenses in California
hospitals- second largest category of expenses.
What are best practices?
21
2011 Supply Per Adjusted Discharge
Small Medium Large
Major
Teaching All
$ 961 $ 1,176 $ 1,434 $ 2,076 $ 1,354
CMI adjusted
Source: HFMA
Supply Chain

2014… The year of
22
Two midnight rule
Starting Oct 2013, CMS introduced the
two midnight rule. The final rule for the
2014 Inpatient Prospective Payment
System stated an appropriate inpatient
admission is when the patient stays in
the hospital for at least two midnights.

2014… The year of
23
Inpatient grew at -1.5% over 2011
And Outpatient grew 2.9%. Inpatient
Surgeries declined -2.2%.
100
120
140
160
180
200
220
240
260
280
1981 1986 1991 1996 2001 2006 2011
IPdaysinmillions
US Inpatient Days
US Inpatient Days
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
210
215
220
225
230
235
240
2009 2010 2011 2012 2013
DischargesThousands
Mid West System Discharges

2014… The year of
Adding 2 new outcome measures
for 2015: PSI, CLABSI
Adding new efficiency: Medicare
Spending per Beneficiary
24
2013
1%`
2014
1.25%
2015
1.5%
70%
45%
20%
10% 10%
30%
30%
30%
25% 25%
25%
30%
40% 40%
20%
25% 25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Clinical Process Patient Experience
Outcome Measures Efficiency Measures
Metric Weighting
Value Based Purchasing

2014… The year of
W
25
Workflow
2012 study by former
Centers for Medicare and
Medicaid Services (CMS)
administrator Donald M.
Berwick and RAND
Corporation analyst Andrew
D. Hackbarth estimated
waste consumed $476
billion to $992 billion, or 18
percent to 37 percent of
healthcare spending.
Waste

2014… The year of
Extra Yellow Zebra
Year of the Horse
26

Now what?
Learning culture
Focus and measurement
Get ready
Remember the value equation
Value= Quality / Cost
27

Questions
28
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The Top Trends That Matter in 2014

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The Top Trends That Matter in 2014

Editor's Notes