Healthcare: Road to Value in Healthcare Hannaford Bros. Co . Peter Hayes MBGH Annual Conference  May 2007
<ul><li>Largest northeast supermarket chain </li></ul><ul><li>5 New England States </li></ul><ul><li>24,000+ associates </...
Healthcare Landscape
Healthcare Landscape Overview <ul><li>National trends still 8-10% with the Northeast Region having the highest costs and t...
Healthcare Landscape Overview <ul><li>Significant regional and global costs along with huge quality variations </li></ul><...
Health Care Spending as % of GDP, 2003* Disability adjusted, life expectancy rank United States #1 in cost #29 out of 30 i...
Source: 2003 Mercer National Survey of Employer Sponsored Health Plans and other sources Hannaford’s Population  in the hi...
Plans Cost by State Annual Medical/RX Costs Per Associate  2006 Estimate Hannaford Average  $5600
Health Management 50% Opportunity <ul><li>Lifestyle Behavior Changes </li></ul><ul><li>Engaged Consumers/Patients  </li></...
National Group on Health/Watson Wyatt  Critical Strategic Levers Medical Trend:
Source:  Goetzel et al. (1998), Journal of Occupational and Environmental Medicine Mercer Human Resource Consulting High R...
 
Health Promotion
PLATINUM 2006 NBGH Award Gold Silver Platinum
Hannaford’s Disease Profile  Executive Summary <ul><li>Hannaford has a 6% higher disease prevalence than benchmarks </li><...
Hannaford Risk Scorecard  Hannaford Health Dividend $6,200,000 Every .5 reduction in total risk score is $3.03 million ann...
Risk Factors Drive Costs 5+ Risks  = 582  Hannaford Members 3-4 Risks  = 5598 Hannaford Members  0-2 Risks  = 10,876 Hanna...
Health Risk Appraisal Behavior Change 2005-2006
Member Engagement Participants Enrolled <ul><li>Introduce $20 Healthy Behavior Credit </li></ul><ul><li>Required to take H...
Comparison  Hannaford, D1, Healthy 2010 Targets and Market
Quality of Care
$12,000 $6,500 Appropriate Diabetic Care Savings Opportunity 60% of Cost Care Management Opportunities
EBM Compliance Concerns –  Population Based Metrics
Financial Updates Annual Associate Medical/RX costs
National Trend Projected (assumes 8% trend) Forecast Healthcare Savings *This was accomplished even with acquisition of Vi...
<ul><li>Need to create a healthcare market with the following characteristics: </li></ul><ul><ul><li>Informed and engaged ...
Percent Variance in Inpatient & Outpatient Hospital Allowed Payments Hospitals best medication safety practices reduce inp...
 
<ul><li>Care Focused Purchasing </li></ul><ul><li>Bridges to Excellence </li></ul><ul><li>Leapfrog </li></ul><ul><li>Tiere...
CFP Overview Care Focused Purchasing Value Based Purchasing <ul><li>National standardized reporting for quality and price ...
Initial CFP Sponsoring Employers
The POD Goal is to… <ul><li>Identify and select physicians in specialties responsible for significant portions of health c...
Specialties Currently Included in POD  <ul><li>Cardiology </li></ul><ul><li>Cardiothoracic surgery </li></ul><ul><li>Gastr...
POD Selection Process  <ul><li>Four-Step Process </li></ul><ul><ul><li>Case Volume  </li></ul></ul><ul><ul><li>Clinical Pe...
Strategic Levers
Strategic Levers Program Components <ul><li>On-site nurses every location </li></ul><ul><ul><li>Dedicated Aetna Health Pro...
2008 Initiative Review/Discussion Value Based Purchasing Strategic Levers
Healthy Hannaford Leverage Points Compensation & Wellness Increasing scope Compensation Wellness Benefits HBC Providers Co...
Projected Spend and Opportunities  ( 2004 - 2013) 100+ stores 1.2 billion capital investment
Lessons Learned <ul><li>Build a business case and translate it into “CEO” speak </li></ul><ul><li>Develop a comprehensive ...
Benefits Roundtable Survey  Benefit Benchmarking Survey of 25 Fortune 100 Companies (Union Pacific, AT&T, Chevron) of 20,0...
 
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Healthcare: Road to Value in Healthcare

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  • The group has 28 committed employers.
  • Note: Aetna is responding to employers who are asking for innovative solutions to help mitigate rising health care cost trends.
  • Case Volume. Aetna looked at the specialists and groups currently participating in Aetna’s network and identified those who have managed at least 20 Aetna cases over the last two years. A minimum volume of cases is necessary in order to meaningfully evaluate performance. B) Clinical Performance. Physicians who met the case volume threshold were then evaluated against established measures of clinical performance. We applied general measures of clinical performance as well as specialty-specific measures, where possible. The specific clinical performance measures include: A case-mix adjusted rate of unanticipated hospital readmissions within 30 days of discharge. A case-mix adjusted rate of unexpected adverse health events experienced by a specialist’s hospitalized patients For cardiologists: 1) the rate of use of cholesterol lowering medication in patients with cardiac disease, 2) the rate of use of beta blockers in patients with a history of an acute cardiac event, and 3) the rate of ACE Inhibitors use (or ARB) in patients with Congestive Heart Failure. For obstetricians/gynecologists: 1) the rate of cervical cancer screening, 2) the rate of breast cancer screening, and 3) the rate of HIV testing in pregnant women. The above measures are then compared to established thresholds determined by performance of the peer group. Specialists whose measured outcomes fall below the 5th percentile of the peer group are excluded from further consideration. C) Efficiency. Aetna analyzed specialists’ efficiency in treating members by applying Episode Treatment Groups (ETG) analysis using Episodes of Care (EOC) software, an illness classification system licensed from Symmetry Data Systems ( http://www.symmetry-health.com/ETGTut_Desc1.htm .) This risk-adjusted analytic tool looks at all of the services rendered in the treatment of an illness or condition, including ambulatory, inpatient, diagnostic imaging, laboratory, pharmacy and all other medical care incurred. For each specialist or specialty group, the adjusted cost per episode of care is derived. This value is then compared to the peer group of specialists by dividing the adjusted cost per episode by the regional average, adjusted for case-mix. All comparisons are made to the peer group of specialists in the region being analyzed. D) Ensure Network Adequacy. In order to account for local nuances in the health care system, such as the organization of specialty practices or the access needs of the projected membership, adjustments were made in each local market to allow for availability of specialty care. These considerations did not override the exclusion of a specialist on the basis of clinical performance. Aetna will periodically evaluate the success of Aexcel based on clinical performance and efficiency and will make adjustments as necessary to the network selection process.
  • Case Volume. Aetna looked at the specialists and groups currently participating in Aetna’s network and identified those who have managed at least 20 Aetna cases over the last two years. A minimum volume of cases is necessary in order to meaningfully evaluate performance. B) Clinical Performance. Physicians who met the case volume threshold were then evaluated against established measures of clinical performance. We applied general measures of clinical performance as well as specialty-specific measures, where possible. The specific clinical performance measures include: A case-mix adjusted rate of unanticipated hospital readmissions within 30 days of discharge. A case-mix adjusted rate of unexpected adverse health events experienced by a specialist’s hospitalized patients For cardiologists: 1) the rate of use of cholesterol lowering medication in patients with cardiac disease, 2) the rate of use of beta blockers in patients with a history of an acute cardiac event, and 3) the rate of ACE Inhibitors use (or ARB) in patients with Congestive Heart Failure. For obstetricians/gynecologists: 1) the rate of cervical cancer screening, 2) the rate of breast cancer screening, and 3) the rate of HIV testing in pregnant women. The above measures are then compared to established thresholds determined by performance of the peer group. Specialists whose measured outcomes fall below the 5th percentile of the peer group are excluded from further consideration. C) Efficiency. Aetna analyzed specialists’ efficiency in treating members by applying Episode Treatment Groups (ETG) analysis using Episodes of Care (EOC) software, an illness classification system licensed from Symmetry Data Systems ( http://www.symmetry-health.com/ETGTut_Desc1.htm .) This risk-adjusted analytic tool looks at all of the services rendered in the treatment of an illness or condition, including ambulatory, inpatient, diagnostic imaging, laboratory, pharmacy and all other medical care incurred. For each specialist or specialty group, the adjusted cost per episode of care is derived. This value is then compared to the peer group of specialists by dividing the adjusted cost per episode by the regional average, adjusted for case-mix. All comparisons are made to the peer group of specialists in the region being analyzed. D) Ensure Network Adequacy. In order to account for local nuances in the health care system, such as the organization of specialty practices or the access needs of the projected membership, adjustments were made in each local market to allow for availability of specialty care. These considerations did not override the exclusion of a specialist on the basis of clinical performance. Aetna will periodically evaluate the success of Aexcel based on clinical performance and efficiency and will make adjustments as necessary to the network selection process.
  • Healthcare: Road to Value in Healthcare

    1. 1. Healthcare: Road to Value in Healthcare Hannaford Bros. Co . Peter Hayes MBGH Annual Conference May 2007
    2. 2. <ul><li>Largest northeast supermarket chain </li></ul><ul><li>5 New England States </li></ul><ul><li>24,000+ associates </li></ul><ul><li>Hannaford </li></ul><ul><li>Largest northeast supermarket chain </li></ul><ul><li>5 New England States </li></ul><ul><li>26,000+ associates </li></ul><ul><li>Delhaize </li></ul><ul><li>Eastern seaboard from Maine to Florida 100,000+ associates </li></ul>U.S. Operations
    3. 3. Healthcare Landscape
    4. 4. Healthcare Landscape Overview <ul><li>National trends still 8-10% with the Northeast Region having the highest costs and trends (2 times the southeast). </li></ul><ul><li>Pressure to eliminate the “transparency” of provider quality and cost from the Bush Administration, Medicare, Coalitions and Consumer Driven Health Plans. </li></ul><ul><li>Accelerating legislative pressure by states to solve the “healthcare crisis”. Massachusetts and Vermont have passed legislation mandating coverage that becomes effective in mid 2007 which will impact our costs and adds tremendous administrative complexity. New York, New Hampshire and Maine have pending legislation. </li></ul><ul><li>Rapidly expanding Medicare/Medicaid programs (i.e., Maine at 25% Medicare) resulting in significant cost shifts. Public pay programs are approaching 50% of the total reimbursement of providers which is resulting in significant cost shifting to our plans (i.e., as much as $1000 per year). </li></ul>
    5. 5. Healthcare Landscape Overview <ul><li>Significant regional and global costs along with huge quality variations </li></ul><ul><li>Increasing obesity levels are driving over 40% of the medical trend </li></ul><ul><li>“ Right Care” is still being delivered less than 50% of the time </li></ul><ul><li>50% of the US healthcare spend is estimated to be unnecessary (waste, errors, poor quality, administrative inefficiencies, etc.) </li></ul>
    6. 6. Health Care Spending as % of GDP, 2003* Disability adjusted, life expectancy rank United States #1 in cost #29 out of 30 in quality
    7. 7. Source: 2003 Mercer National Survey of Employer Sponsored Health Plans and other sources Hannaford’s Population in the higher cost locations
    8. 8. Plans Cost by State Annual Medical/RX Costs Per Associate 2006 Estimate Hannaford Average $5600
    9. 9. Health Management 50% Opportunity <ul><li>Lifestyle Behavior Changes </li></ul><ul><li>Engaged Consumers/Patients </li></ul><ul><li>High Quality Efficient Care </li></ul>Plan Review
    10. 10. National Group on Health/Watson Wyatt Critical Strategic Levers Medical Trend:
    11. 11. Source: Goetzel et al. (1998), Journal of Occupational and Environmental Medicine Mercer Human Resource Consulting High Risk Employees Cost More
    12. 13. Health Promotion
    13. 14. PLATINUM 2006 NBGH Award Gold Silver Platinum
    14. 15. Hannaford’s Disease Profile Executive Summary <ul><li>Hannaford has a 6% higher disease prevalence than benchmarks </li></ul><ul><li>Hannaford has managed that risk significantly better than benchmark (i.e., 24% below) resulting in an annual savings of $6,200,000 </li></ul><ul><li>5 disease states - diabetes, hypertension, high cholesterol, back and coronary artery disease account for 34% of total spend </li></ul><ul><li>Hannaford’s delivery of evidence based medicine “right care” for our most costly disease states (diabetes, CAD, CHF) is significantly below benchmarks and national standards of care. This represents a significant opportunity to improve outcomes and reduce costs. </li></ul>
    15. 16. Hannaford Risk Scorecard Hannaford Health Dividend $6,200,000 Every .5 reduction in total risk score is $3.03 million annually.
    16. 17. Risk Factors Drive Costs 5+ Risks = 582 Hannaford Members 3-4 Risks = 5598 Hannaford Members 0-2 Risks = 10,876 Hannaford Members Hannaford Opportunity Move all of 5+ to 4 risks = Move everyone to 2 or less risks = $7,000,000 (24%) $1,700,000 (6%)
    17. 18. Health Risk Appraisal Behavior Change 2005-2006
    18. 19. Member Engagement Participants Enrolled <ul><li>Introduce $20 Healthy Behavior Credit </li></ul><ul><li>Required to take HRA </li></ul><ul><li>Required to take HRA and participate in disease management </li></ul>1/1/05 1/1/06 TIMELINE Potential Dividend 1100 members x $1000/yr. $1,000,000++ “ Best in Class” benchmark
    19. 20. Comparison Hannaford, D1, Healthy 2010 Targets and Market
    20. 21. Quality of Care
    21. 22. $12,000 $6,500 Appropriate Diabetic Care Savings Opportunity 60% of Cost Care Management Opportunities
    22. 23. EBM Compliance Concerns – Population Based Metrics
    23. 24. Financial Updates Annual Associate Medical/RX costs
    24. 25. National Trend Projected (assumes 8% trend) Forecast Healthcare Savings *This was accomplished even with acquisition of Victory’s 20% higher cost structure and 2005 aberrant catastrophic claim year. Healthcare dividend to date $82,000,000 Projected additional dividend $109,000,000 Source: Medical Benefits - volume 24 - 1/15/07
    25. 26. <ul><li>Need to create a healthcare market with the following characteristics: </li></ul><ul><ul><li>Informed and engaged consumers </li></ul></ul><ul><ul><li>Market Transparency </li></ul></ul><ul><ul><ul><li>Treatment Options </li></ul></ul></ul><ul><ul><ul><li>Outcome and Quality Metrics </li></ul></ul></ul><ul><ul><ul><li>Cost </li></ul></ul></ul><ul><ul><li>Aligned Incentives </li></ul></ul><ul><ul><li>Leverage National and Community Partnerships (medical, education, coalitions, public policy) </li></ul></ul>Start of a Solution
    26. 27. Percent Variance in Inpatient & Outpatient Hospital Allowed Payments Hospitals best medication safety practices reduce inpatient mortality 40% (Leapfrog, IOM) Maine Opportunity = +$300,00 (5%) Total Hannaford Opportunity $2,000,000
    27. 29. <ul><li>Care Focused Purchasing </li></ul><ul><li>Bridges to Excellence </li></ul><ul><li>Leapfrog </li></ul><ul><li>Tiered Quality/Efficiency Networks (Aetna, Cigna, UHC, Pacific Care, Hummana). Coming in 2007 - Primary Care & Specialists - Providers of Distinction. </li></ul>Outcomes: reduced costs by 20% improved quality by 20% * Pacific Care Potential Solution Sets
    28. 30. CFP Overview Care Focused Purchasing Value Based Purchasing <ul><li>National standardized reporting for quality and price transparency </li></ul><ul><li>29 million live database </li></ul><ul><li>1st public data release (9/2007) </li></ul>
    29. 31. Initial CFP Sponsoring Employers
    30. 32. The POD Goal is to… <ul><li>Identify and select physicians in specialties responsible for significant portions of health care spending who deliver cost-effective care. POD selection is based on a balance of measures of clinical performance and efficiency. </li></ul>
    31. 33. Specialties Currently Included in POD <ul><li>Cardiology </li></ul><ul><li>Cardiothoracic surgery </li></ul><ul><li>Gastroenterology </li></ul><ul><li>General surgery </li></ul><ul><li>Neurology </li></ul><ul><li>Neurosurgery </li></ul><ul><li>Obstetrics & gynecology </li></ul><ul><li>Orthopedic surgery </li></ul><ul><li>Otolaryngology </li></ul><ul><li>Plastic surgery </li></ul><ul><li>Urology </li></ul><ul><li>Vascular surgery </li></ul>
    32. 34. POD Selection Process <ul><li>Four-Step Process </li></ul><ul><ul><li>Case Volume </li></ul></ul><ul><ul><li>Clinical Performance </li></ul></ul><ul><ul><li>Clinical Efficiency </li></ul></ul>
    33. 35. Strategic Levers
    34. 36. Strategic Levers Program Components <ul><li>On-site nurses every location </li></ul><ul><ul><li>Dedicated Aetna Health Promotion Nurse/Resource </li></ul></ul><ul><li>$20/week Healthy Behavior Credit </li></ul><ul><ul><li>Required HRA </li></ul></ul><ul><ul><li>Tobacco free </li></ul></ul><ul><ul><li>Required disease management/health promotion </li></ul></ul><ul><li>Benefit Tiering for use “Providers of Distinction” </li></ul><ul><ul><li>Primary care </li></ul></ul><ul><ul><li>12 specialists </li></ul></ul><ul><li>Required Centers of Excellence </li></ul><ul><ul><li>Transplants </li></ul></ul><ul><ul><li>Complex cancers </li></ul></ul><ul><li>Engaging Consumers </li></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Incentives </li></ul></ul><ul><ul><li>Transparency </li></ul></ul><ul><ul><li>CDHP </li></ul></ul><ul><ul><li>Advocacy </li></ul></ul><ul><li>Leverage Informatics </li></ul><ul><ul><li>Data warehousing </li></ul></ul><ul><ul><li>Data Analytics (mining) </li></ul></ul><ul><li>Leverage Provider Reimbursement System </li></ul><ul><ul><li>Pay for health not units/service </li></ul></ul><ul><li>Leverage Community </li></ul><ul><ul><li>Employers </li></ul></ul><ul><ul><li>Physicians </li></ul></ul><ul><ul><li>Delivery systems </li></ul></ul><ul><ul><li>Guiding Stars </li></ul></ul><ul><ul><li>Maine Health / Hannaford Healthy Living Club </li></ul></ul>
    35. 37. 2008 Initiative Review/Discussion Value Based Purchasing Strategic Levers
    36. 38. Healthy Hannaford Leverage Points Compensation & Wellness Increasing scope Compensation Wellness Benefits HBC Providers Community Associate Customer $ $ $ $ Competitive Advantage Performance Management - bonus Nurses - education - coaching Benefit design - incentives Merchandising - pharmacist - meal planning, Guiding Stars, etc... Tiering - pay for performance - preferred partner Business coalitions (CFP), schools, charitable contributions, federal and state reform, healthy living club, corporate giving Preferred employer Preferred destination
    37. 39. Projected Spend and Opportunities ( 2004 - 2013) 100+ stores 1.2 billion capital investment
    38. 40. Lessons Learned <ul><li>Build a business case and translate it into “CEO” speak </li></ul><ul><li>Develop a comprehensive holistic strategy </li></ul><ul><li>Create cultural alignment </li></ul><ul><li>Create metrics to measure success that resonate with the business leaders </li></ul><ul><li>Solutions should incorporate a community based initiative </li></ul><ul><li>Change the paradigm that “health” is an expense to an “investment” in human capital with a significant and measurable ROI </li></ul>
    39. 41. Benefits Roundtable Survey Benefit Benchmarking Survey of 25 Fortune 100 Companies (Union Pacific, AT&T, Chevron) of 20,000 employees

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