The ABCs of Healthcare IT for 2014

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www.healthcatalyst.comProprietary and Confidential
January 2014
Buzzwords for 2014
100
120
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160
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200
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260
280
1981 1986 1991 1996 2001 2006 2011IPdaysinmillions
Inpatient Days

2014 .. The year of
ACO Accountable Care Organization
500 as of year end 2013, projected to double in one year
Medicare added 123 new ACOs (MSSP) in January 2014
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

2014… The year of
Bundled Payment
3
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
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

2014… The year of
4
Consumer Transparency
These common-sense best practices
bring consistency, clarity, and
transparency to patient financial
communications.
Bill posted on Internet $55,000 for appendix operation

2014… The year of
High Deductible Plan
5
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."
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.
Additional buzzwords: Retail, reference pricing
Source: Kaiser Family

2014… The year of
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.
6
17.2%
10%
11%
12%
13%
14%
15%
16%
17%
18%
2000 2002 2004 2006 2008 2010 2012
Health Expenditure as % of
GDP
3.7% 3.6%
3.8% 3.8%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2012 2011 2010 2009
Healthcare Spending Growth

2014… The year of
Frequent
Conditions AHRQ
7
Principal CCS diagnosis
Number of stays in
thousands
Stays per
10,000
population
All stays 38,591 1,239
Liveborn (newborn infant) 3,818 123
Pneumonia (except that caused by
tuberculosis and sexually transmitted
diseases)
1,114 36
Septicemia (except in labor) 1,094 35
Congestive heart failure, nonhypertensive 970 31
Osteoarthritis 964 31
Mood disorders 896 29
Cardiac dysrhythmias 795 26
Chronic obstructive pulmonary disease
and bronchiectasis
729 23
Complication of device, implant, or graft 699 22
Spondylosis, intervertebral disc disorders,
other back problems
667 21
Table 1. Number of hospital stays and stays per 10,000 population by the most
frequent principal diagnoses, 2011
Abbreviation: CCS, Clinical Classifications Software
Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery,
Organization, and Markets, Healthcare Cost and Utilization Project (HCUP), Nationwide
Inpatient Sample (NIS), 2011
Frequencies

2014… The year of
SGR
Sustainable Growth Rate
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.
8
Averted
20% decrease in Jan

2014… The year of
HAC
9
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

2014… The year of
ICD-10
10
Outlook grim for docs' ICD-10 readiness
October 1, 2014
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
Joint accountability with
physicians
11
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

2014… The year of
Risk
12
Potential for revenue losses to competitors or penalties
from regulators is increasing

2014… The year of
Lean
13
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)

2014… The year of
14
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

2014… The year of
Net Income – includes investments
Operating Income- on operations
Median in 2012 3.15%, California
Median 3%
15
-3%
-2%
-1%
0%
1%
2%
3%
2013 2014 2015 2016 2017 2018
Operating Income Projections
Projection with no interventions.

2014… The year of
Outpatient- Growth Area Up 2.9% from 2011
16
JP Morgan- Revenue growth: in the expansion of outpatient care
and in clinical integration leading to value-based care.

2014… The year of
PQRS
17
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
Also Population Health

2014… The year of
Readmit rate 2015
18
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

2014… The year of
Supply Chain
Represent 14% of expenses
in California hospitals- second
largest category of expenses
19

2014… The year of
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.
20

2014… The year
Utilization
21
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
Inpatient Days

2014… The year of
Medicare Value Based Purchasing
Adding 2 new outcome measures
for 2015: PSI, CLABSI
Adding new efficiency: Medicare
Spending per Beneficiary
22
2013
1%`
2014
1.25%
2015
1.5%

2014… The year of
W
23
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
24

Questions
25
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The ABCs of Healthcare IT for 2014

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