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Health Care in Japan’s Aged Society
May 14, 2015
Temple University
Institute of Contemporary Asian Studies
Jennifer Friedm...
Outline
• Disclaimers.
• Successes and Challenges of Japanese Health
Care System.
• Japanese Health Care Policies to Manag...
Successes of Japan’s Health Care System
3
In 2011, Japan celebrated 50 years of
universal health insurance
“Japan's succes...
Comparison of Japan and
U.S. Health Care Systems
Japan United States
Independent Providers Yes Yes
Fee-For-Service Payment...
Japan’s Open Access,
Fee-For-Service System
• Fee-For-Service (FFS) is a payment system where each
item or service is paid...
Japan’s Multi-Payer System
• It is NOT single payer. There are 3400+ insurers in
Japan.
• Government sets rates that are u...
U.S. Health Care Spending Dramatically
Exceeds Japan and OECD
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2000
2001
2002
2003
...
U.S. Health Care Spending Dramatically
Exceeds Japan and OECD (continued)
$8,745
$3,649 $3,484
2012 Overall Spending Per C...
Why is Japan Health Spending So Low..
• Japan’s multi-payer rate setting leads to lower
prices.
• Japanese payment rates s...
…Or, Why is U.S. Health Spending So High
• Higher prices due to diluted purchasing power of
multiple payers.
• More resour...
High U.S. Spending Mainly Due to Prices
High U.S. spending “cannot be attributed to higher income, an older
population, or...
Japan Spending Growth Rate Higher
Than U.S. in Recent Years…
3.6%
2.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0% 2...
…But Per Capita Growth Rate Tells a
More Complicated Story
3.4%
1.3%
3.0%
2.8%
4.9%
3.0%
4.1%
0.2%
3.4%
2000 - 2009 2009 -...
Medical Spending Estimated to Grow
By More than Half by 2025…
¥20.1 ¥22.0
¥28.1
¥14.8
¥16.9
¥25.0
¥5.8
¥6.3
¥7.9
¥40.7
¥45...
Aging and New Technology Usage
Drive Spending Increases
2006 2007 2008 2009 2010 2011 2012 2013 2014
Increase in health
ex...
Japan’s Aging, and Shrinking, Society
16
Source: IPSS
Japan’s Aging, and Shrinking, Society
 Japan is the most aged society in the world, with 24.1% of the population older
th...
Japan Per Capita Health Costs
(by age, ¥ in 1000s, 2011)
223
123
86 68 71 90 106 116 132
167
210
266
352
454
614
771
910
1...
A Different Estimate of Health
Spending Projections
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
2010 2...
Areas of High Health Care Utilization
Japan USA OECD Average
Hospital beds 1/ 13.4 3.1 4.8
Hospital average length of stay...
Other Issues
• Open access to any provider means there is not a
strong culture of a primary care provider who
coordinates ...
Many Good Health Outcomes,
but Others Mixed
Japan U.S.
Life expectancy at birth 83.2 years
(ranked 1st out of 34)
78.7 yea...
Japan’s Health Care Policies
(not exhaustive list)
Cost-savings
• Increase utilization of
generic drugs.
• Health technolo...
Increase Generic Drug Utilization
76%
41%
23%
9%
78%
0%
20%
40%
60%
80%
100%
GenericRxSharebyVolume
• Alternative methodol...
Health Technology Assessment (HTA)
• Economic analysis may be cost effectiveness (cost/QALY),
budget impact, comparative e...
Shifting National Health Insurance to
Prefectures
• Currently, municipalities manage national health
insurance for individ...
General acute
~350,000 beds
Highly acute 180,000 beds
Sub-acute/Recovery
~ 260,000 beds
Long-term care
280,000 beds
Highly...
Integrated Communities of Care
• Create “community-based integrated care,” defined as a system
that provides appropriate l...
Delivery System Reforms in the U.S.
• Affordable Care Act (ObamaCare) testing new payment systems to counter
the incentive...
Delivery System Reforms in the U.S.
(continued)
• Medicare Models include: Accountable Care Organizations (ACOs), Value
Ba...
Accountable Care Organizations
(ACOs)
• Medicare Accountable Care Organizations (ACO) Definition:
– Groups of doctors, hos...
Continuum of ACOs
Advance
Payment/
Investment
Model (35):
Shared savings
participants
receiving help
with upfront
costs (r...
Independent Evaluation of Pioneer ACOs
• 32 ACOs, 670,000 beneficiaries (2012).
• Pioneer ACO’s saved a total of $384 mill...
2012 2013
Total Spending (in millions) -$279.7 -$104.5
Total spending (per beneficiary per month) -$35.62 -$11.18
Acute ca...
Independent Evaluation of Pioneer ACOs
Ongoing Challenges:
• Care transitions widely considered important but ability to
m...
Accountable Care in Japan?
• A tool to incentivize more efficient care, which
can get at that “other” driving spending
inc...
Conclusion
• Japan’s health care system successful at providing
equitable benefits, managing costs.
• Japan has areas of h...
Questions/Comments?
Jennifer Friedman
Jennifer_Friedman@miga.jp
jen1700@hotmail.com
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[Public Lecture Slides] Jennifer Friedman: Health care in Japan's aged society

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Japan’s health care system is a source of great pride for the country. Japan attained universal health coverage over 50 years ago and the country's health outcomes are some of the best in the world by many measures, while health care spending is at relatively low levels.

Despite the many positive aspects of the system, it faces challenges. The demographic wave of rising numbers of elderly will put new pressures on the care delivery system and the nation’s budget. Moreover, the country has high utilization of many health care services, care delivery is often fragmented, and measures of quality are not commonly available or necessarily used for continuous improvement. How will Japan address these issues and manage the health care needs and rising costs of its aged and still aging society? What can other countries, such as the United States, learn from the Japanese experience, and can new care delivery innovations taking place around the globe help address Japan's challenges?

Published in: Education

[Public Lecture Slides] Jennifer Friedman: Health care in Japan's aged society

  1. 1. Health Care in Japan’s Aged Society May 14, 2015 Temple University Institute of Contemporary Asian Studies Jennifer Friedman Council on Foreign Relations International Affairs Fellow in Japan Sponsored by Hitachi, Ltd Meiji Institute for Global Affairs
  2. 2. Outline • Disclaimers. • Successes and Challenges of Japanese Health Care System. • Japanese Health Care Policies to Manage Care Needs and Rising Costs of Aging Society. • Health Care Delivery Reforms Abroad (focus on the U.S.) • Questions/Comments. 2
  3. 3. Successes of Japan’s Health Care System 3 In 2011, Japan celebrated 50 years of universal health insurance “Japan's success in achieving universal health insurance has improved equity in our health system, expanded coverage for our citizens, and controlled health-care costs. Our experience shows how investment in [Universal Health Coverage] brings good returns.” Prime Minister Shinzo Abe The Lancet, Sept 27, 2013
  4. 4. Comparison of Japan and U.S. Health Care Systems Japan United States Independent Providers Yes Yes Fee-For-Service Payment System Yes Yes, along with closed networks/managed care and newer payment models Multiple Payers/Insurers Yes (>3400) Yes Defined Benefit Yes Defined categories of benefits, but variation between states Provider Access Open access Networks of providers Prices Set by government Set/negotiated by payer Universal Coverage Yes No Long Term Care Social Insurance Yes No, Medicaid for low- income and disabled. 4
  5. 5. Japan’s Open Access, Fee-For-Service System • Fee-For-Service (FFS) is a payment system where each item or service is paid separately. • Creates incentives to provide more care. Payment is dependent on quantity, not quality, of care. • U.S. and Japan do use other mechanisms to counter this incentive, such as bundled payments for some services. • Open access means patient can choose to go to any doctor. Insurance is not limited to a certain network of providers. There is no “gatekeeper” or primary care provider managing individual patient care. 5
  6. 6. Japan’s Multi-Payer System • It is NOT single payer. There are 3400+ insurers in Japan. • Government sets rates that are used by all payers to pay providers, for all items and services, with some variation based on provider characteristics. • Payment rates revised every two years by Chuikyo, Central Social Insurance Medical Council. • Payment rate for particular service may be cut if volume appears to be growing inappropriately. • Incentives built into rate system to encourage certain types of provider behavior, such as care at home, increased generic drug utilization. 6
  7. 7. U.S. Health Care Spending Dramatically Exceeds Japan and OECD 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TotalHealthSpendingas%ofGDP USA Japan OECD Average 7Source: OECD
  8. 8. U.S. Health Care Spending Dramatically Exceeds Japan and OECD (continued) $8,745 $3,649 $3,484 2012 Overall Spending Per Capita (U.S.$ Purchasing Power Parity) USA Japan OECD 8Source: OECD
  9. 9. Why is Japan Health Spending So Low.. • Japan’s multi-payer rate setting leads to lower prices. • Japanese payment rates set to discourage costly surgical procedures and encourage lower cost office visits. 9 Japan’s rate setting system, and resulting low payment rates, is key reason why health care spending has been kept low/on par with OECD.
  10. 10. …Or, Why is U.S. Health Spending So High • Higher prices due to diluted purchasing power of multiple payers. • More resource intense (though shorter) hospital stays; access to costly technology. • Higher administrative costs due to multiple payers running their own systems, marketing costs, and underwriting system (pre-health reform). • Higher physician salaries for U.S. doctors. 10 Higher U.S. health spending driven by higher prices.
  11. 11. High U.S. Spending Mainly Due to Prices High U.S. spending “cannot be attributed to higher income, an older population, or greater supply or utilization of hospitals and doctors…. higher spending is more likely due to higher prices and perhaps more readily accessible technology and greater obesity…. Of the countries studied, Japan has the lowest health spending, which it achieves primarily through aggressive price regulation” – Commonwealth Fund, “Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices and Quality,” (2012). “In 2000 the United States spent considerably more on health care than any other country…. At the same time, most measures of aggregate utilization… were below the OECD median…. this implies that much higher prices are paid in the United States than in other countries. U.S. policymakers… could conclude: It’s the prices, stupid.” – “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries, Health Affairs (2003) 11
  12. 12. Japan Spending Growth Rate Higher Than U.S. in Recent Years… 3.6% 2.6% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 HealthExpenditure AnnualGrowthRate USA Japan 12Source: OECD Average Annual Growth Rate (2000 to 2012): U.S. 3.9% Japan 3.3% OECD: 3.8%
  13. 13. …But Per Capita Growth Rate Tells a More Complicated Story 3.4% 1.3% 3.0% 2.8% 4.9% 3.0% 4.1% 0.2% 3.4% 2000 - 2009 2009 - 2011 2000 - 2011 HealthSpendingPerCapita AverageAnnualGrowthRate U.S.A. Japan OECD 13Source: OECD
  14. 14. Medical Spending Estimated to Grow By More than Half by 2025… ¥20.1 ¥22.0 ¥28.1 ¥14.8 ¥16.9 ¥25.0 ¥5.8 ¥6.3 ¥7.9 ¥40.7 ¥45.2 ¥61.0 ¥- ¥10.0 ¥20.0 ¥30.0 ¥40.0 ¥50.0 ¥60.0 ¥70.0 ¥80.0 2012 2015 2025 JPYinTrillions premiums public fund copays …From 8.5% of GDP to 10% of GDP. 14Source: MHLW
  15. 15. Aging and New Technology Usage Drive Spending Increases 2006 2007 2008 2009 2010 2011 2012 2013 2014 Increase in health expenditures 0.00% 3.00% 2.00% 3.40% 3.90% 3.10% 1.60% 2.20% Biannual fee schedule revision -3.16% NA -0.82% NA 0.19% NA 0.004% NA 0.1% Population change 0.00% 0.00% -0.10% - 0.10% 0.00% -0.20% -0.20% -0.20% Aging effect 1.30% 1.50% 1.30% 1.40% 1.60% 1.20% 1.40% 1.30% Residual (technological advances/other) 1.80% 1.50% 1.50% 2.20% 2.10% 2.10% 0.40% 1.10% 15Sources: MHLW and MOF
  16. 16. Japan’s Aging, and Shrinking, Society 16 Source: IPSS
  17. 17. Japan’s Aging, and Shrinking, Society  Japan is the most aged society in the world, with 24.1% of the population older than 65 in 2012, rising to 40% of the population by 2060.  Japan’s population of 127 million has been shrinking since 2010 and estimates are that it will decrease to 86.7 million by 2060. 17
  18. 18. Japan Per Capita Health Costs (by age, ¥ in 1000s, 2011) 223 123 86 68 71 90 106 116 132 167 210 266 352 454 614 771 910 1009 1086 1167 1198 0 200 400 600 800 1000 1200 1400 0to4 5to9 10to14 15to19 20to24 25to29 30to34 35to39 40to44 45to49 50to54 55to59 60to64 65to69 70to74 75to79 80to84 85to89 90to94 95to99 100+ % hospital % non hospital 18 Source: MHLW
  19. 19. A Different Estimate of Health Spending Projections 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 2010 2020 2030 2040 2050 2060 HealthSpendingas%ofGDP 0%/year 1%/year 2%/year Same analysis finds a historical trend of 0.9% excess cost growth during the last two decades. Assuming the same trend going forward, health spending will reach 15.6% of GDP in 2030 and 26.6% of GDP by 2060. Excess Cost Growth = excess of growth in per capita health spending over per capita GDP growth, after controlling for the effect of demographic change. 19 Source: IMF
  20. 20. Areas of High Health Care Utilization Japan USA OECD Average Hospital beds 1/ 13.4 3.1 4.8 Hospital average length of stay 2/ 17.5 4.8 7.4 Discharge rate 3/ 11,055 12,549 15,590 Doctor consultations 4/ 13 4 6.7 MRI 5/ 46.9 35.5 13.9 Generic Drug Penetration 6/ 23% to <~50% 78% 41% 1/ Per 1000 population. Japan and OECD (2012). USA (2010). 2/ Average length of hospital stay, all causes, days. Japan and OECD (2012). USA (2010) 3/ Discharge rate per 100,000 population. Japan (2011). USA (2010). OECD (2012). 4/ Per capita. USA (2010). Japan (2011). OECD (2012) 5/ MRI machines total, per 1,000,000 population. USA (2013). Japan (2011). OECD (2012) 6/ U.S. Congressional Budget Office (2010). Japan range due to varying methodologies, OECD (2011 data). MHLW and EFPIA (2013 data). 20 Source: OECD
  21. 21. Other Issues • Open access to any provider means there is not a strong culture of a primary care provider who coordinates care. • Open access also has fostered competition between providers, which in turn results in lack of information sharing. • Limited sharing of electronic health records/ICT to improve care coordination. • Quality measurement voluntary, not made public, limited measures. Is it used to drive improvement? 21
  22. 22. Many Good Health Outcomes, but Others Mixed Japan U.S. Life expectancy at birth 83.2 years (ranked 1st out of 34) 78.7 years (ranked 27th out of 34) Mortality from cardiovascular disease Ranked 33rd (Lower is better) Ranked 17th (Lower is better) Mortality from cancer Ranked 28th (Lower is better) Ranked 25th (Lower is better) Adult obesity (as measured) Ranked 16th out of 16. Ranked 1st out of 16. Daily smokers 20.7% (ranked 16th) 14.2% (ranked 31st) Alcohol consumption (liters per capita) 7.2 (ranked 28th) 8.6 (ranked 23rd) Suicide rate (per 100,000 population) 20.9 (ranked 3rd out of 33) 12.5 (ranked 12th out of 33) 22 Source: OECD
  23. 23. Japan’s Health Care Policies (not exhaustive list) Cost-savings • Increase utilization of generic drugs. • Health technology assessment (pilot in 2016). • Reduce reimbursement for hospital meals. • Increase copays. • Annual price revision for Rx? System Reforms to Improve Efficiency and Value • Hospital bed realignment. • Fee for care at large hospital without referral. • Shifting national health insurance system to prefecture? Meeting Care Needs of Elderly • Integrated communities of care. • Other policies listed can also meet goal of improving how care needs of elderly are met. These three categories are not mutually exclusive; many policies meet multiple goals. 23
  24. 24. Increase Generic Drug Utilization 76% 41% 23% 9% 78% 0% 20% 40% 60% 80% 100% GenericRxSharebyVolume • Alternative methodology estimates Japan generic penetration at <~50% in 2013. • Goal of increasing penetration to 60% by 2018. Discussion of accelerating timetable or raising target. • Industry estimates generic penetration from promotion measures of 59% by 2017, 70% by 2025. • Industry estimates potential savings of ¥593b/year, ¥8.3T (2012-2025). 24Sources: OECD, U.S. CBO, EFPIA
  25. 25. Health Technology Assessment (HTA) • Economic analysis may be cost effectiveness (cost/QALY), budget impact, comparative effectiveness to inform pricing, other. • HTA pilot by 2016. • Will HTA be used to limit coverage (unlikely), modify reimbursement, and/or delist older drugs? • Who will pay for the necessary research? • Who will conduct the research? • Impact on timelines for drugs/device to enter market and patient access? 25 Definition: “Multidisciplinary process to evaluate the social, economic, organizational and ethical issues of a health intervention or health technology. The main purpose of conducting an assessment is to inform a policy decision making [coverage or reimbursement decisions].” - World Health Organization.
  26. 26. Shifting National Health Insurance to Prefectures • Currently, municipalities manage national health insurance for individuals who do not have corporate or civil servant insurance , mainly self-employed, part- time workers and retirees < 75 years old. • Shifting responsibility for managing and financing health insurance from municipalities to prefectures, starting 2018. • Shift responsibility for long-term strategic planning from national government to region/prefectures. • Increase federal government investment. • What will be the impact of consolidating responsibility at prefectural level? 26
  27. 27. General acute ~350,000 beds Highly acute 180,000 beds Sub-acute/Recovery ~ 260,000 beds Long-term care 280,000 beds Highly acute/General acute: Reduce average length of stay. Revise standards for long-term inpatients and high nursing levels. Sub-Acute/Recovery: New beds for post-acute, including sub-acute. Support home care and return to daily life. Long-term care: Facilities for long-term care patients. Other Issues : Promote home care. Consideration of regions with scarce medical resources and clinics with inpatient facilities. 7:1 ¥15,660 10:1 ¥13,110 13:1 ¥11,030 15:1 ¥9,450 357,569 beds 210,566 26,926 54,301 Care ward 216,653 Shift Patient Care to Lower Cost Settings Patient to nurse ratio JPY/day in 2012 2012 2025 27 Sources: MHLW and MOF Outpatient treatment Home care
  28. 28. Integrated Communities of Care • Create “community-based integrated care,” defined as a system that provides appropriate living arrangements for the elderly and social care, such as daily life supports, in addition to long-term and medical care. Use proper housing and home care services to reduce costly institutional care. • Shift elderly from costly hospital settings of care to home care. • New funds to localities to support medical care and long-term care. • How will this transition take place? What supports exist to assist in the transition? Goal: Better coordination between medical and long-term care for elderly. 28
  29. 29. Delivery System Reforms in the U.S. • Affordable Care Act (ObamaCare) testing new payment systems to counter the incentives of fee-for-service, encourage more efficient delivery of care. • Goal is to encourage better coordination across providers and reduction in unnecessary services while maintaining or improving quality. Pay for “value”, not “volume”. • Some similarity to Japanese goal of shifting patients to lower cost settings of care. • U.S. focus on encouraging integrated care, but integrated care defined differently. – U.S.: integration of patient care across the continuum from primary care to acute care (hospital) to post-acute care. – Japan: integration of LTC and medical care. Integration of ownership. 29
  30. 30. Delivery System Reforms in the U.S. (continued) • Medicare Models include: Accountable Care Organizations (ACOs), Value Based Purchasing (VBP)/Pay-for-Performance (P4P), Bundled Payments, Medical Homes, etc. Medicaid and private payers also pursuing reforms. • Cautions: – These models are being tested, not yet proven. – Need good patient data, ability to share data, and analytic capabilities to assess patient population and identify costly patients or those at- risk of high cost. – Need good quality measurement tools to ensure that quality is maintained/improved and to protect against stinting of care. • These delivery system reforms not unique to U.S. 30
  31. 31. Accountable Care Organizations (ACOs) • Medicare Accountable Care Organizations (ACO) Definition: – Groups of doctors, hospitals, and other health care providers who come together voluntarily to provide coordinated care to Medicare patients. – If ACOs save Medicare money as compared to a projected trend for their patient population, they share in those savings as long as quality is maintained or improved. – Goal is to reduce unnecessary services, prevent medical errors, ensure patients get the right care at the right time. • Payments still based on fee-for-service system. • Beneficiary still has open access to other providers. • 450+ Medicare ACOs, nearly 8 million beneficiaries in 49 states. 31
  32. 32. Continuum of ACOs Advance Payment/ Investment Model (35): Shared savings participants receiving help with upfront costs (rural or no hospital). Shared Savings Program (404): Most only share in savings during first contract cycle. Pioneer ACOs (32, now 19): Share in gains and losses. Can receive population based payment in exchange for reduced FFS payment. Next Generation ACOs (Expect 15- 20): Greater sharing of gains and losses, possibility of capitated payments. 32 There are different ACO models with varying levels of shared savings and losses, reflecting readiness of providers to take on risk.
  33. 33. Independent Evaluation of Pioneer ACOs • 32 ACOs, 670,000 beneficiaries (2012). • Pioneer ACO’s saved a total of $384 million over first two years. • Fewer inpatient stays, procedures, imaging and tests. • Quality measures stable or improving: reduction in admissions for COPD, adult asthma, and heart failure. Earlier doctor’s appointments after discharge. • Few changes in patient perception of quality/satisfaction. 33 Source: L&M Policy Research
  34. 34. 2012 2013 Total Spending (in millions) -$279.7 -$104.5 Total spending (per beneficiary per month) -$35.62 -$11.18 Acute care inpatient stays -9,926 -8,444 Acute care inpatient days -40,799 -15,314 Acute care inpatient stays (per 1000 beneficiary months) -1.26 -0.9 Acute care inpatient days (per 100 beneficiary months) -0.52 -0.16 Primary care evaluation and management services (per 100 beneficiary months) -0.52 -0.15 Procedures (per 100 beneficiary months) -3.0 -1.97 Imaging services (per 100 beneficiary months) -1.76 -0.84 Tests (per 100 beneficiary months) -5.24 -4.33 34 Source: L&M Policy Research Independent Evaluation of Pioneer ACOs
  35. 35. Independent Evaluation of Pioneer ACOs Ongoing Challenges: • Care transitions widely considered important but ability to manage this aspect of care affected largely by availability of timely admissions data. • Data sharing is an issue – need to navigate multiple EHRs, build and improve data warehousing capabilities, communicate electronically across different care settings. “Based on historical evidence from the formal evaluation of the Pioneer ACO Model as well as independent internal analysis of financial impacts…I certify that expansion of the Pioneer Model would reduce net program spending…. “ - Chief Actuary, Centers for Medicare and Medicaid Services 35
  36. 36. Accountable Care in Japan? • A tool to incentivize more efficient care, which can get at that “other” driving spending increases. • Need providers to work together to coordinate care. • Need gatekeeper or patient loyalty to specific providers. • Need data analysis capabilities and information sharing. • Need quality measures. 36
  37. 37. Conclusion • Japan’s health care system successful at providing equitable benefits, managing costs. • Japan has areas of high health care utilization. • Along with aging, high utilization/technology driving spending increases. • Different strategies underway to shift care to lower cost settings, save money, provide integrated medical and long-term care for elderly. • But, could U.S. and other models of “accountable care,” help to further address areas of high utilization and slow spending growth? 37
  38. 38. Questions/Comments? Jennifer Friedman Jennifer_Friedman@miga.jp jen1700@hotmail.com

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