Physician EmploymentAdvocate Health Care
James R. Dan, M.D.May 2, 2014
Leading in a challenging environment
• Intense reimbursement/price/cost pressure
• Care shifting to outpatient
• Rapid growth in consumerism
• Massive provider consolidation
• New industry entrants
The healthcare economic reality2013 Federal budget
Gov’t spending as % of GDPFederal Health
Programs
Social Security
Other Mandatory
Sources: Estimates from The Budget and Economic Outlook (January 2012) - Congressional Budget Office.
Growth projections for Federal spending
Gov’t Outlays$3.8T
Healthcare consuming over 50% of gov’t receipts
Gov’t Receipts$2.9T
Reimbursement dynamics
Commercial
20 20
0% 0%
(20) Medicare (20)
Medicaid
Uninsured
40% 40%
(40) (40)
(100)%
25 50 75
Health System Payer Mix
Ope
rati
ng M
argi
n %
0 100
Avg Margin: 3.5%
Comm’l
Medicare
Medicaid
Uninsured(100)%
25 50 75
Health System Payer Mix
Ope
rati
ng M
argi
n %
0 100
Avg Margin: (4.5)%
Exchange
Today 2020 Outlook
GE Healthcare Proprietary and Confidential Information
TODAY
Medicaid Expansion
3.5%
+2%
Aging/ Medicare
-4%
Exchanges -2%
Reimbursement Cuts
-2%
Comm’l Rates -2%
2020 Outlook -4.5%
The Death of the Chargemaster
• The Brill Effect• Consumer-driven high
deductible plans focus the mind on price as much as use
• Reference pricing scares providers
• All payer transparency is coming soon
GE Healthcare Proprietary and Confidential Information
The Environment
• Intense reimbursement/price/cost pressure
• Care shifting to outpatient
• Rapid growth in consumerism
• Massive provider consolidation
• New industry entrants
Fill the hospital Empty the hospital2012-2020 Inpatient growth 2012-2020 Outpatient growth
Shift from high-cost acute settings accelerating
Overall
OrthopedicsNeuro
Cancer
Gynecology
Spine
Gen Med/Surg
Cardio
Overall
CancerGen Med/SurgNeuro
Spine
Cardio
Ortho
Gynecology
+18-20%
30%
21%
21%
20%
18%
18%
10%
17%
8%
1%
-6 to -8%
-1%
-5%
-5%
-25%
GE Healt hcare Proprietary and Confident ial Informat ion
The Environment
• Intense reimbursement/price/cost pressure
• Care shifting to outpatient
• Rapid growth in consumerism
• Massive provider consolidation
• New industry entrants
Consumerism rapidly growing
GE Healthcare Proprietary and Confidential Information
Consumerism rapidly growing
The Environment
• Intense reimbursement/price/cost pressure
• Care shifting to outpatient
• Rapid growth in consumerism
• Massive provider consolidation
• New industry entrants
Provider consolidation
GE Healthcare Proprietary and Confidential Information Source: Kaufman Hall & Associates, Inc., Presentation by Anu Singh, GE analysis
-5 largest airlines control >75% of seats-5 largest health systems control < 10% of beds
The Environment
• Intense reimbursement/price/cost pressure
• Care shifting to outpatient
• Rapid growth in consumerism
• Massive provider consolidation
• New industry entrants
New entrants
GE Healthcare Proprietary and Confidential Information
Walgreens Goal: Reinvent PharmacyAdvance community pharmacy to play a greater role in healthcare through integration and expanded services- focus on chronic disease management
Source: Presentation at Lazard Annual Healthcare Conference
New entrants
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Physicians on Advocate Medical Staffs = 5,900
Advocate Physician Partners (APP) = 4,400
Non-APP = 1,500Independent = 3,000AMG/Dreyer 1,200/200
Pluralistic Physician Structure
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What is the Role of AMG?Advocate Vision
To be a faith-based system providing the best health
outcomes and building lifelong relationships with
those we serve.
AMG Role
A nationally-recognized, physician-led integrated
group committed to delivering the best health
outcomes.
18
AMG Growth History and Projection
*Projected 19
2007 2008 2009 2010 2011 2012 20130
200
400
600
800
1,000
1,200
Num
ber
of P
hysi
cian
s
Group Composition
Family Medicine 15%
Internal Medicine 14%
OBGYN 4%
Pediatrics 5%
Hospitalists 6%Cardiac Related Specialists 13%
Other Related Specialists 35%
APNs/PAs 8%
= Specialists
= Primary Care
Consolidated, Dedicated
Management2008
Physician-led Governing Council
2009
Rapid Growth and Integration
2010-2011
Group Optimization2012-2014
The Advocate Medical Group Journey
21
AMG Contribution to Advocate Health Care
• Health Outcomes/Safe Clinical Enterprise• Advocate Experience• AdvocateCare• Service Lines• Loyal Patient Growth• Progressive Care Models
22
AMG Performance• Top decile in 7 of 9 national CI benchmarks• Associate Satisfaction – top decile 4 years• Physician Satisfaction – 78th %ile• Patient Satisfaction – 62th %ile• Cost/RVU actual decline over past 5 years• Growth - With Dreyer, 20% of system
revenue and the engine of Advocate • Medicare Advantage medical costs flat year-
over-year for 4 years
23
AMG Value Proposition• Group focused on health outcomes and safety• Competitive physician compensation and benefits• Professionally satisfying practice environment• Proactive input into clinical and operational
practice performance• Strong connection to Advocate system leadership • Resources of a large, nationally recognized,
integrated health care system
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What you need to believe to thrive in AMG
1. Committed to Vision of Best Health Outcomes and Safest Care
2. Cost Concerns are Best Addressed via #1
3. Integrated, Team Care is Essential for #1 and #2
4. Commitment to Personal Leadership of a Health Care Team
25
What is the Role of AMG?
Advocate VisionTo be a faith-based system providing the
safest environment and best health outcomes, while building lifelong
relationships with the people we serve.
AMG RoleA nationally-recognized, physician-led
integrated group committed to delivering the best health outcomes.
26
0
200
400
600
800
1000
1200
2007 2008 2009 2010 2011 2012 2013 Projected
Num
ber o
f Phy
sici
ans
AMG Growth History and Projection
Historical Data
2013
What We Need to Believe to Thrive in AMG: Leading from Principles
1. Committed to Vision of Best Health Outcomes and Safest Care
2. Cost Concerns are Best Addressed via #1
3. Integrated, Team Care is Essential for #1 and #2
4. Commitment to Personal Leadership of a Health Care Team
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