interpreting the healthcare move to...

Interpreting the Healthcare Move to Value

Brian Baker

Founder, CEO

“To fully appreciate the breadth of my experience, the depth of my business acumen and the heights I reached in my previous

position, you need to read my resume with 3-D glasses.”

Copyright Carealytics 2014 2

The “Secret” to Interpreting Healthcare’s Move to Value

• Why a move to value?

• How to measure value in healthcare

• Has healthcare become a commodity?

• How do differences in technology affect value?

• The real goal of the Affordable Care Act

• What the healthcare legislation really means

• Commoditization / Differentiation in healthcare

• Adapting to move away from commoditization and demonstrate value and quality

Todays Objectives


The 2010 Affordable Care Act mandated the development of a mechanism to allow Medicare to make differential payment to fee for service MDs based on the relative

quality and costs for the care they provide.

Why a Move to Value?

4 Copyright Carealytics 2014

5

December 15, 2011 35 Degrees Light Rain

Lunch Time


6 Copyright Carealytics 2014 6


Lunch Time



Lunch Time

8 Hospital based MRI choices within 15 miles

All are 1.5t

Chargemaster based pricing:

Low = $2,067.58

High = $3,971.15

Average = $3,119.70

Medicare payment range:

Low = $322.11

High = $357.77


Where’s the Value?

Source: April 2014 Medicare Data

Nashville, TN

“…Because Medicare pays for just over 1/5 of all US Healthcare…it must pursue reforms that control spending and create incentives for beneficiaries to seek and providers to deliver high-value services.”

9

What’s the Big Deal?

MedPAC Report to Congress

March 2014

Copyright Carealytics 2014

Source: International Federation of Health Plans, Cited in NY Times, 1/22/12

US HEALTH CARE UNIT PRICING IS MUCH HIGHER

10

Interpreting the Move to Value


Baicker, K and Chandra, A. Medicare spending, the physician workforce, beneficiaries' quality of care. Health Affairs Web Exclusive 7 April 2004; W4-184-97.

Medicare Cost Vs. Quality

11



Source: CMS.gov All Payers, All Spend

12

0

0.5

1

1.5

2

2.5

3

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Trill

ion

s

Total US Healthcare Spending Trend



With Permission: GE Market Trends & Assumptions, Fall 2013 Rob Reilly, Chief Marketing Officer

13

2012 = $8,915 Per Person all Payors Source: 2014 MedPac Report



With Permission: GE Market Trends & Assumptions, Fall 2013 Rob Reilly, Chief Marketing Officer

14



2000-2005 IC Growth 87.5% Pop Growth 4.7% 2005-2008 IC Growth 10.9% Pop Growth 2.9%

2008- 2012 IC Growth 8.8% Pop Growth 3.2% IC’s per Million Pop 2000 10.8 2005 19.5 2008 21.2 2012 22.5

15

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

3068 3366

4159

5163 5450

5753 5969 6241 6455

6150 6311 6383

7074 6816

Total Number of Freestanding US Imaging Centers

265

270

275

280

285

290

295

300

305

310

315

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Mill

ion

s

Population Growth Source: US Census


0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

3068 3366

4159

5163 5450

5753 5969 6241 6455

6150 6311 6383

7074 6816

Total Number of Freestanding US Imaging Centers

265

270

275

280

285

290

295

300

305

310

315

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Mill

ion

s

Population Growth Source: US Census

2000-2005 IC Growth 87.5% Pop Growth 4.7% 2005-2008 IC Growth 10.9% Pop Growth 2.9%

2008- 2012 IC Growth 8.8% Pop Growth 3.2% IC’s per Million Pop 2000 10.8 2005 19.5 2008 21.2 2012 22.5


Credit Radiation Exposure Concerns for Utilization Decreases Overall 2.5% Decrease in 2010 was 1/30th of Previous Decade of Growth Appropriateness Still a Concern – Must be Addressed ECG’s and CV Stress grew at over 85% from 2000-2009 – Faster than Imaging

March 2012 Report

17



There is increased urgency to address payment variations across settings because many services have been migrating from physicians’ offices to the usually higher paid (H)OPD setting as hospital employment of physicians has grown. This shift toward (H)OPDs has resulted in higher program spending and beneficiary cost sharing without significant changes in patient care.

June 2013 Report

“If the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than in another.”

Medicare payment differences across ambulatory settings

18



So, in the Future…

Incomes will be based on outcomes

Adapted From: Creating Sustainability in Medical Imaging: Defining and Rewarding Value, Rich Duszak, MD FACR Harvey L Neiman

Health Policy Institute


20

“Finally, studies have found that a significant share of

health care spending in the United States is wasteful;

even if the growth rate of health care spending slows,

much can be done to improve quality of care while

lowering cost per beneficiary.”

2012 Medicare Spend $574 Billion 2012 Medicare Funding $537 Billion (37 Billion)

March 2014 Report


21

Medicaid 16%

Medicare 23%

Out of Pocket (excl. Premiums)

14%

Other Third Party Payers

9%

Private Health Insurance

34%

Other Insurance Programs

4%

Total HC Spend $2.4 Trillion 2012

(CMS data = $2.7 Trillion in 2011)

Total of

105.7m Govt. Enrollees

March 2014 Report


Value = “Outcomes”

Cost

Outcomes include: • Appropriateness • Safety • Efficiency • Satisfaction • Financial Toxicity

Cost to: • Provider • Facility • Patient • Employer • Physician • Society

What is Value?

Adapted From: Creating Sustainability in Medical Imaging: Defining and Rewarding Value, Rich Duszak, MD FACR Harvey L Neiman

Health Policy Institute


Some FFS Confounders

Coverage edits

Payment edits

Discounts

Documentation

Coding

Data to inform

physicians and

practices

Physicians

and Practices

Courtesy: Creating Sustainability in Medical Imaging: Defining and Rewarding Value, Rich Duszak, MD FACR Harvey L Neiman Health Policy Institute

Physician Reporting

CPT coding drives payment under FFS

As a general rule, payment for higher

complexity codes is higher than that for lower

intensity codes

Physician documentation drives code selection


Complete Abdominal US (76700)

1. Liver

2. Gallbladder

3. Common bile duct

4. Pancreas

5. Spleen

6. Kidneys

7. Upper abdominal aorta

8. Inferior vena cava


Limited Abdominal US (76705)

1. Liver

2. Gallbladder

3. Common bile duct

4. Pancreas

5. Spleen

6. Kidneys

7. Upper abdominal aorta

8. Inferior vena cava


Abdominal Ultrasound

76705 Limited

76700 Complete

39%

$28.24

$39.13


Ultrasound Documentation

336,062 abdominal US

reports

37 facilities

1,136 radiologists

Incomplete documentation

7 or fewer elements on

complete examinations

9.3% to 20.2% of reports

2.5% to 5.5% lost

revenue

Duszak R, et al. JACR 2012; 9: 403-408.


• 3.5 year screening / testing program

• 20 Cases – Mix of Modalities

• Free form reports

• No time limit

• Open book

Value: Radiologists


30% Fail!

Courtesy: VRad, Pat Basu M.D.

A Strategic Response; Moving to Value


31

Value: n. The importance, worth or usefulness of something

v. Consider someone or something to be important or beneficial


Achieving this will move imaging and healthcare to the “value” payment model demonstrating differentiated quality and costs.

The Trillion Dollar Prize

32

“Translate data from treatment and results combined with analytics to direct clinical intervention…or not, empirically.”

B.Baker 2013


33

The Trillion Dollar Prize in Practice

“I want to know what the outcome will be before I

treat the patient.” CEO, Physician



Sick Patient

MD Diagnosis Decision

Tests Performed

Outcome Report of

Test

MD Treatment Decision

Patient Outcome

Lab Imaging

Physical Therapy

Clinical Learning

Images Values

Opinion

Poorly functioning feedback loop for learning and improvement

Healthcare Process Today

Moving to Value

Weather Economy Disease Trends Birth Rates Deaths Immigration Utilization Regulations Numeric Values Professional Opinion Technology Predictive Analytics Etcetera…

Plus:

Healthcare Process Tomorrow

35

Clinical Learning

Sick Patient

MD Diagnosis Decision

Tests Performed

Analysis Report of

Test

MD Treatment Decision

Patient Outcome

Big Data &

Powerful Analytics

Moving to Value


Carolinas Health System: Using data from 2m patients. Purchased to ID high risk patients through predictive modeling. Results will be shared w MD’s in 2 yrs.

UPMC: Similar models being tested.


Source: Bloomberg 6.26.14 “The Doctor Knows You’re Killing Yourself. The Data Brokers Told her.”

Stanford Drug Interaction Study - 2012

Shaping Value


• Need for Change • Customer Power • Greater Participation • Meaningful Engagement

Requires acceptance of:

38

Moving to Value


ACO Presence

– Over 400 ACO’s

– Represented in all 50 states

– Over half are Medicare contracted

– Range of models and sizes

39

Moving to Value


• ID Patients in need of care management 66%

• Measure clinical outcomes 64%

• Performance measurement and management 64%

• Point-of-Care clinical decision making 57%

Data and analytics, Keystones to ACO success

IDC Health Insights survey published in Healthcare IT News. March 2013

ACO Survey Results: Priorities

40

Moving to Value


ACR Phantom: Slices 9 & 8 for T1: (Same Manufacturer)

3T 1.5T 1.0T 0.34T 0.2T

41

Courtesy: Bell Associates



Value Modeling

Benefits management companies creating ACO focused business units

Employers building “owned” service lines

Employers collaborating & negotiating with Providers

Providers forming “Patient Home” models

• Coordination

• Cooperation

• Capability

• Connection

The Four C’s

44

Value Modeling


…and much more

Detailed Financial Performance

Liaison Impact & M.D. Loyalty

Scheduling Effectiveness

Exam Effectiveness

Report Turn-Around-Time

Patient Wait & Exam Times

Staff Productivity

Coordination

Cooperation

Capability

Connection

Culture

The Four C’s

Financial

Culture

Transparency

Technology

Risks

45

Value Modeling


1. Be the least replaceable player

2. Become the owner of quality

3. Follow the customer

4. Manage the growth story

5. Demonstrate / Incentivize

Adapted from HBR July-August 2013 “How to Drive Value Your Way”

Michael G. Jacobides and John Paul MacDuffie

46

Value Modeling


1 2 3 4 Replaceability Quality Customer Growth

Incumbent Strategies

Entrant Strategies

Prevent others from assuming a system integrator role Avoid open standards

Brand the customer experience Assume responsibility for the final product

Stay in tune with customer needs Anticipate changes in the identity of the end customer

Pursue growth, but not at the cost of strategic control Use your scale advantage to keep supplier networks closed

Become the go-to outsource source Move to selling and providing solutions

Be patient in terms of returns Make the case that open standards will fuel growth

Try to change who the customer is or what it wants Find new or overlooked customers and build new ecosystems

Leverage brand adjacency Manage standards to commoditize incumbents

Adapted from HBR July-August 2013 “How to Drive Value Your Way”

Michael G. Jacobides and John Paul MacDuffie

47

Value Modeling …Giants do not compete in a sector, they shape it.


Step

1: G

ain

so

me

kno

wle

dge

Formula for Value



Formula for Value St

ep 2

: Exe

rt s

om

e C

on

tro

l


Formula for Value St

ep 3

: Dem

on

stra

te V

alu

e

…do we find problems earlier in the health cycle? …to create self service or automated tools? …much of care is related to genetics? …much of care is related to environment? …much can we actually have an impact on? …do we stop wasting so many HC resources?


Value Modeling

1. Can you survive if paid at 100% Medicare? 2. How do/will your imaging services fit into an

ACO model? 3. How will you manage the culture when your RADS are

paid 30% less? 4. What can we do (together) to demonstrate value? 5. Who is your consumer? 6. How can we capture or combine what imaging reveals

to the linear patient record?

53

Questions to Take Home


Thank you! Brian Baker

[email protected] (615) 330-6675

54

www.care-alytics.com

interpreting the healthcare move to...

Documents