the future of the healthcare marketplace: now what

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December 7, 2016Riverside

THE FUTURE OF THE HEALTHCARE MARKETPLACE:NOW WHAT?

Ian Morrison, PhD

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2

OUTLINE

• American Healthcare: Progress and Promise

• Elections Matter

• Looking Ahead:

– Financial Hydraulics of Healthcare

– Shallow Pocketed Consumers

– Employers Stay or Go

– Massive Medicaid

– Making Volume to Value Real

– Access to Care: Urgent and Emergency Care

3

AMERICAN HEALTHCARE: PROGRESS AND PROMISE

• Coverage Expansion– Obamacare: Exchanges and Managed Medicaid

• Payment Reform– ACOs, MACRA, Medicare Advantage, Managed Medicaid, bundles and value‐based payment in private sector

• Volume to Value– Payment reform in concert with shift to population health, providers at risk

• Consolidation and Integration– Plans, health systems and physicians merging and partnering more and more

• Delivery Shift to Ambulatory Environment– Outpatient, alternate site and retail

• IT Infrastructure– Ubiquitous EHRs, telehealth, big data, and consumer‐facing apps

• Enhancing the Consumer (and Provider) Experience– High deductible health care is a blunt instrument– High bar of service in a world of Apple, OpenTable, and Uber

4

3

BIG DROP IN UNINSURED UNDER OBAMACARE

5

ELECTIONS MATTER

6

4

BREXIT OR BLOWOUT?

7

SCOTLAND, NORTHERN IRELAND AND LONDON VOTED TO REMAIN

8

5

SCOTLAND, NORTHERN IRELAND AND LONDON VOTED TO REMAIN: NEWS TO DONALD TRUMP

9

OLDER, LESS WELL EDUCATED AND NATIONALISTIC VOTERS MORE LIKELY TO BREXIT

10

6

TRUMP TRIUMPHS

11

WHY TRUMP WON: “BREXIT PLUS, PLUS”

Trump Won These Categories Convincingly:

• White 58%• White without a college degree 67%• Can bring needed change 83%• Small, city or rural 62%• Country seriously off track 69%• Family financial situation worse today 78%• Angry about how the federal government is working 77%• Trade takes away jobs 65%• Worse for next generation 63%• Deport illegal immigrants 84%• Support building a wall 86%

Source: 2016 Official Exit Polls12

7

THE PARTISAN DIVIDE ON HEALTHCARE

Source: Harvard/Politico October 201613

VIEWS ON ACA ARE BASED ON VIEWS ON GOVERNMENT ROLE IN IMPROVING HEALTHCARE SYSTEM


8

WHAT SHOULD HAPPEN TO ACA?


MAJOR CHANGES IN ACA WITH REPUBLICAN WIN

• Major structural changes to ACA – changed name

• End of mandates – individual/corporate

• Elimination or reduction of “Cadillac Insurance Tax”

• Establishing state pre‐existing condition pools

• Less federal subsidies for uninsured and Medicaid

• More state discretion for Medicaid spending

• Less insurance regulation

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9

WHAT WILL CHANGE: COVERAGE

• Repeal and replace … incrementally

• More market‐oriented less heavy‐handed regulation

• Will coverage of 20 million be significantly eroded?

• “You Break It, You Own it”

• Guaranteed issuance preserved, but how if mandates are removed?

• Fragile individual market, and small group inflation: What to do?

• Sources of market failure in private health insurance

– Cream skimming

– Adverse selection

– Moral hazard

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WHAT WILL NOT CHANGE: PAYMENT AND DELIVERY REFORM

• Shift from volume to value

• MACRA

• Payment reform in public and private sector

• Managed Medicaid, but more state flexibility

• Increased transparency on cost and quality

• Medicare Advantage growth

• Consolidation

• Population health and continuum of care

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10

TRUMP’S REPEAL AND REPLACE IS LIKE BREAKING UP THE BEATLES: JUST KEEP GEORGE AND RINGO AND

EXPECT IT TO SOUND GOOD

Subsidies to Medicaid and Exchanges

Guaranteed Issuance

Taxes and Fees RaisedMandates

Stay on Parents Plan

19

THE FINANCIAL HYDRAULICS OF HEALTHCARE

20

11

MEDICARE SPENDING VERSUS PRIVATE SPENDING: A DIFFERENT STORY

Source: cited in NY Times, December, 15th, 2015

21

PAYMENT‐TO‐COST RATIO (ILLUSTRATIVE)

0

0.5

1

1.5

2

2.5

3

Uninsured Medicaid Medicare CommercialPayer

DementedSaudi Prince

0.07

0.690.89

1.5

3

Payment to Cost Ratio

Source: Morrison Estimates, in other words a good guess

22

12

PAYMENT‐TO‐COST RATIO (ILLUSTRATIVE)

0

0.5

1

1.5

2

2.5

3

Uninsured Medicaid Medicare Exchange CommercialPayer

DementedSaudiPrince

0.07

0.69

0.89

1.2

1.5

3

Payment to Cost Ratio

Source: Morrison Estimates, in other words a good guess

‐

+++

+

++

‐

‐

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e Nielsen Company. Confidential and proprietary.

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70%

80%

90%

100%

110%

120%

130%

140%

150%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Private Payer

Medicaid(1)

Medicare(2)

AGGREGATE HOSPITAL PAYMENT‐TO‐COST RATIOS FOR PRIVATE PAYERS, MEDICARE AND MEDICAID,

1994 – 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.(2) Includes Medicare Disproportionate Share payments.

AMERICAN HOSPITAL ASSOCIATION

13

SERVING SHALLOW‐POCKETED CONSUMERS

25

CUMULATIVE INCREASES IN HEALTH INSURANCE PREMIUMS, WORKERS’ CONTRIBUTIONS TO PREMIUMS, INFLATION, AND WORKERS’

EARNINGS, 1999‐2016

98%

160%

213%

92%

167%

242%

24%

45%

60%

21%

35% 44%

0%

50%

100%

150%

200%

250%

300%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Health Insurance PremiumsWorkers' Contribution to PremiumsWorkers' EarningsOverall Inflation

SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2016. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999‐2016; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999‐2016 (April to April).

26

14

$5,277

$4,955

$4,823

$4,565

$4,316

$4,129

$3,997*

$3,515

$3,354

$3,281*

$2,973*

$2,713

$2,661*

$2,412*

$2,137*

$1,787*

$1,619

$1,543

$12,865

$12,591*

$12,011

$11,786

$11,429*

$10,944*

$9,773

$9,860*

$9,325*

$8,824

$8,508*

$8,167*

$7,289*

$6,657*

$5,866*

$5,274*

$4,819*

$4,247

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999Worker Contribution

Employer Contribution

$18,142*

AVERAGE ANNUAL WORKER AND EMPLOYER CONTRIBUTIONS TO PREMIUMS AND TOTAL PREMIUMS FOR FAMILY COVERAGE, 1999‐2016

*Estimate is statistically different from estimate for the previous year shown (p < .05).

SOURCE: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2016.

$5,791

$6,438*

$7,061*

$8,003*

$9,068*

$9,950*

$10,880*

$11,480*

$12,106*

$12,680*

$13,375*

$13,770*

$15,073*

$15,745*

$16,351*

$16,834*

$17,545*

27

16%21%*

35%*

40%

46%50% 49%

58%* 61%

63%65%

6%8% 9%

13%*17%

22%*26%

28%32%

39%*

45%

10%12%*

18%*22%*

27%*31%

34%38%

41%

46%

51%

0%

10%

20%

30%

40%

50%

60%

70%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

All Small Firms (3‐199 Workers)

All Large Firms (200 or More Workers)

All Firms

* Estimate is statistically different from estimate for the previous year shown (p<.05).

NOTE: These estimates include workers enrolled in HDHP/SOs and other plan types. Average general annual health plan deductibles for PPOs, POS plans, and HDHP/SOs are for in‐network services.


PERCENTAGE OF COVERED WORKERS ENROLLED IN A PLAN WITH A GENERAL ANNUAL DEDUCTIBLE OF

$1,000 OR MORE FOR SINGLE COVERAGE, BY FIRM SIZE, 2006‐2015

15

INSURED ADULTS WITH LOWER INCOMES WERE MORE LIKELY TO REPORT THEY HAD DELAYED OR AVOIDED

GETTING CARE BECAUSE OF THEIR COPAYMENTS OR COINSURANCE

Note: FPL refers to federal poverty level.Source: The Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014.

30 28 2824

46

10 10 12 10

21

0

25

50

75

Had a medicalproblem, but did

not go to adoctor or clinic

Did not fill aprescription

Skipped amedical test,treatment,or follow‐uprecommendedby a doctor

Did not see aspecialist whenyou or your

doctor thoughtyou needed to

see one

At least one cost‐related access

problem

<200% FPL 200% FPL or more

Insured adults ages 19 – 64 who pay a copayment or coinsurance

Percent responding “yes”

3030

COST‐RELATED ACCESS BARRIERS IN THE PAST YEAR

7 7 8 8 1014

16 17 1822

33

0

20

40

60

UK GER NETH SWE NOR AUS CAN FRA NZ SWIZ US

Source: 2016 Commonwealth Fund International Health Policy Survey

Percent*

*Had a medical problem but did not visit doctor; skipped medical test, treatment or follow up recommended by doctor; and/or did not fill prescription or skipped doses30

16

COST‐RELATED ACCESS BARRIERS IN THE PAST YEAR, BY INCOME

8

16 1620

23 2428 30 30 31

43

7 6 7 8 713

1814 13

22

32

0

20

40

60

80

100

UK GER* SWE* NOR* NETH* AUS* NZ* FRA* CAN* SWIZ* US*

Low income adults All other adults


Percent

*Indicates differences are significant at p<0.05. Note: “Low income” defined as household income less than 50% the country median. Sample sizes are small (n<100) in the Netherlands and UK.

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Copyright ©2013 Th


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DOES SATISFACTION MATTER? COMPARED TO WHAT?

2010(A)

2012(B)

2013(C)

2014(D)

2015(E)

2016(F)

77% 79% 84% 81% 79% 77%Satisfaction with your insurance benefits

Insurance plan meets my/my family’s needs very/extremely well

Satisfaction with out of pocket costs for health care services

Prepared for: Strategic Health PerspectivesBase: All US Adults (2010 n=2775, 2012 n=2000, 2013 n=2501, 2014 n=2501, 2015 n=5037, 2016 n=10011 split sampled)Source: Q600: How satisfied or dissatisfied are you with each of the following?; Q185: Thinking now about all the different components of your health insurance plan, how well does your plan meet your/your family’s health needs?

Significance tested at 95%

General Impression of Health Insurance(Top‐2 Box %)

58% 59% 66% 62% 61% 61%

Satisfaction with out of pocket costs for prescription medications 62% 66% 72% 66% 67% 66%

69% 66% 55% 56%Only 47% of Exchange based plan holders feel their plan

meets needs very or extremely well

However…

F ABDEF

AEF AF

A ABDEF

A A A

ABDEF

AB A A

DEF EF

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Some change towards the positive, but 1 in 4 consumers remains powerless

Prepared for: Strategic Health Perspectives

Base: All US Adults (2014 n=2501, 2015 n=5037, 2016 n=30052)Source: Q90 How would you describe your feelings about the health care you receive today, including how much you pay for it and the benefits you receive? Please select all that apply.

CONSUMERS EMOTIONS TOWARDS HEALTHCARE THEY RECEIVENot much change nationally, but Californians are

significantly more positive in 2016

Consumer Emotions Towards Healthcare They Receive

9%

17%19%

37%

28%

15%

23%

11%14%

6%

20%

13%

32%

24%

17%

31%

14%

18%

9%

21%

15%

34%

24%

14%

26%

12%

17%

14 15 16 14 15 1614 15 16

Empowered Hopeful Relieved Accepting NeutralResigned/ Given up

Powerless Depressed Angry

SHP CONSUMERS 2016

Significant over prior year

13%

37%

24% 18%

27%

14%

21%

10%

California 2016 in Red

13%

14 15 16 14 15 16 14 15 16 14 15 16 14 15 16 14 15 16

STRATEGIC HEALTH PERSPECTIVES℠

COST MATTERS BECAUSE CONSUMERS PAY MORE OF THE INCREASE … THIS MAKES THEM FEEL MORE POWERLESS

Prepared for: Strategic Health PerspectivesBase: All US Adults (n=10011 split sample)Q660. Please indicate if any of the following happened to you in the past year

28%

Received a balance bill for care they thought was covered

8% Received a bill for hospital services ''not in network'' even though the

hospital was in network13%EXCHANGE

TOTAL

12%21%

10% 13%20%

36%

18% 22%

Resigned/ Given up


14%25%

11% 15%21%

35%

21% 22%

Resigned/ Given up


Have notHave not

HaveHave

Have notHave not

HaveHave

California 21%

California 6%

California 13%

18

35

WHO IS BORDERLINE?

9%

21%15%

34%24%

14%

26%

12%17%

7%15%

7%15% 14%

30%

48%

31%41%



40%Have Employer based insurance

42%Had 3+ doctor visits last year

32%Had 1+ ER visits last year

51%Received a balance bill for care they thought was covered

Gen Pop

20% Are uninsured

They are NOT on public insurance!

36


Above Average

Average*

384748596066768890909394101111

143149161

181205Low monthly premiums

Has a low deductible

Low copay for doctor visits

Access to all medical imaging at reasonable cost‐sharing/co‐pay

Reasonable cost sharing, or copay levels for hospitalization

Direct access to all specialists (no referral needed)

Includes an extensive network of doctors

Access to leading hospitals in my area

Coverage for dependents

Coverage for medical care at retail clinics or urgent care centers

Low copay for generic drugs

Access to cutting edge medical devices and medications

Access to brand name drugs at reasonable cost‐sharing, or co‐pay, levels

Provides me with cash incentives or rewards for healthy behavior

Coverage for a wide selection of brand name drugs

Includes an extensive network of hospitals

Coverage for over‐the‐counter medications

Access to specialty hospitals (i.e. children’s hospitals)

The insurance brand is a name I know and trust

LOW OUT‐OF‐POCKET COST REMAINS CRITICAL IN PICKING INSURANCE

Consumers concerned with premiums, deductibles and copays…reasonable cost sharing for hospital services and retail clinic coverage are surging.

BASE: ALL QUALIFIED RESPONDENTS (2015 n=5037)Q65 Respondents were given a maximum difference trade off exercise in which they were forced to choose the most preferred and least preferred plan feature. *Average is 100, and the scores represent importance relative to that average.

Relative Importance of Benefit

SHP CONSUMER 2015

Below Average

Was below avg in 2014

Even higher than 2014

19

EMPLOYERS: STAY OR GO?

37


Projections for 2016: Wide range of estimates7.5

9.7 10.3

14.713.0

10.6

8.5 8.0

6.0 6.07.0

6.0 5.4 5.24.1 4.4 4.0

0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Health care trend afterplan and contributionchanges

CPI‐U

Wells Fargo

Mercer

JUMBO EMPLOYERS ARE SEEING A PROLONGED RESPITE FROM DOUBLE‐DIGIT PREMIUM INCREASES, BUT THESE ARE STILL RUNNING AT TWO TIMES CPI

SOURCE: Towers‐Watson NBGH Annual Surveys (2014‐2015)

TOWERS WATSON

20


21%

79%

36%

64%

BUT MORE ARE SAYING THAT BUSINESS PERFORMANCE SUFFERING AS A RESULT OF HEALTH

INSURANCE COSTS

Base: All Employer Health Benefit Decision Makers (n=340)Q805 Which comes closest to your company’s attitude towards health insurance benefits?

Current Company Attitude towards Health Insurance Benefits

Our business performance is suffering due to health insurance costs

Health insurance costs have very little impact on our business performance

2014 2016

41% 53%

18% 21%27%

44% 46%

33%26%

45%

59%

58%

45%

58%53%

87% 88%

2010 2011 2012 2013 2014 2016

FEWER EMPLOYERS ARE LOOKING FOR AN EXIT; CONTINUE TO FEEL RESPONSIBILITY FOR EMPLOYEE

HEALTH NEEDS

* Asked only of Employers with 50 or more employeesBase: All Employer Health Benefit Decision Makers (n=340)Q800: Please indicate your level of agreement with the following statements. Do you strongly agree, somewhat agree, somewhat disagree or strongly disagree?

Company’s Position on Employer‐Sponsored Healthcare: Providing Benefits(Top‐2 Box % ‐ Describes Completely/Very Well)

It is our responsibility to ensure our employees' healthneeds are met

My company is actively exploring ways to get out ofproviding health insurance to our employees

Employer‐based health insurance will soon become athing of the past

My company feels it is worth it to pay the penaltyassociated with not providing employee health benefitsrather than providing health benefits to our employees.*

40

21

55%57% 58%

54% 53%50% 50%

53%50%

52%49%

52%

48%* 47% 46%44% 45% 44%

66% 67%69% 69% 68% 68%

66%63%

65% 66% 65%63% 64%

62% 61% 62% 63%61%

62% 63%65%

63% 62% 61% 60% 59% 59% 60% 59% 59% 58%56% 56% 55% 56% 55%

20%

30%

40%

50%

60%

70%

80%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

All Small Firms (3‐199Workers)

All Large Firms (200 or MoreWorkers)

PERCENTAGE OF ALL WORKERS COVERED BY THEIR EMPLOYERS’ HEALTH BENEFITS, IN FIRMS BOTH OFFERING AND

NOT OFFERING HEALTH BENEFITS, BY FIRM SIZE, 1999‐2016

*Estimate is statistically different from estimate for the previous year shown (p<.05).



41%38%

34%32%31%31%31%28%27%27%26%26%25%24%23%

Increased emphasis on wellness and prevention

Focus more on primary care

Cost transparency tools for employees to make…

Aggressive management of specialty…

Negotiated reference pricing for specific…

Improved management of behavioral and…

Better manage heavy utilizers of care

Centers of Excellence models

Private exchanges

Focus on accountable care / ACOs

Direct contracting with hospitals

Promoting greater use of bundled payments

Narrow network health plans

Expanded use of Patient‐Centered Medical…

Consumer Directed Health Plans (CDHP)

MOST EMPLOYERS DO NOT THINK CURRENT INITIATIVES WORK WELL TO CONTAIN COSTS CDHPs are at the bottom, but even wellness at the top of the list isn’t viewed as very effective

Base: All Employer Health Benefit Decision Makers (n=340)Q1709 How well do you think each of the following initiatives will work to contain costs?

Works Extremely/Very Well to Contain Costs

22

PROVIDER PRICES FOR PRIVATE INSURANCE

43

MEDICARE SPENDING VERSUS PRIVATE SPENDING: A DIFFERENT STORY

Source: cited in NY Times, December, 15th, 2015 44

23

45

70%

80%

90%

100%

110%

120%

130%

140%

150%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Private Payer

Medicaid(1)

Medicare(2)

AGGREGATE HOSPITAL PAYMENT‐TO‐COST RATIOS FOR PRIVATE PAYERS, MEDICARE

AND MEDICAID, 1994 – 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.(2) Includes Medicare Disproportionate Share payments.

AMERICAN HOSPTAL ASSOCIATION


EMPLOYERS MOST CONCERNED ABOUT HOSPITAL PRICES,SPECIALTY PHARMACEUTICALS AND CANCER CARE

Base: All Employer Health Benefit Decision Makers (bases vary) Q1707: Please indicate your level of concern for the following drivers of health care costs.

Level of Concern for Healthcare Cost Drivers, Total Employer Benefit Decision‐Makers (Top 2 Box: Extremely/Very Concerned)

2013 2014 2016

Hospital inpatient prices ‐ ‐ 60%

Specialty pharmaceuticals 47% 54% 55%

Cancer care 54% 56% 54%

Hospital outpatient prices 47% 49% 50%General pharmaceuticals 46% 50% 50%Physician prices 54% 53% 48%

Obese patients generally 45% 53% 48%

Health plan fees for care management 45% 44% 44%Diagnostic imaging 43% 47% 41%Hospital outpatient utilization 40% 50% 40%

Innovative, breakthrough treatments/cures for disease ‐ 46% 40%

Orthopedic surgery (hips/knees/etc) 41% 44% 39%

Diabetes patients ‐ ‐ 39%

Physician utilization 45% 45% 37%

NICU/early childhood disease costs 0% ‐‐ 36%Low‐back pain treatment 43% 40% 34%Maternity care 41% 40% 32%

Routine preventative testing 40% 43% 31%

24

MASSIVE MEDICAID

47

MASSIVE MEDICAID

• US Medicaid Population edges out France and the Congo for top 19 spot in total population with 72,650,000 enrollees

• US Medicaid spending edges out Argentina for top 25 economies at $540 billion

• US Medicaid is bigger than Wal‐Mart by $50 + billion

48

25

MASSIVE MEDICAID

• Churning in Medicaid eligibles and exchange population

• Who will take these enrollees and what will be the financial impact on providers that do take them?

• Medicaid covers kids, mums, expansion populations, supports the dual eligible and is the default LTC policy for the middle class

• Can we design financially sustainable delivery models for Medicaid?

49

• Medicaid is dominant for low income and children

• Medicaid population has significant churn of approximately 25%

• Exchange population has 40% churn due mainly to changing life circumstances

• Get to 65 and you are “home free on Medicare” … at least for now

• Republicans may move age of Medicare eligibility up

• Democrats may move age of eligibility (or buy in) down

50

26

MAKING VOLUME‐TO‐VALUE REAL

51

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52

Base: All Hospital‐Based Execs (2016: n=205; 2015: n=200; 2014: n=202)Q980: Which of the following best describes your hospital’s/hospital system’s “risk bearing” strategy?

Hospitals committing to clinical integration for contracting w/ payers, but full risk only for the few

Hospital Risk Management Strategy

RISK‐BEARING STRATEGIES VARY CONSIDERABLY

SHP HOSPITALS 2016

41%

29%

19%

10%1%

31%

25% 26%

12%8%

30%28% 27%

9% 6%

No plans to take riskbeyond modest sharedsavings and pay‐for‐

performancearrangements

Experimenting w/riskarrangements, but small

part of revenue

Committed to clinicalintegration organizationstrategy for contracting

w/payers

Building an ACO modelthat is capable of takingrisk such as MedicareAdvantage or employer

direct contracting

Committed to movingthe majority of revenuesto fully at risk within 5

years

201420152016

52

27

53

HALF OF ALL EMPLOYERS WILLING TO CONSIDER CONTRACTING WITH LOCAL

HOSPITAL/HOSPITAL SYSTEM

Consider Contracting with Local Hospital or System to Provide Health Insurance

Base: All Employer Health Benefit Decision Makers (n=340) Q816 Would your company consider offering a health insurance plan provided by a local hospital or hospital system rather than one offered by an insurance company?

14%

7%6%

19%

34%

19%

2016

Yes, definitely

Yes, probably

No, don'thave enoughemployees inonegeography

53% Would consider

29%

28%

32%

32% Would Not Consider

5

THE TENSION

Bundles

•More is still better

• Encourage improvement of teams

•Not everything is easily bundled

• “Screw me on the bundle, and I’ll screw you on the rest”

Population Health/Risk and Accountable Care

•Frequency

•Appropriateness

•Determinants of health care

•The mutual disrespect problem

•Social work not medical care

54

28

WHAT POPULATION LEVEL ANALYTICS REVEAL

• The 5/50 Problem

– 5% account for 50% of spending

– 1% account for 20%

– Bottom 50% account for about 2%

• Segmentation of populations

• What you will find …– HONDAS

– Behavioral health

– End‐of‐life care

– Cancer

– Frail elderly

– Social work not medical care

– Specialty pharmaceuticals

55

THE TRUCK, THE REFRIGERATOR AND THE BUS

56

29

PHYSICIANS CONTINUE TO FEEL POWERLESS IN CURRENT SYSTEM

Physicians’ Feelings Towards Current Health Care System

Base: All Physicians (2016: n=599; 2015: n=626)Q1850: How would you describe your feelings about the health care system today? Please select all that apply.

2%

23%

1%

23%

16%

23%

43%

24% 23%

4%

23%

1%

24%

13%

21%

42%

24%22%



2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016

SHP PHYSICIANS 2016

One in four physicians is depressed or angry about the health care system today – no change since last year.

57

58

ONE IN THREE PHYSICIANS IS DRINKING THE BERWICK KOOL AID

Optimistic IntendersI haven’t reformed yet, but I want to.

Blazing BelieversIntegrating…and happy about it.

Reluctant ObjectorsIntegrating…and NOT happy about it.

Independent ResistersI haven’t reformed, and don’t plan to.

Experience with Integration

Attitudetowards

Integration

14%

30%

37%

20%

Back in 2012, we created a segmentation to understand how US doctors are dealing with all this consolidation and integration. Are they drinking the kool‐aid? Or sitting it out?

Segmentation inputs include: • Use of EHRs• Knowledge about meaningful use criteria• % of medication DAW vs generic allowable• P12M experience on salary, management by health plan,

or use of evidence based guidelines

• Willingness to work in solo practice• Perceptions on physician responsibility for patient

treatment compliance

THE SEGMENTATION OF BERWICKIAN NIRVANA

30

59


THE FORCE AWAKENS –RESISTERS ARE COMING BACK

Believers are increasing but Resisters are also growing once again.

0000

32% 25% 14% 20% 30%

16%19% 35% 20%

14%

22%23% 24%

21% 20%

23% 34% 28% 39% 37%

2012 2013 2014* 2015 2016

BlazingBelievers

ReluctantObjectors

OptimisticIntenders

B

*The 2014 sample skewed a bit different (higher solo practice than the population).

THE SEGMENTATION OF BERWICKIAN NIRVANA (2)

ACCESS TO CARE: URGENT AND EMERGENCY CARE

60

31

DID NOT GET SAME‐ OR NEXT‐DAY APPOINTMENT LAST TIME YOU NEEDED CARE

19 22

31

41 41 42 43 44 47 50 53

0

20

40

60

80

100

NETH NZ AUS SWE UK US SWIZ FRA GER NOR CAN


Percent

Base: Excludes adults who did not need to make an appointment to see a doctor or nurse61

69585656544946

39383635

0

20

40

60

80

100

ACCESS TO AFTER‐HOURS CARE

Percent

9595909081807876

68

4635

Adults, 2013Easy getting after‐hours care

without going to the ER

Primary care physicians, 2012Practice has arrangement for patients’

after‐hours care to see doctor or nurse

Source: 2012 and 2013 Commonwealth Fund International Health Policy Surveys.

Base: Needed care after hours. * In Norway, doctors asked whether their practice had arrangements or there were regional arrangements.

62

32

PRACTICE HAS ARRANGEMENT FOR PATIENTS’ AFTER‐HOURS CARE TO SEE DOCTOR OR NURSE

63

94 92 89 8580 78 75

69

4839

0

20

40

60

80

100

NETH NZ UK GER NOR AUS SWE SWIZ CAN US

Percent

* In Norway, respondents were asked whether the practice has arrangements or if there are regional arrangements.

Source: 2015 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.

DIFFICULTY GETTING AFTER‐HOURS CARE

25

4044 44

49 5158

63 64 64 64

0

20

40

60

80

100

NETH NOR AUS NZ UK US SWIZ CAN FRA GER SWE


Percent who said it was somewhat or very difficult to get after‐hours care without going to the emergency department

* Base: Excludes adults who did not need after-hours care 64

33

USED THE EMERGENCY DEPARTMENT IN THE PAST TWO YEARS

11

20 22 23 24 2630 33 35 37

41

0

20

40

60

80

100

GER NETH AUS NZ UK NOR SWIZ FRA US SWE CAN


Percent

65

WAITED SIX DAYS OR MORE FOR APPOINTMENT LAST TIME NEEDED CARE, BY INCOME

5 711 14

27 27 29 3235 37 38

5 37 9

16 17

25 2417

27 27

0

20

40

60

80

100

NETH NZ AUS SWIZ UK* FRA* NOR SWE* US* CAN* GER*

Low income adults All other adults


Percent

*Indicates differences are significant at p<0.05. Note: “Low income” defined as household income less than 50% the country median. Sample sizes are small (n<100) in the Netherlands and UK.

66

34

ACCESS TO CARE: CONVENIENCE FOR WHOM?

• 5,000 hospital emergency rooms • 10,000 urgent care centers• 5,000 ambulatory surgery centers• 2,800 retail clinics • 500 freestanding emergency rooms

67

URGENT CARE

• 10,000 all across US• Open usually from 8 a.m. until 10 p.m. • Charge at rates that are a third of the emergency department rates

• A facility fee is included in the single bill for services rendered in these facilities

• Located in high‐traffic areas• Goal is volume• Convenience is key• Offer basic on‐site diagnostic services with no advanced imaging such as CT or MRI

• 20 to 24 patients per day are required to break even• Regulatory barriers are relatively low, just like any medical office or clinic

Source: Wally Ghurabi MD, Personal Communication and Industry Filings 68

35

URGENT CARE (cont.)

• Few hospital referrals, but well‐insured when they happen

• Staffed by primary care physicians and nurse practitioners

• Formal emergency medical training is not required

• Well received by consumers for convenience, short waiting time and speedy resolution of episodic care issues

• Franchise‐like offerings in some markets, e.g., the market leader Med Express (which was purchased by Optum in 2015) operates, according to its website, in 15 states and has approximately 200 urgent care centers in those states

• The clinics are open 12 hours a day, seven days a week to serve consumers

• The key driving force behind urgent care is convenience

Source: Wally Ghurabi MD, Personal Communication and Industry Filings 69

FREE‐STANDING EMERGENCY ROOMS • Over 500 especially in Texas, Colorado, Ohio, Minnesota and Arizona

• Texas: Adeptus, a for‐profit publicly traded corporation, is the oldest and largest provider in the freestanding emergency department business. Under its First Choice Emergency Room brand, the company has nearly 100 locations in Texas 52 in metro Dallas (many in partnership with Dallas health system powerhouse Texas Health Resources) and 30 in Houston, seven in San Antonio, and five in Austin

• Could be as many as 2,000 of these facilities nationally in the near future according to Harvard researchers

Source: Wally Ghurabi MD, Personal Communication and Industry Filings

70

36

FREE‐STANDING EMERGENCY ROOMS (cont.) • Two basic types of freestanding emergency rooms:

– Hospital affiliated: that are recognized by CMS as being part of a hospital billing number and therefore can be reimbursed for a facility fee under Medicare

– Independent and not recognized by CMS (the latter also tend not to accept Medicaid patients because they cannot bill for the facility fee)

• 54 percent of all freestanding emergency rooms are hospital affiliated while 37 percent are independent

• Freestanding emergency department are fundamentally different from urgent care in that they are open 24/7, 365 days a year

• Desired location is a high‐traffic area, but disproportionately in relatively affluent suburban communities where a high percent of privately insured patients either live or work


71

FREE STANDING EMERGENCY ROOMS (cont.)• Most freestanding emergency departments charge and payers normally pay standard ER rates

• Physicians bill a professional fee, and a facility fee is collected (usually three times the professional fee)

• The facility fee can be collected by the owner, whomever that is

• Because the charges are so high, they don’t need high volume and depend more on high acuity

• The break‐even point is 8 to 10 patients per day

• Typically they offer more advanced diagnostic equipment, including X‐ray, lab and CT scanner,

• Much more complex to license compared with urgent care, requiring medical practice committees like a hospital


72

37

FREE STANDING EMERGENCY ROOMS (cont.)• Referrals from freestanding emergency departments with typical hospital ERs, are extremely attractive to the hospital since almost every admission will be a commercially insured patient

• Freestanding emergency departments require staff with formal training in emergency medicine.

• Parent company Adeptus indicates in its latest 10 Q filing with the SEC that it also has active partnerships with HCA, Concentra, Dignity Health, University of Colorado Health System and Trinity Health, in addition to their joint venture with Texas Health Resources

• The 10 Q filing also reveals that over 90 percent of its revenue comes from commercial patients, with Medicare and Medicaid being a tiny sliver of revenues

• This is cherry picking through location


73

LOOKING TO 2020• Pressure on public payment sources will continue

• Private Payers will not tolerate costs shift willingly

• Exchanges, Medicare Advantage, Managed Medicaid and DB to DC among employers makes market more retail

• Shallow‐pocketed consumer becomes more important as decision maker

• Long run three payer segments: Managed Medicaid, HDHP (Exchange and Employer) and Medicare Advantage/ACO increase pressure to deliver value

• Care redesign for higher performance

– Migrating Business model to Risk

– Care coordination and management across the continuum of care

– Alignment of all physicians, nurses and caregivers with this process

– Consumer facing innovation in delivery and telehealth

– Innovation at Scale

• Stay Tuned: Even More Change is Coming74

38

QUESTIONS?

75

THANK YOU

Ian Morrison, [email protected]@seccurve

76

the future of the healthcare marketplace: now what

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