From AM Radio to Pandora: The Health Care Innovators Next Frontier PrimeHealth September 19, 2012.

From AM Radio to Pandora:The Health Care Innovator’s Next Frontier

PrimeHealth

September 19, 2012

Today’s Agenda

• Why we have to fix the system now• The tsunamis that are forcing change• What we are being asked to do to create a sustainable

system• How entrepreneurial innovation can be part of the

solution

3© 2009-2012 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement

Medicare+Medicaid is Largest Driver of Future Federal Spending

Offsetting Receipts

Medicare + Medicaid

Net Interest

Social Security

Other Mandatory Spending

Defense

Nondefense Discretionary Spending

-$250

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

Fede

ral S

pend

ing

in B

illio

ns

Projected Increases in Federal Spending, 2010-2021

4© 2009-2012 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement

$318 $899 $1,543

$3,997$1,878

$4,150$4,247

$9,773

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Single Coverage1999

Single Coverage2010

Family Coverage1999

Family Coverage2010

Average Annual Contributions to Health Insurance Premiums1999-2010

Employer Contribution

Worker Contribution

Huge Increases in Costs for Both Employers & Workers

Employer ContributionMore Than Doubled

Employee Contribution

Nearly Tripled

5© 2009-2012 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement

Health Care Costs Have Wiped Out Real Income Gains

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

1999 2009

Monthly Income for Typical U.S. Family of Four

Inflation on Non-Health Care GoodsHealth Care Taxes, Premiums, ExpensesNet Available Income

Source: "A Decade of Heallth Care Cost Growth Has Wiped Out Real Income Gains For an Average US Family," Health Affairs, September 20011

$ 95 for spending

$ 945 for health care

$ 870 for inflation

$1910 more income

The Second Tsunami: Information

• Moore’s law: number of transistors on a chip doubles every 18 mos. (trend true for >50 years)

• Corollary: Information is increasing at an exponential rate

• Conclusion: The tools and methods we used twenty years ago are obsolete, and are being replaced

The Third Tsunami: Consumerism

• Customer expectations are rising exponentially as well

• Other industries have taught Americans to expect their experiences to be individualized and automated: mass customization

• Disruptive innovation: minute clinics, other professionals, telemedicine, remote monitoring, personal health records, communities of care; geography increasingly irrelevant

Old Chinese curse: “May you live in interesting times.”

Federal deficit over next decade will be driven largely by growth in HC spending.Employer contributions have doubled over the last decade; employee contributions have tripled.We owe the Chinese $1.2 trillion; I think they’re on to us.Being out of money has an amazing clarifying effect on people’s thinking.

The challenge of doing the opposite of what you’ve been doing

Old Game• Maximize billable activity• Biggest network of

unconnected providers• Value based on

credentials• Patients as passive

recipients• Care centered on

providers

New Game• Maximize health

outcomes for least price• Providers who produce

best outcomes together• Value based on

outcomes• Patients as activated

partners• Care centered on

patients

Integrated system global payments

Global DRG fee: hosp & MD inpatient

Global DRG fee: hosp only

Episode of care fees

Global ambulatory care fees

Global primary care fees

Blended FFS & med home fees

FFS and DRGsCo

nti

nu

um

of

Pay

men

t B

un

dli

ng

Continuum of Organization

Small practices; unrelated hospitals

Medical Independent Practice Homes Assns; MD-Hosp Orgs

Fully integrated delivery system

Co

ntin

uu

m o

f Perfo

rman

ce-

Based

Pay D

esign

Outcome measures; large

% of total payment

Simple process and structure measures;

small % of total payment

Care coordination and

intermediate outcome

measures; moderate % of total payment

Less Feasible

More Feasible

Source: Modified version of slide from Shih et al, The Commonwealth Fund, August 2008.

Transformation of Payment and Delivery

Big Data + Empowered, Demanding Consumers = Mongo Opportunity for Innovations That Inform and Empower

Berwick: Kano Model of Innovation

• Kano I: reduction in defects (Dissatisfiers)

• Kano II: reduction in cost while maintaining or improving customer experience (Satisfiers)

• Kano III: new service or product that costs more money (Delighters)

Transformation Opportunity

Moving beyond Kano III to offer solutions to enhance health care experiences, contain costs, and improve the health of Coloradans.

Less of: More of:

Opportunities for Innovation

Coverage + Coordination + Collaboration

Clinica Family Health Services | Access 1.Providing high-quality treatment in small groups, plus:

• Education• Screening• Answers• Support

2.90-minute session with coordinated team of caregivers3.Improved outcomes, better adherence

+ Connection?What would it take to offer a new level of interactions and support to patients using the channels they’re already using?

Opportunities for Innovation

Connection + Performance Improvement

Adherence is a $290

Billion/year problem*

1. Interventions impact adherence

2. Medication adherence leads to lower health care costs

* New England Healthcare Institute. Thinking Outside the Pillbox: A System-wide Approach to Improving Patient Medication Adherence for Chronic Disease, 2009.

Opportunities for Innovation

Data on Outcomes, Cost and Quality

Society of Thoracic Surgeons and Consumer Reports:1.Data to report on:

• complication and survival rates• whether groups used the best

surgical technique• whether patients were sent

home with certain medicines2.Examining whether giving patients access to this kind of information could improve heart surgery outcomes

Thank you!

Jay Want, MD

Chief Medical Officer

CIVHC | Center for Improving Value in Health Care

Phone: 720-583-2095

e-mail: [email protected]

Web site: www.civhc.org