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1
Opportunities to Improve Health Care for Washingtonians
Life Sciences Discovery Fund Meeting ~ March 17, 2009
Our Purpose Today
Discuss key issues and trends in Washington’s health care system today
Discuss potential research opportunities to improve outcomes
Focus on improving quality of care
In our view, the cost and access
problem is a quality problem:
Rising cost of health care – impact on business, on the uninsured
Quality improves affordability, and greater affordability improves access
18.6%
17.1%
12.1%
10.1%
8.0%
2.5%
6.1%
8.1%
11.2%
14.7%
10.1%
7.5%
6.1%6.1%
2.1%
7.3%
-1.1% 0.2%
16.7%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Workers' EarningsAnnual Change in Total Health Benefit Cost per EmployeeOverall inflation
Quality problems and variability in care are driving health care costs
State revenue growth is 4%, health care growth trends are 10% Health care cost increases take away from education and other priorities Rising health care costs are negatively impacting jobs, wages and employer provided
coverage As we pay more for health care, cuts hurt safety nets like community clinics
We’re spending more on health care, but the population is less healthy Children born today face a lower life expectancy than you or I Increases in diabetes, obesity, heart disease
Significant quality issues drive increased costs RAND: Americans get evidence-based care only 55% of the time IOM: up to 98,000 Americans die each year due to avoidable medical errors NCQA: up to 79,000 Americans die each year due to quality gaps CDC: 2 million patients acquire infections in the hospital each year => 90,000 die
5
Trends in Washington State
Cost Services being provided
Source: State of Washington Office of Financial Management (July 2005)
0.70
0.90
1.10
1.30
1.50
1.70
1.90
2.10
2.30
2000 2001 2002 2003 2004 2005 2006 2007
DSHS Medical Assistance Department of Health
HCA - Basic Health Employee Health Benefits & K-12 Subsidy
K-12 Education GF-State Revenues
All Health-Related Expenditures
What are we spending our money on (state budget)?
Growth in Costs versus Growth in General Fund-State Revenue
Medical Assistance Admin.Employee & K-12 Health Benefits
All Health-Related Expenditures
Dept. of Health
K-12 EducationGF-State RevenuesHealth Care Authority: Basic Health
Note: MAA growth is a combination of medical cost (avg. 6%) and caseload growth (avg. 4%)
In what health care settings?
Top Medical Assistance Expenditures – SFY 2007
Expenditure data from the November 2008 HRSA Medical Assistance Forecast* - Mandatory Services
Managed Care Premiums *
30%
Inpatient *18%
Drugs 12%
Physicians *7%
Outpatient *7%SMI
6%
FQHC/RHC5%
Dental4%
DME3%
Transportation *2%
Other6%
By which health care professionals & facilities?
Top Venues
Community Provider $102M
FQHC $90M
Indian Health Center $30M
Family Planning Clinic $23M
Rural Health Center $12M
Public Health Dept $0.5M
Medical Assistance Data
Top Provider TypePCP $258M
Other $209M
Dental $113M
Specialist $73M
Top Facilities (% paid)
Other PPS 77%
CPE 15%
CAH 5%
Children’s 13%
Harborview 7%
Sacred Heart 7%
Swedish 6%
Tacoma General 6%
For which services & clients?
Top 10 DiagnosticCancer $21M
OB/GYN $17M
Musculoskeletal $16M
GI $18M
Injury $14M
Other $12M
Respiratory $10M
Cardiac $9M
GU $8M
Dental $6M
Top ProceduresE&M $21M
Diagnostic Radiology $33M
Office Rx $18M
Path/Lab $17M
CV $8M
Medical Assistance Data
Top Client TypesVentilator Chronic and Acute
Chronic Mental Health
Re-hospitalizations
Traumatic Brain
Transplant and Bone Marrow
Inpatient Payments - By Eligibility
CN Blind/Disabled 51%
CN Other Kids 11%
CN Pregnant Alien Women 9%
CN TANF 8%
MN Blind/Disabled 6%
CN Pregnant Women 4%
For which services / clients (cont)?
Medical Assistance Data
Payments For Top 9 services = 62 % of Total $590.6 million paid to all hospital (PPS, CAH, CPE, LTAC)
NEONATE14%
PULMONARY8%
OB/DELIVERY8%
GENERAL SURGERY7%
ORTHOPEDICS6%PSYCHIATRY
7%
CARDIAC SURGERY5%
NEUROSURGERY3%
VASCULAR3%
Other Service Categories39%
SFY06 - Total pymt $590.6 millions by Service Category - All Hosp pymt
On what type of drugs?
Medical Assistance Data
Top Drugs TypesBrand 80%Generic 20%Generic Fill Rate 63%*Mental Health 40%Antipsychotics 25%
* WA plans at 80%
Top Client Types
Hemophilia $0.5-1M per userChemo $100 ->$10K/monMental Health Monthly Rx $500 Poly-pharmacy Avg. 7 drugs per user
$82,700,584.90
$40,651,335.60
$29,211,563.98
$16,397,294.10
$13,864,147.99
$10,001,365.61
$9,861,328.69 ANTIPSYCHOTICS
ANTICONVULSANTS
ANTIHEMOPHILIC
PROTON-PUMP INHIBITORS
ANALGESICS, NARCOTICS
INSULINS
Top Drugs (specific)
Seroquel $21.4MAbilify $16.3MNovoseven $15.4MRisperdal $15.1MZyprexa $13.7M
A final perspective on costs chronic care
Source: Agency Financial Reporting System (AFRS); OFM Eligibility File; State FY 2008
Five percent of the clients have chronicmedical, mental health and substance-abuse issues that are responsible for 50% of FFS expenditures
Manged Care54%
Fee-For-Service
46%
Average Monthly Caseload
Managed Care38%
Fee-For-Service
62%
Total Expenditures
Source: Agency Financial Reporting System (AFRS); OFM Eligibility File
Figures in total dollars (All State, Local, and Federal fund sources); State FY 2008
5% of clients drive 50% of costs
Top Venue -- Hospital, RxTop Issues -- CV, MH, GI, Cancer, InfectionsTop Rx -- Narcotic, CV, MHD
5% of Clients
95% of Clients
Health care spend by client?
14
Trends in Washington State
Quality of care Variation, defects, waste
The Cost of Variability
Supply Sensitive Care
Preference Sensitive Care
Effective Care
Proportion of Medicare spending attributed to each category of unwarranted variation
63%25%12%
Source: The Dartmouth Institute for Health Policy & Clinical Practice
Spending and QualitySupply-sensitive services and the paradox of plenty
Medicare spending
per beneficiary2003
Green - US HRRsBlue - FL HRRsRed - WA, OR
HRRs
How can the best medical care in the world cost twice asmuch as the best medical care in the world? – Uwe Reinhardt
Cedars-SinaiCedars-Sinai 76,93476,934UCLA Medical CenterUCLA Medical Center 72,79372,793New York-PresbyterianNew York-Presbyterian 69,96269,962Johns HopkinsJohns Hopkins 60,65360,653UCSF Medical CenterUCSF Medical Center 56,85956,859Univ. of WashingtonUniv. of Washington 50,71650,716Mass. GeneralMass. General 47,88047,880Barnes-JewishBarnes-Jewish 44,46344,463Duke University Hosp.Duke University Hosp. 37,76537,765Mayo Clinic (St. Mary's)Mayo Clinic (St. Mary's) 37,27137,271Cleveland ClinicCleveland Clinic 35,45535,455
20,000
40,000
60,000
80,000
100,000
120,000
Inpa
tient
+ P
art B
spe
ndin
g pe
r de
cede
nt Spending per Medicare beneficiary with severe chronic disease
(Last 2 years of life, 2000-2003)
Variations in practice, spending, and across America’s Best Hospitals (USN&WR + Cedars)
Transurethral Prostatectomy for Benign Prostatic Hyperplasia
1.01.0
2.02.0
3.03.0
4.04.0
5.05.0
6.06.0
7.07.0
8.08.0
9.09.0
10.010.0
11.011.0
12.012.0
Seattle 3.5Olympia 3.1Yakima 2.6
Port Angeles 9.1
Spokane 7.2
Everett 5.1Tacoma 4.9
per 1,000 Male Medicare Enrollees (2002-03)
Coronary Artery Bypass Grafting
2.02.0
4.04.0
6.06.0
8.08.0
10.010.0
Spokane 5.4Yakima 4.9Kirkland 4.9Tacoma 4.7Olympia 4.5Everett 4.2Seattle 3.9Bellevue 3.5
per 1,000 Medicare Enrollees (2002-03)
Percutaneous Coronary Interventions
3.03.0
9.09.0
15.015.0
21.021.0
27.027.0
33.033.0
39.039.0
Bellevue 12.3Kirkland 11.5Olympia 11.2Yakima 9.9Tacoma 8.7Everett 7.6Spokane 6.9Seattle 6.6
per 1,000 Medicare Enrollees (2002-03)
Back Surgery
1.01.0
2.02.0
3.03.0
4.04.0
5.05.0
6.06.0
7.07.0
8.08.0
9.09.0
10.010.0
Spokane 6.2Tacoma 5.7Olympia 5.3Yakima 4.5Seattle 4.2Everett 4.1
Port Angeles 2.8
per 1,000 Medicare Enrollees (2002-03)
Anti-Psychotic Medication in Children
Maximal doses of anti-psychotics in kids vary between 0.5-3.8%
What does all this tell us about variation in performance overall?
0%10%20%30%40%50%60%70%80%90%
100%
above%
avg%
below%
1
10
100
1,000
10,000
100,000
1,000,000
Health care quality defects occur at alarming rates
U.S Airline flight fatalities/U.S. Industry Best of Class
Airline baggage handling
Breast cancerScreening (WA)
Detection &treatment ofdepression
Adverse drugevents
Hospital acquired infections
Hospitalized patientsinjured through negligence
1(69%)
2(31%)
3(7%)
4(.6%)
5(.002%)
6(.00003%)
Overall Health Care Quality in U.S.
(Rand Study 2003)
IRS Phone-in Tax Advice
U.S. birth defects
Recommendedwell-child visits (WA)
Treatment ofBronchitis (WA)
NBA Free-throws
Sources: modified from C. Buck, GE; Dr. Sam Nussbaum, Wellpoint; Premera 2004 Quality Score Card; March of Dimes
level (% Defects)
Def
ects
per
mil
lio
n
∑
Unnecessary procedures contribute to waste
ConsumerReports.org 10 overused tests and treatments November 2007
1 BACK SURGERY. … surgery, which can cost $20,000 plus physician's fees …..
2 HEARTBURN SURGERY. operation, costs $14,600 or more
3 PROSTATE TREATMENTS. . over treated with surgery that costs $17,000, or by radiation therapy for $20,700
4 IMPLANTED DEFIBRILLATORS. … cost some $90,000 over a lifetime.
5 CORONARY STENTS. Billions are spent each year….
6 CESAREAN SECTIONS. ..cost almost $7,000, about 55 percent more than natural delivery...
7 WHOLE-BODY SCREENS. CT scans, which can cost $1,000 … no proven benefits for healthy people. A few CT scans a year can increase your lifetime risk of cancer.
8 HIGH-TECH ANGIOGRAPHY. Using a CT …costs an average of $450...standard angiography is sometimes still needed.
9 HIGH-TECH MAMMOGRAPHY. Using software to flag suspicious breast X-rays would add $550 million a year to national costs if used for all mammograms. But a 2007 study found that this technique failed to improve the cancer-detection rate significantly, yet resulted in more needless biopsies.
10 VIRTUAL COLONOSCOPY. …Though less costly than a standard colonoscopy, the virtual test isn't cost-effective because any suspicious finding requires retesting with the real thing.
Copyright © http://www.consumerreports.org/cro/health-fitness/index.htm 2000-2006 Consumers Union of U.S., Inc.
26
Potential Research Opportunities
Connecting these trends to the work of the LSDF
Research Opportunities
How do we reduce variability in health care?
How do we achieve more population health for the same or fewer dollars?
How do we actually change people’s behavior?
Some examples (brainstorming)….
High risk pregnancy is larger cause of low birth weight and NICY admissions
How about a low-cost, highly reliable and portable uterine monitor for high risk moms?
High tech old idea: You cannot manage what you do not measure
C-Section Rates Vary 14-48%
Environmental triggers cause asthma to worsen
How about an Air Sampler that tells you good or bad air and what’s wrong?
Only 40% of people take their medications regularly
$200
$20
$75
How about a $2 medication bottle that lights up redred/yellowyellow/greengreen based on compliance?
New Generics Total Class $ Brand vs. Generic Spend ($ diff)
Risperidal (AAP) $86.7M $81M vs. $4M ($121) Venlifexine(AD) $16M $12M vs. $4M ($185) Protonix (PPI) $16.4M $14.9M vs. $1.6M ($58) Altace (ACE) $0.49M $ 0.45M vs. $0.045M ($51) Norvasc (CCB) $0.94M $0.06M vs. $0.88M ($66) Oxycontin (LAO) $10M $5.6M vs. $4.5M ($280) Zocor (Statins) $7.7M $ 7.1M vs. $0.6M ($87)
Lipitor (2012)
Imitrex (2010) $6.5M Allegra Zertex $0.48M $0.1M vs. $0.3M ($34)
For each new generic a new “me too” brand emerges in the class. Often “me too” drugs show little difference in efficacy or are only more effective in special populations. Only two PDL classes have generic > brand costs.
Generics are less expensive and often equally effective
Basis for clinical
decisions
Marker Measuring device Unit of measurement
Evidence Randomised controlled trial
Meta-analysis Odds ratio
Eminence Radiance of white hair
Luminometer Optical density
Vehemence Level of stridency Audiometer Decibels
Eloquence (or elegance)
Smoothness of tongue or nap of suit
Teflometer Adhesion score
Providence Level of religious fervour
Sextant to measure angle of genuflection
International units of piety
Diffidence Level of gloom Nihilometer Sighs
Nervousness Litigation phobia level
Every conceivable test
Bank balance
Confidence* Bravado Sweat test No sweat *Applies only to surgeons
If not good science: what else?
Changing behavior
Washington Wellness handout
Putting it all together - research & policy
Research can help guide state policy to:
Put health care on a budget Increase access by lowering cost and improving quality Significantly increase public health spending on nutrition, obesity,
smoking, and exercise Change reimbursement system Change definition of medical necessity to reflect national standards and
remove decision making from those who have an economic interest Significantly increase transparency of practice patterns, pricing, and
payments to providers Reduce unwarranted variation Defend the state’s position in Medicare as a relatively efficient and higher
quality state
Additional Questions / Discussion