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Tom EmerickEmerick Consulting
Why Employers Should Stay in the Game
Minnesota Health Action GroupEmployer Leadership Summit
February 21, 2013
Tom Emerick, Emerick Consulting LLC (479) 957-4902 Blog: http://crackinghealthcosts.com [email protected]
Not Pretty for US CorporationsEmerick Consulting
Will cover health financing challenges corporations facing
How view of US health care is evolving
Where the puck is going in five years
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Not Just Bottom LinesEmerick Consulting
85% of growth in Consumer discretionary spending went to health costs last 10 years
Corporate top lines under attack
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Health Costs Threaten Top LinesEmerick Consulting
• Sharp Says Its Future Is at Risk WSJ November 4, 2012
• Dell reported an 18 percent drop…August 22 2012
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More Health Spending Woes
• HP sales drag, July 2012
• Intel's Warning Flags PC Woes, September 7, 2012
• Harvard says health care costs are growing at an ‘unsupportable’ rate, Boston Globe Nov. 1, 2012 (irony)
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Corporations Looking for New Solutions
Old costs controls not workingShrinking outlier groupPPOs failingGross variation in care for
outliers6
First PPO Obsolescence
• Shrinking outlier population• 6-8% = 80% of health plan dollars• Most outliers have complex health
needs
Time to Move on
Wellness and prevention has has been a noble effort
Failed to curtail costs sustainably
Distracts from real issues8
More on Outliers
•10-20% misdiagnosed
•40% have flawed treatment plans
•A source of huge waste
•Extreme variation in how clinics and hospitals handle this population (recent Dartmouth study)
Corporations Taking Notice
PBS Story Feb 2012One Doctor in Texas…accused of
$374M in Medicare fraud over six years
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News Corporations See
Reuters News March 2012---“Unnecessary cancer treatment in men on the rise”
Washington Post March 2012---” There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.” (Sort of correct)
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Coronary: A True Case of Medicine Gone Awry by Stephan Klaidman…
Scribner Press
> Tenet’s Redding Hospital---millions of dollars in settlements for heart surgeries on patients with healthy hearts and arteries
> Doctors barred from heart surgery
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News Corporations See> New York Times, Jun-11. "Medicare Claims Show Overuse for
CT Scanning" Hundreds of hospitals across the country performed multiple scans in succession putting patients in danger from overradiation. Some hospitals performed at least two scans in succession over 80 percent of the time.
> Wall Street Journal, Jun-11. "Senators Request Probe of Surgeons" A group of Senators is examining physician-owned distributorships that allow doctors to make money by purchasing their own devices for spinal fusion surgeries. A conflict of interest is apparent since more surgeries means more distributorship profits.
> Wall Street Journal, Jul-11. "Heart Treatment Overused" Of the 600,000 annual $20,000 angioplasty procedures nationwide 15 percent are either deemed unnecessary or inappropriate according to a study. This comes out to a total unnecessary cost of 1.8 billion dollars per year.
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News Corporations See
>Bloomberg, Dec-10. “Highest Paid U.S. Doctors get Rich with Fusion Surgery" The highest paid doctors in the U.S. get rich off spinal fusion surgeries. Spinal fusion surgeries doubled to 413,000 between 2002 and 2008. The surgeries remain highly ineffective, and doctors’ motives for performing the surgeries remain in question. >Burton Report, Jul-11. "Unnecessary Spine Fusions: a Full Time Employment Opportunity" This report discusses how economics, not patient health, is the primary incentive for the $150 billion spinal fusion industry.
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News Corporations See: Excerpt from WSJ on March 29, 2011… Secrets of the System
Medicare Records Reveal Troubling Trail of Surgeries
Dr. Vishal James Makker…
A Medicare database analyzed by The Wall Street Journal …data show highest rate of refusions in the nation among surgeons who performed spinal fusions on 20 or more Medicare patients during those two years.
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Opportunity Rich Environment
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Where? Outlier management
Again: 6-8% = 80% of plan dollars
Again: 10-20% completely misdiagnosed
Again: 40% flawed or suboptimal treatment plans
Micromanaging Outliers Next Frontier
Company Sponsored COE
Stellar results: 20-40% decrease in targeted surgeries
Employee get better quality, save money, plan saves money
No losers
Revolutionary and sustainable
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Needed: New Definitions
QualityEthics
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Quality Definition
Old definition: Is care delivered to a gold standard?
New definition: First is the care needed and appropriate, then is it delivered to a gold standard?
Ethics Definition
Current definition: If something may help, let’s try it
New Definition: First determine the desired patient outcome, then use the safest, least invasive way to achieve it.
Huge Difference
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Comparative Ethics and Quality Defs.
US stands alone among English speaking countries
Stands nearly alone among “peer” countries
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US vs. UK
US spends about 2X per capita
US 10% more obese
UK smokes 6% more
UK drinks booze like no tomorrow
UK life expectancy up relative to USSource: OEDC report
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Customized Centers of Excellence
• Seeking these solutions today: Pepsi, Walmart, Lowes, Boeing, many more
• Huge shift coming
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COE Model Can Avoid Extreme Variations
• Heart surgery• Valve surgery• Cancer Care• Spine surgery • Much more
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COE Design model
• Plan pays for travel for patient and companion
• Employees get better quality of care
• Employees save $ out of pocket
• Plan save money
• No losers
• ers25
Hospitals Worst of 24 Reported (ranked by DAHC Hospital Care Intensity HCI Index)*
• Cedars-Sinai Medical Center 2.06
• NYU Langone Medical Center 1.73
• Mount Sinai Medical Center 1.50
• Ronald Reagan UCLA Medical Center 1.48
• New York-Presbyterian Hospital 1.37
• US Average 1.00*Dartmouth Health Care Atlas
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The Best of 24 Reported
• U. of Washington Medical Center0.78
• Stanford Hospital and Clinics 0.78
• St. Mary's Hospital, Mayo Clinic 0.70
• Scott & White Memorial Hospital 0.62
• University of Utah Health Care 0.62
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Centers of Excellence Employers Use• Virginia Mason 0.74 *• Geisinger 0.65 *• St. Mary's Hospital, Mayo Clinic 0.70• Scott & White Memorial Hospital 0.62• St John’s Mercy Springfield, MO 0.67 *• Cleveland Clinic 1.12*2007
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Comparison UCLA vs. Virginia Mason
1.48 (UCLA ) / .74 (VM)= 2 or 200% Advantage: Virginia Mason UCLA booted out by employers in CA Employers/ees winners
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New COE Model
Saves lives
Gives employees: better quality care
Saves employees out-of-pocket dollars
Best care = most cost-effective
A rising tide…
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Desperately Needed
Focused Health Care FactoriesThey are comingWill be Revolutionary
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New COE Model Impact on Hospitals
WinnersLosersRush to CSCOEs on todayFive year prediction: Many
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Stay in Game
Why stay in game? CSCOEs Transformational Drive real reform Bad guys won’t quit until they lose
patients Feds will never figure this out
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Cracking Health Costs
My blog read globally: Cracking Health Costs
http://crackinghealthcosts.com
Book coming soon: Cracking Health Costs, Wiley Press
Early Buy: http://www.dismgmt.com/cracking-health-costs
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Questions Comments
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