Transforming Healthcare Collaboration among Payors, Providers and Community Leaders Vinod K. Sahney, PhD Senior Vice President and Chief Strategy Officer

Transforming HealthcareCollaboration among Payors, Providers and Community LeadersVinod K. Sahney, PhDSenior Vice President and Chief Strategy OfficerPresented at Purdue UniversityNovember 29, 2006

3Blue Cross Blue Shield of Massachusetts

Outline

• Introduction• Performance of U.S. Healthcare System• Collaboration to Improve Access to Healthcare• Collaboration to Improve Healthcare Delivery System• Collaboration to Improve Quality of Care in Massachusetts• Growing Conflicts• Conclusions


Introduction: Key Messages

Healthcare Delivery – Non System Lack of Aims for Improvement System Performance Compares Poorly to Developed Nations Focus on Medical Technology Gives False Sense of Quality Enough Money in System to Cover All Collaboration Initiatives – Improve Care and Health Status Leadership by Community Organizations Needed


y = 1025.3e0.0449x

R2 = 0.9936

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

1965 70 75 80 85 90 95 2000

Per-Capita Health Spending in the United States in Constant 2000 Dollars

MANAGED CARE


Health Insurance Premiums Compared to Other Indicators

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 1993 1996 1999 2000 2001 2002 2003 2004

Inflation Workers' Earnings HC Premiums

Pe

rce

nt

Incr

ea

se

Source: Employer Health Benefits Survey, KFF, 2004

Premium costs have risen five times faster than inflation and four times faster than wages


International Healthcare Trends

International Health Spending per Capita 2002

Note: Because these data are based on Purchasing-Power Parity values, they will differ slightly from earlier values cited herein.Source: Adapted from Anderson, GF et al. (2005) Health Affairs

In fact, the U.S. spends much more per person on healthcare than other countries, as well as a larger percent of Gross Domestic Product.

0%

3%

6%

9%

12%

15%

$0 $1,000 $2,000 $3,000 $4,000 $5,000

Spending Per Capita

Pe

rce

nt

of

GD

P

Turkey($446, 6.6%)

Mexico($553, 6.1%)

Poland($654, 6.1%)

Japan($2,077, 7.8%)

U.K.($2,160, 7.7%)

Canada($2,931, 9.6%)

U.S.($5,267, 14.6%)

Switzerland($3,446, 11.2%)


Healthcare expenditures are projected to more than double between 2000 and 2010, and healthcare is expected to account for 17% of the Gross Domestic Product by 2010.

*Projected by Centers for Medicare and Medicaid Services.Source: Adapted from Centers for Medicare and Medicaid Services (2005a)

$2,754

$1,937

$1,679

$1,426$1,310

$1,559

$1,805

17.3%15.6%15.4%15.3%

14.9%14.1%13.3%

$0

$500

$1,000

$1,500

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2000 2001 2002 2003 2004* 2005* 2010*

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18%

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National Health Expeditures (NHE) Percent of GDP

National Healthcare Trends

National Health Expenditures (NHE) and Percentage of GDP2000-2010


…and retirees are not faring any better

According to an analysis by the Urban Institute, by 2030 out-of-pocket expenses for retirees will consume:

• 30.3% of income for older unmarried adults, up from 17.3% in 2000, and

•35.1% of income for older married couples, more than double the 16% in 2000

Source: Henry E. Simmons, Pres. National Coalition on Health Care. November 14, 2005 address to International Foundation of Employee Benefit Plans


National Scorecard on U.S. HealthSystem Performance (Commonwealth Fund, September 2006)

Indicator U.S National

Rate

Benchmark

Measure

Benchmark Rate

Score: Ratio of U.S. to Benchmark (%)

Mortality/ 1,000 115 Top 3 Countries

80.0 70

Infant Mortality/ 1,000 7 Top 3 Countries

2.7 39

Healthy Life Expectancy at age 60

16.6 Top 3 Countries

19.0 87

Children missed 11 or more school days

5.2 Top 10% states

3.8 74

Adults received screenings and

preventive care (%)

49.0 Target 80.0 61




Rate

Benchmark

Measure

Benchmark Rate


Chronic Disease under control (%)

52.0 90% Medicare

Private Plans

82.0 61

Nursing Home residents with pressure sores (%)

16.0 Top 10% states

11.0 67

Ability to see doctor on same day or next day

when sick (%)


81.0 58

Easy to get care after hours without going to ER

(%)


72.0 53

Adults with no access problems due to cost (%)

60.0 Top 5 countries

91.0 66




Rate

Benchmark

Measure

Benchmark Rate


Overuse/Waste (%) 22.0 Various 11.0 46

ER visits for conditions could have been treated by PCP

(%)

26.0 Top 6 countries

6.0 23

% of National Health Expenditure on Health

Administration

7.3 Top 3 Countries

2.0 28

Physicians using electronic records (%)


80.0 21


Why Are We In This Situation?

No national healthcare goals

No organized leadership for improvement

Cottage industry structure

Defined benefit with no planning

No accountability

No one owns enough of the system to enforce change

MassachusettsHealthcare Reform


Health Care Reform: The Genesis

October 31, 2003:

CONSENSUS DECLARED AT THE BCBSMA


FOUNDATION: WE NEED A ROADMAP TO


HEALTH CARE REFORMHEALTH CARE REFORM





HEALTH CARE REFORMHEALTH CARE REFORM


Healthcare Reform Timeline

Health care reform has dominated the political landscape for over one year.

_________________Summer 2004 to early 2005

Legislation drafted

April 2005

Governor, Senate bills released

October 2005

House bill released

November 2005

House, Senate final bills/ conference committee appointed

Legislation finalized

April 4, 2006

Governor signs into law

April 12, 2006


Expanding the Focus

As first proposed, the concept of health care reform was about:

Lowering health care costs for employers

Efforts to enroll those eligible for Medicaid but unenrolled

Increasing access to care


Expanding the Focus

With input from BCBSMA, other issues were added to the mix:

Addressing the Quality of Care

Medicaid Provider Shortfalls

In the end, all the issues came together in one bill.


Massachusetts:The Key Elements of Reform

Medicaid Expansions

Health Insurance Connector

Commonwealth Care – Premium Subsidy Program

Individual Mandate for all MA adult residents

Health Insurance Market Reforms

Employer Responsibilities (for firms > 11 employees)

Medicaid provider rate increases


MA Health Care Reform LawKey Components

$540+ million over next 3 years

Hospitals increases to be tied to quality standards in areas including addressing health disparities

Medicaid provider rate increases for hospitals, physicians and community health centers


MA Health Care Reform Law: Key Components (cont’d)

Commonwealth Health Insurance Connector

New public authority (10-member board)

Administers “Commonwealth Care” low income premium subsidy program

Will offer “affordable” health insurance products to individuals and small businesses (50 or fewer employees)


MA Health Care Reform Law:Key Components (cont’d)

<100% FPL – fully subsidized, comprehensive benefits (including dental)

100-300% FPL - sliding scale subsidies, no annual deductibles

Commonwealth Care Health Insurance Program (C-CHIP) – Premium Subsidy Program


Mass Health Care Reform Law Key Components (cont’d)

Individual Mandate for all MA adult residents

Enforcement mechanisms− Indicate insurance policy number on state tax return− Loss of state personal income tax exemption for tax year 2007− Fine for each month without insurance equal to 50% of affordable

insurance product cost for tax year 2008


Mass Health Care Reform Law Key Components (cont’d)

Health Insurance Market Reforms

Non-group and small-group insurance markets merged

Young Adult plans for 19-26 year olds

Age for eligibility for dependent coverage for health insurance raised to 25 years


MA Health Care Reform LawKey Components (cont’d)

Employer Responsibilities (for firms > 11 employees)

Must offer access to pre-tax purchase of health insurance

“Fair share” assessment of no more than $295 per worker


Stakeholders

Health advocacy organizations Organized labor Business community Hospitals Health plans Faith-based organizations Physicians Community Health Centers Nurses Appointed and elected officials


Health Care Delivery System:Introduction: Key Messages

1. Serious Problems in Quality2. Great Degree of Variability3. Source of Problems – Systems4. Increased Quality and Cost Reduction Possible5. Immediate Benefits by Improving Reliability of Healthcare Delivered


Conformance With Care Agreed byUS Health Experts

CAREPERCENTAGE RECEIVING CURRENT

RECOMMENDED PRACTICE

Preventive Care 50%

Acute Problems(colds, stomach pain)

70%

Chronic Illness(diabetes, hypertension)

60%

Beta blockers after heart attack 21%

Care provided that was not needed – may be harmful - acute care - chronic care

33%20%


And the Latest Large American Study…

McGlynn, et al: The quality of health care delivered to adults in the United States. NEJM 2003; 348: 2635-2645 (June 26, 2003)

• 439 indicators of clinical quality of care• 30 acute and chronic conditions, plus prevention• Medical records for 6712 patients• Participants had received 54.9% of scientifically indicated care (Acute: 53.5%;

Chronic: 56.1%; Preventive: 54.9%)

Conclusion: The “Defect Rate” in the technical quality of American health care is approximately 45%


Clinical Effectiveness

Focusing on effectiveness and efficiency of clinical processes Great deal of variability within university hospitals:

• Major surgery complications 49%• CHF re-admission rates 49%• Mortality 30%• Total direct costs/OR hour 24%• Total cost/adj. discharge 80%

Collaboration to Improve HealthcareDelivery System


IHI Mission

The Institute for Healthcare Improvement is a not-for-profit organization driving the improvement of health by advancing

the quality and value of health care.


IHI Vision

The Institute for Healthcare Improvement is a premier integrative force, an agent for profound change, dedicated to improving health care for all. Our measures of success

include improved safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity.


IHI Initiatives

Breakthrough Series• Emergency Rooms• ICU• Surgical Infection• Ventilator Associated Pneumonia

Pursuing Perfection – 13 HospitalsImpact Network – 210 HospitalsCare at the BedsidePatient Safety Officer TrainingExecutive Quality Academy


IHI Breakthrough Series(6 to 13 months time frame)

Select Topic

(develop mission)

Planning Group

Develop Framework & Changes

Participants (10-100 teams)

Prework

LS 1

P

S

A D

P

S

A D

LS 3LS 2

Supports

Email Visits

Phone Assessments

Monthly Team Reports

Congress,

Guides,

Publications

etc.

A D

P

SExpert Meeting


IHI – 100,000 Lives Saved Campaign

Campaign: December 2004 - June 2006

Save 100,000 lives by improving reliability of healthcare within U.S. hospitals

Target 2,300 hospitals

Six proven initiatives


Six Initiatives

Deploy “Rapid Response Teams” at the first sign of patient decline Deliver reliably, evidence-based care for acute myocardial infarction Prevent adverse drug events by implementing medication

reconciliation Prevent central line infections – Implement bundles Prevent surgical site infections – Implement bundles Prevent ventilator associated pneumonia – Implement bundles


Accomplishments

Co-Sponsors:• Agency for Healthcare Research and Quality• American Medical Association• Association of American Medical Colleges• Center for Medicare and Medicaid• Joint Commission on Accreditation of Healthcare Organizations• National Patient Safety Foundation• University Health System Consortium• American College of Cardiology


Accomplishments (continued)

Co-Sponsors (continued):• Centers for Disease Control and Prevention• Society for Healthcare Epidemiology of America• American Nurses Association• Leapfrog• The National Business Group on Health• 20 State Hospital Associations

3,300 Hospitals Voluntarily Signed Up$15M Private Contributions122,000 Lives Saved

Collaboration to Improve Quality of Carein Massachusetts


Seven Levers of Change

I. Governance FocusI. Trustees as champions of New Quality StandardsII. Governance Practices Linked to Hospital Contracts

• Quality and Safety Standards• Adoption of Standardized Quality Measures• Transparent Reporting of Performance Information• Public Recognition Programs to Highlight Extraordinary Achievements in Quality

Improvement


Seven Levers of Change (cont’d)

III. Financing and IncentivesI. Incentives to Achieve New Quality Performance StandardsII. Partnerships with Multiple Quality Improvement Organizations Including IHI,

Dartmouth, RandIII. Funded 100,000 Lives Saved Campaign

I. $35K to each hospitalII. $5M contribution

IV. $400M in Incentives Tied to Quality GoalsV. Redesign Payment Systems to Reduce Overuse and Misuse



IV. Legislation and RegulationI. Cost and Quality CouncilII. Healthcare Reform

V. Public EngagementI. Segmented Focus GroupsII. Seminar Series – Public ForumsIII. Public EducationIV. Eastern Massachusetts Health Collaborative



VI. TechnologyI. E-Health CollaborativeII. Three CommunitiesIII. 500 PhysiciansIV. $50M Investment

• Organizational ReadinessI. LEAD OrganizationII. Capability Building

Growing Conflicts


Growing Conflicts

A. Demographics:

Beneficiaries vs. Contributors—Aging of population—Utilization increases exponentially with age:

65 years vs. 45 years 2 times 85 years vs. 45 years 4 times 95 years vs. 45 years 8 times


Growth Trends - Aging Baby Boomers

0

5

10

15

20

25

1990 1995 2000 2005 2010 2020 2030 2040 2050

65 and Over 85 and Over

Elderly Population by Age, 1990 to 2050:Percent 65+ and 85+

• By 2030 one fifth of the population will be over 65 years of age

Growing ConflictsGrowth Trends – Aging Baby Boomers


6%

7%

8%

9%

10%

11%

12%

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11% 12% 13% 14% 15% 16% 17% 18% 19%

PERCENT OF POPULATION OVER AGE 65

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Iceland

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SwitzerlandGermany

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Health Spending and Aging Selected OECD Countries 2000

Source: OECD Data, 2002

Now over 16%


B. Acute Care vs. Chronic Care—Half of seniors have at least one chronic condition:

arthritis: 49% hypertension: 36% hearing impairment: 30% cardiovascular disease: 27%

—Chronic care now accounts for more than 70% of all healthcare expenditures:

acute care system trying to deliver chronic care

Growing Conflicts


C. Severe Workforce Shortages:—Nursing —Pharmacy—Radiology technicians—Physicians - specialties

Growing Conflicts: Current Environment - Crumbling


D. Growing Complexity of Science andTechnology:

— Rapidly expanding knowledge base— Significant investment in R & D— New medical technologies:

transplantation laparoscopic procedures robotic surgery CT/PET scanners gene therapy implants

E. Rising Uninsured and Underinsured

Current Environment – Crumbling Foundation


Healthcare in the USA is at a crossroad:• Managed care rejected• Healthcare benefit cost increasing rapidly

-5

0

5

10

15

20

1990 1992 1994 1996 1998 2000 2002 2004

% of Increase

Growing Conflicts

Conclusions


Conclusions

Large Country with Diverse PopulationTime for LeadershipHealthcare Score CardAims for Regional Healthcare

• Universal healthcare• Primary care and public health• Coordinated care• Transparency

Coalition for Healthcare System Change

Documents

Transforming Healthcare Collaboration among Payors, Providers and Community Leaders Vinod K. Sahney, PhD Senior Vice President and Chief Strategy Officer