The Future of Healthcare. . . May Not be Where the Crowd is Heading. Jeff Goldsmith National Advisor, Navigant Healthcare
TENNESSEE HOSPITAL ASSOCIATION
SANDESTIN RESORT
DESTIN, FLORIDA
JUNE 2, 2017
What are We Going to Talk About?
What the Election of Donald Trump Means for the Health System?
Has the Lengthy Pause in Health Cost Growth Ended and Why That Matters?
What is Happening to Healthcare Payment? Strategic Priorities
Hail to the Chief!
The Rust Belt Surge that Elected Trump
The Red Shift: 1996 to 2016
Boomers: They Really Did Change the World!
In 2016, They Elected Donald Trump President!
Older Voters Skewed Sharply to Trump, as Did Whites and People with Less than a College Degree
Average Age of Trump Voter: 57 yrs Lower Income, Rural and Small Town
Voters THUNDERED away from the Democrats
Key Facts to Know About Boomers
A Lot of them are Broke Eight Years After
Crash A Lot are also Not Well Many of Them Feel Trapped and
Increasingly Angry (How Smart of Trump to Pledge ”Not to Cut
Social Security or Medicare”?)
Boomer Retirement Savings??
US Mortality Rate per 100,000 people aged 45-54
Source: Anne Case and Angus Deaton; PNAS (By The New York Times)
200
300
400
500
1990 1995 2000 2005 2010
White Americans
Hispanic Americans
France
Germany
Britain Canada Australia Sweden
2013
Increasing Causes of Deaths per 100,000 white Americans, 45-54
Source: Anne Case and Angus Deaton; PNAS (By The New York Times)
0
10
20
30
2000 2005 2010
Alcohol and drug poisoning
Suicide
Chronic liver diseases and
cirrhosis
2013
Deaths from Opioid Overdoses 2003
Deaths from Opioid Overdoses 2014
Percentage of Adult Population Receiving Federal Disability
Poor Health and the 2016 Election: ”Branches of the Same Tree”
Cha
nge
in R
epub
lican
mar
gin
ov
er D
emoc
rats
, 201
2-16
, % p
oint
s
Index of county health metrics Worse health Better health
Sources: Atlas of US Presidential Elections; Census Bureau; IFUMS, Institute for Health Metrics and Evaluation; The Economist
Cha
nge
in R
epub
lican
mar
gin
ov
er D
emoc
rats
, 201
2-16
, % p
oint
s
Voting-age citizens
500,000
5,000
Midwest Northeast
West South
Trump’s Main Healthcare Pledge: Repeal and Replace ObamaCare!
Repealing and Replacing ObamaCare: The Narrow and Rocky Road!
Republicans: One Big Happy Family on Health Policy!!
”Hamburger Hill” Republicans- Freedom Caucus, Tea Party Conservatives: ”Kill the Taxes and the Expansion!”
“Deficit Hawk” Republicans-(Ryan, Price, e.g.) Budget Crisis requires Taming Medicare and Medicaid, Bigger Deal than ObamaCare
Pragmatic Republicans (Alexander, Corker, Portman Cassady, Collins, e.g.) - Sound Health Policy Matters More than Striking a Blow against the Socialist Empire
Sixteen Republican Governors (Kasich, Snyder, Rauner, Sandoval, Martinez, Baker, Pence-!) Who Expanded Medicaid Say: Give Us Flexibility but No Fiscal Crisis Please!
Historical Note: Trump Ran WAY to the Left of His Own Party
Don’t Cut Medicare, Social Security, Medicaid (!!)
Replace ObamaCare with a “Terrific” plan that ”Covers Everyone” with “Better Coverage and Lower Out of Pocket Cost”
The “TerrifiCare” Challenge: How do You . . . ?”
Make ACA Disappear But . . . Cover Just As Many People without. . . Increasing the Deficit or (Visibly) Harming the Sick without. . . Losing More than Two Republican Votes in the Senate Do you Risk ACA Repeal by ALSO Changing Medicare to
Premium Support AND Medicaid to Block Grants without damaging. . . The Sixteen Republican Governors whose states Expanded
Medicaid? With No-one Obviously Managing the Process?
So Far, Legislative Process Hasn’t Been Pretty . . .
American Health Care Act:
Republican Theory of the Case: Blame the Patient!
Poor Health and High Health Costs are the Result of Moral Failure by Patients
Solution: More Individual Responsibility for the Cost of Healthcare! Less Government!
”Empower Individuals” by Providing Less ”Insurance” and More “Skin in the Game”
Theory: Increased Financial Risk Will Transform People into Prudent Purchasers of Health Service AND They Will Take Better Care of Themselves. . .
An Empowered Consumer?
Trump Budget Priorities: FY18
Cuts Medicaid $1.45 trillion over 10 years ($610 MORE than House Bill)
Cuts Food and Nutritional Programs (SNAP, WIC, etc) by $208 billion
Cuts Disability Payments by $79 billion
Cuts Centers for Disease Control and Prevention by $18 billion
Cuts the National Institutes of Health by $18 billion
Zeroes Out Appalachian Regional Commission and (Mississippi) Delta Commission
Cuts Substance Abuse and Mental Health Administration by $11.2 billion (25%)
Hospitals’ Economic Outlook
0
1
2
3
4
5
6
7
8
9
2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Is this Remarkable Cost Moderation History?
Source: CMS, Office of Actuary *Estimated
% G
row
th N
HE
Actual Spending On H
ealth Services
Actual Spending On Health Services % Growth NHE
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.0
Core Cost Trend Has Risen for Two Straight Years (Annual Percentage Increase, 2012-2015)
Source: CMS, Office of Actuary 2015
0
2
4
6
8
10
12
14
16
2012 2013 2014 2015
Overall NHSHospitalsPhysicians/Clinical CarePrescrip. Drugs
Gov't. AdminNet Cost/Health Insurance
Hospital Revenue Growth Challenge 2008-2017
Source: JP Morgan, Altarum
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
Unit Revenue Growth
Admissions
Signs of Trouble in Many Health Systems (Op Income FY15vs FY16)
Providence Health- $511 million decline (-$250 million net)
Dignity Health- $487 million decline (-$63 million net)
Catholic Health Initiatives - $525 million decline (-$460 million net)
Trinity Health- $411 million decline ($46 million net)
SSM (St. Louis)- $220 million decline ($10 million net)
Partners (Boston)- $214 million decline (-$108 million net)
Cleveland Clinic- $341 million decline ($139 million net)
ProMedica (OH)- $167 million decline ($-60 million net)
Some Possible Explanations
“Integration” Expenses (e.g. physician practice subsidies)
Questionable “Risk” Investments, including poor contracts
Rising Patient Acuity Spotty Position Control (FTE creep) Rising Medicare and Medicaid losses on rising share of
mix Specialty Pharma
STAY TUNED FOR FURTHER DETAILS
Health Insurance Reform?
What Most of Us Thought ObamaCare Would Do to Individual Market
Individual Insurance Market Quickly Triples (13 to 40 million) McKinsey said 58 million.
Disorderly End of Small Group Market as Small Employers Dump their 28 Million Workers into the Exchanges (followed by)
Kneecapping of Large Group Market by Cadillac Tax in 2018
Individual Market Eventually Reaches 80-100 Million (after Next Recession)
Exchanges Structure/Dominate Individual Market and Cap Insurer Gross Margins and Rate increases
What Actually Happened?
Public Exchange Population has Stalled at perhaps 11 million paid (vs. 21 million CBO forecast)
Maybe Half of Them were Previously Uninsured Reason: Exchange Plans Were a Poor Value Few Small Employers Dropped Coverage Private Exchange Population Levelled at 8 Million in
2016 (vs 40 million forecast in 2018) Cadillac Tax on Large Employers “Postponed” (e.g.
Dead) Pressure is Off the Large Employer to Lower their
Benefits Costs (at least until the next recession)
PAYMENT REFORM: “Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good” Thomas Sowell
We’re Moving From Volume to Value, Right?
Capitation (Per Capita Payment for a Defined Population) is the Only Effective Way to Control Cost Growth
ACOs are a Forerunner of Capitation Regular Medicare Will Pay Providers on a
Global (e.g. population) Basis Commercial Insurers Will Have to Follow
Medicare ACO/Shared Savings Program Has Foundered
3/4 of the Pioneer ACO Cohort and 1/3 of MSSP First Class Dropped Out
Managed Care Veterans (Presby/NM, Sharp, HealthCare Partners, Atrius, Park Nicollet) Either Struggled or Left
Program Enrollment has topped out at 9 Million (out of 55 million beneficiaries) vs 18 million and growing in Medicare Advantage
Lake Wobegon Accounting: MSSP Alone Actually Lost $216m for Medicare in 2015
According to MedPac, ACO’s Have been a “Disappointment"
MSSP is Not Going to be a “Total Replacement” for Regular Medicare
May Survive as a “Betty Ford Center” Option for High Cost Markets
Medicare Advantage Could be Half the Program by the Time the Boomers Finish Enrolling
Commercial ACOs: Bad Deal for Providers (AND UNPROFITABLE FOR CARRIERS!)
Brookings Institution Estimates 18 million lives covered by ACOs
90+% are in “one sided” Narrow Network products
Entry ticket to Most Commercial ACO: a Huge Front End Discount and in many cases, a Multi-year Rate Cap
Discount Was Basically a Withhold that Providers Earned Back by Meeting Quality and Spending Targets
Pricing Panic Ensued. . .
Seemingly No Lose Proposition for Insurers
AND THEY STILL LOST BILLIONS ON INDIVIDUAL MARKET PRODUCTS DUE TO ADVERSE SELECTION!
8.0%8.0%7.6%
9.3%
12.6%
0%
2%
4%
6%
8%
10%
12%
14%
2003 2007 2010 2013 2014
Source: American Hospital Association Annual Survey (2016)
% Hospitals Reporting Any Capitated Revenue
Percentage of U.S. Office-Based Physician Visits Covered Under Capitation Arrangements By insurance status
0%
5%
10%
15%
20%
25%
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Private, younger than 65
Medicaid, younger than 65
Medicare, 65+
SOURCE: Medical Expenditure Panel Surveys, 1996-2013
(Per
cent
of v
isits
cov
ered
by
capi
tatio
n)
Percentage of M.D. Office Visits Paid by Capitation By census region
-5
0
5
10
15
20
25
30
1996 2007 2013
West
Northeast
Midwest
(Zero) South
SOURCE: Medical Expenditure Panel Surveys, 1996-2013
(% o
ffice
vis
its c
apita
ted)
JCG View: Don’t Hold Your Breath For Population Health
Feds Unable to Execute Payment Reform Competently
With 5-7% Medical Cost Trends, There’s No Cost Emergency Requiring Private Insurers to Change their Payment Methodologies
Care System Capacity to Bear Population Risk Remains Extremely Limited
Market Specific Q for Hospitals and MD Orgs: Who in YOUR MARKET Is Going to Share Premium with You?
Fee for Service Will Be With Us for a While, albeit with Steady Accretion of ”Check the Box” Documentation requirements and costs
“Check the Box” Could be a Prime Target for Sec-designate Tom Price
Is Hospital Risk a Mirage?
The Steadily Expanding Medicare Risk Envelope (1965 to present)
A’la Carte (cost plus, then cost) Per Admission (DRG’s), later APG’s Per Admission PLUS . . . (“Centers of Excellence”, ACE) Per “Episode” (Geisinger ProvenCare™, BPCI, CCJR) Per Illness (Disease/Condition Management) Per Enrolled Life per Year (e.g. Medicare Advantage) Per Community’s Cost Trend(ACO)
Where the Feds are Likely Headed?
Issues Raised by Bundling
WHO GETS THE BUNDLE?
Episode Really Begins at Diagnosis, not Hospital Admission (how to start the clock?)
Hospital/Acute Portion of Episodes Continue Shrinking
Post-Acute Providers have ZERO interest in being “managed” by Hospitals!
However, Post Acute is a Logistical Nightmare for Patients
Will Bundling be Feasible for Oncology?
Specialists FAR more central than in ACOs or MA
Culture Change is the Central Challenge. . .
Culture Change is Hard!
51
Geisinger’s ProvenCare™ CABG Protocol: Delivering on Evidence-based Care
ACC/AHA Class I Recommendations Pre-op antibiotics Pre-op carotid doppler studies Aspirin Epiaortic echocardiography to identify atherosclerotic ascending aorta Aggressive debridement and revascularization for
deep sternal wound infections Perioperative beta blockers (or amiodarone) to reduce atrial fibrillation Statins Smoking cessation education and pharmacotherapy Cardiac rehab Withholding of clopidogrel for 5 days pre-op Left internal mammary artery as graft for the LAD
artery
Source: Geisinger Health System
ACC/AHA Class II Recommendations Pre-operative use of a CABG operative mortality
risk model Anticoagulation for recurrent/persistent
postoperative Afib Anticoagulation for postoperative anteroapical MI
with persistent wall motion abnormality Carotid endarterectomy for carotid stenosis that
is symptomatic or >80% Intra-aortic counterpulsation for low LV ejection
fraction Blood cardioplegia Delay operation for patients with recent inferior
MI with significant RV involvement Tight peri-operative glucose control
Geisinger ProvenCare CABG Results
Cut CABG Mortality Rate from 1.5% to 0.5% Cut Hospital Expense by 5% (-0.5 day ALOS) Cut Post Acute Costs by 50% Cut Readmissions Rates by 44% Cut Complication Rates by 21% Reduced Sternal Wound Infections by 25%
Future of Value-Based Care under Trump?
Dr. Price Voted for MACRA, but . . . Price Also Opposes Mandatory Demos and Expressed
Skepticism about Whether ANY Value Based Payment Experiments Have Saved Money
Likely to Tilt Away from Hospitals and Toward Docs in Future Demos
Expect Him Also to Focus on Administrative Simplification What Republicans REALLY want to do is GET OUT OF
Paying Providers by Outsourcing the Remaining 70% of Medicare and 30% of Medicaid to Health Plans, and Capping their Liabilities Going Forward
What Am I Telling Clinical and Health System Leaders to Do?
Learn to Run on Regular Gas (Get Used to Low Single Digit Topline Growth)
Develop a Fault-Intolerant Clinical Culture Built on Continuous Care Improvement
Teach Young Clinicians Elegant Diagnosis and Resource Sensitive Clinical Management
Smooth and Light the Patient’s Pathway through the Care Episode
Become the Health System of Choice in their Communities and Regions
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