Embed Size (px)
DESCRIPTION
Top Trends in Healthcare for 2009
Citation preview
Center for Health Innovation© 2008 Noblis, Inc.
Top Trends for 2009
Webinar: December 9 and 18, 2008
Presented by:Amy MacNulty
Senior [email protected]
781.482.4072
Peggy Cella Senior Principal
1
Noblis Center for Health Innovation – Top Trends for 2009
Changing Consumer Demands
Budgets Trimmed - Investments Delayed
Continued Consolidation
Workforce in Transition
Health Reform on Many Levels
"The future will be determined in part by happenings that it is impossible to foresee; it will also be influenced by trends that are now existent and observable." Emily G. Balch - American economist and sociologist. Honorary president of the Women's International League for Peace.
"The future will be determined in part by happenings that it is impossible to foresee; it will also be influenced by trends that are now existent and observable."Emily G. Balch - American economist and sociologist. Honorary president of the Women's International League for Peace.
2
Top Trend #1: Consumer Demands will Continue to Change
Utilization Trends will be stable or even decline in all but strongly growing markets
Consumer will continue to seek medical information/knowledge via Web resources
Increased Medical Travel
Hospitals and physicians that continue to focus on improving andmeasuring quality, safety, and operating efficiencies will be best positioned for the future
3
Discharges to Home Health grew by 53%
Medicaid discharges grew by 36%
Medicare discharges grew by 17%
No change in private insurance discharges
Share of admissions through EDs increased from 38% to 44%
US Population (298.8M) grew by 16%
Discharges (39.5M) grew by 28%
Discharge/1,000 population (116.9) declined by 3%
ALOS (4.8) declined by 20% led by largest decline in 65 &> population (to 5.5 having declined by 29%)
Between 1993 and
2006
Between 1997 and
2006
Despite Historical Trends – Utilization will Be Stable or Decline in All But Strongly Growing Markets
4
“More than half of chronically ill patients in the U.S. reported at least one cost-related access problem, such as not filling prescriptions, skipping doses, not visiting a physician when sick, or not getting recommended care.
Health Affairs, doi: 10.1377/hlthaff.28.1.w1(Survey conducted in 2008 and Published online November 13, 2008)
“More than half of chronically ill patients in the U.S. reported at least one cost-related access problem, such as not filling prescriptions, skipping doses, not visiting a physician when sick, or not getting recommended care.
Health Affairs, doi: 10.1377/hlthaff.28.1.w1(Survey conducted in 2008 and Published online November 13, 2008)
“The numbers are down in the past month, there’s no question about it.”
Dr. Richard Friedman, Beth Israel Medical Center
“The numbers are down in the past month, there’s no question about it.”
Dr. Richard Friedman, Beth Israel Medical Center
Once Thought to Be Recession Proof – Health Care is Feeling the Effect of the Downturn
“The possibility of putting off an expensive surgery or other major procedure has not become a frequent topic of conversation with patients.”
Dr. Ted Epperly, family practice Boise, Idaho
“The possibility of putting off an expensive surgery or other major procedure has not become a frequent topic of conversation with patients.”
Dr. Ted Epperly, family practice Boise, Idaho
A survey of 112 nonprofit hospitals found that overall inpatient admissions were down 2 to 3 percent compared with a year earlier. More than 60 percent reported flat or declining admissions.
September 2008 Survey by Citi Investment
A survey of 112 nonprofit hospitals found that overall inpatient admissions were down 2 to 3 percent compared with a year earlier. More than 60 percent reported flat or declining admissions.
September 2008 Survey by Citi Investment
HCA with 160 hospitals reported flat admissions for the three months ended 9/20/08 compared to the
previous year.
HCA with 160 hospitals reported flat admissions for the three months ended 9/20/08 compared to the
previous year.
Source: “Hospitals See Drop in Paying Patients, NY Times, November 6, 2008; Modern Healthcare’s Daily Dose, November 13, 2008, FHA Eye on the Market: Hospital Utilization Report, October 2008. AHA Report on the Economic Crisis: Initial Impact on hospitals, November 2008. DATABANK is a licensed product of the Colorado Hospital Association.
Shands Health Care cited the poor economy and lower patient demand when it announced in October that it
would shutter one of its eight hospitals.
Shands Health Care cited the poor economy and lower patient demand when it announced in October that it
would shutter one of its eight hospitals.
The University of Pittsburgh Medical Center has not seen a drop in patient admissions but reports that growth is tailing off.
Robert A DeMichiee, CFO
The University of Pittsburgh Medical Center has not seen a drop in patient admissions but reports that growth is tailing off.
Robert A DeMichiee, CFO
Hospital admission growth for Hospitals in the State of Florida in 2007 was the lowest in years with a growth of only 0.4%, accounting
for just over 9,000 new admissions in the entire state.
Hospital admission growth for Hospitals in the State of Florida in 2007 was the lowest in years with a growth of only 0.4%, accounting
for just over 9,000 new admissions in the entire state.
AHA 2008 Survey of more than 700 CEOs in late 2008 reported that 31% of hospitals surveyed had experienced a decrease in elective procedures in the past three months.
In addition, 38% of hospitals surveyed reported a decrease in admissions during the same period.
DATABANK’s preliminary 3rd quarter 2008 data (557 hospitals) reported 3rd
quarter patient visits (discharges, surgeries, ED visits) as flat or declining relative to the same quarter of 2007.
5
Consumers Will Continue to Redefine Value to Include Communication, Information, Access, and Outstanding Service
Source: “Many Americans open to care at retail-based health clinics,” Wall Street Journal, October 26, 2005; “For these startups, patients are a virtue,” San Francisco Chronicle, October 2, 2007 and Harris Poll Shows Number of "Cyberchondriacs,“ Harris Interactive website (July 31, 2007).
What Patients/Families Expect in Inpatient & Outpatient CareWhat Patients/Families Expect in Inpatient & Outpatient CareBefore During After
Timely appointments/ short wait timesConvenient access
Ease of navigationMinimum uncertainty/ worryCommunication Confidence in excellenceof care
Same day reportsPainless billing A “fair” price
6
Consumers Seeking Knowledge and Information Via Web Resources
7
Consumers Seeking Knowledge, Information, and Services Via Websites Marketing Direct to the Consumer
Waterfront Media To Merge With Revolution Health Network Establishing The Everyday Health Network As The Preeminent Online Health Destination
“Pinnacle Care takes the notion of VIP services to a whole new level”
Washington Post
Patientsville.com - Your #1 Source for all the latest prescription and off-the-shelf medications side effect information.A Health Expert wants to answer your question.
8
Consumers Seeking Information – Via Websites Marketing Genotyping, Record Storage, Genetic Counseling
1. Order a kit ($399 USD) 2.Claim your kit, spit into the tube, and send it to the lab.
3.CLIA-certified lab analyzes your DNA in 4-6 weeks
4.Log in and start exploring your genome.
deCODEme is an anonymous information service. It is not a medical
service, nor a genetic test, and it is not designed for medical decision
making. Therefore it is not covered by health insurance companies.
deCODEme is an anonymous information service. It is not a medical
service, nor a genetic test, and it is not designed for medical decision
making. Therefore it is not covered by health insurance companies.
9
Medical Travel
Medical Tourism: “process of “leaving home” for treatments and care abroad or elsewhere domestically”
Deloitte 2008 Survey of 3,000 Americans:−
2007 estimated 750,000 Americans traveled abroad, projected to increase to 6 million in 2010
−
“expected to experience explosive growth over next 3-5 year−
“Outbound” - 39% would go abroad for elective procedure to save money
Gen Y 51.1%, Boomers 36.7%, Seniors 29.1%Medical Tourism Association – Three Tenets:−
Transparency, Communication and Education−
2nd World Medical Tourism & Global Health Congress October 26th – 28th, 2009 in Los Angeles, CA California
Medical Tourism Facilitators
Source: Medical Tourism, Consumers in Search of Value, The Deloitte 2008 Survey of Health Care Consumers, Deloitte Center for Health Solutions.
TurkeyCheck your Midnight Express stereotypes at the door - this is a rapidly modernizing country with one foot in Europe and one in the Middle East. It's not all oriental splendor, mystery, intrigue and whirling dervishes but it is a spicy maelstrom of history knocking up against a pacy present.
10
Primary Reasons for Medical Travel
Driver* Explanation
Cost Savings Cost of procedure is much less than in the patient’s home country (e.g., United States).
Improved AccessWaiting times for procedure can be much longer in home country, especially for those with National Health Insurance or Health Service, such as Canada or the United Kingdom.
Procedure Not Available Certain medical procedures are still considered experimental, not yet approved, or in clinical trials in the patient’s home country.
Tourism/Vacations Some patients value the exotic destinations or luxurious accommodations in the destination country.
Privacy and Confidentiality
Some patients (especially celebrities) may be concerned about their privacy if the procedure is performed in their home country.
Wellpoint soon will offer some medical travel benefits Starting in January, Wellpoint will offer employees of Wisconsin-based Serigraph Inc. the option of traveling to India for nonemergency procedures such as joint replacement surgery. Serigraph will waive the insurance deductible and coinsurance for employees who agree to go, paying all medical costs as well as travel expenses for the patient and a companion.
"This is a leap of faith, obviously, to say if you go to India, we'll pay for the whole shebang," said Linda Buntrock, Serigraph's senior vice president of human resources.
"But the cost difference is so monumental.“ Knee replacement surgery that costs between $60,000 and $70,000 in the United States can be done in India for $8,000 to $10,000, said Jill Becher, a Wellpoint spokeswoman.Source: CHEN MAY YEE, Star Tribune,November 13, 2008
* Source: “Medical Travel – Threat or Opportunity for U.S. Providers? It Depends on Your Perspective”, J. Vitalis and G. Milton, Horizons: Journal of the Center for Health Innovation, Winter 2009.
11
Shared Concerns to Improve Patient Experience
Improving and measuring quality and safety
Achieving operating efficiencies
Creating a positive work environment
Bridging Generational differences
Leveraging capabilities with medical technologies
Fostering alternative care settings to improve access (walk-in clinics)
Physician ConcernsH
ospi
tal C
once
rns
12
Balancing Act
Balancing Act, InsideHealthcare (formerly HealthExecutive), September 2008−
Employment alone will not achieve alignment−
Early involvement in decision making critical to alignment−
Key areas of engagement:Improve the quality of services and clinical outcomes, ensuring consistent excellence across the system.Strengthen collaboration among physicians on the medical staffs to enhance their understanding of the qualities and skills of their colleagues and improve communication and patient care.Enhance physician leadership development efforts to build a strong core of physicians who can determine future success requirements, ably represent their peers, and collaborate effectively with hospital
AHA Economic Crisis Report, Nov. 2008 reported that 56% of hospitals experienced an increase in physicians seeking financial support from hospitals and % physicians seeking:−
83% - increased payment for on-call or other services−
69% - employment−
31% - to sell their practice−
23% - to partner on equipment purchase
13
IHI Framework for Engaging Physicians in Quality and Safety
Discover Common Purpose
Reframe Values and Beliefs
Segment the Engagement Plan
Use “Engaging” Improvement Methods
Show Courage
Adopt an Engaging Style
Source: IHI Innovation Series 2007, Engaging Physicians in a Shared Quality Agenda, J. Reinertsen, MD, A.Gosfield, JD, W. Rupp, MD, J. Whittington, MD.
“To bring these two worlds into alignment, both parties have to be interested in making good-faith efforts to understand each other’s point of view and needs.”
Source: Healthcare Executive, Medical Staff Collaboration, Communication Strategies that Get
Results, July/Aug 2006
“To bring these two worlds into alignment, both parties have to be interested in making good-faith efforts to understand each other’s point of view and needs.”
Source: Healthcare Executive, Medical Staff Collaboration, Communication Strategies that Get
Results, July/Aug 2006
14
Disconnect between leadership and practicing physicians
Of the 10 most effective strategies, half involved employing physicians
14
Similar leadership disconnect
Information systems critical
Focus: What strategies are being used to strengthen physician-hospital alignment, and which strategies are most effective?
Source: Noblis/AHA, Strategies for Strengthening Physician-Hospital Alignment: A National Study, 2006; ACPE Member Survey 2008
Hospital Perspective Physician Perspective
15
What Satisfies Physicians?
#1 priority: how the administration responds to the ideas and needs of physicians
4 of 5 top priorities deal directly with doctors’relationships with administrators
One way the administration can build their relationships with physicians is to make it easier for doctors to care for their patients
Physicians are most satisfied with hospitals in their first 5 years and after 20 years on staff
Physicians employed by the hospital are more satisfied than non-employed physicians
2008 Press Ganey Hospital Check-Up Report - Physician Perspectives on American Hospitals 2008 Press Ganey Hospital Check-Up Report - Physician Perspectives on American Hospitals
16
Physician Employment Trends
Healthcare Industry is consolidating rapidly while significant physician shortages are projected−
Substantial economic advantages for systems that integrate payers, hospitals and physicians
New wave of employment different than late ’80s and early ’90s:−
Primary care and specialty physicians−
Willingness to trade off autonomy for economic security−
“Cornerstone strategy” for large integrated systems, e.g., Aurora, WI, Advocote, IL, Senatara, VA
−
Many hospitals and health systems find themselves with no other choice, need to view as “fundamental strategic asset”
−
Payers shifting to “Pay for Performance” and “Medical Homes”−
New generation of physicians seeking improved work/life balance−
Greater emphasis on developing physician leadership and systemized physician engagement
“This is the beginning of a fundamental restructuring of how physicians function in the health care system.”
William Jessee, MD, President of the Medical Group Management Association.
“This is the beginning of a fundamental restructuring of how physicians function in the health care system.”
William Jessee, MD, President of the Medical Group Management Association.
Source: “Employing Physicians”, D. Beckham, HHN, 9/07
17
A program for aligning incentives to support the delivery of high-quality careGovernment-sponsored projects—Annual Payment Update (APU), Premier demo, MedPac recommendation, Value-Based Purchasing (VBP), Physician Group Practice (PGP) demo, State Medicaid ProgramsPrivate payer initiatives (LeapFrog Group, Bridges to Excellence, IHA, individual insurers)
Imperative to improve quality Institute of Medicine (IOM) reported that 98,000 lives lost due to medical errors Public reporting of health care organization performance Institute for Health Improvement (IHI) 100,000 Lives Campaign (and now 5 Million Lives Campaign)
Imperative to control costsConsumer-driven focus on reducing their out-of-pocket costs for health care Employer focus on reducing health care insurance costs
The What and Why of P4P
Why P4P…
What is P4P…
CMS:“The right care for every person every time”
18
Providers Will Have to “Earn” What They Make…. Medicare’s Shifting Priorities and Other Payers Seeking Value
Source: “HFMA’s Healthcare Finance Outlook,” HFMA, January 2007 and 2008.
Change Effect
Coding for Severity of Illness Eliminates Skew Toward Less Complicated Cases
Cost-Based Weights Equitable Reimbursement for Cost of Care
Overhauling of ASC Payments Alters the Competitive Landscape
P4P & Never Events Emphasizes Safety and Quality of Care
Bundled Payments Rewards improvements in quality of care and efficiency
19
Top Trends #2: Budgets will be Trimmed and Capital Investments Delayed
Margins will decline
The economic downturn will force most hospitals to trim their operating budgets in 2009.
The credit market will tighten further and bond ratings will fall.
Great pressure will exist to maintain cash on the balance sheet.
New technology capital expenditures that do not meet quality and safety mandates or do not improve the bottom line in the short term will be delayed, scaled back, or cancelled.
The recent health care construction boom will continue but at a much slower rate.
20
In Uncertain Economic Times, Strong Financial Performance Is Crucial
With healthcare industry credit ratings declining for a majority of the past decade, it will be increasingly important for hospitals to maintain a strong financial performance
−
Hospitals with strong financial performance and good credit will have a much easier time accessing capital and bond insurance
Hospitals should focus on two key measures of financial performance
Source: “The outlook for capital access and spending,” HFMA, August 2006; “Hospital insolvency: the looming crisis,” Alvarez & Marsal, March 2008
Measure Target ReasonPatient Care Margin Greater than 0.0 percent If hospital cannot earn profit on patient care services,
it must rely on non-patient care sources of funding
EBITDA Margin At least 4.0 percent Minimum level of profit needed to re-invest in capital expenditures
21
Economic Crisis: Impact on Hospitals
AHA Report on Impact of Economic Downturn on Patients and Hospitals, 11/19/08
Survey of 736 hospitals and DATABANK a web-based hospital reporting system used in 30 states
30% reported moderate to significant decline in patients seeking elective procedures40% reported drop in admissions overallUncompensated care up 8% from July to September vs. same period last year. Negative 1.6% total margins in 3rd quarter of 2008 vs. positive 6.1% same quarter last year.Investment losses….Cutback made or considered:−
Administrative costs (60%)−
Reducing staff (53%)−
Reducing services (27%)Interests payments increased on average by 15% Facility investments reconsidered or postponed−
Plans to increase capacity (56%)−
Delay purchase of clinical technology or equipment (45%)−
Put off investments in new IT (39%)
Hospitals feel the pain of recessionBy Richard Pizzi, Editor , 11/01/08
As economy slows, tax receipts decrease both at federal and state levels.All states will have issues, some hit harder than other: Florida and California some of the hardest hit. Survival in economic downturn will depend on gaining operational efficiency in the near time.
22
Subprime Mortgage Crisis Creates Perfect Storm for Tax-Exempt Bond Auction Market
Tax-exempt rates are likely to be higher Rating agencies to use more stringent assumptions
Debt must be increasingly collateralized and/or backed by bank letters of credit
Lessons learned:
−
Incorporate assumptions about tighter markets and volatile interest rates
−
Update projections done to support projects in recent years
−
Expect more focus on the underlying credit of borrower
−
Diversify financing sources to minimize cost at an acceptable level of risk
−
For strong credits, may make sense to refund and go forward without insurance cost or to buyback debt in short-term and refinance later
Source: Deborah Kolb-Collier, Scott Clay, and Peter Bruton, “What Hospital Systems Can Do to Ride Out the Financial Market Turbulence,” HealthLeaders Media, March 17, 2008; “The credit crunch squeezes municipal bonds,” U.S. News, February 28, 2008.
23
The Capital Crisis
About one-quarter of all community hospitals continue to operate “in the red.”
Negative patient margins are being supplemented by other sources (e.g., investment income, philanthropy, etc.).
Construction of new health care facilities expected to reach $60 billion by 2010.
Capital Availability
Most CFOs expect their hospital’s capital spending to increase in the next 4 years. The top 3 most commonly cited capital projects all focused on IT: - Digital Radiology Systems- CPOE Systems- Major IT Systems
The capital markets view healthcare with increasing scrutiny.
Capital Needs
The availability of capital is generally limited and uncertain, but the need for capital is constant and seemingly boundless.
The availability of capital is generally limited and uncertain, but the need for capital is constant and seemingly boundless.
Sources: The Lewin Group Analysis of the American Hospital Association Annual Survey data, 1991 – 2004.Baltimore Business Journal, “Rx for Hospital Design,” January 19, 2007.FutureScan Healthcare Trends and Implications, 2005 – 2010.
24
Prior to Recent Economic Crisis: Factors Driving the Boom in Hospital Construction
At the end of 2005, construction of new hospitals and clinics was valued at $22 billion
By 2010, construction of new healthcare facilities expected to reach $60 billion
Key Drivers Aging facilities
Increasing patient volumes
New technology
Need for single rooms
Changing patient populations
Increasing competition
Hospital-physician alignment
Consumerism 25%
24%
51%
NewConstructionFacilityModernizationOther
Source: “Healthcare construction and capital implications,” HFMA, February 2008; “Health construction rolls right along,” H&HN, March 2008.
Percentage of Hospital’s Capital Budget Allocated to Construction Projects in 2008 (Projected)
25
Need for Capital Will Continue
7.9 8.2 8.4 8.6 8.8 8.9 9.2 9.3 9.2 9.4 9.7 9.8 9.8 9.8 9.9 9.7
8.0
0
2
4
6
8
10
12
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
In March 2007, Wall Street Journal article stated that $200 Billion will be spent on rebuilding or replacing aging hospitals over the next decade. What now?
Median Average Age of Plant1990 - 2006
Source: The Almanac of Hospital and Financial Operating Indicators, 1994, 1997, 2006, 2008
Short-Term Focus
Delay implementing master plans
Essential renovations and technology
Maximize capacity with improved efficiency
Longer horizon for most projects
Re-phasing and re-prioritizing
26
Organizations Will Need to Consider a Variety of Options to Finance Construction
How Organizations Are Financing Construction Projects
21%
28%29%33%
46%
Existing CashReserves
Tax-ExemptBonds
Operations Philanthropy Other Debt
Source: “Health construction rolls right along,” H&HN, March 2008.
27
Top Trend #3: The Industry Will Consolidate Even Further
Hospitals that have historically relied on investment income, municipal funding of indigent and charity care, and low interest rate credit lines to offset operating losses will be hardest hit
Small hospitals and rural hospitals are most at risk in a downturned economy
28
Financial challenges again ranked as the top concern for hospital chief executive officers, according to a yearly survey by the American College of Healthcare Executives. Providing care to uninsured patients placed second, followed by hospitals’ relationships with physicians, according to the survey results.
(January 7, 2008)DATABANK also reported an 8% increase in uncompensated care for the same period.
Source: AHA, Report on the Economic Crisis: Initial Impact on Hospitals, November 2008 (Callouts). Note: DATABANK is a licensed product of the Colorado Hospital Association.
DATABANK ‘s
557 Hospitals
reported a 3rd
QTR total
operating margin
of (1.6%)
compared to
6.1% for the 3rd
QTR ’07
29
Uncertainty: Impact of Economy on Total Margin in 2009 Economy?
Source: “Almanac of Hospital Financial and Operating Indicators,” Ingenix, 1998-2007.
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
75th Percentile Median 25th Percentile
U.S. Hospital – Total Margin
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
75th Percentile Median 25th Percentile
U.S. Hospital – Total Margin
There are “winners” and “losers” in every kind of market
Industry Perspective
What model will work in 2009?
Industry Perspective
What model will work in 2009?
30
And Many Hospitals Are Not Surviving – A Few Examples
Source: Modern Healthcare reporting. Modern Healthcare, September 22, 2008, page 10.The Birmingham, News, October 23, 2008; Chicago Tribune, September, 20, 2008, NorthJersey.com, November 25, 2008; Pittsburgh Business Times, April 18, 2008; 2008 Update: The Crisis Deepens, new Jersey Hospital Association,.
Date Hospital Status
August 13, 2008 Muhlenberg Regional Medical Center Plainfield, NJ
Ceased all inpatient services citing mounting financial losses in the face of decreased federal and state funding
August 19, 2008 Trinity Hospital Erin, Tennessee
Competing bids for assets from Restoration Health Care, Erin, Tennessee, and a subsidiary of Rural Healthcare Developers, Plantersville, MS
August 21, 2008 August 26, 2008
Renaissance Hospitals (5 Hospitals) Texas
Filed Chapter 11, cost overruns and the collapse of capital markets drained the system’s resources
August 22, 2008 Century City Hospital Medical Center Los Angeles, CA Closed on August 27, 2008
August 26, 2008 North Oakland Medical Center Pontiac, Michigan Proposed sale to newly formed physician-owned for-profit company
August 29, 2008 Hawaii Medical Center Honolulu, Hawaii Restructuring, seeking to emerge from bankruptcy
Since 1992 a total of 24 hospitals in New Jersey closed and five hospitals filed for bankruptcy protection in less than two years. −
The New Jersey Hospital Association reported that nearly half of the state’s hospitals posted losses, three hospitals closed, and five filed for bankruptcy in 2007.
−
In the first eight months of 2008, five more hospitals in New Jersey closed.The Pennsylvania Health Care Cost Containment Council report identified that 24 percent of the 170 general acute care hospitals stateside lost money in 2007.In a ten day period in August of this year, at least 10 hospitals closed or filed for bankruptcy protection.
31
What Steps are Hospitals Taking to Avoid Closure
Staying on top of finances−
Delaying capital projects and equipment purchases−
Targeting cash flow efforts−
Converting indigent to Medicaid payment – but will State coffers support the expected increased demand?
−
Aggressively managing bad debt−
Auctioning hospital debt
Staff Reductions – Few Hospitals have avoided some staff reductions this year−
Freezing vacancies−
Layoffs – initial efforts targeted to avoiding direct care/nursing positions−
Leaner management level
Service discontinuation/reduction
Lobbying legislature to protect Medicare/Medicaid payments
Exploring merger/consolidation options
Did NY State get it right by
proactively addressing
overbedding and access in their 2006 Recommendations to reform Hospitals
and Nursing Homes?
Did NY State get it right by
proactively addressing
overbedding and access in their 2006 Recommendations to reform Hospitals
and Nursing Homes?
32
In a Nut Shell
No More MoneyNo More Money No Super HeroNo Super Hero Limited OptionsLimited OptionsMERGER
33
Top Trend #4: The Workforce Will Be in Transition
Physician responses to their own financial uncertainties will vary
There will be a shift in the mix of care providers with greater use of mid-levels
Nursing vacancies may lessen somewhat
Union activity will increase
34
Physician Responses to Their Own Financial Uncertainties will Vary
According to a 2007 Merritt Hawkins Survey:
49% of physicians aged 51+ years indicated that they plan to make a change in their practice in the next one to three years
Plan to retire 14%Plan to seek a medical job in a 7% non-clinical settingPlan to seek a job or business 3% in a non-medical fieldPlan to work on a temporary basis 4%Plan to work part-time 7%Plan to close their practice to new 8% patients Plan on taking a combination of the 7% above steps
According to a 2007 Merritt Hawkins Survey:
49% of physicians aged 51+ years indicated that they plan to make a change in their practice in the next one to three years
Plan to retire 14%Plan to seek a medical job in a 7% non-clinical settingPlan to seek a job or business 3% in a non-medical fieldPlan to work on a temporary basis 4%Plan to work part-time 7%Plan to close their practice to new 8% patients Plan on taking a combination of the 7% above steps
Source: 2007 Survey of Physicians 50 to 65 Years of Age, Merritt Hawkins & Associates, 2007
As many as 2/3 of workers may delay retirement due to
the downturn in the economy
As many as 2/3 of workers may delay retirement due to
the downturn in the economy
Physician Population is
Aging 47% of physicians are over age 50
36% of physicians are 65 or older
Physician Population is
Aging47% of physicians are over age 50
36% of physicians are 65 or older
3535
Physician Shortage Physician Shortage
Aging population
Growing population
Longer life spans
Prevalence of chronic disease
Aging physician workforce
Changes in practice patterns
Education system constraintsNeed for
Physician Workforce Planning
Increasing Demand Shrinking Supply
Physician Shortage is a Result of Both Increasing Demand and Shrinking Supply
Declining Utilization – Little Relief for the Current Shortage
36
Part-time Medicine and Nursing while Popular May Provide Relief
Women represent 50 percent of US medical students
Women represent 50 percent of US medical students
24% of female physicians of age less than 50 years
work part-time
vs.
2% of male physicians
Between 2005 and 2007, there was a 46% increase in the number of physicians working part-time
7.6%8.6%
18.1%17.2%
14.0% 14.5%13.1%
14.5%
29 orless
30 – 34 35 – 39 40 – 44 45 – 49 50 – 54 55 – 59 60+
% of All Physicians Practicing Part-time
Age Groups
Top Reason to Work Part-time Top Reason to Work Part-time
MEN – Unrelated professional or personal pursuits
WOMEN – Family responsibilities (including pregnancy)Source: 2007 Physician Retention Study, Cejka Search and AMGA; “Will There be Enough Doctors”, HealthLeaders, October 2007.
37
A Shift in the Mix of Care Providers with Greater Use of Mid- Levels – Constraints on Medical Education will Force Changes
Qualified applicants continue to far outnumber available slots.
While the American Association of Medical Colleges has called for an increase in Medical School enrollment of 30 percent (approx. 5,000 more each year), even if achieved, will take 11 years before number of practicing MDs will increase.
Residency program caps continue to pose a problem.
0
10,000
20,000
30,000
40,000
50,000
1995 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Applicants
Graduates
U.S. Medical School Applicants & Graduates
Source: AAMC Statement on the Physician Workforce, June 2006. Data Warehouse: Applicant Matriculant File as of 10/27/06, 2008 aamc.org 5/12/08. http://www.naahp.org/PDFs/HealthProfPDFs/AAMC.pdf.
38
Greater Use of Mid-Levels Driven by Many Factors PAs, NPs, and Dr. Nurse – Should Help In Filling a Growing Gap
The supply of Physician Assistants is projected to increase byup to 50% over the next decade potentially partially filling theever widening gap in primary care.
The primary care physician shortage has rapidly increased interest and planning for a new kind of “mid-level” - The “Dr. Nurse”.
−
More than 200 nursing schools are in some level of planning or development of a “doctorate of nursing practice” - to equip graduates that some schools say are equivalent to primary care physicians.
−
Advanced practice nurses with national certification in an advanced practice nursing specialty, and a Doctor of Nursing Practice degree, are eligible to sit for certification. The exam is derived from the test pool of the USMLE Step 3 exam for MD licensure candidates. Successful DNP candidates will be designated as Diplomats in Comprehensive Care by the newly established American Board of Comprehensive Care.
Sources: AAPA website, http://www.aapa.org/research/index.html; Wall Street Journal, April 2, 2008, HealthLeaders, Making room for ‘Dr. Nurse’, December 2, 2008
39
Outlook for Nursing Gets Brighter
After a net loss of more than 10,500 nurses in 2004 and 2005, we are now seeing gains in nurse workforce.The recent economic downturn and rocky housing market are driving nurses into the workforce .Despite recent increase in nurses, projected gap in supply and demand remains.Despite these gains, the American Association of College of Nursing reported growth in new enrollment at undergraduate nursing programs stagnated in 2008, while growth in graduate nursing and research doctorate programs either slowed to a crawl or did not show any growth.
18,700
84,200
2006 2007Source: “The nurse staffing outlook gets brighter,” Modern Healthcare, May 1, 2008.
Nurses Added to the Healthcare Workforce
765,000
285,000
2003 2008
Projected Shortage of Nurses in 20202003 vs. 2008
40
Nursing Vacancies May Lessen Somewhat During the Downturn
As reported in the WSJ, Jane Llewellyn, vice president of clinical nursing affairs at Rush University Medical Center in Chicago, said, "We are seeing a temporary lessening of the nursing shortage," but, "as soon as the economy turns up, we'll see them staying home again."
The Washington Post examined how hospitals across the U.S. have begun addressing nursing shortages "by introducing technology to dramatically reduce paperwork, offering more flexible hours, reducing caseloads, paying for advanced training and giving [nurses] more authority" instead of using financial incentives to lure nurses.
In 2007, the number of open nursing jobs in the U.S. reached 116,000. Although the vacancy rate has dropped slightly because of the "dismal economy" –nurses are working longer hours to make up for unemployed spouses, according to the Post – hospitals are "bracing for 2025 when retirements and other factors are projected to push the number of open jobs to as many as one million, just when Baby Boomers will require more nursing care," the Post reports.
Source: Kaiser Daily Health Policy Report Hospitals Offering Better Working Conditions Instead of Financial Incentives To Address Nursing Shortages. September 15, 2008. Wall Street Journal, Economic Downturn Prompts Many Nurses To Work More Shifts, Helps Address Nursing Shortage. May 07, 2008 .
41
Union Activity will Increase
With a new administration favorable to Unions coupled with significant layoffs in jobs most effected by the downturn, efforts to unionize health care workers are expected to increase. −
The Employee Free Choice Act of 2007, co-sponsored by Obama, would require employers to recognize unions if a majority of employees sign union-authorized cards. The bill was blocked in the Senate by Republicans.
−
Also expected to pass if reintroduced is the 2007 Re-Empowerment of Skilled and Professional Employees and Construction Trades Workers (RESPECT Act) was introduced in March 2007 by Democrats Senator Chris Dodd and Representative Rob Andrews.
−
Beneficial to unions, the free choice act would eliminate the 45-day election period in which employers can offer educational sessions to workers on the pros and cons of unions.
“Nurses are excited that we have opportunities with the Democrats in power. Issues related to workers’ rights and safety all will be part of a more progressive agenda in this county”.
John Carebian, Executive DirectorMichigan Nurses Association
“Nurses are excited that we have opportunities with the Democrats in power. Issues related to workers’ rights and safety all will be part of a more progressive agenda in this county”.
John Carebian, Executive DirectorMichigan Nurses Association
“Hospitals are aware that unions have targeted health care as fertile ground for organizing”
Lori Latham, VEEP Michigan Health and Hospital Association
“Hospitals are aware that unions have targeted health care as fertile ground for organizing”
Lori Latham, VEEP Michigan Health and Hospital Association
The Sisters of St. Joseph of Orange are clashing with a union that wants to organize at a chain of hospitals the nuns operated throughout California. SEIU- West hopes to unionize more than 8,000 caregivers, cafeteria works and X-ray technicians at five hospitals.
The Sisters of St. Joseph of Orange are clashing with a union that wants to organize at a chain of hospitals the nuns operated throughout California. SEIU- West hopes to unionize more than 8,000 caregivers, cafeteria works and X-ray technicians at five hospitals.
Source: Crain’s Detroit Business, November 9, 2008. HealthLeaders Media August 8, 2008. SEIU website.
"The results of this election will determine whether we'll be able to grow the union for nurses or whether we'll be on the defensive. “
Betsy Marville, RNSEIU Website
"The results of this election will determine whether we'll be able to grow the union for nurses or whether we'll be on the defensive. “
Betsy Marville, RNSEIU Website
By forming the national healthcare union, we will become the recognized voice of front-line healthcare workers everywhere, fueling our ability to help members win by uniting more and more workers in our union.
SEIU Healthcare Website
By forming the national healthcare union, we will become the recognized voice of front-line healthcare workers everywhere, fueling our ability to help members win by uniting more and more workers in our union.
SEIU Healthcare Website
42
Top Trend #5: Health Reform Will Not be Universal; But it Will be Everywhere
Health reform will be a high priority on a national level although significant national system reform is unlikely in the short term.
Hospitals will increase efforts to fund care for their uninsured patients.
43
Reform as a National Priority: Stars are Aligning
Reform Challenges:
First Step: Cost, Coverage or Both
Coverage: Comprehensive or Universal
Insurance Plans: Private, Public or Both
−
Expand Medicare and/or Medicaid
−
Institute Government-Run Insurance Plan (Obama’s National Health Plan)
Requirements: Employer Pay or Play, Individual Mandate Beyond Children
Alignment of Payments to Health Goals
−
Prevention, Chronic Care, Outcomes, Quality, Value
Top Down, Bottom Up, Both
−
Federal and State Initiatives
Financing the Plan - $50b+ annually?
Altman’s Law
“Most Every Constituent Group Supports Some Form of National Health Insurance—
But If Its Not Their Version of The Plan Their Second Best Alternative Is To
Maintain The Status Quo.”Stuart H. Altman, Heller School for Social Policy and Management, Brandeis University
44
Reform Initiatives on Many Fronts
Obama PolicyEconomy first priority. Connect improving economy with health reform. Greater public responsibility for health care. Many lessons learned from the past – need for compromise. Key Themes: 1) Improve access to care and coverage for all; 2) Control costs, and 3) Improve Quality.
Baucus (D-MT)“Meaningful” coverage Higher quality/greater value Reduce waste
Wyden (D-OR) Bennett (R-UT)
The Healthy Americans Act Portable, affordable, high quality private health care guaranteed for all.
Kennedy (D-MA) Expected in January 2009, call for universal health careFormation of 3 Senate working groups to align leadership
Pelosi (D-CA) House Speaker has indicated plans to pass legislation requiring physicians nationwide to adopt HITs.
HHSThomas A. Daschle, Obama’s choice for HHS Secretary. HHS accounts for one-quarter of all federal spending, second only to defense. Daschle will take on expanded role to “shepherd” health reform legislation through Congress in 2009.
CBO Director to Head White House OMB
“As CBO Director, Peter Orszag has practically been the ‘bionic man’ when Congress has needed budget guidance on everything from stimulating the economy to fixing health care. With all the economic challenges now facing the country, there is no one better qualified than Peter Orszag to provide the solid numbers and sound advice that the president will need to solve the current crises and get our economic future on track.” Senators Wyden and Bennett
Sources: Susan Berson, Esq. “ A Glimpse Into the Future: Predicting the Health Care Landscape in 2009”, Mintz Levin; “HHS Will be Shepherding Health-Care Reform”, washingtonpost.com, 12.5.08; Late News, Modern Healthcare, 12.1.08
45
Proposed Principles for Payment Reform
The HFMA report proposes five basic principles for reform:
Payments reward high-quality care and discourage medical errors and ineffective care.
Payment incentives are aligned among all stakeholders to maximize the efficiency and coordination of health services.
Payment systems sufficiently balance the needs and concerns of all stakeholders.
Payment systems are simplified, standard, and transparent.
The resources needed to support societal benefits of the healthcare system are identified and paid for explicitly.
QualityQuality
AlignmentAlignment
Fairness/ Sustainability
Fairness/ Sustainability
SimplificationSimplification
Societal Benefit
Societal Benefit
Source: Healthcare Payment Reform: From Principles to Action; Healthcare Financial Management Association, 2008.
46
Health Reform in Massachusetts
Significant recognition as a model for reform“Near Universal” coverage “roughly 97% of MA residents are now covered”, lowest in the USPrincipals of Reform−
Build upon the existing base: fill in gaps −
“Shared responsibility”IndividualsEmployersGovernment
−
Shift financing from “opaque bulk payments” to safety net providers to health insurance for individuals
Individual Mandate−
All adult residents−
Minimum Creditable Coverage−
Enforced through state tax system2008 Penalties: $210 - $912
Sources: Nancy Trumbull, Professor, Harvard School of Public Health; “Mass. Model of healthcare reform, hurdles, boston.com, 11.6.08.
55
Young Adults Small Biz.
Section 125 plansIndiv.& Families
The Connector in Massachusetts: The Connector in Massachusetts: The The ““TravelocityTravelocity”” of Health Insuranceof Health Insurance
47
Preventive Care – Medicare Demonstration Projects
Name Description Implemented
Medicare Coordinated
Care Demonstration
Tests a variety of care coordination models to reduce hospitalizations, improve health status, and reduce overall healthcare costs for chronically ill beneficiaries.
Fifteen organizations receive monthly fees to coordinate care and provide disease management.
2002
Care Management for
High-Cost Beneficiaries
Provider-directed model to manage care of high-cost and high-risk beneficiaries including those with chronic conditions.
CMS will test a variety of models including structured chronic care programs, increased provider availability, and flexibility in site settings.
2005
Medicare Medical Home
Three-year medical home demo in up to 8 states which will pay care management fees to physicians overseeing implementation of care plan for persons with multiple chronic illnesses.
Under Development
48
Episode of Care Payment – Medicare Demonstration Projects
Four hospitals (Ann Arbor, Atlanta, Boston, Columbus) each received a single payment covering hospital and physician services for CABG. Payments negotiated to be 10% - 37% below normal payment levels.
All parties benefited: physicians reduced LOS and hospital costs, post-discharge costs (not included) also decreased, patients had only one co-pay.
Five-year demonstration project to make global payments for hospital/physician services for cardiac care (OHS, defibrillators, pacemakers, etc.) and orthopedic care (hip and knee replacements).
One system in each market (Texas, Oklahoma, New Mexico, and Colorado) will be chosen based on price and quality/approach.
Medicare Acute Care Episode Demonstration (ACE) 2009
Medicare Participating Heart Bypass Demonstration Project (1990s)
49
Episode of Care Payment – Private Sector Pilots
Geisinger provides a “warranty” that covers any follow-up care needed for avoidable complications within 90 days at no additional charge.
Currently used for CABG with plans to expand to hip replacement, cataract surgery, angioplasty and other areas.
Currently developing episode of care payment system for a variety of conditions including AMI, hip and knee replacements, CABG, bariatric surgery, and hernias.
Full episode of care payments for all providers will be based on actual historical cost and estimated costs using evidence-based care with adjustments based on quality performance.
PROMETHEUS Payment, Inc.
Geisinger Health System – ProvenCareSM System
50
Hospitals that have historically relied on investment income, municipal funding of indigent and charity care, and low interest rate credit lines to offset operating loses will be hardest hit. Small hospitals and rural hospitals are most at risk in a downturned economy.
Margins will decline.The economic downturn will force most hospitals to trim their operating budgets in 2009. The credit market will tighten further and bond ratings will fall. Great pressure will exist to maintain cash on the balance sheet.New technology capital expenditures that do not improve the bottom line in the short term will be delayed, scaled back, or cancelled. The recent health care construction boom will continue but at a much slower rate.
Noblis Center for Health Innovation – Top Trends for 2009Changing Consumer Demands
Budgets Trimmed - Investments Delayed
Continued Consolidation
Workforce in Transition
Health Reform on Many Levels
Utilization will be stable or even decline in all but strongly growing markets. Consumers will continue to seek medical information/knowledge via web resources. Increased medical travel. Hospitals and physicians that continue to focus on improving and measuring quality, safety, and operating efficiencies will be best positioned for the future.
Physician responses to their own financial uncertainties will vary. There will be a shift in the mix of care providers with greater use of mid-levels.Nursing vacancies may lessen somewhat. Union activity will increase.
Health reform will be a high priority on a national level although significant national system reform is unlikely in the short term. Hospitals will increase efforts to fund care for their uninsured patients.
5151
Strategy Development Strategic and business plans Strategic thinking facilitation Affiliation planning Portfolio assessments Marketing plans & market assessments
Governance Defining governance roles Governance structure and best practices Board education and development
Regulatory Planning CON/DON assistance Expert testimony
Post-Acute Strategy Strategic planning Operational improvement/turnaround Compliance
Physician Strategy Physician-hospital alignment Medical staff development planning Physician practice/organization planning
Service Line Planning Service line business plans and
structures Demand/financial modeling Physician linkages
Financial Assessment Acquisition, divestiture & merger
analyses Multi-year financial projections Financial feasibility studies Determination of financial capability Capital allocation assistance
Performance Innovation Labor productivity Clinical resource management Margin improvement Hospital acquired conditions avoidance Customer service/patient satisfaction Small hospital turnkey assessments
Facility Planning Master facility planning Concept of Operations Functional/operational space
programming Capacity and throughput planning
Center for Health Innovation at a Glance
Atlanta Area404.231.4422 (voice)404.231.4423 (fax)
Ann Arbor, MI734.944.7524 (voice)734.944. 7534 (fax)
Austin, TX512.784.8616 (voice)512.301.9466 (fax)
Boston Area781.482.4050 (voice)781.863.5657 (fax)
Chicago, IL312.751.8800 (voice)312.751.8782 (fax)
Cleveland, OH216.789.0041 (voice)216.932.1852 (fax)
Denver, CO303.954.8644 (voice)312.751.8782 (fax)
Portland, OR312.751.4173 (voice)312.751.8782 (fax)
St. Louis, MO314.726.4879 (voice)314.721.8695 (fax)
Virginia Beach, VA757.284.1177 (voice)800.420.5295 (fax)
Washington DC Area703.610.1001 (voice)703.610.2453 (fax)
West Springfield, MA413.732.3366 (voice)413.732.7711 (fax)
STAFF LOCATIONS SERVICES
www.noblis.orghttp://www.noblis.org/hc/HealthInnovation.asp
52
An Innovative Company Producing Enduring Positive Impacts
Nationally recognized science, technology, and strategy organizationWe are a 501(c)(3) with a Mission to serve the public goodOur Vision is to create enduring positive impacts on our clients’ missionsSome of our profits are reinvested into Noblis-sponsored research to address our Nation’s most complex problems
We focus our resources on six areas of National importance
Noblis was named one of the “World’s Most Ethical Companies” for 2008 by the Ethisphere Institute
Public Safety Transportation
Oceans, Atmosphere,
& Space
HealthcareEnvironmental
& Energy Sustainability
National Security & Intelligence
© 2008 Noblis, Inc.Our Program Will Begin Momentarily
