GREG STOCK, CEOTHIBODAUX REGIONAL MEDICAL CENTER

MAY 11, 2011

Analyzing the US Healthcare Reform & How it is Affecting

Healthcare

Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2008

119%

34%

29%

0%

20%

40%

60%

80%

100%

120%

140%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Health Insurance Premiums

Workers' Earnings

Overall Inflation

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2008. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 2000-2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 2000-2008 (April to April).

Pushed Out by Rising Insurance Costs

Growth In Healthcare Insurance Costs Are Now Making Affordability Difficult for Individuals and Small Businesses

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National and State Healthcare Legislation

National Legislation:Patient Protection and Affordable Care Act (PPAC)Passed & signed into law in March, 2010Approximately 2,700 pages longMost significant changes to American Healthcare since 1983

Cost: $940 billion over ten years.

Deficit:Would reduce the deficit by $130 billion over the first ten years. Would reduce the deficit by $1.2 trillion dollars in the second ten years.

Coverage:Would expand coverage to 32 million Americans who are currently uninsured

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Medicare & Medicaid Payment Cuts

Paying for ReformNationally, hospital payments will be cut $155 billion over 10 year period beginning in 2010 to help pay for expanding coverage to 32 million.

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Louisiana Medicaid Inpatient Hospital Payments Compared to Medical Care Inflation

1997  2.6% MCD rate increase  

2001  $25 million appropriated for 2.5% MCD rate increase

2006  $38 million appropriated for 3.8% MCD rate increase

2007  $33 million appropriated for 4.75% MCD rate increase

2009  3.5% mid‐year reduction in Feb & 6.3% IP / 5.65% OP reduction in Aug (approximate $90 million total impact to hospitals including outlier reductions)

2010  5% mid‐year reduction in Feb (approximately $50 million impact to hospitals) & 4.6% estimated reduction passed in recent state budget (estimatedimpact of $46 million at present pending additional data)Medical Care CPI projected for 2009 and 2010 using average of the three previous years; Medicaid

Enrollment Increases for 1995 and 1996 based on average of three subsequent years; Medicaid Enrollment Increases for 2009 and 2010 based on average of three previous years

State of Louisiana Burdens Under National Health Reform

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• At 133% of Federal Poverty Level, nearly 42% of all Louisiana residents would qualify for Medicaid!

• 260,000 residents could be added to Medicaid rolls.

• This alone could cost the state an additional $614 million in state dollars.

Nursing Home Quality InitiativeCMS Updates Hospitals on HCAHPS

New Multi-Million Dollar Initiative to Reward Doctors and Hospitals for Higher Quality Care

HCAHPS - % of time patient chose "Always"

Quality is Becoming THE Strategic Initiative

Focus on payment for quality & efforts to reduce costsNew payment & delivery models to improve quality & efficiency

Value-Based Purchasing

Bundled Payments (includes pre-op,

inpatient hospital, all physician services, &

post-acute care services)

Comparative Effectiveness

Accountable Care Organizations

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Affordable Care ActValue Based Purchasing Rule

Dollars at Risk for Quality:6% of base DRG payments by 2017HAI’s 1%; Readmissions 1-3%; Value-Based Purchasing 1-2%

Weighted scoring system:70% Clinical domain 17 process measures currently in place30% patient experience domain HCAHP’s

Beginning FY13 Hospitals Scored on:AchievementImprovementTotal Performance

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Example: Hospital Readmissions

Preventable situations $25 billion in wasteful spending annuallyDriven by:

Poor discharge planning Inadequate follow upInsufficient health information technology

Current rate:1 in every 5 Medicare patients readmitted within 30 days

Solution:Get it right the first time through best practices and consistency

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Opportunity vs. Danger

“Opportunity? Often it comes in the form of misfortune, or temporary defeat.”

Napoleon Hill

“We are continually faced by great opportunities brilliantly disguised as insoluble problems.”

Anonymous

“Opportunity knocked. My doorman threw him out.”

Adrienne Gisoff

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Recognizing Opportunity as a means to achieve Excellence

One Goal: Better overall healthcare

outcomes at lower costs

Culture of Performance Improvement

Business Model Change

Strategic Initiatives for Excellent

Clinical Outcomes

Physician Integration

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Culture of Performance Improvement

Six Sigma/Lean /DIGs –A Proven Systematic Structures Approach

Resources Allocated:2 MBBs, 20 Green Belts, 113 Lean Leaders, 42 DIG Facilitators

Focus:Quality Core Measures, HAIsPatient Safety Bedside Medication VerificationCardiology Outcomes Consultant EngagementService Lines Imaging, OR, Cancer CareFinance Contract Compliance, Supply Cost Reduction

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Risk-adjusted Mortality Ratios

Coronary Artery Bypass

Surgery

Valve Replacement

Surgery

Coronary Interventional Procedures

Acute Myocardial Infarction

Congestive Heart Failure

Business Model Change

• Clinical Value vs. Economic ValueBetter Value Proposition

• Service Area Needs vs. Latest TrendSmart Growth

• Expense of In-put vs. Revenue of Out-putProductivity

• Integrating Providers for Total Care vs. Single Provider Care

Accountable Care Organizations

• Proactive Improvements vs. Government Reform

“Working Smarter not Harder”

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Strategic Initiatives for Improving Clinical Outcomes“War on

Infections” Targeting the elimination of Hospital Acquired Infections

• 60% reduction in CAUTIs

• 40% overall reduction in HAIs

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Strategic Initiatives for Improving Clinical Outcomes

“Call to Action” A plan to survive & thrive in an uncertain environment to remain a leading healthcare provider by Creating a Culture of Lean Thinking

86 additional Lean Facilitators

21 Lean Projects in 6 months

Benefits:

Human Development – “Growing Our Own”

Improved Clinical Quality

Resource Management

Maximized Efficiency21

Physician Integration

Uniting for an Excellent Total Healthcare ExperienceHow to achieve the goals of integration?

Strategic Planning / Goal SettingMarket AnalysisMD LeadersData SharingCompensationCultural BlendingTechnologyPerformance Improvement

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Achieving True Healthcare Reform

Individual – take responsibility for your own health

Society – foster development of a healthy environment

Healthcare Industry – strive for improved clinical outcomes at lower costs

Government– end wasteful spending on a broken system

Healthcare Transformation23

Health & Wellness Leader

Health & Wellness of the Community

State-of-the-Art Center

“Synergy Created”

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National RecognitionAward Winning Care

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