Creating a High Performing Health System

David Blumenthal, MD, MPPPresident, The Commonwealth Fund

Mark McKenna LectureArizona State University

Tempe, AZApril 23, 2014

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Agenda

• Challenges• Next Steps

–ACA• The Good and Bad News• Update on Health IT

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COST• $Billions in unnecessary and wasteful spending

•Overuse puts patients at risk, drains resources, and makes healthcare less accessible and less effective

QUALITYDespite rapid advances,

thousands of patients die each year from

medical error

COVERAGE55 million uninsured;

many more underinsured

A BROKEN SYSTEM

430 Percent of Working-Age Adults Uninsured Now or

During the Past Year

Note: Totals may not equal sum of bars because of rounding. Source: The Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, and 2012).

Percent of adults ages 19–64

2003 2005 2010 20120

5

10

15

20

25

30

35

17 18 20 19

9 9 8 10

Insured now, time uninsured in past yearUninsured now

26 28 28 30

5In 2012, Nearly Half of Adults Were Uninsured During the Year or Were Underinsured

Note: Numbers may not sum to indicated total because of rounding.* Combines “Uninsured now” and “Insured now, time uninsured in past year.” ^ Underinsured defined as insured all year but experienced one of the following: out-of-pocket expenses equaled 10% or more of income; out-of-pocket expenses equaled 5% or more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income.Source: The Commonwealth Fund Biennial Health Insurance Survey (2012).

Insured all year, not

underinsured^54%

100 million

184 million adults ages 19–64

Insured all year,

underinsured^16%

30 million

Uninsured during the year*

30%55 million

6Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation,

and Workers’ Earnings, 1999-2013

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

50%

100%

150%

200%

250%

57%

119%

182%

56%

117%

196%

14%

34%

50%

11%

29%40%

Health Insurance PremiumsWorkers' Contribution to PremiumsWorkers' EarningsOverall Inflation

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2013; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2013 (April to April).

7U.S. Health in International Perspective:

Shorter Lives, Poorer Health• Americans live shorter lives and are

in poorer health at any age

• Poor outcomes cannot be fully explained by poverty or lack of insurance

• White, insured, college-educated, and upper income Americans are in poorer health than their counterparts in other countries

8When it Comes to Health Care,

There are Two Americas

Source: D. Blumenthal, Two Americas, (New York: The Commonwealth Fund, August 2013).

9Overall Health System Performance

for Low Income Populations

Source: Commonwealth Fund Scorecard on State Health System Performance for Low-Income Populations, 2013.

10

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000 USSWIZNORNETHGERCANFRASWEAUSUKNZ

80 83 86 89 92 95 9836

893

3799

139

090 10

0

2

4

6

8

10

12

14

16

18

20 AUSNORUKSWENZCANSWIZGERFRANETHUS

International Comparison of Spending on Health, 1980–2012

Note: $US PPP = purchasing power parity.Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013 (Paris: OECD, November 2013). US data from National Health Expenditure Accounts, adjusted to match OECD definitions.

Total expenditures on healthas percent of GDP

$8,745

$3,182

17.6%

8.9%

Average spending on health per capita ($US PPP)

The U.S. sweeps GOLD, SILVER, and BRONZE in international competition

$$$$$$$$$$$$$$$

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Health Policy at a Fork in the Road

Benefit and Price

Reduction

ORFundamental

Delivery System Reform

Regardless of how you envision the role of government, health care and the markets in which it’s purchased need to be improved

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Microsystems

Macrosystems

Health SystemPerformance

Improving Performance13

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MicrosystemsOR

ICU ED

Admitting dept

MD practice

People, processes and practices that interact directly with patients or

support patient care at the local level (the “sharp end”).

Microsystems

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Macrosystems

Hospitals

Accreditingorganizations

Govt programs/regulations

Healthplans

Nationalboards

Organizations and environmental forces that support and influence microsystems (the “blunt end”).

Macrosystems

16Supply Chains:

Micro, Macro or Something in Between?

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Interventions That Work: Microsystem

Microsystems

Primary Care

Reminder

Systems

CDS/CPOE

Care

CoordinationToyotaProductionSystem

Supply Chain

Management?

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We have failed to create macrosystems

that encourage and support use

of these solutions,

thereby changing the behavior

of large numbers of microsystems

and raising the performance

of the health care system as a whole.

Macrosystems

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We need to make it easier to do the right thing…

Fundamental Delivery System Reform

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Microsystems

Macrosystems

Health SystemPerformance

Improving Performance21

Affordable Care Act

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Reduced Payments for Avoidable Complications

Medicare Advantage Plan Bonuses

Bundled Payments

Physician Quality Reporting System

Meaningful Use

Value Based Purchasing

AccountableCare Organizations

Hospital Inpatient Quality Reporting

Medical Homes

The Affordable Care Act

23

Surge of Expert Reports

24Shared Approaches to Confronting Costs• Provider payment reform

– Repeal Medicare sustainable growth rate formula– Move from paying for volume to paying for value– Enhance support for primary care

• Delivery system reform– Encourage development and implementation of innovative

delivery models

• Medicare reform– Improve financial protection for beneficiaries– Provide positive incentives for choosing high performing providers

• Consumer/patient engagement

• Enhancing performance of health care markets– Increase transparency of quality and cost information– Eliminate administrative inefficiency

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Some Good News: Medicare accountable care organizations (ACOs)

• Over 360 Medicare ACOs serving up to 5.3 million people

• Costs for beneficiaries aligned to “Pioneer ACOs” increased 0.3 percent in 2012 vs. 0.8 percent for other beneficiaries.

• Over $380 million in savings have been generated by Medicare ACOs and Pioneer ACOs.

• 9 out of 23 Pioneer ACOs produced gross savings of $147 million in their first year (though 9 ACOs also dropped out).

Source: Centers for Medicare & Medicaid Services.

26ACO Distribution to Date,by Hospital Referral Region

Total of 601 accountable care entities in the U.S.• 366 Medicare ACOs• 235 Non-Medicare ACOs

Note: Data for Medicare ACOs as of January 2014; data for non-Medicare ACOs and in map as of July 2013. Source: Petersen M, Muhlestein D, Gardner P, “Growth and Dispersion of Accountable Care Organizations: August 2013 Update,” Leavitt Partners; Centers for Medicare and Medicaid Services.

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Delivery System Reform, Further Effects

Reporting on hospital-acquired conditions

• Rates of serious hospital-acquired conditions (HACs) now available on Hospital Compare website

Creation of the Center for Medicare and Medicaid Innovation (CMMI)

• More than 50,000 health care providers involved in CMMI innovation projects

Source: CMS.

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Healthcare Associated Infections Declining

Central Line-associated Bloodstream Infections

Surgical-site Infections for 10 Common Procedures

0

0.2

0.4

0.6

0.8

1

20082012

Standardized Infection Rate [2008 set to 1.0]

Source: “National and State Healthcare Associated Infections: Progress Report,” Centers for Disease Control and Prevention, March 2014.

44% drop

20% drop

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2007 2008 2009 2010 2011 2012 201317%

18%

19%

20%

Monthly Rate

Trendline

Medicare Hospital Readmissions Declining

Note: Medicare 30-Day, All-Condition Hospital Readmission Rates January 2007 - May 2013Source: CMS.

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Source: Gallup-Healthways Wellbeing Index.

Rate of Uninsured Falls to Lowest Level of Obama’s Presidency

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Spending Growth Rate Has Slowed in Recent Years

Source: Martin AB, Hartman M, Whittle L, Catlin A; National Health Expenditure Accounts Team. National health spending in 2012: rate of health spending growth remained low for the fourth consecutive year. Health Aff (Millwood). 2014 Jan;33(1):67-77.

2005 2006 2007 2008 2009 2010 2011 20120

1

2

3

4

5

6

7

NHE per capita spending growthPercent

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Is This the Dawn of a New Day?

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…Costs Began Picking Up at the End of 2013

Source: “Insights from Monthly National Health Expenditures Estimates through February 2014,” Altarum Institute, April 8, 2014.

Year-Over-Year Growth Rates in NHE

34U.S. Health Spending is Larger Than the GDP of

Most Nations

Notes: Data from 2011, adjusted for differences in cost of livingSource: D. Blumenthal and R. Osborn, In Pursuit of Better Care at Lower Costs: The Value of Cross-National Learning, (New York: The Commonwealth Fund Blog, April 2013).

35Looking Back: What We Could Have Saved if We Had

Matched the Next Highest Country (Switzerland)

Note: Per capita spending amounts adjusted for differences in cost of living, total U.S. savings adjusted for inflation. Source: D. Squires, The Road Not Taken: The Cost of 30 Years of Unsustainable Health Spending Growth in the United States, (New York: The Commonwealth Fund Blog, March 2013).

Increase spending on public health by 20,000%

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Update on Health IT

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Meaningful Use Framework in HITECH Act

Rewards the effective (meaningful) use of EHRs certified by the federal government.

Key provisions• Clinicians: $44,000 / $63,750

over 5-10 years• Hospitals: $2 million bonus

plus per DRG payments• Penalties after 2015

Estimated expenditures:• $9-27 billion over 10 years

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MU Registration and Attestation• More than half of all doctors and

other eligible providers have received Medicare or Medicaid incentive payments for adopting or meaningfully using electronic health records

• 94 percent of hospitals are enrolled in the program.

• More than $21.6 billion in payments as of February 2014

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2006 2007 2008 2009 2010 2011 2012 20130.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

10.5% 11.8%16.9%

21.8%27.9%

33.9%39.6%

48.1%

29.2%34.8%

42.0%48.3% 51.0%

57.0%

71.8%78.4%

EHR Adoption AmongOffice-Based Physician Practices, 2006-13

Source: Hsiao C-J, Hing E. “Use and characteristics of electronic health record systems among office-based physician practices: United States, 2001–2013.” NCHS data brief, no 143. Hyattsville, MD: National Center for Health Statistics. 2014.

Any EMR/EHR System

Basic System

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EHR Adoption AmongHospitals, 2008-12

Source: DesRoches CM, et al. Adoption Of Electronic Health Records Grows Rapidly, But Fewer Than Half Of US Hospitals Had At Least A Basic System In 2012. Health Affairs, July 2013.

2008 2009 2010 2011 20120.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%

8.8%11.9%

15.1%

26.6%

44.0%

7.2% 9.2%11.5%

18.0%

27.3%

1.5% 2.7% 3.6%8.7%

16.7%

At Least Basic EHR

Basic EHR

Comprehensive EHR

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Future Challenges for HIT: Realizing Value

• Usability.

• Interoperability and exchange.

• Analytics.

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Question and Answer