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HBS Health Industry Alumni Conference

March 14, 2012

Health Care 2020

Emerging Innovations in the Health Care Payment and

Delivery Landscape

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Looking to Put Health Care on a Budget

2

Source: Health Care Advisory Board interviews and analysis.

Three Manifestations of Health Care on a Budget

Federal Budget

Framework

Budgeting in the

Private Market

Individuals

on a Budget

1

2

3

Growth

Rate

Inflation

Health Care

Inflation

Time

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Driving Innovation in the Commercial Market

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Commercial Insurers Following Medicare’s Lead

Source: “Anthem Blue Cross, Sharp HealthCare Pilot San Diego-Area ACO,” available at: www.healthcarefinancenews.com; “Norton Healthcare, Humana Launch ACO Pilot,” “Aetna, Carilion Clinic

Building ACO in VA ,” available at www.healthleadersmedia.com; “An ACO Takes Root in San Francisco,” available at: www.chwhealth.org; “8 Aspects of UnitedHealthcare's Plans to Fund an ACO at

Tucson Medical Center,” available at: www.beckershospitalreview.com; “Advocate Health Care, Blue Cross and Blue Shield of Illinois Sign Agreement Focusing on Improving Quality, Bending the Health

Care Cost Curve,” available at: www.bcbsil.com; “Minnesota’s Largest Health Plan Signs ‘Total Cost Of Care’ Agreement With Park Nicollet Health Services,” available at: www.bcbs.com; “BCBS

Massachusetts Announces First Year Results of Alternative Quality Contract,” available at: www.bluecrossma.com; “CIGNA and Piedmont Physicians Group Launch Accountable Care Organization Pilot

Program,” available at: newsroom.cigna.com; Maine Health Management Coalition, available at: www.mehmc.org; Health Care Advisory Board interviews and analysis.

BCBS Massachusetts’s

Alternative Quality

Contract: Annual global

budget, quality incentives

for participating providers

Blue Shield California:

Two ACOs in Northern

California

CIGNA: Medical home

contract with Piedmont

Physicians Group

BCBS Illinois: Shared

savings contract with

Advocate Health Care

BCBS Minnesota:

Shared savings contract

with five providers

UnitedHealth Care: ACO

with Tucson Medical Center

Maine Health

Management Coalition:

Multi-stakeholder group

supporting ACO pilots

Providence Health &

Services: $30 M, two-year

contract with public

employee benefits board

Humana: ACO pilot

with Norton Healthcare

Anthem Blue Cross:

ACO pilot with Sharp

HealthCare medical groups

Aetna: ACO pilot

with Carilion Clinic

Budgeting in the Private Market

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Looking Ahead to a Decade (or More) of Change

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Entering an Era of “Accountable Care”

1) Evidence-based medicine

Betting on a Provider-Driven Solution Set

• Consolidation and integration

• Continuum-wide care

• Efficiency and standardization

• Group aggregation and employment

• Enhanced primary care practice

• Embedding IT to drive to EBM1

• Public—price cuts and risk shifts

• Private—risk-based contracting

• All—value-based payment models

• Increased cost-sharing with employees

• Heavier emphasis on health management

• Defined (or no) contribution

Who’s “accountable”?

Hospitals

Doctors

Payers

Employers

Patients

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Argument in Brief

Information Liberation

New Incentives

Rocket Fuel for Innovation

+

=

There Has Never Been a Better Time to Be an Innovator in Health Care

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Community Health

Provider Directories &

Quality

“Blue Button”

Consumer Product

Information

Medical/Scientific Knowledge

Govt Spending

HHS(Growing)

Catalog of

Liberated Data

Open Health Data

Engaging Citizens in Health Improvement at the Community-Level

Source: Asthmapolis, iTriage, Ozioma, Healthline.

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“Deep Dive” – Data Liquidity for Personal Health

Blue Button,” DIRECT - Government Startups that Scale

Source: www.va.gov/open; www.bluebuttondata.org.

“Blue Button” in Brief “Direct” Secure Email Standard

President challenges VA to deliver

simple health download from PHR

on 08/10; delivered 10/10 and has

>400,000 users to date

An open collaboration to develop a simple

method for enabling secure Internet-based

health data transmission; specs posted in

90 days; first production transaction 1/11;

implementation by 65+ vendors

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“Meaningful Use”

New Incentives, Part I

Office-Based Physicians an EHR

ePrescribing on the Surescripts Network

Source: Office of the National Coordinator for Health IT; Source: Cebul, Randall D., et al.

New England Journal of Medicine, August 2011; Surescripts.

Quality of Diabetes Care

Cleveland Clinic Providers using EHRs vs. Paper Records

51%

44%

7%

16%

% Obtaining All Recommended Care Processes

% Obtaining 4 of 5 Outcome Standards

Growing Evidence Linking Quality to Health IT Adoption

Care Processes: Measure Hemoglobin; Kidney

Mgmt; Pneumococcal Vaccine; Eye Exam

Outcomes: LDL<100 mg/dl; smoking; glycated

hemoglobin <8%; BP <140/80; BMI<30

0.8%

20.7%

40.2%

0.0% 5.0%

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

Dec

-06

M

ar-0

7

Jun

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Dec

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Jun

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Dec

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Jun

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Se

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9

Dec

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M

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0

Jun

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Se

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Dec

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Jun

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Se

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1

*Denominator

Dramatic uptick in EHR adoption –

nearly doubling in one year and on

track to support “meaningful use” in the

coming years

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Cultivate Innovation Ecosystems

Substitutability the Key Design Principle to Modular Development

Source: Dr. Gunston Ho, Apixio;

Extending the EHR

Dr. Gunston Ho

3rd Party Applications

Search Tool Extends Aids Care

Primary care clinic earns 180% of

Medicaid to improve care

coordination; adopts EHR with

support from extension center

EHR interoperates with modern

search tool to better manage

care population

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Looking Ahead to a Wired Health System

10 Information Asset

Emerging Data Systems Change Outlook of Competitive Asset

Source: Executive Office of the President, “Realizing the Full Potential of Health Information Technology to Improve

Healthcare for Americans: The Path Forward,” available at: http://www.whitehouse.gov/sites/default/files/microsites/

ostp/pcast-health-it-report.pdf, accessed April 26, 2011.; Health Care Advisory Board interviews and analysis. 1) Electronic Health Record.

Disruptive

Technologies

• Cloud Computing

• National Network

• Health Information

Exchanges

• Focus on data ownership

• Health system has possession

of “the wires,” proprietary data

• Data analysis conducted in silos

• Data is prescriptive, predictive

• Focus on EHR1 capability

• Compete in a world of

greater transparency

Today: Differentiate

on Data Access

Future: Differentiate on

Data-Informed Care Plan

Physicians on the Fast Track

“Cloud-based technologies and PHRs1 are potential examples of disruptive technologies in health IT.

These types of technologies might allow the 80 percent of physicians who are non-digital to leapfrog

some of the existing limitations of EHR systems directly into more modern technologies.”

Report to the President

President’s Council of Advisors on Science and Technology

“

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New Incentives, Part II: Payment Reform

Pay for “Value” to Drive New Markets for Care Coordination Services

• Data Mining/Analytics

• Care Integration Tools

• Timely Clinical Data,

Decision-Support

• Technology to Extend

Physician Reach

• Consumer Engagement

Tools/Platforms/Apps

• Organized outpatient care, coordination and team-based approaches

Patient Centered Medical Homes

• Shared savings; Redesigned care processes for high quality, efficient delivery

Accountable Care Organizations

• Pilot program for episodes of care; incentivizes reduced costs around eight conditions

Bundled Payments

• Motivates hospitals to engage with care coordinators and better organize delivery systems

Readmission Reduction Programs

Innovations Needed:

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Shifting Risk and Accountability to Providers

Providing an Incentive to Remake the Delivery System

Source: Health Care Advisory Board interviews and analysis.

Degree of

Shared Risk

Care Continuum

Pay-for-Performance

Hospital-Physician Bundling

Episodic Bundling

Capitation/Shared-Savings Models

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Chronic Disease Growth Outpacing Population Growth

Source: Milken Institute, available at: http://www.milkeninstitute.org/

pdf/chronic_disease_report.pdf, accessed April 27, 2011; Health Care

Advisory Board interviews and analysis.

Projected Increase in Chronic Disease Cases

2003-2023

29.0% 31.0%

39.0% 41.0%

53.0% 54.0%

62.0% 19%: Projected

population

growth, 2003-

2023

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Enabling Constant Monitoring of Health Status

Reminders Help Patient Stay on Track and Reinforce Care Plan

Source: WellDoc Inc., available at: http://www.welldocinc.com,

accessed: May 4, 2011; Health Care Advisory Board Interviews and analysis.

Activation On the Go

Advice Triaged Across

Multiple Sources

• Real-time biometric

alerts via text message

• Longitudinal alerts and

reminders via web portal

• Secure provider

communication via e-mail

WellDoc Alert

“Your most recent blood

test shows that you have

low blood sugar. It’s time

to treat this before you eat

your meal or take your

meal time medication.”

Technology in Brief: WellDoc, Inc.

• Health care technology company based in Baltimore, Maryland

• Initial clinical trials showed successful reduction of HbA1c levels by 2.03 percent

• Mobile health coach device can be used with variety of patients; with or without

physician participation

• Two-year, 225-patient effectiveness study completed January 2010; participants

included University of Maryland, Care First Blue Cross Blue Shield, Sprint, LifeScan

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Telemedicine an “Embedded” Asset in Care Delivery

Putting it Altogether

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Web-based EMR provides

easy access to patient

charts, labs, and

pharmacies.

Two-way fully

duplex web-

based video

conferencing

system.

Remote desktop

login assistance

is available at

the physician’s

finger tip.

Patients can consult with a

CareClix physician from the

comfort of their home or office. No

equipment or special hardware

needed. Mobile apps are available

for mobile patient. Little or no wait

to consult with a physician.

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Crimson Supporting Total Value of Care

Managing Performance Across Three Dimensions

Measuring Total Value of Care

1

2 3

Care Sustainability

Ensuring Financial and Operational Health

to Support Reinvestment and Growth

Key Metrics:

• Contribution margin

• Adjusted length of stay

• Cost per case

• Surgical revenue, percentage

of operating revenue

Care Outcomes

Improving Quality, Reliability,

and Experience of Care Provided

Key Metrics:

• Same-site 30-day readmissions

• Hospital-acquired conditions

• Complication of care rates

• Severity-adjusted mortality

1 2

3 Care Management

Managing Population Health and Preventing Chronic Disease

Key Metrics:

• At-risk population measures (e.g. diabetes, heart failure, hypertension, COPE, etc)

• Ambulatory-sensitive measures

• Preventive care measures and screening

Value Potential Total Value of Care

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HBS Health Industry Alumni Conference

March 14, 2012

Health Care 2020

Emerging Innovations in the Health Care Payment and

Delivery Landscape