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TRANSCRIPT
Marketing and Planning
Leadership Council
Health Care Industry
Trends 2015Ready-to-Use Presentation Slides
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1
Road Map
©2014 The Advisory Board Company • advisory.com
Payment Reform
Provider Market
Purchaser Behavior
Provider Selection Trends
• Overview of Accountable Payment Models
• Update on Value Based Purchasing Program
• Update on Bundled Payments
• Update on Accountable Care Organizations
Payment Reform
3
©2014 The Advisory Board Company • advisory.com
Overview of Accountable Payment Models
1) Center for Medicare and Medicaid Innovation.
Key AttributesValue-Based
Purchasing
Bundled
Payments
Accountable Care
Organizations (ACOs)
Definition
Pay-for-performance program
differentially rewards or punishes
hospitals (and likely ASCs and
physicians in coming years)
based on performance against
predefined process and outcomes
performance measures
Purchaser disburses single
payment to cover certain
combination of hospital,
physician, post-acute, or other
services performed during an
inpatient stay or across an
episode of care; providers
propose discounts, can gain
share on any money saved
Network of providers collectively
accountable for the total cost and
quality of care for a population of
patients; ACOs are reimbursed
through total cost payment
structures, such as the shared
savings model or capitation
Purpose
Create material link between
reimbursement and clinical
quality, patient satisfaction scores
Incent multiple types of providers
to coordinate care, reduce
expenses associated with care
episodes
Reward providers for reducing
total cost of care for patients
through prevention, disease
management, coordination
Advisory Board
Assessment
Withhold-earn back model will put
significant dollars at risk for all
providers, force immediate focus
on quality and experience metrics
Increases accountability for cost
and quality within episodes of
care without removing FFS
volume incentive; new lever for
financial alignment between
independent specialists and
hospitals
Long-range goal of CMS to
migrate to risk contracting; will
spark industry-wide investment in
primary care infrastructure to
establish narrower networks
Role of CMMI1
Dedicating $500M to Partnership
for Patients, targeting hospital-
acquired infections, readmissions
Accepting providers’ proposals to
test four different bundled
payment models, including one
without inpatient care
Accepting providers’ proposals to
test various payment systems,
including both shared savings and
partial capitation
4
Source: Marketing and Planning Leadership Council interviews and analysis.
Overview of Accountable Payment Models
©2014 The Advisory Board Company • advisory.com
Initially Weighted at 20%, Reducing Clinical Process Weight
Update on Value Based Purchasing Program
Source: The Advisory Board Company, “Mortality Rates Are Only One of Many VBP Changes
to Come,” December 4, 2013, available at: www.advisory.com; CMS, “Request for Information
on Specialty Practitioner Payment Model Opportunities,” February 2014, available at:
www.innovation.coms.gov; Health Care Advisory Board interviews and analysis.
1) Value-Based Purchasing.
CMS Adds Efficiency Metric to VBP Program
Clinical Process
Patient Experience
Outcomes of Care
Efficiency20% 25%25%
30%
40%
30%
30%
30%
25%
70%
45%
20%10%
FY 2013 FY 2014 FY 2015 FY 2016
Medicare VBP1 Program Domain Weights
5
©2014 The Advisory Board Company • advisory.com
6
1) Bundled Payments for Care Improvement.Source: Centers for Medicare and Medicaid Services;
Health Care Advisory Board interviews and analysis.
Update on Bundled Payments
BPCI1 Participation by State
Over 6000 Providers Participating in BPCI1
50-100 providers
100-200 providers
200-300 providers
>300 providers
August 2014
©2014 The Advisory Board Company • advisory.com
Number of ACOs Continues to Grow
Source: Oliver Wyman, “ACO Update: Accountable Care at a Tipping Point,” April 2014; Leavitt Partners, “Growth
and Dispersion of ACOs,” June 2014; Marketing and Planning Leadership Council interviews and analysis.
Update on Accountable Care Organizations
1) As of April 2014.
Total Number of Operating ACOs
May 2014
Widening Reach of ACOs1
67%Portion of U.S. population
living in a primary care
service area with an ACO
17%Portion of U.S.
population treated
by an ACO
5.3MMedicare FFS
beneficiaries treated
by an ACO
23
306
210
74 13 626
MSSP
Cohort
Private
Sector
ACOs
ACOs
without
announced
contracts
Pioneer
ACO
Model
TotalPrivate &
Public
ACOs
7
©2014 The Advisory Board Company • advisory.com
Where the Medicare ACOs Are
23 Pioneer and 343 Shared Savings Program ACOs
Source: Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.
Update on Accountable Care Organizations
April 2014
Shared Savings ACOs 2013 Cohort
Shared Savings ACOs 2014 CohortShared Savings ACOs 2012 Cohort
Pioneer ACOs
8
©2014 The Advisory Board Company • advisory.com
Physician-Led ACOs More Likely to Generate Savings
Update on Accountable Care Organizations
Source: Muhlestein D, “Accountable Care Growth in 2014: A Look Ahead,” Health Affairs Blog, January 29, 2014,
available at: www.healthaffairs.com/blog; CMS, “More Partnerships Between Doctors and Hospitals Strengthen
Coordinated Care for Medicare Beneficiaries,” December 23, 2013; Oliver Wyman, “Accountable Care Organizations
Now Serve 14% of Americans,” February 19, 2013; Health Care Advisory Board interviews and analysis.
1) Medicare Shared Savings Program.
Early Adopters Beginning to Reap Results
First-Year Spending Reduction
By MSSP1 ACOs
2012 Cohort
$147MTotal cost savings by
Pioneer ACOs in first year
$126MShared savings earned by 2012
MSSP ACOs in first year
Percent of MSSP ACOs that Earned
Shared Savings by Sponsorship
29%
20%
Physician-Led Hospital-Led
25%
22%
53%
Earned
Shared
Savings
Reduced
Spending But
Did Not Earn
Shared Savings
Did Not Reduce
Spending
2012 Cohort
9
©2014 The Advisory Board Company • advisory.com
Performance, Persistence Closely Correlated
Update on Accountable Care Organizations
Source: Centers for Medicare and Medicaid Services, http://innovation.cms.gov/Files/x/PioneerACO-Fncl-PY1PY2.pdf; “San Diego-Based Sharp
HealthCare Pulls Out of Pioneer ACO Program,” California Healthline, August 28, 2014; Health Care Advisory Board interviews and analysis.
1) Dropped out after second year; second-
year performance not reported
Some Pioneers Dropping Out of the Program
Pioneer ACO Performance
First-year performance
Second-year performance
Dropped out after first year
Gross Savings as Percentage of Benchmark
1
-5.6%
(min)
7.1%
(max)
Dropped out after second year
10
• Volume Performance
• Mergers and Acquisitions
• Partnerships and Affiliations
• Imaging Centers
• Ambulatory Surgery Centers
• Primary Care Network
Provider Market
11
©2014 The Advisory Board Company • advisory.com
Modest Growth Anticipated for the Near Term
12
Inpatient and Hospital Based Outpatient Volume Projections
Inpatient Volume,
CAGR1
2013-2018
0.5%
1.0%
1.0%
1.3%
2.6%
0.4%
Cardiac Services
Neurology
General Surgery
Orthopedics
General Medicine
Neurosurgery
Overall
Hospital-Based Outpatient Volume,
CAGR1
2013-2018
Source: Advisory Board Inpatient and Outpatient Market Estimators; Advisory Board research and analysis.
1) Compound Annual Growth Rate
0.8%
1.0%
1.2%
1.6%
1.8%
1.5%
Orthopedics
GeneralSurgery
E&M
Cardiology
Radiology
Oncology
Overall
(2.3%)
3.1%
Volume Performance
©2014 The Advisory Board Company • advisory.com
Volumes Continuing to Shift Outpatient
13
Source: “Report to the Congress: Medicare Payment Policy,”
MedPAC, March 2014, available at: www.medpac.gov; Marketing
and Planning Leadership Council interviews and analysis.
1) Outpatient services represent entire market regardless of
site of service (includes hospital-based settings, ASCs,
other freestanding providers and physician offices)
Medicare Volume Growth
Cumulative Percent Change
All Payer Volume Growth Projections1
2013-2018
Outpatient Services per FFS Part B Beneficiary
Inpatient Discharges per FFS Part A Beneficiary
28.5%
(12.6%)
2006 2012
14.0%
5.0%
(3%)
(11%)
Inpatient Oupatient
11%
16%
15%
17%
Cardiac
Services
Vascular
Services
Orthopedics
Neurosurgery
Volume Performance
©2014 The Advisory Board Company • advisory.com
Volume Performance
Source: CMS, “2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance
and Federal Supplementary Medical Insurance Trust Funds,” May 31, 2013, available at:
http://downloads.cms.gov/files/TR2013.pdf; Health Care Advisory Board interviews and analysis.
Medicare to Become Majority of Volume by 2022
Projected Number of
Medicare Beneficiaries
Millions of Beneficiaries
54.0
55.6
57.3
59.0
60.7
Average Inpatient Case Mix
By Volume
n = 785 Hospitals
42%58%
19%
15%
33%25%
6% 2%
2012 2022
Medicare
Medicaid
Commercial
Self-Pay
2014 2016 2018 2020 2022
14
©2014 The Advisory Board Company • advisory.com
6589 95 98
2010 2011 2012 2013
Mergers and Acquisitions Continue to Rise
Source: AHA Hospital Fast Facts, available at www.aha.org; GE Capital Survey, available at:
www.gehealthcarefinance.com; Kaufman Hall, “Number of Hospital Transactions Grew in
2013,” available at: www.kaufmanhall.com; Advisory Board interviews and analysis.
Mergers and Acquisitions
1) September 2013.
Hospital Mergers and Acquisitions M&A Plans for the Next 12 Months1
Number of Hospitals Part of a Health System
2000-2012
2000 2003 2006 2009 2012
2542 26262775
29213100
88%
12%
n=189
No M&A Activity
Planned
Planning to Pursue
M&A Within the
Next 12 Months
15
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New Partnerships Aim at Integration Without M&A
Partnerships and Affiliations On the Rise
New Hanover Regional
Medical Center,
Wilmington Health,
BCBSNC agree to
accountable care
alliance
Medium-sized
academic medical
center partners with
smaller rival to fill cath
lab service deficiencies
Large academic medical center
signs preliminary partnership
agreement with six rival
hospitals to better compete with
bigger systems
Source: The Advisory Board Company, “Cardiovascular Regionalization and Network Strategy”, Washington, DC; Duke-
Lifepoint Healthcare, “Duke University Health System and LifePoint Hospitals Partner to Create Innovative Options for
Community Hospitals,” available at: http://www.dlphealthcare.com, accessed May 3, 2011; Accountable Care Alliance,
Omaha, NE; http://www.accountablecarealliance.com/partners/; Crosby J, “HealthPartners, Allina form a 'lab' for health
reform,” StarTribune, available at http://www.startribune.com/business/133126273.html; accessed November 5th, 2011;
Marketing and Planning Leadership Council interviews and analysis.
Baylor, CHI form
community hospital joint
venture to explore joint
affiliation options
Partnerships and Affiliations
Allina and
HealthPartners affiliate
to create a “testing lab”
for accountable care
Large medical center
agrees to sell CON-
approved open-heart
surgery suite to
competitor
Growth Goals for
Partnerships
• Ambulatory footprint
• Access to new
regions
• New clinical program
• Brand equity
16
©2014 The Advisory Board Company • advisory.com
Partnerships and Affiliations
Source: Health Care Advisory Board interviews and analysis.
Five Major Types of Provider Partnership
Description
Merger or
Acquisition
Formal purchase of one organization’s assets by another, or the combination of
two organizations’ assets into a single entity
Clinically-Integrated
Hospital Network
Collection of hospitals contracting jointly in order to support improved
coordination, outcomes; modeled after physician CI networks
Accountable Care
Organization
Independent entity, owned by one or several independent organizations, that
accepts risk-based contracts and distributes shared savings
Regional
Collaborative
Flexible umbrella structure, often encompassing many independent
organizations of similar geography, that may serve as foundation for further
integration
Clinical Affiliation Typically bilateral agreement to cooperate around a particular initiative or
service line; may involve local or national partners
17
©2014 The Advisory Board Company • advisory.com
Imaging Center Market Dips After Years of Growth
18
First Decline Since 2009
Source: Radiology Business Journal, “Imaging-center Growth Hits the
Wall in 2013; Volumes Plummeted in 2011,” August 30, 2013;
Marketing and Planning Leadership Council interviews and analysis.
Imaging Centers
6,241
6,455
6,150
6,3116,383
7,074
6,816
5.60%3.40%
-4.70%
2.60%1.10%
10.80%
-3.60%
Net percent
growth from
previous year
Total Number of Imaging Centers in the U.S.
2005-2013
2007 2008 2009 2010 2011 2012 2013
©2014 The Advisory Board Company • advisory.com
Total Number of Medicare-Certified ASCs
4,798
5,001
5,111
5,203
5,2915,357
2007 2008 2009 2010 2011 2012
ASC Growth at All-Time Low
19
Source: “Report to the Congress: Medicare Payment Policy,” MedPAC, March 2014;
Marketing and Planning Leadership Council interviews and analysis.
Ambulatory Surgery Centers
5.9%
1.7%
4.2%
2.2% 1.8%
Net percent growth
from previous year
1.2%
©2014 The Advisory Board Company • advisory.com
A Growing Network of Immediate Access Choices
Markets Responding to Unmet Needs
Source: Mehrota A et al, "Visits To Retail Clinics Grew Fourfold From 2007 To 2009,
Although Their Share Of Overall Outpatient Visits Remains Low," Health Affairs,
August 2012; Health Care Advisory Board interviews and analysis.
Primary Care Network
Traditional
Access
Points
Consumer-
Oriented
Access Points Retail
Clinic
Urgent Care
Center
Virtual
Visit
Primary
Care Office
Low Acuity High AcuityEmergency
Department
Consumer-Oriented Service Delivery Sites Filling the Gap
Driving Provider Questions:
• Should we partner to establish retail clinics?
• Should we build or expand our urgent care footprint?
• Is virtual care something that we should provide?
• When should we enter into partnerships to meet patient demands?
20
©2014 The Advisory Board Company • advisory.com
Major Opportunity to Shift Primary Care Volumes
Redistributing Non-emergent Care to Appropriate Lowest-Acuity Sites
Source: CDC/NCHS, "National Ambulatory Medical Care Survey, National Hospital Ambulatory Medical Care Survey,"
2009-2010; “Primary Care Physician Shortages Could be Eliminated Through Use of Teams, Nonphysicians, and
Electronic Communication,” Health Affairs 32:1. Jan 2013. Health Care Advisory Board interviews and analysis.
Primary Care Network
Annual Visits
to PCPs
Annual
ED Visits
Visits Eligible for
NP-Led Care
103M
47M
132M
Non-urgent
ED Visits Shifted
to Other Care Sites
573M18% of PCP
visits could be
handled by NPs
at convenient
care sites
Non-urgent ED
visits could be
treated at urgent
care, retail or
primary care
Visits At Risk of Shifting to Other Sites of Care
21
©2014 The Advisory Board Company • advisory.com
Retail Clinics Expected to Continue Growing
Primary Care Network
1) As of Oct. 2014.Source: Accenture, "Retail medical clinics: From Foe to Friend?," 2013; Ritchie J, "After a stall, Kroger could
add clinics," Cincinnati Business Courier, July 5, 2013; Robeznieks A, "Retail clinics at tipping point," Modern
Healthcare, May 4, 2013; Health Care Advisory Board interviews and analysis.
2000-20151
Estimated Total Number of Retail Clinics in the
US
202
868
1135 1172 12201355 1418
1743
2243
2868
2000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Growth trajectory
depends on preferred
payer relations, PCP
capacity, and health
system partnerships
Retailer
Operational
Retail Clinics1 900+ 400+ 135 14 75+
22
©2014 The Advisory Board Company • advisory.com
Primary Care Network
Providers Expanding the Applications of Virtual Care
From Administrative Transactions to Real-Time Care Delivery
Source: Wang H, “Virtual Health Care Will Revolutionize The Industry, If We Let It.,” Forbes, 3 April 2014;
available at: http://goo.gl/oOJOCG, accessed May 9, 2014; Health Care Advisory Board interviews and analysis.
Virtual Care Platform Function
A Fast-Emerging Market Segment
Estimated revenue from
virtual visits in 2018, up
from $100M in 2013
$13.7BProjected increase in
households using virtual
care between 2013-2018
220%
Impact on
Access
Automate Administrative Functions
Streamline Clinical Transactions
Virtualize Care Delivery
• View medical records
• Schedule in-person appointments
• Refill existing prescriptions
• Pay bill
• Prescribe new medications
• Receive lab results
• Asynchronous, message-
based visits
• Live, video-based visits
• Deliver online education,
shared decision-making tools
23
• Commercial Payers
• Employers
• Medicare
• Coverage Expansion
Purchaser Behavior
24
©2014 The Advisory Board Company • advisory.com
Commercial Payers
Source: Mathews AW and Kamp J, “Another Big Step in Reshaping
HealthCare,” Wall Street Journal, February 28, 2013, available at:
www.online.wsj.com; Health Care Advisory Board interviews and analysis.
Seeing Price Cuts On Most Exchange Plans
Anticipated Provider Reimbursement Rates for Exchange Plans
Catholic Health Initiatives
Modest discounts from
commercial rates
Tenet Healthcare
Up to 10% below
commercial rates
Meriwether Hospital1
5% below commercial
rates
WellPoint Inc.
Between Medicare
and Medicaid rates
Meyers Health1
10% above
Medicare rates
Millern Medical Center1
20% below commercial
rates
25
©2014 The Advisory Board Company • advisory.com
40%
46%50% 49%
58%
13%17%
22%26%
28%
2009 2010 2011 2012 2013
Small Firms (3-199 Workers)
Large Firms (200+ Workers)
Particularly Severe for Out-of-Network Care
Commercial Payers
Source: Kaiser Family Foundation and Health Research & Educations Trust, “Employer Health
Benefits 2013 Annual Survey,” August 2013; PwC, “Medical Cost Trends: Behind the Numbers
2014,” June 2013, available at: www.pwc.com; Health Care Advisory Board interviews and analysis.
Employer Shifting Risk by Increasing Cost-Sharing
$680$760
$1,010 $940
$1,230
$1,000
$1,380
$1,750
$1,570
$2,110
2009 2010 2011 2012 2013
In-Network Out-of-Network
Average In- and Out-of-Network
Deductibles for Group Plans
n = 1,100 employers
Percent of Covered Workers Enrolled in a
Plan with a $1,000+ Deductible by Firm Size
Single Coverage
26
©2014 The Advisory Board Company • advisory.com
Commercial Payers
Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and
Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index
Report for Open Enrollment and Q1 2014,” May 2014; Health Care Advisory Board interviews and analysis.
Public HIX Participants Choosing High Deductibles
Annual Deductibles of Individual Plans
Selected on eHealth
13%
3%
11%
5%
30%
39% $6,000+
$3,000-$5,999
$2,000-$2,999
$1,000-$1,999
$500-$999 < $500
October 2013 – March 2014
27
©2014 The Advisory Board Company • advisory.com
Payers Responding to Anticipated Premium Sensitivity
Source: Gottleib S, “Hard Data on Trouble You’ll Have Finding Doctors in Obamacare,” Forbes, March 8, 2014,
www.forbes.com; McKinsey & Company, “Hospital Networks: Configurations on the Exchange and Their Impact
on Premiums,” December 2013; Medical Group Strategy Council interviews and analysis.
Public Exchange Plans Mainly Narrow Network
Majority of Public Exchange Plans
Exclude >30% of Largest Hospitals
20 Urban Markets, December 2013
Excludes 30% of
20 largest hospitals
38%
32%
30%
“Ultra-Narrow”
“Narrow”
Broad
Excludes 70% of
20 largest hospitals
Commercial Payers 28
©2014 The Advisory Board Company • advisory.com
Will Employers Maintain Coverage, and How?
Employers
Traditional Employer Coverage Eroding
“Activation”“Abdication”
Convert to Self-Funding
Pros:
• Close control over
network design
• Exemption from
minimum benefits
requirements
Cons:
• Greater financial risk
• Network assembly
challenging
Shift to Private Exchange
Pros:
• Responsiveness to
employee preference
• Predictable, defined
contributions
Cons:
• Disruption to benefit
design
• Risk employees may
underinsure
Spectrum of Options for Controlling Health Benefits Expense
Drop Coverage
Pros:
• Escape from cycle of
rising premium costs
Cons:
• Employer mandate
penalty
• Labor market
disadvantage
Source: Health Care Advisory Board interviews and analysis.
29
©2014 The Advisory Board Company • advisory.com
Employers
1) Full-time equivalents.
Employers’ Alternatives to Providing Coverage
Average Cost of 2014
Employer-Sponsored Insurance
$5,884
$16,351
Single Family
Penalty per employee
for failing to provide
qualifying health
coverage
$2,000
Several Strategies to Avoid ACA Mandate Penalties…
Cut jobs to
remain under
50 FTEs1
Convert full-time
employees to
part-time status
Hire all new
employees at
part-time status
Split into smaller
companies with
fewer than 50 FTEs
…Though Some May Consider Penalty a More Economical Option
Source: Herring B and Lentz LK: “What Can We Expect from the ‘Cadillac Tax’ in 2018 and Beyond?” Inquiry,
48(4):322-37; Piotrowski J et al., “Health Policy Brief: Excise Tax on ‘Cadillac’ Plans,” Health Affairs, September
12, 2013, available at: www.healthaffairs.org; Medical Group Strategy Council interviews and analysis.
30
©2014 The Advisory Board Company • advisory.com
Low-Wage Employers Most Active Today, but Skilled Industries in the Wings
Employers
Source: Accenture, “Are You Ready? Private Health Insurance Exchanges are Looming;”
privatehealthexchange.com; Health Care Advisory Board interviews and analysis.
Huge Growth Forecast for Private Exchanges
3M9M
19M
30M
40M
2014 2015 2016 2017 2018
Potential Growth Path for Private Exchange Enrollment
Prominent Employers Using Private Exchanges
For Active Employees: For Retirees:
(Medicare Advantage, Medigap plans)
Private exchange
operators as of
October 2014
172
31
©2014 The Advisory Board Company • advisory.com
Employers
Source: Gabel JR et al., “Small Employer Perspectives On The Affordable
Care Act’s Premiums, SHOP Exchanges, And Self-Insurance,” Health Affairs,
32(11): 2032-39; Health Care Advisory Board interviews and analysis.
Self-Funding Strategies Steadily Gaining Ground
ACA Benefits Standards Avoidable
Through Self-Funding
Modified
Community Rating
Essential Health
Benefits
Guaranteed Issue
and Renewability
Medical Loss Ratio
Requirements
49%
54%
59%61%
40%
45%
50%
55%
60%
65%
70%
2000 2005 2010 2014
Percentage of Covered Workers
in Self-Funded Plans
32
©2014 The Advisory Board Company • advisory.com
Medicare
Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012;
CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011; CBO,
“Bipartisan Budget Act of 2013,” December 11, 2013, all available at: www.cbo.gov; Health Care Advisory Board interviews and analysis.
1) Includes hospital, skilled nursing facility, hospice, and
home health services; excludes physician services;
annual reductions rounded.
2) Disproportionate Share Hospital.
Medicare FFS Payment Cuts Continue
($4B)
($14B)($21B)
($25B)($32B)
($42B)
($53B)
($64B)
($75B)
($86B)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
ACA’s Medicare Fee-for-Service Payment Cuts
Reductions to Annual Payment Rate Increases1
$415B in total
fee-for-service
cuts, 2013-2022
$260BHospital payment
rate cuts,
2013-2022
$56BReduced Medicare
and Medicaid DSH2
payments, 2013-2022
$151BReduced Medicare payments
due to sequestration and
2013 budget bill
33
©2014 The Advisory Board Company • advisory.com
Coverage Expansion
Source: FamiliesUSA.org, available at http://familiesusa.org/product/50-state-look-medicaid-expansion-2014;
accessed on Nov. 6; Marketing and Planning Leadership Council interviews and analysis.
Majority of States Expanding Medicaid
State Participation in Medicaid Expansion
Participating
Will Not Participate
Undecided
September 2014
34
©2014 The Advisory Board Company • advisory.com
Public Exchange Enrollment Exceeds 8 Million
Bumpy Rollout Did Not Dampen Projections
Source: Radnofsky L and Nelson CM, “Obama Says Health-Insurance Enrollees Reach 8 Million,” Wall Street Journal, April 17, 2014, available at: www.wsj.com; CBO,
“The Budget and Economic Outlook: 2014 to 2024,” February 2014, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf;
Demko P, “UnitedHealth to Expand Exchange Presence as Profits Dip,” ModernHealthcare, April 17, 2014, available at: www.modernhealthcare.com; Cheney K and
Norman B, “Insurers See Brighter Obamacare Skies,” Politico, April 15, 2014, available at: www.politico.com; Health Care Advisory Board interviews and analysis.
Coverage Expansion
Projected and Actual Enrollment in Qualified Health Plans
2014-2019
8.0M 6.0M
13.0M
22.0M 24.0M
25.0M 25.0M
2014 2015 2016 2017 2018 2019
Actual Enrollment Projected Enrollment
Unchanged despite flawed rollout
35
©2014 The Advisory Board Company • advisory.com
Coverage Expansion
Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial
Annual Open Enrollment Period,” May 1, 2014; HHS, “Health Insurance Marketplace
Premiums for 2014,” September 2013; Health Care Advisory Board interviews and analysis.
Individuals Gravitating Toward Leaner Plans
Metal Tiers of Plans Chosen on Public Exchanges
October 2013 to April 2014
20%65%
9%5% 2%
Bronze
Silver
GoldPlatinum
Catastrophic
33%
25%21%
10%
12%
Bronze
Silver
Gold
Platinum
Catastrophic
Enrollees Without Premium SubsidiesAll Enrollees
36
©2014 The Advisory Board Company • advisory.com
Second Round of Open Enrollment Will Reveal True Dynamics
Coverage Expansion
Source: Health Care Advisory Board Interviews and Analysis.
Exchanges 2015: What to Watch
Trends to Watch: Enrollment
• Are the technical glitches really fixed?
• Will higher individual mandate penalties change anyone’s mind?
• Will the young and healthy turn out in force?
Choice and Mobility
• How will automatic reenrollment affect consumer behavior?
• Will last year’s bargain hunters regret choosing high deductibles
and narrow networks?
• Can plans that raise premiums maintain market share?
Market Reaction
• How aggressively will providers court the newly insured?
• Will employers dump workers onto the exchanges?
1
2
3
37
• Independent Physicians
• Patients
Provider Selection Trends
38
©2014 The Advisory Board Company • advisory.com
Independent Physicians
Referral Choice Criteria Different for PCPs, Specialists
Source: Service Line Strategy Advisor interviews and analysis.
The Extended Service Line Referral Pathway
HospitalPCP Medical
Specialist
Proceduralist
Consumer
Interventions• Top-notch specialty capabilities and technology
• Superior specialist access
• Operations focused on specialist efficiency
• Comprehensive care continuum
• Highest value of care
• Superior patient access and experience
Traditional Differentiators
Emerging Differentiators
So
urc
es
of
Infl
uen
ce
Value-Based
Incentives
Steerage
Mechanisms
Emerging and Traditional Differentiators for Physicians
39
©2014 The Advisory Board Company • advisory.com
Referrals Hinge on Accessibility and Communication
Independent Physicians
Source: Kinchen, KS, et al., “Referral of Patients to Specialists: Factors Affecting Choice of Specialist by
Primary Care Physicians,” Annals of Family Medicine, May/June 2004, 2: 245-252; Barnett, Michael L. et al.,
“Reasons for Choice of Referral Physician Among Primary Care and Specialist Physicians.,”Journal of
General Internal Medicine, September 16th, 2011; Service Line Strategy Advisor interviews and analysis,.
1) Top four factors (out of 17 options) rated by PCPs as either a
moderate or major factor in their specialty referral decision
What PCPs Value Most for Referrals
Top Four Factors When Choosing a Specialist
Rated as Moderate or Major Importance1
n = 553
100%96% 95% 94%
Medical Skill AppointmentTimeliness
Quality ofCommunication
PatientExperience
with Specialist
PCPs’ Referral Decision Factors
Compared to Specialists’
PCPs 1.5 times more likely to
refer based on physician
communication than specialists
1.5x
PCPs two times more likely to
refer based on timely availability
of appointments than specialists
2x
40
©2014 The Advisory Board Company • advisory.com
Catalyzing a Shift in Network Demands
Patients
Source: Health Care Advisory Board interviews and analysis.
Market Forces Turning Patients into Consumers
Traditional Market Retail Market
Growing number of buyers
1
Proliferation of product options
2
Increased transparency
3
Reduced switching costs
4
Greater consumer cost exposure
5
Passive employer,
price-insulated employee
Activist employer,
price-sensitive individual
Broad, open networks Narrow, custom networks
No platform for apples-to-
apples plan comparison
Clear plan comparison
on exchange platforms
Disruptive for employers
to change benefit options
Easy for individuals to
switch plans annually
Constant employee
premium contribution,
low deductibles
Variable individual
premium contribution,
high deductibles
Characteristics of a Traditional vs. Retail Market
41
©2014 The Advisory Board Company • advisory.com
Patient Experience Vital For Securing Purchaser Choice Year Over Year
Patients
Source: Health Care Advisory Board interviews and analysis.
Welcome to the Renewals Business
Day 1
Day 365
Care Decision
Network Selection and Ongoing Experience
Care
Decision
Care
Decision
Care DecisionClinical interactions
represent repeated
opportunities to
reinforce patient
preference through
superior experience
Annual network
selection in fluid
insurance market
implies consistent
reevaluation of
network performance
Patient
Experience
42
©2014 The Advisory Board Company • advisory.com
Consumers’ Top 10 Primary Care Clinic Attributes
Prioritizing Convenience and Affordability
Patients
Average Utilities for Top Ten Preferred Primary Care Clinic Attributes
n=3,873
3.00
3.00
3.01
3.04
3.70
3.91
3.94
3.95
3.98
4.11
If I need lab tests or x-rays, I can get them done at
the clinic instead of going to another location
The provider is in-network for my insurer
The visit will be free
The clinic is open 24 hours a day,
7 days a week
I can get an appointment for later today
The provider explains possible causes of my illness
and helps me plan ways to stay healthy in the future
Each time I visit the clinic, the
same provider will treat me
If I need a prescription, I can get it filled at the
clinic instead of going to another location
The clinic is located near my home
I can walk in without an appointment, and I’m guaranteed
to be seen within 30 minutes
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
43
©2014 The Advisory Board Company • advisory.com
Patient Preferences for Online Care Growing
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
Patients
1) Based on proportions of respondents interested in teleheatlh.
Survey Finds Email Visits Preferred to Clinic Near Errands or Work
Increasing Consumer Preference
Emailing provider
with symptoms
Preference for Location of Services
Clinic located
near work
Clinic located
near errands
Clinic located
near the home
Young, Wealthy, Busy—Strongest Potential Telehealth Targets1
Of 18-29 yrs olds
54%Of those making
>$71K per year
49%Of those working
>35 hours per week
53%
44
©2014 The Advisory Board Company • advisory.com
Consumers Seeking Accurate Estimates
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
Patients
Compared to Not Knowing How Much
the Visit Costs Until Receiving the Bill:
Would rather have to go
to another clinic for lab
tests, x-rays, or pharmacy
Would rather drive 20
minutes to the clinic
Would rather pay $50
out of pocket
Would rather pay $100
out of pocket
92%
76%
74%
38%Primary Care Consumer
Survey Results
Rank, out of 56
attributes, of “not
knowing how
much the visit
would cost until
receiving the bill”
55th
45
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Marketing and Planning
Leadership Council
Project Director
Anna Yakovenko
Contributing Consultant
Emily Zuehlke
Design Consultant
Kinsey Fore
Practice Manager
Alicia Daugherty