physician employment advocate health care james r. dan, m.d. may 2, 2014

Physician EmploymentAdvocate Health Care

James R. Dan, M.D.May 2, 2014

Leading in a challenging environment

• Intense reimbursement/price/cost pressure

• Care shifting to outpatient

• Rapid growth in consumerism

• Massive provider consolidation

• New industry entrants

The healthcare economic reality2013 Federal budget

Gov’t spending as % of GDPFederal Health

Programs

Social Security

Other Mandatory

Sources: Estimates from The Budget and Economic Outlook (January 2012) - Congressional Budget Office.

Growth projections for Federal spending

Gov’t Outlays$3.8T

Healthcare consuming over 50% of gov’t receipts

Gov’t Receipts$2.9T

Reimbursement dynamics

Commercial

20 20

0% 0%

(20) Medicare (20)

Medicaid

Uninsured

40% 40%

(40) (40)

(100)%

25 50 75

Health System Payer Mix

Ope

ratin

g M

argi

n %

0 100

Avg Margin: 3.5%

Comm’l

Medicare

Medicaid

Uninsured(100)%

25 50 75

Health System Payer Mix

Ope

ratin

g M

argi

n %

0 100

Avg Margin: (4.5)%

Exchange

Today 2020 Outlook

GE Healthcare Proprietary and Confidential Information

TODAY

Medicaid Expansion

3.5%

+2%

Aging/ Medicare

-4%

Exchanges -2%

Reimbursement Cuts

-2%

Comm’l Rates -2%

2020 Outlook -4.5%

The Death of the Chargemaster

• The Brill Effect• Consumer-driven high

deductible plans focus the mind on price as much as use

• Reference pricing scares providers

• All payer transparency is coming soon


The Environment






Fill the hospital Empty the hospital2012-2020 Inpatient growth 2012-2020 Outpatient growth

Shift from high-cost acute settings accelerating

OverallOrthopedicsNeuro

Cancer

Gynecology

Spine

Gen Med/Surg

Cardio

OverallCancerGen Med/SurgNeuro

Spine

Cardio

Ortho

Gynecology

+18-20%

30%

21%

21%

20%

18%

18%

10%

17%

8%

1%

-6 to -8%

-1%

-5%

-5%

-25%

GE Healt hcare Proprietary and Confident ial Informat ion

The Environment






Consumerism rapidly growing


The Environment






Provider consolidation

GE Healthcare Proprietary and Confidential Information Source: Kaufman Hall & Associates, Inc., Presentation by Anu Singh, GE analysis

-5 largest airlines control >75% of seats-5 largest health systems control < 10% of beds

The Environment






New entrants


Walgreens Goal: Reinvent PharmacyAdvance community pharmacy to play a greater role in healthcare through integration and expanded services- focus on chronic disease management

Source: Presentation at Lazard Annual Healthcare Conference

New entrants

Physicians on Advocate Medical Staffs = 5,900

Advocate Physician Partners (APP) = 4,400

Non-APP = 1,500Independent = 3,000AMG/Dreyer 1,200/200

Pluralistic Physician Structure

17

What is the Role of AMG?Advocate Vision

To be a faith-based system providing the best health

outcomes and building lifelong relationships with

those we serve.

AMG Role

A nationally-recognized, physician-led integrated

group committed to delivering the best health

outcomes.

18

AMG Growth History and Projection

*Projected 19

2007 2008 2009 2010 2011 2012 20130

200

400

600

800

1,000

1,200

Num

ber o

f Phy

sici

ans

Group Composition

Family Medicine 15%

Internal Medicine 14%

OBGYN 4%

Pediatrics 5%

Hospitalists 6%Cardiac Related Specialists 13%

Other Related Specialists 35%

APNs/PAs 8%

= Specialists

= Primary Care

Consolidated, Dedicated

Management2008

Physician-led Governing Council

2009

Rapid Growth and Integration

2010-2011

Group Optimization2012-2014

The Advocate Medical Group Journey

21

AMG Contribution to Advocate Health Care

• Health Outcomes/Safe Clinical Enterprise• Advocate Experience• AdvocateCare• Service Lines• Loyal Patient Growth• Progressive Care Models

22

AMG Performance• Top decile in 7 of 9 national CI benchmarks• Associate Satisfaction – top decile 4 years• Physician Satisfaction – 78th %ile• Patient Satisfaction – 62th %ile• Cost/RVU actual decline over past 5 years• Growth - With Dreyer, 20% of system

revenue and the engine of Advocate • Medicare Advantage medical costs flat year-

over-year for 4 years

23

AMG Value Proposition• Group focused on health outcomes and safety• Competitive physician compensation and benefits• Professionally satisfying practice environment• Proactive input into clinical and operational

practice performance• Strong connection to Advocate system leadership • Resources of a large, nationally recognized,

integrated health care system

24

What you need to believe to thrive in AMG

1. Committed to Vision of Best Health Outcomes and Safest Care

2. Cost Concerns are Best Addressed via #13. Integrated, Team Care is Essential for #1

and #24. Commitment to Personal Leadership of a

Health Care Team

25

What is the Role of AMG?Advocate Vision

To be a faith-based system providing the safest environment and best health

outcomes, while building lifelong relationships with the people we serve.

AMG RoleA nationally-recognized, physician-led

integrated group committed to delivering the best health outcomes.

26

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011 2012 2013 Projected

Num

ber o

f Phy

sicia

ns

AMG Growth History and Projection

Historical Data

2013

What We Need to Believe to Thrive in AMG: Leading from Principles

1. Committed to Vision of Best Health Outcomes and Safest Care

2. Cost Concerns are Best Addressed via #13. Integrated, Team Care is Essential for #1

and #24. Commitment to Personal Leadership of a

Health Care Team

28

physician employment advocate health care james r. dan, m.d. may 2, 2014

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