Healthcare Crisis From 3 Points of View

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Healthcare Crisis From 3 Points of View
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HealthCare 21 Business Coalition

• Founded in 1997 by ten Knoxville employers
• 501 (c) 3 Tax-Exempt Non Profit
• Chattanooga, Cleveland, Knoxville, Nashville
• Multi-stakeholder Membership Group
• 90 Plus Corporate Members
• 200,000 Covered Lives
• Member of the National Business Coalition on
  Health

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Connect to Mission

• HealthCare 21 Business Coalition is a
  non-profit, member driven organization committed
  to improving the quality and cost of healthcare.
  HealthCare 21 believes only cooperative
  relationships between employers, health plans,
  hospitals and providers can produce positive and
  progressive changes in healthcare. Our mission is
  implemented through the following strategies

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HC21 Strategies

• Improve the purchasing process (employers and
  employees)
• Improve the health system (health plans,
  hospitals, providers)
• Improve the health of the community (employees,
  consumers, public)

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A Short History of Medicine

• I have a pain.
• 2000 B.C. Here, eat this root.
• 1000 A.D. That root is heathen, say this
  prayer.
• 1850 A.D. That prayer is superstition, drink
  this potion.
• 1920 A.D. That potion is snake oil, swallow
  this pill.
• 1999 A.D. That pill is ineffective, take this
  FDA approved COX-2.
• 2005 A.D. That COX-2 inhibitor is dangerous.
  Here, eat this root.

Source Jeanne Scott
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Top 10 Issues of Concern HR

• Retention of professional employees
• Escalation/control of health benefit costs
• Employee morale
• Recruiting and retaining skilled technical
  employees.
• Competitiveness of total compensation package
• Availability of qualified workers
• Strengthening the relationship between
  performance and pay.
• Competitiveness of benefits package
• Accuracy of market pricing data
• Productivity of workforce

Source Employee Benefits Journal, Volume 27,
Number 1 March 2002.
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Health Care in 2010
The future comes out of the present and is more
than a projection of the past! What if by 2010 .
. . energy prices continue at an all time high,
the war on terror (Iraq and Homeland Security)
continues to drain the U.S. budget, the federal
deficits continue to swell, Medicare Rx is more
than projected, Medicare benefits are not
curtailed, healthcare policy takes a backseat,
private sector initiatives are showing an ROI but
only in isolated cases (disease management, CDHP,
P4P, data warehousing, worksite clinics) and cost
shifting to employees bottoms out. Then . . .
there is nothing to prevent another doubling of
the health benefit budget!
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Health Care in 2010

• Givens
• The government is not going to lead.
• The private benefit sector will continue to offer
  health benefits.
• The government will continue to expand access to
  the marginalized increasing federal deficits.
• Employers will increase the intensity of their
  search for a solution.
• Consumers will become aware of their role.
• Employers will become the brokers of health
  information.
• Employers will deliver health promotion, primary
  care and disease management at the work site.

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Health Care in 2010

• Tort reform will occur.
• Allied health workers will be given an expanded
  role (nurse practitioners, pharmacists).
• Employers will steer employees to higher quality
  providers.
• The health system will become more transparent.
• IT and connectivity within the health system will
  make a giant leap forward.
• The numbers of the uninsured will continue to
  rise.
• A national index of drugs within a category will
  develop.

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Total Health Benefit Cost Increase Slows for the
Third Straight Year All Employers
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Total Health Benefit Cost for Active Employees Up
6.7Large Employers
7.2
6.7
9.0
10.2
11.5
12.1
6.6
7.0
5.7
Average increase projected for 2006 after
changes increase of 9.9 predicted before changes
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Employee Entitlement

• Consumer Out-of-Pocket Costs as a Percentage of
  National Healthcare Expenditures

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Quality Crisis

• IOM Report
• Rand Studies
• Dartmouth Atlas

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Americas Healthcare Roadmap

• 30 40 Eliminate senseless waste
• ?
• Re-engineering
• Electronic Medical Record
• ?
• GDP 15 Target
• 2½ productivity gain per year

Source Dr. Arnie Milstein
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In Summary

• 8 - 10 premium increase persists
• Higher and higher deductibles ? consumers getting
  activated
• Healthy behavior incentives spreading quickly
• Pooling purchase power and brain power ? back in
• Brokers/consultants under the microscope
• Insight requires data control and management
• HPNs entering the vocabulary

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Three Domains of Healthcare
Supplier
Consumer
HealthcareSystem
Consumer Health
HealthcareFinancing
Buyer
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SEEING THE HEALTH IN HEALTHCARE COSTS
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V C Q
Value Transaction
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CDHP
HPN
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30 - 40 Savings
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• Knoxville Area Hospital
• Community Project

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ZAP VAP
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VAP2004 / 2005 Results

• 36 decrease in VAP since project inception (Jul
  2004)
• 73 lives and 5.4MM dollars saved in our
  community
• Honorable mention TN Patient Safety Award
• Numerous presentations and inquiries about project

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Provider Behavior Change Programs-
H.E.R.E.I.U. (Culinary) Health Fund

• 134,000 lives- Union members/ families
• Hotel and restaurant workers- low pay, immigrants
• 43 Latino 13 Asian 10 African-American
• Rich benefit plan coverage
• 2,000 healthcare providers
• 36 primary care 64 specialists
• 610,000 doctor visits/year
• Uniform specialty fee schedules
• 268 million annual spend for health benefits
• Doctors, Hospitals, Drugs

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Medical Cost Increases(per Eligible Enrolled
Employee Includes Rx)2 year savings 69 million
Year 2 Savings 43 M
Predicted
Restructured physician network
Year 1 Savings 26 M
Projected at 13 trend
Actual
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1
13
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National HMO CY Premium Trends 03 14.6
04 12 05 8.8
Fiscal Year 2001 - 2005
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Task Force Initiatives

• As a result of these discussions, the committee
  decided to move forward with these goals for the
  next 12 months.
• Generics
• After determining baselines for each purchaser,
  we will target increasing generics by 4. 
• Rule of Thumb every increase of 2 in generic
  utilization represent a 1 savings in plan cost
• A 2 increase means over 350K for data coop
  benchmark, a 4 increase means over 700K. 
  Savings could more than pay cost of data coop.
• Hypertension
• Identifying, stratifying Hypertensives and
  joining the dialog with member health plans to
  improve health condition of hypertensive
  patients.
• Hypertensive patients  11 of the population
  drives 30 of the cost.
• Hypertensive costs  all costs associated with
  hypertensive patients hypertensives often have
  expensive co-morbidities (diabetes,
  hyperlipidemia, etc.)

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• One dollar cost in health benefit.
• Another dollar cost in hidden loss of
  productivity through absenteeism/presenteeism.
• (10M health benefit budget 10M low productivity
  20M cost of health)

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• Leaders of U.S. group practices believe that
  responsibility for resource stewardship and for
  providing high-quality, coordinated patient care
  is best met in the setting of multi-specialty
  group practice, particularly when financing
  mechanisms support the provision of efficient
  services.
• (Source Health Affairs. Vol. 24 No. 6, 2005.)

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Innovative Care Redesign for 2007 Testing
A-ICU Adapt a National Care Engineering Teams
3-Level Tri-Level Home for the Sickest 20 of
Members(Better, Faster 35 Leaner)

• 35 Lower Net Spending
• 13
• - 20
• - 5
• - 23

Special Care Center
Level 3 BeanReferral to most
cost-effectivespecialists/hospitals
Level 2 DemingLean primary care MD visits
Level 1 NordstromEconomical relationship-based
self-management coaching
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Putting Quality Into the Doctor Equation

• Recognition (LeapFrog)
• Pay for Performance (Bridges to Excellence)
• Tier and Steer (Benefit Design)
• High Performance Networks (Health Plans)

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Next Step The Global HPN
After failing to obtain satisfactory discounts
from local providers, North Carolina based, Blue
Ridge Paper Products, is amending its
self-insured health benefit plan to allow its
employees and their dependants to seek medical
care in India, beginning in 2007.
Source Business Insurance