THREE BREAKTHROUGHS POISED TO TRANSFORM THE US ECONOMY 1. Big data - PDF document

JACK LEWIN, MD HON. FACC LEWIN AND ASSOCIATES HEALTH INNOVATION STRATEGIES LLC THREE BREAKTHROUGHS POISED TO TRANSFORM THE US ECONOMY 1. Big data – internet as a “cloud” 2. Smart manufacturing – materials science and supply chain management 3. Wireless revolution – cheap connectivity, info and processing power to nearly everyone/everywhere! The Impacts to medicine will be huge for all three! The Wall Street Journal, Mills and Ottino, Jan. 30, 2012 “The Coming Tech Led Boom”

DEFINING AMERICAN CHARACTERISTICS THAT WILL USHER IN TECHNOLOGICAL CHANGE • Youthful demographics (by 2020, US will be younger than China and Europe) • Dynamic culture (US embraces change) • Diverse educational system (one size does not fit all in US education) Again – huge impacts medicine and m- health! The Wall Street Journal, Mills and Ottino, Jan. 30, 2012 “The Coming Tech Led Boom” THE FUTURE • Acceleration of science and • Acceleration of science and technology technology • • Evolution of research Evolution of research • Delivery system reform • Delivery system reform • Payment reform • Payment reform • Evolution of learning • Evolution of learning • • Professionalism and Patients Professionalism and Patients

BIG CHANGE IS COMING! U.S. HEALTH CARE: THE GOOD THINGS THE GOOD THINGS • Stunning technology and infrastructure • Superbly trained workforce • Excellent academic institutions • World leader in science, research and health innovation • 84% of Americans have public or private health insurance • AND THE SGR ? • AND the ACA?

U.S. HEALTH CARE: THE PROBLEMS THE PROBLEMS • 16% of Americans remain uninsured • Quality of care uneven – great variation • Lack of care coordination U.S. HEALTH CARE: THE PROBLEMS THE PROBLEMS • 16% of Americans are still uninsured • Quality of care uneven – great variation • Lack of care coordination • Costs • Costs remain remain out of control out of control

PERCENT OF MEDIAN FAMILY INCOME REQUIRED TO PURCHASE FAMILY HEALTH INSURANCE Source: Author’s calculations, using KFF and AHRQ premium data, CPS income data, plus projections from Carpenter and Axeen, The Cost of Doing Nothing, 2008. HEALTH CARE IS THE PRIMARY DRIVER OF FUTURE FEDERAL SPENDING Federal revenues and noninterest spending CBO’s extended-baseline scenario Percentage of GDP 40 40 Actual Projected 35 35 30 30 Revenues 25 25 20 20 15 15 Medicareand Medicaid OtherFederal Noninterest Spending 10 10 5 5 Social Security 0 0 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067 2070 2073 2076 2079 2082 10 SOURCE: Congressional Budget Office, Long-Term Budget Outlook, Figure 1-1; June 2009

THE ORIGIN OF THE ORIGIN OF THE THE AFFORDABLE CARE ACT AFFORDABLE CARE ACT IS IT THE BEGINNING, TH E NEMESIS, OR THE RESULT OF HEALTH REFORM PRESSURES? BULLISH FORCES AND THE ACA ASIDE, THE CERTAINTIES ARE: • • The Science The Science Future Future --- --- stunning progress coming stunning progress coming • • The Pipeline of The Pipeline of DM/Obesity/CV Risks DM/Obesity/CV Risks and and Morbidity – – a a “ “tsunami tsunami” ” Morbidity • Delivery System Change Necessary • Delivery System Change Necessary -- -- > integration > integration • Payment Reforms Essential • Payment Reforms Essential -- -- value vs. volume value vs. volume • Services Must Become Cheaper; and practices are being transformed

Journey To Value-Based Provider Reimbursement Compensation Continuum (Level of Financial Risk) Moderate % of Small % of financial risk Large % of financial risk financial risk chart07 chart07 Limited integration Moderate Full integration integration chart07 Hospitals expect much more of their future reimbursement to be from performance-based risk than do physicians 22% of physicians and 40% of hospital executives expect a quarter or more of their reimbursement to be from performance-based risk within 10 years 1 CURRENT REFORM STATUS • Are ACOs are taking off? • Real progress with PCMHs? • Specialty PCMHs? • The 5-10% that consume >50% • Efficiency in use of intellectual capital • Reimbursement future? (Brailer) • Consumerism and patient power !!!!

THE ACA BEYOND JUSTICE ROBERTS! UNCERTAINTY CAN CAUSE PARALYSIS UNCERTAINTY CAN CAUSE PARALYSIS

IT’ ’S S REALLY ALL ABOUT REALLY ALL ABOUT IT COUNTERING THE HEALTH COST COUNTERING THE HEALTH COST DEFICITS WITH VALUE- -BASED CARE BASED CARE DEFICITS WITH VALUE From Michael Porter 2011: Redefining Health Care Delivery • The core issue in health care is the value of health care delivered Value: Patient health outcomes per dollar spent • Value is the only goal that can unite the interests of all system participants • Value Based Health Care is the Path out of the Value Based Health Care is the Path out of the • National Deficit Dilemma !!!!!! National Deficit Dilemma !!!!!!

THE OUTCOME MEASURES HIERARCHY Tier Survival Survival 1 Health Status Achieved Degree of health/recovery Degree of health/recovery or Retained Tier Time to recovery and return to normal activities Time to recovery and return to normal activities 2 Process of Disutility of the care or treatment process (e.g., diagnostic errors and Disutility of the care or treatment process (e.g., diagnostic errors and Recovery ineffective care, treatment-related discomfort, complications, or ineffective care, treatment-related discomfort, complications, or adverse effects, treatment errors and their consequences in terms adverse effects, treatment errors and their consequences in terms of additional treatment) of additional treatment) Recurrences Tier Sustainability of health /recovery and nature of recurrences Sustainability of health /recovery and nature of recurrences 3 Care-induced Sustainability Illnesses Long-term consequences of therapy (e.g., care-induced Long-term consequences of therapy (e.g., care-induced of Health illnesses) illnesses) Source: NEJM Dec 2010 OPPORTUNITIES FOR HEALTH CARE COST REDUCTION Source: Harold D. Miller, “How to Create Improved Accountable Care Organizations.” Center Inpatient Care for Health Care Quality and Payment Use of Processes Reform lower-cost Reduction in treatments Hospitals and Specialists Adverse Events Reduction in Improved Use of Lower- Preventable Lower Management Readmissions Cost Settings Of Complex Total And Providers Patients Health Improved Care Primary Care Practices All Providers Reduction in Prevention Costs! Preventable and Early Reduction in ER Visits and Diagnosis Unnecessary Admissions Improved Tests and Referrals Practice Efficiency

OPPORTUNITIES FOR HEALTH CARE COST REDUCTION Improved Inpatient Care Use of Processes lower-cost Reduction in treatments Hospitals and Specialists Adverse Events Reduction in Improved Use of Lower- Preventable Management Lower Readmissions Cost Settings Of Complex Total And Providers Patients Health Care All Providers Primary Care Practices Reduction in Costs! Preventable Reduction in ER Visits and Unnecessary Admissions Improved Tests and Referrals Practice Improved Efficiency Prevention MEDICAL HOME and Early Diagnosis OPPORTUNITIES FOR HEALTH CARE COST REDUCTION Improved Inpatient Care BUNDLING Use of Processes lower-cost Reduction in treatments Hospitals and Specialists Adverse Events Reduction in Improved Use of Lower- Preventable Lower Management Readmissions Cost Settings Of Complex Total And Providers Patients Health Care All Providers Primary Care Practices Reduction in Costs! Preventable Reduction in ER Visits and Unnecessary Admissions Improved Tests and Referrals Practice Improved Efficiency Prevention and Early Diagnosis

OPPORTUNITIES FOR HEALTH CARE COST REDUCTION ACO’s Improved Inpatient Care Use of Processes lower-cost Reduction in treatments Hospitals and Specialists Adverse Events Reduction in Improved Use of Lower- Preventable Lower Management Readmissions Cost Settings Of Complex Total And Providers Patients Health Care All Providers Primary Care Practices Reduction in Costs! Preventable Reduction in ER Visits and Unnecessary Admissions Improved Tests and Referrals Practice Improved Efficiency Prevention and Early Diagnosis THE OPPORTUNITIES: USING PAYMENT REFORMS AND DATA FEEDBACK TO: 1. Reducing unnecessary variation to increase value Reducing unnecessary variation to increase value 1. 2. Improving chronic disease management and 2. Improving chronic disease management and prevention prevention 3. Improving systems of care and coordination Improving systems of care and coordination 3. 4. Identifying inefficient physicians and hospitals 4. Identifying inefficient physicians and hospitals 5. Creating transparency and continuous feedback to Creating transparency and continuous feedback to 5. clinicians and hospitals in terms of quality and clinicians and hospitals in terms of quality and efficiency performance efficiency performance 6. Engaging physicians and patients as partners in the 6. Engaging physicians and patients as partners in the process process