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LSU Now and in the Post Health Care Reform World
Fred CeriseJuly 19, 2011
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U.S. health care is expensive
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3
International Comparison of Spending on Health, 1980–2008
0
1000
2000
3000
4000
5000
6000
7000
8000
19
80
19
81
19
82
19
83
19
84
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91
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92
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02
20
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20
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20
05
20
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20
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20
08
United StatesNorwaySwitzerlandCanadaNetherlandsGermanyFranceDenmarkAustraliaSwedenUnited KingdomNew Zealand
Average spending on healthper capita ($US PPP)
0
2
4
6
8
10
12
14
16
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
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1996
1997
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1999
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2008
United StatesFranceSwitzerlandGermanyCanadaNetherlandsNew ZealandDenmarkSwedenUnited KingdomNorwayAustralia
Total expenditures on healthas percent of GDP
Source: OECD Health Data 2010 (June 2010).
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A growing number of Americans cannot afford U.S. healthcare
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Premiums Rising Faster Than Inflation and Wages
* 2008 and 2009 NHE projections. Data: Calculations based on M. Hartman et al., “National Health Spending in 2007,” Health Affairs, Jan./Feb. 2009 and A. Sisko et al., “Health Spending Projections Through 2018,” Health Affairs, March/April 2009. Insurance premiums, workers’ earnings, and CPI from Henry J. Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 2000–2009.Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums (New York: The Commonwealth Fund, Aug. 2009).
Projected Average Family Premium as a Percentage of Median Family Income, 2008–
20
0
25
50
75
100
125
2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009*
Insurance premiums
Workers' earnings
Consumer Price Index
Cumulative Changes in Components of U.S. National Health Expenditures and Workers’
Earnings, 2000–09
Percent Percent
108%
32%
24%
1112
1314
1617
18 18 18 1819 19 19
20 2021 21
22 2223
24
18
0
5
10
15
20
25
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Projected
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Health Care Costs for American Families Double in < 9 Years
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• While health care costs increase, there is a strong public sentiment to reduce spending among public programs
• We have access problems today among our public program
• Having a Medicaid card does not ensure access to services
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NEJM, June 16, 2011
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NEJM June 16, 2011
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NEJM, 2/10/11
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The government can’t afford to continue feeding the medical-
industrial complex at its current rate
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Slide from Uwe Reinhardtpresentation to NAPH 6/11
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Current Health Care Spending is Non-Sustainable
• During the past 4 decades, per beneficiary costs under Medicaid and Medicare increased 2.5% faster per year than the rest of GDP.
• If that trend continues, federal spending on those two programs alone would rise from 4.6% GDP in 2007 to 20% by 2050. This represents the same share of the economy that the entire federal budget does today.
• For all of health care this would represent 40% of GDP in 2050
• That can’t happen
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Public delivery systems can be capped and can offer predictable
spending and lower costs solutions for some populations
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Total Medicaid Spending vs. LSU Hospital Medicaid & DSH
Millions
17
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Private Hospital vs. LSU Medicaid and DSH Hospital Spending FY 05-FY 10
-
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
FY 05 FY 06 FY 07 FY 08 FY 09 FY 10
Private Hospitals
LSU Hospitals
10
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The uninsured (and underinsured) are not going away.
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Mini-Med Plans
• McDonald’s (Montana) employees pay $56/mo for coverage of up to $2,000/yr
• Ruby Tuesday employees pay $18/wk for $1,250 outpatient and $3,000 inpatient care/yr
• Denny’s employees pay $69/mo for no inpatient coverage and $300 maximum doctor’s office visits
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Affordable Care Act Phases Out Some Caps
• Phases out annual dollar limits• Requires essential benefits package for
individuals purchasing their own coverage or through small employers
• Large employer requirements regarding benefits package not clearly laid out
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What Does the Future Hold?2 or 3 Tiers
• Wholly Privates: Those who can afford high cost and overutilization
• Wholly Publics: Uninsured and Medicaid (Medicare?)
• Stressed in the Middle: ESI and Medicare – Delivery system reforms essential to maintaining
access– 30% “waste” in the system
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Proposed Delivery System Reforms
• Medical Homes• Accountable Care Organizations• Coordinated Care Networks• Bundled Payments• Pay for Performance
• You get the idea
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Delivery system reforms require infrastructure which requires scale.
Most U.S. physicians do not practice in large groups. Eighty eight percent of visits to office-based practices are to practices with 9 or fewer physicians.
Health Affairs, Web First, August 2011
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Health Affairs, August 2011
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Health Affairs, August 2011
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But this world is changing too.
Hospitals are acquiring physician practices again.
Insurers are beginning to acquire physicians and hospitals.
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NEJM, 5/12/11
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NEJM, 5/12/11
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Advantages of Hospitals Acquiring PhysiciansNEJM, 5/12/11
• Reduce costs associated with unnecessary practice variation and unnecessary expensive supplies selected by physicians– Standardizing surgical supplies– Selecting cost-effective devices– Requiring use of HIT– Requiring adherence to clinical guidelines– Scheduling elective procedures to maximize asset
utilization– Discharging patients consistently early in the day
• Doctors trading autonomy for employment
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LSU A Huge Head Start – But Not For Long
• “Hospital owned practices”• Medical homes• Electronic health records• Chronic disease registries• Disease management programs• Funding flexibility
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• LSU cannot rely upon being a default public provider. Others will attempt to provide some of these services for additional money.
• There is vocal rhetoric regarding our services without regard for the facts.
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Strategies LSU Must Employ• Establish greater sense of urgency• Understand our finances• Manage our costs• Improve our quality• Improve patient experience• Improve access – the right thing to do (and
insurers will require it)– Primary care – Specialty care– Strategic use of NPs and PAs– Develop partnerships to maximize our services– Balance training and service
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Improve Access and QualityBalance Training and Service
• We can train AND provide consistent reliable access
• We cannot rely SOLELY on residents as PCPs• Use of nurses, NPs and PAs• Consistent and accountable faculty
supervision
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UHC = Blocking and Tackling
• Must have unit costs that are at least in-line with the industry. Should be lower.
• Must be able to demonstrate that FTEs are in-line with the industry
• Where it makes sense to outsource, outsource– But not for our core expertise
• Reliable measures and managers must be accountable to meeting them
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Improve Quality
• Basics first• Goal for 2012:– No CMS core measure below 50th percentile
• All hospitals should be operating in top quartile
• Establish targets and managers must be accountable to meeting targets
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Improve the Patient Experience
• Friendly, attentive, considerate staff• CLEAN facilities• Respect appointments• Be available• “Would you return for care….”• “Would you recommend.…”• Managers must demonstrate attention to the
measures and improvements
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Develop Partnerships
• Among ourselves• Rural hospitals and practices• FQHCs– Capacity expected to double under ACA
• Other hospitals and practices
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Developing Partnerships
• Ease of referrals– Clinics– Emergency departments– Inpatients
• Telemedicine• Shared electronic records• Strategic LINCCAs
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Summary• Health care is expensive and unaffordable for the
entire U.S. population given current practices• Pressure to provide ongoing access while reducing
costs• Tiers likely to become more explicit • LSU has structural advantages that must be exploited
to allow us to continue providing public services (delivery, education, research)
• Others will attempt to profit from changes• LSU must outperform competitors; measure its results;
and report in simple, indisputable terms