making healthcare affordable - chilmark research conti… · making healthcare affordable november...
TRANSCRIPT
ImplementIng true ContInuous CostIng
MAKING HEALTHCARE AFFORDABLE
November 10, 2016
CORE BELIEFS AT CHILMARK
Effective deployment and use of IT will contribute to improving the delivery of care and ultimately the patient experience.
We focus on those technologies that will be transformational to healthcare delivery.
We strive to provide comprehensive, objective, high quality research to create a more informed market on the effective adoption & use of IT.
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ROB THOLEMEIERAdjunct Analyst
As the only person in his family not in medical practice or pursuing an MD, in 2009 Rob’s focus shifted to the healthcare IT sector. His current research is concentrated on how providers can use technology and best practices to reduce their cost of providing care.
Rob has broad and deep experience in all aspects of information technology and business strategy and operations. He has consulted on application design, systems architecture, and data management software for companies as diverse as Sun Micro, Duke Power, US Airlines, Wells Fargo Bank, MaxMara, and the Department of Justice State of California. He continues to study all manner of process improvement strategies, activity based costing theory and technology, etc.
Rob was an industry research analyst with the META Group focusing on database systems and data interoperability. Rob spent a dozen years on Wall Street as research analyst and was involved in over two dozen public company transactions, primarily in the business intelligence, database, and data integration software sectors. Rob holds an MBA from the University of San Francisco.
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AGENDA
Why Provider Costs Matter
Where the Money Comes from and Goes
Intro to True Continuous Costing
Contrast With Other Methodologies
Dealing With Objections
Case Study Thumbnails
Recommendations
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THE NEED
Healthcare Providers Face
> Declining Revenue
> Raising Costs
> Increased Demand
Consumers Experiencing
> Higher Prices
> Restricted Access
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THE FOUR CONCERNS
“Will I survive?”
“Will I get better?”
“Will it hurt?”
“Can I afford it?”
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The Bulk of the Money coming into HC is spent by providers in order to Provide Care*. Margins are extremely thin across the board.
*2014. Estimates for 2016 are $10,000 per man, woman and child and growing at 6% per year.
Total US Spending on HC = $3.03T per Year
— Insurance company profits are less than 1%— Drug company profits are less than 2%— Provider profits are just over 2%—Total Net cost insurance is about 6%
$3.5T
$3.0T
$2.5T
$2.0T
$1.5T
$1.0T
$0.5T
$0.0THealthcare spending
Insurance profits
Rx Drugs profits
Provider profits
Net Cost of HC insurance
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The money comes from people — Cash
Payments, Insurance premiums, Taxes
and Mounting Federal Debt.
Over two thirds of the Money goes to
Providers who hire people and buy stuff in
order to provide the HC services we demand
Where Does my Money GoSource of Funds
Personal Care5%Investment
5%Govt. Admin +
Cost of Ins 8%
Dental 4%
RX Drugs10%
Provider Services
68%
Government 56%
Private Health Insurance
33%
Out of Pocket 11%
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Use Technology and Best Practices to Lower Costs of Providing Care
THE OPPORTUNITY
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TWO POSSIBLE APPROACHES
Reduce Utilization
> Shorten Length of Stay
> Reduce Re-admissions
> Try Population Health Management Again
> Capitated Medicine Redux
Focus on Productivity
> Measure, Manage, Monitor All Costs
> Build Care Plans With Cost of Care as a Metric
> Reward Efficiency and Productivity
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REDUCING UTILIZATION IS AN UPHILL BATTLE
Factors Conspiring to Drive Utilization UP
Expansion of care through proactive government policies and programs to get more people covered.
Aging population will continue to require increasing care for the foreseeable future, and with the “Silver Tsunami” hitting, this will be an exponential curve for the next 2+ decades.
On effect of population health analytics is identification of clients in your population that are currently not getting treatments or are not even diagnosed — the results of all this new outreach are unknown large-scale.
Medical science is constantly developing new diagnostics – especially early diagnosis, which is certainly going to get more people into the system demanding care.
Pharma, biotech and med device companies are regularly inventing new interventions, which are initially very expensive.
CMS is projecting 6% growth in spend despite MACRA, etc.
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THE OPPORTUNITY FOR PRODUCTIVITY FOCUSED
> Has hardly ever been tried in HC, but succeeds every time it is (case studies).
> Lowers costs, increases profits, reduces consumer prices.
> Outside of HC, productivity improvement strategies are well known.
> HCOs have the data and infrastructure already in place to excel.
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True Continuous Costing
THE SOLUTION
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HOW DOES TRUE CONTINUOUS COSTING WORK?
EHR Clinical Data & Log Files
Medical Device Maint. Ports
Bar Code, SCM & ERP Data
Design Cost Effective Care Plans
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THE KEYS TO ADOPTION
> Gather the data. You can start small with one department or DRG set.
> Use the real costs. You have them. Be a data detective.
> Information is presented using modern ADV technology.
> Variances in costs, graphically depicted, are the Rosetta Stone.
> Updated in Real Time.
> Deliver VALUE not just quality.
> It is NOT activity-based costing.
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Data, Culture, Economy
BARRIERS TO ADOPTION
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DATA AVAILABILITY AND INTEGRATION CHALLENGES
> Always the Hardest Part of Any Project w. Analytics
> Less Challenging/Costly than Traditional Activity Based Costing Approaches
> TCC is Bottoms Up. ABC is Top Down (details are lost)
> Reusability, Leverage-able (its software not manual)
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CULTURAL CHALLENGES
> It’s never been done before
> Healthcare is “special”
> “We need to focus on clinical outcomes”
> Value not just quality
> The two myopias: Utilization Reduction & RCM
> Compelling data will drive culture shift (show doctors the facts, not estimates, guesswork or RVUs.)
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ECONOMIC CHALLENGES
> HCO operating budgets are tight
> Not many examples of ROI using this approach
> No CMS “Cat and Mouse” incentives
> Revenue cycle industrial complex myopia
> In most cases the “solution” to budget problems is seen as more revenue not lower costs
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CASE STUDY THUMBNAILS
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UNIVERSITY OF UTAH HOSPITAL
> “How much does a minute of OR time cost?”
> Strong CEO. Ability to move mountains.
> Comprehensive system wide project.
> Large investment in time and labor.
> Working. Saving money.
> Operational visibility.
> ROI?
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YALE NEW HAVEN HOSPITAL
> Initiated as part of a clinical quality program.
> Intense vendor involvement.
> Clinical staff very active in the entire project.
> Smaller scope.
> Demonstrable savings.
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HCA
> Pioneer
> SEC necessity
> Detailed BOM for every patient encounter
> Gross and contribution margin analysis
> Interesting deployment strategy
> Demonstrable savings
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CLEVELAND CLINIC
> Driven by State government bundled payment mandate.
> Best use of variance analysis I have seen in the USA.
> Cut cost of TJs dramatically.
> Got nearly all docs onboard without much trouble.
> Justified cutting some loose.
> Hard to get them to talk about it – strategic advantage?
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NORTHERN EUROPE
> Healthcare prices much lower.
> No, Alice, not everybody is single-payer.
> TCC (PLC) is common and becoming standard.
> Nearly identical to TCC principles.
Ϡ Real cost data not RVUs
Ϡ Bottoms up
Ϡ Gross and net margin for every patient encounter
Ϡ Variance analysis is pervasive
Ϡ Cost of care is a pillar of good care
Ϡ Continuous feedback
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> Just get started.
> Begin anywhere (OR, DRG, Imaging, etc,).
> Trust but verify the data.
> Transparency is critical to get clinical buy-in.
> Lean on the army of data integration and analytics experts.
> Check out the case studies in more detail (GIYF).
> We are all to happy to help out in any way.
RECOMMENDATIONS
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THANK YOUFOR ATTENDING
Questions?
Please feel free to email Rob directly with any additional questions or inquiries:
Report can be purchased here.
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