onset of healthcare reform 090811

7/29/2019 Onset of Healthcare Reform 090811

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WHITE PAPER

ONSET OF HEALTHCARE

REFORM: MANAGING NEW

DEMANDS

DENNIS DUNN, PHDLINDA MACCRACKEN, MBA

SEPEMBER 2011


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TAbLE OF CONTENTS

INTRODUCTION 4

Figure 1: Six Steps to Manage the Onset of Healthcare Reform ...................................................................... 5

FINDINGS 5

STARTING WITH THE VOICE OF THE CONSUMER ......................................................................................... 5

Physicians are central to the consumer denition of quality ................................................................... 5

Figure 2: Percentage of Adults Who Look for Healthcare Quality Information

Figure 3: Top Three Denitions of Quality Healthcare by Adult Generation

Figure 4: Denition of Quality Healthcare by Adult Generation

MANAGING DEMAND NECESSITATES PLANNING FOR CAPACIT IN EACH MARET ................................7

Figure 5: The Uninsured by Percentage of Population, 2010

Medicaid growth will come from newly insured and currently eligible, yet unenrolled, individuals ...... 8Figure 6: Medicaid Growth in Enrollment, 2010-2020

Increased numbers of young adults (21-26 years) will stay enrolled on parents insurance .................. 8

Figure 7: Percentage Affected by Extended Coverage for Ages 21-26, 2010-2020

Many individuals will be insured through Health Exchanges, based on state programs ....................... 9

Figure 8: Health Exchange Share: 2010-2020

Medicare growth will ensue, based on aging Baby Boomers increased use of services ......................... 9

Figure 9: Medicare Growth in Enrollment, 2010-2020

STRATEGIZE WITH PHSICIANS TO DEVELOP CARE DELIVER MODELS AND PLAN STAFFING ............10

Figure 10: Increase in Primary Care, 2010-2020

Physician demand growth varies by market ...............................................................................................11

Figure 11: Primary Care Physician Demand Growth, 2010-2020

Figure 12: Percent Growth in Demand by Specialty

Recruiting physicians is not a one-for-one replacement ratio................................................................... 12

Figure 13: Adult Primary Care Provider Productivity by Physician Age Group

Prepare to deliver new care models based on community service use and anticipated need ................. 13

Table 1: Use Rates by Market for Both Inpatient and Outpatient Procedures

SHIFTING TO POPULATION HEALTH MANAGEMENT ................................................................................... 13Engage patients to manage their health ................................................................................................... 13

There is a growing need for a focused physician and care delivery model ...............................................14

Figure 14: Preventive Care Improvements After One ear of Personalized Health Messaging

CONCLUSION 15

REFERENCES 15

CONTRIBUTORS 15


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4 Onset of Healthcare Reform: Managing New Demands

INTRODUCTION

he biggest shift that healthcare reform will bring about

is the change from fee-for-service provider-driven care to

fee-for-value consumer-driven care. his new focus starts with

estimating the extent of the impact. Under the traditional

fee-for-service system, increases in demand are easier to plan

for and manage. In this new era, providers will need to stay

ahead of the issues and take the opportunity to develop a

team approach to care.

Creating new care models calls for aligned care that reduces unnecessary duplication, develops careteams led by a trusted clinician, and integrates distributed care settings with outcomes tied to population

health results.

This paper explores ways healthcare providers can prepare for the opportunities and avoid challenges in

responding to unique community needs in their local market.

1) Engage consumers. Understand how consumers view quality healthcare as they take a more active

role in managing their own healthcare. Physicians skills and affordability are central to their denitio

of quality healthcare.

2) Plan capacity. Anticipate increased service demand that will arise from the newly insured (mostly

projected growth in Medicaid) and the aging Baby Boomers (projected growth in Medicare).

3) Strategize with physicians. Demand for physician-provided primary care services and other drivers wi

take off in 2014 and will require changes to care delivery teams. These changes invite the crucial step trethink the physician strategy as partners and providers.

4) Deliver new care models. Design and implement effective and efcient care delivery models while

providing an equivalent quality of care to consumers.

5) Manage population health. Find connections within multiple systems to develop approaches that

respond to the needs of the population. Utilize personalized message delivery to help providers

manage population health in a timely and cost-efcient manner.

6) Connect information. Connect patient care and market data sources to pull the insights necessary

to drive improvement for care delivery.


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Onset of Healthcare Reform: Managing New Demands

Figure 1: Six Steps to Manage the Onset of Healthcare Reform

FINDINGS

SR H HE OCE OF HE COSMER

Physicians are central to the consumer denition of quality

Quality information is increasingly important to healthcare consumers. Adults across all age groups are

researching their healthcare decisions and determining their own denition of what constitutes quality

healthcare. Most importantly, physicians, and the affordability of the care they provide, are central to

consumers denition of healthcare quality.

One in four adults now looks for healthcare quality information an increase from one in ve reported in

2006.1 Since four out of ve adults say quality information (outcomes and ratings) inuences a healthcare

decision, the increase in searching behavior underscores growing consumer activation in their own care

over the last four years. Among the four adult generations currently consuming healthcare today2, the

younger generations are the more active quality information searchers.

Figure 2: Percentage of dults ho Look for Healthcare Quality nformation

ENGAGINGCONSUMERS TO

MANAGE HEALTH

RETHININGPHSICIAN

STRATEG

PLANNINGCAPACIT

MANAGING

POPULATIONHEALTH

DELIVERINGCARE UNDER

NEW BUSINESSMODELS

CONNECTINGINFORMATION

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%1 - Silent

Generation

2 - Baby

Boomers

3 - Generation X 4 - Millennials

n 2010

n 2006

Source: Thomson Reuters PULSE Healthcare Survey


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One in three adults identies good physicians and nurses as the leading factor dening healthcare qualit

(Figure 3).

Figure 3: op hree Definitions of Quality Healthcare by dult eneration

Among older (and more frequent service user) generations Silents, Boomers, and GenXers the

leading quality denition revolves around physician skill. Affordability is the next priority. The youngest

generation, the Millennials, by contrast cite clinicians ability and affordability as equally important in

dening quality, followed by a more personal view of good health and good service (Figure 4).

Figure 4: Definition of Quality Healthcare by dult eneration

GoodPhysicians/Nurses

GoodHospitals

TreatmentOptions

GoodService

Affordable

Goo

dHealth

ChoiceofPhysicians

n 1 - Silent Generation

n 2 - Baby Boomers

n 3 - Generation X

n 4 - Millennials

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%


1-SilentGeneration

2-BabyBoomers

3-GenerationX

4-Millennials

Total

n Choice of Physicians

n Affordable

n Good Physicians/Nurses

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%



6/15

Onset of Healthcare Reform: Managing New Demand

M DEMD ECESSES PL FOR CPC ECH MRE

Healthcare reform will insure many Americans who currently do not have healthcare coverage. As of 2010,

the uninsured, by percentage of population, varied quite drastically by region (Figure 5). For example, in

areas of the South and Southwest, 20 percent or more of the population is uninsured, while areas of the

Midwest and Northeast have below 10 percent uninsured.

Figure 5: he ninsured by Percentage of Population, 2010

There are various conditions that will drive the newly insured to demand healthcare services, but the

increased demand for these services will come primarily from four groups: Medicaid enrollees, young

adults, health exchange participants, and new Medicare enrollees.

Source: Thomson Reuters Insurance Coverage Estimates

Below 10%

14% 18%

10% 12%

18% 20%

12% 14%

20% plus


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Medicaid growth will come from newly insured and currently eligible, yet unenrolled, individuals

Medicaid program growth will come from both the newly insured and entry of the currently eligible,

yet unenrolled, local residents. The anticipated growth varies by state from less than 12 percent to more

than 50 percent over the next decade (Figure 6). As the following chart illustrates, each state and region

will feel the effects of this demand differently. For example, Texas is projected to see 50 percent or more

growth in Medicaid enrollment between 2010 and 2020, while Wisconsin is projected to see less than

12 percent growth in Medicaid enrollment during the same timeframe. These differences will affect how

providers plan for capacity and recruit new care providers.

Figure 6: Medicaid rowth in Enrollment, 2010-2020

Increased numbers of young adults (21-26 years) will stay enrolled on parents insurance

There are also young adults who may now be covered as dependents through age 26 on individual plans

and in small businesses. Both married and unmarried children qualify for this coverage. This rule applies

to plans in the individual market, new employer plans, and existing employer plans, unless the adult chil

has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, childre

up to age 26 can stay on their parents employer plan even if they have another offer of coverage throughan employer. The percent of young adults expected to take advantage of this opportunity for continued

coverage varies greatly by state. It is anticipated that Minnesota, Connecticut, and Massachusetts will se

the greatest impact at 14 percent plus (Figure 7).

Figure 7: Percentage ffected by Extended Coverage for ges 21-26, 2010-2020

0% 6%

10% 12%

6% 8%

12% 14%

8% 10%

14% plus


Below 12%

30% 40%

12% 20%

40% 50%

20% 30%

50% plus



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Many individuals will be insured through Health Exchanges, based on state programs

State Health Exchanges will cover many consumers. This provision calls for states to establish an American

Health Benet Exchange that (1) facilitates the purchase of qualied health plans and (2) provides for the

establishment of a Small Business Health Options Program (SHOP Exchange) designed to assist qualied

small employers to facilitate employee enrollment in small group, market-qualied health plans. The

impact of State Health Exchanges will vary greatly by state, with Texas and New Mexico having the greatest

share of participation (Figure 8).

Figure 8: Health Exchange Share, 2010-2020

Medicare growth will ensue, based on aging Baby Boomers increased use of services

The fourth factor will be Medicare growth, which covers the aging Baby Boomers now eligible for Medicare.

Boomers will drive up demand for healthcare services since they have the highest utilization rates. The impact

on the growth of Medicare enrollment shown in Figure 9 at a state level ranges from 20 percent to more

than 40 percent.

Figure 9: Medicare rowth in Enrollment, 2010-2020

0% 3%

6%

4%

8%

5%


Below 20%

30% 35%

20% 25%

35% 40%

25% 30%

40% plus



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SREE H PHSCS O DEELOP CRE DELER MODELS D PL SFF

A physician-engaged strategy is key to developing cost-efcient, quality outcomes related to care deliver

models and staff planning. Top-performing hospital CEOs report that it is important to build relationship

with quality physicians and staff who embrace organizational goals and work with management to develo

and plan quality standards. Making great physician relationships a priority is a resounding theme across

the top CEOs.3

Demand for physician-provided primary care services and other drivers will launch in 2014 and will require

changes to care delivery teams. These changes invite the crucial step to rethink the physician strategy as

partners and providers face pending payment and delivery changes, establish care team models, reducecosts, and develop success factors to drive success under bundled payment and population health initiative

The rst line approach comes from reviewing market changes with physicians to plan the care for the

enlarged patient base. Most physicians believe that the newly insured Americans will require the greates

amount of care, which will increase the scarcity of primary care providers and their extender associates.4

At the current service levels, there is a need for between 10 percent and 70 percent more primary care

providers, depending on the local market (Figure 10).

Figure 10: ncrease in Primary Care, 2010-2020

Source: Thomson Reuters Physician Demand Estimates

Growth 10% 20%

Growth 40% 50%

Growth 20% 30%

Growth 50% plus

Growth 30% 40%


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Physician demand growth varies by market

Detailed growth projections are required, since each markets demand depends on:

Service growth in the local market

The physician specialists needed to care for the population

The local provider base

The forecasted growth in demand for primary care physicians in specic markets is i llustrated in Figure

11. ey drivers are based on population and payer changes in each market ranging from Bostons 20

percent growth to Atlantas or Dallas 50 percent or more growth in demand over the next decade. Each

market must be individually assessed for the likely impact of future demand, followed up with a plan forproviding a timely response to meet those needs.

Figure 11: Primary Care Physician Demand rowth, 2010-2020

Atlanta-SandySprings-

Marietta,

GA

Boston-Cambridge-

Quincy,MA

Chicago-Joilet-

Naperville,IL

Dallas-FortWorth-

Arlington,

TX

Detroit-Warren-

Livonia,M

I

Neworketal,

N-NJ-PA

Philadelphia-Camden-

Wilmington,

PA-NJ-DE

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

Source: Thomson Reuters Physician Demand Estimates, 2010


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Figure 12 shows the changing need for physician care based on three illustrative specialties:

ophthalmology, pediatrics, and obstetrics. There are different timing and demand sensitivities that need

collaborative preparation depending on the local market. This chart clearly demonstrates the need to

forecast and prepare for increased demand at the specialty level, since each specialty varies dramatically.

Figure 12: Percent rowth in Demand by Specialty

Steady growth in older adult populations drives demand for ophthalmologists. The increasing demand

for obstetricians, forecasted from 2014-2016, is based on the newly insured whose coverage will begin

in 2014. The demand for pediatricians is similar to obstetrics, although less dramatic since children are

generally already covered in many markets under Medicaid.

Recruiting physicians is not a one-for-one replacement ratio

Recruitment plans that rely on replacing retiring or departed physicians should include consideration of

additional factors to manage stafng replacement. Physician practice productivity depends on physician

age, full-time employee equivalence, and practice maturity all of which would impact the medical

staff development plan (Figure 13). Older, mid-career physicians have higher productivity, which is rarelyequaled when they are replaced by younger practitioners who are launching their practices and have

different volume and success targets that would impact medical staff need forecasts. Medical staff plans

are well-served to use volume replacement targets versus full-time equivalent targets when planning

medical staff replacements.

Figure 13: dult Primary Care Provider Productivity by Physician ge roup

PercentGrowth

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Pediatrics Ophthalmology OB/GYN

Source: Thomson Reuters Physician Demand Estimates

visits/yR

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

Source: Thomson Reuters Physician Demand Estimates, 2011

ges


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Prepare to deliver new care models based on community service use and anticipated need

Estimating future utilization starts with local use rates, scenario models based on use rates from other

markets, and consideration of care-setting redistribution. New care model targets illustrate the impact

of redirecting point of care to new providers and new settings from inpatient to outpatient, hospital

to outpatient setting, physician ofce to clinic setting, and clinical setting to home or virtual setting.

Preparation for this care-setting shift will require modeling volume targets for each local market.

Service forecasting around benchmark indicators from similar or target markets allows consideration

of service use using higher or lower utilization, or hero markets. The two examples provided below for

sample inpatient and outpatient utilization rates provide a launching point for considering alternate

service specic use rates that could be leveraged in similar markets (Table 1). Specically, alternativemarket or payer use rate scenario development allows teams to revisit their delivery patterns and

re-examine their delivery plans.

able 1: se Rates by Market for Both npatient and Outpatient Procedures

PE OF OLME OL ERE HH SE RE LO SE RE

Outpatient Procedures/ 1000

population159 75 (New ork metro market) 50 (Chicago metro market)

Inpatient Discharges/ 1000

population2113 141 (Philadelphia metro

market)

86 (Seattle metro market)

Sources:

1) Thomson Reuters, Outpatient Estimates Procedures (excludes drugs, visits, labs, and injection s)

2) Thomson Reuters, The Market Planner Plus, Inpatient Estimates

Market challenges will drive new care delivery approaches. This starts with a clear view of the local

community and marketplace and estimating the impact on possible care models. Following those care

models focuses on population health an approach to care delivery that calls for consumer activism,

transparency, and care coordination.

SHF O POPLO HELH MEME

Creating incentives for providers to manage the health of the population will require new care delivery

and payment models. Population management is a strategy to address national health needs, which

will be a key component in addressing the healthcare challenges of quality and cost. Since the most

important feature is the application of modern and culturally competent patient engagement and

communication strategies that promote self-care, these service line strategies represent customer

engagement opportunities for preventive care, chronic care or condition management, or entire care

setting management.5

Engage patients to manage their health

During this transition phase, providers are nding that developing strong patient engagement strategies

to build loyalty and repeat business, while improving the health of the patients, will prepare them

well for the future. Connecting the health system directly with the patient creates a channel to boost

market share, while engaging patients directly about their care compliance and condition management

without jeopardizing current fee-for-service payment rewards. For example, tailored messaging has

led to smoking cessation, underscoring the impact of health behavior change with personalized health

messaging.6

As shown in Figure 14, a 7 percent improvement in preventive care adherence occurred injust one year among employers and payers using this approach.

Personalized messaging includes physician-enabled reminders, care direction, prevention, and chronic

care reminders. These reminders present a signicant opportunity to shift healthcare delivery costs,

enhance service touch points, deepen engagement, enhance loyalty, and ensure greater compliance.

Providers can use this capability in the short term to build their brand while preparing for long-term

shifts in pay-for-value reward systems.


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Figure 14: Preventive Care mprovements fter One ear of Personalized Health Messaging

There is a growing need for a focused physician and care delivery model

Preparing the physician network relies on assumptions of timing. First, increased utilization of physician

services tied to payer-mix changes calls for focused physician recruitment and alignment initiatives. The

changing community demand will drive a clear need for more physician specialists, spurring additional

competition for providers. The key to managing future capacity is to balance new modes of delivering

care against this increased physician demand and emergency department demand growth. Currently U.S.

hospital emergency departments show that 72 percent of visits are urgent care.7 This is supported under

fee-for-service payment models whereas under a fee-for-value payment system, a great proportion woul

be redirected to lower cost settings.

Patient redirection to the most appropriate, skilled, and cost-effective care settings will change care

delivery. New care models based on prevention, routine screening for early diagnosis, and managing

chronic care will contribute to new ways to increase the health of the patient population. New primary care

strategies are likely to leverage non-physician providers, physician-directed care teams, and physicianenabled patient messaging to augment physician delivered treatment.

New care delivery and payment models that reward population health management and maximize

the use of preventive care reminders are needed to transfer care management accountability to the

patients themselves. Directing patients to the appropriate site of care supports efcient care delivery

with personalized, relevant message content and delivery mechanisms mail, email, and text. This

allows personalized patient direction and care management to ensure compliance, enable self-care

management, and help patients navigate effectively through the healthcare system.

80%

70%

60%

50%

40%

30%

20%

10%

0%

51.9%

59.3%

39.2%

49.4%

17.5%

28.2%

46.4%

57.8%

25.0%

33.3%

63.0%

67.7%

Total Colorectal CancerScreening

InuenzaVaccination(Ages 50+)

CholesterolScreening

(High-Risk)

OsteoporosisScreening(Normal)

Breast CancerScreening

n Baseline

n After 12 Months of Personalized Messaging

Source: Thomson Reuters Consumer Advantage


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CONCLUSION

Planning for the local community needs will require collaboration between leadership and clinicians in

taking these steps:

1) Engage consumers. Identify current and likely consumers in the local market place through population

planning and customer segment assessment and understand their needs.

2) Plan capacity. Community need shifts will reect changes in payer coverage, service access, and new

kinds of care delivery providers. Create scenarios using assumptions about patient demographics,

payer mix, and provider service use.3) Strategize with physicians. Find ways to develop medical staff/clinical teams to serve the new

community need and provide the right stafng complement taking productivity into consideration.

4) Deliver new care models. Plan for the most appropriate care delivery setting (inpatient vs. outpatient,

ofce-based vs. home-care-based) and touch point (call managed vs. personalized message managed,

leveraging the new medical home model and related approaches).

5) Manage population health. Prole service use by preventable, chronic, or high-cost disease to identify

cost efciencies, duplication reduction, or early-stage intervention options. Consider including direct

consumer support tools to enable more self-care.

6) Connect information. Provide integrated community need prole with total market and patient

information to pull the insights necessary to drive improvement for care delivery.

The connection between quality care and future demand is inherently linked to a better understanding of

community needs and collaboration with physicians to provide high-quality care in a changing deliveryenvironment. Extensive future demand calls for clinician stafng in a time-sensitive care setting. Each

market will face unique challenges in adapting care delivery, driven by local payer mix, demographics, and

provider capabilities. These market proles underscore the need for changing care models, which include

clinician care teams, the use of physician guided clinicians, and personalized patient engagement. This

sets the table to prepare each provider to respond to unique community needs.

REFERENCES1 MacCracken L. The Quest for the Quality Driven Consumer. Thomson Reuters 2007.2 MacCracken L. Matching the Market. Thomson Reuters 2006.3 100 Top Hospitals CEO Insights: eys to Success and Future Challenges. Thomson Reuters 2011.4 2011 National Physicians Survey, HCPlexus and Thomson Reuters: http://hcplexus.com/survey.5 Nash DB, Resifnyder J, Fabius RJ, Pracilio, VP. Population Health: Creating a Culture of Wellness 2011.6 Chua, HF, et al. Self-related neural response to tailored smoking-cessation messages predicts quitting

Nature NeuroScience 2011.7 Thomson Reuters Outpatient Market Proles

CONTRIbUTORS

The following individuals contributed to the development of this white paper.

Ray Fabius, MD, Chief Medical Ofcer, Thomson Reuters

ent Francis, Solution Executive, Thomson Reuters

John Froehlich, MPH, VP Strategy Services, Thomson Reuters

Peter Green, Director, Product Management, Thomson Reuters

Janet Guptill, FACHE, Consulting Manager, Senior Consulting Manager, Thomson Reuters

George Popa, Research Scientist, Thomson Reuters


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