where innovation is tradition academic medicine and health reform: insync or tissue rejection? len...
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Where Innovation Is Tradition
Academic Medicine and Health Reform:
InSync or Tissue Rejection?
Len M. Nichols, Ph.D., Professor and Director
Center for Health Policy Research and Ethics
College of Health and Human Services
OU Medicine’s Leadership Development Institute
Oklahoma City, OK
July 19, 2013
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Where Innovation Is Tradition
Overview
• Key Linkages• The Fragile Promise of System Reform• Where We Are Now• The Race Against Time• Special Circumstances of Medical Education• The Collaboration and Competition We Need
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Linkages
Values
Health SystemEconomy
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Family Premium / Median Income
1996 20110
5
10
15
20
25
10.8%
20.9%
AHRQ premium, Census Income data
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Author’s calculations, treating average employer contribution as income
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What is Reform REALLY About?
• Elevating population health, and stewardship
• Signaling that “Business As Usual” is over
• Changing obsolete business models
• Transparency
• Incentive Realignment5
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Where Innovation Is Tradition
Incentive Alignment Is Multi-Dimensional
Wellness & Cost Sharing
Decision Support
PaymentReform
Patient
Employer/PayerClinicians
Community
Community
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Where Innovation Is Tradition
Cost Containment Theory of PPACA• End profitability of risk selection
Change insurance business model to value seeking
• Force transparency and margin limits on insurersChannel competition into socially productive
areas
• Make FFS less attractive in Medicare• Develop incentive structures that reward cost
reduction, improve quality, and SPREAD
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Where Innovation Is Tradition
So we think we know what we want
• Condition specific, patient acuity adjusted, comprehensive payment, distributed among coordinated clinicians and providers
• IF we pull this off, win-win-win
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Problem: There is no Scotty!
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This Will Not All Be Smooth Sailing
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Close Up of Not Smooth Sailing
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Where Innovation Is Tradition
Where are we now?
• ACA “models” emerging in private sector, too
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Innovation Center Portfolio
ACO Suite:
• Shared Savings Program• Pioneer ACO Model• Advance Payment ACO Model• Accelerated and Learning
Development Sessions
Primary Care Suite• Comprehensive Primary Care Initiative
(CPCI)• Federally Qualified Health Center
Advanced Primary Care Practice Demonstration
• Multi-Payer Advanced Primary Care Practice (MAPCP) Demonstration
• Independence at Home• Medicaid Health Home State Plan
Option
Bundled Payment Suite
• Bundled Payment for Care Improvement
Dual Eligible Suite:
• State Demonstration to Integrate care for Dual Eligible Individuals
• Financial Alignment to Support State Efforts to Integrate Care
• Demonstration to Reduce Avoidable Hospitalizations of Nursing Facility Residents
• Medicaid Health Home State Plan Option
Diffusion and Scale Suite:
• Partnership for Patients• Million Hearts Campaign• Innovation Advisors Program• Care Innovations Summit
Healthcare Innovation Challenge
Rapid Cycle Evaluation and Research
Learning and Diffusion14
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Where Innovation Is Tradition
Where are we now?
• ACA “models” emerging in private sector, too
• Fiscal pressures cannot be overstated
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Allow US to Default ?
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Where Innovation Is Tradition
Where are we now?
• ACA “models” emerging in private sector, too
• Fiscal pressures cannot be overstated
• Insurance reform implementation “bumpy”
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20Scott Walker finds an alternative to Medicaid: Obamacare
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Two states say 2014 Obamacare insurance costs on low side
California Active Purchaser Premiums
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Where are we now?
• ACA “models” emerging in private sector, too
• Fiscal pressures cannot be overstated
• Insurance implementation “bumpy”
• Health cost growth slowing
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Where Innovation Is Tradition
Total Health Spending Growth
1990 2000 2007 2008 2009 2010 20110
2
4
6
8
10
12
NHEMCRMCD
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Where Innovation Is Tradition
Relative Health Spending Growth
1990 2000 2007 2008 2009 2010 2011
-4
-2
0
2
4
6
8
10
12
NHE/popGDP/popMCR/beneMCD/bene
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The Race Against Time
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Where Innovation Is Tradition
The Budget World is Skeptical
• ACO takeup disappointing relative to hype• CABG demo in 1990s not implemented• PGP demo results mixed on cost• ACE results not out yet• AQC results promising; elsewhere…? • PCMH evidence to date
PCPCC vs. Mathematica Policy Research/AHRQ
• CMS data woes continue to plague participants
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Two Roads to Fiscal Balance
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CUTSRE-ALIGNINCENTIVES
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Where Innovation Is Tradition
So What are we really talking about?
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$/N
Time
Healthier populationLower UseLower PricesHigher quality
Unsusta
inable
cost
growth
2012
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Targets of Spending Reductions• Poor care delivery
Unnecessary services $210B 8% of NHEInefficient delivery $130B 5%Missed prevention $ 55B 2%
• Excessive Admin Costs $190B 8%• Prices $105B 4%• Fraud $ 73B 3%• TOTAL $765B 31%
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D. Cutler, Senate Budget Testimony, citing IOM
Expls. 1/2
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Break
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Where Innovation Is Tradition
Un-Coordinated Care => Juicy Margins
• Care Transitions
• Poly-pharmacy management
• Integrating behavioral and acute care
• Managing those with multiple chronic conditions
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High Prices => Juicy Margins• Insurers
GI+MCR + MLR and Admin simplification
• PhRMA
• Advamed
• Specialists and HospitalsCardiology, orthopedics, radiology, etc.
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Private Price Variation Large
• Physician prices vary 3:1
• Hospital prices vary 6:1
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MEDPAC 2011 analysis of 2008 Thompson-Reuters Market ScanData.
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Hospital Charge Variation
Breathing Chest pain Heart Failure Lower joint Pneumonia0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
37SOURCE: CMS MEDPAR charge data, 2011.
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Where Innovation Is Tradition
“Theory” of payment reform
• Changing the way we pay will so change behavior that total costs will fall AND SOME MDs (plus SOME hospitals) will gain**(Compared to what? Which baseline?)
• AND this outcome will be sustained from new incentive structure
• When is this possible, and when not?
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Where Innovation Is Tradition
Sustainable Payment Reform
Intervention
Better Performance
Savings cover cost of
intervention
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$$$
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Pre-requisites for shared savings-based payment reform to work
• ALL must focus on Total Cost of Care• Savings must more than cover intervention• Payers must share some of the cost savings
Cost could be foregone revenueCost could be new services that must be added
• Current Baseline temporary reference point
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Challenges• Status Quo is very, very good to some• Micro math ≠ macro math
Reduced admissions => need fewer beds / popMore PC => need fewer specialists / pop
• We have less time than we’d like• Total spend and total cost of care are only cost
metrics that matter, only payers have “total” dataAND financial + clinically relevant data are NOT
linked for most providers and payers now
• Agreements on respective roles, shares not present41
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Roles Once Clear, Distinct
PC
SPEC
H
Plan
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Roles Now Evolving, Melding
PC
SPEC
H
Plan
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Where Innovation Is Tradition
Fundamental Fact of Capitalism
• Risk bearors keep margins they can protect
• All others are wage / piece rate employees
• THEREFORE: your choices are:Earned shared savings, OR Declining FFS prices and/or declining covered
access
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Why transitions are possible but complex
• Actuarial expertise moves from insurers to providers
• Care coordination and financial alignment templates are public goods
• Education and research and last resort uncompensated care are public goods, tooWho Is Willing to Pay for Them Today?
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The Time Has Come…
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"The time has come," the Walrus said, "To talk of many things: Of shoes—and ships—and sealing-wax— Of cabbages—and kings— And why the sea is boiling hot— And whether pigs have wings." —Through the Looking-Glass
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Where Innovation Is Tradition
The Time Has Come…• Juicy Margins are hard to protect in transparent
and competitive world• Original BCBS community rating unraveled
because employers refused to pay big margins on their workers, for-profit insurers arose, ERISA followed soon enough
• Cost-shift = high minded margin protection• ME margins are particularly hard to protect
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Why ME margins hard to protect
• Opaque so long => credibility gap• High FPP and AHC prices hide noble goals
Tertiary, experimental, uncompensated careResearchTeaching
• Caught in larger public budget debate:Are these goals efficiently priced?Who should pay? Taxpayers or privately insured?Relative income realities
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So What Is To Be Done?• Get your accounting acts together• PROVE your public goods’ value
To yourselvesTo private payersTo public financiersTo local communities
• Build sustainable business modelsExpand awareness of TCC, value in communitiesBe ever mindful of local ability to payForce rigorous “make or buy” ROI calculus
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Where Innovation Is Tradition
Deliver Value
• Care quality and care improvement (GWOS)• TEACH care coordination in teams
Science of care delivery + translational research may be as or more important than basic/clinical for next 10 years
• Develop and GIVE AWAY coordination protocols• Develop and GIVE AWAY incentive contracts
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Where Innovation Is Tradition
ADD to your Mission Statement
• Stewardship(If you think this is not your problem, it will be, sooner)
• Consider sobering facts: Since 1960, US has seen72 % growth in population278% growth in N of MDs (4 x)1,500% growth in clinical faculty (21 x)
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Where Innovation Is Tradition
Every Stakeholder is Scared
• Insurers• Drug and Device Companies• Hospitals• Specialists• PCPs• Nurses• Software vendors
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Where Innovation Is Tradition
Scale of Coming Global Cap Cuts
2013 20230
102030405060708090
MLRLabsPhRMAHospSPECPCP
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Where Innovation Is Tradition
Health Service Payment Modalities
2013 20230%
10%20%30%40%50%60%70%80%90%
100%
P4PbundlesFFS
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Atavistic Competition is Always Possible
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Where Innovation Is Tradition
In general, when is Collaboration wise?
• When economies of scale from necessary investment are large relative to any one player
• When no one knows exactly how to improve • When incentives have to be fundamentally
changed to support necessary improvements• When basic level of trust exists, or can be
cobbled together and maintained with incentives and DATA
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Where Innovation Is Tradition
What do Clinicians Need for Collaboration to be Feasible ?
• DATA
• Technical assistance, learning pathways
• Templates for quality measurement, incentive contracts
• Risk-sharing partners, algorithms
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Where Innovation Is Tradition
If health plans won’t share data….
• Convince employers to make them
• Convince consumers/legislators/exchanges to make them
• Explain to patients what’s at stake
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Where Innovation Is Tradition
Stuff to collaborate on
• Analytic database construction (HIE + APCD)• Quality measures• Payment STRUCTURE• Diagnostic and treatment protocols• Risk sharing contract parameters
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Where Innovation Is Tradition
Stuff to compete on
• Patient Experience and (risk adjusted) Outcomes
• Overall cost
• Quality execution
• Continuous learning
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Where Innovation Is Tradition
Equilibrium?
Academic Medicine
Public Goods
Non-Mission Providers
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Where Innovation Is Tradition
What if we don’t share cost of Public Goods…• We won’t get enough of them
Arthur and the Vikings
• We WILL be sorryToo little research and uncompensated care
• The people will someday wonder why…
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Where Innovation Is Tradition
What if this all pay reform doesn’t work?
• Independent Payment Advisory Board (IPAB)
• Price controls
• Raise taxes
• Reduce coverage subsidies, repeal law
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Hard Things I’m Asking You to Do• Collaborate more to compete smarter• Develop community-wide payment models• Pursue stewardship, not just short-run self-interest• Treat successful models as public goods• Amend PPACA: malpractice reform and claims
adjudication standardization, make Medicare partner• Don’t forget why we’re asking you to do this
Incentive realignment is only humane way to fiscal sanity
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Where Innovation Is Tradition
Stuff to Remember
• Patients trust you
• Plans need you
• Why you went to medical school
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