working draft 8-2-12 cahl – higher education network mission college healthcare it and industry...

WORKING DRAFT 8-2-12 CAHL Higher Education Network Mission College Healthcare IT and Industry Trends Discussion August 2, 2012

WORKING DRAFT 8-2-12 Agenda I.Top Ten Trends in Healthcare II.Value of Networking III.Internships 1 DRAFT 752\90\196976(pptx)

WORKING DRAFT 8-2-12 I. Top Ten Trends in Healthcare Summary 2 DRAFT 752\90\196976(pptx) 1.Improved Finances While there will still be haves and have-nots, the financial health of hospitals and health systems will collectively stabilize. 2.Market Consolidation The number of mergers and acquisition (M&A) transactions within the industry will continue to increase. 3.Focused Program Strategies Hospitals will continue to focus on increasing the market share of those services with favorable margins in the current fee-for-service payment methodologies. 4.Cost-Conscious Providers must continue to focus on reducing costs through operational improvement efforts. 5.Increasing Physician Employment The number of physicians becoming employed by hospitals/health systems will continue to increase. 6.New Payment Formulas Payors will begin to look at various models to address long-term solvency issues and/or short-term investor pressures. 7.Evolving Quality Definition Quality improvement initiatives will transition from process measures to outcomes. 8.IT Optimization Providers will begin to determine the best way to optimize their investments in IT systems to succeed in a value-based environment. 9.Innovative Care Models Estimated physician shortages will require providers to begin implementing new patient care models. 10.Comparison Shopping Consumerism will continue to force all market segments (providers and payors) to provide user-friendly information in a way that allows for effective comparison of cost and quality. As healthcare reform continues to evolve, providers will have to balance operating in the current fee-for-service environment while preparing for a future value-based industry.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Improved Finances 3 DRAFT 752\90\196976(pptx) While there will still be haves and have-nots, the financial health of hospitals and health systems will collectively stabilize. Dow Jones Industrial Average 10-Year Chart The positive outlook will allow providers more favorable interest rates for debt, both public and private, to fund capital expenditures, such as acquisitions, IT systems, and facilities.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Market Consolidation Diversification It may be more advantageous to acquire services and facilities rather than develop the service and/or facility from scratch. Sharing Cost Burdens Smaller, less profitable hospitals are looking to create economies of scale with other hospitals in order to bear the burden of large expenses. Pending Payment Reform Hospitals facing changes in payment structures resulting from healthcare reform are looking to position themselves favorably and develop negotiating leverage in a changing landscape dominated by consolidated national carriers. 4 DRAFT 752\90\196976(pptx) A report from Irving Levin Associates recorded 23 hospital deals in the first quarter of 2012, a 5% increase over the same period last year and a 10% increase over the fourth quarter. In total, hospital deals amount to $129 million in the first quarter of this year. Modern Healthcare, April 26, 2012 The number of M&As within the industry will continue to increase. Source: Hospital M&A Continued to Grow in Second Half of 2010, Beckers Hospital Review, Irving Levin Associates. Hospital M&A Deals

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Focused Program Strategies 5 DRAFT 752\90\196976(pptx) Hospitals will continue to focus on increasing the market share of those services with favorable margins in the current fee-for-service payment methodologies. Source: Total Hospital Industry Contribution Profit, 2007 (Inpatient and Outpatient), The Advisory Board Company, 2009. Ranking Total Hospital Contribution Profit and Inpatient Revenue More progressive health systems will have market advantage to demonstrate quality and cost advantages with key services.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Cost-Conscious Improve Operational Efficiency Unit Costs Minimize overhead expenses and increase the efficiency of administrative services. Reduce the cost of operating units and services through supply and labor control. Outsource select functions as appropriate. Focus on using the integrated structure to simplify the healthcare experience for members and patients. Improve Intra-Case Utilization Episodic Costs Identify and eliminate waste or ineffective utilization within existing inpatient and outpatient cases. Direct care to lower-cost settings and/or use lower-cost providers. Improve Utilization of Overall Care Cost Avoidance Manage provider and facility capacity as reductions in utilization rates take effect. Align the incentives around creating value. 6 DRAFT 752\90\196976(pptx) Providers must continue to focus on reducing costs through operational improvement efforts. Executives at leading health systems report that they will need to find a way to cut operating costs by as much as 5% per year over the next few years to survive the changes brought about by the passage of health reform.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Increasing Physician Employment Changing Landscape of Physician Practice 80% of physicians surveyed reported that they believed health reform will erode the viability of the private practice model. 1 Physician Preference Unlike previous generations of physicians, new physicians are unwilling to accept the risks of private practice. Reimbursement Cuts Reimbursement cuts in key areas, such as imaging, ancillary testing, and drug administration, are resulting in declining incomes for physicians in independent practices (or longer work hours and stagnant incomes). 7 DRAFT 752\90\196976(pptx) The number of physicians becoming employed by hospitals/health systems will continue to increase. Physician Employment Percentage of Active Physicians Employed 1 Survey of Physicians and Health Reform, The Physicians Foundation, Merritt Hawkins, October 2010. Primary care employment is designed to secure future success in a value- based payment environment, while specialty care employment is designed to secure profitability in todays era of declining reimbursement.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare New Payment Formulas 8 DRAFT 752\90\196976(pptx) Payors will begin to look at various models to address long- term solvency issues and/or short-term investor pressures. PayorBurning PlatformSolution MedicareThe Medicare Board of Trustees reports that Medicares Hospital Insurance Trust Fund is now projected to remain solvent until 2029 as a result of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010. Previous projections estimated insolvency in 2017. (Report issued on August 12, 2010.) Shared savings program (ACO). Center for Medicare and Medicaid Innovation. MedicaidEighteen states reported that Medicaid or other healthcare programs were over budget. Connecticut indicated that the Medicaid shortfall is projected at $185 million in FY 2011. Maryland reports a deficiency need of $239 million in its Medicaid program due to an increase in childrens enrollment and a decrease in federal stimulus funds. (National Conference of State Legislatures, State Budget Update: November 2010.) Managed care. ACO. Exit program. CommercialBeginning in 2011, insurers in the individual and small group market must spend at least 80%, and insurers in the large group market at least 85%, of their premium revenues (excluding federal and state taxes and licensing and regulatory fees) on healthcare and quality improvement activities. (Patient Protection and Affordable Care Act, Section 2718.) Full or partial provider risk agreements.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Evolving Quality Definition Process Measurement Success is measured by completing tasks for a specific illness or disease. Efficiency and thoroughness are measurements of success. Metrics are self-defined and personally monitored. Quality Measurement Success is measured by achieving treatment goals and improving patients health, which could translate to cost savings. Metrics are defined by multiple organizations, including individual health plans, NCQA, and CMS. Outcomes are currently measured in financial savings, with quality improvement considered a possible driver of the savings. 9 DRAFT 752\90\196976(pptx) Outcomes are currently driven by financial savings, but with an eye toward translating financial savings into improved health as a result of improved quality of care. Quality improvement initiatives will transition from process measures to outcomes. Process Measurement Outcomes Measurement

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare IT Optimization 10 DRAFT 752\90\196976(pptx) Providers will begin to determine the best way to optimize their substantial investments in IT systems to succeed in a value-based environment. Source: CompTIA, Second Annual Healthcare IT Insights and Opportunities Study. Results are based on two separate online surveys conducted in July 2010 of 370 IT companies and 300 healthcare providers, including dentists, nurses, office managers, physicians, and physician assistants. A report from Circle Square, Inc., mentioned that as of June 2012, 71% of physicians in California had an EMR, but only 30% met meaningful use capabilities. How Far Along Are Healthcare Providers in Using an Electronic Health Record System?

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Innovative Care Models Decline in Primary Care Physicians A shortage of 64,000 primary care physicians is projected in 2015. 1 Medical students entering family practice dropped 50% from 1997 to 2005. 2 New Care Models Expanding prevalence and utilization of retail medicine clinics. From 2007 to 2009, the rate at which patients visited these clinics rose by almost 1000%. 3 MinuteClinic experienced a 22% growth, each year, in 2010 and 2011. Concierge medicine expanding beyond highest income segment. 16% of physicians plan to switch to concierge practice in the next 1 to 3 years. 4 Patients pay a yearly or monthly fee for more personalized access to physicians. Nurse practitioners and physician assistants (PAs) serving as primary care practitioners. Employment of PAs is expected to grow by 39% through 2018. 5 11 DRAFT 752\90\196976(pptx) As primary care availability continues to decrease, retail medicine and team-based models will be pursued as strategies to improve access. Estimated physician shortages will require providers to begin implementing new patient care models. 1 Reuters News, Doctor Shortage Looming? Use Nurses, Report Says, October 5, 2010. 2 St. Louis Post-Dispatch, Is There a Doctor in the House? February 7, 2010. 3 Los Angeles Times, Use of Retail Medical Clinics is Rising, Study Says. November 22, 2011. 4 Survey of Physicians and Health Reform, The Physicians Foundation, Merritt Hawkins, October 2010. 5 Bureau of Labor Statistics.

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Comparison Shopping 12 DRAFT 752\90\196976(pptx) Organizations will need to develop innovative methods of delivering health-related information to their consumers. Provider MarketPayor Market Searching Internet for diagnoses and treatment advice. Health plan prices available online at Department of Health and Human Services Web site. Researching hospital quality outcomes data. Network physicians education and training, and quality ratings as available. Consumerism will continue to force all market segments (providers and payors) to provide user-friendly information in a way that allows for effective comparison of costs and quality. Source: Manhattan Research, Cybercitizen Health v7.0-v10.0. Number of Americans (in Millions) Consulting Social Media for Health Information

WORKING DRAFT 8-2-12 II. Top Ten Trends in Healthcare Implications An argument can be made that IT figures prominently in seven of the key trends. Value-based reimbursement, a key tenet of the health reform efforts, will require information technology: Inform providers. Coordinate care activity. Improve operational efficiency. Health IT impacts consumers of care: Retail applications (e.g., ED wait time, available clinic appointments). Clinical transparency (e.g., quality metrics, patient feedback). System performance (e.g., outcomes, readmissions, conditions). Health Reform Implications on IT. CMS hospital reimbursement programs (e.g., value-based purchasing, readmission rates). Transparency and efficiency of health exchanges. 13 DRAFT 752\90\196976(pptx)

WORKING DRAFT 8-2-12 DRAFT 782/90/195207(pptx) 14 II. Value of Networking What is Networking? Networking is not about: Schmoozing. Rapid-fire business card exchanges. Insincere glad-handing. Reeling in favors. Meeting as many people as possible. Manipulating people to get them to work with you. Networking is about: Building relationships before you need them. Communicating openly and honestly about how you can help others and how they can help you. Sustaining relationships with people of similar minds and similar business interests. Relationships are the key to networking. Develop relationships by finding common ground with everyone you meet and avoiding writing people off as not your kind of person.

WORKING DRAFT 8-2-12 II. Value of Networking Exercise: Identify Opportunities Opportunities Where do you see opportunities for building your network? What are 2-3 conferences/meetings that you plan to attend in the next year. Considerations Grab a volunteer opportunity to meet people regionally. Attend local meetings when possible. Student chapter outreach (e.g., ACHE/CAHL). Graduate school recruitment meet the firm. 15 DRAFT 782/90/195207(pptx)

WORKING DRAFT 8-2-12 II. Value of Networking Network Management Developing the Network 16 DRAFT 782/90/195207(pptx) Establishing the Network Former employers/coworkers. Alumni networks. Friends in related fields. Professional associations (ask before joining). Attend local meetings. Managing the Network Touches Calls Im working on X and would like to get your opinion on Taking advantage of mentorship opportunities. Social Media LinkedIn, Blogs, Facebook, Twitter. Setup meetings. Establish realistic goals. Stick to a plan.

WORKING DRAFT 8-2-12 II. Value of Networking Creating Relationships How do you break the ice? Introduce yourself and where you are from (e.g., XYZ University Healthcare IT Program). Remember names. Redirect responses and questions to others in the group. How do you meet people? Geography, where are they from. System affiliation, who are they with. Function, what department do they work in. What are the topics that you can bring up? News of the day. Topics trending in healthcare. Regional issues (e.g., recent phenomenon, sports). Ask open ended questions (e.g., what are your thoughts on, how is your system responding to, what barriers are you facing on). 17 DRAFT 782/90/195207(pptx) Creating connections in a hostile environment can be challenging. They take time and are not build immediately.

WORKING DRAFT 8-2-12 II. Value of Networking Trade Organizations - CAHL CAHL and other organizations like it can serve as the following: A great venue for early careerists to build and develop networks by exposing them to others in the industry and creating forums for discussion. Provides specific events focused for the HEN such as the College Bowl in the Spring 2013. Career shadow day in Winter. Educational opportunities (e.g., conferences, seminars) at discounted rates. 18 DRAFT 752\90\196976(pptx) Trade organizations offer an easy and inviting way to quickly expand your network and avenues into internships and future jobs. To become a HEN program, just need the program director to sign up the program and they can enjoy the accesses to all the events.

WORKING DRAFT 8-2-12 III. Internship Opportunities Resources Consulting firms. Non-profit organizations (e.g., California Health Care Foundation, Cal HIPSO). Large systems. Health Care Careers - HIT Fellowship Program HCC provides paid, full-time Health Information Technology (HIT) Fellowships in California for recent graduates and individuals interested in pursuing hands on experience and careers in Health IT. In partnership with the CA Health Workforce Alliance, HIMSS Southern California and leading employers and associations, 3 and 6 month HCC HIT Fellowships connect talented candidates to employers building their HIT workforce. http://www.healthcareers.org/program-overview/hit-fellowshiphttp://www.healthcareers.org/program-overview/hit-fellowship http://www.healthcareers.org/program-overview/hit-fellowship/hit-process-and- timeline 19 DRAFT 752\90\196976(pptx) There are opportunities all around, but they require diligence to identify them and seek them out.

WORKING DRAFT 8-2-12 For additional information on our firm, visit our Web site at www.ecgmc.com. Contact Information DRAFT 752\90\196976(pptx) 20 Mr. Jason C. Lee Senior Manager ECG Management Consultants [email protected]

WORKING DRAFT 8-2-12 DRAFT 752\90\196976(pptx) 21

working draft 8-2-12 cahl – higher education network mission college healthcare it and industry...

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