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A 21 st Century Intelligent Healthcare System

Creating the Possible…. A 21 st Century Intelligent Healthcare System. Healthcare Visions, Inc. Yes, when…. Ronald E. Bachman FSA, MAAA President & CEO Healthcare Visions, Inc. Sr. Fellow – Center for Health Transformation 404-697-7376 ronbachman@healthcarevisions.net.

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A 21 st Century Intelligent Healthcare System

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  1. Creating the Possible… A 21st Century Intelligent Healthcare System Healthcare Visions, Inc. Yes, when… Ronald E. Bachman FSA, MAAA President & CEO Healthcare Visions, Inc. Sr. Fellow – Center for Health Transformation 404-697-7376 ronbachman@healthcarevisions.net

  2. The Missing Link Future State A Common Vision Process for Change POSITIVE CHANGE + + = Vision Process for Change Expensive False Starts + + = Creating a Healthcare Strategy Starts with a Clear Vision Desire for Change Desire for Change You can’t change what you can’t see

  3. Supply Controls or Demand Controls • Plan Sponsors and Members have two basic choices to control costs: • 1. Managed care & HMOs - The “supply of care” is limited by a third party who controls the access to medical services (e.g. utilization reviews, medical necessity, gatekeepers, formularies, scheduling, types of services allowed), or • 2. Consumerism - The member controls their “demand for care” because of a direct and significant financial involvement in the cost of care, rewards for compliance, and the information to make wise health and healthcare value driven decisions.

  4. Supply Controls Are Failing • Every system is perfectly designed to generated the outcomes that it gets • High Healthcare Costs Climbing Higher • Patients have lost control of their own healthcare, and are not truly engaged in the process of managing their health • Patients are frustrated with managed care “rules” and the impact on time and productivity • Patients don’t understand healthcare costs – costs are not transparent

  5. Mega Trends Leading to Demand Control • Personal Responsibility • Self-Help, Self-Care • Individual Ownership • Portability • Transparency (the Right to Know) • Consumerism (Empowerment)

  6. Healthcare Consumerism • Healthcare Consumerism is about transforming a health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants. • It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors.

  7. Two Basic Principles for Successful Consumerism • Must work for the Sickest Members, as well as the healthy • Must work for those not wanting to get involved in decision-making, as well as the “techies”

  8. The Core of Consumerism • The Unifying Theme • for a • Health and Healthcare Strategy is: • Behavioral Change “Implement only if it supports behavioral change consistent with the strategy”

  9. Consumerism Choices involve Options for Behavioral Change rather than Optional Plan Designs • Consumerism Choices: • Wellness • Preventive care • Early Intervention • Lifestyle Options (diet, exercise, smoking, safety) • Self-help, self care • Discretionary Expenses (e.g. OV, ER, Rx) • Value purchasing (e.g. DXL, o/p vs. in/p) • Participation in Disease Management Programs • Compliance with Evidence Based Medicine Treatment Plans

  10. Consumerism – Much Broader than Consumer-Driven Healthcare Consumerism is A Strategy ****************** It’s about moving from a “benefit” to an “accumulating asset.”

  11. The Evolution of Healthcare and ConsumerismFuture Generations of Consumerism 2nd Generation Consumerism Focus on Behavior Changes Traditional Plans with ConsumerInformation 1st Generation Consumerism Focus on Discretionary Spending 4th Generation Consumerism Personalized Health & Healthcare 3rd Generation Consumerism Integrated Health & Performance Traditional Plans Behavioral Change and Cost Management Potential Low Impact ---- ---- ---- ---- ---- ---- ---- ---- ---- High Impact

  12. The Promises of Consumerism Major Building Blocks of Consumerism Personal Care Accounts The Promise of Demand Control & Savings It is the creative development, efficient delivery, efficacy, and successful integration of these elements that will prove the success or failure of consumerism. Wellness/Prevention Early Intervention The Promise of Wellness Disease and Case Management The Promise of Health Information Decision Support The Promise of Transparency Incentives & Rewards The Promise of Shared Savings

  13. 2nd Generation Consumerism Focus on Behavior Changes 4th Generation Consumerism Personalized Health & Healthcare 1st Generation Consumerism Focus on Discretionary Spending The Consumerism Grid 3rd Generation Consumerism Integrated Health & Performance Personal Care Accounts Wellness/Prevention Early Intervention Disease and Case Management Information Decision Support Incentives & Rewards

  14. Using Information & Incentives To Address Wellness & Disease Management Behavioral Changes Wellness - Lifestyle Prevention Wellness - Lifestyle Minimize Minimize Maximize Maximize Wellness - Clinical Early Intervention Wellness - Clinical

  15. Company Data Warehouse & Metrics Process Integration & Disciplined Improvement Integrated Health Management ProgramAn Implementation Option for Multiple Generations General Manager The secret is cooperation and synergy between components supporting the corporate strategies Personal Care Accts. FSAs, HRAs, HSAs Integrated Absence Mgmt Acute Case Mgmt Disease Mgmt Programs Demand Management Prevention Wellness Utilization and Case Management NETWORK A / TPA A NETWORK B / TPA B

  16. Potential Savings from Full Implementation of ConsumerismAchievement of savings and improved outcomes is dependent upon both the Type and Effectiveness of the programs implemented. *Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs

  17. Actual Published Consumerism Experience • In 2004, Aetna consumerism plans showed cost increases of only 1.5% versus increases of more than 10% for traditional health plans. Employers that offered only consumerism plans had an average decrease in premiums of 2.9%. • In 2004, United Health Care showed average cost increases of less than 1% for consumerism plans. Humana, Blue Cross Blue Shield, and other health insurers are finding similar results from their new consumerism products. • Forrester Research predicts 24% of Americans will be covered under such plans by 2010.

  18. Milliman 10/2004 CDHC Survey • 89% of those responding expect to offer a CDHC plan to employers within the next year, up from 29% in last year's survey. Specifically, these 89% currently offer or plan to offer within the next year a high deductible plan with an integrated employee account (i.e., HRA or HSA). • Milliman Group Health Insurance Survey • CDHC Available Currently or Within 2005 • Offer a Tiered Offer a High Offer a % Prem • Provider NetworkDeductible Plan CDHC PlanFrom CDHC • 2004 Survey 42% 96% 89% 7.8% (in 2005) • 2003 Survey 17% 48% 29% 3.4% (in 2004) • Percentage of Respondents

  19. Survey Information on CDHC • Mercer 4/2004 • Nearly three-quarters (73%) of employers asked by Mercer Human Resource Consulting said they were likely to offer the new accounts to their workers by 2006, according to a survey to be released this week. • "We're looking at a major market change," says Linda Havlin, Mercer's Midwest health care practice leader, noting that a 73% interest in adopting a new program within two years "is unprecedented.“ Forrester Research 9/2003

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