National Landscape for Children’s Hospitals
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National Landscape for Children’s Hospitals Fall Forum Series September 12, 2012. Objectives – today’s discussion. Fundamentals Implications Strategy Children’s Hospital Association. Fundamentals. POPULATION. PAYORS. PROVIDERS. Fundamentals. POPULATION. PAYORS. PROVIDERS.

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National Landscape for Children’s Hospitals Fall Forum Series September 12, 2012

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National landscape for children s hospitals fall forum series september 12 2012

National Landscape for Children’s Hospitals

Fall Forum Series

September 12, 2012


Objectives today s discussion

Objectives – today’s discussion

  • Fundamentals

  • Implications

  • Strategy

  • Children’s Hospital Association


Fundamentals

Fundamentals

POPULATION

PAYORS

PROVIDERS


Fundamentals1

Fundamentals

POPULATION

PAYORS

PROVIDERS


Population growth

Population: Growth

  • U.S. children increasing from ~79 to ~89 million by 2022

    • Million a year pace

    • More kids than the total population of any EU nation

  • Numbers of chronically ill children growing faster


Population expectations how much life quality is health care

Population: ExpectationsHow much life quality is “health care?”

  • A life at all…<1950s

    • Premature birth, polio, MM&R, congenital defects…

  • A better, longer life…1980-2000s

    • Allergies, attention, learning, comfort, convenience, mobility, motility, mood...

  • Perfection…2020 and beyond?

    • Genetic and pre-natal diagnoses and interventions…

      Population upshot – more demand


Fundamentals2

Fundamentals

POPULATION

PAYORS

PROVIDERS


Providers supply

Providers: Supply

  • Pediatric subspecialists in short supply vs. demand

    • CHGME funds > 50% of training – to be cut back…away?

  • Physician practice shift from independent to employed practice models

    • Several major centers now “employ” 100% of subspecialty staff: Philadelphia, Boston, National, Cincinnati

  • Children’s hospital beds full; rising CMI and/or complexity

    • New hospital (project) costs running $2-4 million/bed

      Provider upshot – supply constraints


Fundamentals3

Fundamentals

POPULATION

PAYORS

PROVIDERS


Payors multi sponsor system

Payors: Multi-sponsor system

All Population

Commercial

Medicare

Medicaid

Uninsured


Payors federal budget problem

Payors: Federal budget problem

Federal Budget Surplus/ Deficit

$200 B

Surplus

0

Deficit

(200)

(400)

(200)

(800)

($1,000)

FY1980

1985

1990

1995

2000

2005

2010

Note: Fiscal years end September 30

Sources: Congressional Budget Office: Office of Management and Budget


Payors political process

Payors: Political process

More Conservative

More Liberal

Most liberal Republican senator

Most conservative Democratic senator

1982

Source: National Journal, February 26, 2011


Concentration

Concentration

More Conservative

More Liberal

Most liberal Republican senator

Most conservative Democratic senator

1982

1994

2002

Source: National Journal, February 26, 2011


Polarization

Source: National Journal, February 26, 2011

Polarization

More Conservative

More Liberal

Most liberal Republican senator

Most conservative Democratic senator

1982

1994

2002

2010


Payors budget sequestration

Payors: Budget sequestration

$1.2 trillion in automatic reductions

FY 2013

9% across-the-board reductions

FY 2014-2021

Cuts achieved through spending caps


Payors state budget problems

Payors: State budget problems

Total Estimated State Budget Shortfalls

$0

2009

2010

2011

2012

($50)

Portion covered by states

($79)

($100)

($101)

($31)

($123)

($134)

Portion offset by federal stimulus

($150)

($59)

($6)

($68)

($200) billion

Sources: Center on Budget and Policy Priorities; Investment Company Institute


Payors medicaid managed care

Payors: Medicaid managed care

Medicaid Managed Care Penetration Rates by State: 2008

U.S. Average = 70%

0 - 50% (5 states)

51 - 70% (20 states including DC)

71 - 80% (9 states)

81 - 100% (17 states)

Note: Unduplicated count. Includes managed care enrollees receiving comprehensive and limited benefits.

Sources: Medicaid Managed Care Enrollment as of December 31, 2008. Centers for Medicare and Medicaid Services; Commonwealth Fund, Kaiser Family Foundation


Payors pricing focus

Payors: Pricing focus

Measures states are planning on taking to manage Medicaid expenditures in 2014

75%

Tougher price negotiations w/ providers

73%

More use of managed care

63%

Tougher price negotiations w/ suppliers

Restricting prescription drug formulary

57%

Moving to bundled payments

56%

48%

Moving to capitation

43%

Dropping people from the program

5%

Other

Base: All State HCF Finance and PolicymakersSource: Strategic Health Perspectives 2011 State HC Finance and Policymakers Survey


Pediatrics uniquely at risk

Pediatrics uniquely at risk

  • Federal Medicaid cuts of $100M - $1B+ plus state cuts to worst payor in market

  • CHIP block grant reauthorization in 2014 unclear ... $10B+

  • CHGME unauthorized and at risk ... $265M+

  • DSH cut $17B+ under ACA by 2020

  • Medicare voters outnumber child voters ~47 million to 0


Strategy accountability

Strategy: accountability

ACCOUNTABILITY: The quality or state of being accountable; especially: an obligation or willingness to accept responsibility or to account for one’s actions

HEALTH CARE TRANSLATION:

Clinical success outcome vs. work/ service performed

Defined price up front vs. “as incurred” costs

Public reporting of results vs. non-disclosed transaction

Next incarnation of the MCO (managed care organization)


Strategy reform scenarios

Strategy: reform scenarios

ACCOUNTABILITY

Major

Minor

Major

Super Systems

We’re back

ECONOMIC RECOVERY

“Kalos orisate stin Ellada!”

Minor

Survival of the Fittest


Strategy vis vis payors

Strategy vis-à-vis payors

ABILITY TO BE ACCOUNTABLE

Low

High

High

“Manage population, money; reap gains”

“Benevolent dictator or robber baron?”

LEVERAGE vs PAYORS

“Negotiate niches; win the ‘buy vs build’ war”

Low

“Bled to life support”


Models for pediatric accountability

Models for pediatric accountability

High

Bundles

Population Full

PopulationSector

Investment

Pay-for-Perfor-mance

DRG

FFS

Low

Low

High

Financial Risk


Model strategy

Model strategy

  • Regional multi-payor environment = multi-model strategy

    • Pay-for-performance with a local commercial payor?

    • Bundle contracts with neighboring state Medicaid?

    • Population sector (0-18) with metro/regional HMO?

    • Population sector (complex/chronic) with Medicaid?

    • Own HMO product for local Medicaid populations?

  • “No regrets strategy” is an accountable provider panel


Accountability readiness providers

Accountability readiness: providers

Low

Readiness Level

High


Strategy cornerstones 2020

Strategy cornerstones -- 2020

  • More accountability ‒ organize, measure, publicize

  • Demand exceeds supply ‒ success essential in the high reimbursement sectors of your market

  • More consumerism ‒ brand and product matter, think like a retailer!

  • More regionalization ‒ demand > supply = choose wisely!

    • Clinical-subspecialist access the key factor

  • “Have a bank” ‒ you can’t be too rich!


Challenge to the association

Challenge to the Association?

  • Federal Medicaid cuts of $100M - $1B+ plus state cuts to worst payor in market

  • CHIP block grant reauthorization in 2014 unclear ... $10B+

  • CHGME unauthorized and at risk ... $265M+

  • DSH cut $17B+ under ACA by 2020

  • Medicare voters outnumber child voters ~47 million to 0

    Reorganization and new strategy essential to our ability to support and advance our children’s hospitals


Children s hospital association

Children’s Hospital Association

Mission

  • Advance child health through innovation in care, education and research with our children’s hospitals

    Focus

  • Drive public policy improving child health

  • Improve care delivery, quality and cost through collaboration

  • Inform awareness and solutions through information


Strategy

Strategy

  • Extend the power of collaboration

    • World’s preeminent forum driving pediatric performance improvement, quality, and strategic leadership

    • Largest and most insightful pediatric analytics capabilities

    • Known and respected voice for children on the Hill

  • Recreate our operating organization

    • High end expertise, service, performance, value

    • Affordable and accessible to our children’s hospitals


Merger reorganization

Merger reorganization

  • Concluded both phases of organizational restructuring

    • Majority of operating costs and merger potential in staffing

    • Realized redundancy savings of over 30 positions

    • Streamlined executive positions by more than half

  • Completed GPO outsourcing per Novation contract

    • Achieved staff outsource of 17 positions

  • Redefined the Association from 250 to 200 staff

    • Merger related improvements of $5M+ annual expenses


Children s hospital association organization

Children’s Hospital Association organization

Mark Wietecha

Brian Humphreys

David Bertoch

Richard Stepanek

David Spizman

Amy Knight

Marlene Miller

Jim Kaufman

Mark Riley

  • CHEX

  • Child advocacy

  • Communications

    • External

    • Internal

    • Member

  • Corporate relationships

  • Education

  • Executive Institute

  • Forums

  • Governance

  • Marketing

  • Member services

  • Quality strategy

  • Quality program development

  • National visibility – quality initiatives

Federal affairs

Outreach and mobilization

Policy analysis

501c3 HR and facilities

Cooperative HR and facilities

Office operations

501c3 finance

501c6 finance

Cooperative finance

Analytics

Data products

Research & development

Research & statistics

Architecture

IT

Project management

Systems infrastructure

  • BPI

  • CHND/PSO

  • Collaboratives (All)

  • Financial services

  • FOCUS Groups

  • Insurance services

  • QTN

  • Solutions

  • Supply Chain Services (SCS)


Policy results ytd

Policy results YTD

Externally -- Patient care

  • Medicaid – exempted from the FY2013 Sequestration

  • Medicaid – pediatric sub-specialists included in the ACA Medicare rate package

  • TRICARE – legislation improving the system for children

  • Prescription Drug User Fee Authorization

    • Improve/extend Best Pharmaceuticals for Children Act, and the Pediatric Research Equity Act


Policy results ytd1

Policy results YTD

Externally – Education

  • CHGME – FY2013 appropriations supported by Senate and House at $265M+

  • CHGME – Working for Reauthorization in Lame Duck

    Internally – Organization

  • Restructured our leadership team, Public Policy Committee of the Board, lobbying team


Business results ytd

Business results YTD

  • Delivered our program plan FY2012 with strong user satisfaction, at or below budget while reorganizing

  • Improved returns to GPO participants

    • Patronage dividend up 50% from 2011 to FY2013

  • Containing costs to hospital membership by reducing our expenses and reinvesting saving

  • Developingthe next generation of analytics supporting improved hospital operating performance

    • Merging and redeveloping PHIS, Case Mix, data products


Fy2013 priorities

FY2013 priorities

Mission Focus

  • Drive public policy improving child health

    • Fundamental reformation of the system – how far?

  • Improve care delivery, quality and cost through collaboration

    • Align and deliver insight and innovation to our hospitals

  • Inform awareness and solutions through information

    • Greater visibility for “children” in media, on the Hill


Our board your reps

Our Board, Your Reps

Chair: James Mandell, MD

Children’s Hospital BostonBoston, MA

Vice Chair: Christopher J. Durovich

Children’s Medical Center DallasDallas, TX

Treasurer: Amy B. Mansue

Children’s Specialized HospitalMountainside, NJ

Secretary: Herman B. Gray, MD

Children’s Hospital of MichiganDetroit, MI


Our board your reps1

Our Board, Your Reps

Steve J. Allen, MD

Nationwide Children’s Hospital

Columbus, OH

Christopher G. Dawes

Lucile Packard Children’s Hospital at Stanford

Palo Alto, CA

Thomas D. Kmetz

Kosair Children’s Hospital, Norton Healthcare, Inc.

Louisville, KY

James E. Shmerling, DHA, FACHE

The Children’s Hospital

Denver, CO


Our board your reps2

Our Board, Your Reps

Marcy Doderer, FACHE

CHRISTUS Santa Rosa Children’s Hospital

San Antonio, TX

Peggy Troy, RN, MSN

Children’s Hospital of Wisconsin

Milwaukee, WI

Karen R. Wolfson

Wolfson Children’s Hospital

Jacksonville, FL

Steve Worley

Children’s Hospital

New Orleans, LA


National landscape for children s hospitals fall forum series september 12 2012

Alexandria Office:

401 Wythe Street

Alexandria, VA 22314

Phone: 703-684-1355

Fax: 703-684-1589

Overland Park Office:

6803 W. 64th Street

Overland Park, KS 66202

Phone: 913-262-1436

Fax: 913-262-1575


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