Opportunities and Challenges for Health Care Integration: A Framework for Success at Mayo Clinic

1. Opportunities and Challenges for Health Care Integration: A Framework for Success at Mayo Clinic Robert E. Nesse MD Chief Executive Officer Mayo Clinic Health System Associate Professor of Family Medicine Mayo School of Medicine nesse.robert@mayo.edu

2. Where are we Headed? • We will see more patients and reimbursement • for their care will decrease • Care must focus on the needs of the patient rather • than focus on any single facility or site of care. • We will be accountable for the value of our care • and our results. • We must develop integrated systems of care with • shared services, coordinated expertise, and public • accountability for the quality and cost of our care .

3. Why should Mayo Clinic Integrate? • Implications of the Patient Protection and Affordable Care Act of 2010? • Accountable Care requirements • Continuity of care • Transparent quality and safety metrics • New payment models (care baskets, outcome based payment, episode of care payment) • Preventive care and wellness • Broad access and eligibility for government sponsored insurance and public programs? • Reimbursement will decrease for care • Public patients will increase in our practice “A union of forces is necessary” Wm Mayo 1910

4. The basis of Accountable Care Organizations • Section 3022 of the Patient Protection and Affordable Care Act

5. Regardless of whether the country embraces Federal ACOs we must change to be relevant and competent in delivering accountable care to our patients

6. The Inconvenient Truth about Health Care and Health Reform Harvard Business Review2008. 86:5,99-106.

7. Selected Characteristics of a Wicked Problem • A wicked problem involves many stakeholders who all will have different ideas about what the problem really is and what its causes are • A wicked problem has innumerable causes, is tough to describe, and does not have a “right” answer. • Every wicked problem can be considered to be a symptom of another problem • Wicked problems have no stopping rule Harvard Business Review2008. 86:5,99-106.

8. Physicians & Scientists 800 Total Employees 7,300 Hospitals 0 Sites 2 Revenue $381m Physicians & Scientists >5000 Total Employees > 58,000 Hospitals 22 Sites 83 Revenue $8500m The Mayo Clinic System 1980-2012 1980 2012 • Mayo Health System • 900 physicians • 18 hospitals • 73 sites

9. Mayo Clinic Rochester, MN • Founding Mayo Clinic site where Drs. Mayo established their practice • Campus of inpatient, outpatient, research, education and administrative buildings in downtown Rochester • MCR campus square ft. is 3x Mall of America • 2,059 inpatient beds • Saint Mary's Hospital • Rochester Methodist Hospital • Mayo Eugenio Litta Children's Hospital and T. Denny Sanford Pediatric Center • 1,700 Physicians in 80 specialties • 350,493 unique patients in 2010

10. Red Wing

11. The Statements of Mayo Clinic • Primary Value • The needs of the patient come first. • Mission • To inspire hope and contribute to health and well being by providing the best care to every patient through integrated clinical practice, education, and research. • Vision • Mayo Clinic will provide an unparalleled experience as the most trusted partner for health care. • Core Business • Create, connect and apply integrated knowledge to deliver the best health care, health guidance and health information. • Value Proposition/Differentiation Statement • Mayo Clinic combines knowledge, integrity, and teamwork into a uniquely effective, integrated model of care

12. Mayo Clinic Care for a Lifetime Community-based care has been partof Mayo Clinic since the beginning Community care providers deliverthe Mayo Clinic Model of Care Our patients deserve a system that can… Unifyas a single practice Embracea culture committedto integration Inventnew practice models Improvecare by using collective resources 3050920-12

13. The Core Business Essential strategic requirement Core Business Essential organizational requirement

14. A New Approach to Health Care Reform: A Third Way? • The Regulators • The best way to slow increasing costs is to control the total resources going into the health care system • The Marketers • Competing health plans and information-empowered ..consumers would drive down costs, especially if insurance were restructured to give people the right incentives • Systems Reformers. • The best way to bend the cost curve is from the inside out, by creating a smarter health care system with the information base, new delivery models and payment incentives that will improve quality and lower costs. “The "Third School" for Controlling Health Care Costs". Drew Altman. KFF. 2009

15. Mayo Clinic Health System Goals 2012 • Assure regional patient access to Mayo Clinic • Further develop an integrated, geographically dispersed provider network in our system • Improve community-based healthcare in the region surrounding Rochester, Min • Support quality reporting and shared system efficiencies as a single system • Align our systems to support an ACO and new payment models • Deliver value to the market for competitive relevance

16. What are the fundamental requirements for success ? • A network of providers • Physical or virtual • Governance model • Alignment of purpose • Coordinated care delivery • Common measures • Financial alignment

17. Past Provider Centered Price Driven Knowledge Disconnect Slow Innovation Reactive, episodic care Paper based Outcomes ignored Overall Cost Increase Present and Future Patient Centered (integrated) Driven by Value (quality/cost) Knowledge Intensive Rapid Innovation Health Oriented Involvement Accountable Overall Cost Stable or Decrease A New Model for Healthcare System Integration Group Autonomy Robert Waller M.D. 1995

18. We Must Answer the Following Questions • What are the economics of “best practice”? • Do improved process measures improve outcomes of care? • How should we manage co-morbid chronic disease? • What is the cost of best practice for an episode of care? • What rules support high value care for Americans? • How can we decrease cost and improve quality? • Can we break even on Medicare? What is the best care model for high cost patients?

19. What are the economics of “high value practice”? Do we have a business model??

20. System Cost percentile and DM Control Mayo Clinic Div. of HCPR

21. Understanding the Distribution of Costs – Diabetes (n=1,376) Mayo Clinic Div. of HCPR ** Mean Annual Costs Per Year over 4-years

22. Percent of Patients WithMultiple Conditions by Cost Percentile(Mayo Clinic Rochester Employees+Dependents) % COST PERCENTILE Mayo Clinic Div. of HCPR 2008

23. Ave. Cost/Year by Primary Diagnosis and Co-morbid Illness burden $ Primary Diagnosis Mayo Clinic Div. of HCPR 2010

24. Cost Concentration Percentage of patients in Top 20th percentile every year orTop 5th percentile any year This cohort is less than 3% of the total group % Mayo Clinic Div. of HCPR 2010

25. The Genesis of High Costs over Time • Co-morbidity • For every disease cohort, co-morbidity is the major logistic regression coefficient correlated to cost • (Usual System) • Consider the number of patients + cost • (Precision Medicine) • Consider co-morbidity burden at the patient level.

26. Population Health Resource Relationship2010 data from Mayo Clinic HSER COST Chronic Disease Services % of Medicare Spending Multi-disciplinary Care Teams, Home Monitoring + “Medical Home” Utilization Education Community Support + Wellness, Risk Screening Shared Decision Making Health Education 50% 5% 3+ 45% 45% 1-2 5% 50% 0 Population % of community

27. A More Precise Approach for High Value Care • There are 3 types of patients in most systems • Majority are healthy (or pre-symptomatic) • Wellness programs, Risk Screening, Proactive Mgmt • Healthy living education & shared decision making • Office and outreach services + acute care • Minority have 1-2 chronic conditions • Medical home • Rx management and utilization education • Plus all of the above • Small Group have multiple chronic conditions • Medical home • Multidisciplinary care team • Home monitoring and case management

28. Business Disruption in referrals Increased financial risk New model Contracts with commercial insurers Cost sensitivity will heighten expectations of “consumers” Government policies still in development and vague Practice In depth knowledgeof cost, patient outcomes of service lines Rapid application of best practices Cultural acceptanceof best practice models Population health management tools, expertise Efficient, seamless care across organizations Accountable Care: What does this mean for Providers? R. Scott Gorman. Mayo Clinic Az. 2011

29. Health Policy Development WorkEtheredge, L. Technology of Health Policy. Health Affairs 26(6):1537-8. 2007 • “Partisan ideologies do not explain the adoption of major health policy changes over the past 25 years.” • Four factors came together to bring about previous national health policy changes • Previous policies were no longer satisfactory • Urgent feeling of need for change • New policy prescriptions were proposed • Pragmatic judgments were made as to whether the promising idea could be implemented on a national scale For their adoption, new national health policies must be developed into implementable measures by the time decision makers demand the new approach” An urgent need