Measurable improvements
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Save money. Live better. January 11, 2012. Measurable Improvements. Florida Health Care Affordability Summit 2012. Lowering The Cost Of Health Care. To lower the total cost of health care (i.e. impact overall trend), two things:

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Measurable improvements

Save

money.

Live

better.

January 11, 2012

Measurable Improvements

Florida Health Care Affordability Summit 2012


Lowering the cost of health care

Lowering The Cost Of Health Care

  • To lower the total cost of health care (i.e. impact overall trend), two things:

    • Recognize that not all health care providers are the same – choose the “right” ones.

    • Drive more utilization of the right kind of services at the right time, place and price.


Bad health care results driven by design of the market

Bad Health Care “Results” Driven By Design Of The Market

Care is not affordable, convenient or consumer friendly

Costs are too high …

…care cannot be accessed conveniently…

… and does not meet consumer expectations.

Percentage of consumers who have deferred care in the past year (2011) because of cost

Nearly 60M Americans live in Primary Care Health Professional Shortage Areas

2012 Forrester Customer Experience Index Score

87

81

69

66

55

38

In 2011, the average annual premium for employer-sponsored health insurance was $15,073 for family coverage — up 9% from 2010 and 113% from 20011

Current gap of over 16,000 practitioners

Healthplans scored 26 points lower than retailers on average

Sources: 1 PwC Health Research Institute 2 US Department of Health and Human Services 3 Forrester Customer Experience Index


The pharmacy perception customers view

The Pharmacy Perception – “Customers’ View”

“Honey, it doesn’t matter. They are all the same price.”

Haymarket Square Farmers’ Market

Boston, MA


Here s the pharmacy reality payers view

Here’s The Pharmacy Reality – “Payers’ View”

Comparing Walmart Prescription Reimbursement vs. Competitive Channel in an Open Network

  • When participating in a Preferred Network, Walmart may provide even greater discounts, increasing the spread by an additional 500-1000 bps.

Source: Multiple Large PBM Open Network Reimbursement analysis 2012


Differences in pricing highly utilized statin

Differences In Pricing: Highly Utilized Statin


Preferred pharmacy networks drive significant savings 13 18

“Preferred Pharmacy Networks” Drive Significant Savings (13%-18%)

Source: Milliman HR Consulting and Restat


Not all pharmacies are the same differences in true quality

Not All Pharmacies Are The Same: Differences In True Quality

Example of Differences in Pharmacy Performance in Driving Better Health Outcomes: Medication Adherence


Not all pharmacies are the same differences in true quality1

Not All Pharmacies Are The Same: Differences In True Quality

Notes: EQUIPP Analysis for Large Medicare Plan on ability of pharmacy to ensure patient on diabetes Rx is also on a hypertension Rx


Employers in ohio distribution of normal deliveries across providers

Employers In Ohio: Distribution Of Normal Deliveries Across Providers

Notes: Analysis of normal vaginal deliveries across the State of Ohio (same CPT code) for set of employers representing 3 million lives in 2011


Measurable improvements

Employers In Ohio: Cost Per Normal Deliveries Across Those Providers

Notes: Analysis of normal vaginal deliveries across the State of Ohio (same CPT code) for set of employers representing 3 million lives in 2011


Normal labor delivery cost distribution in california

Normal Labor & Delivery Cost Distribution In California


Spread on pricing for other procedures in california

Spread On Pricing For Other Procedures In California


Aggregated employer cost for various procedures

Aggregated Employer Cost For Various Procedures

Notes: Analysis by Analytica and Employer Health Care Direct (EDHC) 2012


Is the problem overutilization or underutilization

Is The Problem Overutilization Or Underutilization?

Cholesterol Testing

130 Million

13 Million


Underutilization is driving gaps in care

Underutilization Is Driving Gaps In Care

Drivers of underutilization

Key gaps in care

Costs Too High

Only 62% of recommended routine labs arebeing completed

  • Only 13% of the recommended visits for hypertensive patients are being utilized

Too Hard to Access

Lack of Awareness of Available Care

Lack of / Gaps in Health Insurance Coverage

  • Only 10% of the 60+ population get a shingles vaccination

  • <1% of new enrollees completed their Welcome to Medicare Exam

Not Focused on Customer Experience

Sources: RAND (2011), American Medical News, American Medical Association (2011), CDC (2012), CMS (2011), PBS, NPR, Robert Wood Johnson Foundation: Health and Health Care Improvement, Boston Globe, Sun Sentinel


The risk of underutilization how will you know who will explode

The Risk Of Underutilization: How Will You Know Who Will Explode?

Reduction in risk equals lower cost

Behavioral Risk Per Member

Clinical Risk Per Member

*This is medical spend only. If you calculate total productivity the 7.76x becomes more like 13-16x

* Statistics based on SHPS profile of 25M members


More utilization at the right place time price can lower costs

More Utilization At The Right Place/Time/Price Can Lower Costs

  • The current health services market is 44% lower than if all clinical recommendations were followed

    • Healthcare reform will add to the problem with up to 30 million new consumers

  • Basic health services includes:

    • 50-65% of primary care (chronic and basic acute)

    • Health screenings (Welcome to Medicare, Annual Wellness Visit, biometric screens)

    • Routine labs

    • Immunizations (excluding pediatrics)

  • While this increase in basic care utilization would result in over $145 Billion more in spend for those services, it would actually reduce overall spend by 2-3x because of the impact of having a more informed, engaged healthcare consumer.

Retail Health Service Market for Basic Care

Potential

1,325 Million visits/year

Current

750 Million visits /year

Size of Prize =

$185 Billion

44%

lower

Size of Prize =

$330 Billion

Notes: PWC Health Care Analysis 2012


Quality is not an issue in clinical care delivered at retail

Quality Is Not An Issue In Clinical Care Delivered At Retail

Major gaps in care utilization can be solved with an expanded retail model- at a lower cost and at equal or better quality

Cost and Quality of Care

Sources: Angie’s List, “Sizing up retail clinics: Quality and Cost,” (2011)


Measurable improvements

To Win The “War”, We Have To Get In The Fight!

The retail setting (150 Million Customers/Week) + the discounters’ mindset (Every Day Low Price- EDLP) can be the answer to driving “engagement”.

Current Status

PCP

Lab

PCP

Pharmacy

Approximate time:

3-5 weeks

(+ 4 hours travel)

Primary Care Visit

($133)

Lab Test at Draw Site

($50)

Primary Care Visit

($133)

Pharmacy Script Fill

($10)

4 visits

Total Cost: $326

Walmart Model

Health Screening

($45)

Approximate time:

30-90 min.

(+20 min. travel)

1 visit

Primary Care Visit

($60)

Pharmacy Script Fill

($4)

Lab Test

($22)

Total Cost: $131


Medical progress the myth of not enough supply

SCIENTIFIC DISCOVERY

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

First clinical

Cardio

-

First

Penicillin

First renal

Microsurgical

CT

use of

Recombinant

Laparoscopic

pulmonary

successful

MRI

available

transplant

techniques

scanners

monoclonal

drugs

(

tPA

)

surgery

bypass

liver tx

.

antibodies

First kidney

Crick

&

Watson

Monoclonal

Radio

-

First heart

Fetal

dialysis

crack genetic

antibody

immuno

-

Cyclosporin

Angioplasty

EPO

transplant

surgery

machine

code

technology

assay

HEALTHCARE CHANGES

National

Division of

Immigration

Medicare

CON

,

HSA

IRS code

:

health

Growth of

Medicare

HMO

Managed

Health

Research

laws

renal

Health

DRGs

RBRVS

benefits tax free

"

The Blues

"

Medicaid

Act

Competition

?

Service

(

UK

)

Grants

changed

dialysis

Planning

HEALTHCARE EXPENDITURES (% of GDP)

5

.

3

%

5

.

5

%

7

.

5

%

9

.

4

%

12

.

2

%

>

14

%

HEALTHCARE MANPOWER (MDs/100,000 population)

1

.

42

2

.

44

“Medical Progress” & The Myth Of Not Enough “Supply”

21st

Century

2010

VADs,

ICDs

Genomic

Medicine

Health

Reform

>

18%

2.56

PCP:SPECIALIST RATIO

1:3

2:1

1:2

Source: Alere Health Analysis, Department of Labor Analysis, HHS Analysis


Lowering the cost of health care1

Lowering The Cost Of Health Care

  • To lower the total cost of health care (i.e. impact overall trend), two things:

    • Recognize that not all health care providers are the same – choose the “right” ones.

    • Drive more utilization of the right kind of health services.

Leverage the low-cost, strong outcomes providers and figure out how to drive all your Plan’s utilization to those providers.

Motivate your employees/members in any way possible to do a health “baseline” and then motivate them to “engage”.


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