An Honest Conversation about Cost Drivers

Paul Fletcher, M.D.Group HealthSeptember 12, 2013

BIG Drivers: We all have a part

• U.S. funds R&D for equipment and pharmaceuticals: we pay retail

• We like new equipment and procedures: arms race

• Historically most patients not sensitive to costs

• We spend a lot at end of life; not so much on public health

• We boomers spend a lot to maintain our lifestyle

• We eat a lot, we smoke, we don’t get enough exercise

2

In Variation We Can Find Hope

• There is variation across the developed world

• There is variation across the country

• There is variation across the state

• There is variation between cities

3

A Tale of Two Cities from Atul Gawande, M.D.

4

El Paso, TX:2006: $7,504 per capita Medicare spend

McAllen, TX:2006: $15,000 per capita Medicare spend

All Health Care is Local

Variation across the state in:

– Quality

– Cost

– Integration

5

Care in the Wrong Place

6

Seattle vs. SpokaneEmergency Room Visits: 70/1000 Vs. 120/1000

Too much Care?

7

Spokane procedures vs. statewide:

• Repair pelvic prolapse: 179%• Laparoscopic hysterectomy: 159%• Knee replacement: 148%• Arthroscopy: 147% • Back surgery: 145%• Hip replacement: 129%• Laparoscopic cholecystectomy: 125%

Quality is Variable as Well

8

Central line and ventilator infectionsNumber of infections per

1,000 central line/ventilator days

More like El Paso, Less like McAllen

9

True patient-centered care: Informed activated patients

Collaboration: Working across organizations to align financial interests with social interests

Integration: Working across disciplines to give the best care in the right place

Efficiency: Working everywhere to eliminate wasteful steps, procedures and complications

A Collaborative Clinical Integration Model

Group Health/Providence Integrated Provider Organization

- Company formed (LLC), with shared governance

- Includes nearly 400 physicians in Spokane

Short term objectives:

• Design and implementation

• Working committees:

• Physician management

• Information technology

• Finance

• Marketing & communication

Clinical Integration: Long-term Vision

Creation of tiered networks with linked products