Health Care Industry Trends 2015umnmilisa.weebly.com/uploads/3/9/8/2/39829925/...Inpatient Volume,...

Marketing and Planning

Leadership Council

Health Care Industry

Trends 2015Ready-to-Use Presentation Slides

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Road Map

©2014 The Advisory Board Company • advisory.com

Payment Reform

Provider Market

Purchaser Behavior

Provider Selection Trends

• Overview of Accountable Payment Models

• Update on Value Based Purchasing Program

• Update on Bundled Payments

• Update on Accountable Care Organizations

Payment Reform

3


Overview of Accountable Payment Models

1) Center for Medicare and Medicaid Innovation.

Key AttributesValue-Based

Purchasing

Bundled

Payments

Accountable Care

Organizations (ACOs)

Definition

Pay-for-performance program

differentially rewards or punishes

hospitals (and likely ASCs and

physicians in coming years)

based on performance against

predefined process and outcomes

performance measures

Purchaser disburses single

payment to cover certain

combination of hospital,

physician, post-acute, or other

services performed during an

inpatient stay or across an

episode of care; providers

propose discounts, can gain

share on any money saved

Network of providers collectively

accountable for the total cost and

quality of care for a population of

patients; ACOs are reimbursed

through total cost payment

structures, such as the shared

savings model or capitation

Purpose

Create material link between

reimbursement and clinical

quality, patient satisfaction scores

Incent multiple types of providers

to coordinate care, reduce

expenses associated with care

episodes

Reward providers for reducing

total cost of care for patients

through prevention, disease

management, coordination

Advisory Board

Assessment

Withhold-earn back model will put

significant dollars at risk for all

providers, force immediate focus

on quality and experience metrics

Increases accountability for cost

and quality within episodes of

care without removing FFS

volume incentive; new lever for

financial alignment between

independent specialists and

hospitals

Long-range goal of CMS to

migrate to risk contracting; will

spark industry-wide investment in

primary care infrastructure to

establish narrower networks

Role of CMMI1

Dedicating $500M to Partnership

for Patients, targeting hospital-

acquired infections, readmissions

Accepting providers’ proposals to

test four different bundled

payment models, including one

without inpatient care

Accepting providers’ proposals to

test various payment systems,

including both shared savings and

partial capitation

4

Source: Marketing and Planning Leadership Council interviews and analysis.

Overview of Accountable Payment Models


Initially Weighted at 20%, Reducing Clinical Process Weight

Update on Value Based Purchasing Program

Source: The Advisory Board Company, “Mortality Rates Are Only One of Many VBP Changes

to Come,” December 4, 2013, available at: www.advisory.com; CMS, “Request for Information

on Specialty Practitioner Payment Model Opportunities,” February 2014, available at:

www.innovation.coms.gov; Health Care Advisory Board interviews and analysis.

1) Value-Based Purchasing.

CMS Adds Efficiency Metric to VBP Program

Clinical Process

Patient Experience

Outcomes of Care

Efficiency20% 25%25%

30%

40%

30%

30%

30%

25%

70%

45%

20%10%

FY 2013 FY 2014 FY 2015 FY 2016

Medicare VBP1 Program Domain Weights

5

http://www.advisory.com/

http://www.innovation.coms.gov/


6

1) Bundled Payments for Care Improvement.Source: Centers for Medicare and Medicaid Services;

Health Care Advisory Board interviews and analysis.

Update on Bundled Payments

BPCI1 Participation by State

Over 6000 Providers Participating in BPCI1

50-100 providers

100-200 providers

200-300 providers

>300 providers

August 2014


Number of ACOs Continues to Grow

Source: Oliver Wyman, “ACO Update: Accountable Care at a Tipping Point,” April 2014; Leavitt Partners, “Growth

and Dispersion of ACOs,” June 2014; Marketing and Planning Leadership Council interviews and analysis.

Update on Accountable Care Organizations

1) As of April 2014.

Total Number of Operating ACOs

May 2014

Widening Reach of ACOs1

67%Portion of U.S. population

living in a primary care

service area with an ACO

17%Portion of U.S.

population treated

by an ACO

5.3MMedicare FFS

beneficiaries treated

by an ACO

23

306

210

74 13 626

MSSP

Cohort

Private

Sector

ACOs

ACOs

without

announced

contracts

Pioneer

ACO

Model

TotalPrivate &

Public

ACOs

7


Where the Medicare ACOs Are

23 Pioneer and 343 Shared Savings Program ACOs

Source: Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.


April 2014

Shared Savings ACOs 2013 Cohort

Shared Savings ACOs 2014 CohortShared Savings ACOs 2012 Cohort

Pioneer ACOs

8


Physician-Led ACOs More Likely to Generate Savings


Source: Muhlestein D, “Accountable Care Growth in 2014: A Look Ahead,” Health Affairs Blog, January 29, 2014,

available at: www.healthaffairs.com/blog; CMS, “More Partnerships Between Doctors and Hospitals Strengthen

Coordinated Care for Medicare Beneficiaries,” December 23, 2013; Oliver Wyman, “Accountable Care Organizations

Now Serve 14% of Americans,” February 19, 2013; Health Care Advisory Board interviews and analysis.

1) Medicare Shared Savings Program.

Early Adopters Beginning to Reap Results

First-Year Spending Reduction

By MSSP1 ACOs

2012 Cohort

$147MTotal cost savings by

Pioneer ACOs in first year

$126MShared savings earned by 2012

MSSP ACOs in first year

Percent of MSSP ACOs that Earned

Shared Savings by Sponsorship

29%

20%

Physician-Led Hospital-Led

25%

22%

53%

Earned

Shared

Savings

Reduced

Spending But

Did Not Earn

Shared Savings

Did Not Reduce

Spending

2012 Cohort

9

http://www.healthaffairs.com/blog


Performance, Persistence Closely Correlated


Source: Centers for Medicare and Medicaid Services, http://innovation.cms.gov/Files/x/PioneerACO-Fncl-PY1PY2.pdf; “San Diego-Based Sharp

HealthCare Pulls Out of Pioneer ACO Program,” California Healthline, August 28, 2014; Health Care Advisory Board interviews and analysis.

1) Dropped out after second year; second-

year performance not reported

Some Pioneers Dropping Out of the Program

Pioneer ACO Performance

First-year performance

Second-year performance

Dropped out after first year

Gross Savings as Percentage of Benchmark

1

-5.6%

(min)

7.1%

(max)

Dropped out after second year

10

• Volume Performance

• Mergers and Acquisitions

• Partnerships and Affiliations

• Imaging Centers

• Ambulatory Surgery Centers

• Primary Care Network

Provider Market

11


Modest Growth Anticipated for the Near Term

12

Inpatient and Hospital Based Outpatient Volume Projections

Inpatient Volume,

CAGR1

2013-2018

0.5%

1.0%

1.0%

1.3%

2.6%

0.4%

Cardiac Services

Neurology

General Surgery

Orthopedics

General Medicine

Neurosurgery

Overall

Hospital-Based Outpatient Volume,

CAGR1

2013-2018

Source: Advisory Board Inpatient and Outpatient Market Estimators; Advisory Board research and analysis.

1) Compound Annual Growth Rate

0.8%

1.0%

1.2%

1.6%

1.8%

1.5%

Orthopedics

GeneralSurgery

E&M

Cardiology

Radiology

Oncology

Overall

(2.3%)

3.1%

Volume Performance


Volumes Continuing to Shift Outpatient

13

Source: “Report to the Congress: Medicare Payment Policy,”

MedPAC, March 2014, available at: www.medpac.gov; Marketing

and Planning Leadership Council interviews and analysis.

1) Outpatient services represent entire market regardless of

site of service (includes hospital-based settings, ASCs,

other freestanding providers and physician offices)

Medicare Volume Growth

Cumulative Percent Change

All Payer Volume Growth Projections1

2013-2018

Outpatient Services per FFS Part B Beneficiary

Inpatient Discharges per FFS Part A Beneficiary

28.5%

(12.6%)

2006 2012

14.0%

5.0%

(3%)

(11%)

Inpatient Oupatient

11%

16%

15%

17%

Cardiac

Services

Vascular

Services

Orthopedics

Neurosurgery

Volume Performance

http://www.medpac.gov/


Volume Performance

Source: CMS, “2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance

and Federal Supplementary Medical Insurance Trust Funds,” May 31, 2013, available at:

http://downloads.cms.gov/files/TR2013.pdf; Health Care Advisory Board interviews and analysis.

Medicare to Become Majority of Volume by 2022

Projected Number of

Medicare Beneficiaries

Millions of Beneficiaries

54.0

55.6

57.3

59.0

60.7

Average Inpatient Case Mix

By Volume

n = 785 Hospitals

42%58%

19%

15%

33%25%

6% 2%

2012 2022

Medicare

Medicaid

Commercial

Self-Pay

2014 2016 2018 2020 2022

14

http://downloads.cms.gov/files/TR2013.pdf


6589 95 98

2010 2011 2012 2013

Mergers and Acquisitions Continue to Rise

Source: AHA Hospital Fast Facts, available at www.aha.org; GE Capital Survey, available at:

www.gehealthcarefinance.com; Kaufman Hall, “Number of Hospital Transactions Grew in

2013,” available at: www.kaufmanhall.com; Advisory Board interviews and analysis.

Mergers and Acquisitions

1) September 2013.

Hospital Mergers and Acquisitions M&A Plans for the Next 12 Months1

Number of Hospitals Part of a Health System

2000-2012

2000 2003 2006 2009 2012

2542 26262775

29213100

88%

12%

n=189

No M&A Activity

Planned

Planning to Pursue

M&A Within the

Next 12 Months

15


New Partnerships Aim at Integration Without M&A

Partnerships and Affiliations On the Rise

New Hanover Regional

Medical Center,

Wilmington Health,

BCBSNC agree to

accountable care

alliance

Medium-sized

academic medical

center partners with

smaller rival to fill cath

lab service deficiencies

Large academic medical center

signs preliminary partnership

agreement with six rival

hospitals to better compete with

bigger systems

Source: The Advisory Board Company, “Cardiovascular Regionalization and Network Strategy”, Washington, DC; Duke-

Lifepoint Healthcare, “Duke University Health System and LifePoint Hospitals Partner to Create Innovative Options for

Community Hospitals,” available at: http://www.dlphealthcare.com, accessed May 3, 2011; Accountable Care Alliance,

Omaha, NE; http://www.accountablecarealliance.com/partners/; Crosby J, “HealthPartners, Allina form a 'lab' for health

reform,” StarTribune, available at http://www.startribune.com/business/133126273.html; accessed November 5th, 2011;

Marketing and Planning Leadership Council interviews and analysis.

Baylor, CHI form

community hospital joint

venture to explore joint

affiliation options

Partnerships and Affiliations

Allina and

HealthPartners affiliate

to create a “testing lab”

for accountable care

Large medical center

agrees to sell CON-

approved open-heart

surgery suite to

competitor

Growth Goals for

Partnerships

• Ambulatory footprint

• Access to new

regions

• New clinical program

• Brand equity

16


Partnerships and Affiliations

Source: Health Care Advisory Board interviews and analysis.

Five Major Types of Provider Partnership

Description

Merger or

Acquisition

Formal purchase of one organization’s assets by another, or the combination of

two organizations’ assets into a single entity

Clinically-Integrated

Hospital Network

Collection of hospitals contracting jointly in order to support improved

coordination, outcomes; modeled after physician CI networks

Accountable Care

Organization

Independent entity, owned by one or several independent organizations, that

accepts risk-based contracts and distributes shared savings

Regional

Collaborative

Flexible umbrella structure, often encompassing many independent

organizations of similar geography, that may serve as foundation for further

integration

Clinical Affiliation Typically bilateral agreement to cooperate around a particular initiative or

service line; may involve local or national partners

17


Imaging Center Market Dips After Years of Growth

18

First Decline Since 2009

Source: Radiology Business Journal, “Imaging-center Growth Hits the

Wall in 2013; Volumes Plummeted in 2011,” August 30, 2013;


Imaging Centers

6,241

6,455

6,150

6,3116,383

7,074

6,816

5.60%3.40%

-4.70%

2.60%1.10%

10.80%

-3.60%

Net percent

growth from

previous year

Total Number of Imaging Centers in the U.S.

2005-2013

2007 2008 2009 2010 2011 2012 2013


Total Number of Medicare-Certified ASCs

4,798

5,001

5,111

5,203

5,2915,357

2007 2008 2009 2010 2011 2012

ASC Growth at All-Time Low

19

Source: “Report to the Congress: Medicare Payment Policy,” MedPAC, March 2014;


Ambulatory Surgery Centers

5.9%

1.7%

4.2%

2.2% 1.8%

Net percent growth

from previous year

1.2%


A Growing Network of Immediate Access Choices

Markets Responding to Unmet Needs

Source: Mehrota A et al, "Visits To Retail Clinics Grew Fourfold From 2007 To 2009,

Although Their Share Of Overall Outpatient Visits Remains Low," Health Affairs,

August 2012; Health Care Advisory Board interviews and analysis.

Primary Care Network

Traditional

Access

Points

Consumer-

Oriented

Access Points Retail

Clinic

Urgent Care

Center

Virtual

Visit

Primary

Care Office

Low Acuity High AcuityEmergency

Department

Consumer-Oriented Service Delivery Sites Filling the Gap

Driving Provider Questions:

• Should we partner to establish retail clinics?

• Should we build or expand our urgent care footprint?

• Is virtual care something that we should provide?

• When should we enter into partnerships to meet patient demands?

20


Major Opportunity to Shift Primary Care Volumes

Redistributing Non-emergent Care to Appropriate Lowest-Acuity Sites

Source: CDC/NCHS, "National Ambulatory Medical Care Survey, National Hospital Ambulatory Medical Care Survey,"

2009-2010; “Primary Care Physician Shortages Could be Eliminated Through Use of Teams, Nonphysicians, and

Electronic Communication,” Health Affairs 32:1. Jan 2013. Health Care Advisory Board interviews and analysis.


Annual Visits

to PCPs

Annual

ED Visits

Visits Eligible for

NP-Led Care

103M

47M

132M

Non-urgent

ED Visits Shifted

to Other Care Sites

573M18% of PCP

visits could be

handled by NPs

at convenient

care sites

Non-urgent ED

visits could be

treated at urgent

care, retail or

primary care

Visits At Risk of Shifting to Other Sites of Care

21


Retail Clinics Expected to Continue Growing


1) As of Oct. 2014.Source: Accenture, "Retail medical clinics: From Foe to Friend?," 2013; Ritchie J, "After a stall, Kroger could

add clinics," Cincinnati Business Courier, July 5, 2013; Robeznieks A, "Retail clinics at tipping point," Modern

Healthcare, May 4, 2013; Health Care Advisory Board interviews and analysis.

2000-20151

Estimated Total Number of Retail Clinics in the

US

202

868

1135 1172 12201355 1418

1743

2243

2868

2000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Growth trajectory

depends on preferred

payer relations, PCP

capacity, and health

system partnerships

Retailer

Operational

Retail Clinics1 900+ 400+ 135 14 75+

22



Providers Expanding the Applications of Virtual Care

From Administrative Transactions to Real-Time Care Delivery

Source: Wang H, “Virtual Health Care Will Revolutionize The Industry, If We Let It.,” Forbes, 3 April 2014;

available at: http://goo.gl/oOJOCG, accessed May 9, 2014; Health Care Advisory Board interviews and analysis.

Virtual Care Platform Function

A Fast-Emerging Market Segment

Estimated revenue from

virtual visits in 2018, up

from $100M in 2013

$13.7BProjected increase in

households using virtual

care between 2013-2018

220%

Impact on

Access

Automate Administrative Functions

Streamline Clinical Transactions

Virtualize Care Delivery

• View medical records

• Schedule in-person appointments

• Refill existing prescriptions

• Pay bill

• Prescribe new medications

• Receive lab results

• Asynchronous, message-

based visits

• Live, video-based visits

• Deliver online education,

shared decision-making tools

23

• Commercial Payers

• Employers

• Medicare

• Coverage Expansion

Purchaser Behavior

24


Commercial Payers

Source: Mathews AW and Kamp J, “Another Big Step in Reshaping

HealthCare,” Wall Street Journal, February 28, 2013, available at:

www.online.wsj.com; Health Care Advisory Board interviews and analysis.

Seeing Price Cuts On Most Exchange Plans

Anticipated Provider Reimbursement Rates for Exchange Plans

Catholic Health Initiatives

Modest discounts from

commercial rates

Tenet Healthcare

Up to 10% below

commercial rates

Meriwether Hospital1

5% below commercial

rates

WellPoint Inc.

Between Medicare

and Medicaid rates

Meyers Health1

10% above

Medicare rates

Millern Medical Center1

20% below commercial

rates

25

http://www.online.wsj.com/


40%

46%50% 49%

58%

13%17%

22%26%

28%

2009 2010 2011 2012 2013

Small Firms (3-199 Workers)

Large Firms (200+ Workers)

Particularly Severe for Out-of-Network Care

Commercial Payers

Source: Kaiser Family Foundation and Health Research & Educations Trust, “Employer Health

Benefits 2013 Annual Survey,” August 2013; PwC, “Medical Cost Trends: Behind the Numbers

2014,” June 2013, available at: www.pwc.com; Health Care Advisory Board interviews and analysis.

Employer Shifting Risk by Increasing Cost-Sharing

$680$760

$1,010 $940

$1,230

$1,000

$1,380

$1,750

$1,570

$2,110

2009 2010 2011 2012 2013

In-Network Out-of-Network

Average In- and Out-of-Network

Deductibles for Group Plans

n = 1,100 employers

Percent of Covered Workers Enrolled in a

Plan with a $1,000+ Deductible by Firm Size

Single Coverage

26

http://www.pwc.com/


Commercial Payers

Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and

Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index

Report for Open Enrollment and Q1 2014,” May 2014; Health Care Advisory Board interviews and analysis.

Public HIX Participants Choosing High Deductibles

Annual Deductibles of Individual Plans

Selected on eHealth

13%

3%

11%

5%

30%

39% $6,000+

$3,000-$5,999

$2,000-$2,999

$1,000-$1,999

$500-$999 < $500

October 2013 – March 2014

27


Payers Responding to Anticipated Premium Sensitivity

Source: Gottleib S, “Hard Data on Trouble You’ll Have Finding Doctors in Obamacare,” Forbes, March 8, 2014,

www.forbes.com; McKinsey & Company, “Hospital Networks: Configurations on the Exchange and Their Impact

on Premiums,” December 2013; Medical Group Strategy Council interviews and analysis.

Public Exchange Plans Mainly Narrow Network

Majority of Public Exchange Plans

Exclude >30% of Largest Hospitals

20 Urban Markets, December 2013

Excludes 30% of

20 largest hospitals

38%

32%

30%

“Ultra-Narrow”

“Narrow”

Broad

Excludes 70% of

20 largest hospitals

Commercial Payers 28

http://www.forbes.com/


Will Employers Maintain Coverage, and How?

Employers

Traditional Employer Coverage Eroding

“Activation”“Abdication”

Convert to Self-Funding

Pros:

• Close control over

network design

• Exemption from

minimum benefits

requirements

Cons:

• Greater financial risk

• Network assembly

challenging

Shift to Private Exchange

Pros:

• Responsiveness to

employee preference

• Predictable, defined

contributions

Cons:

• Disruption to benefit

design

• Risk employees may

underinsure

Spectrum of Options for Controlling Health Benefits Expense

Drop Coverage

Pros:

• Escape from cycle of

rising premium costs

Cons:

• Employer mandate

penalty

• Labor market

disadvantage


29


Employers

1) Full-time equivalents.

Employers’ Alternatives to Providing Coverage

Average Cost of 2014

Employer-Sponsored Insurance

$5,884

$16,351

Single Family

Penalty per employee

for failing to provide

qualifying health

coverage

$2,000

Several Strategies to Avoid ACA Mandate Penalties…

Cut jobs to

remain under

50 FTEs1

Convert full-time

employees to

part-time status

Hire all new

employees at

part-time status

Split into smaller

companies with

fewer than 50 FTEs

…Though Some May Consider Penalty a More Economical Option

Source: Herring B and Lentz LK: “What Can We Expect from the ‘Cadillac Tax’ in 2018 and Beyond?” Inquiry,

48(4):322-37; Piotrowski J et al., “Health Policy Brief: Excise Tax on ‘Cadillac’ Plans,” Health Affairs, September

12, 2013, available at: www.healthaffairs.org; Medical Group Strategy Council interviews and analysis.

30

http://www.healthaffairs.org/


Low-Wage Employers Most Active Today, but Skilled Industries in the Wings

Employers

Source: Accenture, “Are You Ready? Private Health Insurance Exchanges are Looming;”

privatehealthexchange.com; Health Care Advisory Board interviews and analysis.

Huge Growth Forecast for Private Exchanges

3M9M

19M

30M

40M

2014 2015 2016 2017 2018

Potential Growth Path for Private Exchange Enrollment

Prominent Employers Using Private Exchanges

For Active Employees: For Retirees:

(Medicare Advantage, Medigap plans)

Private exchange

operators as of

October 2014

172

31


Employers

Source: Gabel JR et al., “Small Employer Perspectives On The Affordable

Care Act’s Premiums, SHOP Exchanges, And Self-Insurance,” Health Affairs,

32(11): 2032-39; Health Care Advisory Board interviews and analysis.

Self-Funding Strategies Steadily Gaining Ground

ACA Benefits Standards Avoidable

Through Self-Funding

Modified

Community Rating

Essential Health

Benefits

Guaranteed Issue

and Renewability

Medical Loss Ratio

Requirements

49%

54%

59%61%

40%

45%

50%

55%

60%

65%

70%

2000 2005 2010 2014

Percentage of Covered Workers

in Self-Funded Plans

32


Medicare

Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012;

CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011; CBO,

“Bipartisan Budget Act of 2013,” December 11, 2013, all available at: www.cbo.gov; Health Care Advisory Board interviews and analysis.

1) Includes hospital, skilled nursing facility, hospice, and

home health services; excludes physician services;

annual reductions rounded.

2) Disproportionate Share Hospital.

Medicare FFS Payment Cuts Continue

($4B)

($14B)($21B)

($25B)($32B)

($42B)

($53B)

($64B)

($75B)

($86B)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

ACA’s Medicare Fee-for-Service Payment Cuts

Reductions to Annual Payment Rate Increases1

$415B in total

fee-for-service

cuts, 2013-2022

$260BHospital payment

rate cuts,

2013-2022

$56BReduced Medicare

and Medicaid DSH2

payments, 2013-2022

$151BReduced Medicare payments

due to sequestration and

2013 budget bill

33

http://www.cob.gov/


Coverage Expansion

Source: FamiliesUSA.org, available at http://familiesusa.org/product/50-state-look-medicaid-expansion-2014;

accessed on Nov. 6; Marketing and Planning Leadership Council interviews and analysis.

Majority of States Expanding Medicaid

State Participation in Medicaid Expansion

Participating

Will Not Participate

Undecided

September 2014

34

http://familiesusa.org/product/50-state-look-medicaid-expansion-2014


Public Exchange Enrollment Exceeds 8 Million

Bumpy Rollout Did Not Dampen Projections

Source: Radnofsky L and Nelson CM, “Obama Says Health-Insurance Enrollees Reach 8 Million,” Wall Street Journal, April 17, 2014, available at: www.wsj.com; CBO,

“The Budget and Economic Outlook: 2014 to 2024,” February 2014, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf;

Demko P, “UnitedHealth to Expand Exchange Presence as Profits Dip,” ModernHealthcare, April 17, 2014, available at: www.modernhealthcare.com; Cheney K and

Norman B, “Insurers See Brighter Obamacare Skies,” Politico, April 15, 2014, available at: www.politico.com; Health Care Advisory Board interviews and analysis.

Coverage Expansion

Projected and Actual Enrollment in Qualified Health Plans

2014-2019

8.0M 6.0M

13.0M

22.0M 24.0M

25.0M 25.0M

2014 2015 2016 2017 2018 2019

Actual Enrollment Projected Enrollment

Unchanged despite flawed rollout

35

http://www.wsj.com/

http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf

http://www.modernhealthcare.com/

http://www.politico.com/


Coverage Expansion

Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial

Annual Open Enrollment Period,” May 1, 2014; HHS, “Health Insurance Marketplace

Premiums for 2014,” September 2013; Health Care Advisory Board interviews and analysis.

Individuals Gravitating Toward Leaner Plans

Metal Tiers of Plans Chosen on Public Exchanges

October 2013 to April 2014

20%65%

9%5% 2%

Bronze

Silver

GoldPlatinum

Catastrophic

33%

25%21%

10%

12%

Bronze

Silver

Gold

Platinum

Catastrophic

Enrollees Without Premium SubsidiesAll Enrollees

36


Second Round of Open Enrollment Will Reveal True Dynamics

Coverage Expansion

Source: Health Care Advisory Board Interviews and Analysis.

Exchanges 2015: What to Watch

Trends to Watch: Enrollment

• Are the technical glitches really fixed?

• Will higher individual mandate penalties change anyone’s mind?

• Will the young and healthy turn out in force?

Choice and Mobility

• How will automatic reenrollment affect consumer behavior?

• Will last year’s bargain hunters regret choosing high deductibles

and narrow networks?

• Can plans that raise premiums maintain market share?

Market Reaction

• How aggressively will providers court the newly insured?

• Will employers dump workers onto the exchanges?

1

2

3

37

• Independent Physicians

• Patients

Provider Selection Trends

38


Independent Physicians

Referral Choice Criteria Different for PCPs, Specialists

Source: Service Line Strategy Advisor interviews and analysis.

The Extended Service Line Referral Pathway

HospitalPCP Medical

Specialist

Proceduralist

Consumer

Interventions• Top-notch specialty capabilities and technology

• Superior specialist access

• Operations focused on specialist efficiency

• Comprehensive care continuum

• Highest value of care

• Superior patient access and experience

Traditional Differentiators

Emerging Differentiators

So

urc

es

of

Infl

uen

ce

Value-Based

Incentives

Steerage

Mechanisms

Emerging and Traditional Differentiators for Physicians

39


Referrals Hinge on Accessibility and Communication

Independent Physicians

Source: Kinchen, KS, et al., “Referral of Patients to Specialists: Factors Affecting Choice of Specialist by

Primary Care Physicians,” Annals of Family Medicine, May/June 2004, 2: 245-252; Barnett, Michael L. et al.,

“Reasons for Choice of Referral Physician Among Primary Care and Specialist Physicians.,”Journal of

General Internal Medicine, September 16th, 2011; Service Line Strategy Advisor interviews and analysis,.

1) Top four factors (out of 17 options) rated by PCPs as either a

moderate or major factor in their specialty referral decision

What PCPs Value Most for Referrals

Top Four Factors When Choosing a Specialist

Rated as Moderate or Major Importance1

n = 553

100%96% 95% 94%

Medical Skill AppointmentTimeliness

Quality ofCommunication

PatientExperience

with Specialist

PCPs’ Referral Decision Factors

Compared to Specialists’

PCPs 1.5 times more likely to

refer based on physician

communication than specialists

1.5x

PCPs two times more likely to

refer based on timely availability

of appointments than specialists

2x

40


Catalyzing a Shift in Network Demands

Patients


Market Forces Turning Patients into Consumers

Traditional Market Retail Market

Growing number of buyers

1

Proliferation of product options

2

Increased transparency

3

Reduced switching costs

4

Greater consumer cost exposure

5

Passive employer,

price-insulated employee

Activist employer,

price-sensitive individual

Broad, open networks Narrow, custom networks

No platform for apples-to-

apples plan comparison

Clear plan comparison

on exchange platforms

Disruptive for employers

to change benefit options

Easy for individuals to

switch plans annually

Constant employee

premium contribution,

low deductibles

Variable individual

premium contribution,

high deductibles

Characteristics of a Traditional vs. Retail Market

41


Patient Experience Vital For Securing Purchaser Choice Year Over Year

Patients


Welcome to the Renewals Business

Day 1

Day 365

Care Decision

Network Selection and Ongoing Experience

Care

Decision

Care

Decision

Care DecisionClinical interactions

represent repeated

opportunities to

reinforce patient

preference through

superior experience

Annual network

selection in fluid

insurance market

implies consistent

reevaluation of

network performance

Patient

Experience

42


Consumers’ Top 10 Primary Care Clinic Attributes

Prioritizing Convenience and Affordability

Patients

Average Utilities for Top Ten Preferred Primary Care Clinic Attributes

n=3,873

3.00

3.00

3.01

3.04

3.70

3.91

3.94

3.95

3.98

4.11

If I need lab tests or x-rays, I can get them done at

the clinic instead of going to another location

The provider is in-network for my insurer

The visit will be free

The clinic is open 24 hours a day,

7 days a week

I can get an appointment for later today

The provider explains possible causes of my illness

and helps me plan ways to stay healthy in the future

Each time I visit the clinic, the

same provider will treat me

If I need a prescription, I can get it filled at the

clinic instead of going to another location

The clinic is located near my home

I can walk in without an appointment, and I’m guaranteed

to be seen within 30 minutes

Source: 2014 Primary Care Consumer Choice Survey, Marketing


43


Patient Preferences for Online Care Growing



Patients

1) Based on proportions of respondents interested in teleheatlh.

Survey Finds Email Visits Preferred to Clinic Near Errands or Work

Increasing Consumer Preference

Emailing provider

with symptoms

Preference for Location of Services

Clinic located

near work

Clinic located

near errands

Clinic located

near the home

Young, Wealthy, Busy—Strongest Potential Telehealth Targets1

Of 18-29 yrs olds

54%Of those making

>$71K per year

49%Of those working

>35 hours per week

53%

44


Consumers Seeking Accurate Estimates



Patients

Compared to Not Knowing How Much

the Visit Costs Until Receiving the Bill:

Would rather have to go

to another clinic for lab

tests, x-rays, or pharmacy

Would rather drive 20

minutes to the clinic

Would rather pay $50

out of pocket

Would rather pay $100

out of pocket

92%

76%

74%

38%Primary Care Consumer

Survey Results

Rank, out of 56

attributes, of “not

knowing how

much the visit

would cost until

receiving the bill”

55th

45

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Marketing and Planning

Leadership Council

Project Director

Anna Yakovenko

Contributing Consultant

Emily Zuehlke

Design Consultant

Kinsey Fore

Practice Manager

Alicia Daugherty

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