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Healthcare 101 & HLS Symposium

PreparationSeptember 15,2013

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Why Healthcare?

Size• Currently 1/6 of US economy• Increasing international access

Dynamic Nature•Healthcare reform•Changing and evolving population

Perpetual Innovation•Industry driven by need to continuously innovate (patent expiration)•New products, services, and markets present new marketing challenges

Positive Impact•Work for a company and industry that works to improve the length and quality of peoples lives

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Healthcare spending is exploding

Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2005.pdf

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1999 2000 2001 2002 2003 2004 2005* 2006* 2007* 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015*

Year

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Spend Spending as % of US GDP

Nati

onal

Hea

lth E

xpen

ditu

res (

Billi

ons U

SD) N

ational Health Expenditures as % of GDP

U.S. Healthcare Spending

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Retail: Who buys? Who pays? Who chooses?

Amazon.com ConsumerPlaces Order using Visa

Ships Order

Credit Card (Bank)

Check card; bill

Pay $ Pay $

Bill Cardholder

Pretty simple to follow the money

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Healthcare: Who buys? Who pays? Who chooses?

Producer

(Pharma/

Device)

Wholesaler/

distributorsShip Product Ship Product

Payor(Gov’t, private

insurance)

Consumer

(Patient)

Pay $ (AWP)

Files “Claim”

Pays $ (Reimbursement)

Payment (“Premium”)

IT’S COMPLICATED

Provider(Physician, Hospital, or Pharmacy)

Pay $ (WP)“Co-Pays”

Product or Service

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Healthcare Landscape

Pharma/Biotech

Medical Device

Payors & Providers

Healthcare IT (EMR)

IndustryRegulatory

Uncertainty

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Pharma/Biotech is Growing

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Pharma/Biotech Leading Corporations

Industry lives and dies by patents; patent life is 20 years from filing “+10 years and +$1 billion dollars to bring a drug to market”

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Pharma/Biotech Leading Therapy Areas

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Medical Device is Growing

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Medical Device Market Split by Sector

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Cardiovascular Device Sector

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There are Many Types of Providers

Health Systems/Hospitals

/ACOsOutpatient Clinics

Physician Offices

Pharmacies

Home Health Agencies

Rehabilitation Centers

Hospices

Nursing Homes

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Hospitals in the US

Source: IBISWorld Industry Report “Hospitals in the US,” July 2013

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Payors: The private market follows the public trends

US Payors:

• Public (CMS): ~$1,200B in 2013• Medicaid• Medicare

• Private: ~$630B in revenue in 2013• Employer-sponsored• Out-of-pocket (exchanges)

Negotiation power:

• Access• Pricing• Gov’t > commercial > exchanges?

Global implications:

• International payors – usually governments & OOP

• Global benchmarking for pricingSource: IBISWorld Industry Report “Health & Medical Insurance in the US,” July 2013

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In 2010, private insurers collected $650B in premiums

2010 Rank (market share)

Health Insurance Company

1 United Health2 Wellpoint3 Kaiser Foundation4 Aetna 5 Humana6 HCSC Group7 Coventry8 Highmark9 Independence Blue Cross

10 Cigna

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Roughly 32 million Americans will gain coverage starting in 2014

Medicaid expansion (~ 16 million) Citizens with family incomes < 138% of the FPL will be eligible Newly eligible will mainly be childless adults

Private coverage through Insurance Exchanges (~ 16 million) Citizens with incomes between 100% and 400% of the FPL will be eligible

for premium tax credits

Young adults can remain on their parents plan until age 26 Has increased coverage by 2 million already

Regulatory: ACA increases insurance coverage

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Some use policy levers unique to the Federal government Reductions in Medicare payments to private health plans Reductions in the growth of Medicare reimbursement rates Reform of the tax treatment of employer-sponsored insurance

Many build on private sector initiatives already underway Integrated, accountable care Bundled payments Increased use of electronic health records

It is too early to judge ACA, but private sector developments may already be having an impact

ACA also aims to reduce the growth in spending

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Consulting

General Management

Finance

Marketing

Operations

Strategy/Business Development

MBA Opportunities

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Pharma / Biotech Medical Device Payer / Provider / Retail

Healthcare Recruiting at Ross

And many others….

Consulting

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HLS Symposium – BE PREPARED, BE PROFESSIONAL

Formal business attire (bring your name tags!)

Be on time

Come prepared with some questions

Know a little bit about the companies you’re interested in

Be nice, humble, and polite to recruiters and other students

Stay for the entire event

HAVE FUN!!

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Sources of Information

• Impact (several events this week)• HLS education events & corporate presentations• Kresge: Databases (tutorial on Monday) & Librarians• Students, Professors, Alumni

Internal (Ross)

• Company websites• Google & Fierce alters• Recruiters (use caution!!)

External

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Summer Intern Experiences