Healthcare Innovations: Trends, Transitions, Technology, and Talent

Ricardo Martinez, MD, FACEPChief Medical OfficerNorth Highland Company, North Highland Worldwide

It Starts…

• Care given at home• People paid out of their pockets directly• Hospitals largely for poor or travelers without a home

-run by charities and religious orders.• Physicians started many of today’s hospitals to deliver

advances in medicine.• In the 1920-30’s, health insurance started by hospitals

and doctors to help people pay for hospital and physician care.

• Then…

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...it went nuts.

Putting the “Fun” in Dysfunction….

Common Characteristics of Current Healthcare System

• Expensive, with hidden prices• Activity-based rather than performance• Fragmented and uncoordinated• Insular• Difficult to access and to use. Not user-friendly• Inefficient• Ineffective• Highly variable• Autonomous and insular thinking• Slow to adopt and change

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Market Failure – Widespread Demand For Improvement

What is Innovation?Innovare; "to renew or change”

Steps to Innovation• Curiosity• Discovery • Invention• Innovation

The Nature of Innovation• Unique, not just new.• Must be definably

valuable• Must be worthy of

exchange – of time, money or effort

Four Types of Innovation

• Transformational– A paradigm shift that changes

society

• Category– Building new industry within

transformation

• Marketplace– Builds or expands markets, reach

new customers

• Operational– Redesign to improve business

processes and customer experience

The Innovators Dilemma

• Great companies fail for doing the right things.

• Too much emphasis on current customer needs and fail to adopt new technology or business models

• Stuck in a value network• Examples: computers,

steel minimills• Healthcare?

The Big Trends

• Financial• Social• Technological• Political

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Market drivers toward Value Based Care = Quality/Costs

• Responds when patient need arises

• Centered around provider practice and schedules

• Independent practices• Highly variable practice• Systems designed for

commercial rates to be profitable

• Large administrative burden• Volume-based• High utilization = revenue• Margins dependent upon

reimbursement• Patients finds access points

and navigates fragmented system

• Identifies unmet needs and responds proactively

• Centered around patient needs and schedules

• Integrated network

• Highly repeatable practice

• Systems designed for Medicaid rates to be profitable

• Frictionless healthcare

• Value-based

• Utilization = costs

• Margins dependent upon costs

• Patients ushered to appropriate access point and navigated thru integrated health system

Drivers of HealthCare Trends

Activity-Based Care Fading Away

Future

Value-Based Care Rapidly Emerging

Positioning Enterprises for Success.

Social

Financial

Technology

• Consumerism• Aging population• Chronic Disease• Shortage of staff

• Limited Reimbursement• Financial Risk Sharing• Consumer as payment

source

• Rapid growth health IT• Mobile devices• Telehealth• Cloud and exchanges

Healthcare enterprises must change or die.

Health Reform• Increased Medicaid• Insurance and Data

Exchanges• Payment reform

Current

Financial Crest

• Reimbursement peaking• Move toward “Pay for Value” – Quality/$$• Shift away from high fixed costs• Move toward risk sharing models• Greater scrutiny from payers and public• Growth of defined contribution benefits• Increasing patient co-pays makes them a

payer source• Value-based insurance design

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Building capability requires a phased approach

Fee for Service Discounted Bundling / Episodes Capitation Scheme

Pro

vid

er

Re

imb

urs

em

en

ts

Reimbursement Model

Decrease Costs Decrease

Costs Decrease

Costs

Current State

Phase 2: Enhanced

Phase 3: Advanced

Phase 1: Foundational

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Road Map of Future Shifts in Reimbursement Models

Just cut the fat out and you’ll be fine…

Social Waves

• Aging of population • Growth of chronic diseases• Shortage of physician and healthcare

workers• Increasing consumerism• Shift from Independence to

Interdependence [Systems Thinking]

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Source: The Economist: Into the Unknown. November, 2011http://www.economist.com/node/17492860

I think I’m going Japanese…

http://socioecohistory.wordpress.com/2010/05/18/japan-the-sleeping-sovereign-debt-crisis-giant/

Growth of Chronic Disease

• 5% of population accounts for ~ 50% of total health expenditures

• The 15 most expensive health conditions account for 44%• 25% of US have one or more of 5 major chronic conditions

– Mood disorder, diabetes, heart disease, asthma, hypertension

• Rise in population treated with 7 of top 15 conditions, rather than rising treatment costs per case, accounted for greatest part of spending growth.

• And obesity continues to climb – which causes

hypertension, diabetes, heart disease and hyperlipemia.

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Shortage of Physicians and Health workers

• US has 3 specialists for each generalists, the inverse of other countries.

• Geographic maldistribution of healthcare resources

• Leads to difficulties and delays in access to care • Each state has different laws on scope of

practice of various• Will only get worse

• Started in the US in the 1960’s • Systems Thinking accelerated with The 5th

Discipline, 1990’s• Most other industries adopted and

“reengineered”• Relatively new concept to Healthcare• Physicians taught autonomy often without

skills needed for success in systems.

Shift From Independence to Interdependence

Increasing Consumerism

• Want more control and choice in health relationship

• Desire more convenient access to care• Think they own their medical information• Increasingly cost conscious• Can collaborate with others with the same

disease• Want access to medical information• Desire personalized experience

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Technological Waves

• Rapid growth and implementation of Health IT across healthcare allows capture and exchange of clinical data.

• Expansion of wireless broadband increase flow of information

• Rise of digital sensors and imaging that can provide information and be shared

• Boom of mobile devices for collaboration and information retrieval, including consumers.

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https://www.ecri.org/Documents/Secure/Health_Devices_Top_10_Hazards_2013.pdf

What is the “Road Ahead” ?

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Patient-centered, physician-directed teams

Value-driven: high quality at lowest cost

Connected and integrated – culturally and digitally

Delivers measurable quality health care (meaningful metrics, dashboards)

Data-driven performance, with Business Intelligence – constantly learning

Opportunity Knocks.

Maintaining Margin Depends on Lowering Costs

Decrease Costs Decrease

Costs Decrease

Costs

Road Map of Future Shifts in Reimbursement Models

Current State

Phase 2: Enhanced

Phase 3: Advanced

Phase 1: Foundational

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The Medicaid Paradox

$1.14

$0.89

$0.60

$-

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

Commercial Medicare Medicaid

Re

lati

ve

Re

imb

urs

emen

t Ra

tes

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Decrease Costs

Recalibrating the system for Medicaid rates will increase margins for other payers.

Source: Hospital and Physician Cost Shift: Payment Level Comparison of Medicare, Medicaid, and Commercial Payers. Milliman. December 2008.

Controlling Cost Per Unit Service

Ways to decrease costs of care delivery:• Provider substitution• Diagnostic/treatment substitution• Setting Substitution• Process redesign:

• Eliminate steps and processes• Add missing steps and processes• Re-engineer process

• Offload costs to patient and family

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Cost Per Unit Service Concept

Progressive strategies build in a cost-effective manner

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“Value” requires matching patient need with the lowest cost access point…

Care Continuum

Consistent Quality and Connectivity / Culture

Self Care Call CenterWellness

and Fitness Center

Retail Clinics and Pharmacies

/ Urgent Care Clinic

Primary Care

Physician

Diagnostic / Imaging

CenterHospital Inpatient

RehabSNF

Ambulatory Surgery Center

Cost of CareEase of Access

…while maintaining consistent quality

Hiring the Patient

• Patient Empowerment and Activation– Self-monitoring and feedback “self

quantification” – Nike?– Patient health portals, shared with caregivers– Healthcare Gamification– Home testing and diagnostics– Disease-specific communities of care– Decision support– Informed Consent

Redesigning the ProcessAnd Patient Experience

• Delivery process re-engineering– RFID, Real-time Locations Systems, Kiosks

• Care Coordination across spectrum• Care Navigators and health coaches• Focused factories and value streams• Health malls• Cost transparency• Patient compliance tracking

Setting substitution

• Home diagnostics, with wireless connectivity

• Retail clinics, expanding into chronic care• Urgent care, tightly affiliated with networks• Telemedicine/teleheath• Hospital At Home programs for >100 DRGs• Home-based chronic care• Online/email consultations

Diagnostics/therapeutics substitution

• Utilization management programs• Consumer decision-support and Intelligent

Virtual Assistants• Online/telemedicine

– Behavioral health, neurology, wound care, cardiology, chronic care, EM

• Decentralized lab and testing - POC• Computer-guided diagnostics• Sleep testing and therapy

Provider Substitution

• Generalist over Specialist – Medical Home• MLP or Associate Provider over MD• Nurse over Associate Provider• LPN over Nurse• Tech over LPN• Community Worker over Tech• Do it yourself

Emerging

• Big Data – drowning in it– “Money Ball” Analytics– Predictive Modeling– Integrated dashboards

• Cloud-based solutions• Crowd sourced solutions and epi• Computer-assisted diagnostics

These interconnected competencies drive successful transformation.

What “talent” attributes are needed now?

• Leadership• Teamwork• Systems thinking

Three Generations of Reform

In The Road Ahead…Leadership Counts

Thanks!!Ricardo.Martinez@northhighland.com

404-975-6192