Marc Berg: Contracting value: shifting paradigms
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Transcript of Marc Berg: Contracting value: shifting paradigms
Contracting Value:
Shifting
Paradigms
Nuffield Trust European Health Summit
24 January 2012
Marc Berg
1 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Challenges health care policy makers: same the world over
Ageing
demographics Healthcare
cost inflation
Technology
advances
Rising patient
expectations
The economic
downturn
Health
inequalities
Unhealthy
lifestyles
Rising chronic
diseases
How do we achieve better
outcomes and control the
cost curve?
2 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Major opportunity: bending cost curve through better outcomes
The safety, patient centeredness and effectiveness our health care systems deliver is
highly variable:
• Care is too often too little, too much or sometimes just wrong
• From the perspective of the patient, our care systems are highly fragmented and poorly
coordinated
In a fascinating reversal of common
sense economics, improving health
care quality more often than not
makes the delivery of health care
less rather than more expensive.
Cost
Quality
3 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Example: Acute Stroke Care
Saving more lives saves significant money as well...
Total cost of care (all health care costs, incl. home care, long term care, excl. informal care)
Percentage of patients
living at home 365 days
after stroke
4 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Why do healthcare systems not deliver high value care efficiently?
Because we pay providers to do so...
We get exactly the results we ask for (Paul Batalden)
Producing high quality health care efficiently is not rewarded by higher
revenues for providers. There are often substantial perverse incentives:
• We pay for individual activities, or for the existence of a building or an
organization...
• We pay whether things go right or wrong; we often actually pay extra when
things go wrong...
We do not pay for the integration of all these individual activities, nor do we pay
for the results that all this work delivers
We pay for disjointed and non-coordinated inputs, not for integrated
outcomes
5 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
The Quest for the Holy Payment Grail: a Payment System that Produces
High Value
= ↑ Value
Right Volume of care delivered
↓ Price of care delivered (per unit)
↑ Quality outcomes of care
delivered
6 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Payment systems: the early classics we can live without…
FFS
block grant
Payment system Desirable
incentive
Perverse
incentive
Macro effect
Fee for Service Productivity Overproduction, lack
of integration
Escalating costs,
fragmentation care
delivery
Block grant
budgets
Cost control Reduced innovation,
reduced productivity
Waiting lists
Creeping costs
escalation due to lack
of disruptive
innovation and
creative destruction
7 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
The first rudimentary step to redesign payment systems towards delivering ‘value’ but
still ultimately input based
Payment systems.. next steps
FFS
block grant
Cap. GP
DRG
Payment system Desirable
incentive
Perverse
incentive
Macro effect
Fee for Service Productivity Overproduction, lack
of integration
Escalating costs,
fragmentation
Block grant
budgets
Cost control Reduced innovation,
reduced productivity
Waiting lists &
Creeping costs
escalation
DRG – like
systems
Stimulate innovation,
productivity and
efficiency along the
patiënt’s path within
the hospital
Volume incentive
Negative quality
creep through cost-
cutting within DRG
Possible volume
explosion
Possible cost shifting
Capitated payment
for general
practitioners
Population- and
prevention-oriented
focus
Stimulus for efficiency
Underuse
Negative quality
creep
Cost shifting
(referring difficult
patients)
8 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Payment systems: P4P
• Explicitly link the quality of care delivered to the payment of the provider.
• Payment is no longer solely tied to ‘input’, and undoing the negative effects of
fragmentation can actually be rewarded.
FFS
block grant
Cap. GP
DRG P4P
0% 10% 20% 30% 40% 50%
AMI (heart attack)
Coronary artery bypass graft
Heart failure
Pneumonia
Hip and knee replacement
Composite Quality Score (CQS) increase
1.1 2.0 2.0 2.2 3.2 2.2 0
1
2
3
4
5
ACQ Non-ACQ
Optim
al quality
Chronic Care Management Quality
2007
2008
2009
CMS: Premier Hospital Quality
Incentive Demonstration project
Blue Cross Blue Shield
Massachusetts (BCBSM) Alternative
Quality Contract (AQC)
9 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Payment systems: P4P
Is often merely a sweet topping on a sour base...
• P4P initiatives run into severe limitations, because the underlying payment structures
remain unchanged
• The institutional boundaries that all too often hamper overall quality rather than
strengthen it remain untouched
• Mostly based on process and structure measures – working to rule often does not
improve outcome yet improves income...
FFS
block grant
Cap. GP
DRG P4P
10 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Payment systems: Contracting Value
What would contracting value look like?
What should be done differently?
FFS
block grant
Cap. GP
DRG P4P
Contracting Value
11 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Contracting Value: the building blocks that make it work
Three principles that are much more within our reach than we tend to think:
1. Define integrated care ‘services’ or ‘products’
2. Define meaningful and measurable outcomes for these services
3. Contract these outcomes with provider or prime contractor
12 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
1. Define integrated care ‘services’ or ‘products’
No longer see the historically grown institutions as the default…:
these boundaries only sometimes coincide with entities of care relevant to the patient
Primary care
GP
s
Physio
thera
py
Die
tary
care
Denta
l care
Hom
e c
are
Hospital care
Dis
able
d c
are
Pharm
aceu
tical c
are
Nurs
ing
hom
e c
are
Revalid
ation
Specialty care
13 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
1. Define integrated care ‘services’ or ‘products’
The unit of care to be contracted should be an integrated care product or service
Elective care
Care for people with a handicap
Maternity care (pregnancy & delivery)
Basic medical care &
gatekeeper function
Acute cardiovascular care
‘Primary care’ ‘Tertiary care’
Acute trauma care
‘Secondary care’
Multimorbidity / frail elderly care
Oncological care
Chronic care
Dental care
Mental health care
Continuous: focus on integrated, pro-active care; on
secondary prevention; the focus on lifestyle, and so forth
Non-continuous: focus on patient-centered, rapid care
delivery, active patient decision making
14 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. Define meaningful and measurable outcomes for these services
Measuring quality is seen as an almost unsolvable problem…
… yet the complexity of the problem evaporates largely when we look at
health care through the lens of these services
The question is: What matters most to the patient?
‘Value’ is produced when these goals are met – and this will vary per
domain of care
15 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. Define meaningful and measurable outcomes for these services
The unit of care to be contracted should be an integrated care product or service
Elective care
Care for people with a handicap
Maternity care (pregnancy & delivery)
Basic medical care &
gatekeeper function
Acute cardiovascular care
‘Primary care’ ‘Tertiary care’
Acute trauma care
‘Secondary care’
Multimorbidity / frail elderly care
Oncological care
Chronic care
Dental care
Mental health care
• Healthy mother, healthy baby • High patient satisfaction • High rescue rates
• Low 3 months mortality • Low 3 months morbidity
• High patient satisfaction • High quality referrals • Optimal coordination role
• Many high-quality life years • No exacerbations, no complications • High patient satisfaction • Patient-empowerment, self management
• Quality of Life • Low (re-)admissions rate • Patient empowerment, self management
16 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. Define meaningful and measurable outcomes for these services
Data at our hands
Billing data Clinical
registries
Patient Questionnaires
Provider Questionnaires
17 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. E.g. acute cardiovascular care: Stroke – 1 yr outcome
18 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. E.g. acute cardiovascular care: Stroke – value of care
Total cost of care (all health care costs, incl. home care, long term care, excl. informal care)
Percentage of patients
living at home 365 days
after stroke
19 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
2. E.g.: elective care - total hip replacement
% s
ignific
ant im
pro
vem
ent
PR
OM
s e
ffect score
Practice variation score
Provider delivering higher
value
Provider delivering lower
value
20 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2011 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
3. Contracting these outcomes - there is not one answer
Per case
Per year of
care
Per year of
care
(population-
based)
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subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG Internat ional
Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
3. Contract outcomes in the right way
The potential reductions in cost are enormous:
- avoiding non-value added care (‘waste’)
- increased efficiency in the delivery of value-added care