Transforming Fairview’s Business Model to Accept Risk and Manage the Health of

Populations

Cornell University’s International Health Care Conference

May 11th – 12th, 2010

Fairview Overview

Large integrated health system• Not-for-profit, established in

1906• Headquartered in Minneapolis,

MN• Partnership with University of

Minnesota• 22,000+ employees• 2,500 aligned physicians

Comprehensive continuum of services

• 8 hospitals/medical centers• 42 primary care clinics• 55+ specialty clinics• 28 retail pharmacies• 20+ rehabilitation centers • 26 senior housing locations • Home care and hospice

2009 data• 4.8 million outpatient

encounters • 80,314 inpatient admissions• $333.6 million community

contributions • Total assets of $2.4 billion• $2.7 billion total revenue

2

• We are being asked to deliver greater value.– Improved clinical outcomes– Lower cost– Improved experience

• We will be asked to care for the health of a population.

• Payment systems and methodologies will change, rewarding those who deliver value.

Change is coming…Change is here

3

The market is changing…Pa

ymen

tM

etho

dolo

gies

Care Delivery

Population/Global

Payment

Individual/

Discount Fee For Service Encounter Episode/Lifetime

XToday

Transition

Market RelevanceGlobal Adoption

Change Experience

Change Experience

Change Care

Change Care

Change PaymentChange

Payment

Consumer

Employer / Plan

Provider

Volume

Value

4

Requiring a new “value chain”…

Change Experience

Change Care

Change Payment

Consumer

Employer/Plan

Provider

Creating Value and Outcomes

“Global Payment”Enables Performance

Rewards Value

Patient Activation and Consumer Engagement

Value

5

And a repositioning of our business model

Multi-Specialty

GroupPractice

OutpatientAncillaries

Sub-AcuteCare

AcuteCare

Care Management

Maximize Utilization/

RevenueGrowth

Minimize Utilization/

ManageMargin

Incentiveto reduceutilization

TODAY (fee for service)

FUTURE(global payment)

Integrated Delivery System

Internet

RetailClinics

EmployerClinics

VirtualClinics

PhysicianClinics

UrgentCare

ER

Multiple Pointsof Access

(Health Home)

Population

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To deliver on today’s and tomorrow’s definition of “value”

Today Tomorrow

Processes Health& Outcomes Status

Encounter CustomerSatisfaction Loyalty

Cost/ Cost/Case Member

Share of Share ofEncounters Covered Lives

7

Creating capabilities and capacity to manage the health

of populations

2009

2010

2011

2012

Fee-for-Service Shared Savings Partial Capitation Global Payment

Care Delivery

Innovation

Fairview Medical GroupReorganization

Medical Home

Care Packages

Payer Contracting

Methodologies

Epic Install

Physician Compensation

Fairview Population

Volume ValueEpisode Payment

NetworkDevelopment

Population Health

Operating Model/Infrastructure

Virtual Care

SensorTechnology

AccountableCare

Organization

Integrated Business Intelligence

8

Today…care for the sick is physician centric

9

Tomorrow…keeping patients healthy with team-based

care

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• Improved quality

• Increased access and capacityo promoted virtual care (phone, email, webcam)o created new visit types (nurse only, team visits – n clinicians

to one patient)o asked patients for input on length of appointment required

when scheduling

• Increased patient satisfaction o Migraine exampleo A real person answered the phoneo . . . who knows you

2009 CMI results…

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Improved quality in CMI clinics

2008 Q1 09 Q2 09 Q3 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 1010%

20%

30%

40%

50%

60%

41.4%

30.1%36.0% 36.2% 40.4%

Quality of CareDiabetes Management

Eagan

Non-CMI Fairview Clinics

2008 Q1 09 Q2 09 Q3 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 1060%

65%

70%

75%

80%

85%

90%

95%

100%

86.7% 86.0% 86.5%

Quality of CareHypertension Management

Rosemount

Non-CMI Fairview Clinics

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July Wk 4 July Wk 5 Aug Wk 1 Aug Wk 2 Aug Wk 3

0%

20%

40%

60%

80%

100%

30.3

8.0

19.89.8

3.2

62.1

78.0

73.088.2

93.7

Eagan Teamlet DPatient Msg Handling

Provider RN Huddle

MD Capacity Increase Improved Access

Northeast ClinicCall Abandonment Rate

DateAbandonment

Rate6/1-6/5 22%6/8-6/12 33%6/15-6/19 34%6/22-6/26 31%6/29-7/3 34%7/6-7/10 31%7/13-7/17 35%7/20-7/24 33%8/5/2009 GO LIVE8/10-8/14 14%8/17-08/21 13%

Improved access and capacity…

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Successfully shifting care to lower cost & more patient-

friendly interactions…Team-Based Care

0% 10% 20% 30% 40% 50% 60% 70%

66%

52%

Clinic's % Of Non- Traditional Encoun-

ters

2008

2009

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49 visits (0 paid extensions)21 coupons used1057 enrolled consumers (4.3% with visits)32 providers (75% with visits)

Time of Day

0% Phone Only100% Web

0 Disconnects0 Provider Cancelled/ Provider Declined49 Completed

Visit Details

94% MD4% Physician Asst2% Nurse Practitioner

Provider Types

1. Skin disorders and redness 2. Behavioral Health3. Insomnia4. Migraines and other headaches5. Hypertension

Top Diagnoses/Disease Areas

Online Care Rooms2133 Total Card Swipes 1503 Main

525 RP105 Virginia

Average Satisfaction with Online CareBy Consumer: 4.69/5 starsBy Provider: 4.31/5 stars

4.63/5 stars

Satisfaction with Provider

0

1

2

3

4

5

6

7

Time

8 am to noon

Noon to 4 pm

4 pm to 8 pm

Virtual care prototype with BCBSM: • Fairview providers care for BCBSM

employees & family members using web cams in employer clinics and homes

• Model and understand virtual care operations

• Design for consumerism

Visit Demographics

69.4% Female30.6% Male

18 prescriptions written.No additional detail available

28.6%21-34

26.5%35-44

32.7%45-54

12.2%55-64

Age

Top Rx

Virtual care…Care Anywhere

( November 30, 2009 - January 25, 2010) 15

Payer revenue at risk

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• Revenue at risk with 3 major commercial payers

• Various models• Clinical quality• Clinical quality & total cost of care• Total cost of care

• 2010 Revenue at risk $40+M

Challenges

• Changes in the care models are moving faster than payment & growth models

• Living in two worlds is difficult• Change roles

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Our work requires transformational change in

organization focus…

Global Business ServicesCreating enabling expertise

Clinical EnterpriseRealize value

Care Model InnovationCreating new value

Member AcquisitionConnecting to Members

Business Model InnovationRecognizing Economic Value

Design

Operations

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Our work requires transformational change in

organization focus…Operations

Realize value

Multi-Specialty GroupOutpatient CareSub-acute Care

Acute CareCare Management

DesignCreating new value

Care Model InnovationBusiness Model Innovation

Member Acquisition

Global Business Services

Goals and Strategies

Business model shift

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Individuals Employers

Payers Providers

DiseaseRisk

SelectionRisk

Perform-ance Risk

RiskMitigation

CashManagement

Sales

Credentialing

NetworkManagement

MedicalManagement

Cash Mgmt.

Risk Reserves

Und

erw

riting

Cash Mgmt.

Credentialing

NetworkManagement

MedicalManagement

New and changing roles will emerge as a “network of capability” forms to deliver on the promise of the new value chain.

ProductDevelopment

MemberServices