Making Leaps in Health Care

Suzanne Delbanco, Ph.D., CEOThe Leapfrog Group

sdelbanco@leapfroggroup.orgwww.leapfroggroup.org

The Purchaser’s Perspective

Employer-Based Health Care System

in Trouble• Rapid escalation in cost (9-20+%/yr)

• Companies unable to absorb growing medical cost through product price increases

• Individual companies have limited purchasing power to effect change in system

Gridlock in the Health Care System

Health PlansNot Letting Provider Value Show Through

ProvidersNot Seeing Case for

Reengineering

PurchasersNot Buying Right,

Toxic Payment System

ConsumersNot In the

Quality Game

Everyone Responsible, No One Accountable

New Thinking is Needed to “Leapfrog” the Gridlock

The Impact of Bad Health Care Purchasing

Failures in the Quality and Safety of Care

• Patients receive recommended health care only 55% of the time1

• 30% of all direct health care costs are due to poor care – Misuse, under-use, overuse, and waste2

– Poor quality care costs between $1,900 and $2,250 per covered employee year2

• Poor quality means lives lost and mistakes made– Up to 98,000 deaths/year due to medical mistakes3

1McGlynn et al. 20032Midwest Business Group on Health/Juran Institute 20033Institute of Medicine 1999

The Leapfrog Movement and other Remedies

Inform & Educate

Enrollees

Compare Providers

Rewarding & Creating

Incentives for Quality & Efficiency

Member Support & Activation

The Leapfrog Operating System

Improved Value

Multipliers: Health plan

products

CMS & state purchasers

Other distribution channels &

partners

Pillars for Improving QualityStandard

Measurements & Practices

Transparency Incentives & Rewards

Sec. Leavitt’s Four Cornerstones to Promote Quality and Efficiency

1. Interoperable Health IT

2. Transparency of quality information based on standard measures

3. Transparency of price information

4. Incentives for high quality care

Expands President’s Executive Order calling for federal purchasers (OPM, CMS, DoD) to use

purchasing practices to promote these cornerstones

Standard Measurements & Practices

We must ‘speak the same language’ when asking hospitals & doctors to

report – national standards are essential

Four Safety ‘Leaps’ and Beyond• Four Leaps

1. Computer physician order entry (CPOE)2. Staffing ICUs with intensivists3. Evidence-based hospital referral (EHR) for patients

needing high-risk care to hospitals with the best track record and experience

4. Safety Score of 27 other National Quality Forum (NQF) -endorsed Safe Practices

4. Beyond• “Never events” policy• Leapfrog Hospital Insights

The Dashboard of Information Neededis Still Largely Blank

Hospitals PhysiciansIntegrated Delivery Systems

Treatment Options

Clinical Quality(Safe, Timely,

Effective)

Efficiency

Patient Experience

Equity

Transparency Make reporting quality and cost

measure results routine and use this information to make health care

purchasing decisions

Leapfrog Hospital Quality and Safety Survey

• 2007 Survey launched on March 5

• New additions include aortic valve and bariatric surgeries, never events, and a transparency indicator

• 2376 hospitals targeted in 33 regions

• 1,264 hospitals participating to date (7/31/07)

Leapfrog’s Regional Roll-Outs:Painting the USA Green 2001-2007

Regions drive survey data collection:1. Recognize hospitals

for participation and good performance

2. Use various financial incentives and rewards to drive further improvements

Regional Roll-Outs!(Regions in Green)

9

Survey results posted publicly

Leapfrog Hospital Insights• Helps consumers make informed health care

decisions and purchasers and plans create informed benefit designs, provider networks and reimbursement strategies

• Measures hospital performance on clinical quality and efficiency

• Five clinical areas: – Coronary artery bypass graft (CABG);– Percutaneous coronary intervention (PCI);– Acute myocardial infarction (AMI);– Community acquired pneumonia; and,– Deliveries/newborn care.

Good Progress, but…

• Leapfrog and other reporting efforts are limited in either or both scope and participation

• Rate limiting factors include quality of measures, burden of reporting, voluntary reporting may lead to self-selection, cost and quality are rarely connected

Incentives & RewardsEncourage better quality of care through incentives and rewards

Growing Efforts to Buy Right• Public reporting and recognition

• Financial rewards to providers (200+ programs)– Reliance on process rather than outcomes

measures– Payments are small – 2 to 6%

• Financial incentives for consumers

• CMS and states engaging and can be major force

Leapfrog Hospital Rewards ProgramTM

• Leapfrog Hospital Rewards ProgramTM (LHRP) is based on Leapfrog Hospital Insights measures

• Program Goal is to motivate hospital quality improvement through recognition and rewards

• Self-sustaining as rewards are paid out of savings from improvements

There Is Significant Variance in Hospital Performance

Sample LHRP Quality and Efficiency Performance (AMI)

(2.5)(2.0)(1.5)

(1.0)(0.5)0.00.51.0

1.52.02.5

40% 50% 60% 70% 80% 90% 100%

Quality Score

Effici

ency

Sco

re

The Top Performing Hospitals Show What is AchievableSample LHRP Quality and Efficiency Performance (AMI)

(2.5)(2.0)(1.5)

(1.0)(0.5)0.00.51.0

1.52.02.5

40% 50% 60% 70% 80% 90% 100%

Quality Score

Effici

ency

Sco

re

Top 25% in Quality and Efficiency

Savings Analysis - Results

# hospitals

% of Total

HospitalsAvg

Payment

% of Grand Mean

# hospitals

% of Total

HospitalsAvg

Payment

% of Grand Mean

# hospitals

% of Total

HospitalsAvg

Payment

% of Grand Mean

Cohort 1 9 8.2% $13,631 65% 8 7.5% $24,685 71% 9 4.4% $4,851 76%

Cohort 2 56 50.9% $18,699 90% 55 51.9% $31,626 91% 115 56.1% $5,809 90%

Cohort 3 14 12.7% $23,372 112% 10 9.4% $39,145 113% 31 15.1% $6,723 105%

Cohort 4 31 28.2% $25,700 123% 33 31.1% $41,025 118% 50 24.4% $7,918 123%

110 100.0% $20,852 100% 106 100.0% $34,737 100% 205 100.0% $6,420 100%

# hospitals

% of Total

HospitalsAvg

Payment

% of Grand Mean

# hospitals

% of Total

HospitalsAvg

Payment

% of Grand Mean

Cohort 1 3 2.7% $11,050 73% 17 6.9% $3,071 75%

Cohort 2 72 64.9% $12,438 82% 137 55.7% $3,708 90%

Cohort 3 9 8.1% $17,641 116% 28 11.4% $4,082 99%

Cohort 4 27 24.3% $20,190 133% 64 26.0% $5,048 123%

111 100.0% $15,170 100% 246 100.0% $4,113 100%

1 Cohort 1 "Top Performance" Hospitals are Top Quadrant in Efficiency and Effectiveness

Grand Mean

Grand Mean

PCI Deliveries / Newborn

CAPAMI CABG

AMI

% of hospitals

Average Payment % of Average

Perf. Group 1 8.2% $13,631 65%

Perf. Group 2 50.9% $18,699 90%

Perf. Group 3 12.7% $23,372 112%

Perf. Group 4 28.2% $25,700 123%

Average 100% $20,852 100%

National Opportunity

Admission Type

Potential for Lives Saved

Potential for Avoided Readmissions

Potential for $$ Saved (billions)

AMI 33,832 24,838 $5.596 CABG 4,089 9,246 $3.962

PCI 2,800 15,203 $2.795 CAP 2,673 48,962 $2.039

Newborn Delivery 12,749 46,674 $4.142

TOTAL 63,953 144,923 $18.536

Lives saved total includes 7,810 lives saved from ICU staffing

What’s Next?

Gainsharing Module

• Reward sharing between a hospital and its physicians under a scenario that also benefits purchasers and payers

• Based on quality, not cost as in other programs

• Possibly layered on top of Leapfrog Hospital Rewards Program

•Rate physicians on whether the hospitals to which they most often refer patients meet the relevant Leapfrog standards

•Goal of shifting market share to hospitals meeting standards to drive performance improvement among others

•Requires attention to benefit design and administration

Physicians Referrals

Bridges To Excellence, Proprietary & Confidential Page 30

PROMETHEUS is a new payment model that, if successful, will…

Remove the current barriers to the realization of high levels of professionalism in medicine, restoring autonomy with full public accountability

Significantly improve the coordination of care in a fragmented delivery system, and the quality of care for patients

Reduce unwarranted variation and moderate medical cost inflation

Create true pricing information for all, and a way to measure output

More information: www.prometheuspayment.org

Bridges To Excellence, Proprietary & Confidential Page 31

It has a few important ingredientsPay right, right from the start – It starts with Evidence-informed Case Rates (ECRs) that are adjusted to reflect patient severity. High performers can make more than 100% of the Case Rate – doing well while doing right. Low performers will make less.

Promote clinical integration and accountability across the board, and reward better quality – 10% to 20% of the payment is deposited in a performance contingency fund and tied to provider performance on process and outcomes of care, patient experience of care, and cost-efficiency. Providers are encouraged to be clinically integrated, even virtually, with 30% of their score dependent on the performance of downstream providers.

Promote transparency – ECRs provide real and complete price transparency for consumers and providers, and the scorecard provides full transparency on quality.

Will Incentives and Rewards Work?

• Our current fixes are superficial

• They highlight the need to rebuild the payment system and how we organize care

• Costs are rising – aging population, new drugs and technology may outstrip efficiencies we can create

• The need to shave the trend in health care costs is desperate

Leaping Over the Gridlock

• Growing standardization in measurement, transparency and aligned incentives

• Health care system evolves so slowly, we can see the future now and might as well prepare