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Transcript of 1 Chip Tooke Founder & former CEO Lumenos Executive Chairman, Graphic Surgery Strategic Outlook On...
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Chip TookeFounder & former CEO LumenosExecutive Chairman, Graphic Surgery
Strategic Outlook On Health Care From An Insurance Perspective
2008 Health Care Forecast Conference
February 22, 2008
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A Three Act Play
Act I: Myth, Reality and The Money
Act II: The Triple Threat
Act III: What’s a Insurance Carrier to Do?
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Act I Myth, Reality and the Money
The best health care on the planet, right?
Most expensive health care delivery system in the world
$2.1 trillion (16% GDP) ramping to $4 trillion (20% of GDP) in 6 years
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Act I Myth, Reality and the Money
The best health care on the planet, right?
Most expensive health care delivery system in the world
$2.1 trillion (16% GDP) ramping to $4 trillion (20% of GDP) in 6 years
Waste 20% to 30% of resource on care that does nothing to improve our health ($500 to $700 billion)
According to Rand, 55% of care meets adopted guidelines That means 45% does not – flip of the coin?
Wide variation in health care services (Wennberg, Dartmouth Atlas)
Poor performance on comparative health indicators
Aging population; 50% of Americans have one or more chronic diseases; personalized medicine on the horizon
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A Simple Test
Answer “yes” or “no” to the following questions
1. I am within 5 pounds of my ideal body weight
2. I exercise 30 minutes or more on most days of the week
3. I eat a healthy diet – 5 fruits/vegetables most days of the week
4. I don’t use tobacco products
5. I consumer 2 or fewer alcoholic beverages a day
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A Simple Test
Answer “yes” or “no” to the following questions
1. I am within 5 pounds of my ideal body weight
2. I exercise 30 minutes or more on most days of the week
3. I eat a healthy diet – 5 fruits/vegetables most days of the week
4. I don’t use tobacco products
5. I consumer 2 or fewer alcoholic beverages a day
YES: 4%
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Behavior drives disease - Costs of “the big three”
• Average 10% of total claims costs attributable to obesity
• 60% of Americans exceed ideal BMI
• Soon to become the leading cause of death
• Average 10% of total claims costs attributable to tobacco
• 25% of Americans smoke
• Leading cause of death. . . still
• 60% perform no substantial activity or exercise
62% of the rise in insurance costs from 1987-2002 due to population risk factors and their treatment
Source: Thorpe, et al, Health Affairs, June 2005
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Disease Reduction Compared to US
Comment
Heart Disease 64%* - 83%** 80% due to modifiable risk factors
Cancer 60%* Approximates NCI estimates
Diabetes 91% ** No Type II Epidemic
All-cause Mortality 50%* 25 year Okinawa Program Similar
Findings
What if? Mediterranean Diet, Nonsmoker, Daily Activity & Moderate Alcohol Use
* Knoops et al and **Rimm, Stampfer, JAMA 2004;292:1433-1439
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Behaviors Drive 50% of Costs
Assumes Average Total Compensation = $55,250
Source: U.S. Bureau of Labor Statistics, Employer Costs For Employee Compensation Summary Dec. 9, 2005.
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Prevalence of Chronic Illnesses
More than 130 million Americans suffer from chronic conditions;
that number will continue to rise.
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1995 2000 2005 2010
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% o
f P
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Chronic Conditions % of Population
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1995 2000 2005 2010
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% o
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Chronic Conditions % of Population
Chronic Condition
PrevalenceU.S. Population
Annual Cost
Diabetes 20.8M $132B
11M lost work days
Heart Disease 60M $277B
5.9M lost work days
Asthma 30M $14B
6.3M lost work days
14M lost school days
Depression 21M $43B
13.2M lost work days
$30B in lost productivity
Source: NCQA State of Healthcare Quality Report, 2007
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P4P: What Providers Fear (one of many)
Copyright Cartoon Bank
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Act II: The Triple Threat
1. Little evidence that what we do works
<15% of medicine based on evidence (David Eddy)
4% of treatments backed up by firm science (IOM)
50% have no or weak evidence (IOM)
2. The odds are barely in the patients’ favor (Rand)
The odds of getting the right treatment ≈ the odds of getting the wrong treatment
Heads you win… tails you lose
3. Wide variations in care based on geography (Wennberg, Dartmouth Atlas)
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The Dartmouth Atlas
Pick any elective surgical procedure
Hemorrhoids in Vermont 5 fold variation in a distance of less than 3 hours
Back surgery 3 times more likely in Idaho than Manhattan
Tonsillectomy 10 x variation from one region to another
Hysterectomy 5 fold variation
In health care, the ordinary laws of nature don’t apply Roemer’s Law: Supply drives Demand
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Act IIISo, What’s a Smart Health Plan To Do?
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Acknowledge: We Live In A Rough Neighborhood
“Which of these industries do you think are generally honest and trustworthy – so that you normally believe a statement by a company in that industry?”
Source: Harris Poll, National Survey of 1,833 Adults, 10/05
% of Adults
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The Consumer Experience
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If you are over age 45, you may remember(and yearn for) this experience
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Winners’ Strategic To-Do List
Accept where we are The lucrative arbitrage called insurance is over We are “middle men” and add little value from the consumers pov Stop digging
Recognize the power base is shifting to the consumer Vast majority of employers want to exit, immediately if not sooner
Start acting like problem solvers, not cost cutters Preoccupation with unit cost and utilization game is over
Focus on what matters… to consumers Give people a reason to believe
Recognize the power of “brand”
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Winners’ Strategic To-Do List
Provide real-time access to financial and medical data Google + Cleveland Clinic
Launch aggressive programs focused on lowering risk factors (remember, this is where the illness/money lives)
Increasing compliance with evidence-based medicine
Give consumers an economic stake in the outcome
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Winners’ Strategic To-Do List
Give people the clinical data translated into behavioral action
Most people make the right decision most of the time Informed consent is powerful: 24% reduction in surgery Spine surgery – new SPORT findings yesterday Get the data out there immediately
Drugs are particularly vexing Vioxx vs. naproxen, Lipitor vs. lovastatin Why did prices on the top 50 drugs go up 7% last year? How can I lower my cost? Provide “point-of-prescription” data
Help the sickest-of-the-sick navigate the chaos Reality: there is no “health care system”
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Timeline
Sign
al Cou
nt
Threshold for Action
Serious Adverse Events
Heart Attacks
&Strokes
Hints of cardiovascular issues in clinical trials
May 1999May 1999
Sept 2004Sept 2004
April 2001April 2001
FDA Approved
Vioxx
removed from Market
Jan1998Jan1998
Vioxx® History
What if the WellPoint Safety Sentinel System was in place in 2000?
Vioxx Case Study
Analysis of our membership would have detected a signal of increased cardiovascular events within 3-6 months
after FDA approval
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Why is this so hard?
Health care: largest industry in our economy
The business is mushy (sophisticated business term)
Huge dollars at stake Eliminate $700 billion waste = eliminate the entire US high tech industry
US expenditures on health care approaching world wide market for oil
We spend more per capita on health care than China spends per capita… on everything
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Why is this so hard?
Health care executives “I know, it’s a mess, but we are all doing quite well, thank you”
“Trend is our friend”
“I know our service sucks, but its slightly less sucky than the competition”
“Innovators Dilemma” by Clayton Christensen The fundamental reason dominant companies don’t innovate?
They don’t want to – it’s that simple (but read the book!)
Creates a breeding ground for innovators… and a cemetery for BDCs
“Overtreated - Why Too Much Medicine Is Making Us Sicker and Poorer” by Shannon Brownlee NYT No. 1 Economics Book of 2007