.…a health and consumer services company making people’s lives better

From Infomediary to Market Maker...

Sam Ho, M.D.Senior Vice President, Chief

Medical Officer

swh:2 .…a health and consumer services company making people’s lives better

Current EnvironmentEnvironment Ripe for Change

• Highest cost trends in 10 years

• Recession

• Rising unemployment / softer labor market

• Consumerism requires information & choice

• Science of performance measurement is improving

• Discount pricing possible & managed solutions

Cost sensitivity

• Benefit reduction & cost-sharing

• Consumer Healthcare Organization (CHO)

• QUALITY INDEX® profile

swh:3 .…a health and consumer services company making people’s lives better

PHS Quality Pedigree

Quality & Accountability

• hailed by purchasers, regulators, consumers, providers, CMS, NCQA, IOM, AHRQ

• NCQA – 21 Consecutive Excellent or Commendable MCO/MBHO Awards. 6 States with Excellent; PCCA = only statewide MCO @ Excellent

• Only MCO to Receive Paul Ellwood Award From FACCT for Efforts in Developing a Consumer-Driven Healthcare System.

• HEDIS - Exceeded Industry Average in 18 Quality-of-Care Measures Compared to California Health Plan Competitors

• Ranked #1 for Patient Satisfaction Among Network Model HMO’s in California - leading consumer magazine, October 2001

• AAHP’s 2001 National Exemplary Practice Award for Congestive Heart Failure Program (CHF) - Colorado

swh:4 .…a health and consumer services company making people’s lives better

• 2000 California HMO Performance Assessment Survey

PacifiCare = Ranked Best by 198 Physician Organizations – 200% Better Than 2nd Ranked HMO

PacifiCare = Ranked Best by 367 Hospitals – 31% Better Than 2nd Ranked HMO

PHS Quality Pedigree

Quality & Accountability

swh:5 .…a health and consumer services company making people’s lives better

Foundation for Change

2002 Measures

• 28 Commercial Indicators & 29 M+C Indicators – Staying Healthy– Appropriate Care– Patient Safety– Service & Satisfaction– Affordability

swh:6 .…a health and consumer services company making people’s lives better

• Effective consumer information tool

• Effective provider management tool

• Platform for product innovation– Tiered benefits– Tiered compensation

• Expanded metrics for 2001 to 2002: staying healthy, appropriate care, patient safety, affordability, service & satisfaction

• 2001 - QUALITY INDEX® profile for Women & enhanced core QUALITY INDEX® Profile

• 2002 - Introduce QUALITY INDEX® profiles of Hospitals & Physicians

• “Leapfrogging” Leapfrog & others– expanded measures, report cards, incentives, benefit plan design

swh:7 .…a health and consumer services company making people’s lives better

Hospital - Leading the Industry

• 87 measures– Medical, surgical, OB, peds– Risk-adjusted outcomes

• Leapfrog measures (9)

• Appropriate care

• Patient Safety

• Patient Satisfaction (Calif)

• Affordability

• 100 Top Hospitals - Solucient

• Aggregated score

• Other report cards = 4, 9, or 30 measures

swh:8 .…a health and consumer services company making people’s lives better

as Platform for New Products

• Value network based on costs and quality

• Lower premium vs. standard HMO or PPO

• Broad network still offered

• Incentives to choose better & cost-effective vs. just cheaper

• Educate consumers on cost + quality variation

• Tiered compensation and market share rewards best performing providers

swh:9 .…a health and consumer services company making people’s lives better

2003 “Value” Product - Quality and Cost as Drivers, w/Costs = Primary

Tiered/Narrow HMOHospitals

Qu

alit

y

Cost

Preferred

Non-Preferred

Tiered/Narrow HMOPhysicians

Qu

alit

yCost

Preferred

Non-Preferred

Coupled with QUALITY INDEX® Profile information to empower consumers

swh:10 .…a health and consumer services company making people’s lives better

PacifiCare Value vs. Kaiser

CurrentCalifornia MDs PMGs Hospitals Members

PacifiCare Value Plan 12,000 119 ~125 50%

Kaiser 6,000 30 30 100%

• “Narrow” Network = 2-4x Kaiser’s Network• Value Network + Benefit Changes = 10-20% Premium Savings

swh:11 .…a health and consumer services company making people’s lives better

• 10 measures (QIX subset)• Preventive health• Chronic diseases• Satisfaction

• Total system cost– PMG + Hospital + Rx

• 6 measures (starter set)• Leapfrog group measures• Satisfaction

PMG Quality

+

Hospital Quality

Costs+

2003 Integrated Value Equation

swh:12 .…a health and consumer services company making people’s lives better

• QUALITY INDEX®

• Consumer info

• Core

• Hospitals

• Physician

• Web link with directory

• Patent pending

• CQI

• Improved clinical outcomes

• Improved service outcomes

• NCQA

• HEDIS

• Provider Profile

• Market maker

• Tiered hospitals– HMO & PPO– Quality– Affordability– Choice

• Tiered MG’s– HMO– Quality– Affordability– Satisfaction– Choice

• Tiered MD’s– HMO & PPO– Quality– Affordability– Choice

+ AccountabilityQuality Product Leadership

“Caring is good… doing something is better