COLLABORATION  AND  INNOVATION  TO  PRODUCE  BETTER  OUTCOMES  FOR  THE  CONSUMERJuly  28th 2015

Bupa

Competition  versus  CollaborationHealth  Funds• 34  tribes…  2  with  shareholders• 3  federations

• 1  industry• Health  Insurer  and  Health  Partner  and  Healthcare  Provider

Old  Relationships• The  umbilical  cord  with  private  hospitals

• An  uneasy  relationship  with  public  hospitals  &  states• Competition   through  portability  and  switching  of  funds  (PHIAC)

New  Relationships• A  new  world,  e.g.  GPs  &  PHNs,  with  a  collection  of  new  and  old  players

• Networks,  relationships  and  trust

• Provider  development   in  primary  and  community  care  areas

Bupa

Wish  ListCollaboration  and  Innovation  to  Produce  Better  Outcomes• Competition  versus  Collaboration

• Value  for  Money  and  Transparency

o Affordability

o Appropriate  and  Effective  Care

o Health  Information  Networks

o Access  to  Information  &  Informed  Decision  Making

o Shared  Feedback  on  Care

Bupa

AffordabilityContext• Overall  Spend  of  GDP  is  9.5%,  lower  than  OECD  average

• Out  of  Pocket  Spend  faced  by  consumers  is  in  top  2  in  OECD,  ergo  government  spending  on  health  is  NOT  a  crisis  in  absolute  terms

• Impact  of  6%  average  health  insurance  increases  is  more  like  9%  for  anyone  receiving  a  rebate  (impact  of  scale-­back  of  rebate  increases  to  CPI  only,  and  step  reductions  in  rebate  due  to  movement  between  fixed  income  bands)

• About  half  of  the  6%  annual  increase  is  due  to  provider  cost  of  living  increases,  remainder  due  to  ageing  which  drives  utilisation  and  technology

• Price  comparators  capturing  significant  market  share  of  new  joins,  and  take  out  25-­40%  of  an  annual  premium

• Switching  and  downgrading  behaviour  by  consumers  at  industry  highs

• Significant  price  variation  between  hospital  providers  for  like  for  like

Bupa

Affordability  – Opportunities  to  AddressProvision• Health  insurers  have  ACCC  issues  over  common  pricing  they  pay  although  a  

nationally  efficient  hospital  pricing  model  does  beg  the  question• Drive  a  lower  rate  of  growth  of  provider  cost  of  living,  say  2%  (6%  to  5%)• Transparency  over  “out  of  pocket  charges”  by  doctors  although  cartel  behaviour  is  

difficult  to  eradicate  unless  regulators  take  an  interest,  e.g.  cataract  prices• Restricted  hospital  networks  to  drive  down  price  (trading  off  access)• Change  Commonwealth  price  setting  method  for  prostheses  by  using  actual  RFPs

Insurers• Mergers  to  drive  scale  (34  funds,  only  15  have  >  100,000  members)• Regulated  fees  for  price  comparators• Regulated  minimum  cover  hospital  insurance  products  to  prevent  “junk”  being  sold      

that  only  really  prevents  MLS  and  a  race  to  the  bottom

Bupa

More  Effective  CareThe  spectre  of  “managed  care”  has  set  back  progress  in  Australia  on  getting  better  value  for  money  from  the  private  health  sector

Contracting• Activity  based  efficient  pricing,  bundled  payments,  e.g.  joint  surgery• Reduce  non-­cost  effective  care,  e.g.  back  surgery,  arthroscopies• Risk  sharing  or  coverage  by  providers  for  “defective  care”,  incentives  and  disincentives  

such  as  never  events  and  pay  for  quality  (Bupa  and  Healthscope/Genesis),  “market  power”  stand-­offs

Alliance  Purchasing• Common  care  pathways  in  primary  care  and  across  primary/secondary  using  the  GP  as  

the  medical  home,  e.g.  a  private  insurer  wraps  an  additional   programme  around  the  underlying  Medicare  structure,  e.g.  Medibank  &  Sonic,  HCF,  Bupa

• With  a  provider  to  provide  a  continuum  of  care  for  an  area  such  as  mental  health  or  rehabilitation  for  a  defined  group  of  members  in  an  area,  e.g.  Bupa  and  Ramsay

• Between  an  insurer/s  and  a  provider/s  to  put  a  significant  part  of  their  joint  business  into  value-­based  clinical  arrangements   such  as  cardiac  care  that  focus  on  the  Triple  Aim  of  better  health,  better  care  and  lower  costs  by  a  certain  date

Bupa

Health  Information  Exchanges

Myriads  of  disintegrated  health  systems• PCIER  and  Repositories…

• Health  information  exchanges

• Opportunities  to  carry  out  proof  of  concept  pilots  between  key  stakeholders  such  as  public  and  private  hospitals,  PHNs  and  GPs,  private  health  insurersØ E.g.  CAHIE’s  vision  is  to  provide  a  California  trust  framework  with  pathways  

that  ensure  that  all  providers  can  connect  to  and  use  the  nationally-­recognized  Direct,  Exchange  and  other  vetted  protocols  that  may  emerge.  CAHIE  will  assist  member  organizations  with  implementations  of  existing  standards,  promoting  interoperability  throughout  the  state,  and  will  represent  California  HIOs  in  the  national  HIE  planning  and  governance  process

Bupa

Access  to  InformationHealth  Content• “The  world  of  digital”  and  vast  amounts  of  information

• (Stop)  Making  sense  of  it….  e.g.  FoodSwitch

• Personalised  advice  by  using  the  individual’s  health  information

• New  settings  such  as  the  workplace

Informed  Decision  Making• Arose  out  of  unwarranted  clinical  variation  research

• Evidence  shows  more  informed  consumers  typically  make  decisions  that  are  more  evidence  based  and  often  less  interventionist  e.g.  osteoarthritis

Transparency  around  Out  of  Pocket  Costs• “The  invoice  is  in  the  mail”  versus  publishing  $  range  and  likelihood  data

Bupa

Shared  FeedbackContext• NIB  and  “White  coat”  on  ancillary  providers

• Web  comparators  and  forums  on  providers  and  health  funds

• UK/US  style  patient  feedback  platforms,  current  examples  such  as  Hospital  Consumer  Assessment  of  healthcare  Providers  and  Systems  (HCAHPS)  which  is  used  by  HCF  and  many  hospitals  and  ACSQHC

Opportunity  for  Industry  Wide  Feedback  Platform• Systemic  feedback  loop  with  learning

• Independence  and  oversight

• Who  and  what  gets  judged?

• Time  for  a  broader  industry  approach  and  discussions  are  happening

Questions

Bupa

Bupa

Health  Insurers  – Margin  Pressure

Meanwhile,  insurers’  hospital  gross  margins  are  shrinking  despite  ~6%  pa  rate  rises

Bupa

Private  Hospitals  – Margin  Growth

Private  hospitals’  EBITDA  margins  continue  expanding