Health Care Reform

Medicine Grand Rounds / Indiana University School of Medicine

Presented by Ora Hirsch Pescovitz, M.D., Executive Vice President for Medical Affairs, University of Michigan,& Chief Executive Officer of the U-M Health System / March 23, 2012

An age of change; An era of opportunity

The University of Michigan Health System

3 Hospitals & >30 Health

Centers

University of Michigan

U-M Health System 28 Schools & Colleges (3 campuses)

U-M School of Nursing (clinical

services)

Michigan Health Corp.

U-M MedicalSchool

(incl.1,625 member Faculty Group

Practice)

National rankings•Hospitals: #14; Honor Roll 17 consecutive years (USNWR)

•Mott is the only ranked children’s hospital in MI (USNWR)

• One of 5 hospitals to have both USNWR Honor Roll and Leapfrog Group top designation

• Tied for 2nd in residency directors’ ranking of Medical School graduates’ “desirability “(USNWR)

• #6 in NIH research funding ($319M; 2.76% market share)

• Researchers produce an average 10 publications/day

By the numbers•$3B in overall revenue

•22,000 employees

•895 staffed beds

•45,000 discharges

•1.9M outpatient visits

•46,000 surgical cases

The University of Michigan Health System

National Challenges

• U.S. health expenditures hit $2.6 trillion in 2010 ($8,402 per capita)

• Expected to reach $4.6 trillion in 2020–Nearly half will come from

government sources

The Cost of American Health Care

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

United States

Switzerland

Canada

OECD Av-erage

Sweden

United Kingdom

Per

Capita S

pendin

g -

PPP A

dju

sted

Growth in Total Health Care Expenditure Per Capita, 1970-2008

$7,911

The Insurance Factor

• In 2010, there were 49 million uninsured nonelderly Americans

• The U.S. is one of only 3 developed countries where a sizable share of its population is uninsured (Mexico, Turkey)

• Americans say they will skip medicines or medical appointments due to their high cost

• Uninsured people receive fewer preventive and diagnostic services, and tend to be more severely ill when diagnosed

• Research shows that insurance coverage could reduce mortality by 4-25%, depending on condition

The Quality of American Health Care• “Quality health care means doing the

right thing at the right time in the right way for the right person and having the best results possible.” (AHRQ)

• What are the dimensions of good quality care? 1. Acceptability2. Accessibility 3. Appropriateness4. Care environment

and amenities 5. Competence/

capability6. Continuity7. Expenditure or cost8. Effectiveness

9. Efficiency10. Equity11. Governance12. Patient-

centeredness or responsiveness

13. Safety14. Sustainability15. Timeliness

Infant Mortality Rate: Deaths per 1,000 live births (2011 est.)

IND IANA7.3

MICH IGAN7.7

SwedenJapan

Finland

Norway

Switzerla

nd

Denmark UK

CanadaU.S.

0

1

2

3

4

5

6

7

2.74 2.78

3.43 3.52

4.08 4.244.62

4.92

6.06

The Quality of American Health Care

Compared to patients in other countries, Americans are less satisfied with:

• The quality of communication they have with their medical team

• Their engagement in medical decision-making

• Access to care outside of traditional working hours

The Quality of American Health Care

Ready for Change?

12

“We’re ready to begin the next phase of keeping things exactly the way they

are.”

If improvement [of the American health care system] is the plan, then we own the plan.

Don BerwickGovernment can’t do it.

Regulators can’t do it.

Payers can’t do it.

Only the people who give the care can improve the care.

• We are those people

• Only we can improve health care processes, because we create, manage and use those processes.

• Only we can improve the quality and safety of care, because we discover and deliver that care.

My Perspective

Affordable Care Act:

The blueprint for change?

Basic Goals of Affordable Care Act• Insure more Americans

• Increase quality, safety and efficiency of care for individuals

• Improve the health of populations

• Contain and control national health care spending

• Adopt reimbursement models based on quality, performance and outcomes

• Improve care delivery systems through increased coordination, shared accountability, better information technology and new business models

• Right care, right time, right place, right cost

Public Views on ACA 2 Years Later

Given what you know about the health reform law, do you have a generally favorable or generally unfavorable opinion of it?

Q:

40

44

41

35

45

40

44

40 41

5048

46

4144

4643 44 43

51

44 43 44 43

40%

14 14

10

1412 11

1518 18

9 8

13

18

1412

1517 16 15

1917

19

15

19%

46

41

4850

43

49

42

42 42

4143 42 41 42 42 42

3941

3437

41

37

42

41%

0%

20%

40%

60%

80%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2010 2011 2012

Don’t know/Refused

Unfavorable

Favorable

Public Views on ACA 2 Years Later

If the Supreme Court rules that the federal government cannot require Americans to have health insurance, do you expect some parts of the health care law will still be implemented, or do you think this will effectively mean the end of the entire law?

Q:

62%

10%

28%Effectively

means end of the entire law

Some parts of the law will

still be implemented

Don’t know/Refused

My Best Guess on What Sticks

Least Controversial

• Children on parents’ insurance through age 26

• Protection for individuals with pre-existing conditions

• Doughnut hole fill for Medicare recipients

• Insuring the uninsured

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GAMS

OK

NJ

SD

19%–22.9%

14%–18.9%

23% or more

2008–2009

MA

RI

CT

VTNH

MD

8%–13.9%

Less than 8%

2019 (estimated)

Percent of Uninsured Adults 19–64

My Best Guess on What Sticks

My Best Guess on What Sticks

More Controversial

• Transition to pay-for-performance reimbursement

• Development and implementation of better information management systems

• Establishment of Accountable Care Organizations: Systems of providers responsible for the quality, cost and delivery of health care for a population

ACOPopulation:

5,000+

members

PayerBased on quality and performance indicators$$

$

Outpatient Care

Hospital Care

Nursing Home

Home Care

Community Health &

Social Services

School-based Clinics

PATIENT

Integrated Health IT (EMR/PHR, Portals, etc.)

Integrated Business Systems

Reporting(Quality, Satisfaction,

Clinical Data, Research Data)

Reimbursement Structure (i.e. Bundled payments, Partial or Full Capitation)

Physician Engagement & Alignment

Patient Engagement

Outpatient Care

Hospital Care

Nursing Home

Home Care

Community Health &

Social Services

School-based Clinics

PATIENT

Can ACOs work?I think so.

Collaborative Quality Initiatives

• Physicians at more than 50hospitals across MI worked together to share and analyze clinical data

• Goal: Improve quality and reduce costs of care

Laying The Foundation

Collaborative Quality Initiatives: Outcomes• Angioplasty

– Reductions in kidney injury, stroke, transfusions and deaths

– Saved $8.5M/year

• Bariatric Surgery– Reduced readmissions by 35%, LOS by 20%, adverse

events by 22% and complications by 13%– Saved $4.1M/year

• General & Vascular Surgery– Reduced surgical site infections by 18%;

complications by 37%– Saved $13M/year

Laying The Foundation

Physician Group Incentive Program: Outcomes

• Established a platform for statewide multi-disciplinary health services research

• Improved quality of care for patients with chronic conditions

• Increased patient capacity at physician practices through care redesign

• Savings– Ex: $20M/year in Radiology Services

Laying The Foundation

An ACO Case Study:

Physician Group Practice

Medicare Demonstration

Project (PGP)

• Develop skills for population management

• Leverage experience from running M-CARE health plan for 20 years

• Prepare for Medicare Value Based Purchasing and pay-for-performance

• Collaborate across specialties and with hospitals, leading physician groups and CMS

• Earn financial returns from shared savings

• Opportunity to be part of Medicare’s first Pay for Performance ACO prototype, as outlined in the Affordable Care Act

PGP: Why We Participated

PGP: Overview

• Participation: 10 large U.S. physician groups, incl. U-M Faculty Group Practice

• Duration: 2005-2010

• Goals:

– Determine whether care can be coordinated in a way that generates Medicare savings in acute, ambulatory and post-acute care settings

– Reduce Medicare cost growth while maintaining quality (32 quality metrics)

PGP: Outcomes

• All 10 groups met at least 29 of the 32 quality goals

• U-M was one of two groups to achieve success in financial measures all five years– UM saved Medicare >$46M; Earned back $17M

• Demonstrated lower readmission rates

• Improved care coordination for high risk/high cost patients

• Received national recognition as a leader in health care value and in developing ACOs

ACO Next Steps

• Now participating in CMS Innovation Center’s Pioneer ACO Model

– Intended to test the impact of different payment arrangements in achieving quality and cost goals

– 32 provider organizations in 18 states are participating

Personalized Medicine

Personalized Medicine

1990: U.S. Human Genome Project initiated

2000: INGEN created (LE, IU & IUSM)• $153 million investment by LE

• $744M in awards and grants supported by INGEN

• 3,725 articles published with INGEN support

• Recruitment of 94 new faculty

• Indiana Physician-Scientist Initiative ($60M LE investment)

• Indiana Institute for Personalized Medicine

2001: Scientists reported “working draft” of the human genome

Personalized Medicine

2003: First human genome sequenced

Year Cost per Genome

Time per genome Data generation only, 1 instrument

2007 $9,408,739 16 months (ILMN 1G)

2009 $232,735 26 days (ILMN GAIIx)

2010 $46,774 11 days (ILMN HiSeq2000)

2011 $20,963 11 days (ILMN HiSeq2000)

2012 (est) $7,950 25 hours (ILMN HiSeq 2500)

Source: The Genome Institute at Washington University, Washington University School of Medicine

Personalized Medicine

Before 2013, I predict that:

We will sequence for under $1,000 and in less than 4 hours. (Faster than Moore’s Law)

We will be able to diagnose diseases and treat patients like never before.

What is the Future of Health

Care?

Personalized medicine

Population health

Technology

Cost c

ontrol,

quality

met

rics

We have an opportunity to

rethink and advance medicine.

This is an era of unprecedented

opportunity.

Right Mechanism[Discovery]

Right Target[Translation]

Right Therapy for the Right Patient at the Right Time [Personalized Medicine]

The Future of Health CareThrough Discovery

http://dystonia.thebeerys.com/Video/Video_Player/VideoId/71/Today-Show-October-27-2011.aspx

Beery Family: Dealing With Dystonia

“When it comes to the future, there are three kinds of people:

Those who make it happen;

Those who let it happen;

Those who wonder what happened.”

John M. Richardson, Jr.

You are the people who make it

happen.