Deloitte Center for Health Solutions

July 16, 2012

Monday memo

Health reform update

My take

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

I often ponder which chief executive officers (CEO) in health care have an easier time sleeping at

night. ―Looking around the corner‖ at the industry, the realities in each sector certainly make for an

interesting parlor game…

Hospital CEOs face pressures to cut costs from government and commercial payers, increased labor

and supply costs, expanding requirements, intensified competition, and perplexing challenges of

physician alignment. If you happen to be a CEO of a multi-hospital system, the complexity amps up as

unique factors make life more complicated in efforts to standardize across multiple sites and satisfy

bond holders and debt issuers.

Health insurance plan CEOs face a barrage of new Affordable Care Act (ACA) requirements coupled

with intensified state and federal oversight, caps on premiums and administrative costs, premium

resistance pressures from individuals and groups, and pressure to build public trust. The certainty of

increased enrollment is dampened by the reality that the industry‘s transition to an individual market is

daunting, and its top line increasingly truncated by pricing constraints. And the opportunity to

differentiate beyond size and scope of services is increasingly complicated by regulatory efforts to

standardize offerings to facilitate consumer transparency.

CEOs running drug manufacturing companies face the risk of being the odd man out in the race to

cost containment. Becoming commodities in the U.S. supply chain is perplexing for drug

manufacturing companies. They must replace revenue from lost patents, transition their pipelines from

blockbusters to large molecule and companion diagnostics, and implement comparative effectiveness

research (CER) and advanced analytics to stay competitive. If in start-up mode, tougher access to

working capital and fewer strategic investors with unflattering term sheets rob sleep time. If an

established player, the question of globalization keeps CEOs awake at night—which country, how big

a bet, what‘s the right entry and growth strategy, and is it sustainable given political and economic

conditions in those markets?

CEOs in device manufacturing ditto the sleep deprivation profile of drug manufacturer CEOs—the

same issues and challenges but with a unique twist. Parts of the device industry in the U.S. are tightly

regulated, but new areas force new regulations that might be imposed today and changed tomorrow.

Are mobile communication and biomonitoring devices considered ―medical devices‖ that are subject to

the same scrutiny as others, and how might purchasing by provider organizations change as group

purchasing organizations (GPO) modify their business models and direct-to-consumer device

advertising increases?

And the distributers in this industry—the CEOs who lead the organizations that get our stuff from here

to there—face similar challenges that make sleeping difficult at times: tougher negotiations with

manufacturers and GPOs, increased regulatory and performance risk in the value chain, and a dearth

of new gadgets and pills that markets require. And in some sectors, drawing the ire of regulators using

―channel choking‖ to disrupt the flow of health care goods and services keeps many awake.

So, I am not sure which CEO has the hardest time sleeping. But I do know what helps each sleep a

little better: knowledgeable boards and competent management teams.

CEOs lead organizations to make educated bets with measurable risk. They are constantly second

guessed, rarely given credit for right calls, and usually the fall guy or gal for the public failures. And

most will admit that it‘s a lonely role.

Those with boards of directors and management teams that ―have their backs‖ are the lucky ones. All

too often, CEO turnover is more the result of wounds from friendly fire than navigation of market

pressures and opportunities. They are hired to bring about change and often fired because they

changed things.

In recent years, most CEOs in this industry have been bringing messages to their organizations that

are not popular: going big or getting out, cutting cost aggressively, transforming culture insulated from

outside input, crafting deals with unusual collaborators, rebuilding operational models, re-engineering

the workforce to reward competence over comfort, and taking risk and managing in uncertainty are

not things rank and file employees wish to hear. CEOs with trustees and C-suites that understand

these messages act on the basis of facts, and those who act boldly are the ones who might get better

sleep. And kudos to those who have the CEO‘s back when the daggers start flying from the rear.

The health care industry has had a great run: each of our sectors has operated for 35 years using a

variety of adaptive models focused on growth. And while the ebb and flow of reimbursement changes

and regulatory requirements forced adjustments, each sector was suitably capable of sustainability

simply because there has been enough money and growth to go around. A generation of CEOs with a

set of talents attuned to growth prospered in this era.

I believe that era has ended. I believe we‘re at the start of a new era requiring new CEO capabilities.

Health care spending increased at 7% for the past decade, providing false security. The recent

Congressional Budget Office (CBO) forecast of 5.7% annual spending increases through 2022 might

make sleep easier for some were it not for an inconvenient fact: that‘s well above the gross domestic

product (GDP), and well above what is necessary to keep per capita spending on an even keel with

the rest of the economy. Given global and domestic economic uncertainty, what‘s clear is a new era is

upon us, and radical cost reduction is necessary to achieve sustainability.

So, I admire health care CEOs across the industry that are visionaries and are pragmatic and realistic

about their role as game changers. I respect CEOs who speak honestly and candidly with their boards

and management teams. I respect those that seek individuals for these roles based on required

competencies and experiences needed for the future rather than rubber stamps and insulated

thinking.

It boils down to this: every CEO who is in touch with reality is sleepless these days. It is easier for

some because their board and management team has their back. But all are sleeping less these days.

P.S. We recently interviewed CEOs from major health systems as part of our Insights from the C-suite

series: ―A look around the corner: Healthcare CEOs’ perspective on the future,‖ an Issue Brief

from the Deloitte Center for Health Solutions, presents the results of Deloitte's interviews with 24

CEOs of acute-sector hospitals and multi-hospital health systems, looking at the short-term (next

three to five years) and long-term future (to 2020). The brief is now available:

www.deloitte.com/us/healthcareceoperspectives

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This week’s headlines:

My take

Implementation update

HHS to states: Medicaid expansion optional but most expected to participate

HHS announces 89 ACOs, total now 154

USPSTF revises obesity guidelines

Legislative update

Rockefeller: dual eligible demonstrations too big, costly

CMS releases proposed annual Medicare payment update

House votes to repeal ACA

President signs PDUFA into law

House Veterans’ panel focus on transparency efforts

State update

CMS awards new CO-OP grant

Health exchange update

State round-up

Industry update

Study: health system CEOs concerned about cost pressures, uncertainty about health reform

OIG report to CMS: inadequate conflict of interest surveillance for contractors found

Physicians no longer in demand for independent private practices

WellPoint, AmeriGroup deal announced

Trade group asks Congress to revise observational stay regulations

Physicians to Congress: SGR replacement will take years to develop

Hospital trade groups seek avoidance of Medicare cuts from sequester

Quotable

Fact file

Subscribe to the Health Care Reform Memo

Upcoming life sciences and health care Dbriefs webcasts

Deloitte Center for Health Solutions research

Deloitte contacts

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Implementation update

HHS to states: Medicaid expansion optional but most expected to participate Speaking at the annual meeting of the National Governors Association (NGA) in Williamsburg last

week, U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius told state

executives that she anticipates most states will choose to expand their Medicaid coverage despite the

U.S. Supreme Court decision making state participation optional. Thursday, Centers for Medicare &

Medicaid Services (CMS) acting administrator Marilyn Tavenner responded to a letter from

Republican governors indicating there is no deadline for states to notify the agency of plans to

implement the Medicaid expansion but states can receive funding for Medicaid information technology

costs whether they proceed with the expansion or not.

According to Bloomberg Government analytics, the 27 states that sued HHS will leave $207 billion on

the table that might otherwise flow into the system. Counter-point from skeptical governors: states will

bear 10% of costs for the expansion after 2016 so the impact may be quite negative for states seeking

fiscal recovery.

Some comments issued by Republican state executives last week:

Governor Rick Scott (R-FL): ―That‘s what I‘m focused on, getting our citizens jobs to afford

insurance. This expansion will cost the federal government, which is our tax money, and the

state a lot of money. We can‘t afford it…If you talk to the citizens, they want a job, they want

to make sure their kids can get a great education. Every time we expand Medicaid, we make it

more difficult to fund our education system, which is very important to our citizens.

Governor Rick Perry (R-TX): ―I oppose both the expansion of Medicaid as provided in the

Patient Protection and Affordable Care Act and the creation of a so-called ‗state‘ insurance

exchange, because both represent brazen intrusions into the sovereignty of our state. Neither

a ‗state‘ exchange nor the expansion of Medicaid under the Orwellian-named PPACA would

result in better ‗patient protection‘ or in more ‗affordable care.‘

Governor Gary Herbert (R-UT): ―They ought to be giving all states more flexibility, block

grant the money and let us find our own unique ways with our own unique populations and

demographics to find the best way to provide health care.‖

Governor Bill Haslam (R-TN): ―I don‘t see a reason to make a final decision right

now…There‘s a boatload of questions about expanding Medicaid,‖ he said. ―I think what you

hear from every governor here is, Republican and Democrat, the more flexibility you give us,

the better. I‘m just convinced we can control the costs better than the federal government.‖

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HHS announces 89 ACOs, total now 154

Monday, HHS announced that, as of July 1, 89 new accountable care organizations (ACOs) serving

1.2 million Medicare enrollees in 40 states entered into agreements with CMS. Per the HHS news

release, almost half of all the ACOs are physician-operated businesses serving fewer than 10,000

enrollees, demonstrating smaller organizations‘ willingness to operate ACOs. For 2012, CMS

developed 33 quality measures for ACOs to meet including:

Care coordination and patient safety

Appropriate use of preventive health services

Improved care for at-risk populations

Patient and caregiver experience of care

Note: for background on ACOs, download the ―Accountable Care Organizations: A New Model for

Sustainable Innovation‖ Issue Brief from the Deloitte Center for Health Solutions or contact John

Keith or Bob Williams, leaders of Deloitte’s Accountable Care Solutions team.

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USPSTF revises obesity guidelines According to the Centers for Disease Control and Prevention (CDC), 36% of the U.S. adult population

is obese—defined as having a body mass index (BMI) of 30 or higher. The U.S. Preventive Services

Task Force (USPSTF) is recommending increased counseling and behavior modification under the

ACA‘s requirement that certain services be accessible to consumers without a co-pay.

Employers are concerned: as Helen Darling, president of the National Business Group on Health

stated, "Does this mean that employers and the government will be paying for up to 26 intense visits

every year for every obese person for the rest of their lives?" According to USPSTF, effective

programs for the treatment of obesity involve anywhere from 12 to 26 sessions over the course of a

year that cover multiple behavioral management techniques. HHS has indicated they will evaluate

whether to issue additional guidance on the new rules.

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Legislative update

Rockefeller: dual eligible demonstrations too big, costly Tuesday, Senator John Rockefeller (R-WV) wrote a letter to HHS Secretary Kathleen Sebelius calling

for a halt in the implementation of the pilot program for dual eligibles—the nine million individuals

eligible for both Medicare and Medicaid services, accounting for 15% of Medicaid enrollees and 39%

of the program‘s costs.

In addition to his concern about the savings target, Rockefeller expressed concern that the pilots

proposed by 27 states participating in the program are too large to be considered pilot projects since

they enroll three million beneficiaries—one million more than proposed in the original design of the

program. Senator Rockefeller urged CMS to:

Focus on providing high-quality care as the primary goal instead of up-front programmatic

savings—which was never the intent of the law.

Rigorously test new care coordination concepts and make recommendations to Congress

about programmatic changes that show promise for broad implementation.

Guarantee that dual eligibles retain all the rights and same access to care as all other

Medicare beneficiaries.

Related: the Medicare Payment Advisory Commission (MedPAC) also wrote a letter to CMS

addressing concerns about the demonstration projects suggesting the scope of the proposed

demonstrations is too broad. It projected that if all state proposals are approved, approximately three

million dual eligible beneficiaries will be enrolled thus possibly destabilizing the Medicare Part D

prescription drug plan market by moving the drug benefit back to the states, resulting in uneven

benefits across the country for the low income population. MedPAC also recommended passive

enrollment with opt out—beneficiaries are given the opportunity to opt out of the demonstrations

before they are passively enrolled.

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CMS releases proposed annual Medicare payment update Friday, July 6, CMS released proposed rules to update payment policies and rates under the

Medicare Physician Fee Schedule (MPFS) in hospital outpatient departments (HOD) and ambulatory

surgical centers (ASC), outpatient services, and home health agencies for calendar year (CY) 2013.

Highlights:

Primary care: increased payments to family physicians by 7% and other primary care services

3-5%.

Note: CMS proposes to make separate payments to physicians providing care for the 30 days

after patients are discharged from a hospital or nursing facility.

Hospital outpatient: HOD payment rate increases of 2.1% and ambulatory surgery centers

1.3%.

Home health: decreased 0.1%.

Note: provisions of ACA apply a 1% reduction to the CY2013 home health market basket

update of 2.5%, resulting in a 1.5% increase for home health agencies in CY2014.

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House votes to repeal ACA Wednesday, the House passed H.R. 6079, Repealing the Affordable Care Act, by a vote of 244-185,

with five Democrat members supporting the measure. The vote marked the 33rd time the House has

voted to repeal the entire law or provisions of ACA. The bill is not expected to be picked up by the

Senate and President Obama said he would veto the bill should it pass through Congress.

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President signs PDUFA into law Monday, July 9, President Obama signed into law S. 3187, the Food and Drug Administration Safety

and Innovation Act (FDASIA), reauthorizing the Prescription Drug User Fee Act (PDUFA) after

passing through both the House and Senate with bipartisan majorities.

For information on what the legislation includes, see the Monday Memo for July 9, 2012.

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House Veterans’ panel focus on transparency efforts The Veterans‘ Affairs Committee passed by voice vote H.R. 4057, Improving Transparency of

Education Opportunities for Veterans Act of 2012, to develop a comprehensive policy to improve

outreach and transparency to veterans. The legislation package would require the U.S. Department of

Veteran Affairs (VA) Secretary to establish a registry to monitor service members and veterans to

determine whether exposure to burn pits in war zones has caused health problems, and to develop a

public information campaign to inform those eligible about the registry. The full House is expected to

vote on the bill prior to the August recess.

Note: in May, the Government Accountability Office (GAO) released a report finding that open burn

pits on or near military bases produced ―harmful emissions that military and other health professionals

believe may cause acute and chronic health effects.‖ The report conflicts with a previous Institute of

Medicine (IOM) report that found insufficient evidence that long-term health effects might be seen in

service members exposed to burn pits. The Department of Defense (DOD) and VA are under

increased pressure to develop more transparency in dealings with veterans. (Sources: GAO, ―DOD

Can Improve Its Response to Environmental Exposures on Military Installations,‖ May 2012; IOM,

―Long-Term Health Consequences of Exposure to Burn Pits in Iraq and Afghanistan,‖ October 2011)

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State update

CMS awards new CO-OP grant CMS has awarded an $85.4 million loan to a new Consumer Operated and Oriented Plan (CO-OP) in

Utah—the Aarches Community Health Care. It is the 17th CO-OP funded under ACA Section 1322:

the Act authorizes $6 billion to fund the CO-OP program to foster creation of nonprofit, member-run

health insurance companies that serve individuals in one or more states. CO-OP grantees shall

compete in the reformed individual and small group insurance markets. Federal funds shall be

distributed as loans and grants; loans to assist with start-up costs, grants to meet state solvency

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Health exchange update Thirteen states have sent letters to HHS indicating their intention to set up state-based health

insurance exchanges (HIX): California, Colorado, Connecticut, Hawaii, Massachusetts, Maryland,

Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and Kentucky. return to top

State round-up Arkansas Insurance Commissioner Jay Bradford issued a proposed rule to establish a

process for the state to set benchmark essential health benefit plan by the end of September.

Massachusetts voters will decide on two health-related measures in November: whether to

allow terminally ill residents with less than six months left to live to obtain life-ending drugs,

and whether to legalize medicinal marijuana, setting up a regulated system of dispensaries

and patient ID cards.

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Industry update

Study: health system CEOs concerned about cost pressures, uncertainty about health

reform Based on one-on-one interviews with health system CEOs: on a scale of 1 to 10, with 10 your

highest/greatest concern, how would you rank these issues as they impact your organization?

Statement, ranked by level of concern Mean Range

A concern: the issue/challenge that is getting more attention and remains challenging

Our current cost structure is optimal for value-based purchasing by Medicare and

payers 6.0 4-9

We are prepared for the eventualities that might come from health reform 6.1 2-8

Our board is well informed about the industry and its future challenges 6.7 5-10

Our culture lends itself to innovation 6.7 3-10

Our clinical programs are the right balance of acute and ambulatory services 6.7 3-10

We have the information systems necessary to prepare for the future 6.7 3-8

A source of concern: issue/challenge is getting attention and can use more

Our relationship and structure with our physicians is well positioned to share risk

with insurance plans 7.1 7-10

Our physicians are well informed about the industry and changes that will impact their future

7.2 3-9

Our competitive position is strong relative to our local competitors 7.4 3-10

A major concern that is being managed

We enjoy the trust and confidence of our core medical staff 8.6 7-10

Our balance sheet is strong: we can access adequate capital at favorable rates 8.8 8-10

Source: Deloitte Center for Health Solutions, ―A look around the corner: Healthcare CEOs’ perspective on the

future,‖ 2012. See My Take for link to full report.

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OIG report to CMS: inadequate conflict of interest surveillance for contractors found Last week, the HHS Office of Inspector General (OIG) released a report in response to a letter from

Senators Max Baucus (D-MT), Thomas R. Carper (D-DE), and Claire McCaskill (D-MO) raising

concerns about potential conflicts of interest among Medicare contractors. The OIG review of 1,919

contractual relationships concluded that CMS does not have an adequate policy for reviewing conflict

and financial interest information submitted by contractors nor does it capture information that is

consistent or complete. OIG offered CMS the following recommendations:

Provide clearer guidance in the Requests for Proposals to offerors and subcontractors

regarding which business and contractual relationships should be identified as actual conflicts

and possible conflicts.

Require offerors and subcontractors to distinguish those business and contractual

relationships that they deem to be actual conflicts from those they deem to be possible

conflicts.

State whether offerors and subcontractors need to report income amounts, periods of

performance, and types of work performed for their contracts with CMS and income amounts

generated from key personnel's other employment.

Create a standardized format for reporting information in the Organizational Conflict of Interest

Certificate and require its use by offerors and subcontractors.

Develop a formal, written policy outlining how conflict-of-interest information provided by

offerors should be reviewed by CMS staff.

Note: CMS notified OIG that it is implementing the recommendations beginning with development of a

new policy and staff training to spot, document, and mitigate conflicts of interest. (Source: OIG,

Conflicts and Financial Relationships Among Potential Zone Program Integrity Contractors,‖ July

2012)

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Physicians no longer in demand for independent private practices A new survey from Merritt Hawkins‘ indicates that 63% of recent search assignments for hospital employment of physicians were up from 56% the 2011 and 11% in 2004. See Fact File for more.

(Source: Source: Merritt Hawkins, ―Survey: Search for Solo Doctors Coming to an End,‖ July 2012)

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WellPoint, AmeriGroup deal announced Last week, the acquisition of Medicaid managed care #2 player, AmeriGroup by WellPoint for $4.9

billion cash (18.4 times 2013 earnings) was announced. The combined companies will serve 4.5

million of the nation‘s 53 million Medicaid enrollees.

Note: state and federal outlays for the Medicaid program were $457 billion in 2011—$263 billion from

the federal government.

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Trade group asks Congress to revise observational stay regulations The American Health Care Association (AHCA) is urging Congress to fix the hole of coverage that

older adults hit when their physicians call for observatory stays following discharge from inpatient

stays. Observational stays are currently considered outpatient stays and do not qualify for the 100-

days of nursing facility care Medicare normally pays for. Representative Joe Courtney (D-CT)

introduced H.R.1543, Improving Access to Medicare Coverage Act of 2011, which will consider a

patient under observation as an inpatient with respect to the 3-day hospital stay Medicare requires

before paying for long term care claims. ACHA members have also been encouraged to discuss the

initiative surrounding nursing home quality measures to include increasing staff stability by 15% and

customer satisfaction up to 90% and reducing hospital readmissions by 15% and off-label anti-

psychotic use by 15%. The bill currently has 27 cosponsors and has been referred to the

Subcommittee on Health.

Note: from AHCA website—The American Health Care Association is a non-profit federation of

affiliate state health organizations, together representing more than 11,000 non-profit and for-profit

nursing facility, assisted living, developmentally-disabled, and subacute care providers that care for

approximately one million elderly and disabled individuals each day.

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Physicians to Congress: SGR replacement will take years to develop Wednesday, the Senate Finance Committee heard testimony from physician organizations about a

replacement for the sustainable growth rate (SGR), the formula used to compensate physicians. While

the whole group advocated that real-time data from CMS is required for them to improve quality of

care, statements from specific groups included:

American Medical Association (AMA) president-elect Ardis Hoven indicated that multiple

formulas may be needed and also commended a new Innovation Center for its method of

paying $20 per month per beneficiary for offering longer and more flexible office hours,

coordinating treatment with other physicians, and using electronic health records.

American Academy of Family Physicians (AAFP) President Glen Stream urged CMS to use

the patient-centered medical home model more, citing evidence that these models save

money and improve the quality of care. While all of the physicians acknowledged the formula

is flawed and needs to be replaced, they also emphasized that CMS data needs to be more

up-to-date in order for physicians to track their patients‘ care and control costs.

Douglas Weaver of the American College of Cardiology (ACC) offered that CMS should

encourage more use of clinical data registries that allow for the tracking, reporting, and

improvement of health care quality.

The American College of Surgeons (ACS) described its proposal to add quality measures

developed by medical specialties to currently existing measurements—specialties would

choose a target goal and all health care professionals who help achieve those goals would

receive part of a bonus.

Senator Orrin Hatch (R-UT) asked panelists to submit ideas for compromising on medical malpractice,

stating that defensive medicine is responsible for a large part of unnecessary spending in the

program.

Note: a full replacement for the SGR was not presented by the physician organizations.

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Hospital trade groups seek avoidance of Medicare cuts from sequester Last week, the American Hospital Association (AHA) and Federation of American Hospitals (FAH)

announced a campaign to prevent funding cuts of 2% to Medicare that go into effect January 1,

2013—a cut of $124 billion over ten years to providers (32% of sequester cuts hit hospitals, 8%

outpatient facilities). The hospital groups are planning a targeted push against the spending cuts

beginning in September, and will include outside groups such as business trade associations.

Representative Edolphus Towns (D-NY) introduced H. R. 3519 to exempt the Medicare program from

fallback sequestration under the Budget Control Act of 2011 last year. It has eight Democratic and no

Republican co-sponsors.

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Quotable ―In the decade before the law was passed, national health expenditures increased about 7 percent a

year. But in the past two years, those increases have dropped to less than 4 percent per year, saving

Americans more than $220 billion...You can see the same trend with premiums. Between 2000 and

2009, the average family premium more than doubled, from $6,438 to $13,375, an annual increase of

8.1 percent. From 2009 to 2011, family premiums still rose—but at a rate 25 percent lower. That

generated savings of more than $1,200 per family…Another falsehood...is that it is putting ...a greater

burden on small businesses…Small businesses were struggling in the health insurance market long

before the law passed, spending an average of 18% more than their large competitors annually…

[and] the number of small businesses offering coverage to employees was falling rapidly—from nearly

70% in 2000 to less than 60% in 2009…People are entitled to their opinions but not to their own

facts.‖—HHS Secretary Kathleen Sebelius, ―The Truth about Health Reform,‖ Washington Post

Editorial, July 11, 2012

―For the most serious infections, where few alternatives exist, the FDA should create streamlined

regulatory pathways for approval of new antibiotics. Alarm bells have been ringing for a long time about the march of the microbes. It is time to pay attention.‖—Editorial Board, ―Resistance to

antibiotics is becoming a crisis,‖ Washington Post, July 10, 2012

―These trends reflect a sea change in American culture toward more individualism. That can be both

good and bad. Some people have argued that individualism has been on the rise in Western cultures

for centuries but that the increase accelerated after the late 1960‘s. These results suggest that‘s

indeed the case.‖—Jean Twenge, Keith Campbell, and Brittany Gentile, ―Increases in Individualistic

Words and Phrases in American Books, 1960–2008,‖ PLoS ONE, July 10, 2012

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Fact file

The 27 states that sued the federal government will forego $207 billion over five years in

federal funding if they choose not to expand their Medicaid programs. Five states—Florida,

Texas, Pennsylvania, Ohio, and Georgia—account for $106 billion. (Source: Bloomberg

Government, ―Supreme Court Ruling May Undermine Increase In Medicaid Spending,‖ March

2012)

Health care workforce: 10.8% of total employment—one in nine jobs in the economy; highest on record. (Source: Bureau of Labor Statistics, June 2012)

Federal tax rates 2009: Household income fell 12% from 2007-2009 (top 20% paid 23.2% in

2009 vs. 24.7% in 2007; bottom 20% tax rate fell from 5.1% in 2007 to 1% in 2009). The

federal tax rate fell to 17.4% in 2009 from 19.9% in 2007—previous low was 19.4% in 2003.

(Source: Congressional Budget Office, ―The Distribution of Household Income and Federal

Taxes, 2008 and 2009,‖ July 2012)

Lobbying investments: labor unions $4.4 billion 2005 thru 2011 including soft costs not captured in Federal Election Commission filings. (Source: Tom McGinty, Wall Street Journal,

―Political Spending by Unions Far Exceeds Direct Donations,‖ July 10, 2012)

Supervisory care: in the past three months, 39.8 million people over 15 provided unpaid care

to someone over 65 because of a condition related to aging; 22% of those aged 45-64 identify themselves as elder care providers—56% of these are women. (Source: Bureau for Labor

Statistics, ―American Time Use Study,‖ June 22, 2012)

Voter opinions of ACA:

o ACA individual mandate is a tax hike: 55% yes, 36% no

o Agree with the Supreme Court decision to uphold the law: 48% yes, 45% no

o Believe Congress should repeal ACA: 49% yes, 43% no

o Presidential candidate‘s position on health care is extremely or very important to their

vote in November: 55%

o Supreme Court decision effect on their vote: 59% no effect, 27% less likely to vote for

President Obama, 12% more likely to vote for President Obama

(Source: Quinnipiac University poll, ―American Voters Say Health Care Law Is A Tax Hike,

Quinnipiac University National Poll Finds; Most Want Arizona-Type Immigration Law In Their

State,‖ July 12, 2012)

Medicaid patient visits to emergency department (ED): nonurgent visits represented 10% of

ED visits paid by nonelderly Medicaid patients, while 7% of ED visits were privately insured in

2008. Slightly more than half of Medicaid and private payer visits were categorized as ―urgent‖

or ―emergent,‖—the difference in the rate of nonurgent visits per 100 enrollees between Medicaid and private insured account for 13% of the total difference in ED visit rates. (Source:

Center for Health System Change, ―Dispelling Myths About Emergency Department Use:

Majority of Medicaid Visits Are for Urgent or More Serious Symptoms,‖ July 2012)

National health expenditures: increase of 3.8% in May 2012 vs. 4.2% observed in April.

Health spending as a share of GDP was 18% in April, down from the all-time high of 18.1% in

June 2011—up from 16.4% in December 2007, the start of the recession. (Source: Altarum

Institute, Center for Sustainable Health Spending, ―Insights from Monthly National Health

Expenditure Estimates through May 2012,‖ July 2012)

Solo practices: according to a new survey, only 1% of new physician recruiting assignments

were for solo practices, down from 22% in 2004. The researchers predict that, in two years,

75% of newly hired physicians will be hospital employees. (Source: Merritt Hawkins, ―Survey:

Search for Solo Doctors Coming to an End,‖ July 2012)

Global spending on pharmaceuticals: a new report predicts global spending on medicines to

reach nearly $1.2 trillion by 2016—rising from 2011 levels of $956 billion. U.S. spending is

projected to grow by less than 2% in 2012 and 2013 before rising up to 4% in 2014—the year

that an expected 30 million uninsured American gain insurance. The U.S. share of the world‘s

prescription drug spending dropped from 41% in 2006 to 34% last year, and will continue to

drop, reaching approximately 31% by 2016. (Source: IMS Institute for Healthcare Informatics,

―The Global Use of Medicines: Outlook through 2016,‖ July 2012)

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Upcoming life sciences and health care Dbrief webcasts Anticipating tomorrow's complex issues and new strategies is a challenge. Stay fresh with Dbriefs –

live webcasts that give you valuable insights on important developments affecting your business.

July 24, 1:00 PM ET: Health Cost Management and Health Benefits Plans: What Are Employers Planning?

August 21, 1:00 PM ET: Medicare: A Look around the Corner

September 20, 1:00 PM ET: Medicaid: What‘s Its Future?

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Deloitte Center for Health Solutions research

Coming soon:

2012 Survey of U.S. Health Care Consumers – INFOBrief series

Meeting the challenge: Maximizing the value of employer provided health care

State Medicaid Program Management: Update and considerations

Currently available: A look around the corner: Health care CEOs’ perspectives on the future—July 2012. Available

online at www.deloitte.com/us/healthcareceoperspectives

Deloitte 2012 Survey of U.S. Health Care Consumers: The performance of the health care

system and health care reform—June 2012. Available online at

www.deloitte.com/us/2012consumerism

Health Care Reform: Center Stage 2012 Perspectives from consumers, physicians and

employers—June 2012. Available online at www.deloitte.com/us/healthcarecenterstage2012

Value-based pricing for pharmaceuticals: Implications of the shift from volume to value —June

2012. Available online at www.deloitte.com/us/ValueBased

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Deloitte contacts Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

(pkeckley@deloitte.com)

Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology, Deloitte

Center for Health Solutions (hgreenspun@deloitte.com)

Jessica Blume, U.S. Public Sector National Industry Leader, Deloitte LLP (jblume@deloitte.com)

Bill Copeland, U.S. Life Sciences and Health Care National Industry Leader, Deloitte LLP

(bcopeland@deloitte.com)

Rick Wald, Director, Human Capital, Deloitte Consulting LLP (rwald@deloitte.com)

Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting LLP

(mitchmorris@deloitte.com)

Jason Girzadas, National Managing Director, Life Sciences & Health Care, Deloitte Consulting LLP

(jgirzadas@deloitte.com)

George Serafin, Managing Director, Health Sciences Governance Regulatory & Risk Strategies,

Deloitte, LLP (gserafin@deloitte.com)

To receive email alerts when new research is published by the Deloitte Center for Health Solutions, please register at www.deloitte.com/centerforhealthsolutions/subscribe.

To access Center research online, please visit www.deloitte.com/centerforhealthsolutions.

To arrange a briefing for your team, contact Jennifer Bohn (jebohn@deloitte.com).

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