The Changing U.S. Healthcare Landscape · Sources: News releases, company websites, Dartmouth Atlas...
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© OLIVER WYMAN The Changing U.S. Healthcare Landscape Mike Lovdal, Emeritus Partner [email protected]
Transcript of The Changing U.S. Healthcare Landscape · Sources: News releases, company websites, Dartmouth Atlas...
© OLIVER WYMAN
The Changing U.S. Healthcare Landscape
Mike Lovdal, Emeritus Partner
1© OLIVER WYMAN
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1960 1970 1980 1990 2000 2010
Pe
rce
nta
ge
(%
)
Year
Total
Private
Public
U.S. Healthcare Expenditures
Percent of GDP
Source: Centers for Medicare and Medicaid Services, 2013
$2.81T
$1.56T
$1.25T
U.S. health spending: 5% of GDP in 1960, 17.5% in 2013
Demographicage wave
Declining population
health status andattitudes
New medical and therapeutic
technologies
Fee-for-service payment systems
Sense of healthentitlement
Projected
User = payer
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U.S. healthcare performance
…2nd highest risk of dying of noncommunicable diseases and 4th
highest risk of dying from communicable diseases…
… the United States ranked last among males and next to last among females for
life expectancy…
… the United States had the highest infant mortality rate of the 17 peer
countries…
3© OLIVER WYMAN
Patient Protection and Affordable Care Act (aka ACA)
4© OLIVER WYMAN
King v. Burwell: Supreme Court to rule on Obamacare subsidies based on ACA language ambiguity (“. . . established by the State”)
5© OLIVER WYMAN
Exchange status
Maryland
New
ConnRI
Mass
Federal Exchange
Federal Exchange
(state policy)
State SHOP/ Federally-
Facilitated Individual
State Exchange
Source: Mercer
6© OLIVER WYMAN
Plans offered in
New York City
NOTES: Under discussion indicates executive activity supporting adoption of the Medicaid expansion. *AR, IA, MI, and PA have approved Section 1115 waivers; IN has a pending waiver to implement the expansion. The PA waiver is set to go into effect on January 1, 2015, but the newly-elected governor may opt for a state plan amendment. NH has submitted a waiver to continue their expansion via premium assistance. WI covers adults up to
100% FPL in Medicaid, but did not adopt the ACA expansion.
SOURCE: “Status of State Action on the Medicaid Expansion Decision,” KFF State Health Facts, updated December 17, 2014.http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/
State Medicaid expansion decisions
WY
WI*
WV
WA
VA
VT
UT
TX
TN
SD
SC
RI
PA*
OR
OK
OH
ND
NC
NY
NM
NJ
NH*
NVNE
MT
MO
MS
MN
MI*
MA
MD
ME
LA
KYKS
IA*
IN*IL
ID
HI
GA
FL
DC
DE
CT
COCA
AR*AZ
AK
AL
Adopted (28 States including DC)
Adoption under discussion (7 States)
Not Adopting At This Time (16 States)
Healthy Indiana Plan – a consumer-directed plan for low-income individuals. The Governor has requested to use the state-run plan in place of traditional Medicaid expansion
Coordinated Care Organizations –innovative experiment with managing Medicaid populations in coordinated care organizations
Accountable Care Entities – ACOs for Medicaid
Private Option – uses federal funds to purchase private coverage for low income residents
8© OLIVER WYMAN
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
Three waves reshaping the U.S. healthcare landscape
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
9© OLIVER WYMAN
How will the three waves impact your Community Heath Center’s business model?
Served Populations Revenue Models
Strategic Control Scope
Value Proposition
What revenue models will
we use to capture value
from serving these
consumers?
What consumer (aka patient)
segments (aka populations)
are we serving?
How will we protect our
consumer base and sustain
our value proposition?
What is our unique and
differentiated value
proposition relative to
competitors?
What value chain positions
and what assets and
partners do we need?
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
10© OLIVER WYMAN
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
Three waves reshaping the U.S. healthcare landscape
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
11© OLIVER WYMAN
Team-Based
Population
Health
IT
Interoperability
Predictive Care
Patient
Personalization
Patients First
Philosophy
Targeted
Engagement /
Management
Holistic Care Fast Analytics
Evidenced-
Based
Real-Time
Monitoring
Accessible and
Available
Patient-Centered
Care Core Principles
Wave 1: Patient-centered . . .
12© OLIVER WYMAN
Team-Based
Population
Health
IT
Interoperability?
Predictive Care
Patient
Personalization
Patients First
Philosophy
Targeted
Engagement /
Management
Holistic Care Fast Analytics
Evidenced-
Based
Real-Time
Monitoring
Accessible and
Available
Patient-Centered
Care Core Principles
Report to Congress
April 2015
Report on Health Information Blocking
The Office of the National Coordinator for
Health Information Technology (ONC)
. . . The federal government has
invested over $28 billion to
accelerate the development and
adoption of health IT . . .
. . . Current economic and market
conditions create business
incentives for some persons and
entities to exercise control over
electronic health information in
ways that unreasonably limit its
availability and use . . .
. . . Information blocking not only
interferes with effective health
information exchange but also
negatively impacts many important
aspects of health and health care.
One hurdle . . .
13© OLIVER WYMAN
Future: FFV
Partial Population
• Frail elder
• Poly-chronic
Full Population
• Pediatric
• All-risks
• Oncology
• Diabetes
• Asthma
• Chronic renal
• Orthopedics
• CV surgery
• General surgery
Today: FFS
Transactional
Models
Episodic
Care
Models
Condition
Care
Models
Population
Care
ModelsTransactional
Models
Episodic
Care
Models
Condition
Care
Models
Population
Care
Models
Wave 1: Patient-centered and value-based care
14© OLIVER WYMAN
75%Healthy
Independent
5%Complex /
Polychronic
20%Early State
Chronic
20%
45%ER visits,
overutilization, cost variation,
noncompliance
35%Infections,
complications, rehospitalizations
Wave 1: Patient-centered, value-based care
15© OLIVER WYMAN
HHS January 26, 2015 announcement
“HHS has set a goal of tying 30% of traditional, or fee-for-service, Medicare payments
to quality or value through alternative payment models, such as Accountable Care
Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying
50% of payments to these models by the end of 2018 . . .
. . . This is the first time in the history of the Medicare program that HHS has set
explicit goals for alternative payment models and value-based payments.”
16© OLIVER WYMAN
Reactions to HHS announcement
“We encourage the Administration to fully evaluate and improve on the delivery system reforms currently in place . . . Moreover, we need to phase in changes in a thoughtful manner tailored to the specific needs of individual communities.
We look forward to learning more from HHS on the details and metrics of this program.”
"Physicians have many ideas for redesigning and improving the delivery of high-quality patient care in this country . . .
We look forward to hearing more details behind the percentages HHS put forward as well as their plans to reach these percentage targets.”
“Advancing a patient-centered health system requires a fundamental
transformation in how we pay for and deliver care. Health plans have been
on the forefront of implementing payment reforms . . .
We are excited to bring these experiences and innovations to this new
collaboration.”
17© OLIVER WYMAN
$1T to value-based healthcare (in some form) by 2017
$0
$0.5 TN
$1.0 TN
$1.5 TN
$2.0 TN
$2.5 TN
$3.0 TN
$3.5 TN
$4.0 TN
2010 2015 2020 2025
Managed Medicaid: $268 B
MA
$1.5 T
Duals
$578 B
Innovative Employers
$1.2 T
Individuals & Exchange
$231 B
Value market by funding source
2010-2025
$3.7T in 2025
(70% of total spend)
TIPPING POINT:
FFV tops 30% of total market
18© OLIVER WYMAN
The transition is already underway, with 500+ ACOs currently in the market and hundreds of additional pilots on the way
Legend
Medicare / Medicaid
Private
Both
Prep activity only
Updated as of January 2014. Sources: News releases, company websites, Dartmouth Atlas PCSAs, Claritas, Oliver Wyman analysis
1. ACOs defined as providers participating in Pioneer ACO, Medicare Shared Savings, a Medicaid ACO, PGP Transition, or in a shared savings/risk arrangement with a commercial payer; Prep
activity defined as participation in a learning collaborative or providers preparing to become an ACO
19© OLIVER WYMAN
Accountable Care ... ... Organizations
• High quality care
• Efficient delivery
• Coordination of activities
• Measurable results
• Patient-centric
• Whose “Organization”
– Hospital?
– Doctor?
– Payer?
– Population Health Manager?
Where will the trillion $ migrate?
– Community Health Center?
20© OLIVER WYMAN
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
Three waves reshaping the U.S. healthcare landscape
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
21© OLIVER WYMAN
Wave 3: Science of diagnosis and prevention
$100M
$10M
$1M
$100K
$10K
$1K
$100Co
st
to S
eq
uen
ce a
Wh
ole
Gen
om
e
2001 2005 2009 2013 2017 2021 2025
1. Source: National Human Genome Research Institute
2001
First human genome
sequenced for ~$95M
Today
Human genome
sequencing costs ~$1 -2K
2020 ?
High throughput
technology lowers cost to
~$100 / genome
22© OLIVER WYMAN
23© OLIVER WYMAN
Future: Preventive, Interventionist Health Management
Today: Reactive, Transactional Sick Care
Wave 1: Patient-centered, value-based care + Wave 3: Science of diagnosis and prevention
24© OLIVER WYMAN
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
Three waves reshaping the U.S. healthcare landscape
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
25© OLIVER WYMAN
Public Employer
37M
Individual
16 M
Medicare
51 M
Medicaid
54 M
Uninsured
40 MPrivate Employer
121 M
Source: Oliver Wyman analysis based on multiple surveys
5%16%
17%
13%
37%
12%
Insurance status of 319M Americans
26© OLIVER WYMAN
Medicare Vouchers and /or
Medicaid Block Grants are Adopted
More Employers Move to
Defined Contribution
But what if . . .
Active Employees
Retired Employees
27© OLIVER WYMAN
Public Employer
37M
Individual
16 M
Medicare
51 M
Medicaid
54 M
Uninsured
40 MPrivate Employer
121 M
Source: Oliver Wyman analysis based on multiple surveys
5%16%
17%
13%
37%
12%
Here comes the healthcare consumer! Changes to Medicare
(e.g., proposals for vouchers for
buying private insurance) = +51 M?
Changes to
Medicaid (e.g.,
block grants to
states) = +54 M?
Employers dropping
health coverage or
moving to defined-
contribution health
plans = +158 M?
Entry of the uninsured
through ACA penalties
+ exchange subsidies
= +40 M?
28© OLIVER WYMAN
Old World: Patients and members
Sick
At-Risk
Healthy
Provider
Payer
29© OLIVER WYMAN
New World: Consumer-centricity
Family Status
Employment
Education
Geography
Income Level
Social Network
Tech-savviness
Pref. Channels
Ambitions
Gender
Culture
Age
30© OLIVER WYMAN
Voice of the U.S. Healthcare Consumer
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
31© OLIVER WYMAN
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
Voice of the U.S. Healthcare Consumer
Source: IFTF, Centers for Disease Control and Prevention, Health and Health Care, 2010, The Forecast, The Challenge.
“We want to understand how to improve our health and live longer and better.”
Behavior 50%
Genetics 20%
Environment 20%
Access to care 10%
Drivers of health status
3333© Oliver Wyman
A B C ’ S
Aspirin
~60% compliance1
Blood Pressure
Control
(~50% compliance)2
Cholesterol
Control
(~50% compliance)3
Smoking
Cessation
(~30% compliance)4
1. Source: 1) Lip, Gregory. Shantsila, Eduard. “Aspirin Resistance’ or treatment non-compliance? Which is to blame for Cardiovascular Complications?” Journal of Translational Medicine, 2008. 2) Ahmed, Calhoun. “Apparent Resistant Hypertension and Medication Compliance.” Nature commentary of Hypertension Research, 2011. 3) Medscape Today: Lipid lowering therapy: Strategies for Improving Compliance: Improving Patient Compliance 4) Lightwood. “Smoking Cessation in heart failure-it is never too late. Journal of the
American College of Cardiology. 200
“We want to understand how to improve our health and live longer and better.”
34© Oliver Wyman 34
1985
Obesity defined as BMI ≥ 30, or about 30 lbs. overweight for a 5’4” person
2013
No Data <10% 10%–14% 15%–20% 20%–25% 25%–30% ≥30%
Obesity in America
3535© Oliver Wyman
0% 5% 10% 15% 20% 25% 30% 35%
2010
2050
Source: Centers for Disease Control and Prevention.
14%
21% to 33%
Projections
Total Diabetes Prevalence in U.S. Adults
Diagnosed and Undiagnosed Cases
“We want to understand how to improve our health and live longer and better.”
3636© Oliver Wyman
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
Voice of the U.S. Healthcare Consumer
37© OLIVER WYMAN
No
Coordination of
Care
Hard to fit
patients in
schedule
Lack resources to
manage chronic
illnesses
DoctorsWait weeks
to see doctor
Too many
patients, too little
time
No time or $ to
talk end of life
Emotionally
attached
Byzantine
billing
More billing
staff than
nurses
Hard to be
ideal doc
Professional
frustration
Miss
Appointments
Problems go
unnoticed
Can’t
Drive
Complicated
referrals
15-20
medications
Patient
Expensive
hospitalization
Multiple
specialistsConflicting
treatmentsNo holistic
care
Emergency?
Call 911
Expensive
co-pays
No end-of-life
plan
Health
Plan
Redundant
treatment
Hard to find
quality docs
Costly
senior
care
Risk of
adverse
selection
death spiral
Need to
minimize
costs Staff
focused on
costs, not
preventionSmall
margin for
Medicare
patients Denial of
coverage
Healthcare hassle map
38© OLIVER WYMAN
22% 41%
40%
24%
14%
24%32%
40%Finding
information
Enrolling in
a plan
Figuring out
premium costs
Learning about
resources
(e.g. Gym discounts)
Getting information
about vision, dental,
etc.
Understanding
what I have to pay
for care
Comparing
health plans
Understanding
what is covered
Hassle Map for finding health insurance coverage
3939© Oliver Wyman
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
Voice of the U.S. Healthcare Consumer
40© OLIVER WYMAN
?Will consumers opt-in
to the cloud or will
privacy concerns
drive “in-pocket”
alternatives
“We want simple, secure personal health information and tools.”
41© OLIVER WYMAN
Healthcare-Focused Social Media
“We want simple, secure personal health information and tools.”
42© OLIVER WYMAN
Tech Times | October 6 2014, 9:17 AM
“We want simple, secure personal health information and tools.”
Easy-to-use, affordable
technology to track patients and
their health conditions remotely
Reflexion Health uses Kinect for Windows to bring physical therapy to patients’ homes
“We want simple, secure personal health information and tools.”
44© OLIVER WYMAN
“We want simple, secure personal health information and tools.”
Google’s Glucose Tracking Contact LensInstant Heart Rate Monitor
Lens measures glucose levels in tears,
potentially relieving millions of diabetics from the
burden of having to prick their fingers to draw
their blood as many as 10 times a day
App uses the camera lens to monitor heart
rate by detecting changes in color in the
user’s fingertip
“We want simple, secure personal health information and tools.”
46© OLIVER WYMAN
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
Voice of the U.S. Healthcare Consumer
47© OLIVER WYMAN
“We want to be able to stretch our dollars beyond the benefit plan.”
Do you think your doctor should discuss the cost of recommended medical treatment
with you ahead of time, or don’t you think that is necessary?
80%
18%
2%
Should discuss
Not necessary
No opinion
Should discuss
Source: CBS / NYT poll
48© OLIVER WYMAN
Disparities in healthcare prices have captured media attention
49© OLIVER WYMAN
The transparency revolution has already reshaped other consumer-facing service industries
50© OLIVER WYMAN
Innovators are driving and monetizing transparency
51© OLIVER WYMAN
“The lack of price transparency in health care threatens
to erode public trust in our healthcare system . . .
The time for price transparency in health care is now.”
The definitive statement on transparency
52© OLIVER WYMAN
You will be rated . . .
Cost
Experience
Access Quality Winning in the Future
You will be rated by several sources, crowd-sourced and B2C
Sources of Medical Ratings
54© OLIVER WYMAN
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
Voice of the U.S. Healthcare Consumer
55© OLIVER WYMAN
Retailer clinics
Total rooftops:
7,800 8,582 4,987 2,638 1,801
Ratio: 1 : 9 1 : 21 1 : 38 1 : 19 1 : 26
4,587
1 : 153
~30~70
~140~130
~400
~900
0
100
200
300
400
500
600
700
800
900
Source: Company Websites and Annual Reports
“We want anytime and anywhere access to convenient care.”
56© OLIVER WYMAN © OLIVER WYMAN
Urgent Care in New York City
Source: Company Websites
40 locations in NY today,
9 more planned (3 in New Jersey)
“We want anytime and anywhere access to convenient care.”
57© OLIVER WYMAN
“We want anytime and anywhere access to convenient care.”
58© OLIVER WYMAN
“We want anytime and anywhere access to convenient care.”
59© OLIVER WYMAN
“We want to understand how to improve our health and live longer and better.”
“We want to be able to make informed decisions about health services.”
“We want simple, secure personal health information and tools.”
“We want to be able to stretch our dollars beyond the benefit plan.”
“We want anytime and anywhere access to convenient care.”
“We want help with caregiving.”
“We want to live independently.”
Voice of the U.S. Healthcare Consumer
The voice of specific segments
60© OLIVER WYMAN
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
Three waves reshaping the U.S. healthcare landscape
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
61© OLIVER WYMAN
How will the three waves impact your Community Heath Center’s business model?
Served Populations Revenue Models
Strategic Control Scope
Value Proposition
What revenue models will
we use to capture value
from serving these
consumers?
What consumer (aka patient)
segments (aka populations)
are we serving?
How will we protect our
consumer base and sustain
our value proposition?
What is our unique and
differentiated value
proposition relative to
competitors?
What value chain positions
and what assets and
partners do we need?
Wave 1
Volume to Value
Wave 2
Patient to Consumer
Wave 3
Blunt to Precision
Patient-centered,
Value-based Healthcare
Consumer Engagement
and Empowerment
Science of Diagnosis
and Prevention
