An Arm and a Leg….Managing healthcare costs Managing chronic disease- An Australian private health insurer’s perspective

1. An Arm and a Leg….Managing healthcare costsManaging chronic disease- An Australian private health insurer’s perspective Julie AndrewsGroup Manager, Health ServicesMedibank PrivateMay 2007

2. State of the private health industry…. The Australian Care Health Environment

3. The Australian Health Care EnvironmentPublic and Private systems • Universal Health Care System-Medicare • Complementary private health system: • 33% of beds • 39% of all admissions: 56% of surgery • Private health insurance: • Value proposition: choice and access • Hospital (inpatient care) and Ancillary covers • Consumer marketed, with numerous incentives • Community rating • Portability • Over 10 million people insured (highest in 20 years) • Hospital cover: 8.90 million (43.2%) • 65 yrs+ : 45.7% insured yet only 13.3% of the population

4. Chemotherapy 53% Major procedures for malignant breast conditions 54% Hip Replacements 55% Other major joint replacement & limb reattachment 63% Mental health treatment, same day 65% Major lens procedures 70% Major wrist, hand & thumb procedures 71% Knee procedures 77% The Australian Health Care EnvironmentPublic and Private systems Proportion of procedures performed in Private Hospitals

5. The Australian Health Care EnvironmentHealthcare expenditure growth

6. State of the private health industry…. Impact of Chronic Disease…and Arm and a Leg

7. Chronic Disease and High Cost Claims 1% of Membership is responsible for 45% of hospital outlays MPL Claims data

8. Chronic Disease and Avoidable Admissions Top 5 Avoidable admissions by condition AIHW 2006

9. Chronic Disease and Risk Factors Contribution of preventable Risk factors to Burden of Disease AIHW: 2006 Australia’s Health 2006

10. Relationship between Health Risk and Costs

11. State of the private health industry…. Disease Management: the Private Health Insurance Experience

12. Medibank’s Disease Management Journey 2006-2007 2003-2005 From 2000-2002 Member Wellbeing Pilots Pilots investigating customised health information; Personalised advice & feedback; Interactive programs, telephonic and online support; GP engagement • Peak Health Alliances • Health Information & Health Promotion (general audience, not targeted) • National Heart Foundation • National Asthma Council • DepressioNet betterhealth Programs Telephone and mail based disease management and case management programs targeting members with specific health conditions and multiple co-morbidities Face to face case management services Online health information and health programs focusing on health risks such as being overweight, diet and lack of physical exercise Objective: To reduce the impact of health risk and disease on our members and influence future health care utilisation and costs. Objective: To align Medibank with health information and advice in the minds of our stakeholders. Objective: To assess impact of pilots on members’ health status, to improve internal capability & knowledge.

13. Medibank’s Disease Management Programs • betterhealth Online • Web-based personal Wellness Record supported by Active Health programs and information for members with health risks • betterhealth On Track Diabetes • Mail based diabetes monitoring program for members with type-2 diabetes promoting preventative care and improved self management • betterhealth On Call • Telephone-based, proactive support programs providing patient education and self management for members with chronic disease • Interventions based on Australian guidelines and best practice and derived from Australian data, eg Burden of Disease • Guided by advisors: GP, Disease Management specialist, epidemiologist • Programs subjected to an independent 3rd party evaluation

14. betterhealth online Promoting wellbeing & prevention

15. Medibank’s Disease Management Programs • betterhealth Online • Web-based personal Wellness Record supported by Active Health programs and information for members with health risks • betterhealth On Track Diabetes • Mail based diabetes monitoring program for members with type-2 diabetes promoting preventative care and improved self management • betterhealth On Call • Telephone-based, proactive support programs providing patient education and self management for members with chronic disease • Interventions based on Australian guidelines and best practice and derived from Australian data, eg Burden of Disease • Guided by advisors: GP, Disease Management specialist, epidemiologist • Programs subjected to an independent 3rd party evaluation

16. betterhealth On Track Diabetes Program • Objectives: • Improve participant’s knowledge of diabetes management and complications screening • Increase rates of complications screening and risk factor assessment • Increase the proportion of people meeting treatment targets • Components: • Survey • Mailed individualised feedback and suggestions based on pathology results • Information tip sheets

17. Medibank’s Disease Management Programs • betterhealth Online • Web-based personal Wellness Record supported by Active Health programs and information for members with health risks • betterhealth On Track Diabetes • Mail based diabetes monitoring program for members with type-2 diabetes promoting preventative care and improved self management • betterhealth On Call • Telephone-based, proactive support programs providing patient education and self management for members with chronic disease • Interventions based on Australian guidelines and best practice and derived from Australian data, eg Burden of Disease • Guided by advisors: GP, Disease Management specialist, epidemiologist • Programs subjected to an independent 3rd party evaluation

18. betterhealth On Call Program • Target conditions: CAD, CHF, COPD • Objectives: • Improve participant’s knowledge and management of his/her condition(s) • Improve compliance with guidelines and targets • Components: • Outbound calls from health professionals • Development of Action Plans/Care Plan consistent with GP care • Mailed information • 24 hour call line

19. State of the private health industry…. The Bottom Line……results of Medibank’s Disease Management Programs

20. The Results: Change in Health Status HRA and Health Risk Programs • 32% recorded an average decrease of 1.5kg/m2 in BMI with an average weight loss of 4.6 kg • Females under 25 and males over 55 recorded the largest average improvements in BMI • 28% reported an average increase in physical activity from 103 to 204 minutes per week (97% increase) • Improvements in Blood Pressure, Blood Glucose and Cholesterol (High>Normal; Normal>Low; Not sure> Aware) were reported in approx 5% of participants • Only slightly more than 1% stopped smoking and 5% reduced their alcohol intake

21. The Results: Change in Health Status HRA and Health Programs

22. The Results: Change in Health Status Diabetes On Track Pilot • Members at highest risk, with results outside the target ranges for CVD risk factors, had the greatest improvements which included: • Nearly 70% of those with initial high blood glucose (HbA1c) level showed improvement • Close to 10% of participants achieved a 1% point decrease in their HbA1c • 35% reached target for total cholesterol • a 14% improvement from base line • overall blood lipid levels improved by 8% • 39% lowered systolic BP-26% achieved 10mmHg reduction • 50% reported an increase in physical activity • 56% of those who were overweight or obese lost weight

23. The Results: Change in Health Status Diabetes On Track Pilot

24. The Results: Change in Behaviour • Diabetes On Track Pilot • Foot checks increased , with >50% occurring in the period immediately after the survey mail-out • 33% reported changes in their interaction with their GP • “I became more assertive – asking for HbA1c” • 25% reported commencing BP medication; 25% started cholesterol medication; 50% modified Diabetes treatment • 80% increase their knowledge about diabetes • HRA and Health Programs • Member Wellbeing participants reported increased GP visits (24%), particularly those in risk programs (31%)

25. The Results: Change in Behaviour betterhealthOn CallPrograms - Preliminary Results • Over 2,000 members are currently participating in betterhealth On Call • As at Dec-06, 520 had completed six-months on the Program, with 193 on COPD program, 275 (CHF) and 52 (CAD) • Key improvements in these members were: • Daily weighing up from 34% to 72% (CHF) • Low sodium diet for 86% from 60% (CHF) • Early recognition of symptoms up from 56% to 77% (COPD) • Uptake of written action plans (COPD: 13% 52%, CHF: 3% 43%) • Increased awareness of blood pressure (CAD: 57%73%) • Lower average BMI (CAD: 26.926.5)

26. The Results: Change in Utilisation Diabetes On Track Pilot • For the 295 participants who completed the program, hospital admissions reduced by 16% in the 12-month pilot when compared with the previous 12-months • Includes 8% decrease in overnight admissions • MPL data indicates that diabetes as a co-morbidity doubles the cost of a hospital admission • 8% decline in benefits paid to 295 final participants during the pilot compared to the prior 12-months • Largely driven by 9% decrease in hospital benefits • More medical/diagnostic DRG’s rather than surgical DRG’s

27. The Results: Change in Utilisation Member Wellbeing Pilot

28. The results: Change in role..

29. The questions remain: • Are we doing the right thing? • Correct targeting • Optimising participation • Intervention effectiveness • Cause and effect? • Will we obtain the benefits? • Sustaining behaviour change • Delivering positive ROI

30. Contact Details: Julie Andrews Group Manager, Health Services Medibank Private Level 16, 700 Docklands Vic 3008 Phone: (03) 8622 5240 Fax: (03) 8622 5270 Email: julie_andrews@medibank.com.au