What’s Next for Health Care? Understanding the current state to get to the future state

1. What’s Next for Health Care? Understanding the current state to get to the future state Presented to the Concord Coalition May 28, 2009 Julie Lewis Director for Health Policy The Dartmouth Institute for Health Policy & Clinical Practice

2. What does health care in the US currently look like?

3. Healthcare is in Crisis • Unsustainable Growth in Spending • Pay for Volume, not Value • Little to No Accountability for Quality or Cost • Gaps & Variances in Care • Poor Chronic Disease Management • Lack of Care Coordination • Disparities by Race and Ethnicity • Increasing Uninsured & Underinsured • Lack of Information • Effectiveness of Treatments • Comparative Effectiveness • Public Information on Provider Cost and Quality

4. The Numbers • US healthcare costs in excess of $2.5 trillion • Recent CBO report suggests waste = $700B/year • Patients, on average, receive recommended health care only 55 percent of the time (McGlynn et al. 2003)

5. Cost: Over half of cost growth in federal spending will be attributed to per capita cost growth Percent of GDP Allocation of Projected Growth in Federal Spending on Medicare and Medicaid by Source Source: Economic and Budget Issue Brief: Accounting for Sources of Projected Growth in Federal Spending on Medicare and Medicaid. A series of issue summaries from the Congressional Budget Office. May 28, 2008

6. Cost: U.S. Health Expenditures and Workers’ Earnings, 2000–2008 106% 75% Percent 47% 29%

7. Three fold variation in per capita spending Peter Orszag, N Engl J Med, 2007

8. UCLA Massachusetts Mayo Clinic Medical General (St. Mary's Center Hospital Hospital) 50,522 40,181 26,330 Total Medicare spending Spending and resource usechronically ill, last 6 months of life 52.1 42.2 23.9 Physician visits 19.2 17.7 12.9 Hospital days End-of-Life SpendingVariation at Major US Medical Centers

9. Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Examples: Mammogram, Women 65-69 Pap Smear, Women 65+ Pneumococcal Immunization Aspirin at admission (Heart attack)

10. Higher healthcare spending is not associated with better quality Source: Baicker et al. Health Affairs web exclusives, October 7, 2004

11. Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Preference Sensitive Care Examples: Total Hip Replacement Total Knee Replacement Back Surgery CABG Following Heart Attack

12. Rate of Coronary Artery BypassGraft Surgery Age-sex-race adjusted, 2001 14.0 12.0 10.0 8.0 6.0 4.0 Q1 Q2 Q3 Q4 Q5 2.0 Variation in preference sensitive care exists within ALL regions rather than between regions Each red dot represents a Hospital Referral Region (HRR) Rate per 1000 Enrollees HRRs by Spending Quintile

13. Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Preference Sensitive Care Supply Sensitive Care Examples: Total Inpatient Days/ICU Days Diagnostic Tests Evaluation and Management (visits) Imaging

14. What do higher spending regions get? (1) Fisher et al. Ann Intern Med: 2003; 138: 273-298 (2) Baicker et al. Health Affairs web exclusives, October 7, 2004 (3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005 (4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006 (5) Sirovich et al Ann Intern Med: 2006; 144: 641-649 (6) Fowler et al. JAMA: 299: 2406-2412

15. What’s going on? Research on causes of regional variations

16. What might be going on?Research on causes of regional variations Source: Sirovich et al. Health Affairs. May/June 2008

17. What about Iowa?

18. Per Capita Medicare Reimbursements(Part A & B, 2006) Dollars Iowa $6,572/beneficiary States

19. Per Capita Medicare Reimbursements(Part A & B, 2006) Dollars Dubuque $7,859/beneficiary Iowa City $6,045/beneficiary Hospital Referral Region

20. What if…. If per capita Medicare spending in Iowa was at the Marshalltown level? Saving for… - Just Medicare - Just for Part A & B - Just 2006 Would have been: $520 Million

21. Standardized PricesTotal Medicare Expenditures (Part A & B) National Average

22. Standardized Prices Inpatient Short Stays National Average

23. Standardized Prices Hospice Services National Average

24. Standardized Prices Outpatient Services National Average

25. Annual Growth Rates of per Capita Medicare Spending Dubuque……………..5.2% Sioux City……………4.9% Waterloo……………..4.2% Des Moines………….4.0% Davenport……………3.5% Cedar Rapids………..3.5% Iowa City……………..2.8% Source: Slowing the Growth of Health Care Spending: Lessons from Regional Variation Fisher, Skinner, Bynum, New England Journal of Medicine, February 26, 2009

26. Where are we trying to go?

27. Meaningful Measures of System Performance Meaningful Measures of System Performance Better Evidence to Reduce Gray Areas Focus of Measurably Improving Health Focus of Measurably Improving Health Principles for Reform Rewarding Value, Not Volume Rewarding Value, Not Volume Organizational Accountability for Capacity, Cost, and Quality Organizational Accountability for Capacity, Cost, and Quality Engaged Patients, Informed Choice Engaged Patients, Informed Choice The Right Workforce to Lead the Change The Right Workforce to Lead the Change