ACHIEVING VALUE IN HEALTHCARE: Some Experiential-based Observations

1. ACHIEVING VALUE IN HEALTHCARE: Some Experiential-based Observations Kenneth W. Kizer, M.D., M.P.H. President and CEO National Quality Forum June 17, 2004

2. Presentation Overview VA transformation - a case study in achieving better healthcare value Personal reflections on achieving better value in healthcare based on experience with California Department of Health Services, esp MediCal and other publicly funded healthcare programs U.S. Department of Veterans Affairs National Quality Forum

3. The VA Health Care System

4. VA Health Care-Core Missions Medical care Health professional training Research Emergency management Homelessness

5. RE-ENGINEERINGVA HEALTH CARE

6. VA Transformation... Basic Premise

7. What is Healthcare Value? V = Value C = Cost/price A = Accessibility TQ = Technical quality FS = Functional status SS = Service satisfaction

8. VA Transformation… Critical Strategic Goals (Vision) VA Healthcare will: Provide a seamless continuum of care; Provide high quality care “consistently and predictably”; and Provide superior value.

9. VA Transformation... Operational Restructuring

10. VA Transformation... Key Structural & Process Changes Change Governing Laws Eligibility reform Contractual authority Enrollment system Rationalize resource allocation Design and implement a new resource allocation system (VERA) Diversity funding base

11. VA Transformation… Rationalize Resource Allocation Basic Care - $2,857 (PMPM - $238) 96% patients 62% funds Complex Care - $36,955 (PMPM - $3080) 4% patients 38% funds

12. VA Transformation... Key Structural & Process Changes Modernize information management Implemented EHR systemwide Standardize information systems Implement an accountable performance management system Align vision and mission with quantifiable strategic goals Identify performance indicators for strategic goals Hold managers accountable for achieving results

13. RESULTS AT FIVE YEARS

14. VA Transformation… Selected Results: FY 1995-1999 Implemented universal primary care Closed 55% (28,886) of acute care hospital beds Reduced BDOC per 1000 patients by 68% Increased patients treated by >24% (700,000) ~350,000 (36%) fewer admissions per year 48% increase (25 to 37 million) in ambulatory care visits Decreased staffing by 12% (25,867 FTEEs)

15. VA Transformation… Key Structural and Process Changes

16. VA Transformation… Selected Results: FY 1995-1999 Increased ambulatory surgery from 35% to >75% of all surgeries Established 302 new community-based outpatient clinics (no new $) Merged the management and operations of 52 hospitals into 25 locally integrated systems Eliminated 72% (2,793) of all forms and automated the rest Universal access and identification card 25% decrease in per patient costs (constant dollars)

20. VA Transformation… Surgical Mortality and Morbidity Rates Overall 30-day mortality and morbidity rates dropped 9% and 30%, respectively, from 1994 to 1997 with no change in patient risk profile Mortality rates lowest or equal to U.S. lowest for Colectomy Abdominal aortic aneurysm repair Carotid endarterectomy Cholecystectomy Hip replacement

21. VA Transformation… American Customer Satisfaction Index 80 percent of VHA users experience more satisfied now than two years ago. VHA’s score on the index is 79 (the score for private hospitals is 70).

22. SOME REFLECTIONS

23. Increased value (higher quality, reduced cost and more satisfied customers) can be achieved relatively rapidly – notwithstanding the complexity of healthcare.

24. To Achieve Better Healthcare Value Must identify priorities. Have a clear and easy to understand vision of the desired change Focus on critical change levers Have a coherent, generic plan that can be quickly modified and locally adapted, as needed

25. Critical Change Levers Performance measurement Public reporting of performance data Payment policy (must align payment policy with desired outcomes) Information management Promote a “value-oriented” culture

26. The future is not what it used to be!