The Perfect Storm: Our Role in Delivering Value in Healthcare

1. The Perfect Storm:Our Role in Delivering Value in Healthcare Matt Wain, Chief Operating Officer, MUSC Health May 6, 2016

2. Agenda • Introduction • MUSC Health • Perfect Storm • Changes • Patient Focused • High Reliability • Our Role as Partners • Questions & Comments 2 2

3. Overview • Employees - 8,000 • Physicians - 750 • Nurses - 2,400 • Four Hospitals • Inpatient visits - 36,114 • Observations - 5,629 • Ambulatory surgeries - 3,693 • Outpatient visits - 1,205,066 • Off-campus care settings – 120 • Emergency department visits - 66,736 • Clinical trial studies - 581 actively enrolling • Operating budget - $1.6 Billion

4. Accomplishments

5. The Perfect Storm Increase in Cost of Healthcare 5 5

6. Why is this important? • HealthCare becomes more of a business every day • Double digit cost increases annually • Balancing business and patient duties is difficult • > 40% of private practice physicians spend at least one day per week managing business responsibilities. • > 82% find this balance “challenging” or “extremely challenging” • 74% identified financial management as an area they would like to improve Source: Medical Practice Monitor survey by OPEN • Hospital Margins Decline • Non-Profit Hospital Revenue Growth lowest in 2 decades (Moody’s)

7. Current U.S. Healthcare System • Free Market Based • Who, when and where is largely • an individual decision • Employer, Private, Government and Self • Strengths • Choice, Access, Technology, Availability • Challenges • Costs, Un/Under Insured

8. Current U.S. Healthcare System Costs • 16.0% of US GDP spent on healthcare including: • Technology • Infrastructure • Services • Payment • Consumer Costs • Highest % Among Industrialized Nations • 4.3 times higher than spending on National Defense • Different perspectives on whether this is good or bad?

9. Current U.S. Healthcare System Uninsured Population • 46.6 million uninsured in the United States including: • Non-citizens • Anyone without insurance for 1 day • Those who choose not to be insured • Can’t afford insurance and don’t have it for more than 2 years • Based on median US income level

10. Current U.S. Healthcare System Uninsured Population • 46.6 million uninsured in the United States including: • Non-citizens • Anyone without insurance for 1 day • Those who choose not to be insured • Can’t afford insurance and don’t have it for more than 2 years • Based on median US income level • 8.2 million Americans uninsured

12. The Perfect Storm Increase in Cost of Health Care Access to Health Care  Affordable Care Act – “Obamacare” • Value-Based Purchasing • Decrease in payment for unfunded • Expansion of Medicaid 12 12

13. The Perfect Storm Increase in Cost of Health Care Access to Health Care  Affordable Care Act – “Obamacare” Recession  South Carolina Budget Deficit 13 13

14. The Perfect Storm Increase in Cost of Health Care Access to Health Care  Affordable Care Act – “Obamacare” Recession  South Carolina Budget Deficit Decrease in Medicaid Funding 14 14

15. The Perfect Storm Increase in Federal Spending Access to Health Care  Affordable Care Act – “Obamacare” Recession  South Carolina Budget Deficit Decrease in Medicaid Funding 1 of 15 States to Not Expand Medicaid 15 15

16. The Perfect Storm Increase in Cost of Health Care Access to Health Care  Affordable Care Act – “Obamacare” Recession  South Carolina Budget Deficit Decrease in Medicaid Funding 1 of 15 States to Not Expand Medicaid 1 of 6 SC Hospitals with Largest share of unfunded patients 16 16

17. The Perfect Storm Increase in Federal Spending Access to Health Care  Affordable Care Act – “Obamacare” Recession  South Carolina Budget Deficit Decrease in Medicaid Funding 1 of 15 States to Not Expand Medicaid 1 of 6 SC Hospitals with largest share of unfunded patients 17 17 How Safe are We?

18. How Safe is Healthcare? Scheduled Commercial Airlines European Railroads Nuclear Power Safe Driving in the United States Chartered Flights Chemical Manufacturing Healthcare third leading cause of death in the US Mountaineering Bungee Jumping Unsafe

19. Clostridium Difficile “C Diff” Gram-positive, spore-forming anaerobic bacteria • 453,000 cases annually; 29,300 deaths • Two-thirds of C Diff cases are estimated to originate in hospitals

20. Clostridium Difficile “C Diff” • Various Surveys: • 42% of hospital privacy curtains were contaminated with some bacteria; 4% with C Diff • One C Diff outbreak linked to mop pads after a laundry malfunction • Infection rate reduced by 47.8% with effective bed cover laundry methods • Mattress cover openings/cracks result in increased incidence

22. The Perfect Storm Our Response Choluteca Bridge, Honduras 22 22

23. 23

25. Moments of Truth “A moment of truth occurs anytime a customer comes into contact with your organization and can form an opinion.” Jan Carlzon Scandinavian Airlines

26. Fred Lee, “What if Disney Ran Your Hospital” Correlation of Patient Care and Service Excellence Inspired Required Hired Fired

27. Putting it all Together 27 27

28. Questions, Comments & Discussion