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Service Line Strategy Advisor

Service Line Strategy Advisor. Orthopedic and Spine Market Trends. Ready to Use Presentation Slides Prepared April 2014. Clinical Innovation. Care Quality. Growth and Financial Outlook. Additional Resources. Service Line Strategy.

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Service Line Strategy Advisor

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  1. Service Line Strategy Advisor Orthopedic and Spine Market Trends Ready to Use Presentation Slides Prepared April 2014

  2. Clinical Innovation Care Quality Growth and Financial Outlook Additional Resources Service Line Strategy

  3. Source: Advisory Board Inpatient and Outpatient Market Estimator tools. Orthopedics a Top Volume Contributor Growth and Financial Outlook Service Lines by Volume Inpatient, 2013 Outpatient, 2013 Poised for Growth: 10-year Volume Forecasts 15% 28% Inpatient Orthopedics Outpatient Orthopedics

  4. Source: HCUP NationwideInpatientSample (NIS). Growth Led by Inpatient Joints Growth and Financial Outlook Growth in Key Procedures for Musculoskeletal Care 2002-2011 88% 34% 67% -26% -66%

  5. Implants Driving Cost Pressures Source: HCUP NationwideInpatientSample (NIS); Orthopedic Network News (ONN). Costs Growing Alongside Volumes 2012 data was not available, and only Q1 of 2013 data was available. Growth and Financial Outlook Growth of Cost, Stays for Spine & Joint Replacement National Joint Replacement Implant Costs 2008-2011, All-Payer Average Selling Price; 2008-Q1 20131 Spinal fusion costs growing at nearly twice the rate of inpatient stays -24% 7% -16% -13%

  6. Five-Year Orthopedic Growth Trajectories Growth Largely Concentrated in Outpatient Setting Growth and Financial Outlook Source: Advisory Board Inpatient and Outpatient Market Estimator tools. All-Payer Volume Growth Projections Volume Growth Projections by Key Sub-Service Lines 2013-2018 2013-2018 Spine Orthopedic Services Spine Services Injections & Blocks Sports Medicine Hand Joint Replacement Foot Fracture/Dislocation Treatment Other Surgical Spine Fusion Orthopedic Trauma Sports Medicine Medical Spine 157% 169K Expected five-year growth of outpatient joint replacements Projected volume of outpatient joint replacements in 2018

  7. Source: “Projections of the Population by Selected Age Groups and Sex for the United States: 2015 to 2060,” U.S. Census data, 2013; The Center for Disease Control, “Facts and Figures,” 2013. Growth and Financial Outlook Four Forces Driving Future Orthopedic Growth 1 2 3 4 Demographics Co-Morbidities Revisions & Replacements Clinical Innovations • Aging population driving joint replacement volumes • Osteoarthritis affecting larger share of population • Smoking, diabetes, obesity correlated with osteoarthritis • Increased prevalence of obesity in hip replacement patients complicates outcomes • Expected increase in demand over next 20 years given higher patient longevity • “Weekend warriors” may require eventual replacements following arthroscopy • Technology improvements driving utilization • Minimally invasive surgical techniques key innovation 53% 40% 34% 80% Population growth of 65+ year olds from 2015 to 2030 Percent of adults 65+ years old diagnosed with obesity Rate of osteoarthritis in adults 65+ years old Percent of people to suffer from back pain in their lifetime

  8. Clinical Innovation Care Quality Growth and Financial Outlook Additional Resources Service Line Strategy

  9. Source: Service Line Strategy Advisor research and analysis. Surgery Mainstay, But Non-Operative Care Essential Component Unbundling the Musculoskeletal Service Line Service Line Strategy Trauma Foot & Ankle Pain Management & Non-Operative Care Joint Replacement • Procedures: • Fracture Repair • Tendon Repair • Procedures: • Ankle Arthrodesis • Ankle Arthroplasty • Procedures: • Hip Arthroplasty • Knee Arthroplasty • Shoulder Replacement • Rheumatology • Anesthesiology • Physiatry Sports Medicine Hand & Upper Extremity Spine • Procedures: • Rotator Cuff Repair • ACL Repair • Procedures: • Carpal Tunnel Release • Ganglion Excision • Procedures: • Fusion • Decompression • Kyphoplasty/Vertebroplasty

  10. Service Line Strategy Source: Service Line Strategy Advisor research and analysis. Four Key Components of Service Line Strategy Comprehensive Offerings Care Pathway Development and Planning Centralized musculoskeletal offerings retain patients seeking various procedures and promote multidisciplinary care Patient satisfaction improved by smooth care pathway and protocols more easily followed with standardized care Referrals Management Physician Engagement Streamlined referral pathways incentivize providers to keep patients in the system Strong relationships between physicians and administration enhances communication and increases likelihood of success of new programs

  11. Leaving Business on the Table? Source: Service Line Strategy Advisor research and analysis. Comprehensive Offerings Narrow Orthopedic Scope Ignores Attainable Volumes Defining the Orthopedics & Spine Business Expanding Referral Sources Bubble Size Reflective of Relative Volume Moving Beyond Traditional Referrers Traditional Referrers Expanded Referrers Joints PCP Spine SportsMedicine Athletic Trainer Pain Management Chiropractor Hand & Foot Podiatrist Trauma & OtherSurgery ED Physician

  12. Planning Must Account for Outpatient Offerings Dedicated Strategy Supports Ease of Outpatient Delivery Source: Service Line Strategy Advisor research and analysis. Comprehensive Offerings Hallmarks of Outpatient Business: Necessary Resources: Volumes Dedicated facility resources Operative Time Patient risk stratification process Active integration into service line strategy Case Acuity OP rehab network affiliation Services Most Significantly Affected by Outpatient Shift Sports Medicine Joint Replacement Spine • Opportunity to collocate surgical, conservative care, and wellness services in OP setting for sports medicine institute • Ongoing CMS discussions on reimbursing OP joint replacement • Increased attention on UKR • Rapid adoption of OP surgeries for low acuity spine cases • Potential integration with pain management

  13. Source: Service Line Strategy Advisor research and analysis Comprehensive Product Packaging a Differentiator Care Pathway Development and Planning Components of a Comprehensive Joint Program’s Continuum of Care • Patient Intake • Pre-operative Planning • Post-operative Care • Elevating Awareness • Easy-Intake Joint Pain Seminars • Advanced Technology Promotion • Alumni Development • Enhancing Patient Satisfaction • Patient Education • Pre-surgery Screening • Hip and Knee Hotel Model • Decreasing Length of Stay, Readmissions • Rapid Recovery Protocols • Next-Generation Pain Management • Family Coaching • Group Rehabilitation • Organized Discharge Planning and Post-Acute Relationships

  14. Reduces Burden of Inappropriate Referrals and Wait Times Source: Vickrey et. al (1999). “General neurologist and subspecialist care for multiple sclerosis: patients' perceptions.” Neurology, 53 (6): 1190-7; Service Line Strategy Advisor research and analysis Triage Driven Patient Pathway Enables Efficiency Care Pathway Development and Planning Standard Care Pathway is Repetitive and Time Consuming Triage Driven Pathway is Efficient and Productive PCP Orthopedist or Neurosurgeon Spine Triage Specialist PCP Inappropriate Subspecialty Orthopedist/Neurosurgeon Pain Mgmt. Specialist Pain Mgmt. Specialist

  15. Nurse Navigators Improve Patient Satisfaction, Drive Referrals Care Pathway Development and Planning Source: Advisory Board Interviews and Analysis Nurse Navigator: The Backbone of the Care Pathway Nurse Navigator Responsibilities Manage Patient Expectations Improve Physician Alignment Direct Patient Flow • Involve multiple providers in program development • Reduce communication barriers and inefficiencies • Offer opportunities for provider feedback • Lead comprehensive pre-surgery classes • Inform patients of expected progress timeline • Help patients develop own goals and to be own care advocates • Operate along entire care pathway including post-discharge • Direct pre-surgery screening process • Develop discharge plan for efficient patient transition

  16. Referrals Management Source: Service Line Strategy Advisor research and analysis Primary Care, Podiatry the Top Physician Referrers Top Referring Specialties to Orthopedic Surgery n = 253,000 Patient Records Other General Surgery Pain Management Physical Therapy Emergency Medicine Internal Medicine & General Practice Podiatry Key Steps to Building Referral Relationships • Divide referring physicians into “loyalists,” “splitters,” and “new referrers” for targeted outreach • First shore up loyalist business, focusing on service ethic and education about offerings. • With splitters, listen to top-of-mind priorities and concerns, consider physician-to-physician conversations and sharing clinical outcomes data where applicable. • Standardize approach to follow-up with new referrers. Consider sending welcome packets to physician offices or appointing a hospital liaison

  17. Independent Surgeons Trending Toward Increased Employment Physician Engagement Source: AAOS, “Orthopedic Surgeon Quick Facts,” accessed June 29, 2011, available at: http://www.aaos.org/research/stats/Surgeonstats.asp; AAOS, “Orthopaedic Practice in the US 2005-2006,” accessed June 29, 2011, available at: http://www2.uic.edu/stud_orgs/prof/surgeons/events/2006CensusPublic.pdf; Medscape, “Medscape Orthopedics Productivity Report: 2011 Results,” accessed June 29, 2011, available at: http://www.medscape.com/features/slideshow/compensation/2011/orthopaedics; Service Line Strategy Advisor interviews and analysis. Formal Hospital-Surgeon Alignment on the Rise 2008 AAOS Orthopedic Census Report 2011 Medscape Ortho Surgeon Compensation Report Orthopedic Surgeon Practice Setting Reporting Orthopedic Surgeon Practice Setting Reporting n = ~9,500 n = 15,924* Multispecialty Group Academic Other Partner, Private Practice Hospital Employed Solo Practice Single-Specialty Group

  18. Physician Engagement Source: Service Line Strategy Advisors research and analysis; Source: HealthLeaders Intelligence, “Physician Alignment in an Era of Change,” available at: http://content.hcpro.com/pdf/content/256536.pdf, accessed March 22, 2011;. PPI = Physician preference items JV = Joint venture Physician Alignment Drives Programmatic Success The Spectrum of Alignment Initiatives Strategic planning involvement Medical directorship bonus Traditional comanagement More Intensive Less Intensive Savings partnerships (PPI1, Quality) Targeted JV2s (Facilities, services) Proposed Returns on Co-management Contract Improved Performance Recoups Contract Value Orthopedics Device Costs Quality Improvements Decreased infection rates $500,000 in device savings 50% 50% Reduced complication rates Improved documentation

  19. Clinical Innovation Care Quality Growth and Financial Outlook Additional Resources Service Line Strategy

  20. Value of Care to Drive Orthopedic Policy Care Quality Source: Service Line Strategy Advisor research and analysis Measuring Quality Integral to Defining Value Cost Conscious Care Delivery Quality of Outcomes Shifting Imperatives for Measuring Value • Patient input • Episodic care/readmissions • Value of premium technology • Surgical vs. conservative care Value Financial Incentives Tied to Quality Metrics Patient Perception Clinical Results

  21. Accurate Tracking Requires Participation from Multiple Perspectives Quality Reporting Mandated Across Care Episode Source: Advisory Board research and analysis. Care Quality Patient Care Pathway Surgical Care Improvement Project Physician Quality Reporting System Screening Surgery Rehab Outcome Tracking EHR Meaningful Use Consumer Assessment of Healthcare Providers and Systems Perspective Matters: Categorical Input for Quality Metrics Patient: Provider: Outcome reportingPublic health initiativesAdhering to clinical guidelines Timeliness of appointmentsImpression of provider and staff

  22. Joint Registry Provides Benchmarking Perspective on Outcomes Care Quality Entering an Era of Peer Comparison 2012 Growth of AJRR Participating Institutions The American Joint Replacement Registry: • Currently collecting Level I data • Seeking to collect Level II, III, and IV data from hospital participants in 2013 • Will provide benchmarking statistics for national joint replacement figures Source: The American Joint Replacement Registry “Preliminary 2012 Report;” Service Line Strategy Advisor research and analysis.

  23. Opportunities to Affect Quality Throughout Episode Target Measures to Prepare for Value-Based Care Source: Service Line Strategy Advisor research and analysis. Care Quality Preoperative Perioperative Postoperative • Discharge • Postsurgical assessment • Long-term follow-up survey Interface Opportunity: • Referral • Initial consultation • Pre-surgical visit • Joint camp • Intake • Surgery • Inpatient stay Measures for Tracking: • Time to appt. • Visit wait time • Patient health habits • Patient mental state • OR time • Blood loss/transfusion rate • Turnover time • Time to IP unit • Readmissions • Pain/mobility • Return to normal activity • Patient satisfaction

  24. Clinical Innovation Care Quality Growth and Financial Outlook Additional Resources Service Line Strategy

  25. Technology Pipeline for Orthopedics Future-Looking Musculoskeletal Technologies and Procedures Clinical Innovation Unicompartmental Knee Replacement • Niche surgical procedure offers less invasive alternative to total knee replacement for specific disease states Robotic Assistive Devices • Passive guidance and 3D imaging platforms assist surgeons for complex UKR and THR procedures Intraoperative Imaging • Capital technology ranging from surgical suites to portable platforms designed to improve surgeon visibility Bone Morphogenic Protein • Biogenic technology designed to accompany spine surgeries, but has recently received negative feedback due to severe risk of complications Joint Replacement Well-established procedure targets innovation through niche procedures Spine Wide-ranging technology approaching spine intervention from different perspectives Platelet Rich Plasma • PRP is a injectable therapy aimed at accelerating soft tissue healing Regenerative Medicine • Group of therapies seeking to treat tissue degeneration with autologous implantation Sports Medicine Non-invasive therapies attempt to enable preventative interventions Source: Service Line Strategy Advisor research and analysis

  26. Potential Savings from UKR Marred By Inherent Physician Bias Clinical Innovation Source: Goodfellow, et al., “A critique of revision rate as an outcome measure: reinterpretation of knee joint registry data.” The Bone & Joint Journal, 2010, 92(12): 1628-1631; Shankar, et al., “Cost Comparison of Total vs. Unicompartmental Knee Arthroplasty,” AAOS 2013. 1 Unicompartmental Knee Replacement 2 Total Knee Replacement UKR: Complex, Yes. But Cost Effective? Operational Considerations for UKR1vs. TKR2 Revision Rates of UKR vs. TKR Despite similarly poor scores, UKR is revised at far greater rate Revision Rate (6 Months) Financial Considerations for UKR vs. TKR Oxford Knee Score

  27. Robotics Carving Out Space with Niche Procedures With Hefty Price Tag, MAKO Success Reliant on Growth of UKR, MI Hip Source; Advisory Board Inpatient and Outpatient Market Estimator tools; Service Line Strategy Advisor research and analysis. Clinical Innovation Projected National Volumes of MAKO-Eligible Procedures 2012-2017 630 Estimated number of new patients needed to cover capital costs of MAKO RIO 6% 6% $727K 258% 244% Estimated 5-year NPV based on national incidence rates and reimbursement data

  28. Reduced Radiation and Lower Cost Makes Mini C-Arm Attractive Investment Clinical Innovation Source: Service Line Strategy Advisor Interviews and Analysis Dawe, E, et al., “A comparative study of radiation dose and screening time between mini C-arm and standard fluoroscopy in elective foot and ankle surgery.” Foot and Ankle Surgery. (2011), 17: 33-36. Lee, M, et al., “Mini-C-arm fluoroscopy for emergency-department reduction of pediatric forearm fractures.” Journal of Bone & Joint Surgery. (2011), 93(15): 1442-1447. Mahabir, R, et al., “Closed reduction internal fixation rates and procedure times for metacarpal fractures treated in a minor surgery area before and after the introduction of a mini C-arm unit,” Canadian Journal of Plastic Surgery. (2008), 16(3): 162-164. Hospitals Seek to Downsize Expensive Imaging Mean Radiation Dose (Gy cm2) in Foot & Ankle Surgery: Mini C-arm vs. Standard Fluoroscopy1 p = 0.001 Average Consultation Time for Pediatric Fracture Reduction (minutes)2 n = 279, p < 0.001 • n = 72 • n = 55 $50-70K USD Estimated price range of mini C-arms3

  29. Finding the Right Place, Right Time for BMP Usage Balancing BMP Cost with Risks of Non-Union and Complication Source: Ong et. al (2010). “Off-Label Use of Bone Morphogenetic Proteins in the United States Using Administrative Data.” Spine, 35(19):1794-1800; Miller, L, “Cost-Effective Spine Surgery: 8 Things to Know,” Becker’s Spine Review2011. Clinical Innovation 1 Bone Morphogenic Protein Fusion Success Rates, 24-Month Follow-Up N = 279 BMP1 Cost vs. Revision Cost Additional cost in bundled payment system Risks of BMP1 Usage vs. Unsuccessful Fusion: • BMP: • Bone overgrowth • Elevated risk of cancer • Frequent off-label usage • Non-Union: • Spinal fracture • Revision surgery

  30. PRP Gaining Strong Public Attention Bolsters Institution’s Progressive Reputation Source: Meleanet al. “Effects of Platelet Rich Plasma in hamstring Anterior Cruciate Ligament Reconstruction”, AAOS Podium #444, 2010. Clinical Innovation 1 Platelet Rich Plasma 2 *Variation dependent on regional- and physician-specific differences ACL Reconstruction: Standard Versus Addition of PRP1,2 n = 50 $500-$1,500 Cost to patient for PRP injection* Evaluating PRP’s Impact for the Orthopedic Service Line

  31. Carticel Maturing Regenerative Techniques Early Results Show Promise as Alternative to Traditional Surgery Source: Peterson, L, et al, JBJS 85A(2), 2003: 17-24; Wood JJ, et al, JBJS 88, 2006: 503-7; Advisory Board Outpatient Market Estimator. Clinical Innovation Early Clinical Outcome, Carticel Tissue Regeneration National Market Estimate Cartilage Transplantation No randomized, controlled trials have been published to date 22% Overall Market Growth

  32. Clinical Innovation Care Quality Growth and Financial Outlook Additional Resources Service Line Strategy

  33. A Comprehensive Solution for Your Ortho Strategic Needs Enhancing Orthopedic Service Line Strategy Service Line Strategy Advisor 1 2 3 • Service Line Assessment • Current and future service line performance evaluation to pinpoint growth and development opportunities • Unique insights based on market dynamics to drive fine-tuned recommendations • Strategic recommendations on clinical asset deployment and competitive strategy based on current system structure • Tactical recommendations for service investments and distribution • Technology and Service Business Plans • Comprehensive market and financial analysis to determine investment decisions • Concrete plans and prioritization accounting for institutional priorities, budget, and goals System Service Rationalization

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