1 / 15

Today’s Changing Healthcare Economics

Today’s Changing Healthcare Economics. WSHMMA Meeting April 13, 2011 Presented by Jeff Veilleux, EVP & CFO. Adapting to a New Reality… Positioning for Success. Long Term Pressure – Healthcare Reform. Organizational Expectations. Slow Growth Cost Pressure Deteriorating Payer Mix

danyl
Download Presentation

Today’s Changing Healthcare Economics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Today’s Changing Healthcare Economics WSHMMA Meeting April 13, 2011 Presented by Jeff Veilleux, EVP & CFO

  2. Adapting to a New Reality…Positioning for Success

  3. Long Term Pressure – Healthcare Reform

  4. Organizational Expectations • Slow Growth • Cost Pressure • Deteriorating Payer Mix • HCR Pressures • 3rd party insurer pressure • Medicare and Medicaid rate decreases • Medicare and Medicaid volume increases • Move to outpatient • Bad debts may decrease

  5. Expected Shift in Insurance Coverage 342mm 334mm 327mm 314mm Dual coverage affects the total insurance coverage population calculation, thus total insurance coverage population does not equal to the true US population amount. Estimated Effects of the Patient Protection and Affordable Care Act, as Passed by the Senate, on Enrollment by Insurance Coverage, in millions Source: Congressional Budget Office and the staff of the Joint Committee on Taxation. Centers for Medicare & Medicaid Services, Office of the Actuary. January 8, 2010 (http://www1.cms.gov/ActuarialStudies/Downloads/S_PPACA_2010-01-08.pdf)

  6. Translating Insurance Coverage into Bottom-Line Impact 2006 U.S. Hospital Cost Shift Estimate In 1999, the gap between Medicare and Commercial Payers was 11.3%. By 2006, the gap widened to 32.5%. Source: Milliman Inc. – Hospital and Physician Cost Shift, December 2008. Of the $89 billion in total cost shift, 57% or $51 billion is hospital related.

  7. 0 - 25th Percentile 25th - 50th Percentile 50th - 75th Percentile 75th - 100th Percentile State Medicaid Spending is Expected to Increase because of Health Reform B: 24.1% M: 26.0% B: 34.7% M: 28.2% B: 12.9% M: 16.3% B: 9.4% M: 21.7% B: 30.2% M: 18.9% B: 9.6% M: 18.7% B: NA M: 16.8% B: NA M: 15.1% B: NA M: 13.7% B: 26.0% M: 22.6% B: 3.6% M: 12.1% B: 13.9% M: 25.9% B: 15.9% M: 26.7% B: 3.4% M: 21.9% B: 23.9% M: 13.5% B: 8.8% M: 22.3% B: 9.2% M: 22.2% B: 28.9% M: 17.4% B: 10.3% M: 10.2% B: 15.6% M: 30.3% B: 54.0% M: 12.3% B: 18.9% M: 17.9% B: 11.3% M: 23.2% B: 9.6% M: 17.7% B: 38.3% M: 19.5% B: 14.6% M: 13.6% B: 41.5% M: 29.5% B: 8.8% M: 15.1% B: 21.6% M: 19.7% B: 21.6% M: 11.1% B: 11.5% M: 11.5% B: 8.8% M: 21.3% B: 8.7% M: 18.7% B: 9.4% M: 34.5% B: 30.3% M: 26.4% B: 14.4% M: 18.9% B: 9.8% M: 28.5% B: 36.6% M: 22.8% B: 25.6% M: 21.1% B: 14.8% M: 18.6% B: 6.2% M: 20.8% B: NA% M: 20.3% B: 26.2% M: 19.6% B: 8.3% M: 11.0% B: 16.1% M: 22.4% B: 10.2% M: 16.4% B: 20.2% M: 23.2% B: NA M: 8.4% B: 12.5% M: 19.3% B: 12.0% M: 11.2% National Medians State Budget Deficit: 14.2% Medicaid Spending: 19.6% Statistical Key: B = Budget Deficit (Share of FY2011 state budget that is under-funded as of 7/15/2010) M = Medicaid Spending (State Medicaid spending as a percentage of total state expenditures, FY2008) Source: Center on Budget and Policy Priorities (FY2011 estimates) and National Association of State Budget Officers (FY2008 data); based on a composite score comprising equal weightings of the estimated percentage of state spending on Medicaid and most recently available state deficit/surplus as a share of general fund.

  8. N: 10.3% U: 5.9% N: 9.6% U: 8.0% N: 11.8% U: 8.9% N: 11.9% U: 10.1% N: 10.2% U: 6.0% N: 5.4% U: 9.0% N: 15.9% U: 7.3% N: 10.9% U: 3.6% N: 16.5% U: 10.5% N: 8.5% U: 6.8% N: 14.6% U: 8.5% N: 11.3% U: 12.0% N: 13.6% U: 8.2% N: 14.7% U: 8.8% N: 8.9% U: 7.9% N: 11.3% U: 4.5% N: 11.7% U: 13.2% N: 9.7% U: 8.8% N: 13.6% U: 6.8% N: 9.7% U: 9.2% N: 18.0% U: 14.2% N: 9.4% U: 6.8% N: 11.6% U: 10.5% N: 12.6% U: 4.8% N: 14.9% U: 9.6% N: 13.0% U: 7.2% N: 13.1% U: 10.4% N: 13.6% U: 7.0% N: 18.4% U: 12.3% N: 16.1% U: 8.0% N: 11.0% U: 8.5% N: 14.8% U: 10.0% N: 12.4% U: 6.5% N: 12.6% U: 9.1% N: 15.9% U: 10.0% N: 12.9% U: 7.1% N: 14.7% U: 10.1% N: 18.9% U: 9.6% N: 16.1% U: 10.7% N: 15.9% U: 6.8% N: 23.1% U: 8.2% N: 17.0% U: 7.5% N: 9.8% U: 10.0% N: 17.7% U: 10.0% N: 11.9% U: 10.3% N: 18.3% U: 11.0% N: 25.1% U: 8.2% N: 20.1% U: 11.4% N: 19.0% U: 7.9% N: 19.3% U: 7.0% N: 7.7% U: 6.3% National Medians Uninsured Population: 13.1% Unemployment Rate: 8.7% Statistical Key: N = Uninsured Population (Percentage of Total Population Under 65, 2010) U = Unemployment Rate (Seasonally adjusted percentage of civilian labor force, as of June 2010) 0 - 25th Percentile 25th - 50th Percentile 50th - 75th Percentile 75th - 100th Percentile States With Stronger Economies May Lower System Bad Debt Risk Sources: Bureau of Labor Statistics (June 2010 figures) and Robert Wood Johnson Foundation (2010 estimates); based on a composite score comprising equal weightings of the state unemployment rate and uninsured percentage of state population.

  9. Market Expectations • Local Competition • MD’s • Employees • Battles for Market Share • Programs • Patients • Consolidation • Local • Regional • National

  10. Health System Consolidation: Poised to Re-Ignite 1992-1994: Anticipation of Clinton Reform 1997-2000: BBA After Shocks 2001-2002: Tech Bubble Implodes 2002-2007: Provider Recovery 2008-2010 Great Recession Federal Policy / Economic Factors October 1983: Inception of DRGs 2003-2008: ACT II Payor Consolidation Returns 1985-1998: HMO Heyday - Payors control lives Act 1: Payor consolidation 2009-2010: Reform Overhang Kills M&A Commercial Payors 2008-2010: Preserve cash 1990-1997: Columbia – Take No Prisoners Approach to Growth 1998-2003: Specialty Companies Emerge and outperform 2004-2008: NFPs embrace growth Provider Catalysts Twin bullets: Recession and Reform Strengthening Fundamentals drives Growth Growth in response to external factors Portfolio Rationalization driven by financial considerations

  11. Largest Systems Continue to Experience Highest Operating Margins Preliminary 2009 results show the impact of improved operations. Average Operating Margin of 2.5% was an improvement of 90 bps from 2008 levels. Scale continues to drive difference in performance between “Haves” and “Have-Nots” Operating Margin 3.6% 2.8% 2.2% 2.2% Note: Historical Data based on approx 250 reporting systems; Preliminary 2009 data is based on 168 systems, which represents 64% of the systems used in the 2008 Citi Growth Study. Approximately 90% of systems above $5 billion and 60% of all systems with operating revenue below $5 billion have reported 2009 data. Comparative data from Citi Growth Study. Health system data reflects average value of category. NMHS’ FY 2001-2009 data reflects data reflects operating margin calculated from audited financials.

  12. Leading IHN’s and Large Systems Have Clear Sustainable Competitive Advantages in Periods of Transformation

  13. Both Scale and Integration Favorably Impact Supply Costs Supply Expense Ratio 21.8% 21.7% 21.4% 18.5% 18.1% 15.2% *Note: Historical Data based on approx. 250 reporting systems; Comparative data from Citi Growth Study. Health system data reflects average value of category. NMHS’ did not break out supply expense in its audited financials prior to 2008.

  14. Wild Cards • ACO Activity • New Payment Structures • Bundling • Pay for performance

  15. Long Term Pressure – Healthcare Reform

More Related