Health Reform is Underway: Repeal or No Repeal! HIMSS Oregon Chapter November 14, 2011

1. Health Reform is Underway: Repeal or No Repeal! HIMSS Oregon Chapter November 14, 2011 Jack A. Friedman Chief Executive Officer Providence Health Plans

2. Healthcare’s Growing Social Burden (2009) • Medicare spending up 7.9% • Medicaid spending up 9% • 17.6% of GDP-from 16.6% in 2008 • $8,086 per capita • $2.5 trillion total spend • Public education: <4% GDP • Fresh food per household < • Lower income = greater weight gain 2

3. Why we’re talking about this 3

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5. Some Undeniable Truths About U.S. Healthcare • Overall system performance is poor and staying that way • 30-40% waste has not changed significantly • Population health deteriorating • Healthcare priced beyond the reach of middle class, even those with insurance • Medicare and Medicaid liabilities enormous—will require fundamental tax shift or benefit reduction • More GDP allocation does not improve system performance 5

6. What our Industry Leaders are Saying: • “If GDP is Animal Farm, I think we know who the Pigs are!” • “Be Wary of the Medical-Industrial Complex” • “Current US health care training and delivery models will not advance us in the 21st century” • “Any sustained change must begin with payment reform” • “FFS is the unspeakable evil in US healthcare” • “It is becoming increasingly clear that the future of US healthcare is now arithmetically impossible” 6

7. Three Underlying Assumptions 1. The federal deficit cannot grow forever. 3. Without a crisis, the U.S. does not have the political will to meaningfully cut benefits. 2. Tax increases necessary to cover costs are implausible. 7

8. Five Key Areas of Current Focus • Payment Reform • Health Benefits Reform • Health Purchasing Reform • Health Delivery Reform • Consumerism 8

9. Payment Reform Models • P4P - paying for process improvement and outcomes • Bundled Payments - interesting but limited impact • Episodes of Care - should improve chronic care management • Shared Savings Models – rewards for “right” care • Subspecialty capitation - aligns around “appropriateness” • Global medical budgets - aligns around total cost of care 9

10. Ortho: Percent of Hip and Knee Replacements with Documented Indications for Advanced Joint Disease 10

11. Consumerism 2.0: • Comparative price information • Comparative provider performance information • Shared decision making for “informed consent” 11

12. Online PCP Quality Profile – Individual PCP View Online PCP Quality Profile – Individual PCP View Online PCP Quality Profile – Individual PCP View 12

13. Online Provider Directory with Quality Ratings 13

14. Primary Care Physician Quality Improvement 14

15. Healthwise Content Overview 15

16. Providence Profile • NFP – Catholic Sponsored • 30 Hospitals (Anchorage → Los Angeles) • $9B Revenue • 2K Employed MD’s • 400K Member Health Plan • Elderplace PACE • Long Term Care Facilities • Home Health/Hospice • 55,000 Employees • 5 States 16

17. What We Believe “Expect to take on more financial risk and to be held accountable, clinically and economically, for what happens across the continuum of care—whether we ‘own’ the continuum or not.” —Michael Sachs, Chairman and CEO, Sg2 17

18. Transformation Work is Central to our System’s Strategy “… a connected experience of care, built on a foundation of clinical excellence.” Where we are headed … Clinical Transformation Physician Integration New Financing Models Your Division’s Priorities … Single Information. Platform Medical Home How we will get there … Innovate (Change the way we work) Standardize (Elim. unnecessary variation) Connect (Systems & Structures) • Epic Implementation • Single customer contact center business plan • Integrated data reporting capability • Your work to innovate, standardize and connect … • Advanced Access • Behav. Health integration • Care Transitions • Chronic disease mgmt • Specialty & primary • care collaboration • Ministry-wide financial reporting • PH&S population- based financing pilot • CMS ACO demonstration site • New pymt. models with other payors • New models of care: joint & lower back pain, palliative care • Appropriate use criteria: coronary revascularization, spine surgery, • ‘Triple Aim’ measures • MDs into decision making structures • Physician leadership dvlpmt • Common clinical outcome metrics • Grow employed primary care A few specific initiatives S t r a t e g y M a p Improve Health i.e. Evidence based chronic care mgmt i.e. Patient perception of health i.e. Mortality / 30 day readmissions More Affordable i.e. Premium increase at CPI + 2% i.e. % of Fee for Service declining i.e. % decrease in Type 1 & 2 ED visits Best Experience i.e. Patient activation measures i.e. Levels of shared decision making i.e. Measure across continuum How we’ll measure success … 18

19. Providence Delivery SystemRedesign Key Ingredients • Medical Home Build • Clinical Transformation Projects • Powered by:  EPIC, culture shift, $ shift • Disease/Case Management 19

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21. Providence Clinical Transformation Projects • Regional Care Mgmt Redesign • One Formulary • Coronary Revascularization Appropriateness • Spine Outcomes to Inform Indications • COPD System of Care • End of Life Cancer Care • Joint Bundling • Uncomplicated back care protocol • Pregnancy Mgmt to reduce C-Sections 21

22. Case and Disease ManagementHealth Care Cost ContinuumWhy We Focus on Specific Members 1% of People 30% Total Cost 10% Total Cost 0% Total Cost % of People  20% of People 70% of People 22 Source: Milliman USA Health Cost Guidelines—2001 Claim Probability Distributions.

23. Case and Disease Management 23

24. Inpatient Bed Day Trend Providence Health Plans Annualized Inpatient Bed Days per 1000 Medicare Members per Year 24

25. The IT Imperative • Connect care into episodes • Help operators understand their true costs • Help clinicians understand gaps in care • Make meaningful data transparent • Create registries to facilitate better point of care decisions 25

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27. Thank you! 27