Lessons from Healthcare Transformation

1. Lessons from Healthcare Transformation August 5, 2014

2. The Six Campuses of NYP Morgan Stanley Children’s Hospital Columbia University Medical Center Weill Cornell Medical Center Payne Whitney Westchester The Allen Hospital Lower Manhattan Hospital

3. NYP Snapshot - 2013 Centers of Excellence CHILDREN’S CARDIAC DIGESTIVE NEUROSCIENCES ONCOLOGY TRANSPLANT *2011 Data

4. Affiliation with Two Premier Medical Schools 1771 – New York Hospital 1898 – Cornell University Medical College (Now Weill Cornell) 1927 – Affiliation Agreement 1868 – Presbyterian Hospital 1767 – Columbia University College of Physicians & Surgeons 1911 – Affiliation Agreement Both highly ranked by U.S. News 1998: NewYork-Presbyterian Hospital Over 1,600 residents 120 ACGME-accredited programs Single-site GME provider

5. NewYork-Presbyterian Healthcare System *Facilities include hospitals, nursing homes, & specialty institutions **NY Metro Area includes 5 boroughs of NY, Westchester, Rockland, Orange, Nassau; Fairfield and Litchfield, CT; Bergen and Hudson City, NJ

6. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

7. College Tuition Has Outpaced Medical Inflation

8. And is Projected to Continue to Rise Significantly

9. Healthcare Spending Continues to Rise, and is Consuming More of the Economy Actual Projected Source: CMS (2012)

10. The US Healthcare System in Context Source: CIA World Fact Book 2012

11. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

12. Healthcare Spending Has a Large Opportunity Cost

13. Education & Healthcare Consumed Almost 2/3 of the 2014 NYS Budget

14. Projected Financial Impact of Reform on NYP

15. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

16. Is a College Education Delivering Value?

17. High Prices, Poor Outcomes Source: OECD data

18. What Health Care Services Really Make a Difference? $750 Billion in Waste Prevention Failures Inflated Prices Fraud 7% 10% 14% 28% 25% Excess Administrative Costs Unnecessary Services 17% Source: Institute of Medicine Report 2012 Inefficient Care Delivery

19. Healthcare Perception or Reality “Well Bob, It looks like a paper cut, but just to be sure let’s do lots of tests.”

20. Are We Spending Money on the Right Things? Source: Bipartisan Policy Center, “F” as in Fat: How Obesity Threatens America’s Future (TFAH/RWJF, Aug. 2013)

21. Healthcare Costs Are Concentrated • 7 Million Beneficiaries • Spending $55,000 each • Total Spending = 75% • ($391 B) • 16.1 Million Beneficiaries • Spending $6,150 each • Total Spending = 20% • ($104 B) • 23 Million Beneficiaries • Spending $1,130 each • Total Spending = 5% • ($26 B)

22. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

23. Defining Quality

24. Proposed Quality Measures for Higher Education • Student loan repayment and default rates • Student progression and completion • Institutional cost per degree • Employment of graduates • Student learning

25. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

26. Regulatory Overhead

27. Unfunded Mandates in Healthcare • EMTALA • HIPAA • Transition to ICD-10 coding • MRSA testing for patients • Quality & readmission penalties

28. Common Problems: Higher Education & Healthcare • Cost • Declining government support • Public perception / rankings • Defining and measuring quality • Regulation • Business model disruption

29. Disruption in Education

30. New Entrants in Healthcare Delivery

31. Consumer Expectations Changing Markets

32. New Entrants in Healthcare

33. The Traditional Fee-For-Service Model is Changing Increasing Risk Insurance Product Fee-for-Service P4P / Penalties Bundled Payments ACOs/ Shared Savings Capitation

34. Population Health: Developing a Comprehensive Delivery System

35. The (R)evolution of Personalized Medicine Past Present Future Human Genome Project - first human genome sequenced in 2003 Targeted therapy around: “Inexpensive” sequencing means: • Breast, lung & colon cancer • BMT • Rare diseases • Warfarin • More discovery • Earlier diagnosis • More targeted therapy Genomes done infrequently $2-4,000+ /test $15,000+ /genome $1,000 /genome $2.7 billion

36. U.S. Healthcare Delivery System Challenges • Procedure-based reimbursement • Fragmented care transitions • Undifferentiated quality • Immature information technology • Demographics: aging population, chronic disease • Innovation • Cost shifting • Lack of transparency

37. NYP Market Challenges Declining overall and commercial utilization Increasing pressure on payer mix and pricing Increasing level of hospital consolidation Consolidation and restructuring of the physician landscape, threatening existing informal referral relationships Aggressive physician alignment by large healthcare systems in the NYC metropolitan area Rapid growth of large suburban physician organizations 36

38. Change in Commercial Discharges from NYC 5-Borough & Westchester Source: Truven

39. Demand Model: NYP’s Projected Discharges Demand Model assumes that NYP will maintain constant share of the NY 5-Borough and Westchester market

40. Projected Financial Impact of Reform on NYP

41. NYC Key Competitors NYP Hackensack Montefiore Mount Sinai Health System NYU NSLIJ MSKCC

42. Strategic Tension: Clinical Demand vs Business Profitability 41

44. Two Choices

45. To Achieve Our Vision, NYP’s Business Model Is Built Around 6 Strategic Initiatives 44

46. Strengthening Health and Wellbeing at NYP • Reaching multiple populations… • Employees • Corporate • Regional Health Collaborative • National • International - National - International • …of all health statuses… • Healthy • Acute Illness • Chronic Illness • …to deliver comprehensive care • Primary prevention • Acute episode • Tertiary prevention HEALTH IT * 2017 represents when programs will be fully operational and mature

47. Health and Wellbeing at NYP • Primary Prevention • To protect individuals from developing disease • Tertiary Prevention • To manage complicated, long-term health problems and prevent disease progression Care Coordination Patient Engagement Program Evaluation & Outcomes

48. Engage Staff & Patients Staff, Patient & Family Engagement Staff, Patient & Family Engagement Patient Care Culture Goal: To enable patients to become more involved in their care by providing them with education and other necessary tools Goal: To develop staff programs and practices that align with NYP’s values Community Environment of Care Goal: To improve quality of care and the patient experience by involving patients and families in policies, programs, and changes in care delivery Goal: To enhance population health by partnering with community based organizations

49. Making Care Better A comprehensive, interdisciplinary redesign of clinical systems and processes to deliver greater value across the care continuum

50. MAKING CARE BETTER: Standardize and Coordinate • Care & Practice within a Safe and Highly Reliable Culture Provide Highly Reliable Innovative Care Deliver & Demonstrate Value