DU Strategic Issues Panel

1. DU Strategic Issues Panel Jay Want, MD December 9, 2010

2. Today’s Agenda Why health care has to change, and why it has to now How health care will change over the next two decades What part information technology will play Other cost containment mechanisms

3. What’s Not On Today’s Agenda The magic bullet (single factor solutions) How IT will magically improve health care without any effort on anyone’s part Ways to “build a seawall” against health care reform How to find $10 trillion of other people’s money over the next decade to allow us to continue with the current FFS mess (the Chinese are on to us)

4. Why can’t health care cost grow infinitely? Health care costs compete with all other costs: transportation, investment in innovation, education Competitors who spend more on raw materials generally lose to competitors who spend less; health care is a raw material for all other goods and services We are losing global competitiveness, partly because it costs too much to provide health care to our people relative to other countries Poor global competitiveness=high unemployment for a really long time

5. What’s The Problem? Theories about what’s wrong with health care: Cost It’s greedy (insurance companies, doctors, hospitals, pharmaceutical companies); if they were eliminated from the equation, cost would come into control. Access It’s that I’m paying for everyone else; if I just weren’t paying for the uninsured, I could afford it. Or, if I could eliminate the cost shift associated with the uninsured, I could afford it. Quality It’s that the quality is so poor; if everyone would just do the right thing, health care would be affordable.

6. Okay, There Are At Least Two More Problems Problem 1: We think there’s only one problem. Problem 2: Even if we think there’s a problem, not everyone’s sure they want to fix it.

7. The Road To Hell Is Paved With Good Intentions And Other People’s Money Third party payer system creates gigantic pool of unsupervised money Innovators learn how to provide more stuff, in bigger billable chunks Giant sucking sound: providers of care hooking hoses up to government/business treasuries and turning on the vacuum Managed care clogs up hose, open access clears clog Designing larger bore vacuums is a growth industry American health care inflation roughly double what it is in other developed nations since1965

8. International Comparison of Spending on Health1980–2004 Average spending on healthper capita ($US PPP) Total expenditures on healthas percent of GDP Data: OECD Health Data 2005 and 2006. Schoen C, Davis K, How SKH, Schoenbaum SC. US health system performance: A national scorecard. Health Aff. 2006;25(6):w457-w475.

9. “Ask not what your country can do for you, ask what you can do for your country.” John F. Kennedy, POTUS

10. “Somebody has to do something, and it's just incredibly pathetic that it has to be us.” Jerry Garcia, Grateful Dead

11. What Will Oppose The Status Quo: Megatrends • Consumerism/free markets (health care as service industry): • retail clinics, • commercial telemedicine, • concierge medicine • Data and transparency: • performance reports for providers on the web (I think there’ll be an app for this), • need for aggregation into larger entities for measurement purposes/performance improvement • Globalization: • offshoring, • medical tourism

12. Believe It Or Not, PPACA Is Here To Help: Little Understood Provisions Near universal coverage, phased in Center for Medicare/Medicaid Innovation Independent Payment Advisory Board (replaces RUC?) ACO pilot modeled after Physician Group Practice Demonstration Project

13. The Role of IT: Will It Save Us? “Information is not knowledge. The world is drowning information, but slow in the acquisition of knowledge. There is no substitute for knowledge.”—W.E. Deming More than ever in the information age, information translated into knowledge is power. IT is a means to knowledge, not an end in itself IT requires the user to change workflows—this is a good thing IT is an equalizing force; it will reduce the power asymmetry between providers and patients—also a good thing

14. Other Mechanisms You’re Likely To See • Intensive care management and coordination by whatever entity is at financial risk (provider, health plan, ACO, government, business) • Predictive modeling • Guideline adherence incentives for both patient and provider • Patient activation coaching • Assembly of patient care teams

16. Take Homes American health care is unsustainable in its current form, and it is no accident that reform is upon us now The change in the market dynamics will be from accountable for volume only to accountable for cost and quality outcomes The new markets will be driven by consumerism, data and transparency, and declining relevance of geography in service delivery, like other goods and services IT will enable, but not be a mission unto itself; it will reduce the power asymmetry between providers and patients/consumers, and reward those that can turn information into knowledge to serve customers better Teams will win over individuals as complexity increases; this will drive aggregation and larger units of delivery