Presented by: Michael L. Millenson President Health Quality Advisors LLC Highland Park, IL mm@healthqualityadvisors.com

1. Taming the Health Care Hurricane: An Rx for Revolution Florida Health Care Affordability Summit Orlando, FL Jan. 10, 2013 Presented by: Michael L. Millenson President Health Quality Advisors LLC Highland Park, IL mm@healthqualityadvisors.com

2. Required Health Care Crisis Slide “If there's one thing that can bankrupt the country, it's health care. It's out of control…affecting our economic and national security.”David Walker, Former Comptroller General, U.S. General Accountability Office

3. A Health Care “Crisis”?Really? “Crisis” 1969 “Unsustainable” 2009

4. An Actual Crisis

5. “Hurricane Health Care” ApproachesSustained Gale Force Winds • Cash: Unrelenting global economic pressure makes high medical costs a target • Computers: Widely available IT to manage and measure care brings transparency and actionable information • Culture: New legislation, regulations and public expectations

6. Bottom-Line PressureYour Costs, My Paycheck Sources: Kaiser Family Foundation; Commonwealth Fund via Orlando Sentinel

7. Your Costs, My Paycheck, Schools and Public Services

8. Your Unnecessary Costs, My Paycheck, Schoolsand Public Services “Care that is delivered is often not important. Care that is important is often not delivered.” – Institute of Medicine Roundtable on Value & Science-Driven Health Care

9. Did I Mention Profits and Jobs?

10. Follow the Florida Money • $2,800 billion1 × 0.0632 = $176.4 billion • $176 billion × 0.303 = $52.9 billion annual waste4 • Annual U.S. health care expenditures 2012 (est.) • FL share of annual U.S. health care spend (6.3 percent) • 30 percent waste • Assumes waste in Florida is at U.S. average

11. Sunshine StateIs Florida Care More or Less Wasteful? “Miami…had the highest rate of [unnecessary repeat] testing in 3 of 6 testing categories.” Arch Int Med “South Florida is ground zero” – FBI ???? ???? FL price transparency just “toe in the water” Transparency Now State ranks #34in America’s Health Rankings, 2012

12. Higher-priced care, higher death rate?“Sorry, no refunds”

13. The Choice: Fight…or Flee How to Escape a Hurricane

14. Fight-Back Strategy #1:Better Health Address factors leading to poor health

15. Fight-Back Strategy #2: Control Care Costs • Pay less • Access, anyone? • Do less • The “R” word • Do things better • Value, not volume

16. Words of Wisdom • “How many businesses do you know that want to cut their revenue in half? That’s why the health care system won’t change the health care system.”– Gov. Rick Scott, Rock Health Innovation Summit, Aug., 2012 • “Trust, but verify” – Pres. Ronald Reagan

17. Value-Based Purchasing:Bringing Verification to Trust Value-based health care is based on 3 principles: • The goal is value for patients • Care delivery is organized around medical conditions and care cycles • Results are measured Michael Porter & Elizabeth Olmsted Teisberg, Harvard Business School, Redefining Health Care (2007)

18. Value-Based Purchasing:Millenson’s Reality-Based Caveats Value-based health care is based on 3 principles: • The goal is value for patients1 • Care delivery is organized around medical conditions and care cycles2 • Results are measured3Michael Porter & Elizabeth Olmsted Teisberg, Harvard Business School,Redefining4 Health Care (2007) • Value must be explicitly defined for different stakeholders • The bedside is more complex than the business school • Measurement tools must include technical assistance for providers. “The people who do the work have to drive the change” • Always read the fine print

19. The Massachusetts ExamplePrivateSector Carefully Defines Value

20. “In God we trust: all others bring data.”

21. Pay for Performance

22. Clarity. Partnership. Urgency(And a Political Subtext)

23. Taming the Health Care HurricaneHave the winds turned favorable? (Typical Florida Scene)

24. The Economics AlignACA Links Quality and Payment Source: Kaiser Family Foundation New Center for Medicare and Medicaid Innovations (2011) Shared Savings/Accountable Health Organizations (2012) Reduces payments for preventable hospitalizations (2012) Independents at Home demonstration project with shared savings (2012) Value-based purchasing for hospitals (2012) National pilot to bundle payments for hospital and post-acute care (2013) Reduces payments for hospital-acquired conditions (2015) Establishes mandatory physician quality reporting (2015)

25. Physician Culture Starts to Change

26. A National Consensus on Strategy Source: PS Hussey et al., NEJM, 2009

27. Employers Become Part of the SolutionValue-Based Benefit Design • Minimizes or eliminates out-of-pocket costs for high-value services in a defined patient population • The more beneficial and cost-effective the therapy, the lower the out-of-pocket cost to the patient • Better use of high-value services can lead to: • Fewer preventable health problems • Less use of high-cost health care services Sources: Chernew et al. Health Aff. 2008; Fendrick et al. Am J Manag Care. 2001; Fendrick, Chernew. Am J Manag Care. 2006

28. Barriers to Change • Cash: Economic pain remains unevenly distributed among public. Among providers, one man’s “waste” is another man’s income. • Technology: Public believes “morehigh-tech” equals “better care.” Health IT for providers needs more simplicity as well as sophistication. • Culture: Popularity of panaceas. Provider self-confidence and patients’ belief in “my doctor”overrides the evidence.

29. BUT:“It doesn’t take a weatherman to know which way the wind is blowing.:” “A reform is a correction of abuses. A revolution is a transfer of power.”--Edward George Earle Bulwer-Lytton

30. “As for the future, your task is not to foresee, but to enable it.“– Antoine de Saint Exupery

31. Contact: Michael L. MillensonPresidentHealth Quality Advisors LLCHighland Park, IL Tel: (312) 952-1075 mm@healthqualityadvisors.com