Transcript ECG Management Consultants, Inc.

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CAHL – Higher Education Network
Mission College
Healthcare IT and Industry Trends Discussion
August 2, 2012
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Agenda
I.
Top Ten Trends in Healthcare
II.
Value of Networking
III.
Internships
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I. Top Ten Trends in Healthcare
Summary
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As healthcare reform continues to evolve, providers will have to balance operating in the
current fee-for-service environment while preparing for a future value-based industry.
1.
Improved Finances – While there will still be haves and have-nots, the financial health of hospitals and health
systems will collectively stabilize.
2.
Market Consolidation – The number of mergers and acquisition (M&A) transactions within the industry will
continue to increase.
3.
Focused Program Strategies – Hospitals will continue to focus on increasing the market share of those
services with favorable margins in the current fee-for-service payment methodologies.
4.
Cost-Conscious – Providers must continue to focus on reducing costs through operational improvement efforts.
5.
Increasing Physician Employment – The number of physicians becoming employed by hospitals/health
systems will continue to increase.
6.
New Payment Formulas – Payors will begin to look at various models to address long-term solvency issues
and/or short-term investor pressures.
7.
Evolving Quality Definition – Quality improvement initiatives will transition from process measures to
outcomes.
8.
IT Optimization – Providers will begin to determine the best way to optimize their investments in IT systems to
succeed in a value-based environment.
9.
Innovative Care Models – Estimated physician shortages will require providers to begin implementing new
patient care models.
10.
Comparison Shopping – Consumerism will continue to force all market segments (providers and payors) to
provide user-friendly information in a way that allows for effective comparison of cost and quality.
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II. Top Ten Trends in Healthcare
Improved Finances
While there will still be haves and have-nots, the financial health
of hospitals and health systems will collectively stabilize.
Dow Jones Industrial Average – 10-Year Chart
The positive outlook will allow providers more favorable
interest rates for debt, both public and private, to fund capital
expenditures, such as acquisitions, IT systems, and facilities.
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II. Top Ten Trends in Healthcare
Market Consolidation
The number of M&As within the industry will continue to increase.
• Diversification – It may be more
Hospital M&A Deals
advantageous to acquire services and
facilities rather than develop the service
and/or facility from scratch.
• Sharing Cost Burdens – Smaller, less
profitable hospitals are looking to create
economies of scale with other hospitals in
order to bear the burden of large expenses.
• Pending Payment Reform – Hospitals
facing changes in payment structures
resulting from healthcare reform are looking
to position themselves favorably and develop
negotiating leverage in a changing
landscape dominated by consolidated
national carriers.
Year
Deals
Value (in Billions)
Source: “Hospital M&A Continued to Grow in Second Half of 2010,”
Becker’s Hospital Review, Irving Levin Associates.
“A report from Irving Levin Associates recorded 23 hospital deals in the first
quarter of 2012, a 5% increase over the same period last year and a 10%
increase over the fourth quarter. In total, hospital deals amount to $129
million in the first quarter of this year.” – Modern Healthcare, April 26, 2012
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II. Top Ten Trends in Healthcare
Focused Program Strategies
Hospitals will continue to focus on increasing the market share of those services
with favorable margins in the current fee-for-service payment methodologies.
Ranking Total Hospital Contribution Profit and Inpatient Revenue
32%
24%
17%
21%
7%
16%
1%
7%
5%
6%
11%
5%
3%
4%
4%
3%
2%
2%
Inpatient Revenue
Contribution Margin
Source: Total Hospital Industry Contribution Profit, 2007 (Inpatient and Outpatient), The Advisory Board Company, 2009.
More progressive health systems will have market advantage to
demonstrate quality and cost advantages with key services.
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II. Top Ten Trends in Healthcare
Cost-Conscious
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Providers must continue to focus on reducing
costs through operational improvement efforts.
Improve Operational Efficiency – “Unit Costs”
•
•
•
•
Minimize overhead expenses and increase the efficiency of administrative services.
Reduce the cost of operating units and services through supply and labor control.
Outsource select functions as appropriate.
Focus on using the integrated structure to simplify the healthcare experience for members and
patients.
Improve Intra-Case Utilization – “Episodic Costs”
• Identify and eliminate waste or ineffective utilization within existing inpatient and outpatient cases.
• Direct care to lower-cost settings and/or use lower-cost providers.
Improve Utilization of Overall Care – “Cost Avoidance”
• Manage provider and facility capacity as reductions in utilization rates take effect.
• Align the incentives around creating value.
Executives at leading health systems report that they will need to find a way
to cut operating costs by as much as 5% per year over the next few years to
survive the changes brought about by the passage of health reform.
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II. Top Ten Trends in Healthcare
Increasing Physician Employment
The number of physicians becoming employed by
hospitals/health systems will continue to increase.
• Changing Landscape of Physician Practice –
Physician Employment
80% of physicians surveyed reported that they
believed health reform will erode the viability of
the private practice model.1
40%
Percentage of Active
Physicians Employed
• Physician Preference – Unlike previous
generations of physicians, new physicians are
unwilling to accept the risks of private practice.
• Reimbursement Cuts – Reimbursement cuts in
key areas, such as imaging, ancillary testing, and
drug administration, are resulting in declining
incomes for physicians in independent practices
(or longer work hours and stagnant incomes).
31%
24%
22%
18%
15%
8%
5%
Primary Care
1
Specialists
Survey of Physicians and Health Reform, The Physicians Foundation,
Merritt Hawkins, October 2010.
Primary care employment is designed to secure future success in a valuebased payment environment, while specialty care employment is designed
to secure profitability in today’s era of declining reimbursement.
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II. Top Ten Trends in Healthcare
New Payment Formulas
Payors will begin to look at various models to address longterm solvency issues and/or short-term investor pressures.
Payor
Burning Platform
Solution
The Medicare Board of Trustees reports that Medicare’s Hospital
Insurance Trust Fund is now projected to remain solvent until 2029 as a
result of the Patient Protection and Affordable Care Act, as amended by
the Health Care and Education Reconciliation Act of 2010. Previous
projections estimated insolvency in 2017. (Report issued on August 12,
2010.)
• Shared savings
Medicaid
Eighteen states reported that Medicaid or other healthcare programs
were over budget. Connecticut indicated that the Medicaid shortfall is
projected at $185 million in FY 2011. Maryland reports a deficiency
need of $239 million in its Medicaid program due to an increase in
children’s enrollment and a decrease in federal stimulus funds.
(National Conference of State Legislatures, State Budget Update:
November 2010.)
• Managed care.
• ACO.
• Exit program.
Commercial
Beginning in 2011, insurers in the individual and small group market
must spend at least 80%, and insurers in the large group market at least
85%, of their premium revenues (excluding federal and state taxes and
licensing and regulatory fees) on healthcare and quality improvement
activities. (Patient Protection and Affordable Care Act, Section 2718.)
Full or partial
provider risk
agreements.
Medicare
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program (ACO).
• Center for
Medicare and
Medicaid
Innovation.
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II. Top Ten Trends in Healthcare
Evolving Quality Definition
Quality improvement initiatives will transition from process measures to outcomes.
Process Measurement
• Success is measured by completing tasks for a specific illness or disease.
• Efficiency and thoroughness are measurements of success.
• Metrics are self-defined and personally monitored.
Quality Measurement
• Success is measured by achieving treatment goals and improving patients’ health, which could
translate to cost savings.
• Metrics are defined by multiple organizations, including individual health plans, NCQA, and
CMS.
• Outcomes are currently measured in financial savings, with quality improvement considered a
possible driver of the savings.
Outcomes
Measurement
Process
Measurement
Outcomes are currently driven by financial savings, but with an eye toward translating
financial savings into improved health as a result of improved quality of care.
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II. Top Ten Trends in Healthcare
IT Optimization
Providers will begin to determine the best way to optimize their substantial
investments in IT systems to succeed in a value-based environment.
How Far Along Are Healthcare Providers in Using an Electronic Health Record System?
20%
29%
16%
34%
Source: CompTIA, Second Annual Healthcare IT Insights and Opportunities Study.
Results are based on two separate online surveys conducted in July 2010 of 370 IT companies and 300 healthcare providers, including dentists,
nurses, office managers, physicians, and physician assistants.
A report from Circle Square, Inc., mentioned that as of June 2012, 71% of physicians
in California had an EMR, but only 30% met meaningful use capabilities.
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II. Top Ten Trends in Healthcare
Innovative Care Models
Estimated physician shortages will require providers
to begin implementing new patient care models.
Decline in Primary Care Physicians
• A shortage of 64,000 primary care physicians is projected in 2015.1
• Medical students entering family practice dropped 50% from 1997 to 2005.2
New Care Models
• Expanding prevalence and utilization of retail medicine clinics.
– From 2007 to 2009, the rate at which patients visited these clinics rose by almost 1000%.3
– MinuteClinic experienced a 22% growth, each year, in 2010 and 2011.
• Concierge medicine expanding beyond highest income segment.
– 16% of physicians plan to switch to concierge practice in the next 1 to 3 years.4
– Patients pay a yearly or monthly fee for more personalized access to physicians.
• Nurse practitioners and physician assistants (PAs) serving as primary care practitioners.
– Employment of PAs is expected to grow by 39% through 2018.5
1
2
3
4
5
Reuters News, “Doctor Shortage Looming? Use Nurses, Report Says,” October 5, 2010.
St. Louis Post-Dispatch, “Is There a Doctor in the House?” February 7, 2010.
Los Angeles Times, “Use of Retail Medical Clinics is Rising, Study Says.” November 22, 2011.
Survey of Physicians and Health Reform, The Physicians Foundation, Merritt Hawkins, October 2010.
Bureau of Labor Statistics.
As primary care availability continues to decrease, retail medicine and
team-based models will be pursued as strategies to improve access.
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II. Top Ten Trends in Healthcare
Comparison Shopping
Consumerism will continue to force all market segments
(providers and payors) to provide user-friendly information in a
way that allows for effective comparison of costs and quality.
Provider Market
Searching Internet
for diagnoses and
treatment advice.
Researching
hospital quality
outcomes data.
Number of Americans (in Millions) Consulting
Social Media for Health Information
Payor Market
Health plan prices
available online at
Department of
Health and Human
Services Web site.
Network physicians’
education and
training, and quality
ratings as available.
120
100
80
60
40
20
0
2007
2009
2011
Source: Manhattan Research, “Cybercitizen Health” v7.0-v10.0.
Organizations will need to develop innovative methods of
delivering health-related information to their consumers.
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II. Top Ten Trends in Healthcare
Implications
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• An argument can be made that IT figures prominently in seven of the key trends.
• Value-based reimbursement, a key tenet of the health reform efforts, will require
information technology:
– Inform providers.
– Coordinate care activity.
– Improve operational efficiency.
• Health IT impacts consumers of care:
– Retail applications (e.g., ED wait time, available clinic appointments).
– Clinical transparency (e.g., quality metrics, patient feedback).
– System performance (e.g., outcomes, readmissions, conditions).
• Health Reform Implications on IT.
– CMS hospital reimbursement programs (e.g., value-based purchasing,
readmission rates).
– Transparency and efficiency of health exchanges.
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II. Value of Networking
What is Networking?
Relationships are the key to networking.
Networking is not about:
Networking is about:
•
•
•
•
•
•
• Building relationships before you
Schmoozing.
Rapid-fire business card exchanges.
Insincere glad-handing.
Reeling in favors.
Meeting as many people as possible.
Manipulating people to get them to
work with you.
need them.
• Communicating openly and honestly
about how you can help others and
how they can help you.
• Sustaining relationships with people
of similar minds and similar business
interests.
Develop relationships by finding common ground with everyone you
meet and avoiding writing people off as “not your kind of person.”
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II. Value of Networking
Exercise: Identify Opportunities
Opportunities
• Where do you see opportunities for building
your network?
• What are 2-3 conferences/meetings that you
plan to attend in the next year.
Considerations
• Grab a volunteer opportunity to meet people
regionally.
• Attend local meetings when possible.
• Student chapter outreach (e.g., ACHE/CAHL).
• Graduate school recruitment “meet the firm”.
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II. Value of Networking
Network Management
Developing the Network
Establishing the Network
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•
•
•
•
Former employers/coworkers.
Alumni networks.
Friends in related fields.
Professional associations (ask before joining).
Attend local meetings.
Managing the Network
• “Touches”
• Calls – “I’m working on X and would like to get your opinion on…”
• Taking advantage of mentorship opportunities.
• Social Media – LinkedIn, Blogs, Facebook, Twitter.
• Setup meetings.
• Establish realistic goals.
• Stick to a plan.
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II. Value of Networking
Creating Relationships
Creating connections in a hostile environment can be challenging.
They take time and are not build immediately.
• How do you break the ice?
– Introduce yourself and where you are from (e.g., XYZ University Healthcare IT
Program).
– Remember names.
– Redirect responses and questions to others in the group.
• How do you meet people?
– Geography, where are they from.
– System affiliation, who are they with.
– Function, what department do they work in.
• What are the topics that you can bring up?
– News of the day.
– Topics trending in healthcare.
– Regional issues (e.g., recent phenomenon, sports).
– Ask open ended questions (e.g., what are your thoughts on…, how is your system
responding to…, what barriers are you facing on…).
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II. Value of Networking
Trade Organizations - CAHL
Trade organizations offer an easy and inviting way to quickly
expand your network and avenues into internships and future jobs.
CAHL and other organizations like it can serve as the following:
• A great venue for early careerists to build and develop networks by exposing
them to others in the industry and creating forums for discussion.
• Provides specific events focused for the HEN such as the
– College Bowl in the Spring 2013.
– Career shadow day in Winter.
• Educational opportunities (e.g., conferences, seminars) at discounted rates.
To become a HEN program, just need the program director to sign
up the program and they can enjoy the accesses to all the events.
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III. Internship Opportunities
There are opportunities all around, but they require
diligence to identify them and seek them out.
Resources
•
•
•
•
Consulting firms.
Non-profit organizations (e.g., California Health Care Foundation, Cal HIPSO).
Large systems.
Health Care Careers - HIT Fellowship Program
– HCC provides paid, full-time Health Information Technology (HIT) Fellowships
in California for recent graduates and individuals interested in pursuing hands
on experience and careers in Health IT.
– In partnership with the CA Health Workforce Alliance, HIMSS Southern
California and leading employers and associations, 3 and 6 month HCC HIT
Fellowships connect talented candidates to employers building their HIT
workforce.
– http://www.healthcareers.org/program-overview/hit-fellowship
– http://www.healthcareers.org/program-overview/hit-fellowship/hit-process-andtimeline
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Contact Information
Mr. Jason C. Lee
Senior Manager
ECG Management Consultants
[email protected]
For additional information on our firm, visit our Web site
at www.ecgmc.com.
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