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2Confidential and Proprietary © 2016 Sg2
Sg2, a Vizient company, is the health care industry’s premier provider ofmarket data and information.
Our analytics and expertise help hospitals, health systems and leading suppliersunderstand market dynamics and capitalize on opportunities for growth.
Industry-LeadingConsulting
UnmatchedExpertise andIntelligence
PowerfulAnalytics
Sg2 OFFERINGS
DataResources
Meet Sg2
6Confidential and Proprietary © 2016 Sg2
AdvancedInnovativeTraditionalData Not Available
Composite RiskReadiness by Market
In the Halting March Toward Risk, Markets Move atRadically Different Paces
Minneapolis-St. Paul
Boston
Los Angeles
7Confidential and Proprietary © 2016 Sg2
The Menu of Options is Broad, Complex and Fraughtwith Hazards
8Confidential and Proprietary © 2014 Sg2
Lessons from the Early ACO Experience
Accelerate towardfull-bore risk
Mixed model?
Revert to volume-based model?
• Economics of shared savingsdon’t work
• “Leakage” in open accessmodel a fatal flaw
• Attribution methods arecomplex, elusive
• Idealism mixed up with powerpolitics of local markets
SO NOW WHAT?
9Confidential and Proprietary © 2016 Sg2
With MACRA, the Era of Value-Based Payment HasReached Physicians
10Confidential and Proprietary © 2016 Sg2
Taking on Risk Requires Infrastructure, Investment,Scope, Partnerships, a Balance Sheet and Fortitude
11Confidential and Proprietary © 2016 Sg2
SIX FUNDAMENTALSfor health system strategy in atime of change and uncertainty
Confidential and Proprietary © 2016 Sg2
#1: Anticipate Clinical Service Demand and Meet ItWhere It Lies
25
30
35
2016 2021 20263.0
3.5
4.0
2016 2021 2026
Note: Forecast excludes 0–17 age group.Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2013. Agency for Healthcare Researchand Quality, Rockville, MD; OptumInsight, 2014; The following 2014 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice,Outpatient, Skilled Nursing Facility; The Nielsen Company, LLC, 2016; Sg2 Analysis, 2016.
Adult Inpatient ForecastUS Market, 2016–2026
Adult Outpatient ForecastUS Market, 2016–2026
Sg2 IP Forecast Population-Based Forecast Sg2 OP Forecast
VolumesBillions
+14%+16%
10-YearDischargesMillions 5-Year
+7%
+8%
5-Year
+7%
–3%
+15%
–3%
10-Year
13Confidential and Proprietary © 2016 Sg2
Despite Overall Declines, Many Markets WillExperience Inpatient Growth - Location Matters!
Market 3-Year IPGrowth
5-Year IPGrowth
10-Year IPGrowth
Austin, TX +3.4% +5.5% +10.8%
Boston, MA -0.5% -0.8% -1.4%
Chattanooga, TN -1.1% -1.8% -2.6%
Denver, CO +2.7% +4.4% +7.9%
Detroit, MI -6.8% -10.8% -19.1%
Lafayette, LA -1.8% -2.9% -4.5%
Orlando, FL +0.1% +0.3% +1.4%
Tacoma, WA -0.6% -1.1% -2.5%
14Confidential and Proprietary © 2016 Sg2
Sg2 ANALYTICS
20%22%
15%16%
2%7%
5%3%
20%23%
15%16%
12%14%
21%–12%
16%–7%
2%–6%
6%–15%
20%1%
18%8%
20%3%
Inpatient Growth is Concentrated Within KeyService Lines - Procedural
Inpatient Service Line Growth RatesUS Market, 2016–2026
Outpatient Service Line Growth RatesUS Market, 2016–2026
Sg2 IP Forecast Population-Based Forecast Sg2 OP Forecast
Orthopedics and Spine
Neurosciences
Cancer
Gynecology
Pediatrics
Med/Surg
Cardiovascular
Orthopedics and Spine
Neurosciences
Cancer
Gynecology
Pediatrics
Med/Surg
Cardiovascular
Note: All service lines exclude 0–17 age group except Pediatrics, which excludes 18+ age group. Cardiovascular includes cardiology and vascular. Med/Surg includes allergy andimmunology, burns, dermatology, endocrinology, ENT, gastroenterology, medicine and surgery, infectious diseases, nephrology, ophthalmology, pulmonology, rheumatology, andurology. Neurosciences includes Brain/CNS Cancer CARE Family. OP Pediatrics excludes psychiatry, gynecology and obstetrics; IP Pediatrics additionally excludes normal newbornsand neonatology. CNS = central nervous system; ENT = ear, nose and throat. Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost andUtilization Project (HCUP). 2013. Agency for Healthcare Research and Quality, Rockville, MD; OptumInsight, 2014; The following 2014 CMS Limited Data Sets (LDS): Carrier,Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility; The Nielsen Company, LLC, 2016; Sg2 Analysis, 2016.
Confidential and Proprietary © 2016 Sg2
#2: Build a System of CARE Footprint That Is Relevantand Defensible on Your Local Market Chessboard
Geographic reach
System of CARE scope
Must-have clinical services
Must-have locations
Diversified strategy of“primary care”
Channel strategy matchedto your clinical portfolio
Confidential and Proprietary © 2016 Sg2
#3: Develop a Deep Understanding of Patient Flow
What are the entry pointsto my key clinicalprograms?
What are the mostcommon patienttrajectories?
Where are thebottlenecks and exitdoors?
Who represents the“swing vote” that I caninfluence?
Sg2 Patient Flow
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#4: Respond to the Access Needs of Consumers
INFORMATION: Consumers have more information (much of it poor)about treatment and provider options.
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PRICE SENSITIVITY: Consumers are bearing more of the cost ofhealth care.
CHOICES: Consumers have a broader array of options for where toseek care, particularly in the ambulatory arena.
GENERATIONAL SHIFT: Younger consumers have a differentrelationship with their physician and a different approach to seekinghealth care.
Forces driving increased role of the consumer in health care:
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Having a Consumer Strategy in Health Care MeansSolving for 3 Needs
Time Location Price
Confidential and Proprietary © 2016 Sg2
#5: Build a Progressive Approach to PartnershipDevelopment and Management
“Built by Others…Connected to Us”
CommunityOutreach
AdvancedAnalytics
PrivateLabel Health
Plan
Post-AcuteNetwork
Employer-SponsoredWellnessInitiatives
Virtual HealthInsource/Outsource
CVSMinuteClinic
ClinicalIntegrationNetwork
NarrowNetworkPartners
RegionalCancerNetwork
UrgentBehavioral
HealthCenter
ChronicDisease
Management
AreaAgency on
Aging
20Confidential and Proprietary © 2016 Sg2
#6: Pursue Meaningful Scale and Commit toRealizing its Benefits
Operating Scale
Clinical Scale
“Economies of Skill”
Local MarketRelevance Scale
Balance Sheet Scale
?
?
?
?
?
?
?
Covered Lives Scale ?
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How Many Front Doors to My System of CARE Can IOpen, and How Wide?
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