FOLLOW THE MONEYaiaportland.org/wp-content/uploads/2017/09/Who-Pays-Why-It-Matters...HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights

HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved. 1

FOLLOW THE MONEY WHO PAYS FOR HEALTHCARE AND WHY IT MATTERS


$3.35 T 18%


PRODUCT RIGHT


PRODUCT RIGHT Car accident

Cancer Ear Infection

Knee replacement Child birth

HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights reserved.

ACA OBAMA CARE


ACA OBAMA CARE Affordable Care Act

Preventative care requirements

Lifetime cost limits Insurance subsidies to offset cost of insurance


MEDICARE FOR ALL

STATE BLOCK GRANTS

Single national system One payer Leverage purchasing power

Regional control Complex distribution formula Savings through competition


1.  2015 Health Insurance Coverage of the Total Population: Kaiser Family Foundation

Commercial 49% 156 M

Medicaid 20% 62 M

Individual 7% 22 M

Medicare 14% 43 M

Uninsured 9% 29 M

VA & Other Govt 2% 6 M

318 M Insured Americans


Healthcare: It isn’t peanut butter

It is more than one business

Last year’s payment model

NOT SOLVING THE REAL PROBLEM


SEGMENT Tailor solutions to patient cohorts

ADVOCATE LEARN Understand the business model

Change the rules to fit today’s world


Healthcare payments are like airline tickets Not all regulations were created equal Not everyone can be innovative

TARGETED SOLUTIONS


Engaged Consumers

Low Discounters

Value Based Healthcare

CommercializedHealthcare

Healthy Families 66M Health Enthusiasts 23M Adult Skeptics 13M

PwC Health Research Institute 2017

Bridge Connector Provider patient relationship focused Technology supports interaction

Care Integrator Payment/ care integrated Incentives for reduced costs

Consumer Advocate Simple plans, transparent costs

Digital access to health data

Lean Operator Prioritize efficiency

Leverage strategic partnerships

Self-insured market Streamlined payments Strategic partnerships

Strong brand, financials, Mergers and acquisitions Technology drives care

Commercial market Price transparency

Self-service

Strong provider relationships Non-clinical providers Retail and telehealth

Health Insurer of the future

Frail Elderly 6M Complex Chronic 25M Chronic 175M Mental Health 10M


Healthy Families Health Enthusiasts Adult Skeptics

Engaged consumers that shop Open to non-traditional health and wellness Early adopters of retail and on-line healthcare High revenue/ low utilizers

Market Segments – Care Delivery Perspective

Frail Elderly Chronic Illnesses Mental Illnesses

Unable to advocate for their health Needing multi-disciplinary team medicine Wanting high touch, hands on care High revenue for the adept/ high utilizers


Individual Small Group Large Group

Sold on the exchanges Highly regulated Financially challenging Employers with >50 employees Moderately regulated Can be financially sustainable Employers with >51 employees Must cover ACA EHBs Financially sustainable but competitive

Market Segments – Payers Perspective


Regulation Mandated benefits Annual contracts

Filing requirements

Population Stability Annual enrollment turnover Midyear disenrollment

Failure to pay premiums

Actuarial Risk

Innovation

No knowledge of medical history No knowledge of demographics

Adverse selection risk

Opportunities Risk adjustment provisions (ACA)

Individual Market Segment


Regulation Mandated benefits Annual contracts

Premium filing requirements

Population Stability Sales drives enrollment Moderate enrollment turnover

Actuarial Risk

Renewing – known utilization history New – no known history

Adverse selection risk

Innovation"Opportunities

Provider risk contracts Sustainable when appropriately priced

Small Group Market Segment


Regulation ACA and state ESBs only

Population Stability

Sales drives enrollment Moderate enrollment turnover

Actuarial Risk

Some known utilization history Premiums are experience rated

"Innovation"

Opportunities

Accountable care organizations

Provider risk contracts

Large Group Market Segment


Is it volume or cost management based? Overhead is the big ticket Multiple revenue streams and multiple opportunities

LEARN THE BUSINESS MODEL


Healthcare Business Model

Facility Fees 42%

Pharmacy 10%

Professional Fees 32%

Margin, Reinsurance & Taxes 5%

Case Management 3% Administration 8%


Clinic Business Model – Volume Driven Fee for Service Model

RVU Payments Based on % of Medicare

Network Contract with Payer Patients

$140/ visit x 20 visits/day = $56,000/ month revenue MA+MD/ month expense = $15,200 MA+NP/ month expense = $9,600 Administration, supplies and facilities = $25,000/ month


Clinic Business Model – Cost Management Capitation Model

Monthly Payment per Assigned Patient

Network Contract with Payer Patients

$25/ patient/ month x 1,800 patient panel = $45,000/ month Quality incentives @ 10% = $4,500/ month MA+MD/ month expense = $15,200 MA+NP/ month expense = $9,600 Administration, supplies and facilities = $25,000/ month


Transaction revenue Project revenue Recurring revenue Service revenue Platform revenue

Fee for service based on CPT code Bundled payment for episode of care Capitated payments, quality of care incentives Cash sale of DME, Rx and services to patients Sale of vendor products at site of care

Healthcare Business Model


Use design to identify problems to be solved

Connect design solutions to clinical outcomes

Advocate for implementation

CREATIVITY IMPROVES REGULATION


ADVOCATE Regulations Care Delivery Inpatient vs. outpatient

Codes for buildings, not care models

Laws that incentivize poor solutions

Multi-day ASC stays

Retail urgent an emergency clinics

Consumer facing IOT health products


SEGMENT Tailor solutions to specific patients

ADVOCATE LEARN Understand the business model

Change the rules to fit today’s world


FOLLOW THE MONEY

Erik Goodfriend Providence Health Plan | www.providencehealthplan.org Humanity Innovation Labs | www.humanityinnovationlabs.com [email protected]

Documents

FOLLOW THE MONEYaiaportland.org/wp-content/uploads/2017/09/Who-Pays-Why-It-Matters...HUMANITY INNOVATION LABS | WHO PAYS WHY IT MATTERS I © 2017 Humanity Innovation Labs. All rights