Matthew Cullen, Medibank Health Solutions - Integrated Care – the Alternate Path to Health Reform

Integrated Care The Alternate Path to Health Reform

March 2014Matthew Cullen

1. Why Now?

2. What‟s Driving Growth?

3. The Path to System Reform

4. Integrated Care as a Catalyst

5. Future Reform

Healthcare costs in Australia are

growing at an unsustainable rate

3

Source: AIHW4

Context: Healthcare Expenditure

Total Recurrent Healthcare Spend FY02-FY12 Federal Gov‟t Recurrent Healthcare Spend FY02-FY12

State/Local Gov‟t Recurrent Healthcare Spend FY02-FY12 Non-Gov‟t Recurrent Healthcare Spend FY02-FY12

FY02 FY12

8.31%

CAGR

FY02 FY12

7.93%

CAGR

FY02 FY12

10.08%

CAGR

FY02 FY12

7.45%

CAGR

$140.2b

$63.1b

$59.5b

$27.8b

$38.3b

$14.7b

$42.4b

$20.7b

From 44.0% of healthcare spend in FY02 to 42.4% in FY12

From 23.2% of healthcare spend in FY02 to 27.3% in FY12 From 32.8% of healthcare spend in FY02 to 30.3% in FY12

All figures in Current prices

Despite unbroken economic

growth for many years, healthcare

expenditure continues to

encompass a greater proportion of

the economy

5

Source: AIHW6


Recurrent health spend per Capita per annum FY02-FY12 Health Expenditure as a % of GDP FY02-FY12

Federal Health Spend as a % of Tax Revenue FY02-FY12 State Health Spend as a % of Tax Revenue FY02-FY12

FY02 FY12

6.67%

CAGR

FY02 FY12

FY02 FY12 FY02 FY12

$6,172

$3,237

$9.51%

8.36%

26.4%

22.4%

24.5%

16.4%

GDP was $755b in FY02 and $1,475b in FY12

Federal tax revenue was $124b in FY02 and $225b in FY12 State/Local tax revenue was $90b in FY02 and $156b in

FY12

Population was $19.5m in FY02 and $22.7m in FY12

All figures in Current prices


Source: Grattan Institute

7

Large changes in Commonwealth and state government

expenditures, relative to GDP growth, FY03 to FY13 ($bn)Change in Australian governments‟ health

expenditure by sub category, FY03 to FY13 ($bn)

“Growth in health spending above GDP over the past ten years was greater than

the growth above GDP of all other spending combined. The expense that did most

to increase government spending above GDP growth was hospital spending”

Hospital utilisation is the key issue:

in FY02 there were 0.33 hospital

admissions per capita but 0.41

admissions per capita by FY12

8

Source: AIHW9


MBS Funded Primary Care Consults p/annum FY02-FY12 Total MBS Funded Services p/annum FY02-FY12

Total Hospital Separations p/annum FY02-FY12 Total ED Occasions of Service p/annum FY08-FY12

FY02 FY12

2.40%

CAGR

FY02 FY12

FY02 FY12 FY08 FY12

126.7m

99.9m

332.7m

220.7m

9.3m

6.4m

7.8m

7.1m

Total MBS services have grown more quickly, driven by

Pathology and Diagnostic Imaging

Hospital admissions have grown from 0.33 per capita p/annum

in FY02 to 0.41 per capita p/annum in FY12

Primary care growth is only marginally above population growth

4.19%

CAGR

3.76%

CAGR

2.41%

CAGR

ED occasions have grown from 0.33 per capita p/annum in

FY08 to 0.34 per capita p/annum in FY12

For private payors the growth

trajectory is equally problematic

10


Source: PHIAC

554 594 638 669 713

126135

143153

164111

121129

136143

FY08 FY09 FY10 FY11 FY12

Prostheses Medical Hospital

Hospital treatment benefits per capita paid per year FY08 to FY12 ($)

5 Year CAGR: 5.2%

5 Year CAGR of

6.5%

5 Year CAGR: 6.6%

5 Year CAGR: 7.2%

11

Based on the FY02-FY12 growth

trajectory, health spend will

account for 43.8% of government

tax revenue in 20 years (versus

25.6% today)

12


13Extrapolation of growth rates from FY02 to FY12

Health Spend as a % of Federal Tax Revenue FY12-FY32 Health Spend as a % of State Tax Revenue FY12-FY32

Health Spend as a % of All Gov‟t Tax Revenue FY12-FY32 Health Spend as a % of GDP FY02-FY32

FY12 FY32 FY12 FY32

FY12 FY32 FY12 FY32

36.7%

26.4%

54.8%

24.5%

43.8%

25.6%

12.3%

9.5%

1. Why Now?




5. Future Reform

Cost growth is driven by multiple

interrelated factors but increases

in utilisation are the main

contributor

15

What‟s Driving Cost Growth?

Core Issues Contributing Factors

Healthcare Demand

Inappropriate attendance

Unplanned hospital admissions and readmissions

Geographic, cultural and socio-economic diversity

Lack of preventative health expenditure and activity

Poor health literacy, education and self-management practices

Ageing, lifestyle risk factors, chronic disease and disability

Complex patients with multiple morbidities

Healthcare Supply &

System

System fragmentation & poor coordination (health & non-health)

Funding and incentives – non alignment of payer, provider & patient

Number of procedures, screens and tests (volume per case)

Unwarranted variation & procedures with a questionable evidence

base

Organisational and operational efficiency and productivity

Price inflation driven by demand/supply imbalance

Medical technology and pharmaceutical costs

Traditional models of face to face healthcare

16

Examples of key drivers reveal a

system with significant

unwarranted variation that is ill

equipped to deal with chronic

illness

17

There is material unwarranted variation in treatment rates between geographies that

can‟t be explained by age, sex or socio-economic factors (source: Health Dialog /

NSW Health)

Variation in PSC

Surgery Rates/1,000 by

AHS in NSW

Chronic Medical

Admission Rate/1,000

Variation by AHS in

NSW

Variation in

Readmission Rates Post

PSC Surgery by AHS in

NSW

Surgery Rates are adjusted by age, sex and socio-economic status of underlying population.

Source: Linked records of the NSW Admitted Patient Data Collection

Data from the period 1 July 2005 to 30 June 2008

Cost Growth: Unwarranted Variation

A significant proportion of services performed either lack strong evidence of efficacy

or are performed without patient insight into risks, benefits and alternatives

Cost Growth: Health Literacy & EBM

33% of patients believed the angioplasty (PCI) was emergent yet all were elective

70% believed the procedure would prevent future heart attacks

66% believed the angioplasty would extend their life

42% believed the angioplasty saved their life

“Patients’ perceived benefits of an elective PCI do not match existing evidence. Better

patient education may be needed prior to elective PCIs to elucidate the evidence-based

risks and benefits so as to facilitate more truly informed consent.”

“Arthroscopic partial meniscectomy is one of the most common orthopedic procedures, yet

rigorous evidence of its efficacy is lacking…In this trial involving patients without knee

osteoarthritis but with symptoms of a degenerative medial meniscus tear, the outcomes

after arthroscopic partial meniscectomy were no better than those after a sham surgical

procedure.”

Widespread Patient Misconceptions Regarding the Benefits of Elective

Angioplasty

Medibank funds more than $100m of

arthroscopic menisectomy every year

Cost growth: Complex and High Utilising Patients

There has been too little focus on the very small number of consumers that are

recurrently responsible for a substantial proportion of healthcare expenditure

40% of all

hospital bed

days

1/3 of all

hospital

benefits

(~$1 billion

per annum)49% of all

hospital

medical

benefit

outlays

3 MDCs in 4

years on

average

69 years old

on average

Approx. 13

hospital

separations

in 4 years

61,780 members

(2.3% of members

with hospital cover)

Medibank Private

Data FY07 to FY11

Source: Medibank Private

20

21

Hand-written

Medications

Morning

Afternoon

Evening

“I did not really know who to turn to and

sometimes you feel that your GP is too busy to

sit down and chat to”

“My poor health is now the focus of my life, it

has been such a strain on my family”

“My husband is my full time carer, he does all

the cooking cleaning and gets me sorted for the

day with medications and any appointments”

“My providers are so specialized and focus on

just one area. I think this is necessary but

dealing with so many at one given time, it can

be hard to keep up with”

Cost growth: Complex and High Utilising Patients

In the absence of systemic reform

future cost growth will continue to

be driven by higher utilisation

22

2002/03

Healthcare

Expenditure

2032/33 (f)

Healthcare

Expenditure

$85.06b

$246.06b

$37.75b

Ageing

Population

Disease

Rate

Volume per

Case

Treatment

Proportion

Price

$34.38b -$2.29b

$81.30b $1.03b

$8.84b

Components of Forecast Real Cost Growth

Source: John Goss for AIHW

“Increases in health expenditures are primarily

driven not by an ageing population, but by people

of all ages seeing doctors more often, having

more tests and operations, and taking more

prescription drugs, often employing new and

effective treatments”

Cost growth: Utilisation

23

1. Why

Now?2. What‟s Driving

Growth?3. The Path to System Reform


5. Future Reform

25

The Path to System Reform

Key Global Themes

Quality & Outcome

Contracting for

Hospitals

Provider vertical

integration

GP outcome

based

remuneration Multi-modal

service delivery

The engaged

patient

Providers as payors

Payors as providers

Competing

„single‟ payors

Integrated care

Fundamental system reform is

essential to long term sustainability

of healthcare in Australia

26

27


Public Payors Private Payors

Tighter management of provider fees Tighter management of provider fees

Higher taxes / more means testing Premium growth above income growth

Higher debt and deficit Lower financial returns

Healthcare rationing / supply constraints Higher exclusions and excesses

In the absence of reform the consequences are predictable

28


Current State

Multiple payors for an individual

Clinician centric

Fee for service

Episodic, unconnected care

Unwarranted variation

Variable evidence base

Inefficiency / low productivity

Inpatient centric

Poor consumer engagement

Face to face delivery

Fragmented data

Future State

Single, competing payor for an individual

Consumer centric

Quality and outcome based payments

Integrated Care

Consistent pathways

Strong evidence of efficacy

„Industrial production‟ mindset

Community centric

Engaged, literate consumers

Multi-modal delivery

Connected data

1. Why Now?




5. Future Reform

Integrated Care

30

A service aimed at complex, recurrent hospital utilisers

is an ideal catalyst for broader system reform

Highly impactable patient cohort

Demonstrates merits of fund pooling

Solution addresses system fragmentation

Requires a scalable, consistent model

Strengthens the role of primary care

Demonstrates merits of multi-modal delivery

Demonstrates merits of data integration

Evaluation enables future risk based funding

model

The model developed takes

common elements from the most

successful international and local

services

31

Single service jointly funded by public and private payers

Insurers fund their population, government funds non-insured

„Concierge‟ model commensurate with utilisation and cost

General Practice led, applying dedicated resources

Designed to „glue‟ and not replicate the existing system

Integration within healthcare and between healthcare and social services

Face to face and virtual coordination services to improve access and

efficiency

A dedicated platform to enable workflow and integration

A proactive provider engagement and change management strategy

Evaluation design, data linkage and data capture core to project design

Addressing

System

Fragmentation

1. Better health outcomes

2. Better patient experience

3. Lower cost

Triple Aim

Goals

Integrated Care

32

33

Virtu

al L

aye

rP

hysic

al L

aye

r

General

Practice

Outpatient

Specialist

ED

In-patient

Outpatient

Rehab

Community

Care

Pharmacy

Web, Mobile & Remote Monitoring Care NavigatorNurse Triage Virtual Health coaching, and Specialists

Nurse

Home

care &

nursing

Hospital

Liaison

Pivotal Touch Points

Integrated Care

System-wide coordinated care for high utilisers, led from General Practice, focusing

on reduced hospital admissions / readmissions

Core Services

Nurse coordinators in general practice 24 x 7 nurse triage

Care navigators (phone) Care management programs

In-home services Platform, reporting & BI

In-home services Independent evaluation

1. Why Now?




5. Future Reform

A system where healthcare expenditure is linked to the economy‟s ability to pay, and

where consumer choice and service is central to success

36

Other jointly funded, GP led

care management programs

2

Discrete population

fund pooling models

4

Movement from fee for

service to outcome

based provider

remuneration

5

Integrated Care

Program

1

Competing payor models where

each payor is responsible for all

health funding for an individual

3

Future Reform

Thank you

for your time

Health & Medicine

Matthew Cullen, Medibank Health Solutions - Integrated Care – the Alternate Path to Health Reform