Top 7 Financial Healthcare Trends and Challenges for 2016

Top 7 Financial Healthcare Trends and Challenges for 2016 – Bobbi Brown

© 2014 Health Catalystwww.healthcatalyst.comProprietary. Feel free to share but we would appreciate a Health Catalyst citation. 2

2015 Look Back

2009 2010 2011 2012 2013 20140

2

4

6

8

10

12

14

% Growth in Spending

Hospital Physician, clinic RX DrugsSource: CMS Office of the Actuary

Did not predict speed for CMS payment reform

Chronic care management CPT code 99490 Not being used, hard to

incorporate 13% submitted successful

claims

DOC Fix

Drug cost rising


Surprises in 2015

© 2014 Health Catalystwww.healthcatalyst.comProprietary. Feel free to share but we would appreciate a Health Catalyst citation.

Common Leadership Traits

On a recent “Face the Nation,” episode there was a panel discussion about former presidents who were skilled at helping their country overcome challenges in the 21st century.

The discussion noted traits, common to effective leaders:• Resilient• Inspiring• Collaborative• Great communicatorsSpeaker: Doris Kearns Goodwin


Don Berwick- Moral approach

“We will never solve the problem of cost and finance by focusing on cost and finance." Instead, it will be resolved

"by focusing on the design and redesign of healthcare and the improvement of its quality."

Donald Berwick, MD, president emeritus and senior fellow at the Institute for Healthcare Improvement

http://www.ihi.org/Pages/default.aspx

http://www.ihi.org/Pages/default.aspx


Top 10 CEO Issues for 2015 1. Financial challenges

2. Patient safety and quality

3. Government mandates

4. Personnel shortages

5. Patient satisfaction

6. Physician-hospital relations

7. Access to care

8. Population health management

9. Technology

10. ReorganizationSource: American College of Healthcare Executives 2015 survey released Feb 2016


Poll question one: MACRA is an acronym for:

a. Medicare administrative control review act

b. Medicare access & CHIP reauthorization act

c. Multiple access care recovery act


Poll question two:How many Medicare beneficiaries were covered by an MSSP ACO as of April 2015?

a. 7.9 Million

b. 1.5 Million

c. 15.4 Million


Poll question three:Per capita healthcare spending in 2014 was:

a. $7,893

b. $15,980

c. $9,523


Healthcare Financial Trends for 2016

What follows are seven financial healthcare trends for 2016, including action-oriented strategies that will help healthcare financial leaders stay ahead of the curve.


c

11

Journey First Mile


More Data Sharing

As health systems improve their analytics capabilities and the quality of their healthcare data, sharing it with clinicians will become increasingly important.

Sharing data has a proven impact on accountability, productivity, care quality, and innovation.

Financial Trends

For 20161


TransparencyNew Guidelines Nudge Doctors to Give Patients Access to Medical Records By Robert Pear, New York Times, JAN. 16, 2016

Largest nonprofit health system joins trend towards fully transparent pricing. A patient (or a doctor advising a patient) can see the true costs of care in advance in plain English. Effort lead by David Pynn, Ascension St. John CEO

Blue Cross Blue Shield of North Carolina made news when it decided to publish prices it pays to specific sites of care for specific procedures. Currently published rates for 1,200 procedures.

Geisinger Health System President and CEO David Feinberg, MD, said the Danville, Pa.-based health system is going to start offering a money-back guarantee to patients who receive care at its facilities.


More Data Sharing

Lead the way:

Financial Trends

For 20161

Share data with your clinicians: Stop hoarding data. Stop waiting for perfect data. Share data with your clinicians often.

Develop your transparency strategy: Find a partner, answer the questions in your community.


Journey Mile Two Find a flower

Journey Mile Two


Continued shift from volume-based care to value-based care

CMS announced its goal: by 2018, 50% of fee-for-service payments will move to alternative payment models, such as bundled payments and accountable care organizations.

CMS also issued final regulations for joint replacement bundles.

Financial Trends

For 20162


ACOs: Count over 700 ACO CMS announces 21 Next Generation ACOs(NGA) in January. Providers take more risk.

ACO CMS proposes improvements for the Medicare Shared Savings Program (MSSP)

Networ

ks of

Ind P

racti

ces

Group

Pra

ctice

s

Hospit

al/Pro

fessio

nal P

artne

rship

s

Hospit

al em

ployin

g ACO pr

ofess

ionals

Feder

ally Q

ualifie

d Hea

lth C

enter

Rural

Health

Clin

ic

Critica

l Acc

ess H

ospit

al0%

20%

40%

60% 56%

37% 34%25%

12% 9% 8%

Composition of MSSP ACOs

Source: Fast fact sheet CMS April 2015

Multiple response per ACO


CMS Programs for IP Hospital

VBP (Value Based Purchasing) Incentive / Penalty 2016 1.75% + or –

651 Hospitals =>1% Penalty 330 Hospitals => 1% Bonus

Readmission Penalty 2016 - 3% maximum

220 Hospitals > 2% Penalty Add CABG in 2017

HAC (Hospital Acquired Conditions)

2016 -1% for all hospitals in worst 25P 758 Hospitals In Penalty


New trend data

2010 2011 2012 2013 2014105

110

115

120

125

130

135

140

145

150

145

142

132

121 121

HAC Trend

Rate

per

100

0 di

scha

rge

17% drop, savings of $20B2.1 million fewer cases

Source: CMS Website


CJRComprehensive Care for Joint Replacement• Promote quality and financial accountability

Improve care coordinationPromote investment/incentives for value

• Reduce medical expenditures while improving qualityFive year program with goal to save $153M

• Test concepts on large scale- 700 hospitals/67 geographic areas

• Mandatory program with hospital accountable


Physician Fix HR Bill 02 Timeline April 2015

2015 2019 20202018 2025 2026

.5% annual update thru 2019

Zero update 2020 thru 2025

Combine MU, PQRS, VBM

Value Based participation bonus 5% (APM)

Updates .25% to .75%

Merit Based Incentive Payment System (MIPS) combines three programs under MedicareAccess & CHIP Reauthorization Act (MACRA) of 2015. PQRS expires in 2018.Poll question one: Answer is B.


Meaningful Use

Tweet from Andy Slavitt:

In 2016, MU as it has existed-- with MACRA-- will now be effectively over and replaced with something better #JPM16

Slavitt said: ‘The focus will move away from rewarding providers for the use of technology and towards the outcome they achieve with their patients.’

EP penalty news

Starting January 2016 more than 200,000 eligible professionals are set to see a decrease in their Medicare payments after failing to meet Meaningful Use standards in 2014.

https://twitter.com/hashtag/JPM16?src=hash

https://twitter.com/hashtag/JPM16?src=hash


Where are you?

“The shift from volume to value is a trillion dollar opportunity right now,” Farzad Mostashari, M.D. said, and noted that large hospital systems are far along the path toward making that transition. But others are struggling.

“It’s very difficult for those rooted in a volume-based model.”


Continued shift from volume-based care to value-based care

Lead the way:

Financial Trends

For 20162

Understand clinical measures: healthcare financial leaders need to get a handle on clinical quality and how much it costs to achieve a unit of healthcare outcome and quality.

Develop cost systems to quantify your margins: develop new, automated systems that show costs for activities across all sectors

Create your risk vision: we’ve been under various CMS quality programs for years. If you aren’t improving yet, then you need to prioritize helping your teams improve.

Analyze claims data: see what is happening to the total population for a payer


JourneyMile ThreeWildlife Ahead


We’ve recently seen three propsosed large insurance mergers:

According to a recent Health Affairs blog (December 1 2015), Georgia, Connecticut, and Colorado could experience a 40 percent or more commercial insurance concentration.

Industry consolidation (and alternative delivery models)

Financial Trends

For 20163


Anthem at JP Morgan Annual Health Care ConferenceStrength of Cigna that adds to Anthem:

Affordability and Choice for Consumer

Strong Commercial player with broad geographic coverage

Middle Market ASO/Stop Loss solutions

A leading Specialty capability (Behavioral Health, Dental, Pharmacy, Disability & Life)

Proven wellness programs

Medicare position with leading physician-engagement model


Aetna at Credit Suisse Conference

The Humana acquisition better positions Aetna for growth

Humana increases Aetna’s exposure to Medicare growth and high growth services business


Large Pharma

Enhance Category Leadership

Optimize our two pharma businesses

Generate Sustainable Growth

Optimize Capital Structure

Leverage Global Scale and Capabilities

https://www.premierbiopharmaleader.com/



We’re also seeing a spike in alternative delivery models, including retail space.

In October 2015, Walgreens announced they were acquiring Rite Aid to broaden their expanse into retail health.

Both Walgreens and Rite Aid are very active in the walk-in health clinic business.

Financial Trends

For 20163


Retail sideThe retail health clinic trend continues to be strong, according to a new report by Accenture, with experts saying the number of these clinics will likely hit 3,000 by 2017.

There were nearly 2,000 retail clinics in operation at the end of 2014, Accenture said.



Lead the way:

Financial Trends

For 20163

Update your marketing/contracting plan: determine what consolidation means for your contracting strategy. Assess what you’ve lost to the retail movement. Have you seen a decrease in urgent care and physician office visits? Decide if it’s a market you should compete in.


JourneyLots of

bumps in the road


Population health is a top priority

Population health is the recurring theme in a recent interview of healthcare leaders from the 21 winning Healthcare IT News’ 2015 Best Hospital IT Departments.

Fort HealthCare’s Senior Director of IT effectively summarized the increasing prioritization of population health:

Financial Trends

For 20164

Population health is 100 times bigger and the road isn’t yet paved; it isn’t just about the data or the tools used by clinicians, it really is about changing the way healthcare organizations think about practicing medicine.”


35

Patient Stratification & Care Strategy

5%

30% Rising Risk

65% Low Risk

Complex, Acute & High Risk

Car

e M

anag

emen

tC

ondi

tion/

Dis

ease

M

anag

emen

t

• Personal Relationship• Comorbidity Management• Cross Continuum

• Risk of Escalation• Self Management• Condition/Disease Focused

• Self Service• Preventive• Coaching


Medicare Spending

Beneficiaries Spending0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

14%

46%23%

29%

32%

19%31%

6%

6 > Conditions 4-5 Conditions 2-3 Conditions 0-1 Condition

Source: MedPAC Report March 2015, CMS 2012


High risk, high cost

Intermountain Healthcare found that between 2008 and 2012, its top 5% of high-cost, high-utilizing patients consumed 51% of healthcare costs. Even more telling, the top 1%— what they call the true hot-spotters—accounted for a very disproportionate share: 24% of all healthcare costs.


Using data"[The health plan is] able to share utilization patterns with primary care groups in our system and get them risk-adjusted and timely data. They can then focus on areas like ED trends, well child visits, and office visit rates. It helps us to get our members appropriate care at the right time at the right price. It's a great opportunity in this day and age with managing populations," Robert Duncan, Executive Vice President, Children’s Hospital of Wisconsin.


Care Management ProductsCare Team Insights


Patient Flow



Lead the way:

Financial Trends

For 20164

Get comfortable with blurred lines: provider and payer roles will become less obvious, and we’ll continue to rely less on four-walled structures.

Learn the new terminology: Are you familiar with Return on Engagement? In a PMPM capitated environment, you must budget time and resources for patients. You need to predict where to invest for greatest return.

Know how to treat a population: and take risk for that population. Load claims data and analyzing physician, diagnosis codes, and treatment pattern data.



Financial Trends

For 20164

Learn new measurements: with 23.5 million lives covered by commercial ACO and 7.9 million Medicare ACO beneficiaries, you must know your population to define how to measure success.

Collaborate to improve the care continuum: identify partner organizations and stakeholders you’ll need to collaborate with to achieve a broader definition of care.

Study patient flow: start by identifying the bottlenecks at your hospital or clinic. Use data to study patient movement and focus on improving the admission/discharge process.

Lead the way:

Poll question two: Answer is A.


Journey Top of

Mountain


Engaging patients through technology

Using technology to engage patients will be a focal point of patient engagement conversations in 2016.

Financial Trends

For 20165


Virtual VisitsKaiser Permanente Northern California forecasts that virtual visits will surpass in-person visits by 2018.

Source: R. Pearl, Health Affairs 2014 (33)


Society for Healthcare Strategy and Market Development

A common thread throughout a majority of the findings is a belief that patients will become more involved in their own care. In fact, 99 percent of those surveyed agreed that by 2021 patients will demand a greater role in the planning of their treatment.


Lack of usageOnly 2% of patients in the nation’s largest hospitals currently use mobile health apps provided by their hospitals, Accenture said.

The study shows that two-thirds (66%) of the 100 largest hospitals in the U.S. have mobile apps for consumers, while 38% of that group have developed proprietary mobile health apps for their patients.


Top 40 TransformersMedical Marketing & Media January 2016

Sonny Vu, CEO, Founder MISFIT Widely regarded as one of the legitimately transformative minds within the realm of wearables technology. “Wearables are only the first step in a bigger movement toward more connected devices and ambient monitoring.” Misfit has added Link (an activity monitor/smart button), Bolt (a wireless smart bulb) and Beddit (a sleep monitor).

17.5% of top 40 workingon wearable technology


Engaging patients through technology

Lead the way:

Financial Trends

For 20165

Understand how different patient segments use technology: technology is not a one-size-fits-all solution. Understand how different patient segments use technology.

Attend the International Consumer Electronics Show: CES is a global consumer electronics tradeshow that takes place every January in Las Vegas. Or attend HIMSS at the beginning of March.


JourneyFind the flowers


Revive the analytics around revenue cycle

ICD-10The first month of CMS claims processing didn’t show any huge spikes in denials.Now that ICD-10 is in place, we need to revive the analytics around revenue cycle.Patient accountabilityAlso more responsibility shifted to patient.

Financial Trends

For 20166


ICD -10

0%

2%

4%

6%

8%

10%

12%

2.00%

0.09%

10.10%

2.00%

0.17%

10.00%

Medicare Claims

Oct-15 Historical Average

A recent survey conducted by KPMG during a November webinar finds that 79% of respondents said the transition to ICD-10 has been successful.

Cash is kingand that will take timeto determine impact.


More facts on ICD-10Survey respondents:

99% were prepared

60% no impact on monthly revenue

66% plan to work on improving revenue cycle

Source: Navicure Survey done in January


2006 2007 2008 2009 2010 2011 2012 2013 20140%

10%

20%

30%

40%

50%

6%7%

12%*

16%

20%

28%* 27%

31%34%

1% 1% 2% 3%* 4% 5%7% 8%

11%*

3%3%

5%*7%*

10%12%*

14% 15%18%

All Small Firms (3-199 Workers)

All Large Firms (200 or More Workers)

All Firms

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2014.

Percentage of Covered Workers Enrolled in a Deductible Plan


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $275

$375

$475

$575

$675

$775

$875

$975

$1,075

$1,175

$1,275

$584 $616

$735

$826

$917

$991

$1,097 $1,135

$1,217

$1,318

$303 $343

$433

$533

$646

$747 $802

$883

$989 $1,077

Average Deductible Among Covered Workers With a DeductibleAverage Deductible Among All Covered Workers

* Estimate is statistically different from estimate for the previous year shown (p<.05). NOTES: Average general annual deductible is among all covered workers. Workers in plans without a general annual deductible for in-network services are assigned a value of zero. SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2015.

Average General Annual Deductible for Covered Workers Enrolled in Single Coverage, 2006-2015


More factsAs health insurance plans feature high deductibles, many providers are changing procedures to increase their collection by asking patients to pay their share of the bill up front or helping them to explore payment options. More education up front is needed.

A Commonwealth Fund study shows, 25% of privately insured adult Americans can’t afford to pay their medical bills.


Analytics


Revive the analytics around revenue cycle

Lead the way:

Financial Trends

For 20166

Put the right analytics tools in place: Don’t get too comfortable in that false state of tranquility based on high-level metrics. Make sure cash is still flowing at the same rate. Implement frequent reporting so you can quickly and efficiently identify trends.


JourneyBeware of

Cactus


Increased healthcare spending

Healthcare spending increased by 5.3% in 2014—a significant increase compared to previous years, when it was closer to 2.5%.

We’re spending $9,523 per person for healthcare. To contain increases we must be vigilant about costs.Source: Health Affairs Jan 2016 35

Financial Trends

For 20167

Poll question 3: Answer is C.


Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) Historical (1960-2014) and Projected (2014-2024) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group (Accessed on December 7, 2015) Note: 2014 to 2015 percent changes are calculated using 2014 actual and 2015 projected amounts.

Growth in Rx increased rapidly in 2014 and 2015

Average annual growth rate of prescription drug spending per capita for 1970’s – 1990’s;Annual change in actual prescription drug spending per capita 2000 – 2014 and projected prescription drug spending per capita 2015 - 2024

1970

s

1980

s

1990

s

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

7.2%

11.7%

10.5%

14.7%13.7%

12.6%

10.9%

8.1%

5.4%

8.2%

4.2%

1.5%

3.8%

-0.7%

1.5%

-0.6%

1.6%

11.4%

0.0962566844919786

0.0360975609756098

0.0517890772128060.04744852282900630.05128205128205130.05528455284552850.05624036979969180.05762217359591540.05793103448275860.0586701434159061

Prescription (Actual)Prescription (Projected)Total Health (Actual)


Source: Express Scripts 2014 Drug Trend Report and Year in Review . Available at http://lab.express-scripts.com/drug-trend-report/ and http://lab.express-scripts.com/drug-trend-report/introduction/year-in-review

Costly specialty drugs are a major driver of increased health spending

Express Scripts drug trend by therapy class, 2006 -2014

2006 2007 2008 2009 2010 2011 2012 2013 2014-5%

0%

5%

10%

15%

20%

25%

30%

35%

14.1%

30.9%

2.4%

6.4%

Specialty Drug Trend Traditional Drug Trend Overall Drug Trend


Source: Express Scripts 2014 Drug Trend Report

Specialty drug spending in 2014Express Scripts per-member-per-year spending, top 10 specialty therapy class drugs, 2014

Transplant

Pulmonary Arterial Hypertension

Hemophilia

Growth Deficiency

Miscellaneous Specialty Conditions

HIV

Hepatitis C

Oncology

Multiple Sclerosis

Inflammatory conditions

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90

$5.13

$5.41

$5.49

$9.98

$11.10

$27.24

$37.95

$41.64

$52.36

$80.03


Source: Express Scripts 2014 Drug Trend Report

Traditional drug spending in 2014Per-member-per-year spending on top 10 traditional therapy class drugs, 2014

Mental/Neurological disorders

Depression

Attention disorders

Asthma

Heartburn/Ulcer Disease

High Blood Pressure/Heart Disease

Pain/Inflammation

Compounded Drugs

High Blood Cholesterol

Diabetes

$0 $20 $40 $60 $80 $100 $120

$24.85

$25.98

$27.97

$29.59

$33.40

$36.06

$45.98

$46.04

$48.73

$97.68


Medicare Spending

1980 1990 2000 2010-2014 2014-24 Trustee 2014-24 CBO0%

2%

4%

6%

8%

10%

12%

9%

6% 6%

3%4%

2%

2%

1%2%

0%

3%

3%

Medicare % Growth

Per Beneficiary Enrollment

Source: MedPAC Report March 2015, CMS 2012


Increased healthcare spending

Lead the way:

Financial Trends

For 20167

Take a leadership role in reducing waste, overtreatments, and unnecessary variation: you can’t tackle everything at once. Work with clinicians to do the right thing for your patients/members.


Think positiveOnly when it’s warranted by the factsFocused Grit

1. Take paper, pen and a timer

2. Identify a large problem

3. Think about problem/solution for 5 minutes

4. Did you come up with a solution?

Source: The Happiness Code, Jennifer Kahn

NY Time Magazine January 17, 2016


2016: The Year of the ??

“2016 will be an enormous and pivotal year for progress and it’s starting off with a bang”

–Andy Slavitt, Acting CMS Administrator


More about this topicTop 7 Healthcare Trends and Challenges for 2015: From Our Financial Expert Bobbi Brown – Vice President of Financial Engagement

10 Trends in Healthcare Data Warehousing That Every Health System Needs to Know Dale Sanders – Executive Vice President, Software

Understanding the Market Trends and Business Drivers of a Complex Healthcare Organization – Health Catalyst success story

Implementing 4 of AHA’s Must-Do Healthcare Transformation StrategiesScott Holbrook – Strategic Advisor

Why An EMR Can’t Solve Your Most Important Healthcare Transformation ChallengesDan Burton – Health Catalyst CEO

Link to original article for a more in-depth discussion.

Top 7 Financial Healthcare Trends and Challenges for 2016

https://www.healthcatalyst.com/top-healthcare-trends-challenges-2015

https://www.healthcatalyst.com/accelerated-practices-program-healthcare-outcomes-improvement

https://www.healthcatalyst.com/top-trends-healthcare-data-warehousing-analytics

https://www.healthcatalyst.com/success_stories/healthcare-business-drivers-partners-healthcare

https://www.healthcatalyst.com/success_stories/healthcare-business-drivers-partners-healthcare

https://www.healthcatalyst.com/how_to_implement_aha_healthcare_transformation_strategies/

https://www.healthcatalyst.com/urgent-healthcare-transformation-challenges

https://www.healthcatalyst.com/7-Financial-Healthcare-Trends-Challenges-2016


For more information:

https://www.healthcatalyst.com/ebooks/healthcare-transformation-healthcare-a-better-way/


Bobbi Brown is the Vice President of Financial Engagement for Health Catalyst. Ms. Brown started her healthcare career at Intermountain Healthcare supporting clinical integration efforts before moving to Sutter Health and, later, Kaiser Permanente, where she served as Vice President of Financial Planning and Performance. Ms. Brown holds an MBA from the Thunderbird School of Global Management as well as a BA in Spanish and Education from Misericordia University. She regularly writes and teaches on finance-related healthcare topics.

Other Clinical Quality Improvement ResourcesClick to read additional information at www.healthcatalyst.com

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